The Finance Bill 2023, passed in the Lok Sabha, has amended the CGST Act and prescribed the mechanism for establishing the Goods and Services Tax Appellate Tribunal (GSTAT) for hearing appeals related to tax litigation against the orders passed by the first Appellate Authority or the Revisional Authority. Currently, taxpayers are filing writ petitions before high courts, which are subsequently challenged in the Supreme Court. The establishment of GSTAT will expedite and streamline GST issues, including tax litigation, in a very structured manner.

Formation of Goods and Services Tax Appellate Tribunal 

  • The Government shall constitute a ‘Principal Bench’ of the Appellate Tribunal at New Delhi which will consist of the following:
    • President
    • Judicial Member
    • Technical Member (Centre)
    • Technical Member (State)
  • The Government shall constitute ‘State Benches’ on request consisting of the following:
    • Two Judicial Members
    • Technical Member (Centre)
    • Technical Member (State)
  • The President will be a former Judge of the Supreme Court or former Chief Justice of a High Court.
  • A Judicial Member will be a former Judge of the High Court or has an experience of more than 10 years as a District Judge or an Additional District Judge.
  • The Technical Member for Principal Bench will be a present or former member of the Indian Revenue Service, Group A, or of the All India Service with more than 25 years of total working experience and at least 3 years of experience in the administration of an existing law or Goods and Services Tax in the Central Government.
  • The Technical Member for the State Bench will be a present or former officer of the State Government or All India Service not below the rank of Additional Commissioner of Value Added Tax or the State Goods and Service Tax with more than 25 years of total working experience and at least 3 years of experience in administration of an existing law or Goods and Services Tax in the State Government.

Selection of the Member of the Goods and Services Tax Appellate Tribunal

  • The President, Judicial Member, and Technical Member (Centre & State) will be appointed by the Government through a Search-cum-Selection Committee.
  • For Principal Bench, this Committee will consist of:
    • Chief Justice of India or a Supreme Court Judge nominated by him (Chairperson)
    • Secretary of the Central Government nominated by the Cabinet Secretary (Member)
    • Chief Secretary of a State to be nominated by the Council (Member)
    • Present or outgoing President of the Tribunal (Member)
    • Secretary of the Department of Revenue in the Ministry of Finance of the Central Government (Member Secretary)
  • For State Bench, this Committee will consist of:
    • Chief Justice of the High Court (Chairperson)
    • Senior most Judicial Member in the state or retired Judge of the High Court (Member)
    • Chief Secretary of State (Member)
    • Additional Chief Secretary as nominated by State Government, not in charge of the State Tax department
    • Additional Chief Secretary or Secretary of the State Tax Department (Member Secretary)
  • The Committee shall recommend a panel of two names for appointment or re-appointment to the post of the President or a Member.
  • President of the Appellate Tribunal shall hold office for a term of four years until he attains the age of 67 years and shall be eligible for re-appointment for a period not exceeding two years.
  • The other Member shall hold office for a term of four years until they attain the age of 65 years and shall be eligible for re-appointment for a period not exceeding two years.

Operations of Goods and Services Tax Appellate Tribunal

  • Cases in which any one of the issues involved relates to the place of supply shall be heard only by the Principal Bench.
  • The President shall distribute the business of the Appellate Tribunal among the Benches and may even transfer cases from one Bench to another as needed.
  • Senior-most Judicial Member of the State Bench will serve as the Vice-President for respective State Benches and shall exercise the powers of the President.
  • Appeals below the value of 50 lakhs or which do not involve any question of law will be heard by a single Member, while all other cases will be heard together by one Judicial Member and one Technical Member.
  • If the Members differ in their opinion on a particular matter, then the President shall refer such cases to either different members of the Principal Bench or other State Bench.
  • Government, in consultation with the President, may transfer Members from one Bench to another Bench provided that a Technical Member of a State Branch may be transferred to a State Bench of the same state in which he was originally appointed.

Its been more than five years since implementation of GST and the council and the governments collectively could not set up GSTAT. As a result, many unresolved legal matters under GST have accumulated in state High Courts or Supreme Courts. We sincerely hope that establishing GSTAT at the Centre and State levels will help expedite justice delivery on long pending matters and further strengthen the GST structure in India. Please note that, these merely amendments to the CGST Act, these need to be cleared by the centre and then the state legislatures after which it will be notified for implementation. Once these amendments become law the real process of establishment of various benches will take some more time, hope all the entire process is completed in the shortest time possible.