TMI Blog2019 (9) TMI 983X X X X Extracts X X X X X X X X Extracts X X X X ..... y him or on request from the Commissioner of State tax, or the Commissioner of Union Territory Tax, shall call for and examine the record of any proceedings, and if he considers that any decision or order passed under this Act or under the State Goods and Service tax Act or the Union Territory Goods and Services Tax Act, by any officer subordinate to him is erroneous and is prejudicial to the interest of revenue or it is illegal or improper or has not taken into account certain material facts, shall stay the operation of the order for such period as he deems fit and after giving the person concerned, an opportunity of being heard, can pass order as he thinks just and proper, including enhancing or modifying or annulling the said decision or order. The order of the appellate authority and the order of the revisional authority, are taken to the appellate tribunal. The appellate tribunal is constituted under Section 109 of the CGST Act - A perusal of Section 109 shows that it consists of a National Bench or the Regional Benches and State bench or the Area Benches. Section 109(5) provides that the National Bench and the Regional Benches, shall hear the appeals against the orders pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial members. The principle which emerges is that while deciding issues as to whether the decision making process by the adjudicating authority or the appellate authority was just, fair and reasonable and to decide issues regarding interpretation of notifications and sections under the CGST Act a properly trained judicially mind is necessary which the experts will not have. The number of expert members therefore cannot exceed the number of judicial members on the bench. Thus, Section 110(1)(b)(iii) of the CGST Act which states that a Member of the Indian Legal Services, who has held a post not less than Additional Secretary for three years, can be appointed as a Judicial Member in GSTAT, is struck down - Section 109(3) and 109(9) of the CGST Act, 2017, which prescribes that the tribunal shall consists of one Judicial Member, one Technical Member (Centre) and one Technical Member (State), is struck down. The argument that Sections 109 110 of the CGST Act, 2017 and TNGST Act, 2017 are ultra vires, in so far as exclusion of lawyers from the scope and view for consideration as members of the tribunal, is rejected. However, we recommend that the Parliament must consider to am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II of the Central Goods and Services Tax Act, 2017 [in short CGST Act, 2017] and Chapter XVIII of the Tamil Nadu Goods and Services Tax Act, 2017 [in short TNGST Act, 2017] provides for hierarchy of authorities to adjudicate the disputes relating to Goods and Services Tax. 6. Sections 109 110 of the CGST Act, 2017 and TNGST Act, 2017 which are under challenge reads as under. 109. Constitution of Appellate Tribunal and Benches thereof. (1) The Government shall, on the recommendations of the Council, by notification, constitute with effect from such date as may be specified therein, an Appellate Tribunal known as the Goods and Services Tax Appellate Tribunal for hearing appeals against the orders passed by the Appellate Authority or the Revisional Authority. (2) The powers of the Appellate Tribunal shall be exercisable by the National Bench and Benches thereof (hereinafter in this Chapter referred to as Regional Benches ), State Bench and Benches thereof (hereafter in this Chapter referred to as Area Benches ). (3) The National Bench of the Appellate Tribunal shall be situated at N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or otherwise, any appeal may, with the approval of the President or, as the case may be, the State President, be heard by a Bench of two Members: Provided that any appeal where the tax or input tax credit involved or the difference in tax or input tax credit involved or the amount of fine, fee or penalty determined in any order appealed against, does not exceed five lakh rupees and which does not involve any question of law may, with the approval of the President and subject to such conditions as may be prescribed on the recommendations of the Council, be heard by a bench consisting of a single member. (11) If the Members of the National Bench, Regional Benches, State Bench or Area Benches differ in opinion on any point or points, it shall be decided according to the opinion of the majority, if there is a majority, but if the Members are equally divided, they shall state the point or points on which they differ, and the case shall be referred by the President or as the case may be, State President for hearing on such point or points to one or more of the other Members of the National Bench, Regional Benches, State Bench or Area Benches and such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting law or the State Goods and Services Tax Act or in the field of finance and taxation. (2) The President and the Judicial Members of the National Bench and the Regional Benches shall be appointed by the Government after consultation with the Chief Justice of India or his nominee: Provided that in the event of the occurrence of any vacancy in the office of the President by reason of his death, resignation or otherwise, the senior most Member of the National Bench shall act as the President until the date on which a new President, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office: Provided further that where the President is unable to discharge his functions owing to absence, illness or any other cause, the senior most Member of the National Bench shall discharge the functions of the President until the date on which the President resumes his duties. (3) The Technical Member (Centre) and Technical Member (State) of the National Bench and Regional Benches shall be appointed by the Government on the recommendations of a Selection Committee consisting of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (12) The President, State President or any Member may, by notice in writing under his hand addressed to the Central Government or, as the case may be, the State Government resign from his office: Provided that the President, State President or Member shall continue to hold office until the expiry of three months from the date of receipt of such notice by the Central Government, or, as