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The Gujarat High Court today issued notice to the Central government and others in a petition challenging the composition of the National and State Goods and Services Tax (GST) Appellate Tribunals.
Sections 109 and 110 of both the Central GST Act, 2017 and the Gujarat GST Act, 2017, which lay down the composition of Appellate Tribunals at the Central and state level respectively, have been called into question in the petition filed by two chartered accountants, Prateek Gattani and Abhishek Chopra.
As per Section 109 of both Acts, Appellate Tribunals will be composed of the President (a judicial member) and two technical members, one each for the Centre and the state. This, the petition contends, is a violation of separation of powers and impinges upon the independence of the judiciary. Section 110 provides for qualification, appointment, condition of services, etc for President and members of the Appellate Tribunal.
Prior to the introduction of the GST regime, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which heard matters relating to indirect taxes, was composed of one judicial and one technical member. Ever since the roll out of the GST scheme, the GST Act calls for an Appellate Tribunal comprising more technical members than judicial members at both the National Bench and the Regional Benches.
This, the petitioners contend, is a:
“typical instance of a widespread malady which has infected the legislative system in India, the tendency of the legislature of not exercising legislative restraint and crossing their limits by encroaching into the judicial domain.”
The provisions in question have been challenged as being ultra vires Articles 13, 14, 19 and 50 of the Constitution. Counsel for the petitioners, Nipun Singhvi and Vishal Dave had submitted in the High Court that the provisions in question are also violative of the Supreme Court’s judgment in Union of India v. R Gandhi. In that case, the Supreme Court had held,
“Two-Member Benches of the tribunal should always have a judicial member. Whenever any larger or special benches are constituted, the number of Technical Members shall not exceed the Judicial Members.”
It was also pointed out to the Court that the government till date has not appointed members to these Tribunals, even though the GST regime is almost a year old.
Further, it has been pointed out that the CGST and GGST Acts do not provide for a selection committee to appoint members of the Appellate Tribunal, as was the case under the CESTAT Act. Now, members of the National Bench are nominated by the Chief Justice of India, while members of the Regional Benches are nominated by the Chief Justice of that High Court.
In this light, it was submitted that the Supreme Court had recently formed the search-cum-selection committee for appointment of members to all tribunals.
In light of these arguments, the petition seeks a direction from the Court to strike down both provisions in the Central and State GST Acts as being ultra vires the Constitution. It has further been prayed that the notifications bringing these provisions in be stayed.
After hearing the parties today, the Gujarat High Court Division Bench of Justices Akil Kureshi and BN Karia issued notice to the Central government, the state government and the GST Council, along with the Attorney General for India, since the vires of a central legislation is under challenge.
Advocates Vishal J Dave and Nipun Singhvi appeared for the petitioner.
The matter will next come up for hearing after the court vacations, on July 2.
Read the petition:
Read the order: