TaxTMI 
TaxTMI 
TaxTMI 
Note by Author
One of my friends asked me, “We have lost the appeal before the Commissioner (Appeals); should we now directly approach the High Court, or is the GSTAT established in Mumbai?” Given that we have been hearing about GSTAT for the past eight years without any concrete progress, his question made me curious. I decided to explore the reasons behind the prolonged delay, and based on my findings, I have written an article. I would be glad to receive your comments and opinions on it. Happy Reading.
Introduction
In this article, I will discuss on the delayed operationalisation of the Goods and Services Tax Appellate Tribunal, commonly known as GSTAT, and its expected impact on the efficacy of GST dispute resolution in India.
While GSTAT was proposed to be fact-finding appellate authority under GST law, that means it’s main aim is to focus on gathering information and understanding over the situation objectively, In essence, being a fact-finding authority, its prolonged non-functional status has created legal, procedural, and economic hardships for taxpayers and increased pressure on the High Courts.
Since 2017, for nearly eight years, GSTAT remained just on paper. Hence, the taxpayers had no choice but to approach High Courts directly, which was a costly and time-consuming process. This long delay has caused frustration, legal uncertainty, and financial hardships to taxpayers.
Now that the GSTAT President Shri Sanjaya Kumar Mishra has been appointed and new rules have been notified, the tribunal is finally becoming a reality. Is this the start of real change, or just the beginning of more complications? Let’s see what happens in future.
Role of GSTAT in dispute settlement
The GST dispute resolution system was designed to have three levels, first level is relating to adjudication by the GST officer as per the Sections 73 or 74, where section 73 deals with cases where fraud is not suspected while 74 deals with cases involving fraud, second level is relating to First appeal which is before the Commissioner (Appeals) as per the Section 107.
Section 107 states that-
“Any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order ...”
Third level is Second Appeal, which is before GSTAT under Section 112.
Section 112 states that-
“Any person aggrieved by an order passed against him under section 107 or section 108 of this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act may appeal to the Appellate Tribunal against such order within three months from the date on which the order sought to be appealed against is communicated to the person preferring the appeal…”
The GSTAT is been set up to act as a specialised appellate tribunal with the main function of reviewing and deciding disputes involving GST act. It ensures that orders passed by lower authorities are fairly examined, and that taxpayers have access to justice before they approach constitutional courts.
But till now, as GSTAT was just on papers, this structure as I discussed above remained incomplete, forcing litigants to directly approach High Courts.
Legal Framework and Design:
GSTAT derives its authority from Article 323B of the Constitution and Sections 109–112 of the CGST Act, 2017.
Discussing one by one, Article 323B forms the constitutional basis for establishing GSTAT (Goods and Services Tax Appellate Tribunal) as a specialised tax tribunal for second appellate matters under GST laws. While Section 109 provides for GSTAT's establishment, Section 110 deals with qualifications and appointments, Section 111 enables the Central Government to frame procedural rules and Section 112 allows taxpayers to appeal to GSTAT against the orders of appellate/revisional authorities.
CBIC’s circular for recovery proceedings in 2025
The GSTAT (Procedure) Rules, 2025, notified on 24-04-2025, aim to ensure digital-first, time-bound adjudication.
It enabled digital filing of appeals through Form GST APL-05, allowing taxpayers for virtual or hybrid hearings to improve accessibility, Mandates orders to be passed within 30 days of the final hearing, had notified the pre-deposit amount at 10% of disputed tax (capped at INR 20 crore per Act), fixed an appeal fee of INR 1,000 per INR 1 lakh disputed (maximum INR 25,000), and aimed to ensure speedy, transparent, and cost-effective dispute resolution under GST helping to optimise tribunal working.
Structure of GSTAT
Before we proceed further, let’s discuss what will be the structure of GSTAT, first one will be the Principal Bench in New Delhi which includes President, a Judicial member and Technical Members, there will be 31 State Benches across India for regional access, and the Circuit Benches will be established in remote areas to ensure justice delivery is not restricted only to urban centres.
