GST Appellate Tribunal (GSTAT): An Overview

Shubhangi Jain

12 Dec, 2022

The Goods and Services tax, most commonly used as GST, was introduced to subsume the major indirect taxes and remove the cascading effect of the same. However, it has led to a lot of confusion among the general public since its introduction, which hasn’t been cleared even after 5 years of being adopted in the country, which has ultimately led to an increase in the no. of litigations in respect of the same.

It is quite saddening that even after being well aware of the situation, there hasn’t been a designated forum for the redressal of the issues related to GST, despite extensive discussions about the formation of a separate appellate tribunal. The article discusses the GST Appellate Tribunal (GSTAT), the various aspects related to it, and the need of establishing such a tribunal at the earliest.

What is GSTAT?

GSTAT is an acronym for GST Appellate Tribunal, which is an independent specialized appellate authority for the resolution of disputes under the Goods and Services Tax (GST).

Legal Framework for GSTAT

Section 109 of the CGST Act provides the power to the Central Government to constitute a Goods and Services Tax Appellate Tribunal (GSTAT) as per the recommendations of the GST Council^[1] for the purpose of dealing with the appeals under GST filed against the order of the first level appellate authority or the revisional authority. The Supreme Court of India has recently pronounced a judgment with regard to making the operations of the GSTAT completely paperless.

Recommendations Regarding GSTAT

The Group of Ministers have proposed the following recommendations regarding the Goods and Services Tax Appellate Tribunal (GSTAT)

• The main bench of the GST Appellate Tribunal (GSTAT) is proposed to have the headquarters in New Delhi, and the large states can have up to 5 benches.
• The tribunal will be headed by a judge from the Apex Court or the Chief Justice of a High Court.
• The GoM has agreed with states about the relaxation with regard to experience criteria for appointing the technical members ( 25 years earlier as per Council draft) along with allowing the states to have multiple benches based on population, (or) / and the no. of registered and active GST users.
• Another proposal was regarding setting up a four-member search and selection committee for appointing the members to the benches. The 4 member search & selection committee, the head of which would be the Chief Justice of the Apex Court or his representative judge from the said court, shall work towards appointing the members to the Benches consisting of the President of the GSTAT, State Chief Secretary and a Union Government Secretary,
• Each of these regional Benches would be consisting of a judicial officer equivalent to an HC judge and a senior tax officer from either the Centre or the State as a technical member.
• In the event of the existence of 1 or an odd no. of Benches in a State, the technical members/members from the Centre and the State concerned will be on a rotational basis for the purpose of achieving equity.  
• GOM has also proposed amending Sec- 110 of the CGST Act,2017, dealing with appointing the President / Members of the Appellate Tribunal, methodology of appointment, their qualifications, conditions of service etc., and  replacing the word ‘Government’ with ‘State Government’  that would allow the state govt in relaxing the experience condition in the appointment of members UTs.

Why Is GSTAT The Need Of The Hour? 

 GSTAT has now become the need of the hour due to the following reasons-  

• There has been the rejection of export refund claims by the Appellate Authorities in the absence of the GST Appellate Tribunal (GSTAT); taxpayers are left remediless against such adverse orders resulting in the blocking of huge working capital for taxpayers that ultimately lead to an increased financial burden. The assumption about the timeline of the grant of refund is likely to result in another hassle of obtaining the interest of 6 per cent on delayed refund, in cases where the cost of capital is extremely high, which otherwise they would have borrowed from lenders.
• Another reason is the issue faced by the taxpayers in respect of interest accrual on the litigated amounts. The further delay in the formation of GSTAT shall eventually lead to delays in the settlement of the cases when adverse decisions are received by the taxpayers exposing them to heavy interest liabilities on the dues, which is much higher than the lending rate of the prevailing bank. 
• The challenges faced are not limited to the passing of adverse appeal orders, but the same are faced in cases where in the First Appellate Authorities rule decisions in favour of taxpayers. The revenue often delays the implementation of the orders on the ground of their assumption of the taxpayer’s intention of further litigating the matter at the next appellate level, which continues the never-ending story.

Is GSTAT Needed Even After Having Alternate Remedies for GST Appeals?

It is an undeniable fact alternative remedies are available for filing a writ petition before the Hon’ble High Courts. But in reality, the High Court often hesitates to address writs involving “disputed questions of fact”; therefore, they cannot be approached for the appropriate remedies. Only the Tribunals are treated as ‘final fact-finding’ authorities, and the absence of GSTAT has resulted in the inability of the lower courts and authorities in resolving the issues under litigation because of disputes on “facts” The GST cases are dealt by the High Courts in the absence of GSTAT, increases their burden.

Conclusion

The Government needs to consider the issues related to the absence of a Goods and Services Tax Appellate Tribunal and take adequate steps to establish such a tribunal as soon as possible to facilitate the reduction of burden on the High Court and provide the much-needed redressal forum for the taxpayers and promote the speedy disposal of tax litigation in the country.

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