GST Council sets the ball rolling on Appellate Tribunal, but with some tweaks

The GST Council on Saturday set in motion the setting up of a GST Appellate Tribunal (GSTAT). This tribunal, with one Principal Bench and a number of State Benches, is expected to help businesses resolve various disputes in a better manner.

The Council also approved recommendations to plug revenue leakages in pan masala, chewing tobacco and the gutkha industry. However, it could not take up the Group of Minister’s (GoM) report on online gaming, casinos and horse racing as GoM convenor and Chief Minister of Meghalaya Conrad Sangma could not attend the meeting due to election.

This Tribunal is being set up based on the recommendations by a GoM headed by Deputy Chief Minister of Haryana Dushyant Chautala. Briefing reporters after the meeting of the GST Council, Finance Minister Nirmala Sitharaman said: “The Council adopted the report of Group of Ministers with certain modifications. The final draft amendments to the GST laws shall be circulated to Members for their comments. The Chairperson has been authorised to finalise the same.”

All this is expected to be over by March 1 and then a suitable provision will be included in the Finance Bill 2023. Once enacted, the process of setting up of the Tribunal will begin. It is expected that the Tribunal will be in place by the year end.

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Modifications

Giving details of the modification, Revenue Secretary Sanjay Malhotra said now there will be two technical members and two judicial members in the Tribunalwith both Centre and States having equal representation. Though each Bench will have four members, smaller matters (with dispute up to ₹50 lakh) can be heard by just one member, while bigger (dispute of more than ₹50 lakh) will be heard by the Division Bench. The process of searching and selecting members for State will be done by a committee comprising Chief Justice of High Court in the State concerned, the Chief Secretary and an Additional Secretary.

A senior government official explained that the Principal Bench will take up matters related with inter-state disputes and place of supply issues, while Benches in States will take up all other issues including rates. “States can have more than one Bench, depending upon population and number of disputes,” he said. The aggrieved party in this Tribunal can move to High Court and Supreme Court.  

Tamil Nadu Finance Minister P Thiaga Rajan said, 13 members of the GST council had expressed interest for State Tribunals at the meeting.

‘unified structure’

Commenting on GSTAT, Charanya Lakshmikumaran, Partner, Lakshmikumaran & Sridharan Attorney, said having the Principal Bench in New Delhi and regional Benches in different States will provide a unified structure to the Tribunal under one umbrella. According to Vivek Jalan, Partner with Tax Connect Advisory, “Thousands of matters have already piled up to be heard by Tribunals in the last five years and the setting up of Tribunals is the need of the hour from the last two years now.”  Mahesh Jaising, Partner, Leader (Indirect Tax) with Deloitte India, pointed out that while setting up of Tribunals has seen significant delays, the formula for number of members seems interesting and with equal representation by Centre and State, “we seem to be moving in the right direction and these should become a reality soon.”

Pan Masala, Gutkha

With a view to plug the leakages and improve the revenue collection from pan masala, gutkha, chewing tobacco, the Council approved the recommendations of the GoM. Accordingly, compliance and tracking measures will be  taken to plug leakages/evasions and compensation cess levied on such commodities to be changed from ad valorem to specific tax-based levy to boost the first stage collection of the revenue.  

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