Finance Minister Nirmala Sitharaman with Union MoS for Finance Pankaj Chaudhary, Revenue Secretary Sanjay Malhotra and others during the 52nd Goods and Services Tax (GST) Council Meeting, in New Delhi, on October 7, 2023.
| Photo Credit: PTI

The Goods and Services Tax (GST) Council has decided to raise the maximum age limit for the president and members of the GST Appellate Tribunals, Finance and Corporate Affairs Minister Nirmala Sitharaman announced after the 52nd Council meeting.

The president can have a tenure up to the age of 70, raised from 67 earlier, while the cap for members has been raised from 65 to 67. The minimum age of appointment, which was not specified earlier, is now recommended to be 50 years.

“We wanted it to be clear that advocates with up to ten years of experience must be minimum for consideration to become judicial members of the tribunals,” said Ms. Sitharaman.

The GST Council also decided that food preparations of millet flour in powder form, with at least 70% of the composition as millets in the blend, will have a 0% GST if sold loose or packed without any branding and labelling, and 5% only if sold pre-packaged and in a labelled form.

Taxing extra-neutral alcohol

Another critical decision taken that Ms. Sitharaman said would have major implications in Centre-State ties was that though the GST Council had, by law, the right to tax the extra-neutral alcohol (ENA), the Council has ceded that right to tax ENA to the States.

“It’s States’ decision now to tax it or not to,” she said. “This has been done in the interest of the States.”

The Allahabad High Court had earlier ruled that States had lost their competence to levy a tax on ENA.

The GST on molasses has been reduced from 28% to 5%, which the Minister said would benefit sugarcane farmers and will enable them to get paid faster from the sugar mills.

“We also believe that it will reduce the cost of cattle feed. The GST rate notification will be amended to create a new entry for extra-neutral alcohol for industrial use and that shall attract 18% tax,” she said.

On services, in order to promote tourism, the Council has given a conditional exemption to foreign-flag, foreign-going vessels, from the levy of Integrated GST, if they convert temporarily for a coastal run.

“In other words, for the next couple of months, in the winter, let’s say foreign run vessels do cruise tourism along India’s coast, we have decided to exempt them from 5% IGST normally levied. This will promote tourism particularly on the Western coast, from Mumbai to Kochi, and even the eastern coast,” said Ms. Sitharaman.

The establishment of these tribunals was a much-awaited move for industry players, who had been approaching the High Courts and Supreme Court during the past six years. File
| Photo Credit: AFP

The Finance Ministry notified the constitution of 31 Appellate Tribunals across 28 States and eight Union Territories for the Goods and Services Tax (GST) late on Thursday night, setting the stage to resolve a growing number of taxpayer disputes with the Revenue Department.

The establishment of these tribunals — envisaged at the time of the implementation of the GST regime from July 1, 2017 — got a final clearance from the GST Council this July, and was a much-awaited move for industry players, who had been approaching the High Courts and Supreme Court during the past six years.

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As of June 30, the number of pending appeals from taxpayers over central GST levies had spiked sharply to over 14,000. That marks a 20% growth from the number of such pending cases as on March 31 this year.

Tribunals in States

While States had proposed 50 tribunal benches to the GST Council, the Union government had signalled that they will come up in a phased manner, beginning with State capitals and cities with High Court benches. The first set of tribunals will become operational sometime between this November and January 2024.

To start with, Uttar Pradesh will have the highest number of benches of the GST tribunals, with three benches proposed to be set up across Lucknow, Varanasi, Ghaziabad, Agra, and Prayagraj. Karnataka and Rajasthan will have two benches each, while Maharashtra and Goa together will have three benches to take up appeals.

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Tamil Nadu, along with Puducherry, will have two benches, as will Gujarat along with the Union Territories of Dadra and Nagar Haveli, and Daman and Diu. Disputes arising in West Bengal, Sikkim, and the Andaman and Nicobar Islands will be taken up by two benches of the tribunal to come up in Kolkata.

For the seven northeastern States, one tribunal bench has been proposed in Guwahati, with circuit benches in Aizawl, Agartala and Kohima that will be operationalised depending upon the number of appeals filed by suppliers in respective States.

Expediting adjudication

“Constitution of GST Appellate Tribunals (GSTATs) will expedite the process of adjudication and provide tax certainty specially in recurring litigative issues,” said Abhishek A. Rastogi, founder of Rastogi Chambers, who has argued various writ petitions before the High Courts in the absence of such a tribunal so far.

“Ensuring speedier and economic resolution of cases by dedicated and specialized GSTATs will help in bolstering business sentiments and ease of doing business in the country,” said Confederation of Indian Industry director general Chandrajit Banerjee.

The number of appeals against the orders of first Appellate Authorities has been rising sharply. In the last two years alone, such appeals more than doubled from 5,499 in 2020-21 to 11,899 cases in 2022-23, he pointed out.

“Where the taxpayers feel that there has been a burden of high rate of pre-deposit, the decisions by the tribunal will give some relief,” Mr. Rastogi told The Hindu.