The Goods and Service Tax (GST) brought a paradigm shift in the indirect tax regime to realise the dream of One Nation, One Tax. Revenue collection under it has been phenomenal. It has helped usher in India’s Amrit Kaal and brought us closer to the target of a $ 5 trillion dollar economy. Given that the law was introduced relatively recently, it is natural that there have been legal disputes on classification, rate of tax, place of supply, etc. The quick redressal of these disputes is essential to ensure ease of doing business. However, in the absence of the Goods and Services Tax Appellate Tribunal (GSTAT), taxpayers had no alternative but to approach courts and file writ petitions against the orders passed by lower authorities.

As per the original provisions under Section 109 of the CGST Act, the national bench and each regional bench of the tribunal would consist of one judicial member, one technical member (Centre) and one technical member (State). However, the Madras High Court, in Revenue Bar Association v Union of India, struck down the relevant provision on the grounds that the number of technical members can’t exceed the number of judicial members. This was the biggest setback in setting up the GSTAT.

Accordingly, the GST Council, in its 47th meeting held from June 28-29, 2022, in Chandigarh, decided to set up a Group of Ministers (GoM) to recommend necessary amendments in GST laws to maintain the right federal balance and in line with court verdicts.

Every aspect was discussed by the GoM, headed by Deputy Chief Minister of Haryana Dushyant Chautala. The recommendations appear to be in line with various judgments given by courts.

Based on the recommendations of the GoM, the GST Council has approved GSTAT-related changes. The Finance Act, 2023, was passed by Parliament which, inter-alia, intended to bring GSTAT to life. However, it is yet to be notified. There were concerns about the composition of the GSTAT benches. It was suggested that the tribunal should have only two members — one judicial and one technical.

As per the amended Section 109 of the CGST Act, there will be a Principal Bench located in New Delhi and several state benches. The composition of one tribunal bench is two judicial members and one technical member each from the Centre and state. However, cases may be heard by a two-member bench, comprising one member (judicial) and one member (technical).

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GSTAT will be the first joint forum at which the dispute resolution process will converge for all GST laws and both tax administrations, that is, Central and state tax. Therefore, it is prudent that the Centre and states have equal representation. This may be the reason behind the proposed four-member bench.

Section 110 (4)(a) and (b) of the Act provide for the Search-cum-Selection Committee for technical member (State) of a State Bench and for all other cases respectively. Such a committee will be headed by the Chief Justice of the high court in the case of technical member (State) and the CJI for all other cases. This will ensure transparency in the selection process.

The Madras High Court rejected the provisions under Sections 109 and 110 of the CGST Act, observing that it was ultra-vires in so far as excluding lawyers from consideration as members of the Tribunals.

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The court held that because advocates are eligible in other tribunals, the GST law makes them ineligible for appointment since it would be in violation of Article 14. Besides, there are several existing tribunals in India where advocates are not eligible for the post of member [Judicial]. Therefore, I firmly believe that, for the time being, the tribunal can be formed with the existing provisions.

There was apprehension over the tenure of each member as well. The Act provides for a member’s tenure to last four years with a provision of a two-year extension. This accounts for sufficient time for members to perform their duties and to ensure the availability of suitable replacements.

There were also concerns about the process being hastened. Based on the above, it is clear that the GoM has submitted a detailed report and the GST Council, after extensive deliberation, has finalised the GSTAT provisions. These apprehensions seem misplaced.

Now, the immediate challenge will be ensuring there is sufficient manpower to man these tribunals. The initial number of GSTAT benches is expected to be over 30. That means a total of 60 judicial members and 60 technical members. Search-cum-selection committees may struggle to identify the right persons to hold these positions.

The Customs Excise and Service Tax Appellate Tribunal (CESTAT) will also need central and state officers in the same capacity to defend cases that come to it.

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Lastly, lasting and expansive infrastructure will be required to house these GSTAT benches. However, I strongly believe that the Centre and state governments will deal with all possible challenges and ensure the smooth functioning of GSTAT, which will ease taxpayers’ lives.