7 years of GST; Time to Restructure Appellate Tribunal under GST

The Goods and Services Tax ( GST ) was introduced with a stated objective to rationalise the indirect tax ecosystem of India creating a common national market for goods and services. ‘Ease of doing business’, economic growth and price rationalisation were the cornerstones of this ‘one nation-one tax’ initiative.

The GST dispute resolution mechanism in India comprises various stages and authorities designed to handle disagreements related to GST. Before formal proceedings, taxpayers often resolve disputes through self-assessment, audits, and reconciliations with tax authorities. If a dispute arises, the tax officer issues a show cause notice to the taxpayer, outlining the grounds of the dispute. The taxpayer can respond to the notice and present their case. The tax officer then issues an adjudication order based on the submissions and evidence.

If the taxpayer is dissatisfied with the adjudication order, they can file an appeal with the First Appellate Authority (usually a senior tax officer). The Appellate Authority reviews the case, hears the arguments, and issues an order. If the dispute remains unresolved, the taxpayer can appeal to the GST Appellate Tribunal ( GSTAT ). The tribunal consists of judicial and technical members who review the case afresh, considering the law and facts.

If either party is aggrieved by the tribunal’s decision, they can file an appeal with the jurisdictional High Court. The High Court generally deals with substantial questions of law rather than factual issues. The final stage of appeal is before the Supreme Court of India, where cases are taken up if they involve significant legal interpretations or constitutional matters.

Challenges in Resolution Mechanism

• Backlog and Delays: The existing tribunal system faces significant delays due to a backlog of cases. This undermines the efficiency of tax dispute resolution and impacts business operations that rely on timely decisions.
• Complexity and Specialization: GST laws are complex and evolving. There is a need for specialized knowledge to handle disputes effectively. Restructuring can ensure that the tribunal is staffed with experts who have a deep understanding of GST laws and practices.
• Uniformity in Decisions: Currently, there may be inconsistencies in decisions across different states and regions. A restructured GSTAT can provide a more uniform and predictable legal framework, enhancing legal certainty for taxpayers.
• Streamlined Processes: Administrative and procedural reforms can make the tribunal more efficient. This includes adopting technology for case management, reducing procedural redundancies, and implementing best practices from other judicial bodies.
• Appeal Handling Capacity: With the growing number of GST registrations and transactions, the number of disputes is likely to increase. A restructured tribunal with enhanced capacity can handle the anticipated rise in appeals more effectively.

Suggestions and Proposal

Commencing Operation of GSTAT: Enhancing its capacity and ensuring it is staffed with experts. The Central Goods and Service Tax Act, 2017 (CGST Act) in Section 109 mandates the constitution of a Goods and Service Tax Appellate Tribunal ( GSTAT ) and its Benches. The Goods and Services Tax Appellate Tribunal ( GSTAT ) is yet to become operational, to address dispute resolution procedures in the Goods and Services Tax Regime. The long-awaited GSTAT is finally going to be established this year.

Technological Integration: Using technology for case management and dispute resolution processes. The technological integration in GST helps in changing tax compliance to simplify processes and achieve a resultant boost in tax collections. Digitalising dispute management by way of implementing AI techniques will ease the dispute resolution process.

Standardisation: Establishing uniform procedures and guidelines to reduce inconsistencies. A uniformity in procedures will help to avoid chaos among stakeholders and taxpayers.

Capacity Building: A well-trained and experience member can easily handle the dispute and can give a proper resolution. Training tax officers and tribunal members to improve their understanding and handling of GST-related disputes.

The effectiveness of the GST dispute resolution mechanism is crucial for the smooth functioning of the GST system, impacting taxpayers’ compliance and the overall ease of doing business in India. Restructuring the GST Appellate Tribunal is essential to enhance its efficiency, ensure timely justice, provide consistent rulings, and support the overall effectiveness of the GST system in India.

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