2018 Taxo.online 274
WP No.14919 of 2018 and WMP Nos.17635 & 17636 of 2018 dated 11.07.2018
UNION OF INDIA
Central Goods & Services Tax Act, 2017
Section 109 & 110
Ms. Indira Banerjee, Justice & P. T. Asha, Justice
Represented by: –
Writ Petitions under article 226 of the Constitutions of India praying that in these circumstances stated therein and in the respective affidavits filed therewith the High Court will be pleased to
(1)issue a Writ of Declaration to declare Section 109 of the Central Goods & Service Tax Act, 2017 and Tamil Nadu Goods & Service Tax Act, 2017, constituting Appellate Tribunal and Section 110 of the CGST Act and TNGST Act relating to qualification, appointment and condition of services of its members as ultra vires of Article 14 and 50 of the Constitution of India and being violative of the doctrine of separation of powers and independence of judiciary which are parts of the basic structure of the Constitution and further contrary to the principles laid down by the Honourable Supreme Court in Union of India V R.Gandhi, (2010) 11 SCC 1 and Kesavananda Bharati Vs,. State of Kerala [(1973) 4 SCC 225](in WP.14919/2018);
(2) To grant stay of the operation, execution and implementation of the Notification No..09/2017-Central Tax and G.O.Ms. No.60, Commercial Taxes and Registration (B1) dated 29.6.2017, notifying the provisions of Section 109 and 110 of the Central Goods & Service Tax Act, 2017 and Tamil Nadu Goods & Service Tax Act, 2017, respectively, (in WMP.17635/2018) and
(3) To grant stay of the operation of Section 109 which relate to Constitution of Appellate Tribunal and Section 110 which relate to Constitution of Appellate Tribunal and Section 110 which relate to President and Members of Appellate Tribunal their qualification, appointment and conditions of service etc., of the Central Goods & Service Tax Act, 2017 and Tamil Nadu Goods & Service Tax Act, 2017, respectively,(in WMP.17636/2018) respectively pending WP.No.14919 of 2018.
Order :These petitions coming on for orders upon perusing the petitions and the respective affidavits filed in support thereof and upon hearing the arguments of M/S.V.VASANTHAKUMAR PETITIONER-IN-PERSON, appearing for himself the court made the following order:-
(Order of the Court was made by Ms.Indira Banerjee, Chief Justice)
This writ petition has been filed by a practising advocate, in public interest, challenging the vires of Sections 109 and 110 of the Central Goods and Service Tax Act, 2017 (in short, ‘CGST Act’) and Tamil Nadu Goods and Service Tax Act, 2017, (in short ‘TNGST Act’) constituting Appellate Tribunal and the qualification, appointment and condition of services of its members.
- According to the petitioner, the provisions are violative of doctrine of separation of powers and independence of judiciary and also contrary to the principles laid down by the Supreme Court Union of India v. R.Gandhi, (2010) 11 SCC 1 and Kesavananda Bharati vs. State of Kerala [(1973) 4 SCC 225].
- In the affidavit filed in support of the petition, the petitioner has demonstrated the difference in the composition of Appellate Tribunal, viz., Central Excise, Custom and Service Tax Appellate Tribunal (CESTAT), under the Pre-GST regime and Post-GST regime. He submits that during the Pre-GST regime, the Bench of the Appellate Tribunal consisted of two members, one Judicial Member and one Technical Member. It is stated that the CESTAT functions as an independent quasi judicial body and is deemed to be a Civil Court for the purpose of Section 195 of the Code of Criminal Procedure, 1973.
- As per the Constitution of the Tribunal, the President, Vice President, Registrar and members of the Bench would carry on the day-to-day functions of CESTAT. Appointment and qualifications for the recruitment of President, Vice President and Members is governed by CESTAT Members (Recruitment and Conditions of Service) Rules, 1987. For appointment as a judicial member, the qualification would be that he/she has held a judicial office in the territory of India for at least for 10 years or he/she has been a member of Indian Legal Service and has held a 1 st grade post in that service or any equivalent or higher post for at least three years. On the other hand, he/she has been an advocate for at least 10 years. The President, Vice President and members of the CESTAT is approved by a Selection Committee consisting of a Judge of the Supreme Court, being the Chairman of the Selection Committee, the Secretary to Government of India in the Ministry of Finance, the Secretary to Government of India in the Ministry of Law (Department of Legal Affairs), The President and such other persons not more than two as nominated by the Central Government.
