2024 (4) TMI 528 - SC - GST

GST officers' good faith protection under Section 157 upheld against premature judicial observations on immunity scope

The State of Gujarat And Anr. Versus Paresh Nathalal Chauhan

The SC disposed of an appeal concerning GST officers' protection under Section 157's good faith clause. The HC had criticized officers' prolonged stay at ... Availability of Good Faith clause in Section 157 of the GST Act to the officers of the State - Expunging a Portion of the High Court's Interim Order - Respondent sought protection from arrest u/s 69 - High Court is still examining the writ petition, but by the interim order impugned herein, it criticised the prolonged stay of the search party at the residence of the respondents as unauthorized and illegal - HELD THAT:- It is not required to deal with the merits of the issue as the matter is still pending before the High Court, more so when the respondent has submitted that he is not interested in proceeding against the officers and seeks a quietus to the issue. The High Court was of the view that the protection contemplated under section 157 of the GST Act, which is in the nature of a good faith clause, “may not” be available to the officers - A good faith clause, explained in the vocabulary of the rights and duties regime, can be said to be a provision of immunity to a statutory functionary. Such provisions are in recognition of public interest in protecting a statutory functionary against prosecution or legal proceedings. This immunity is limited. It is confined to acts done honestly and in furtherance of achieving the statutory purpose and objective. Section 3(22) of the General Clauses Act, 1897 best explains ‘good faith’ as an act done honestly, whether it is done negligently or not. Good faith clauses in statutes providing immunity against suits, prosecution or other legal proceedings against officials exercising statutory power are therefore limited by their very nature, that far, and no further. The High Court was not conducting a suit, prosecution, or other legal proceeding against a statutory functionary. There are no doubt that the High Court was conscious of the principles governing good faith clauses and therefore couched its displeasure and distress by stating that such officials “may not” be protected or that it “may be difficult” to accept the contention of good faith. These observations are in the nature of advance rulings. This is because even before the initiation of a suit, prosecution or legal proceeding, the High Court expressed a tentative opinion. If such observations remain, they will affect the integrity and independence of that adjudication, compromising the prosecution and the defence equally. Appeal disposed off. Issues involved: Expunging a portion from the High Court's interim order regarding the applicability of the good faith clause in Section 157 of the GST Act to state officers.The judgment addresses the issue of expunging a portion from the High Court's interim order, which questioned the availability of the good faith clause in Section 157 of the GST Act to state officers. The Supreme Court accepted the request to expunge the portion and disposed of the appeal, as the respondent expressed disinterest in pursuing proceedings against the officers. The High Court's observation regarding the good faith clause's applicability to state officers was expunged by the Supreme Court due to incorrect context and conclusions. The case involved a writ petition by the respondent seeking protection from arrest under the GST Act, with the High Court criticizing the prolonged stay of the search party at the respondent's residence. The matter was pending before the High Court, and the respondent sought closure without proceeding against the officers.Regarding the applicability of the good faith clause in Section 157 of the GST Act, the High Court's observation raised concerns about the protection available to officers. The Supreme Court explained that a good faith clause provides immunity to statutory functionaries, limited to acts done honestly in furtherance of statutory objectives. The scope of good faith has been clarified in various court decisions. The High Court's observation suggested that the protection under the good faith clause may not be available to officers, which the Supreme Court found to be an advance ruling compromising the integrity of adjudication. The Supreme Court reiterated that citizens have the right to seek legal remedies, while statutory functionaries are entitled to defend their actions in good faith, to be adjudicated by the court.In conclusion, the Supreme Court expunged the High Court's observation and disposed of the appeal, emphasizing the importance of accountability for citizens and the right of statutory functionaries to claim good faith defense in legal proceedings, subject to court adjudication.