the case may be, the State Government or until a person duly appointed as his successor enters upon his office or until the expiry of his term of office, whichever is the earliest. (13) The Central Government may, after consultation with the Chief Justice of India, in case of the President, Judicial Members and Technical Members of the National Bench, Regional Benches or Technical Members (Centre) of the State Bench or Area Benches, and the State Government may, after consultation with the Chief Justice of High Court, in case of the State President, Judicial Members, Technical Members (State) of the State Bench or Area Benches, may remove from the office such President or Member, who- (a) has been adjudged an insolvent; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court, may suspend from office, a Judicial Member or Technical Member (State) of the State Bench or Area Benches in respect of whom a reference has been made to the Judge of the High Court under sub-section (14). (17) Subject to the provisions of article 220 of the Constitution, the President, State President or other Members, on ceasing to hold their office, shall not be eligible to appear, act or plead before the National Bench and the Regional Benches or the State Bench and the Area Benches thereof where he was the President or, as the case may be, a Member. Sections 109 110 of the TNGST Act, 2017 reads as under 109. Appellate Tribunal and Benches thereof. (1) Subject to the provisions of this Chapter, the Goods and Services Tax Tribunal constituted under the Central Goods and Services Tax Act shall be the Appellate Tribunal for hearing appeals against the orders passed by the Appellate Authority or the Revisional Authority under this Act. (2) The constitution and jurisdiction of the State Bench and the Area Benches located in the State shall be in accordance with the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 109(5) provides that the National Bench and the Regional Benches of the Appellate Tribunal has the jurisdiction to hear appeals against the orders passed by the Appellate Authority or the Revisional Authority in cases where one of the issues involved relates to the place of supply. 12. Section 109(7) provides that the State Bench or the Area Benches shall have the jurisdiction to hear appeals against the orders passed by the Appellate Authority or the Revisional Authority in the cases involving matters other than the issue relating to the place of supply. 13. Section 109(11) provides that if the Members of the National Bench, Regional Benches, State Bench or Area Benches differ in opinion on any point or points, it shall be decided according to the opinion of the majority, if there is a majority, but if the Members are equally divided, they shall state the point or points on which they differ, and the case shall be referred by the President or as the case may be, State President for hearing on such point or points to one or more of the other Members of the National Bench, Regional Benches, State Bench or Area Benches and such point or points shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther cause, the senior most Member of the National Bench shall discharge the functions of the President until the date on which the President resumes office. 20. As stated supra, these writ petitions challenges the validity of Sections 109 and 110 of the CGST Act, 2017 and TNGST Act, 2017, more particularly the composition and qualification of the members to the Goods and Services Tax Appellate Tribunal. 21. The first challenge is to the vires of Section 110 (1)(b) of the CGST Act, on the ground of exclusion of lawyers from being eligible to be appointed as a Judicial Member of the tribunal. According to the petitioners, exclusion of lawyers from zone of consideration as a Judicial Member, is violative of Article 14 of the Constitution of India. It is the contention of the petitioners that the exclusion of lawyers from being considered to hold the post of Judicial Member of the tribunal is a departure from the existing practice. It is the case of the petitioners that Advocates are eligible to be considered as members of various tribunals and there is no justification or reason as to why they should be excluded from the zone of consideration of bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other tribunals in Union of India Vs. R.Gandhi reported in 2010(11) SCC 1 , wherein the Hon'ble Supreme Court at para 120 (i) has observed as under. Only Judges and advocates can be considered for appointment as judicial members of the Tribunal. Only High Court Judges, or Judges who have served in the rank of a District Judge for at least five years or a person who has practised as a lawyer for ten years can be considered for appointment as a judicial members. Persons who have held a Group A post or equivalent post under the Central or State Government with experience in the Indian Company Law Service (Legal Branch) and the Indian Legal Service (Grade I) cannot be considered for appointment as judicial members as provided in sub-sections (2) (c) and (d) of Section 10-FD. The expertise in Company Law Service or the Indian Legal Service will at best enable them to be considered for appointment as technical members. (emphasis supplied) 25. The next challenge is to the composition of the Appellate Tribunal. The composition of the Appellate Tribunal of CGST or TNGST, as the case may be, under Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing or retired District Judge, qualified to be appointed as a Judge of a High Court or a member of the Indian Legal Service and has held a post not less than Additional Secretary for not less than three years alone are qualified to be appointed as a Judicial Member of the tribunal. Mr.Arvind Datar, learned Senior Counsel would submit that it is a departure from the existing practice of making Advocates with ten years experience at Bar and Advocates qualified for appointment as a Judge of a High court, being considered as a Judicial Member of the tribunal. Mr.Arvind Datar, learned Senior Counsel appearing for the petitioners would rely on the Constitution of the Income Tax Appellate Tribunal, CESTAT and other Sales Tax / VAT tribunals in all the States in the Country, where lawyers with 10 years of practice or Lawyers eligible to be appointed as Judge of the High Court are being considered for selection and are also selected