TaxTMI 
TaxTMI 
2019 (9) TMI 983
X X X X Extracts X X X X
X X X X Extracts X X X X
....les 14, 21 and 50 of the Constitution of India and various judgments of the Hon'ble Supreme Court. 2. Article 246-A (Special provision with respect to goods and service tax) was inserted in the Constitution of India, by the Constitution (One Hundred and First Amendment) Act, 2016. As per Article 246-A(1), notwithstanding anything contained in Articles 246 and 254, Parliament, and subject to clause (2), the Legislature of every State has the power to make laws with respect to goods and services tax imposed by the Union or the State. 3. Article 246-A(2) gives Parliament its exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce. 4. Article 366(12-A), which was also inserted by the Constitution (One Hundred and First Amendment) Act, 2016 defines, "goods and services tax" to mean any tax on supply of goods, or services or both, except taxes on the supply of alcoholic liquor for human consumption. 5. Chapter XVIII of the Central Goods and Services Tax Act, 2017 [in short CGST Act, 2017] and Chapter XVIII of the Tamil Nadu Goods and Services Tax Act, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Union territory, as may be recommended by the Council, subject to such terms and conditions as may be prescribed. (7) The State Bench or Area Benches shall have jurisdiction to hear appeals against the orders passed by the Appellate Authority or the Revisional Authority in the cases involving matters other than those referred to in sub-section (5). (8) The President and the State President shall, by general or special order, distribute the business or transfer cases among Regional Benches or, as the case may be, Area Benches in a State. (9) 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. (10) In the absence of a Member in any Bench due to vacancy or otherwise, any appeal may, with the approval of the President or, as the case may be, the State President, be heard by a Bench of two Members: Provided that any appeal where the tax or input tax credit involved or the difference in tax or input tax credit involved or the amount o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s a Judge of a High Court; or (iii) is or has been a Member of Indian Legal Service and has held a post not less than Additional Secretary for three years; (c) a Technical Member (Centre) unless he is or has been a member of Indian Revenue (Customs and Central Excise) Service, Group A, and has completed at least fifteen years of service in Group A; (d) a Technical Member (State) unless he is or has been an officer of the State Government not below the rank of Additional Commissioner of Value Added Tax or the State goods and services tax or such rank as may be notified by the concerned State Government on the recommendations of the Council with at least three years of experience in the administration of an existing law or the State Goods and Services Tax Act or in the field of finance and taxation. (2) The President and the Judicial Members of the National Bench and the Regional Benches shall be appointed by the Government after consultation with the Chief Justice of India or his nominee: Provided that in the event of the occurrence of any vacancy in the office of the President by reason of his death, resignation or otherwise, the senior ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppointment. (10) The Judicial Member of the Appellate Tribunal and the State President shall hold office for a term of three years from the date on which he enters upon his office, or until he attains the age of sixty-five years, whichever is earlier and shall be eligible for reappointment. (11) The Technical Member (Centre) or Technical Member (State) of the Appellate Tribunal shall hold office for a term of five years from the date on which he enters upon his office, or until he attains the age of sixty-five years, whichever is earlier and shall be eligible for reappointment. (12) The President, State President or any Member may, by notice in writing under his hand addressed to the Central Government or, as the case may be, the State Government resign from his office: Provided that the President, State President or Member shall continue to hold office until the expiry of three months from the date of receipt of such notice by the Central Government, or, as the case may be, the State Government or until a person duly appointed as his successor enters upon his office or until the expiry of his term of office, whichever is the earliest. (....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... being heard. (15) The Central Government, with the concurrence of the Chief Justice of India, may suspend from office, the President or a Judicial or Technical Members of the National Bench or the Regional Benches or the Technical Member (Centre) of the State Bench or Area Benches in respect of whom a reference has been made to the Judge of the Supreme Court under sub-section (14). (16) The State Government, with the concurrence of the Chief Justice of the High Court, may suspend from office, a Judicial Member or Technical Member (State) of the State Bench or Area Benches in respect of whom a reference has been made to the Judge of the High Court under sub-section (14). (17) Subject to the provisions of article 220 of the Constitution, the President, State President or other Members, on ceasing to hold their office, shall not be eligible to appear, act or plead before the National Bench and the Regional Benches or the State Bench and the Area Benches thereof where he was the President or, as the case may be, a Member. Sections 109 & 110 of the TNGST Act, 2017 reads as under 109. Appellate Tribunal and Benches thereof. (1) Subject to the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted at Delhi, which will be presided over by the President and shall have two members viz., one Technical Member (Centre) and one Technical Member (State). The Government can also constitute the Regional Benches which shall consist of a Judicial Member, one Technical Member (Centre) and one Technical Member (State). 