Overview of GST Appellate Tribunal

Table of Contents

1. GST – Journey so far
2. Appellate Structure
3. Goods and Service Tax Appellate Tribunal (GSTAT)
4. Issues Faced in the Constitution of GSTAT
5. Initiatives Taken by the Government to set up GSTAT
6. Key Amendments Proposed by GoM
7. Constitution of Benches Pre and Post Finance Act 2023
8. Forthcoming Challenges

1. GST – Journey so far

• Introduced in July 2017, replacing a set of Central and State taxes such as Central excise, State value added tax (VAT), Service tax etc.
• Destination-based consumption tax wherein Centre and State simultaneously levy tax on a common base
• Significant increase in number of compliant GST payers with average monthly GST collection of INR 1.5 lakh crore in FY 2022-23
• Sharpened checks and balances by tax authorities, with significant reduction of manual intervention
• Integrated technology and introduced e-invoicing, e-filing of refunds, online appeals and auto approved letter of undertaking (LUT) etc.
• GST Appellate Tribunal (GSTAT) to be set-up for smooth functionating of GST

2. Appellate Structure

Supreme Court

• Cases decided by principal bench of appellate tribunal
• HighCourt

High Court

• Appeal against the order passed by state appellate tribunal
• Appeal for cases involving question of law

Appellate Tribunal

• Appeal against order passed by appellate authority and revisional authority
• Consisting of State benches and Principal bench

Appellate Authority

• Consist of Commissioner (Appeals) or Joint Commissioner (Appeals)
• Appeal against order passed by adjudicating authorities

Jurisdictional Officers

• Order to be passed within 3 years (5 years in case of fraud) from the due date of annual return

3. Goods and Service Tax Appellate Tribunal (GSTAT)

Significance of GSTAT

• First common forum for resolving disputes from State & Centre perspective

Increasing Trend in GST disputes

• Disputes regarding levy, valuation, classification, eligibility of credit (including transitional credits) and refunds are increasing
• Departmental audit, investigation, enquiry and scrutiny leading to increased disputes

Hardships Faced by Taxpayers

• Aggrieved taxpayer has to approach High Court through writ, post receipt of an order from an Appellate Authority
• Due to pending backlog, High Courts are unable to dispose off the matters expeditiously

GSTAT – Pressing Priority

• Almost 6 years of implementation of GST, discussions around setting up GSTAT are still in progress
• Expected to see increase in number of litigations in near future as the limitation period of three years from the due date of the annual return for FY 17-18 and FY 18-19 is fast approaching

4. Issues Faced in the Constitution of GSTAT

• Parity of share of members between State and Center
• Qualification and experience criteria of technical members
• Number and constitution of benches
• Constitution of a search cum selection committee
• Ratio of judicial and technical members
• Eligibility of lawyers to be appointed as judicial members

In the absence of GST Tribunal, taxpayers are compelled to evaluate the appropriateness of approaching High Court based on the merits, monetary impact and potential exposure.

5. Initiatives Taken by the Government to set up GSTAT

• Constitution of Group of Ministers (GoM) to recommend necessary amendments
• Amendments proposed in Finance Bill 2023 presented before Lok Sabha
• Extension of timeline to file appeal, based upon setting up of GST appellate tribunal
• Resolved issue relating to the ratio between judicial and technical members and parity of share of members between state and center

6. Key Amendments Proposed by GoM

• Principal bench of tribunal with state level benches across the country
• Each bench consist of judicial and technical member in equal proportion
• States with less than 5 crore population should have maximum 2 benches and no State to have more than 5 benches
• Qualification of members and terms of appointment and re-appointment

7. Constitution of Benches Pre and Post Finance Act 2023

In case of NR to R: Shares can not be transferred at more than fair value

8. Forthcoming Challenges

Eligibility of lawyers for selection of judicial member

•  Advocates having more than ten years of experience are being considered for selection as judicial members in Income TaxAppellate Tribunal, CESTAT, the Sales Tax/VAT Tribunals
• Proposed amendment can be challenged by lawyers

Amendments to be notified

• Proposed amendments are yet to be notified
• Another 10 months will be required for GSTAT to be fully functional