GSTAT: Definition, Members, Reason of Delay Domino Effect

What is the GSTAT?

The Central Goods and Service Tax Act, 2017 (CGST Act) in Section 109 mandates the constitution of a Goods and Service Tax Appellate Tribunal (GSTAT) and its Benches. Under the GST laws, the GSTAT would be a specialized appellate authority for resolving disputes.

GSTAT has not yet been applied even after 5 years of GST execution. Multiple reasons exist for the late GSTAT creation such as the qualification and experience criteria of technical members, the number and constitution of Benches, and the figure of a search and selection committee.

The long-awaited GSTAT is finally going to be established! On 15th February 2024, the Department of Revenue opened applications for the positions of Judicial members, technical members centre, and state in the principal bench and state benches of the tribunals. The GSTAT will consist of 31 State benches spread out across the States and one Principal Bench in Delhi. To support these benches, 63 judicial and 33 technical members are needed. Read Press Release

The Finance Minister of India, Smt. Nirmala Sitharaman, presided over the ceremony where Justice (Retd.) Sanjaya Kumar Mishra was sworn in as the first President of the GSTAT. The GSTAT is an organization that deals with disputes related to indirect taxes in India. Read Press Release

Latest Update

The notification F. No. A-50050/150/2018-CESTAT-DoR related to the establishment of Goods and Services Tax Appellate Tribunal (GSTAT) branches. Read PDF
53rd GST Council Meeting:
- The Council proposes changes to the CGST Act to end anti-profiteering rules under GST such as:
  - Amending sections 171 and 109 of the Act to introduce a ‘sunset clause’ phasing out anti-profiteering provisions.
  - Assigning responsibility for handling existing anti-profiteering cases to the Principal Bench of the GST Appellate Tribunal (GSTAT).
  - Setting a deadline of April 1 2025, to stop accepting new anti-profiteering applications.
- To cut down on unnecessary court cases, the Council offered to set limits on how much money is at stake before the government can appeal. These limits would apply to appeals filed with the GST Appellate Tribunal ( INR: 20 lakhs), High Courts (INR: 1 crore), and the Supreme Court (INR: 2 crores), with some exceptions.
Under Section 112 (1) of the CGST/SGST Act, the circular addresses the difficulties that arise from the non-finalization of the GSTATs’ constitution, which prohibits people from filing appeals within the allotted three months. Read more
By combining the provisions of the CGST Act with the Tribunal Reforms Act 2021, the bill initiates the administrative process for operationalizing the GSTAT. Read more
On Tuesday, the Supreme Court acknowledged the submissions made by the centre regarding the initiation of the setup process for the national and regional GST tribunals. As a result, the court disposed of a Public Interest Litigation (PIL) related matter. After hearing the petition, the bench made a decision and concluded the case. The senior advocate Mahabir Singh, who represented the petitioner, was given reassurance that he can return if the tribunals were not made functional as per the order.
The Ministry of Finance, Department of Revenue’s has shared the notification F. No. A-50050/150/2018-CESTAT-DoR for establishing a 31-state bench of the GST Appellate Tribunal. Read PDF

GSTAT absence in the states would occur because of the ripple effect in GST administration, in which the disappointed assessee suffers within the adverse order via revenue heads and poses with no choice, he only could approach the jurisdictional High Court, in writ jurisdiction for relief.

Center Will Appoint Advocates as Judicial Members in GSTAT

The governance plans to amend the CGST Act during the winter session of parliament to permit advocates with previous litigation knowledge to be selected for the GST tribunal. According to GST officials with the finance ministry, the modifications would increase the maximum age of the president and members of the GSTAT. In this way, the GSTAT would be obtained in line with other courts.

Bombay HC: 3 Months Time Period to Appeal After GSTAT Formation

Bombay High Court mentioned that under the GST regime, all the applicants shall obtain three months’ time to appeal post building the GST appellate tribunal. For certain 10,000 assesses the order would arrive as a relief whose writ petitions on GST are due in different HCs while having no resolution procedure.

The petition to the tribunal could be incurred within 3 months from the communication date of the order or the date on which the president or the state president according to the case of the appellate tribunal arrive in office whichever is later, a bench of Justices GS Kulkarni and Jitendra S Jain expressed in their ruling on a writ petition by Essar Steel Suppliers.