as Judicial Members. Mr.Arvind Datar, learned Senior Counsel appearing for the petitioners would submit that advocates who are practicing in that particular branch are experts in the field and would be very valuable and their experience will become very handy if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be placed before the tribunal compared to a District Judge, who would not have experience at all for selection as a Judicial Member. He would place reliance on the judgment of the Hon'ble Supreme Court in Madras Bar Association Vs. Union of India , reported in 2014 (10) SCC 1 , wherein the Hon'ble Supreme Court at paragraph No.97 has observed as under. This issue was also considered in S.P.Sampath Kumar v. Union of India (1987) 1 SCC 123 and it was held that where the prescription of qualification was found by the court, to be not proper and conducive for the proper functioning of the Tribunal, it will result in invalidation of the relevant provisions relating to the constitution of the Tribunal. If the qualifications/eligibility criteria for appointment fail to ensure that the members of the Tribunal are able to discharge judicial functions, the said provisions cannot pass the scrutiny of the higher Judiciary. 31. Mr.Arvind Datar, learned Senior Counsel appearing for the petitioners, would say that apart from the fact that the legislation has not appreciated the need of the hour and the guidelines, as given by the Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal and more so, when there is no reason forthcoming from the respondents as to why lawyers are being excluded and why is there a departure from the norm of considering lawyers eligible to be appointed as Judicial Members of the tribunal. 33. The next challenge of Mr.Arvind Datar, learned Senior Counsel appearing for the petitioners is to the eligibility of a member of the Indian Legal Service for being considered as Judicial Member. Reliance has been placed on paragraph No.120(i) of the judgment of the Hon'ble Supreme Court in Union of India Vs. R.Gandhi reported in 2010(11) SCC 1 [quoted supra], to state that persons who have held a Group A post under Central or State Government with experience in the Indian Company Law Service (Legal Branch) and the Indian Legal Service (Grade I) cannot be considered for appointment as judicial members while dealing with Section 10-FD(2)(c) and (d) of the Companies Act, 2013. He would state that Section 110(b)(iii) is per se contrary to the law laid down by the Hon'ble Supreme Court in the said judgment and must be struck down. 34. Mr.Arvind Datar, learned Senior Counsel appearing for the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall take steps to separate the judiciary from the executive in the public services of the State. He would state that if the majority of the tribunal consists of administrative members who are/were government servants, then there will be no confidence on the independence of such tribunal. He would further state that in all the cases, which come to the tribunal, the revenue is either respondent or the appellant and that any assessee would not be confident of getting justice because the composition of the tribunal is such, it would give a genuine impression that the tribunal might not be an independent body and that it will only carry out the orders of the Government. He would state that it is for the first time that a statute provides for a composition of a tribunal where the administrative members exceeds the judicial members. He would argue that this would be in direct contravention of the spirit of Article 50 of the Constitution of India. The purpose of Article 50 has to separate the judiciary from the executive in the public services of the State. The underlying concept being that the executive must be kept away from discharging judicial functions. Mr.Arvind D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 was amended as follows: 412. Selection of Members of Tribunal and Appellate Tribunal .- (1) * * * (2) The Members of the Tribunal and the Technical Members of the Appellate Tribunal shall be appointed on the recommendation of a Selection Committee consisting of- (a) Chief Justice of India or his nominee- Chairperson; (b) a Senior Judge of the Supreme Court or Chief Justice of High Court-Member; (c) Secretary in the Ministry of Corporate Affairs-Member; and (d) Secretary in the Ministry of Law and Justice-Member. (2-A) Where in a meeting of the Selection Committee, there is equality of votes on any matter, the Chairperson shall have a casting vote. 31. This was brought into force by a Notification dated 9-2-2018. However, an additional affidavit has been filed during the course of these proceedings by the Union of India. This affidavit is filed by one Dr Raj Singh, Regional Director (Northern Region) of the Ministry of Corporate Affairs. This affidavit makes it clear that, acting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal would be impartial. 40. Mr.Arvind Datar, would therefore state that as per Section 110(3) of the CGST Act, 2017 the Technical Member (Centre) and Technical Member (State) of the National Bench and the Regional Benches shall be appointed by the Government on the recommendations of a Selection Committee consisting of such persons and in such manner as may be prescribed. He would further state that as per Section 110 (5) of the Act, the Technical Member (Centre) of the State Bench or Area Benches shall be appointed by the Central Government and Technical Member (State) of the State Bench or Area Benches shall be appointed by the State Government in such manner as may be prescribed. 41. Mr.Arvind Datar, would submit that the revenue, which is a party to all tax litigation therefore appoint its technical members who will be majority in the tribunal and thus would completely erode the impartiality, which is expected from the tribunal. 42. On the other hand, Mr.G.Rajagopalan, the learned Additional Solicitor General and Mrs.Aparna Nandakumar, appearing for the Union of India, would contend that there is no fundamental right for an A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot amount to be a right to be considered for being appointed as a Judicial Member of the tribunal. 