Justice Ram Mohan Reddy gave the direction while hearing a petition filed by Karnataka Industrial Area Development Board (KIADB).
Earlier, drawing the attention of the court to stay of their applications, the petitioners also pointed to the inordinate delay in taking up such matters by the CESTAT.
The court expressed surprise that entire south India had only one such tribunal, while there are many such bodies across the country.
"The Union Government is directed to constitute as many number of benches for Andhra Pradesh, Karnataka and Kerala and file a report before registrar General High Court by June 3, 2013, failing to it the matter will take a serious turn," the court stated.