GST UPDATE ON DELAY IN CONSTITUTION OF APPELLATE TRIBUNAL:- 100/2020-21

GST Law has celebrated his 3^rd Birthday recently and it is expected that it fulfils its objective of “Good and Simple Tax”. There are many advancements pending in its effective implementation, one of being the constitution of Goods and Services Tax Tribunal (GSTAT). As we all know that for any law to be able to operate smoothly, it is utmost necessary that the areas of disputes and litigation are resolved at the earliest as ‘justice delayed is justice denied’. However, one of the important aspect of GST law still remains un-noticed which is the constitution and functioning of the GSTAT. In today’s update, we will discuss about reasons for delay in constitution of GSTAT and its repercussions faced by the taxpayers.

The GST Appellate Tribunal is not constituted till date and it is worth mentioning that its constitution itself is being challenged before Madras High Court in the case of REVENUE BAR ASSOCIATION VERSUS UNION OF INDIA [2019 (30) G.S.T.L. 584 (MAD.)] wherein it was held that requirement that GST Appellate Tribunal benches consists of one Judicial Member, one Technical Member (Centre) and one Technical Member (State) are liable to be struck down as administrative members outnumbering judicial member violated Article 14 and 50 of the Constitution of India and Supreme Court judgments. It is submitted that when the composition of members in GSTAT itself is under dispute, its functionality is far from reality in near future. However, due to non-constitution of Tribunal, the taxpayers are facing many problems as recovery proceedings are being initiated against them for not challenging the order passed by the Commissioner Appeals. It is submitted that filing of Writ before High Court in the absence of GSTAT is a costly affair and every taxpayer cannot afford to knock the doors of High Court. However, in this context, reference may be made to Removal of Difficulty Order No. 09/2019-Central Tax dated 03.12.2019 wherein the time limit for filing appeal before GSTAT has been specified as three months from the date of communication of order or three months from the date on which President or the State President, of the Appellate Tribunal after its constitution under section 109 enters the office, whichever is later. Hence, the starting point of the time limit for filing appeal before the GSTAT has been deferred till the date when President/State President enters office. However, till the constitution of the GSTAT, the taxpayers will be facing the rigours of recovery proceedings being initiated against them.

According to section 78 of the CGST Act, 2017, any amount payable by a taxable person in pursuance of an order passed under this Act shall be paid by such person within a period of three months from the date of service of such order failing which recovery proceedings will be initiated. It is to be noted that this section can very well be invoked by the revenue authorities as there is no exception to initiation of recovery proceedings wherein the statutory time limit for filing appeal has not expired. The provision contained in section 107(7) and section 112(9) also provides stay against recovery of balance amount only where appeal has been filed along with compliance of the condition of mandatory pre-deposit and there is no other exception regarding non-recovery of dues by the department. In the past also, dispute regards recovery of dues wherein appeal was pending along with stay application before Tribunal arose when draconian Circular No. 967/01/2013-CX, dated 1-1-2013 was issued. The taxpayers were issued recovery notices even during pendency of stay application and taxpayers could get relief only by filing writ petitions before High Courts and ultimately, the circular was quashed. When, in the erstwhile indirect tax regime, recovery proceedings were initiated even during pendency of appeals, then it cannot be expected by the taxpayers that the revenue authorities would not resort to recovery proceedings in cases where there is delay in filing appeal before GSTAT on account of its non-constitution. The above view is supported by the recent decision given by the Hon’ble Delhi High Court in the case of ZONES CORPORATE SOLUTIONS VS COMMISSIONER [2020-TIOL-1168-HC-DEL-GST] wherein it was held that the revenue authorities cannot be allowed to withheld refund due to the fact that department is unable to prefer appeal against the order of Commissioner Appeals allowing refund before GSTAT for its non-constitution. Therefore, when refunds can be withheld, ignoring the principle of judicial discipline laid down by the Apex Court in the case of UNION OF INDIA VERSUS KAMLAKSHI FINANCE CORPORATION LTD. [1991 (55) E.L.T. 433 (SC)] wherein it was held that mere filing of appeal cannot be grounds for not following the judicial principle, the recovery proceedings can also be initiated by the department against the taxpayers.

Hence, it is hoped that the GSTAT is constituted and made operational at the earliest possible so that unnecessary harassment of assessees by initiation of recovery proceedings is avoided as every taxpayer is not competent to file writ petitions before High Courts for getting reliefs.

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GST UPDATE ON DELAY IN CONSTITUTION OF APPELLATE TRIBUNAL:- 100/2020-21

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