45. The Union of India states that there is no provision for advocates to become Member of the Tribunal. He further submitted that this is a prerogative of the Parliament. A Judge of Hon ble High Court and a District Judge qualified to be appointed as a High Court judge are eligible to become Judicial member. The law prior to GST also had provision of Member of Indian Legal Service with the similar qualification to become Member (Judicial) in the CESTAT. It is also emphasised that for reaching the level of Additional Secretary in the Ministry of Law, an Officer would have worked for 25-30 years and so he would be sufficiently trained on legal matters. Also, the cadre of Indian Legal Service has Advocates with experience of 7 years or more and sometimes district Judges also joined as an officer of the Indian Legal Service. The officers of the rank of Additional Secretaiy in Indian Legal Service are also discharging quasi-judicial function as Members of several other tribunals and are also working as arbitrators. The guideline that A Technical Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f India would contend that the composition of the tribunal, cannot be found fault with. Learned Additional Solicitor General, would state that the fact the administrative members are more in number, cannot lead to an automatic conclusion that the orders of the tribunal will not be just and fair. The mere apprehension of the petitioner cannot be a ground to strike down Section 109 (9) of the CGST Act. 47. Union of India would submit that the GSTAT is not a Tribunal established under Article 323A and Article 323B of the Constitution. It is also not a Judicial Tribunal which is a substitute for the High Court. The GSTAT is one established under Section 109 of the GST Act whose source of power is Article 246A read with Article 279A of the Constitution of India. It is submitted that both GSTAT and CESTAT are creatures of statutes. Unlike GSTAT and CESTAT, Administrative Tribunals, have been established under Article 323A of the Constitution of India and an aggrieved person entitled to invoke the jurisdiction of the Hon ble High Court under Article 226 of the Constitution of India can move the Administrative Tribunal instead of High Court. Similarly, NCL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar, L.Chandrakumar and Madras Bar Association [cited supra] may not have relevance as far as the challenge to the constitutional validity of Maharashtra VAT Tribunal is concerned. Having said that the Hon ble High Court of Bombay upheld the provisions of the MVAT Act with regard to appointment of Administrative Member of the Tribunal. In para 30 of the judgment, the Hon ble High Court of Bombay has observed that in the appointment of administrative member not below the rank of Joint Commissioner it will be necessary that such Joint Commissioner should be legally qualified and judicially trained in the sense that they have a long experience of dealing with a quasi judicial proceedings involving adjudication of proceedings. In the concluding portion at para 41, the Hon ble High Court has laid down that 1. A Bench of two or more members of MVAT Tribunal shall always be headed Judicial Member. 2. The matters to be required to be heard by the member sitting single should be placed only before the Judicial Member and if none of the judicial member is available in case of emergency, in which an interim relief is sought for, it can be placed before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l also be liable to fine. Explanation 1.-A trial before a Court-martial2 ***is a judicial proceeding. Explanation 2.-An investigation directed by law preliminary to a proceeding before a Court of Justice, is a stage of a judicial proceeding, though that investigation may not take place before a Court of Justice. Illustration A, in an enquiry before a Magistrate for the purpose of ascertaining whether Z ought to be committed for trial, makes on oath a statement which he knows to be false. As this enquiry is a stage of a judicial proceeding, A as given false evidence. Explanation 3.-An investigation directed by a Court of Justice according to law, and conducted under the authority of a Court of Justice, is a stage of a judicial proceeding, though that investigation may not take place before a Court of Justice. Illustration A, in an enquiry before an officer deputed by a Court of Justice to ascertain on the spot the boundaries of land, makes on oath a statement which he knows to be false. As this enquiry is a stage of a judicial proceeding, A has given false evidence 228. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d) Courts and Tribunals act judicially in both senses, and in the term Court are included the ordinary and permanent Tribunals and in the term Tribunal are included all others, which are not so included. e) Tribunals are governed by their prescribed rules of procedure and they deal with questions of fact and law raised before them by adopting a process which in described as judicial process. f) But the authority to reach decision conferred on such administrative bodies is clearly distinct and separate from the judicial power conferred on courts, and the decisions pronounced by quasi judicial bodies are similarly distinct and separate in character from judicial decisions pronounced by courts. 52. The Union of India would further state that the Appellate Tribunals like the VAT Tribunal, CESTAT and GSTAT can at best be described as forums meant for deciding assessment proceedings. The revenue places reliance on a Full bench decision of this Court in the case of State of Tamil Nadu v, Arulmurugan and Company reported in (51 STC 381) 1982. The Full bench, while holding that the statutory C Forms could be filed even at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt of the State or his nominee. It is stated that the Judicial Member are necessarily appointed after consultation with the Chief Justice of India or the Chief Justice of the High Court as the case may be. Therefore, to say that there is complete control and discretion of the Government in the process of these appointments, is devoid of merits. Under Section 109(12) of the CGST Act, the Government, in consultation with the President may, for the administrative convenience, transfer- (a) any Judicial Member or a Member Technical (State) from one Bench to another Bench, whether National or Regional; or (b) any Member Technical (Centre) from one Bench to another Bench, whether National, Regional, State or Area. 56. Mr.Mohammed Shaffiq, learned Special Government Pleader (Taxes) appearing for the 4th respondent more or less adopted the arguments of the Union of India and stated that the judgment of the Hon ble Supreme Court both the Madras Bar Association cases, is not applicable to tribunals which have not been constituted under Article 323-A and B of the Constitution of India. He would also submit that the tribunals in a tax legisla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii)whether the composition of the National Bench, Regional Benches, State Bench and Area Benches of the GST Appellate Tribunal, which consists of one Judicial Member, one Technical Member (Centre) and one Technical Member (State), by which the administrative members outnumber the judicial member is violative of Articles 14 and 50 of the Constitution of India and the judgments of the Hon'ble Supreme Court of India. 