Madras HC issues notice in challenge to constitution of Appellate Tribunals under GST Act
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Madras HC issues notice in challenge to constitution of Appellate Tribunals under GST Act

Meera Emmanuel

The Madras High Court on Monday issued notice in a petition challenging the vires of provisions concerning the constitution of Appellate Tribunals under the Central Goods and Services Tax (GST) Act, 2017.

The petitioner, Advocate V Vasanthakumar, has contended that the statutory constitution of Appellate Tribunals under the latest GST laws violate Articles 14, 19 and 50 of the Constitution.

Further, he has argued that the current scheme runs contrary to the safeguards laid down by the Supreme Court in Union of India v. R Gandhi to protect the independence of the judiciary.

Given that the petition challenges a central legislation, the Bench of Chief Justice Indira Banerjee and Justice PT Asha issued notice to the Attorney General of India and the Additional Solicitor General.

The Bench issued the notice on a prima facie finding that the impugned provisions appeared to run contrary to Supreme Court precedent.

In particular, Vasanthakumar has challenged Sections 109 and 110 of Chapter XVIII of the Central GST and the corresponding provisions in the Tamil Nadu GST Act.

These provisions lay down that the appellate tribunals for tax matters are to be constituted by one judicial member, one technical member (Centre) and one technical member (State) i.e. two technical members and a judicial member.

However, in R Gandhi’s case, the Supreme Court laid down that the number of technical members cannot exceed judicial members when it comes to the constitution of the tribunals under the Companies Act. The principles underlying this imperative were laid down in the judgment.

Inter alia, the Court had explained in this judgment,

“… 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 then dealing with such matters and the members of the Tribunal should have the independence and security of tenure associated with Judicial Tribunals.”

Vasanthakumar has pointed out that these general principles are applicable not only to tribunals/appellate tribunals under the Companies Act, but to all tribunals in general.

“… even though the Hon’ble Supreme Court has prescribed the various guidelines in the decision of R. Gandhi (supra) with regard to the constitution of the NCLT and NCLAT, the same stands applicable to all the tribunals in India.”

In this background, Vasanthakumar has also raised the following allied concerns.

  • The current scheme for the constitution of appellate tribunals under the 2017 GST laws also violates the doctrine of separation of powers under Article 50 of the Constitution, which forms the basic structure of the Constitution as laid down in Kesavananda BharatiState of Kerala.
  • Only judicial officers and civil servants can be appointed as judicial members. Therefore, the current scheme goes against the equality of opportunity as far as practising advocates are concerned. This is contrary to the law laid down in Maras Bar Association v. Union of India and Union of India v Madras Bar Association.
  • With the dominance of technical members, the appellate tribunal may become reluctant to pass orders against the executive. Further, if more executive members sit on the bench as technical members, it may also amount to making one the judge of his own cause. This is in violation of natural justice principles i.e. nemo judex in causa sua
  • Under Sections 109 and 110 of the GST Act, technical assistance and support to tribunals are to be provided by the parent Ministry. This is another violation of the law laid down in R Gandhi’s case, wherein the Court mandated that administrative assistance can only come from the Ministry of Law and Justice.

Since Chief Justice Banerjee has been elevated to the Supreme Court, the matter has been posted before the Roster Bench, to be taken up next in September.

It can be noted that a Division Bench of the Gujarat High Court has already issued notice in a similar petition last May.

Read the petition:

MHC-GST-Appellate-Tribunal-GST-2017-Petition.pdf
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