Against the tax order through the commissioner, appeals, within 3 months of the order, the assessees can appeal. But no tribunal shall be there the assessee would either be stuck or would proceed to different high courts with the writ petitioner asking for a stay against the GST tax orders.

Tax experts mentioned that the method would be practical and a solution could get emerged. Read PDF

50th GST Council Meeting Updates for GSTAT

For a smooth constitution and functioning of the GST Appellate Tribunal, the Council has recommended the Rules governing the appointment and conditions of its Chairman and Members.
As part of the recommendation, the GST Council suggested that the Centre notify the Finance Act, 2023 pertaining to the GST Appellate Tribunal with effect from 01.08.2023 in order to bring the same into operation as soon as possible.
According to Section 110(4)(b)(iii) of the CGST Act 2017, the council has recommended that the Maharashtra Chief Secretary be nominated to the Search Committee Selection Committee. A phase-wise approach was decided regarding the number of State Benches. Read PDF

Pressure on High Courts

The High courts have been loaded with cases and the pandemic-related delays would be imposed to sit in the same writ jurisdiction to hear the assessee.

There is a lower experience for the mentioned case than this High Court in order to deal with the GST or couldn’t accommodate the cases on the board expeditiously because of the due backlog.

Tax Issues Faced by Taxpayers Without GSTAT

The disappointed assessee despite having a complete balance of convenience in favour would have no choice but to wait for justice and the revenue heads pressed aggressively for the execution of their own orders and executed the recovery as per the outcomes.

The GSTAT creation would have gained critical importance and has today enacted the need of the hour. In a recent proceeding, a petition was furnished to the Apex court asking about the priority of the constitution of the GSTAT, a Division Bench of Justices DY Chandrachud and Hima Kohli, rendered that the central Government furnish an expedited reply and through a linked special leave published the case for the final hearing.

Suggestions for GSTAT to GST Council by GoM

The central government has indeed held off on the matter and the GST Council in June 2022, set up a 6-member Group of Ministers (GoM) to discuss several concerns that the states are asking regarding the constitution of the GSTAT.

GoM agreed on the outlines and the framework of putting up the GSTAT and would submit its suggestions to be opted by the GST Council.

GoM report addresses the subject of the states and the additional facts regarding the establishment of the GSTAT which were challenged by various High courts of the country.

The suggestions inter alia furnish that the principal bench of the GSTAT would get set up in New Delhi, and the bigger states on the grounds of population or any additional specified criteria such as GST enrolled assessee and others could set up to 5 benches.

GSTAT benches would be led via a judge of the Supreme Court or a Chief Justice of the State High Court or a Chief Justice of the State High Court. The relaxation towards the kind of appointment of technical members (from the present mandate of 25-year experience requirement), indeed it is critical to note that an amendment to Section 110 of the CGST Act, to substitute the word “Government” with “State Government” for permitting the states to practice their jurisdiction to determine experience conditions and additional process to assign members of the GSTAT.

The last, the revision will open the doors for the qualified members of the bar to get appointed as judicial members, for which a challenge was supported via the Madras High Court.

GoM Guidance for GSTAT Members’ Appointment

The additional essential suggestion of GoM would set the selection committee for the appointment of members.

The same would be anticipated that a 4 member committee administered by either the Chief Justice of India or his representative judge will be assigned, the appointment of members to the Benches.

This committee, the President of the GSTAT, a Union Government Secretary of appropriate rank, and the State Chief Secretary of the separate state.

The suggestions would be chosen for acknowledgement via the GST council same would be crucial that the same considerations wouldn’t take excessive time. The time duration which would have been passed has incurred the GST environment for the taxpayer, in an opposite way, and is not effective for the businesses sometimes for the cause which could not be attributed to them.

Domino Effect of Delaying GSTAT Setup

These delays incurred a ripple effect and stutters the working of the GST framework.

The needed but much more use of the writ jurisdiction to decide cases would incur higher pressure on the already loaded justice system and the renders to the delays in furnishing the relief to the real assessees.

Considering all the factors the GSTAT must be developed on a quicker basis so that the same might incur a smooth introduction and not be ended at birth by cascading boulders of pending litigation.