59. The submission of Mr.Arvind Datar, learned senior counsel for the petitioners that since Section 110(1)(b) of the CGST Act, 2017 excludes the Advocates, from being considered for appointment as judicial member, Section 110 is violative of Article 14 of the Constitution of India, in as much as it even takes away the right of the Advocates from being considered to be appointed as a member of a tribunal, cannot be accepted. The Hon'ble Supreme Court has time and again held that the right to be considered arises only when the rules provide for the same. The right to be considered emanates from being eligible by virtue of an Act or any rule which gives such a right. In the absence of any right, one cannot contend that a person's rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be struck down on the ground of non-inclusion of advocates as being eligible for being considered for appointment as Judicial Member to the Appellate Tribunal under the CGST or TNGST, yet this court is of the opinion that the Union of India must evaluate as to why it is making a departure from the existing practice. Advocates are eligible to be appointed as Judicial Members in the ITAT which is the oldest Tribunal in the country. Lawyers are eligible for appointment as Judicial Member in the Customs Excise Service Tax Appellate Tribunals. Mr.Arvind Datar is justified in contending that when the constitution provides that lawyers are eligible to be appointed as Judges of the High Court, then there is no reason to exclude them from being considered for appointment as Judicial Members. The Hon'ble Supreme Court in R.K. Jain vs. Union of India's case supra in paragraph 67 has held that the Members of the Tribunal must have a judicial approach and also knowledge and expertise in the particular branch of Law. A lawyer practising for 10 years in Taxation would definitely be well-equipped to grapple with the legal issues arising under the Act. It is to be noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Accounts Service, Indian Customs Central Excise Service, Indian Defence Accounts Service, Indian Revenue Service, Indian Ordnances Factories Service, Indian Postal Service, Indian Civil Accounts Service, Indian Railway Traffic Service, Indian Railway Accounts Service, Indian Railway Personal Service, Indian Defence Estates Service, Indian Information Service, Indian Trade Services, or other Central or State Service) with three years' of service as a member of Indian Company Law Service (Account) Branch, or who has `dealt' with any problems relating to Company Law can become a Member. This means that the cases which were being decided by the Judges of the High Court can be decided by two-members of the civil services - Joint Secretary level officers or officers holding Group `A' posts or equivalent posts for 15 years, can now discharge the functions of High Court. This again has given room for comment that qualifications prescribed are tailor made to provide sinecure for a large number of Joint Secretary level officers or officers holding Group `A' posts to serve up to 65 years in Tribunals exercising judicial functions. 112.7. The dilution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances to have more number of members who are expert members (not Judges) will raise a reasonable apprehension in the minds of the assessee that they might not get fair justice and that the decision making, might be more oriented towards the State. 65. The Hon'ble Supreme Court of India, in R.K.Jain Vs. Union of India, reported in 1993 (4) SCC 119, Union of India Vs. R.Gandhi reported in 2010(11) SCC 1 and Madras Bar Association Vs. Union of India , reported in 2014 (10) SCC 1, more or less echoed the same feelings. 66. Mr.Arvind Datar is correct in his submissions that the GSTAT, is replacing the CESTAT, Sales Tax / VAT Tribunals. The composition of GSTAT therefore, has to be on the same lines. In fact, Article 50 of the Constitution of India which provides for separation of the judiciary from the executive, must be interpreted in such a way that the dominance of the departmental / technical members, cannot overwhelmingly outweigh the judicial members. 67. The Court can take judicial notice of the fact that now the tribunals are taking over the subjects which were initially being dealt with / adjudicated by Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence in the public mind and the foremost reason being lack of competence, objectivity and judicial approach. The next reason which is given by the Committee is the constitution, the power and method of appointment of personnel thereto, the inferior status and the casual method of working. The committee has also stated that men of calibre are not being appointed as Presiding Officers in view of the uncertainty of tenure, unsatisfactory conditions of service, executive subordination in matters of administration and political interference in judicial functioning. The Committee therefore has insisted that the tribunals must inspire confidence and public esteem that it is a highly competent and expert mechanism with judicial approach and objectivity. The Committee states that when a tribunal is composed of personnel drawn from the judiciary as well as from services or from amongst experts in the field, any weightage in favour of the service members and value-discounting the judicial members would render the tribunals less effective and efficacious than the High Court. Paragraph 8.65 reads as under. 