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The long-awaited Goods and Services Tax Appellate Tribunal (GSTAT) is likely to be operational soon following amendments to the GST law by the Finance Act, 2023, and the decisions made in the GST Council meeting of June 2023. This is a good time to think about how to build high-quality tribunals.
When the executive imposes charges, it is of the essence in liberal democracy that there must be the possibility of review through the judicial branch. In some areas in India, appeals to tribunals were provided, including the Income Tax Appellate Tribunal (1941) and the Central Excise and Service Tax Appellate Tribunal (CESTAT). There is a natural analogy from these to a GSTAT, but we have to keep the unique features of the GST in mind, e.g. it is simultaneously a Union and a state tax.
While the need for GSTAT emerges from the field of tax administration, its implementation lies within the realm of the legal system. Over the last decade, considerable new knowledge has emerged on the improved working of courts and tribunals. The construction of GSTAT is an opportunity to put to use the best of this legal system knowledge.
We begin with concerns about adjudication by tribunals as opposed to courts. Articles 323A and 323B inserted in the Constitution during the Emergency, empowered Parliament to constitute tribunals for adjudication of matters on certain subjects, including taxation. Unlike the higher judiciary, which is constitutionally independent, tribunals have a large element of executive interface, potentially allowing executive interference.
This push towards “tribunalisation” was motivated both by the desire to bring specialised knowledge into the Bench, and to diminish the caseload going into the judiciary. The experience with tribunals has involved many difficulties. It is ironic that tribunals, created to reduce the burden of cases in courts, are burdened with a lot of cases and a mounting backlog.
In many tribunals, one of the disputants is the Indian State. Sometimes, this disputant is the very department of government that is administratively in charge of the tribunal. This has raised concerns about fair play. Supreme Court rulings have asserted that tribunals should have the same level of independence from the executive as the judiciary. This demands a certain hygiene on issues such as the mode of selection of members, the composition of tribunals, and the terms and tenure of service. Further, the Supreme Court has recommended that all administrative matters relating to tribunals be managed by the Ministry of Law/Justice rather than the relevant domain ministry.
More recently, in the case of Roger Mathew versus South Indian Bank Ltd, the majority judgment of the Supreme Court issued a mandamus to carry out judicial impact assessment of all tribunals. This is with a view to assess their effectiveness and possibly come up with ways and means to improve the same. The minority judgment in this case (of which the present Chief Justice of India was a part) suggested the creation of a National Tribunal Commission and an All-India Tribunal Service. It also explicitly called for the need for adequate provisioning of tribunals with infrastructure and specialised staff.
The bulk of these orders of the Supreme Court have yet to filter out into the actual working of the executive branch. In this setting, getting GSTAT right would be a powerful step forward for the republic.
What does this entail? The court is a services organisation and the wonders of modern process engineering, using information technology, can be applied to it. Of great importance are the hotspots for submitting documents, scheduling, accessing a comprehensive current case docket, and the release of orders and associated materials. The information technology (IT) systems at the court need to exhibit APIs or application programming interface, which would set the stage for multiple rival user interfaces (developed by private entities in a competitive market) that plug into the APIs, and serve all participants (litigants, lawyers, paralegal staff, registry staff, judges, researchers and the public) in a variety of user-friendly ways. Metrics of the efficiency of the court as a services production organisation need to be reported on a daily basis.
Important developmental work of this nature is now underway in Kerala and Karnataka, led by the courts working in collaboration with research organisations. These capabilities can be brought to bear upon the problem of building a sound GSTAT, and of complying with the extant Supreme Court orders concerning the working of tribunals.
In a conventional tribunal, there is always the problem of an existing backlog of historical cases that are pending. These complicate the problem of change management. GSTAT enjoys the luxury of a clean slate. Perhaps all appeals can be sent to a high court for a period of two years, within which a strong GSTAT is established.
Embarking on this journey requires capabilities in the legal system of designing the process and contracting with private firms to build and operate the IT systems. Courts and tribunals unsurprisingly, have low capabilities in these matters. On this, we turn to the Financial Sector Legislative Reforms Commission (FSLRC, 2013), which recommended the creation of a Financial Sector Appellate Tribunal (FSAT) to hear appeals against all financial regulators. The Government of India constituted an FSAT task force (2015) led by the former presiding officer of Securities Appellate Tribunal (SAT), Justice N K Sodhi to chart the course.
This task force emphasised the separation between judicial and administrative work within the legal system. The latter includes financial and personnel management, procurement, managing and IT systems, among others. Once these are put on a sound footing, it will yield great improvements in listing, case allocation, scheduling, case management, machine readable orders and associated case documents, API access, and the like. Such a specialised body, that runs the administration of courts and tribunals, is present in most advanced economies. The successful separation of sovereign (domain) responsibilities and (administrative) process responsibilities in the Indian passport administration and the consequent improvements in service delivery demonstrates that this is possible in other sovereign functions.
The writer is an honorary professor at CPR, member of a few for-profit and not-for-profit boards, and a former civil servant
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