Formation of 31 GSTATs to Resolve GST Disputes

Formation of 31 GSTATs to Resolve GST Disputes
Posted on 18-09-2023

Government Establishes 31 GST Appellate Tribunals (GSTATs) to Expedite Taxpayer Dispute Resolution

In recent news, the Union Ministry of Finance has officially established 31 Appellate Tribunals for the Goods and Services Tax (GST) across 28 States and 8 Union Territories. This significant development aims to address the growing number of disputes between taxpayers and the Revenue Department.

What is the Goods and Services Tax (GST)?

The GST is an indirect tax system implemented in India since July 1, 2017. It replaced various other indirect taxes, such as service taxes, VAT, and excise duties. Under GST, taxes are levied on the manufacturers or sellers of goods and service providers. It is categorized into five different tax slabs: 0%, 5%, 12%, 18%, and 28%. GST includes three types: State Goods and Services Tax (SGST), Central Goods and Services Tax (CGST), and Integrated Goods and Services Tax (IGST) for imports and exports.

What is the GST Council?

The GST Council is a joint forum consisting of representatives from both the Central and State governments. It is empowered by Article 279A of the Indian Constitution and is chaired by the Union Finance Minister. The Council plays a crucial role in making recommendations and decisions regarding GST, including the taxation of goods and services and the formulation of GST laws.

The GST Appellate Tribunal (GSTAT):

The establishment of the GSTAT has been long-awaited by various industry players who had previously approached High Courts and the Supreme Court to resolve disputes. The number of appeals against orders from the first Appellate Authorities has been on the rise, doubling from 5,499 cases in 2020-21 to 11,899 cases in 2022-23. This has led to an increase in pending appeals related to Central Goods and Services Tax (CGST) levies, reaching over 14,000 cases.

The GSTAT was envisioned at the time of implementing the GST regime in July 2017, and it is empowered by the CGST Act. It serves as a forum for second appeals in GST matters and is the primary platform for dispute resolution between the Central and State authorities.

Key points about GSTAT:

  • Appeals related to disputes under the Central and State GST Acts are adjudicated by the GSTAT.

  • Appeals involving disputes of less than Rs. 50 lakh that do not involve questions of law can be decided by a single-member bench.

  • GSTAT serves as a common platform, ensuring uniformity in dispute resolution and GST implementation nationwide.

The establishment of GSTATs holds several significant implications:

  • It expedites the adjudication process, providing tax certainty, particularly in recurring disputes.

  • Dedicated and specialized GSTATs are expected to facilitate quicker and more cost-effective case resolutions, promoting business sentiment and ease of doing business.

  • Taxpayers burdened by high pre-deposit rates may find relief through tribunal decisions.

News Summary on the Formation of GSTAT Benches:

While the States initially proposed 50 tribunal benches to the GST Council, the Union government opted for a phased approach, starting with State capitals and cities with High Court benches. The first set of tribunals is expected to become operational between November and January 2024.

Notable details include:

  • New Delhi will host the principal bench of the Appellate Tribunal.

  • Uttar Pradesh will have the highest number of benches, with three proposed across various cities.

  • Karnataka, Rajasthan, Maharashtra, and Goa will each have two benches.

  • Tamil Nadu, Puducherry, Gujarat, Dadra and Nagar Haveli, and Daman and Diu will have two benches each.

  • West Bengal, Sikkim, and the Andaman and Nicobar Islands will be covered by two tribunal benches in Kolkata.

  • Seven States will have one tribunal bench in Guwahati, with circuit benches in Aizawl, Agartala, and Kohima, depending on the number of appeals filed in each respective State.

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