11. Section 109(5) provides that the National Bench and the Regional Benches of the Appellate Tribunal has the jurisdiction to hear appeals against the orders passed by the Appellate Authority or the Revisional Authority in cases where one of the issues involved relates to the place of supply. 12. Section 109(7) provides that the State Bench or the Area Benches shall have the jurisdiction to hear appeals against the orders passed by the Appellate Authority or the Revisional Authority in the cases involving matters other than the issue relating to the place of supply. 13. Section 109(11) provides that if the Members of the National Bench, Regional Benches, State Bench or Area Benches differ in opinion on any point or points, it shall be decided according to the opinion of the majority, if there is a majority, but if the Members are equally divided, they shall st....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in accordance with the provisions of this Act to fill such vacancy, resumes office. Second proviso to Section 110(2) provides that if the President is unable to discharge his functions owing to absence, illness or any other cause, the senior most Member of the National Bench shall discharge the functions of the President until the date on which the President resumes office. 20. As stated supra, these writ petitions challenges the validity of Sections 109 and 110 of the CGST Act, 2017 and TNGST Act, 2017, more particularly the composition and qualification of the members to the Goods and Services Tax Appellate Tribunal. 21. The first challenge is to the vires of Section 110 (1)(b) of the CGST Act, on the ground of exclusion of lawyers from being eligible to be appointed as a Judicial Member of the tribunal. According to the petitioners, exclusion of lawyers from zone of consideration as a Judicial Member, is violative of Article 14 of the Constitution of India. It is the contention of the petitioners that the exclusion of lawyers from being considered to hold the post of Judicial Member of the tribunal is a departure from the existing practice. It is the case of the petitioner....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the Indian Legal Services have been held not to be eligible for being appointed as members of NCLT and other tribunals in Union of India Vs. R.Gandhi reported in 2010(11) SCC 1, wherein the Hon'ble Supreme Court at para 120 (i) has observed as under. "Only Judges and advocates can be considered for appointment as judicial members of the Tribunal. Only High Court Judges, or Judges who have served in the rank of a District Judge for at least five years or a person who has practised as a lawyer for ten years can be considered for appointment as a judicial members. Persons who have held a Group A post or equivalent post under the Central or State Government with experience in the Indian Company Law Service (Legal Branch) and the Indian Legal Service (Grade I) cannot be considered for appointment as judicial members as provided in sub-sections (2) (c) and (d) of Section 10-FD. The expertise in Company Law Service or the Indian Legal Service will at best enable them to be considered for appointment as technical members." (emphasis supplied) 25. The next challenge is to the composition of the Appellate Tribunal. The composition of the Appellate Tribunal of C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....retired District Judge, qualified to be appointed as a Judge of a High Court or a member of the Indian Legal Service and has held a post not less than Additional Secretary for not less than three years alone are qualified to be appointed as a Judicial Member of the tribunal. Mr.Arvind Datar, learned Senior Counsel would submit that it is a departure from the existing practice of making Advocates with ten years experience at Bar and Advocates qualified for appointment as a Judge of a High court, being considered as a Judicial Member of the tribunal. Mr.Arvind Datar, learned Senior Counsel appearing for the petitioners would rely on the Constitution of the Income Tax Appellate Tribunal, CESTAT and other Sales Tax / VAT tribunals in all the States in the Country, where lawyers with 10 years of practice or Lawyers eligible to be appointed as Judge of the High Court are being considered for selection and are also selected as Judicial Members. Mr.Arvind Datar, learned Senior Counsel appearing for the petitioners would submit that advocates who are practicing in that particular branch are experts in the field and would be very valuable and their experience will become very handy if they a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....istrict Judge, who would not have experience at all for selection as a Judicial Member. He would place reliance on the judgment of the Hon'ble Supreme Court in Madras Bar Association Vs. Union of India, reported in 2014 (10) SCC 1, wherein the Hon'ble Supreme Court at paragraph No.97 has observed as under. "This issue was also considered in S.P.Sampath Kumar v. Union of India (1987) 1 SCC 123 and it was held that where the prescription of qualification was found by the court, to be not proper and conducive for the proper functioning of the Tribunal, it will result in invalidation of the relevant provisions relating to the constitution of the Tribunal. If the qualifications/eligibility criteria for appointment fail to ensure that the members of the Tribunal are able to discharge judicial functions, the said provisions cannot pass the scrutiny of the higher Judiciary." 31. Mr.Arvind Datar, learned Senior Counsel appearing for the petitioners, would say that apart from the fact that the legislation has not appreciated the need of the hour and the guidelines, as given by the Hon'ble Supreme Court, he would state that Section 110(1)(b) which excludes lawyers from....