- According to the petitioner, after the Goods and Service Tax Act came into effect, Sections 109 and 110 of the CGST Act and TNGST Act provides for constitution of the Appellate Tribunal and the qualification, appointment, condition of services, etc. for President and members of the Appellate Tribunal. The GST law envisages constitution of a two tier Tribunal, i.e., National Bench/Regional Benches, to adjudicate the issues relating to place of supply of goods and the State Bench/Area Benches, to adjudicate the issues other than relating to place of supply of goods.
- According to Mr.Vasanthakumar, the provisions relating to the constitution of GST Appellate Tribunal are contained in Sections 109 to 116 of the CGST Act and as per Section 109 (9) of the CGST Act, each State Bench and Area Benches of the Appellate Tribunal shall consist of a Judicial Member, one Technical Member (Centre) and one Technical Member (State) and the State Government may designate the senior most Judicial Member in a State as the State President, and the said constitution is contrary to the law enunciated by the Hon’ble Supreme Court in Union of India vs. R.Gandhi, supra, wherein it has been held that the number of technical members should not exceed the judicial members.
- Mr.Vasanthakumar submitted that it is necessary that those who are called upon to discharge judicial or quasi-judicial powers should have legal expertise, judicial experience and legal training and therefore, in the Bench of Appellate Tribunal, the number of Technical Members should not and cannot be more than the number of judicial members, as the technical member is only to support technical expertise and he/she cannot assume judicial powers.
- According to the petitioner, appearing in person, the qualification required for a Judicial Member has excluded advocates. He submits that an Advocate is entitled to be selected as judicial member in the Tax Tribunals and there is no explanation for excluding advocates from being selected as Judicial Members. According to him, this is a serious infirmity. Section 110(1)(b) is liable to be struck down as unconstitutional.
- Mr.Vasanthakumar took us to the provisions, particularly, Sections 109(3) and 109(4), which read as follows:
(3)The National Bench of the Appellate Tribunal shall be situated at New Delhi which shall be presided over by the President and shall consist of one Technical Member (Centre) and one Technical Member (State).
(4)The Government shall, on the recommendations of the Council, by notification, constitute such number of Regional Benches as may be required and such Regional Benches shall consist of a Judicial Member, one Technical Member (Centre) and one Technical Member (State)
- It is submitted by Mr.Vasanthakumar that at the National Bench, the President has to be a retired Judge of the Supreme Court or a retired Chief Justice of High Court or Judge of High Court for not less than five years. However, he will be in a minority with two technical members who form part of the three-member Bench. Similarly, all the Regional Benches will also have judicial members in a minority. The technical members are Revenue Officers from the Centre and State.
- Mr.Vasanthakumar relied upon the following decisions to buttress his submissions: (a)Union of India vs. R.Gandhi, reported in (2010) 11 SCC 1; (b)Kesavananda Bharati vs. State of Kerala [(1973) 4 SCC 225]
- According to Mr.Vasanthakumar, the provisions of the GST Act, deprive the equality of opportunity to practising Advocates, who are endowed with the qualities of intellect and character, forbearance and patience, temper and resilience in the administration of justice and such qualities give them added advantage and benefit to broaden the perspectives and to discharge the judicial functions effectively. 13. The matter was heard at admission stage and no notice was ordered. On hearing the learned counsel for the petitioner, prima facie it appears that the constitution of the Appellate Tribunal is contrary to the decision in Union of India vs. R.Gandhi, reported in (2010) 11 SCC 1. In such view of the matter, this Court feels it appropriate to issue notice to the respondents returnable in six weeks.
- Since the vires of Sections 109 and 110 of the Central Goods and Service Tax Act, 2017 (in short, ‘CGST Act’) and Tamil Nadu Goods and Service Tax Act, 2017, (in short ‘TNGST Act’) constituting Appellate Tribunal and the qualification, appointment and condition of services of its members is under challenge, notice be also issued to the learned Attorney General of India, through the Additional Solicitor General of India returnable six weeks hence. It is made clear that the views expressed in this order are only prima facie views which will not influence the decision.
- Let the matter be posted before the roster Bench on 17.9.2018.