Constitution of GST Appellate Tribunals (GSTATs)

What’s in today’s article?

• Why in News?
• What Exactly is the Goods and Services Tax (GST)?
• What is the GST Council?
• The GST Appellate Tribunal (GSTAT)
• News Summary Regarding Constitution of GSTATs Benches

Why in News?

• The Union Ministry of Finance notified the constitution of 31 Appellate Tribunals across 28 States and 8 UTs for the Goods and Services Tax (GST).
• This will set the stage to resolve a growing number of taxpayer disputes with the Revenue Department.

What Exactly is the Goods and Services Tax (GST)?

• It is an indirect tax (not directly paid by customers to the government), that came into effect from 1 July 2017 through the implementation of the 101st Amendment to the Constitution of India by the Indian government.
• It has actually replaced various indirect taxes such as - service taxes, VAT, excise and others in the country.
• It is levied on the manufacturer or seller of goods and the providers of services.
• It is divided into five different tax slabs for collection of tax - 0%, 5%, 12%, 18% and 28%.
• Types of GST: State Goods and Services Tax (SGST), Central Goods and Services Tax (CGST) and the Integrated Goods and Services Tax (IGST, on exports and imports).

What is the GST Council?

• Article 279A of the Indian Constitution gives power to the President of India to constitute a joint forum of the Centre and States called the GST Council, consisting of the-
  • Union Finance Minister - Chairperson
  • The Union Minister of State, in-charge of Revenue of finance - Member
  • The Minister in-charge of finance or taxation or any other Minister nominated by each State Government - Members
• The GST Council is an apex committee to modify, reconcile or to make recommendations to the Union and the States on GST, like the goods and services that may be subjected or exempted from GST, model GST laws, etc.

The GST Appellate Tribunal (GSTAT)

• Need:
  • It was a much-awaited move for industry players, who had been approaching the High Courts and Supreme Court during the past six years.
  • The number of appeals against the orders of first Appellate Authorities has been rising sharply.
  • In the last two years alone, such appeals more than doubled from 5,499 in 2020-21 to 11,899 cases in 2022-23.
  • As a result, the number of pending appeals (as of June 30) from taxpayers over CGST levies had spiked sharply to over 14,000.
  • That marks a 20% growth from the number of such pending cases as on March 31 this year.
• Background:
  • The establishment of GSTAT - envisaged at the time of the implementation of the GST regime (July 1, 2017).
  • The CGST Act empowers the Central Government to constitute, on the recommendation of the GST Council, an Appellate Tribunal known as the GSTAT.
  • The GST Council had reached a broad consensus (in July, 2023)on the long-awaited appellate body’s functioning.
• About GSTAT:
  • The appeals against the orders passed by the Appellate Authority under the Central and State GST Acts lie before the GSTAT.
  • Appeals pertaining to disputes of less than Rs. 50 lakh that don’t deal with a question of law could be decided by a single-member bench.
  • Hence, a GSTAT is a forum of second appeal in GST laws and the first common forum of dispute resolution between Centre and States.
  • Being a common forum, GSTAT will ensure that there is uniformity in redressal of disputes arising under GST, and therefore, in implementation of GST across the country.
• Significance of GSTATs:
  • The constitution of GSTATs will expedite the process of adjudication and provide tax certainty especially in recurring litigative issues.
  • Ensuring speedier and economic resolution of cases by dedicated and specialised GSTATs will help in bolstering business sentiments and ease of doing business in the country.
  • Where the taxpayers feel that there has been a burden of a high rate of pre-deposit, the decisions by the tribunal will give some relief.

News Summary Regarding Constitution of GSTATs Benches

• While States had proposed 50 tribunal benches to the GST Council, the Union government had signalled that they will come up in a phased manner, beginning with State capitals and cities with HC benches.
• The first set of tribunals will become operational sometime between this November and January 2024.
• There will be one principal bench of the Appellate Tribunal in New Delhi and several State benches.
• To start with, UP will have the highest number of benches of the GST tribunals, with 3 benches proposed to be set up across Lucknow, Varanasi, Ghaziabad, Agra, and Prayagraj.
• Karnataka and Rajasthan will have two benches each, while Maharashtra and Goa together will have three benches to take up appeals.
• Tamil Nadu, along with Puducherry, will have two benches, as will Gujarat along with the UTs of Dadra and Nagar Haveli, and Daman and Diu.
• Disputes arising in West Bengal, Sikkim, and the Andaman and Nicobar Islands will be taken up by two benches of the tribunal to come up in Kolkata.
• For the seven 7 States, one tribunal bench has been proposed in Guwahati, with circuit benches in Aizawl, Agartala and Kohima that will be operationalised depending upon the number of appeals filed by suppliers in respective States.

Q.1) What are tribunal in India?

Tribunals are judicial or quasi-judicial institutions established by law. They can be established either under Article 323 A of the Indian Constitution (only by Parliament) or under Article 323 B (both by Parliament and state legislatures) with respect to matters falling within their legislative competence.

Q.2) What are the benefits of the Goods and Services Tax (GST) in India?

GST resulted in the simplification of the tax structure. It replaced a complex web of indirect taxes, including excise duty, service tax, and various state-level taxes, with a unified tax structure, making compliance easier for businesses.

Source: Government notifies 31 Benches of GST Appellate Tribunal