The GST law has brought about a radical change. But only a digital GSTAT can serve as a model for the courts
The Supreme Court recently called on Narendra Modi’s government and the GST Council to immediately establish the GST Appeal Tribunal, or GSTAT. It has been four years since the GST law entered into force, but GSTAT is not yet operational. In his absence, taxpayers had to resort to the writ route in high courts, which created uncertainty in the tax compliance environment.
Central states stuck in an impasse
GSTATs were actually notified shortly after the GST law came into effect, but the process was halted due to a stay granted by the Madras High Court in September 2019. The crux of the dispute was the composition of the GSTAT bench. It was proposed that each chamber of GSTAT would have three members – two representatives of the Union and of state governments, and one person with a background in law or judicial service.
In accordance with the case law that has evolved on this issue, in the event that the courts now replace the jurisdiction of the courts, the composition of the judiciary should be such that the number of members representing the executive wing should not exceed the number of members. of the judicial service. This is to ensure the independence of the dispute resolution body, as the courts in most cases adjudicate disputes against government departments. Over the past two years, the Union and state governments have not yet resolved this impasse. Whether lawyers can be excluded from being considered judicial members is another issue in this case.
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A new opportunity
Regardless of how the Union and States solve the problem, it is important to recognize the new opportunity presented by GSTAT to create a next-generation digitally native dispute resolution forum that can set the standard for other courts. and courts in India.
The new GSTAT is expected to build on the Goods and Service Tax Network (GSTN), a dynamic and robust online platform that already processes a large volume of data. In the last audit, it was handling 1.3 crore of registered taxpayers who had uploaded around 74 crore of tax returns. The GSTN had already set up workflows for backend interactions and with taxpayers. It is important that the GSTAT allow the digital track to be continued to the dispute resolution forum so that it is fully online.
GSTAT is the first dispute resolution forum available to citizens and taxpayers that would escape the control of GST authorities. A strong, rules-based tribunal that would operate on a next-generation technological platform is imperative to protect both taxpayer rights and the financial interests of the Union and states. Given the breadth of technology used for GST compliance and administration, such a tribunal would be a natural extension of existing workflows.
Given the magnitude of the changes brought about by the GST system and the targeted efforts that are underway to ensure compliance, it is inevitable that there will be a lot of litigation in the years to come. Now is the time to plan and build such a tribunal, before litigation begins to pile up. It is important to learn from the development of other courts and tribunals and not to take the same path.
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A model for courts, tribunals
The GSTAT should be set up as a fully online, digitally native next-generation tribunal that would receive GSTN cases after the necessary checks and balances. Anyone on appeal, whether the taxpayer or the ministry, should only be required to file the appeal note digitally (with references to documents in GSTN records) and the records should be automatically transferred. at GSTAT. The respondent would then only have to file its objections to the appeal.
GSTN login credentials could also be used at GSTAT, allowing notifications and documents to be received by parties as soon as they are filed. These simple steps can reduce the time spent on a case and provide a much higher level of certainty for the process. A digital GSTAT would have a robust, rules-based case management system with dashboards for judges, department, and taxpayers. Such a platform could then serve as a model for other courts.
For taxpayers, the hassle of producing documents and evidence can be reduced, if not eliminated, to a large extent by switching to a digital GSTAT. Clear, rules-based interactions will ensure transparency of the process and instill confidence in the institution. The certainty of events and the life cycle of the case would reduce costs and difficulties. From the point of view of the tax administration, lawyers in the department would be able to easily access all files and present their files without delay. Tax administrators could also gain quick insight into the nature, amount and subject of litigation that would enable data-driven tax policy and administrative action. Better tax compliance and sound tax administration that such a GSTAT would promote would have long-term socio-economic benefits.
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In addition to technology, talent must harness a vision
Building such an institution cannot be just a question of technology. Those overseeing this new institution will need to share the vision and engage in change and transformation. The fact that the talent pool, from which the team will be drawn, is common to other courts and tribunals makes a high threshold even more imperative. It will also be necessary to design reimagined processes that serve the vision and make full use of technology without falling into the comfort zone of proven and failed methods. Most importantly, the transition period should be managed in an inclusive manner, so that all stakeholders share a common vision.
Here’s an opportunity to create a whole new dispute resolution forum on the first try, rather than trying to reform it over the years. It is up to the GST Council to move this file forward. Let’s not kick the box on the road and miss the signs.
Harish Narasappa is with Samvad Partners and co-founder, DAKSH.
Surya Prakash BS is Program Director at DAKSH, a non-profit organization working on governance and accountability.
Opinions are personal.
(Edited by Humra Laeeq)
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