Budget 2026 Introduces Interim Appellate Authority u/s 101A: What Changes from April 1?

Among other announcements of Union Budget 2026 made by the Finance Minister NirmalaSitharaman in the Lok Sabha today, India's GST dispute resolution framework has undergone a critical procedural change with the introduction an interim mechanism for appeals under Section 101A of the Central Goods and Services TaxAct of 2017 (CGST Act). A mechanism that has been awaiting implementation for many years due to the absence of the National Appellate Authority for Advance Ruling (NAAR).

The interim process will come into effect on 1 April 2026 and is intended to eliminate delays in filing appeals and reduce litigation uncertainty for taxpayers, especially in disputes relating to conflicting advance rulings.

Background

Taxpayers can obtain guidance on their potential tax liability and classification issues before engaging in transactions through Advance Rulings granted by either the State or Union Territory Advance Ruling Authorities. Under the GST regime, parties aggrieved by Advance Rulings issued in a particular state used to be able to appeal based upon the overarching legal framework governing that state.

However, when aggrieved parties receive conflicting Advance Rulings from different states or Union Territories, the law has typically mandated that the party aggrieved by the conflicting Advance Rulings must appeal to the National Appellate Authority located in accordance with Section 101B of the CGST Act.

Section 101A states that the Government will set up the NAAR on the recommendation of the GST Council. NAAR will be a high-level appellate body that will consist of a presiding judicial officer - retired High Court/Supreme Court judge and technical members with extensive experience in taxation matters.

Despite the statutory provision being in place for some time, NAAR has yet to be set up, leaving taxpayers who would normally file their appeals under Section 101B with no available procedural mechanism for doing so. In addition, there were conflicting advance rulings with no appellate forum designated for years.

Interim Appellate Authority Explained

To address this gap in jurisdiction, the Finance Bill for 2026 adds a new subsection (1A) to Section 101A, which gives the Government authority to allow an existing authority or tribunal to hear appeals under Section 101B pending the establishment and start-up of NAAR. The new amendment clarifies that an "existing authority" may also refer to bodies such as tribunals that currently operate under GST law.

The purpose of this legislative change is to remove the bottleneck in litigation by providing taxpayers with an active appellate process as of April 1, 2026, and to avoid disputes from getting stuck in limbo due to lack of procedures.

Why it Matters: Budget & Repercussions for Litigation

The interim appellate solution is part of an overall government strategy to enhance ease of conducting business, as well as improve dispute resolution. Delayed proceedings in the appellate court can cause harm to the economy as a result of the compliance burden placed on the business community and the lack of certainty regarding the collection of revenues for government operations.

By establishing a functional appellate process, it will be possible for the Government to correct a problem that has existed within the GST system for many years, and to provide both investors and businesses with certainty regarding the legal framework upon which they operate. It has been repeatedly stated by legal professionals and the taxpayer community that the lack of a means to appeal an advance ruling creates an environment that ultimately leads to excessive litigation costs in the regular court system and uncertainty in respect to taxation.

The interim solution has been designed to bridge the gap in governance until such time as the NAAR has been established as a permanent alternative to the litigation process, without eliminating the statutory appellate rights under Section 101B of the Act.

Operational Implications for Taxpayers

Once in force, this interim authority will:

• Enable filing and disposal of appeals arising from conflicting advance rulings between states/UTs under Section 101B.
• Prevent pendency-related stagnation of key disputes that have so far lacked a clear appellate path.
• Offer a predictable appellate window for taxpayers seeking clarity and finality in their GST-related disputes.

Further, this interim mechanism does not alter the substantive appeal rights under law; it merely bridges the transition until the long-awaited NAAR comes into existence.

The Government has put forth the budget related amendment to Section 101A as a practical and evidentially supported way of resolving a procedural challenge to the current GST appellate framework. As the Government has empowered an existing tribunal or authority to provide taxpayers with access to an interim appellate authority, it has taken a significant step toward eliminating a major pain point for taxpayers and the profession. All stakeholders will be monitoring how well the interim process will handle appeals as part of the formal establishment of the National Appellate Authority on 1 April 2026.

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