GSTAT IS THE NEED OF THE HOUR

[K Balasubramanian]

1. Introduction: The Supreme Court in the case of TEAM COMPUTERS PRIVATE LIMITED VERSUS UNION OF INDIA & ORS. - 2024 (12) TMI 875 - SC ORDER, vide their order dated 13/12/2024 have in para number 6 of the order expressed that we would like to first know at the earliest why the Goods and service Tax Appellate Tribunal has not been made functional till this date (13/12/2024) This is a peculiar case where the department passed orders seeking pay back of already sanctioned refund. As GSTAT was not in place, a writ was filed in the High Court wherein the High Court has ordered to seek remedy under section 112 of the CGST Act by filing appeal in GSTAT.  Left with no option, the taxpayer approached the Supreme Court where stay was granted for seeking pay back of refund from the tax payer. The Supreme Court desired a reply on status of formation of GSTAT by the next hearing after three weeks from 13/12/2024.

2. Sections 109 to 114 of the CGST Act 2017, which are on GSTAT have seen several amendments, including replacement of the section itself many times with the recent one being clause 125 of the Finance Bill 2025 on Section 119 of the CGST ACT 2017. While the Government is putting efforts on the legal framework pertaining to GSTAT, one wonders as to whether there are similar efforts on constituting and operationalizing the GSTAT with required number of benches. The delay in formation of the benches have put the taxpayer in to severe difficulties on various counts which are analysed in this article.

3. ABNORMAL DELAY: The law completed seventh year on 30/06/2024 itself and is on eighth year now. Based on the law which was in force as on 01/07/2017 and with the kind of set up as well as the powers which the Government is having, the GSTAT could have been implemented within 3 years itself, had the required focus was on constituting the much-needed TRIBUNAL.  The Court case on number of technical and judicial members could have easily overcome and at least by now, we could be having the benches of GSTAT, had the Government been aggressive on this issue. We are unable to predict whether the benches would be operationalized at least in the eighth year or even miss this target.

4. Madras High Court on GSTAT: As the initial proposal suggested one judicial member, one technical member from Centre and one more technical member from respective State in the benches, it was ruled that the number of technical members can not be more than the number of Judicial members. As the above verdict relates to 2019, the subsequent delays appear to be due to the approach of the Government as their major focus is on REVENUE.

5. Perhaps the Government was not so serious on setting up the GSTAT as quickly as possible, and delayed the GSTAT as they  got a reason for the delay as Madras High Court Verdict.  However, as the Government is required to answer before the Supreme Court in the Team Computers Private Limited case, today there is a Flash in whatsapp saying The Government has made GST Appellate Tribunal website functional and the site can be visited on gstat.gov.in.

6. However, it appears that the above flash is false as gstat.gov.in is showing 403 Forbidden.

7. The need for GSTAT is being illustrated with three recent Court Orders which describe to what extent the field formations disregard the orders of court on similar issues in the past, pass orders and put the taxpayers into HARDSHIP.

8. Vide order dated 17/02/2025, the Supreme Court in the case of BALAJI MOTORS VERSUS ASSISTANT COMMISSIONER RAJASTHAN GOODS AND SERVICE TAX DEPARTMENT & ANR. - 2025 (2) TMI 793 - SC ORDER, the SC has dealt the case where the GST Registration was cancelled without an opportunity of hearing or even without any SCN. When the taxpayer approached the High Court, the High Court declined to interfere and suggested the taxpayer to seek fresh registration. Neither the Department nor the High Court have considered the fact that the right of the taxpayer to continue his business is a FUNDAMENTAL RIGHT and cancellation of registration to be applied as a last resort after issue of SCN and hearing the taxpayer. Had GSTAT been in place, the taxpayer would not seek the help of High Court or Supreme Court.

9. The second example is from Allahabad High Court reported in M/S ZHUZOOR INFRATECH PRIVATE LIMITED VERSUS ADDITIONAL COMMISSIONER GRADE 2 AND ANOTHER - 2025 (2) TMI 791 - ALLAHABAD HIGH COURT  wherein due to an error in the e way bill on the shipping address, the taxpayer was put in to hardship as the goods were seized and heavy penalty was also levied. This happened despite several High Court orders on identical issue where it was held that unless there is an intention to evade the payment of GST, seizure should not be resorted to. There are several departmental clarifications which are also not considered while passing orders on the goods being transported. To stop occurrences of such cases being filed in High Courts, the formation and operationalization of GSTAT must happen as quickly as possible.

10. The next issue is on condonation of delay when the appeal is being preferred after the time limit specified in law. There are contrary decisions amongst HIGH COURTS as there is no clarity as to whether delay could be condoned based on facts and circumstances of the case. The best example on this issue is that this is live before Supreme Court in the case of THE JOINT COMMISSIONER & ORS. VERSUS S.K. CHAKRABORTY AND SONS. & ANR. - 2025 (2) TMI 672 - SC ORDER dated August 30, 2024

11. The trigger for this article is today’s flash news that GSTAT website is functional as against Economic Times news item on 15/01/2025 which states that GST Appellate Tribunal may take six more months to begin operations. As other formalities on constitution of benches are already in place and as we are crossing the eighth year on 30/06/2025, it is appealed to the Government on behalf of all taxpayers to expedite the formation of GSTAT as quickly as possible and in all cases not later than 30/06/2025.

12. Conclusion: At present, when a taxpayer gets an adverse order from the First Appellate Authority of the department, the tax payer is required to pay the required pre deposit for preferring the appeal in GSTAT and inform the proper officer that as and when the GSTAT is functional, he shall file the appeal. As the GSTAT is likely to be operational soon, it is hoped that the website GSTAT.GOV.IN may be made functional with immediate effect with facility to file the appeal online with all supporting documents so that the case may be registered. As there are several appeals piled up for filing in GSTAT pertaining to the period commencing from 01/07/2017 onwards, let the website of the TRIBUNAL start working from now onwards.