Reason is the Soul of Justice: The Constitutional Mandate for Speaking Orders in GST Adjudication

Introduction

The Principle of Natural Justice is a cardinal doctrine embedded in Indian jurisprudence, rooted in the idea of fairness, equity, and transparency. Among its various limbs, the requirement of providing reasoned orders forms a fundamental cornerstone. The Supreme Court of India, in the landmark case KRANTI ASSOCIATES PVT. LTD. Versus MASOOD AHMED KHAN - 2010 (9) TMI 886 - Supreme Court, eloquently articulated the necessity of recording reasons by judicial, quasi-judicial, and even administrative authorities. This case remains a guiding beacon in enforcing the rule of law through accountable decision-making processes.  The relevance of these principles is particularly significant under the Goods and Services Tax (GST) regime, where tax authorities exercise quasi-judicial powers under the CGST Act including Assessment (Sections 73/74), Cancellation of Registration (Section 29), and Detention of Goods (Section 129)

This Article endeavours to distil and analyse the legal principles enunciated by the Apex Court in this case, reaffirming that 'reason is the soul of justice', and how the principles laid down in Kranti Associates must be scrupulously followed in GST proceedings, and how failure to do so renders departmental actions vulnerable to constitutional challenge under Articles 14 and 21 of the Constitution. for arbitrariness and denial of due process.

The Context and Judicial Observations in Kranti Associates Case:

In Kranti Associates, the Supreme Court said that when an authority gives a decision without explaining the reasons, it’s like giving a verdict in the dark — you can’t know why it was made, can’t question it properly, and justice becomes meaningless. So, giving clear reasons is a must for fairness and transparency.

Why the Constitution Demands Decisions That Explain Themselves:

The judgment in Kranti Associates distilled 15 fundamental principles on the necessity of providing reasons in any decision that affects rights. These are not mere procedural niceties but they constitute the very essence of justice delivery. Key principles include:

• Fairness and Transparency:

All decisions be it judicial, quasi-judicial or administrative that affect rights must be reasoned.

• Restraint on Arbitrariness:

Reasons serve as a safeguard against misuse of power.

• Right to Appeal and Review:

If an order doesn’t explain the reasoning, the affected party won’t know why the decision went against them, making it nearly impossible to challenge it effectively in appeal or review. In legal terms, this undermines the right to a fair hearing and proper judicial scrutiny.

• Precedential Clarity:

In common law systems, reasoned decisions build the body of law and set benchmarks for future cases.

• Accountability:

Recording of reasons ensures that authorities are held accountable to law and logic.

• Human Rights Dimension:

The duty to provide reasons is now recognized as an integral part of fairness and due process, aligned with both domestic and international jurisprudence. 

Thus, it is concluded by the Hon’ble Supreme Court that – 'Reason is the very life blood of judicial decision-making. It makes the system credible, reliable, and just.'
 

Interlinkage with Principles of Natural Justice

Natural justice rests on two pillars — audi alteram partem (right to be heard, which includes the duty to give reasons) and nemo judex in causa sua (rule against bias). Recording reasons is vital for fairness and transparency; without them, the right to challenge a decision is illusory, violating Articles 14 and 21 of the Constitution.

Statutory Framework Mandating Reasoned Orders under GST Law:

The CGST Act reinforces the obligation to pass reasoned and speaking orders across various provisions governing adjudication, appeal, cancellation, and enforcement. These provisions reflect the legislative commitment to fairness and transparency in decision-making.

Key Judicial Principles from Kranti Associates and their relevance in GST scenario:

Hon’ble Supreme Court in its judgment in Kranti Associates laid down a set of foundational principles underscoring the necessity of providing reasons in all judicial, quasi-judicial, and administrative decisions. The relevance of each principle in the GST adjudication framework is highlighted below:

Thus, these principles are not only doctrinally sound but are practically indispensable in the GST regime, where compliance burden and litigation potential are high.

Conclusion

The GST framework is not merely a revenue-generating statute but a part of India's constitutional and legal fabric. Officers performing adjudication, assessment, or appellate functions do not exercise absolute authority but they act underlegal limitations imposed by the Constitution, GST Act, and jurisprudence.  As emphasized inKranti Associates – “If a quasi-judicial authority is not candid about its reasoning, it becomes impossible to know whether the decision was faithful to law or arbitrary.”  Hence, every order passed under GST, be it for tax demand, cancellation, detention, or refund, must disclose reasons that are relevant, clear, and justifiable.

Key Takeaway:

In GST law, a reasoned order is not a choice, but it is a necessity, a constitutional obligation, and a procedural imperative. Reason is the bridge between power and justice. Let every adjudicator walk that bridge.