- Apprentice Lawyer
- Legal Jobs
The Madras High Court has been moved challenging recently notified rules concerning the appointment and the terms of service governing the President and Members of the Goods and Services Tax Appellate Tribunals (GSTAT).
As per the plea filed by the Revenue Bar Association (RBA), the GSTAT (Appointment and Conditions of Service of President and Members) Rules, 2019 (2019 Rules), violate Articles 14, 21, and 50 of the Constitution of India and the doctrine of separation of powers. The petition further contends that these rules are contrary to the principles laid down in the Supreme Court’s ruling in Union of India v R Gandhi.
The RBA has posed two broad challenges in this regard. The first concerns the constitution of selection committees which appoint technical members of the GSTAT Benches. In this regard, Rule 3 of the 2019 Rules is relevant. The second concerns the powers vested in the Government to dictate the service conditions of GSTAT members, in which regard Rule 8 is relevant. Registering its objection to these rules, the RBA contends,
“The separation of the executive from the judiciary as envisaged under Article 50 is a part of the basic structure of the Constitution, and necessary for rule of law and access to justice. The impugned rules directly encroach into these basic features and derogate from the same by vesting unbridled powers in the Executive. Rules 3 and 8 are a testament to such Executive excesses…
… It is submitted that the impugned rules suffer from severe infirmities in view of the doctrine of separation of powers and the independence of the judiciary, which forms the basic structure of the Constitution.”
The plea was admitted today by a Bench of Justices M Sathyanarayanan and N Seshasayee. Advocate Rahul Unnikrishnan appeared for the RBA, in the petition drafted by him and Advocate Karthik Sundaram. The matter has been posted for next week when the Additional Solicitor General is expected to appear on behalf of the Union Finance Ministry.
On the Selection Committee for the appointment of Technical Members to GSTAT
Sections 109 and 110 of the Central and State Goods and Services (GST) Acts provide for the constitution of GST Appellate Tribunals. As per these provisions, the National Bench of the GSTAT would comprise of a President and two Technical Members i.e. one Technical Member from the Centre and one from the State. The State/Area Benches of the GSTAT would comprise of a Judicial Member and two Technical Members (one each representing the Centre and the State).
The President of the National GSTAT Benches and the judicial member of the State GSTAT Benches are appointed by the Government after consulting the Supreme Court Chief Justice and the High Court Justice (or their nominees) respectively.
However, under the present regime, the technical members to the GSTAT Benches (National and/or State) are appointed by the Central Government on the recommendations of a selection committee, composed entirely of members from the Executive, with no representation from the higher judiciary.
The relevant provisions in this regard are Sections 110 (3) and 110 (5). Rule 3 of the 2019 Rules detail the composition of this section committee. The plea highlight that the convenors of these selection committees are also members of the Executive.
To mount its challenge against the same, the petitioner has relied on the rulings in the following rulings, i.e.
On a reading of these case laws, the RBA has submitted,
“In short, the selection committee which comprises of members only from the executive was held to be unconstitutional and violative of the basic structure of the Constitution. It is submitted that using the same reasoning, the selection committee mentioned in Rule 3 of the impugned rules is clearly unconstitutional and violative of the directions of this Hon’ble Court and the Supreme Court.
The Supreme Court has categorically stated that (a) Selection Committee should have equal representation from the Judiciary, (b) must be headed by the Chief Justice or his nominee, and (c) the Chief Justice or his nominee should have a casting vote. However, the Selection Committees prescribed in Rule 3 of the impugned rules fall short of the said stipulation on all counts.”
On the rules governing conditions of service of GSTAT members
Rule 8 of the 2019 Rules require the President to apply to the Central Government for sanction of leave. Another issue raised is that the service conditions of Members – such as salaries, leave, pay, TA, HRA, and other benefits – has been made equivalent to Group ‘A’ officers of the Government of India of corresponding status. The RBA has argued that this scheme of things would be detrimental to the independence of the tribunal. As noted in the petition,
“… this would entail master-servant relationship between the President and the Nodal Ministry. Likewise, the Central Government has also reserved to itself the final authority in interpreting service conditions. Thus, the Executive enjoys dominant and pervasive control over the functioning GSTAT.”
On the other hand, the petitioner points out that the Supreme Court has repeatedly stated that the service conditions for Members of Tribunals should be equivalent or comparable to that of High Court Judges.
Further, an objection is also registered to the fact that administrative assistance and support to GSTAT continues to remain under the Nodal Ministry, contrary to the guidelines prescribed by the Supreme Court in R Gandhi’s case. The petitioner highlights that the Supreme Court, in that case, had categorically held that,
“…the administrative support has to come from the Department of Law & Justice. It is submitted that the dependence of Tribunals on their ‘parent’ Ministry/Department is not only a clear case of conflict of interest, but has an enduring and debilitating effect on the independence of the Tribunal.”
The petitioner goes on to argue,
“The importance to ensure judicial independence assumes heighted importance considering the fact that the Executive is directly involved in the lis before all benches of the GSTAT. Further as the Union of India is a party to all the litigations before the GSTAT, it should be barred from selecting the members of GSTAT without the involvement of the higher judiciary. Such an exercise would be violative of the basic tenets of rule of law, which is, no man can be judge in his own cause.“
In view of these submissions, the RBA has prayed that the Court,
” … declare Goods and Service Tax Appellate Tribunal (Appointment and Conditions of Service of President and Members) Rules, 2019 framed by the respondent vide Notification No. GSE 584(E) dated 21stAugust, 2019, as void, defective and unconstitutional, being violative of Articles 14, 21, and 50 of the Constitution of India and the doctrines of separation of powers and independency of judiciary, which are part of the basic structure of the Constitution of India, and further contrary to the principles laid down by the Hon’ble Supreme Court of India in Union of India v. R. Gandhi…“
It may be noted that a Madras High Court Bench of Justices S Manikumar and Subramonium Prasad reserved orders in two pleas (of which RBA is one petitioner) challenging the constitutionality of Sections 109 and 110 of the Central and Tamil Nadu GST Acts last June. In view of the same, the RBA has contended,
“... when the validity of sections 109 and 110 was already under challenge before this Hon’ble Court and various other High Courts, it was highly improper for the respondent to notify the impugned rules. In fact, such an act also amounts to contempt of court in view of the decision of the Supreme Court in R. Gandhi.”