Now, your question might be why GSTAT was delayed for 8 long years?
Firstly, there were many disputes over the bench composition as the initial law relating to GSTAT gave more power to Technical Members from revenue background, leading to concerns over impartiality, in this case the Madras High Court, in Revenue Bar Association Versus Union of India, The Goods and Services Tax Council, The State of Tamil Nadu - 2019 (9) TMI 983 - MADRAS HIGH COURT, held that such a structure which brings impartiality was unconstitutional.
Secondly there was exclusion of Advocates, as per the initial law, experienced advocates were not allowed to become Judicial Members of GSTAT. This thing was challenged in courts, leading to an amendment in 2023 which now allows eligible advocates to be appointed as members.
Thirdly, there were many administrative challenges, as setting up infrastructure across 30+ locations, recruiting qualified members, and ensuring procedural compliance took longer than expected.
The main cause of delay was multiple legal challenges as we discussed the case of Revenue Bar Association v. UOI, similarly various high court cases are still pending, most recently the Orissa High Court’s stay on appointments in the Pranaya Kishore Harichandan v. UOI matter have been delaying the full functionality even today.
Impact of Delay
Without GSTAT, taxpayers had to file writ petitions under Article 226, directly in High court, which was increasing the burden on the judiciary and delaying justice. Also, different High Courts were interpreting the same GST provisions differently, creating confusion and uncertainty for nationwide businesses, till Intervention of supreme court.
Here, I want to quote a famous judgement and a good example for this M/s. Safari Retreats Private Limited and another Versus Chief Commissioner of Central Goods & Service Tax & others - 2019 (5) TMI 1278 - ORISSA HIGH COURT which dealt with denial of ITC on construction of immovable property meant for letting out. The Orissa High Court held that ITC should be allowed if the property is used for business, reinforcing the principle of seamless credit under GST.
When cases went to high court, the taxpayer were required for pre-deposits under both first and second appeal stages that blocked 20% of the disputed tax amount. This drastically impacted MSMEs the most, causing cash flow problems and business disruption.
Even the ease of doing business was affected as the investors look for a stable and predictable tax environment. The absence of a functional tribunal reflected poorly on India's dispute resolution system.
CBIC’s Circular for recovery proceedings in 2024 addressing above issue
To address the interim situation, Circular No. 224/18/2024-GST dated 11-07-2024 was issued. It provided with deemed stay on recovery if pre-deposit is made and an undertaking is submitted, also the adjustment facility was given for the amounts that were wrongly paid through DRC-03 using new Form DRC-03A and through this notification, clear guidelines on how recovery will proceed if appeals are not filed in time. This circular ensured that taxpayers right to appeal is not prejudiced due to GSTAT’s delays.
Can we expect further delays?
While GSTAT has finally started taking shape, still concerns are coming in between, as I discussed latest case of Pranaya Kishore Harichandan Versus Union of India, The Goods and Service Tax Council New Delhi, The Search and Selection Committee Represented by its Member Secretary Department of Revenue, New Delhi - 2025 (7) TMI 59 - ORISSA HIGH COURT which brought a stay on appointments, halting the same by the Orissa High Court due to question on selection fairness, Secondly, Principal Bench hearings, originally scheduled to start on 1st July 2025, are put on hold due to above case.
Dueto this, taxpayers are suffering between the need for fair procedure and urgent justice.
So, answer to above question is “yes” we can expect further delays in GSTAT functionality.
Conclusion
The long-awaited operationalisation of GSTAT is a welcome move towards strengthening the GST dispute resolution framework. However, delays due to legal and administrative hurdles continue to impact its full functionality. While recent appointments and rules signal progress, pending litigations like Pranaya Kishore Harichandan v. UOI still pose challenges. Going forward, timely constitution of benches and procedural clarity will be crucial to ensure GSTAT delivers on its promise of accessible, consistent, and cost-effective tax justice.
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Author can be contacted at [email protected]