Lok Sabha clears forming GST Appellate Tribunal

The Lok Sabha on Friday passed Finance Bill, 2023 with 64 amendments, including one that seeks to set up the much-awaited GST Appellate Tribunal (GSTAT), which will deal with tax disputes, and also lessen the burden on the higher judiciary, which has repeatedly sought the institution of such a body

New Delhi: The Lok Sabha on Friday passed Finance Bill, 2023 with 64 amendments, including one that seeks to set up the much-awaited GST Appellate Tribunal (GSTAT), which will deal with tax disputes, and also lessen the burden on the higher judiciary, which has repeatedly sought the institution of such a body.

Union finance minister Nirmala Sitharaman speaks in the Lok Sabha during the second phase of the Budget Session of the Parliament, in New Delhi on Friday. (ANI)

While moving the Bill in the House amid sloganeering by the opposition, Union finance minister Nirmala Sitharaman termed it one of three major amendments– the other two mentioned during her short speech were constitution of a panel on National Pension System (NPS) and bringing credit card expenses on foreign tours under the tax net.

“One amendment [in the Finance Bill] is for the GST Council, which is establishing the tribunal,” she said. The constitution of GSTAT has been pending since the new indirect tax regime was launched in July 1, 2017. The amended Finance Bill, 2023 proposed substitution of section 109 of the Central GST Act in order to facilitate creation of the GSTAT and its benches. It did not, however, mentioned any deadline. “The Government shall, on the recommendations of the Council, by notification, establish with effect from such date as may be specified therein, an Appellate Tribunal known as the Goods and Services Tax Appellate Tribunal for hearing appeals against the orders passed by the Appellate Authority or the Revisional Authority,” it said

According to the legislation, GSTAT will have a “Principal Bench” in New Delhi, with the President, a judicial member, a technical member (centre) and a technical member (state). It will also have state benches .

Experts called the creation of the tribunal a delayed but a major move to make the GST regime more efficient. In line with the GST law, the Union Cabinet in 2019 cleared a proposal to set up GSTAT and its regional benches, but it could not be operationalised due to differences among members over its constitution. The council is the apex federal body on GST matters, headed by the Union finance minister, with states represented through their respective finance ministers. Their decisions are often unanimous.

Post several rounds of deliberation, the Council on February 18 agreed to table a draft legislation in the current session of Parliament to establish the GST Appellate Tribunal after stakeholders’ (states and Union Territories) consultations. The law bringing GST into effect in July 1, 2017 has provisions to set up an appellate tribunal for disputes between assessees and the authorities – in its absence, the disputes ended up in the high courts, which was time consuming and expensive.

Saurabh Agarwal, Tax Partner at consulting firm EY said the creation of the tribunal would :streamline the litigation process”, and that the “Principal Bench can also take important decisions such as distribution of cases among the state benches, referring of case to other members in case of difference in views within the same bench or otherwise, etc“.