8.65 A Tribunal which substitutes the High Court as an alternative in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra] itself an authority for proposition that all the tribunals must be subject to the superintendence power of the High Court under Article 227 of the Constitution of India. 71. If that being so, the observations made in paragraph No.8.65, observed above, must also be applied to all the tribunals and more so such of the tribunals, whose decisions could be only challenged in the Hon'ble Supreme Court. 72. The tribunal consists of three members. Out of the three members, only one is a judicial member. The other two members are technical members, who would ordinarily possess little experience in law, though they might be otherwise adept in the understanding of the taxing statute. In these circumstances in a bench of 3 members, two of which would be technical members, there exists the possibility of the two technical members, arriving at a view, different from that of the Judicial member. Undoubtedly, mere possibility of the malafide exercise of power is no ground to strike down an enactment, (Refer D.K. Trivedi Sons, v State of Gujarat (1986) Supp SCC 20.), but in the instant case, the appropriateness of the tribunal discharging judicial func ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r centuries has been expended in seeking a solution of this great problem. A region of law, in contrast to the tyranny of power, can be achieved only through separating appropriately the several powers of the Government.If the lawmakers should also be the constant administrators and dispensers of law and justice, then, the people would be left without a remedy in case of injustice since no appeal can lie under the fiat against such a supremacy . And, in this age-old search of political philosophers for the secret of sound Government, combined with individual liberty, it was Montesquieu who first saw the light. He was the first among the political philosophers who saw the necessity of separating judicial power from the executive and legislative branches of Government. Montesquieu was the first to conceive of the three functions of Government as exercised by three organs, each juxtaposed against others. He realised that the efficient operation of Government involved a certain degree of overlapping and that the theory of checks and balances required each organ to impede too great an aggrandizement of authority by the other two powers. As Holdsworth says, Montesquieu convinced the wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d too, from where we have inherited our present system of administration of justice in its broad and essential features, judicial independence is prized as a basic value and so natural and inevitable it has come to be regarded and so ingrained it has become in the life and thought of the people that it is now almost taken for granted and it would be regarded an act of insanity for anyone to think otherwise. But this has been accomplished after a long fight culminating in the Act of Settlement, 1688. Prior to the enactment of that Act, a Judge in England held tenure at the pleasure of the Crown and the Sovereign could dismiss a Judge at his discretion, if the Judge did not deliver judgments to his liking. No less illustrious a Judge than Lord Coke was dismissed by Charles I for his glorious and courageous refusal to obey the King s writ de non procedendo regeinconsulto commanding him to step or to delay proceedings in his Court. The Act of Settlement, 1688 put it out of the power of the Sovereign to dismiss a Judge at pleasure by substituting tenure during good behaviour for tenure at pleasure . The Judge could then say, as did Lord Bowen so eloquently: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. Where this Court refers to independence, fairness and reasonableness in decisionmaking as the hallmarks of judiciary, there it also states impartiality as one of its essentials. Though, what is most important is the independence of judiciary, its freedom from interference and pressure from other organs of the State. The courts and Judges, thus, must be provided complete freedom to act, not to do what they like but to do what they are expected to do, legally and constitutionally and what the public at large expects of administration of justice . If the State is able to exercise pressure on the Judges of the High Court by providing arbitrary or unreasonable conditions of service or altering them in an arbitrary manner, it would certainly be an act of impinging upon the independence of judiciary. Of course, what is put forward as part of the basic structure must be justified by reference to the provisions of the Constitution. When one looks into the scheme of our Constitution and the doctrine of separation of powers, there are many Articles, some of which I have already referred to, which clearly show that independence of the judiciary was of utmost concern with the Framers of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n organ and as one of the three functionaries of the State, and (2) independence of the individual Judge. 335.There can be no quarrel that this proposition is absolutely correct. Our Constitution fully safeguards the independence of Judges as also of the judiciary by a three-fold method - (1) by guaranteeing complete safety of tenure to Judges except removal in cases of incapacity or misbehaviour which is not only a very complex and complicated procedure but a difficult and onerous one, (2) by giving absolute independence to the Judges to decide the cases according to their judicial conscience without being influenced by any other consideration and without any interference from the executive. Article 50 clearly provides that the State shall take steps to separate the judiciary from the executive in the public services of the State. This important Directive Principle enshrined in Article 50 has been carried out by the Code of Criminal Procedure, 1973 which seeks to achieve complete separation of judiciary from the executive, (3) so far as the subordinate judiciary is concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the powers of the executive and whether the executive has acted within the scope of its power. Such a question obviously cannot be left to the executive to decide and for two very good reasons. First the decision of the question would depend upon the interpretation of the Constitution and the laws and this would pre-eminently be a