The Central Goods and Service Tax Act, 2017 (CGST Act) in Section 109 mandates for the constitution of a Goods and Service Tax Appellate Tribunal (GSTAT) and its Benches. The GSTAT is to be the specialized appellate authority for resolving disputes under the GST laws.
However, even after five years of implementation of GST, the GSTAT is yet to see the light of the day. There are various reasons for this delay in establishment of the GSTAT, ranging from, among others, the qualification and experience criteria of technical members, number and constitution of Benches, constitution of a search and selection committee.
The absence of the GSTAT in the states has caused a ripple effect in GST administration, where the aggrieved taxpayer, faced with an adverse order from the revenue authorities, has no option but to approach the jurisdictional High Court, in writ jurisdiction for relief.
The High Courts, already burdened with cases and pandemic related delays, are being forced to sit in such writ jurisdiction to hear the taxpayer.
It is often the case that these High Courts may not have specialized Benches to deal with GST matters, or simply cannot accommodate the matters on the Board expeditiously, due to the pending backlog.
Difficulties faced by aggrieved taxpayers
As a result, the aggrieved taxpayer, even with a complete balance of convenience in favour, has no option but to wait for justice, while the revenue authorities press aggressively for implementation of their own orders and consequent recovery action.
In this backdrop, the establishment of the GSTAT has now gained paramount importance and has today passed the need of the hour.
During a recent proceeding, in a petition filed before the Supreme Court to seek on utmost priority the constitution of the GSTAT, a Division Bench of Justices DY Chandrachud and Hima Kohli, has directed the Union Government to file an expedited response, and with a connected Special Leave, posted the matters for final hearing.
The Union Government is also seized of the matter and the GST Council in June 2022, set up a six-member Group of Ministers (GoM) to address various concerns raised by the states in relation to the constitution of the GSTAT.
It is believed that the GoM has agreed on the contours and framework of setting up of the GSTAT and will submit its recommendations to be taken up by the GST Council.
It is expected that the GoM report addresses the concerns of the states and other facets for the establishment of the GSTAT, that were challenged before various High Court of the country.
The recommendations, inter alia, provide that the principal bench of the GSTAT be set up in New Delhi, while large states, on the basis of population or any other defined criteria like GST registered taxpayers, etc., can set up to five benches.
The GSTAT Benches are to be headed by a judge of the Supreme Court or a Chief Justice of the State High Court. Relaxation for the criterion of appointment of technical members (from the current mandate of 25 year experience requirement), and most importantly an amendment to Section 110 of the CGST Act, to replace the word “Government” with “State Government”, to allow the states to exercise their jurisdiction to define experience conditions and other methodology to appoint members of the GSTAT.
This last amendment would also open the doors for eligible members of the Bar to be appointed as judicial members, for which a challenge was upheld by the Madras High Court.
Another important recommendation of the GoM is to set up the selection committee for the appointment of members.
It is expected that a four-member committee headed by either the Chief Justice of the India or his representative judge will be tasked with the appointment of members to the Benches.
This committee will also consist of the President of the GSTAT, a Union Government Secretary of appropriate rank, and the State Chief Secretary of the respective state.
While the recommendations are taken up for consideration by the GST Council, it is equally important that these deliberations are not extended by an inordinate amount of time. Already, the time frame that has elapsed has made the GST environment for the taxpayer somewhat adverse and unfriendly for business operations, very often for reasons that cannot be attributed to them.
These delays are now like potholes in the road to dispensing justice, where each such bump, in turn creates a ripple effect and stutters the working of the GST framework.
The necessary but excessive use of the writ jurisdiction to decide cases is also creating additional pressure on an already overburdened justice system, and further leading to delays in providing relief to genuine taxpayers.
Taking all of these factors into account, the GSTAT has to be established on an urgent basis so that it may have a smooth introduction, and not be strangulated at birth by cascading boulders of pending litigation.
Rajat Bose is a Partner and Neeladri Chakrabarti is a Consultant at Shardul Amarchand Mangaldas & Co. Views are personal.