Hearing a petition by Verma challenging his transfer to Junagadh Police Training College, a division bench of Ashok Kumar and U Sarathchandran directed the government lawyer to make submissions justifying its April 2012 order.
Next hearing on the petition has been fixed on July 2.
Verma was the part of the SIT, formed by the Gujarat High Court to probe the alleged fake encounter of Ishrat in 2004, and was also assisting the CBI which was handed over the investigations by the high court in December 2011.
When the bench was to take up the final hearing on Verma's petition today, the lawyer for state government Manisha Lavkumar argued that he did not resume duty even after the high court ordering his repatriation from June 24.
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However, the bench refused to hear this argument saying this has no bearing on the present petition and government should raise this issue with the concerned court while the tribunal would hear only the issue of Verma's transfer.
Verma, in his petition before CAT, alleged that his transfer was mala fide and very much against the state government's own statutes.
He said his transfer was a "punishment" for taking stern action in the alleged staged encounter of Ishrat before completing his tenure at one place.
Verma was the Joint Commissioner of Police (Traffic) in Ahmedabad when he was transferred to Junagadh.
Ishrat (19) and three others were gunned down allegedly by the Crime Branch near here on June 15, 2004 on the ground that they were terrorists on a mission to assassinate Gujarat Chief Minister Narendra Modi.