matter fit to be decided by the judiciary, because it is the judiciary which alone would be possessed of expertise in this field and secondly, the constitutional and legal protection afforded to the citizen would become illusory, if it were left to the executive to determine the legality of its own action . So also if the legislature makes a law and a dispute arises whether in making the law, the legislature has acted outside the area of its legislative competence or the law is violative of the fundamental rights or of any other provisions of the Constitution, its resolution cannot, for the same reasons, be left to the determination of the legislature. The Constitution has, therefore created an independent machinery for resolving these disputes and this independent machinery is the judiciary which is vested with the power of judicial review to determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would be nothing short of subversion of the Constitution, for it would make a mockery of the distribution of legislative powers between the Union and the States and render the fundamental rights meaningless and futile. So also if a constitutional amendment is made which has the effect of taking away the power of judicial review and providing that no amendment made in the Constitution shall be liable to be questioned on any ground, even if such amendment is violative of the basic structure and, therefore, outside the amendatory power of Parliament, it would be making Parliament sole judge of the constitutional validity of what it has done and that would, in effect and substance, nullify the limitation on the amending power of Parliament and affect the basic structure of the Constitution. The conclusion must therefore inevitably follow that clause (4) of the Article 368 is unconstitutional and void as damaging the basic structure of the Constitution. It is undoubtedly true that my judgment in Minerva Mills Ltd. case was a minority judgment but so far as this aspect is concerned, the majority Judges also took the same view and held that judicial review is a bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicial approach, in Tribunals constituted under Articles 323-A and 323-B, and the observations, are extracted as under: 67. The tribunals set up under Articles 323-A and 323-B of the Constitution or under an Act of legislature are creatures of the statute and in no case can claim the status as Judges of the High Court or parity or as substitutes. However, the personnel appointed to hold those offices under the State are called upon to discharge judicial or quasi-judicial powers. So they must have judicial approach and also knowledge and expertise in that particular branch of constitutional, administrative and tax laws. The legal input would undeniably be more important and sacrificing the legal input and not giving it sufficient weightage and teeth would definitely impair the efficacy and effectiveness of the judicial adjudication . It is, therefore, necessary that those who adjudicate upon these matters should have legal expertise, judicial experience and modicum of legal training as on many an occasion different and complex questions of law which baffle the minds of even trained judges in the High Court and Supreme Court would arise for discuss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pends upon the nature of jurisdiction that is being transferred from the courts to tribunals. Logically and necessarily, depending upon whether the jurisdiction is being shifted from a High Court, or a District Court or a Civil Judge, the yardstick will differ. It is for the court which considers the challenge to the qualification, to determine whether the legislative power has been exercised in a manner in consonance with the constitutional principles and constitutional guarantees. ****** We may summarise the position as follows: (a) A legislature can enact a law transferring the jurisdiction exercised by courts in regard to any specified subject (other than those which are vested in courts by express provisions of the Constitution) to any tribunal. ( b) All courts are tribunals. Any tribunal to which any existing jurisdiction of courts is transferred should also be a judicial tribunal. This means that such tribunal should have as members, persons of a rank, capacity and status as nearly as possible equal to the rank, status and capacity of the court which was till ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defects found in the NCLAT by the Hon ble Supreme Court, which ultimately had to be remedied by Parliament, was in respect of the Constitution of a Tribunal. It became necessary for the Tribunal to consist of at least one judicial member, and in the event that a larger bench was to be formed, such larger bench would necessarily require the present of judicial members at par, or in excess of the no. of technical members. 86. In the case of Madras Bar Assn. v. Union of India, (2014) 10 SCC 1, the Hon'ble Supreme Court observed as under. 124. One needs to also examine sub-sections (2), (3), (4) and (5) of Section 5 of the NTT Act, with pointed reference to the role of the Central Government in determining the sitting of the Benches of NTT. The Central Government has been authorised to notify the area in relation to which each Bench would exercise jurisdiction to determine the constitution of the Benches, and finally to exercise the power of transfer of Members of one Bench to another Bench. One cannot lose sight of the fact that the Central Government will be a stakeholder in each and every appeal/case which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not otherwise. It has also been held that where the adjudicatory process transferred to a tribunal does not involve any specialised skill, knowledge or expertise, a provision for appointment of non-Judicial Members (in addition to, or in substitution of Judicial Members), would constitute a clear case of delusion and encroachment upon the independence of judiciary , and the rule of law .It is difficult to appreciate how Accountant Members and Technical Members would handle complicated questions of law relating to tax matters, and also questions of law on a variety of subjects (unconnected to tax), in exercise of the jurisdiction vested with NTT . That in our view would be a tall order. An arduous and intimidating asking. Since the Chairperson/Members of NTT will be required