Ambiguity and delay in any dispute resolution mechanism is undesirable for any system including taxation. Ever since the introduction of GST more than four years ago, we have seen a steep rise in litigation mainly due to the reason of ambiguous legal provisions. Further, consequent to non-constitution of an Appellate Tribunal, the first level of appellate decisions is accumulating against assessees who are awaiting setting of the Appellate Tribunal in order to provide clarity or decisions on various issues.
Section 109(1) of the Central Goods and Services Tax Act, 2017, empowers the Central Government to constitute, on the recommendation of the GST Council, from such date as may be specified therein, an Appellate Tribunal to hear appeals against orders made by the first level appellate authority or the revisional authority. The power of the Appellate Tribunal shall be exercised by the National Bench; the Regional Benches; and the State and Area Benches.
The constitution of National and other Benches of the Appellate Tribunal is the need of the hour, and the Government must not delay its constitution any longer.
A person dissatisfied with a decision or order made against him under the GST by an adjudicating authority can appeal to the first appellate authority. If they are not satisfied with the decision of the first appellate authority under Section 107 or by the Revisional Authority under Section 108 of the CGST Act, 2017, they can appeal to the National Appellate Tribunal, under Section 122 thereof and then to the High Court, and finally to the Supreme Court. Thus, any blockage in the entire dispute resolution chain would lead to blockage of a swift dispute remedy available to taxpayers, which is what is happening currently. Even after four years of the CGST Act coming into existence, the tribunal has not been constituted.
Recently, the hon'ble Supreme Court has sought directions from the government for setting up of the Goods and Services Tax Appellate Tribunal as mandated under the Central Goods and Services Act, 2017, to avoid hardships caused to litigants and to curb huge backlog of cases. The taxpayers in the PIL have alleged that the government is deliberately not setting up the GST tribunal. In this regard it is important to note that there has not been any plausible reason communicated by the government for delay in constitution of the GST Tribunal.
The Central Board of Indirect Taxes and Customs vide Circular No. 132/2/2020 – GST dated March 18, 2020, referring to various representations received from taxpayers citing difficulty wherein first level appeals have been decided against the registered person by the adjudicating authority or refund application has been rejected by the appropriate authority and appeal against the said order is pending before the appellate authority. In many of such cases, the appellate procedure has been kept pending by first level appellate authorities on the grounds that the Appellate Tribunal has been not constituted and that till such time no remedy is available against their appellate order, such appeals cannot be disposed.
In order to remove difficulty arising in giving effect to Section 122 of the Central Goods and Services Tax Act, 2017, the Government, on the recommendations of the GST Council, has issued the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019, dated December 03, 2019, in terms of which appeal to Appellate Tribunal can be made within three months (six months in case of appeals by the Government) from the date of communication of order or date on which the President or the State President, as the case may be, of the Appellate Tribunal enters office, whichever is later. Accordingly, the Central Board of Indirect Taxes and Customs vide Circular No. 132/2/2020 – GST dated March 18, 2020, clarified that the prescribed time limit to make application to the Appellate Tribunal will be counted from the date on which the President or the State President enters office, whichever is later. It was further clarified that the first level appellate authority while passing order may mention in the preamble that appeal may be made to the Appellate Tribunal whenever it is constituted within three months from the President or the State President enters office, whichever is later.
However, such clarifications do not solve the underlying purpose and cannot be seen as a resolution of the same. The pending appeals arising against the orders/ directions passed by the first appellate authority are pending due to absence of any appellate tribunal, thus defying the objectives of introduction of the GST.
The absence of a GST Tribunal under the CGST Act has been a long-standing problem, which has led to many pending disputes, with no opportunity to appeal and get satisfaction. Decisions of various high courts directing department not to initiate recovery proceedings as long as the appeal period has not expired is a great relief to the taxpayers. However, this is not a long-term solution. The absence of a proper appeal mechanism is a big challenge both for the government and the taxpayers which should be prioritised, and the issue should be resolved at the earliest.
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