Sources indicate that the establishment of the GST Appellate Tribunals is about to bring about a significant change in both government and industry dynamics. It is indicated that once the tribunals are operational, they will handle over one lakh appeals involving more than ₹1 lakh crore. The government aims to have these tribunals functioning by April 2024, to alleviate the litigation burden on the High Courts.
The creation of the GST Appellate Tribunals was officially announced by the government on October 27, 2023.
Industry insiders suggest that there will likely be a boost in appeals filed against unfavourable GST orders. However, the industry has appealed to the government to reconsider the high pre-appeal deposit requirement, as it could have adverse effects on the working capital of many firms.
At present, GST assesses must make a pre-appeal deposit of 30% of the GST demand before they can file an appeal. However, for cases involving significant Central Goods and Services Tax (CGST), the maximum pre-appeal deposit has been raised to ₹50 crore, which is an increase from the previous limit of ₹25 crore that existed before the implementation of GST.
Similarly, the maximum pre-appeal deposit for cases involving high-value IGST has been increased to ₹100 crore. In the first phase, the government plans to establish 32 benches of GST Appellate Tribunals, including one national bench and 31 state benches. Larger states will have two benches, while smaller states may have common benches.
Sources indicate that in the second phase, the government aims to double the number of state-level GST Appellate Tribunals to 62. Experts believe that these tribunals have been eagerly awaited and are much needed in the current scenario. The absence of a GST Appellate Tribunal, even six years after the implementation of the GST law, has been a glaring gap in the GST administration. The government has now taken the necessary steps to set up the tribunal.
On September 14, the government issued a notification regarding the location of the benches, with 31 benches to be established across various states. On October 25, the government issued another notification outlining the appointment and conditions of service for the President and members of the tribunal.
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This marks a significant milestone, enabling the process of selection and appointment to commence. Najib Shah, former chairman of CBIC, expressed hope for a prompt completion of the process, leading to the tribunals’ operationalization.
The formation and functioning of these tribunals will provide support to taxpayers who have pending litigations to be presented before the tribunal. However, the pre-deposit obligation might present difficulties in situations involving legitimate tax disputes. Considering the anticipated backlog of cases, taxpayers will need to prioritize getting their matters listed for resolution.
Abhishek A Rastogi, who has argued before the High Courts for the statutory and constitutional right of taxpayers to file these appeals in the absence of the tribunal, highlighted a significant ruling by the Bombay High Court. The court held that the filing time for appeals before the tribunal will be counted from the day the tribunals become operational, benefiting taxpayers across the country.