to determine substantial questions of law , arising out of decisions of the Appellate Tribunals, it is difficult to appreciate how an individual, well-versed only in accounts, would be able to discharge such functions. Likewise, it is also difficult for us to understand how Technical Members, who may not even possess the qualification of law, or may have no experience at all in the practice of law, would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion has been explained by Hidayatullah, J., in Harinagar Sugar Mills Ltd. v. Shyam Sunder Jhunjhunwala [AIR 1961 SC 1669] in para 32, relevant portion of which is quoted hereinbelow: (AIR p. 1680) 32. With the growth of civilisation and the problems of modern life, a large number of administrative tribunals have come into existence. These tribunals have the authority of law to pronounce upon valuable rights; they act in a judicial manner and even on evidence on oath, but they are not part of the ordinary courts of civil judicature. They share the exercise of the judicial power of the State, but they are brought into existence to implement some administrative policy or to determine controversies arising out of some administrative law. They are very similar to courts, but are not courts. When the Constitution speaks of courts in Articles 136, 227 or 228 or in Articles 233 to 237 or in the Lists, it contemplates courts of civil judicature but not tribunals other than such courts. This is the reason for using both the expressions in Articles 136 and 227. By courts is meant courts of civil judicature and by tribunals , those bodies of men who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under. ( 8 ) Appellate Authority means an authority appointed or authorised to hear appeals as referred to in section 107; 93. The appellate tribunal is defined in Section 2(9) of the CGST Act, which reads as under. ( 9 ) Appellate Tribunal means the Goods and Services Tax Appellate Tribunal constituted under section 109; 94. An appeal from the adjudicating authority lies to an appellate authority under Section 107 of the CGST Act. Section 107 (16) states that the order of the appellate authority, subject to the provisions of Section 108 or Section 113 or Section 117 or Section 118, is final. 95. The revisional authority is defined in Section 2(99) of the CGST Act, which reads as under. ( 99 ) Revisional Authority means an authority appointed or authorised for revision of decision or orders as referred to in section 108; 96. The revisional authority subject to the provisions of Section 121 and any rules made thereunder, may, on his own motion or upon information received by him or on request from the Commissioner of State tax, or the Commissioner of Union Te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be borne in mind that the decision making process has to be scrutinised by the tribunal. In doing so, judicial principles have to be kept in mind. The criticism of the Manlimath Committee, that any weightage in favour of the service members or expert members and value- discounting the judicial members would render the tribunal less effective and efficacious than the High Court, would clearly apply to the Appellate Tribunal. It is well accepted that the tribunal must inspire confidence in the assessee for which purpose the members must have legal training, experience, judicial acumen, equipment and approach. 100. Similarly, even though the judgment of the State Bench or the Area Benches is subject to an appeal to High Court, it is well settled that while giving judicial decisions, Judges should be able to act impartially, objectively and without any bias. Infact the Hon'ble Supreme Court in Manak Lal (Shri), Advocate Vs. Prem Chand Singhvi and Others , reported in 1957 SCR 575 has observed that when a tribunal or a Court decides the matter, the test is not whether in fact a bias has affected the judgment. The test always is and must be whether a litigant could reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the National Green Tribunal constituted under the National Green Tribunal Act, 2010. Proviso to Section 4 (4)(c) of the National Green Tribunal Act provides that number of expert members shall be equal to number of judicial members. This Court in para 41 and 42 of the said judgment interpreted Section 21, Section 4(4) read with Section 35 of the National Green Tribunal Act, 2010 and Rule 3(1) of the National Green Tribunal (Practices and Procedure) Rules, 2011 and observed as under. 41. But, Section 21 of the National Green Tribunal Act, 2010 contains a Catch-22 situation. It declares that the decision of the Tribunal by majority of members shall be binding. The First Proviso to Section 21 states that if there is a difference of opinion among the Members and the opinion is equally divided, the Chairperson shall hear such application and decide. The Second Proviso to Section 21 states that where the Chairperson himself has heard such application along with other Members and if the opinion among the Members is equally divided, he shall refer the matter to the other Members of the Tribunal. This is despite the fact that the Chairperson of the Tribunal, as per Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it is incomprehensible that a reference made to a larger Bench of an Administrative Tribunal, which would ordinarily require an exposition of a substantial question of law, can be decided by two Administrative Members, making the Judicial Member a minority. What John Marshall said in Marbury v. Madison [2 L Ed 60 : 5 US (1) Crunch 137 (1803)] could be of assistance in resolving the issue on hand and hence, it is extracted as follows: It is emphatically the province and duty of the Judicial Department to say what the law is . If two laws conflict with each other, the Courts must decide on the operation of each 104. Ultimately, in paragraph no.44, the Hon'ble Division Bench came to the final conclusion and observed as under. 44. The Proviso to Section 5(4)(d) of the Administrative Tribunals Act, 1985 cannot be understood to mean that the Parliament contemplated a single Judicial Member to be a decorative piece in a Bench of more than two. Therefore, we are of the considered view that in a Bench of more than two Members constituted by the Chairperson of the Administrative Tribunal, the number of Administrative Members c ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
