More than seven years after the rollout of the Goods and Services Tax (GST), the appellate mechanism meant to handle GST-related disputes remains non-functional.
In a written response in the Lok Sabha on Monday, the Ministry of Finance confirmed that none of the notified benches of the Goods and Services Tax Appellate Tribunal (GSTAT) have become operational yet.
Responding to an unstarred question by MP Manish Tewari, Minister of State for Finance Pankaj Chaudhary stated that the government has notified 31 State Benches at 45 locations and one Principal Bench in New Delhi.
However, he added, “None of the GSTAT benches are fully operational as of now.”
₹210 crore allocated, only ₹3 crore spent
For the financial year 2025–26, the government has allocated over ₹210 crore towards the establishment and functioning of the GSTAT. However, the funds utilised so far stand at a modest ₹3.05 crore, indicating that work on staffing, infrastructure, and logistics is still at an early stage.
Reasons for the delay
The Finance Ministry cited a series of legal and procedural roadblocks that have delayed the establishment of the GSTAT. These include:
- The Madras High Court’s 2019 verdict, which struck down the original provisions of Sections 109 and 110 of the CGST Act concerning the tribunal’s constitution.
- A subsequent wave of legal challenges to tribunal reforms initiated by the Centre, including the Tribunal, Appellate Tribunal and Other Authorities Rules, 2020, which were also set aside by the Supreme Court.
- The need to enact a fresh Tribunal Reforms Act in 2021, which then necessitated further amendments to the CGST Act to align with the new law.
- A Group of Ministers (GoM) was constituted to suggest the way forward.
- Based on its recommendations, the GST Council in its 49th meeting (February 2023) approved the creation of the GSTAT, following which amendments were made via the Finance Act, 2023 and further updated in December 2023.
- The process of appointing members and staff has only recently commenced, the Ministry said.
Interim measures in place
In the absence of a functioning appellate tribunal, the government has implemented temporary measures to ease the burden on taxpayers and reduce litigation:
- A retrospective amendment via the Finance (No. 2) Act, 2024 has allowed taxpayers to claim input tax credit (ITC) for FY 2017–2021 through GSTR-3B returns filed up to November 30, 2021.
- Amendments to Sections 107 and 112 of the CGST Act have reduced the pre-deposit requirements for filing appeals. The limit has been brought down from ₹25 crore to ₹20 crore under both CGST and SGST at the appellate authority level, and from 20% (subject to a ₹50 crore cap) to 10% (capped at ₹20 crore) for appeals to the tribunal.
- Introduction of an amnesty scheme under Section 128A, which allows waiver of interest and penalties for demand notices under Section 73 for the years 2017–18 to 2019–20, if full tax is paid by March 31, 2025.
The road ahead
The absence of an appellate tribunal has long been a concern for businesses and tax professionals, with disputes piling up at the adjudication stage and no avenue for higher appeal. The Finance Ministry’s update confirms that while structural planning is in place, the GSTAT is still some distance away from becoming functional.
