GST gets its first dispute resolution tribunal on 'place of supply' issue

The decision was taken six months after the GST Council in July approved setting up one national and three regional benches of the appellate tribunal

The Union Cabinet on Wednesday approved a proposal to set up a national bench of the goods and services tax (GST) appellate tribunal (GSTAT) in Delhi. The apex appellate tribunal would deal with disputes between GST taxpayers and tax authorities predominantly arising out of the “place of supply” issue.

Place of supply issue becomes critical, especially in case of supply of services by a company having presence in two or more states, or in the case of imports and exports.

The decision was taken six months after the GST Council, in its July 2018 meeting, had approved setting up one national and three regional benches of the appellate tribunal (GSTAT). This will be the first dispute resolution tribunal under the GST regime, on similar lines with the erstwhile central excise and service tax appellate tribunal (CESTAT).

Currently, disputes on place of supply, or of any other kind, between tax authorities and taxpayers are handled by the Commissioner Appeals in the respective states. The national bench will give a platform for second appeal.

According to the Central GST (CGST) Act, the GSTAT would come into play when an aggrieved company (GST taxpayer) appeals against an order passed by appellate or revisional authority in cases where one of the issues of contention pertains to the “place of supply”.

Experts think that the GSTAT cannot be approached if none of the existing disputes pertain to “place of supply issue”.

However, the cabinet has not taken a decision on regional benches yet. Section 109 of the CGST Act mandates the formation of such a tribunal with a national bench and three regional benches, along with state benches and area benches for regions within states.

It is likely that the states will decide to set up state benches of appellate tribunal as the State GST (SGST) Acts provide for. Sources said the decision on regional benches is unlikely very soon.

The national bench would have three members, a president assisted by two technical members, one representing the Centre and other representing states. Experts, however, pointed out a reason for concern with regard to this. “The tribunal should have had representatives with a judicial background too. If all the members are from the tax domain, the institution gets a revenue bias, which can be averted by having a member(s) with judicial stature,” Saloni Roy, senior director at Deloitte India, said.

It is not yet clear if the GSTAT will hear appeals on orders passed by Authorities for Advance Ruling (AAR). The GST Council in December decided to set up a national-level appellate authority for AAR to tackle issues arising from conflicting judgments from state appellate AARs.

The GSTAT on the other hand, would be the apex platform to address issues with uniformity under the GST regime. “Being a common forum, GST Appellate Tribunal will ensure that there is uniformity in redressal of disputes arising under GST, and therefore, in implementation of GST across the country,” the government said in a release.

Experts noted that this decision is timely since litigations under GST have just started to emerge. 

“While typically not many litigations would have got adjudicated as of now, early formation of GSTAT would help prevent unwarranted delays in appeal adjudication in future,” said Abhishek Jain, partner, EY India.