MARCH 26, 2025

By Vijay Kumar

TWO days ago, the Minister of State for Finance, Mr. Pankaj Chaudhary informed the Lok Sabha that:

The Principal Bench and State Benches of the Goods and Services Tax Appellate Tribunal (GSTAT) have been notified. The President, GSTAT has been appointed w.e.f. 06.05.2024. Work towards early operationalization is in progress.

GSTAT has not started accepting appeals.

After the benches are constituted, GSTAT would commence operations.

Let's Break This Down:

1. Tribunal has been notified - only notified, not working.

2. President has been appointed and is in office from 06.05.2024. There is a President for nearly one year. It seems that some other employees are also appointed and are in office.

3. No appeals are being accepted, because there are no Benches. There is a Captain; no ship.

4. After the Benches are constituted, GSTAT would commence operations - obviously, but when?

Section 109(1) of the CGST Act stipulates,

The Government shall, on the recommendations of the Council, by notification, constitute with effect from such date as may be specified therein, an Appellate Tribunal known as the Goods and Services Tax Appellate Tribunal for hearing appeals against the orders passed by the Appellate Authority or the Revisional Authority.

But where is the Tribunal? Appellate Authorities have been passing orders and the assessees do not know where to go in appeal against the orders of the appellate authorities.

On 23rd January 2019, the PIB issued a Press Release:

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has approved the creation of National Bench of the Goods and Services Tax Appellate Tribunal (GSTAT).

The National Bench of the Appellate Tribunal shall be situated at New Delhi. GSTAT shall be presided over by its President and shall consist of one Technical Member (Centre) and one Technical Member (State).

The creation of the National Bench of the GSTAT would amount to one time expenditure of Rs.92.50 lakh while the recurring expenditure would be Rs.6.86 crore per annum.

That was five years ago!

In August 2021, the Supreme Court is reported to have told the Government:

The CGST Act came into force about 4 years back, you have been unable to create any appellate tribunal at all.

The concern is that we want to know it clearly from you whether you want the tribunals or you want to close them down. The impression that we gather is that the bureaucracy does not want tribunals at all. Just tell us and we will entrust their jurisdiction to the high court once again. It is a very sorry state of affairs.

That was four years ago!

It is now nearly seven years since the simple GST has been in existence, but the Tribunal seems to be elusive. Still Members have to be appointed, support staff recruited, infrastructure procured…..

Meanwhile justice can wait. Anyway, it is a good game for the government.

As per Section 112 of the CGST Act, any person aggrieved by an order passed against him by the first appellate authority or by a revisional authority, has the statutory right to appeal before the Tribunal. But now that right cannot be exercised because the Tribunal does not exist and the Tribunal does not exist because the government did not create it.

Your rights may be denied but your liabilities remain, thanks to a benevolent government. You cannot appeal to the Tribunal, but the Government shall initiate recovery proceedings.

It should be noted that appeals can be filed to the Tribunal on payment of the admitted amounts and 10 per cent of the contested tax as pre-deposit. Once the appeal is filed after payment of the required pre-deposit, the balance of the demand is deemed to be stayed and the taxpayer can relax happily, without botheration from unwelcome officers trying to recover the demands by means fair or foul, until the Tribunal takes up the case after a few years.

The taxpayers are not able to file appeal in the Appellate Tribunal against the orders of the first appellate authority and, therefore, are not able to make the pre-deposit under sub-section (8) of section 112 of CGST Act.

It seems, in some cases, the tax officers are taking a view that there is no stay against recovery as per sub-section (9) of section 112 of CGST Act as the taxpayer has neither appealed nor paid the pre-deposit. Why? There is no Tribunal to appeal to and no way to pay the pre-deposit.

However, some taxpayers have paid the amount and some are willing to pay, if only they knew how to do it.

But tax officers will have nothing of it. They say there is a deemed stay only if you appeal to the Tribunal and pay the pre-deposit. It is not for them to tell you how to appeal to a non-existing Tribunal or how to pay the pre-deposit for that impossible appeal. And they are merrily going about recovery proceedings, because the Government did not create the Tribunal and so there is no appeal and, therefore, no stay.

