When the goods and services tax (GST) was launched in 2017, lawmakers anticipated disputes between taxpayers and the tax department due to interpretational issues in the new system. To address this, the GST Act provided for a three-tier appeal structure: the first appeal before the Appellate Authority, the second before the GST Appellate Tribunal (GSTAT), and further appeals before the High Court and Supreme Court. While the first and third layers functioned, GSTAT—though envisaged in law—remained non-operational for eight years owing to legal challenges over appointments and centre-state differences.
The original law envisaged GSTAT benches with one judicial member and two technical members from the tax departments, with appointments controlled by the government. Lawyers and professional bodies challenged this framework, arguing it gave excessive power to the executive and diluted judicial independence.
“Courts made it clear that for a tribunal to be truly independent, judicial members must have a dominant role. Because appointments and service conditions were never finalised, GSTAT could not start. Taxpayers had no forum to resolve disputes, and High Courts were overloaded with cases,” said Bimal Jain, founder of A2Z Taxcorp LLP.
A Group of Ministers formed in the 47th Council meeting recommended that GSTAT benches be led by judicial members to ensure independence, with technical members from the Centre and states playing a supportive role. Under this model, the Principal Bench in New Delhi will have a President, one Judicial Member, one Technical Member from the Centre, and one Technical Member from a state. Each State Bench will have two Judicial Members, one Technical Member from the Centre, and one from the state. Matters relating to place of supply will be heard exclusively by the Principal Bench.
