August 1, 2023
Shaik Musrath

Non-Constitution of GSTAT: Orissa HC Directs Payment of Entire Tax Demand

The Goods and Services Tax Appellate Tribunal (GSTAT) plays a critical role in resolving disputes related to GST. However, the non-constitution of GSTAT in certain states has been a matter of concern for taxpayers. Recently, the Orissa High Court made a significant ruling regarding this issue, directing the payment of the entire tax demand despite the absence of a functional GSTAT. This blog delves into the implications of the Orissa HC's decision and the broader implications of the non-constitution of GSTAT.

Understanding the Role of GSTAT:

GSTAT is an essential institution under the Goods and Services Tax (GST) framework in India. It serves as an appellate authority to adjudicate appeals against orders passed by the Appellate Authorities or the Revisional Authorities. GSTAT provides taxpayers with a platform to challenge decisions concerning tax liability, input tax credit, and other GST-related matters.

The Absence of GSTAT in Orissa:

Despite the importance of GSTAT in resolving GST disputes, certain states have faced delays in the constitution of the tribunal. Orissa, in particular, has been affected by the non-constitution of GSTAT, leading to concerns among taxpayers regarding their access to a fair and efficient dispute resolution mechanism.

The Orissa HC's Directive:

In response to the non-constitution of GSTAT in the state, the Orissa High Court recently passed a significant directive. The court ruled that taxpayers must pay the entire disputed tax demand upfront, even before their appeals are heard by the GSTAT or any other appropriate forum. This decision has sparked discussions and debates within the business community, legal experts, and tax professionals.

Implications for Taxpayers:

The Orissa HC's directive presents several challenges for taxpayers. Paying the entire disputed tax demand upfront can strain the cash flow and financial stability of businesses, especially small and medium-sized enterprises (SMEs). This may discourage some taxpayers from pursuing legitimate appeals, potentially affecting their ability to challenge erroneous tax assessments.

Legal and Judicial Impact:

The ruling raises questions about the balance between the interests of the government in revenue collection and the rights of taxpayers to fair and timely dispute resolution. Legal experts argue that taxpayers may face undue hardship due to the unavailability of a functional GSTAT, and this may impact their confidence in the tax system.

The Need for Prompt GSTAT Constitution:

The Orissa HC's decision highlights the urgent need for the constitution of GSTAT in states where it is yet to be established. A functional GSTAT can provide taxpayers with an independent, specialized, and expedited forum to address their GST-related grievances, enhancing the overall efficiency and fairness of the GST dispute resolution process.

Call for Government Action:

Given the significance of GSTAT in the GST regime, the central and state governments must take immediate action to establish the tribunal in states where it is yet to be constituted. Timely resolution of tax disputes is essential for promoting taxpayer compliance and fostering a business-friendly environment.


The non-constitution of GSTAT in certain states, including Orissa, has become a pressing concern for taxpayers seeking redressal for GST-related disputes. The recent directive from the Orissa High Court, mandating the upfront payment of the entire tax demand before the appeal is heard, has raised pertinent issues regarding the availability of an efficient and independent dispute resolution mechanism. Establishing a functional GSTAT in states that lack one is crucial for ensuring timely and fair resolution of GST disputes, upholding taxpayer rights, and fostering a conducive business environment. As the government addresses this issue, it is essential to strike a balance between revenue collection and taxpayer support, ultimately contributing to the growth and development of the economy.


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