FEBRUARY 12, 2024

By K Raji Reddy, IRS, Assistant Director, NACIN, Hyderabad

WE are aware that disputes arise with regard to interpretation of the provisions of GST law and the Rules with regard to classification of goods and services with varying tax rates, valuation issues, matters of short payment and non-payment of taxes, exemption of taxes, eligibility of input tax credits issues etc. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) was constituted under Section 129 of the Customs Act,1962 to resolve the tax/duty disputes pertaining to Customs Act,1962, Central Excise Act, 1944 and Finance Act,1994. There is a need for dispute resolution mechanism in GST law also with many tax related disputes coming up for resolution regularly.

2. As part of dispute resolution mechanism, the law provides for adjudication of the disputes by the adjudicating authorities by passing orders in respect of the show cause notices issued under Section 73 or Section 74 of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017 for brevity) after considering the replies to the notices and hearing the points of view of the taxpayers on the disputes.

3. Law also provides for the first stage appellate mechanism under Section 107 of the CGST Act, 2017 in the form of appeal to Joint/Additional Commissioner (Appeals) on making payment of 10% of the tax disputed by him if the orders are passed by the adjudication authorities lower in rank to the Joint Commissioner of Central Tax and to the Commissioner (Appeals) if the orders are passed by the Joint/Additional Commissioner of Central Tax working in the Central Tax department as per the monetary powers prescribed for adjudication as per CBIC Circular No. 31/05/2018-GST dt 9.2.2018.

4. It appears that the monetary powers for adjudication by the State Tax officers are different as prescribed by the respective State Governments and accordingly first appellate mechanism would be different from the first appellate mechanism of the Central Tax department.

5. However, coming to the second stage appellate mechanism under Central and State GST laws, if the taxpayer is aggrieved with the order passed by the respective Appellate and Revisional Authorities, then the next course of action would be to approach the Goods and Services Tax Appellate Tribunal (GSTAT) under Section 112 of CGST Act, 2017 by making payment of 20% of the remaining tax in dispute, in addition to 10% of the tax already paid at first appellate stage. The appeals would lie to GST Appellate Tribunal against orders of the Appellate and Revisional Authorities. On making payment of 10%/20% of the taxes/remaining taxes disputed before filing appeals, the recovery proceedings for the balance amount shall be deemed to be stayed as per Section 107(7)/112(9) of the CGST Act, 2017 till the disposal of the appeals.

6. The appeals against the orders passed by the State Benches of the Tribunal are to be filed in the High Courts while appeals in case of orders passed by the Principal Bench would lie to the Supreme Court. Appeals against the orders of High Courts are also to be filed in Supreme Court. However, the entire amount as determined by the Tribunal/High Court needs to be paid even if one would want to file appeal in High Court/Supreme Court as per Section 119 of the CGST Act, 2017.

7. The Central Government issued Notification No. S.O. 4073 (E) dated 14th September 2023, exercising powers conferred under Section 109(4) of CGST Act, 2017 constituting 31 State Tribunals in 36 States and Union Territories put together and issued another Notification No. S.O 1(E) dated 29.12.2023 exercising powers conferred under Section 109(3) of CGST Act, 2017 constituting the Principal Bench to be located at New Delhi. The Principal Bench would have a President and a judicial Member, one Technical Member (Centre) and another Technical Member (State) while State Benches would have two judicial Members and two Technical Members one each from the Centre and the State. The senior most Judicial Member of the State Bench acts as the Vice-President of the State Bench.

8. With the issue of above Notifications constituting the State Benches and the Principal Bench of the GST Appellate Tribunal by the Government, curious questions are raised by some of the stakeholders on what happened to the four different kinds of Benches in GST Appellate Tribunal. Earlier there were National/Regional/State/Area Benches of the Tribunal as initially provided for in Section 109 of the CGST Act, 2017. The procedure with regard to appointment of the President and Members was provided for in Section 110 of the said Act. In this regard, a patient reading of what follows will relieve many niggling doubts. A new Section 109 and a new Section 110 of the CGST Act, 2017 were substituted through Finance Act, 2023 in the CGST Act, 2017 w.e.f from 1.8.2023 through Notification 28/2023-CT dt 31.7.2023 in place of earlier Sections. The new Section 109 provides for only two kinds of Benches of the GST Appellate Tribunal, namely the Principal Bench and the State Benches replacing of hitherto four different Benches of the Tribunal and the new Section 110 provides for eligibility requirements /service conditions/selection process for the post of the President and Members of the Principal Bench located at New Delhi and State Benches located in various States/UTs.

9. The procedure for appointment to Principal Bench and State Benches is laid down in Section 110 of the CGST Act, 2017. The Central Government is the appointing authority for all positions in all Benches. A five-member Search-cum-Selection committee headed by the Chief Justice of India or a Supreme Court Judge nominated by him would recommend the appointment of the President and other Members except Technical Member (State) of a State Bench, to the Principal Bench and State Benches of the GST Appellate Tribunal. Another five-member Search-cum-Selection committee headed by the Chief Justice of High Court of a State would recommend the appointment of Technical Member (State) for a State Bench. The Benches would have two Judicial Members and Two Technical Members, one each from the Centre and the State unlike one Judicial Member and two Technical Members as contemplated earlier in old Section 109 of the CGST Act, 2017.

10. A person who has been a Judge of the Supreme Court or is or has been the Chief Justice of a High Court is eligible for appointment as the President of the Principal Bench of the GST Appellate Tribunal, New Delhi. This Bench would hear and decide the cases in which one of the issues involved relates to the dispute on place of supply. The State Benches would hear and resolve disputes on tax matters other than the disputes on place of supply. The President holds office for a term of four years or till he attains the age 70 years, whichever is earlier, with financial and administrative powers in the GST Appellate Tribunal.

11. The eligibility requirements to become Judicial Member, Technical Member(Centre) and Technical Member(State) who hold a term of four years in office or work till they attain the age of 67 years whichever is earlier, is tabulated here under :

12. Further, an Advocate with a minimum of 10 years of practice on indirect tax matters in CESTAT/State VAT Tribunal/High Court/Supreme Court is made eligible for appointment as Judicial Member as per the amendment carried out to the new Section 110 of CGST Act, 2017 through the CGST (Second Amendment) Act, 2023. The said amendment Act also increased the age limit for the retirement of the President to 70 years and Members to 67 years, apart from prescribing minimum age limit as fifty years to be considered for the post of the President and the Member.

(The views expressed are strictly personal.)