X X X X Extracts X X X X
X X X X Extracts X X X X
....why is there a departure from the norm of considering lawyers eligible to be appointed as Judicial Members of the tribunal. 33. The next challenge of Mr.Arvind Datar, learned Senior Counsel appearing for the petitioners is to the eligibility of a member of the Indian Legal Service for being considered as Judicial Member. Reliance has been placed on paragraph No.120(i) of the judgment of the Hon'ble Supreme Court in Union of India Vs. R.Gandhi reported in 2010(11) SCC 1 [quoted supra], to state that persons who have held a Group A post under Central or State Government with experience in the Indian Company Law Service (Legal Branch) and the Indian Legal Service (Grade I) cannot be considered for appointment as judicial members while dealing with Section 10-FD(2)(c) and (d) of the Companies Act, 2013. He would state that Section 110(b)(iii) is per se contrary to the law laid down by the Hon'ble Supreme Court in the said judgment and must be struck down. 34. Mr.Arvind Datar, learned Senior Counsel appearing for the petitioners would state that the composition of the Benches in which the Technical Members would be majority is unconstitutional and he would state that Secti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ernment servants, then there will be no confidence on the independence of such tribunal. He would further state that in all the cases, which come to the tribunal, the revenue is either respondent or the appellant and that any assessee would not be confident of getting justice because the composition of the tribunal is such, it would give a genuine impression that the tribunal might not be an independent body and that it will only carry out the orders of the Government. He would state that it is for the first time that a statute provides for a composition of a tribunal where the administrative members exceeds the judicial members. He would argue that this would be in direct contravention of the spirit of Article 50 of the Constitution of India. The purpose of Article 50 has to separate the judiciary from the executive in the public services of the State. The underlying concept being that the executive must be kept away from discharging judicial functions. Mr.Arvind Datar, would place reliance on the judgment of the Hon'ble Supreme Court in Supreme Court Advocates on Record Association Vs. Union of India, reported in 1993 (4) SCC 441, wherein at paragraph No.81, Hon'ble Su....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Chief Justice of India or his nominee- Chairperson; (b) a Senior Judge of the Supreme Court or Chief Justice of High Court-Member; (c) Secretary in the Ministry of Corporate Affairs-Member; and (d) Secretary in the Ministry of Law and Justice-Member. (2-A) Where in a meeting of the Selection Committee, there is equality of votes on any matter, the Chairperson shall have a casting vote." 31. This was brought into force by a Notification dated 9-2-2018. However, an additional affidavit has been filed during the course of these proceedings by the Union of India. This affidavit is filed by one Dr Raj Singh, Regional Director (Northern Region) of the Ministry of Corporate Affairs. This affidavit makes it clear that, acting in compliance with the directions of the Supreme Court in the aforesaid judgments, a Selection Committee was constituted to make appointments of Members of NCLT in the year 2015 itself. Thus, by an order dated 27-7-2015, (i) Justice Gogoi (as he then was), (ii) Justice Ramana, (iii) Secretary, Department of Legal Affairs, Ministry of Law and Justice, and (iv) Secretary, Corporate Affairs, were constituted as the S....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... State Bench or Area Benches shall be appointed by the Central Government and Technical Member (State) of the State Bench or Area Benches shall be appointed by the State Government in such manner as may be prescribed. 41. Mr.Arvind Datar, would submit that the revenue, which is a party to all tax litigation therefore appoint its technical members who will be majority in the tribunal and thus would completely erode the impartiality, which is expected from the tribunal. 42. On the other hand, Mr.G.Rajagopalan, the learned Additional Solicitor General and Mrs.Aparna Nandakumar, appearing for the Union of India, would contend that there is no fundamental right for an Advocate to be considered for appointment as a Judicial Member of the tribunal. The Advocates Act, 1961 permits only an advocate to practice in any Court. The Advocates Act, 1961 does not give any right to an Advocate, to be considered to be appointed as a Judge in a Tribunal and it is for the Government to decide as to whether an Advocate must or must not be considered to be eligible to be appointed as Judicial Member of the tribunal. In the absence of any right, no duty is cast on the government to consider the eli....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the CESTAT. It is also emphasised that for reaching the level of Additional Secretary in the Ministry of Law, an Officer would have worked for 25-30 years and so he would be sufficiently trained on legal matters. Also, the cadre of Indian Legal Service has Advocates with experience of 7 years or more and sometimes district Judges also joined as an officer of the Indian Legal Service. The officers of the rank of Additional Secretaiy in Indian Legal Service are also discharging quasi-judicial function as Members of several other tribunals and are also working as arbitrators. The guideline that "A Technical Member' presupposes an experience in the field to which the Tribunal relates", has been followed. The qualifications are the minimum qualifications, and during the process of selection, the Competent Authority would ensure that the officers of sufficient seniority and high level of competence are selected as members. It is also emphasised that the same qualification has been prescribed for the Member Technical (Accountant Member) in Income Tax Appellate Tribunal and this system has been smoothly functioning there, from many years. 46. The Union of India would state that the G....
