22.02.2023: GST appellate tribunal will reduce pendency of cases, enable faster resolution, enhance ease of doing business

Lawyers have lauded the Goods and Service Tax (GST) Council’s approval for the formation of GST Appellate Tribunal (GSTAT) on February 18, opining that the tribunal will enhance the ease of doing business in the country.

Since the tribunal will have a bench in every state, lawyers note that it will ensure lower pendency and faster disposal of cases, while highlighting that tribunals will clarify the provisions of GST law, which in turn, will reduce the scope for future litigation.

While the tribunal is bound to see a large number of cases in the near future, it is likely to reduce in the long run as the tribunal starts clarifying the law.

As the tribunal is yet to be formed, persons intending to initiate GST-related litigation in the courts, are filing writ petitions against the orders of officials before the high courts.

The immediate aftermath of the formation of the tribunal will be a reduction in the GST-related writ petitions in the high courts across the country.

What is the role of the tribunal?

Despite the GST Act having been introduced in the country in 2017, a dedicated tribunal for GST is expected to be established only in 2023.

Since GST replaced central excise, service tax, additional customs duty and state-level value-added tax, the GSTAT is a successor to the Customs Excise Service Tax Appellate Tribunal (CESTAT) and State VAT tribunals.

When the department raises a claim against a GST payer, the latter can contest the claim at various levels, starting from the Adjudicating Officer (known as ‘proper officer’ in GST law) to the Supreme Court. If the taxpayer receives an unfavourable order from the Adjudicating Officer, the taxpayer can approach the Appellate Authority (Commissioner of Appeals); the order of the appellate authority is appealable in the tribunal.

The order of the tribunal can be appealed in the high court and finally in the Supreme Court.

In the absence of a tribunal, GST-related litigation may take more than a year to reach finality. However, once the tribunal is introduced, taxpayers may choose not to approach the high courts if the tribunal resolves the dispute.

How is GSTAT different from CESTAT?

The announcement that GSTAT will have benches in each state is a stark departure from the government’s policy on CESTAT, which has a total of nine benches across the country. CESTAT has frequently been criticised for the slower disposal of cases and large pendency.

As of November 2022, CESTAT had a pendency of over 78,000 cases across its nine benches. While the pendency can be attributed to many reasons, one of the most important is the lack of benches in many states. For instance, while there are three benches of CESTAT in the five southern states, there are only three benches covering the entire north.

Source: Money Control


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