Ever since GST assessments commenced a few years back, taxpayers have been receiving aggressive assessment orders demanding GST on the interpretation of a law that everyone is still trying to come to grips with. Adding to the woes of the taxpayers was the fact that they could not appeal against the orders since the GST Tribunals were not set up. They could not knock on the doors of the High Court since many of the issues were not questions of law. Taxpayers must be heaving a sigh of relief that the government finally notified the establishment of 31 Appellate Tribunals. It is expected that the first set of these Tribunals will be up and running by the end of this year.
The government should now focus on providing these Tribunals with the necessary infrastructure and manning them with competent members. Infrastructure should not prove to be a problem since the infrastructure of the earlier VAT and service tax departments can be done up and used. Recruiting competent members to man these Tribunals could prove to be a challenge — it is already the subject matter of a writ petition.
The Madras Tax Bar Association has been advocating the need for judicial members to be eligible to be appointed as members of the Tribunal. They have been advocating this ever since the GST laws were enacted. Soon after the announcement on the establishment of the GST Tribunals, the Association filed another writ petition before the Supreme Court challenging the replacement of Sections 109 and 110 of the CGST Act with Sections 149 and 150 of the Finance Act, 2023.
The PIL stated that Parliament passed the CGST Act in 2017 and under the scheme of the Act, an appellate tribunal was to be constituted known as the Goods and Services Tax Appellate Tribunal under Sections 109 and 110 of the Act. However, the Appellate Tribunal was never operationalised. On February 1, the Finance Bill, 2023 was introduced in the Lok Sabha. There were no provisions relating to the GST Appellate Tribunal in the Finance Bill at that time. The petitions add that in March 2023, through last-minute amendments, Sections 137A to 137G were added to Finance Bill 2023, amending the provisions of the CGST Act.
Further, Section 137B proposed to amend Section 109 of the CGST Act and Section 137C proposed to amend Section 110 of the CGST Act. Through these amendments, various changes were proposed to be made to the Appellate Tribunal’s constitution, qualifications for members, process of appointment and the conditions of service of the members to be appointed. The substituted Sections 109 and 110 will have various provisions that are directly and ex facie in violation of various judgments of the Court, wherein similar provisions have been held to be unconstitutional (Rojer Mathew vs South Indian Bank, is an example) since they affect independence of the judiciary, rule of law and separation of powers, which are part of the basic structure of the Constitution and are sourced in Articles 14, 19 and 21, amongst others.
One can expect a further delay in the establishment of the Tribunals due to the petition before the Supreme Court. However, the delay may well be worth the wait since the only ask of the Madras Tax Bar Association in filling up the posts of members of the Tribunal are eligibility and competence. Taxpayers who have been at the receiving end of some aggressive assessment orders would agree with this.
The writer is a chartered accountant