Delay in Operationalizing GSTAT: Legislative Reforms, Trade Facilitation Measures, and Budgetary Allocations Explained by Pankaj Chaudhary in Lok Sabha

In the Lok Sabha, MoS Finance Pankaj Chaudhary on July 21, 2025 explained delays in operationalizing GSTAT were due to legislative changes, including the Tribunal Reforms Act, amendments to Sections 109 and 110 of the CGST Act, and revised rules for appointment and qualifications of tribunal members. He cited the CGST (Second Amendment) Act, 2023 and GSTAT Procedure Rules, 2025. Trade facilitation measures from the 53rd GST Council Meet include extended ITC claim timelines, reduced pre-deposit for appeals, and an amnesty scheme waiving interest and penalties for FY 2017–18 to 2019–20. He also detailed budget allocations, funds released, and utilization for GSTAT’s setup.

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

UNSTARRED QUESTION NO. 158

TO BE ANSWERED ON MONDAY, THE 21st JULY, 2025/ASHADHA 30, 1947 (SAKA)

ESTABLISHMENT OF GSTAT

158. SHRI MANISH TEWARI:

Will the Minister of FINANCE be pleased to state:

(a) the total number of Goods and Services Tax Appellate Tribunal (GSTAT) benches, including Principal and State Benches, notified for each State and Union Territory and how many of them are functional;

(b) the total number of applications before GSTAT benches, including Principal and State Benches, pending adjudication;

(c) the details of the budget allocated to GSTAT (released and utilized so far for the last three years and the current financial year);

(d) the delay in making the GSTAT benches operational and the reason; and

(e) whether the delay has led to mounting of tax litigations and pendency and dispute the above facts, whether the Government intends to take steps for early pending GST disputes due to the non-establishment of an operationalised GSTAT?

ANSWER

MINISTER OF STATE IN THE MINISTRY OF FINANCE

(SHRI PANCHAK PATEL CHAUDHARY):

(a) There are 31 state benches located at 26 locations and a Principal Bench at New Delhi (vide S.O. 5058(E) dated 29th November, 2022 (as amended from time to time).

(b) None

(c) The Budget allocation for the Goods and Services Tax Appellate Tribunal (GSTAT) for the FY 2025-26 is Rs. 21,040.74.000/-. The fund utilized till date is Rs. 3,058.35/-

(d) Delay in making the GSTAT benches operational is due to the following reasons:

1. The original provisions of section 109 and 110 of the CGST Act were challenged in the Madras Bar Association Vs. Union of India (W.P. No. 804 of 2020) before the Hon’ble Madras High Court. The Hon’ble High Court in its judgment dated 30th September, 2021 struck down the said provisions.
2. Subsequently, the Government amended various acts to take into account the observations made in the judgment and notified the Tribunal Reforms Act, 2021 and Tribunal Reforms Rules, 2021 and also abolished certain tribunals. These included GSTAT. The amendment made to the Finance Act, 2017 to remove the provisions relating to the constitution of appellate tribunal, which were also challenged and struck down by the Supreme Court.
3. On this basis the Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2020 were struck down and were required to be re-framed.
4. After the Court verdict and the judgment of Hon’ble Supreme Court in the Madras Bar Association case (2021), the Government drafted fresh provisions relating to the GST Appellate Tribunal. This was considered. Based on the recommendation of the GST Council in its 49th meeting held in February 2023, suitable amendments have been carried out in section 109 and 110 of the CGST Act to modify the provisions relating to the constitution of GST Appellate Tribunal.
5. The new provisions under section 110 of the CGST Act have been aligned with the observations of the Hon’ble Supreme Court in the Madras Bar Association case (2021). These amendments have been notified on 19th April, 2023 vide notification no. 04/2023-Central Tax.
6. The rules relating to appointment, conditions of service and other requirements for GSTAT have since been notified.

(e) On the recommendations of the GST Council, a new sub-section 16(1) has been inserted in Section 112 of the Finance Act, 2023 (No. 8 of 2023) which has come into effect from July 1st, 2023 to take the time period under section 112(1) of the Finance Act, 2017 from the date of communication of order till the date of constitution of GSTAT to avoid any hardship to taxpayers. Further, notification no. 26/2023-CT dated 19.06.2023 has been issued to notify the date of effect of the amendments.

Amendment in section 109 and section 110 of CGST Act for reducing the number of members in each state bench to five for quick establishment and to reduce the requirement of number of members was carried out. Notification 26/2023 Central Tax dated 19.06.2023 issued. Further, Rs. 375 crore budget allocation has been made for the establishment of GSTAT in 2023-24.

The delay in setting up GSTAT has led to filing of writ petitions before Hon’ble High Courts to challenge appellate orders of Appellate authority in the absence of Appellate Tribunal. These writ petitions are causing heavy burden on Hon’ble High Courts and delay in settlement of disputes.

The amendment of Section 112B in CGST Act has been carried out to provide for an automatic provision for waiver of interest and penalty on pre-deposit where the appeal stands filed under Section 112 of the Finance Act, 2017 as on the date of constitution of the GSTAT. For the FY 2017-18 to FY 2019-20, it is seen that the taxpayers have paid the amount but the demand is not admitted to the notice 03.01.2023 yet.

The Answer can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/07/LOK-SABHA-on-ESTABLISHMENT-OF-GSTAT.pdf