In cases, where the appellate authority has confirmed the demand by the adjudicating authority, the taxpayers cannot file appeal against the appellate order at present due to non-operation of GST Appellate Tribunal as yet. The harried taxpayers had to rush to the High Courts to get a stay from recovery.

Fortunately, the benign government has come out with a benevolent solution.

In CIRCULAR NO 224/18/2024-GST; Dated: July 11, 2024, the Board (CBIC), in order to facilitate the taxpayers to make the payment of the amount of pre-deposit as per sub-section (8) of section 112 of CGST Act, and to avail the benefit of stay from recovery of the remaining amount of confirmed demand as per sub-section (9) of section 112 of CGST Act, clarified:

1. That in cases where the taxpayer decides to file an appeal against the order of the appellate authority and wants to make the payment of the amount of pre-deposit as per sub-section (8) of section 112 of CGST Act, he can make the payment of an amount equal to the amount of pre-deposit. The said amount deposited by the taxpayer will be adjusted against the amount of pre-deposit required to be deposited at the time of filing appeal before the Appellate Tribunal.

2. The taxpayer also needs to file an undertaking/ declaration with the jurisdictional proper officer that he will file appeal against the said order of the appellate authority before the Appellate Tribunal, as and when it comes into operation, within the timelines mentioned in section 112 of the CGST Act.

3. On providing the said undertaking and on payment of an amount equal to the amount of pre-deposit as per the procedure, the recovery of the remaining amount of confirmed demand as per the order of the appellate authority will stand stayed as per provisions of sub-section (9) of section 112 of CGST Act.

4. In case, the taxpayer does not make the payment of the amount equal to amount of pre-deposit or does not provide the undertaking/ declaration to the proper officer, then it will be presumed that taxpayer is not willing to file appeal against the order of the appellate authority and in such cases, recovery proceedings can be initiated as per the provisions of law.

5. Similarly, when the Tribunal comes into operation, if the taxpayer does not file appeal within the timelines specified in Section 112 of the CGST Act read with Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019, the remaining amount of the demand will be recovered as per the provisions of law.

So, the story is:

The Government could not create the Tribunal (for whatever reasons) and so the taxpayer could not file the appeal and pay the pre-deposit to get the deemed stay. The Government says, "Don't worry, what if there is no Tribunal, you just tell us that you are going to appeal as, when and if the Tribunal comes into existence, but don't forget to pay whatever you would have paid if there was the Tribunal." Fair? When there is no Tribunal and no appeal, why should the taxpayer make a deposit? As long as I get my money, I am not worried whether there is a tribunal or not!

Is the government all about collecting money? You want to collect money now to enable a taxpayer to appeal to a non-existent tribunal sometime in the unknown future?

Before parting - an interesting case:

An adjudicating authority granted refund to a taxpayer. The Appellate Authority quashed it. Now, the taxpayer does not owe any money to the government, but actually, the government owed and paid a refund which was set aside. The taxpayer has to appeal to the Tribunal and there is no tribunal! In the meantime, overzealous officers are anxious to recover the refund already paid. The taxpayer challenged the Appellate Authority's order in writ petition before the High Court. The High Court did not entertain the petition as "Concededly, the petitioner has an efficacious remedy of an appeal under Section 112 of Central Goods and Services Tax Act, 2017, before the Goods and Services Tax Appellate Tribunal."

Wonder why nobody told the Court that the Tribunal does not exist! The matter reached the Supreme Court which observed,

4. However, the fact is that the Goods and Services Tax Appellate Tribunal has not been made functional till this date.

6. We would like to first know at the earliest why the Goods and Services Tax Appellate Tribunal has not been made functional till this date.

7. We want a report in the aforesaid regard by the next date of hearing.

10. It appears that a writ petition had to be filed before the High Court as the Department wants to claim back the amount which was already refunded to the assessee.

The Supreme Court stayed the order passed by the Department asking the assessee to pay back the already refunded amount. 2024-TIOL-122-SC-GST

And the matter is pending in the Supreme Court.

Babus are brilliant.

Until next week

Comments/feedback welcome at vijaywrite@tiol.in or 9848111243 (WhatsApp)