Introduction to GSTAT’s Partial Rollout
The Goods and Services Tax Appellate Tribunal (GSTAT) in India is slowly coming into effect, marking a significant development in tax litigation strategy. This tribunal, long anticipated by taxpayers and practitioners, aims to address the burgeoning backlog of GST disputes. However, experts warn that it faces the risk of inheriting an ‘archaeological accumulation’ of cases.
According to government data, 44 GSTAT benches have been approved, including the Principal Bench in New Delhi. Yet, only this Principal Bench is fully operational, comprising five courts, including a registrar court. Major commercial centers such as Mumbai, Pune, and Ahmedabad still lack functional benches, while cities like Bengaluru and Chennai have only one operational court each. This limited functionality comes almost a decade after the introduction of GST in 2017, leaving the tribunal framework largely theoretical until now.
The Impact on High Court Jurisdiction
In the absence of a functioning GSTAT, taxpayers have had to rely on High Courts, often invoking writ jurisdiction to seek relief. SR Patnaik, Partner and Head of Taxation at Cyril Amarchand Mangaldas, highlighted the challenges this posed, stating, “Taxpayers had no recourse other than to approach the already overburdened High Courts under extraordinary writ jurisdiction, leading to uneven interpretations across jurisdictions.”
However, with GSTAT’s partial establishment, this scenario is changing. Keshav Garg, a Partner at CNK & Associates LLP, noted that High Courts are now less inclined to entertain writ petitions that are essentially appellate in nature, due to the existence of GSTAT. “The old ‘no alternative remedy’ argument, which had easy access to the High Court, has lost much of its force,” he said.
Strategic Shifts in Litigation
The tribunal’s presence is also reshaping litigation strategies. Sudipta Bhattacharjee, Partner of Indirect Taxes at Khaitan & Co, observed, “It activated a substantive limitation framework, so taxpayers and GST departments could no longer treat the absence of GSTAT as an open-ended excuse for delays.” Under Section 112(8) of the CGST Act, taxpayers must make a pre-deposit of 20% of the disputed tax to pursue an appeal before the tribunal, impacting litigation planning significantly.
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Challenges of Transitioning Writ Petitions
Many writ petitions filed during GSTAT’s absence are still pending. High Courts are increasingly directing these cases to the tribunal, particularly those lacking constitutional or jurisdictional issues. However, transitioning these writs is complex, especially where High Courts granted stays without any pre-deposit. “When GSTAT becomes fully operational, the department will push for these writs to be closed and the taxpayer directed to the tribunal,” Garg explained.
Addressing a Massive Backlog
The GSTAT faces a daunting caseload, described by Patnaik as an ‘archaeological accumulation.’ Bhattacharjee emphasized the need for innovative case management, suggesting that the tribunal treats the backlog as a managed inflow problem rather than traditional adjudication. The tribunal’s success will depend on procedural innovation and disciplined case management.
Procedural Innovations and Future Directions
To handle the backlog effectively, experts suggest the creation of subject-matter benches and a stronger advance ruling mechanism. Additionally, the Central Board of Indirect Taxes and Customs (CBIC) circular of 2024, which sets monetary thresholds for departmental appeals, aims to reduce unnecessary litigation. Imposing costs on frivolous appeals and creating a searchable database of precedents could further improve litigation quality.
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Despite these challenges, GSTAT represents a pivotal element in India’s GST dispute framework. However, its full potential remains constrained by incomplete rollout, with major commercial centers still awaiting operational courts. As skeletal benches tackle a decade’s worth of disputes, GSTAT is poised to play a central role in the country’s tax litigation landscape.
