Presently, the Government's efforts are primarily channelled into addressing post-implementation challenges, with a focus on the inevitable litigations. The existence of a strong dispute resolution mechanism for timely resolution of the disputes is profoundly significant, for both taxpayers and the Government, leading to certainty in the tax positions.

One significant development in this regard is the announcement for the establishment of 31 Benches of GST Appellate Tribunals across 28 States and 8 Union Territories in India. This marks a significant step in the Government's efforts to address issues related to litigation, since the taxpayers were forced to approach High Courts for matters requiring urgent resolution, in the absence of Tribunals. 

Furthermore, the Government has recognized that taxpayers have faced many challenges, from the disturbances caused due to COVID-19 pandemic or the technological and other logistical challenges, including the confusion and lack of awareness about processes, in pursuing legal recourse against demand orders, due to which, many taxpayers were unable to file appeals with the first appellate authority within stipulated time limits (including the period, for which the appellate authorities had powers to condone the delays). 

As a trade facilitation measure, the Government has announced an "amnesty scheme" for filing appeals before the first appellate authority, in the 52nd GST Council Meeting.

This amnesty scheme is in respect of the extension of time limit in filing of appeal against the demand order passed on or before 31 March 2023 subject to payment of specified pre-deposit. It brought a sigh of relief for the business community, particularly smaller taxpayers, struggling to navigate the economic uncertainties brought about by the COVID-19 pandemic and those who were unable to file their appeals before the first appellate authorities within specified time due to various issues.

The amnesty scheme provides extended time period for filing of appeal till 31 January 2024 for two types of taxpayers, the first is those who could not file appeal against the demand order which was passed on or before 31 March 2023 and the second is those taxpayers whose appeal against the aforementioned demand orders passed on or before 31 March 2023 was rejected solely on the ground that the appeal was not filed within the prescribed time limit of 3 months provided under GST law. 

The amnesty scheme for filing of appeal by such taxpayers is subject to the condition of payment of pre-deposit amount of 12.5% of the tax in dispute, out of which, at least 20% (i.e., 2.5% of the tax in dispute) should be debited from Electronic Cash Ledger.

At this juncture, it is critical to note that a lot of small taxpayers had approached the High Court in writ jurisdiction where the first appellate authority had rejected the appeals filed against the demand orders after lapse of prescribed time limit. On this aspect, the High Courts have adopted varying stances. 

For instance, while the Guwahati High Court has unequivocally asserted that writ courts have the inherent authority to grant extensions for such delays, the Kerala and Patna High Courts have taken an opposing view, ruling that when the law specifies a particular time frame for the condonation of delay, High Courts cannot exceed this period. The amnesty scheme has granted the taxpayers a one-time extension in time period of filing the appeal, though for a slightly higher pre-deposit. 

Accordingly, all the taxpayers who were unable to file appeal within the time limit or whose appeal were rejected due to delay in filing appeal under GST law for the demand order passed on or before 31 March 2023 can now file the appeals by 31 January 2024.  

As a result, taxpayers will have the opportunity to contest tax-related issues on their merits rather than acquiescing to tax demands lacking substantial basis. Undoubtedly, this is poised to lead to a significant upsurge in the volume of litigations before appellate authorities throughout India.

Despite the enthusiastic reception of this scheme by both small-scale taxpayers and the wider industrial community, the measure might have been more complete had the time limit also been allowed to be extended for filing appeals against rejection of refunds, which does not seem to be covered. The industry would also be looking at the fine prints and also, about the provisions to address the situations, where the recoveries were made/recovery proceedings had started.