X X X X Extracts X X X X
X X X X Extracts X X X X
....GSTAT is one established under Section 109 of the GST Act whose source of power is Article 246A read with Article 279A of the Constitution of India. It is submitted that both GSTAT and CESTAT are creatures of statutes. Unlike GSTAT and CESTAT, Administrative Tribunals, have been established under Article 323A of the Constitution of India and an aggrieved person entitled to invoke the jurisdiction of the Hon'ble High Court under Article 226 of the Constitution of India can move the Administrative Tribunal instead of High Court. Similarly, NCLT/NCLAT, were also clothed with the jurisdiction which were exercised by the High Court. These GSTAT therefore, cannot be equated to NCLT or the Administrative Tribunal. It is submitted that time and again it has been held in the case of Appellate Tribunals created under statute like FEMA, Central Excise Act/ Customs Act, VAT Acts that the remedy available to the High Court or to the Apex court is available only as a statutory appeal on a question of law, wherein the High Court or Supreme Court is a statutory forum of appeal and these tribunals do not exercise original jurisdiction. The Union of India, relies upon the decisions of the Hon'ble....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he concluding portion at para 41, the Hon'ble High Court has laid down that 1. A Bench of two or more members of MVAT Tribunal shall always be headed Judicial Member. 2. The matters to be required to be heard by the member sitting single should be placed only before the Judicial Member and if none of the judicial member is available in case of emergency, in which an interim relief is sought for, it can be placed before the single administrative member. 3. That in selection of Administrative member covered by clause d,e,f of Rule 6(1) of the Maharashtra VAT Rules, the State Government should constitute a proper Selection Committee headed by a retired judge. 4. The Administrative member eligible for appointment under clauses d,e,f should also be legally qualified and judicially trained in the sense that they have long experience in dealing with quasi judicial proceedings and with adjudication proceedings. 49. It is therefore contended on behalf of Union of India that the reliance made on the judgment of the Hon'ble Supreme Court in the case of Union of India Vs. R.Gandhi reported in 2010(11) SCC 1, Madras Bar Association Vs. Union of India, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ustice. Illustration A, in an enquiry before an officer deputed by a Court of Justice to ascertain on the spot the boundaries of land, makes on oath a statement which he knows to be false. As this enquiry is a stage of a judicial proceeding, A has given false evidence" 228. Intentional insult or interruption to public servant sitting in judicial proceeding - whoever intentionally offers any insult, or causes any interruption to any public servant, while such public servant is sitting in any stage of a judicial proceeding, shall be punished with simple imprisonment for a term which may extent to six months, or with fine which may extend to one thousand rupees, or with both. " 51. It is therefore submitted that all forums in which the proceedings are deemed to be judicial proceedings within the meaning of Sections 193 and 228 of the IPC, do not become Courts. It is submitted that Section 111(4) is only to ensure that the evidence given either oral or documentary have to bear the semblance of truth in it and to ensure cooperation during investigations and enquiry. It is submitted that likewise Section 111(4) of the CGST Act lays down that the proceedings are deeme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s Court in the case of State of Tamil Nadu v, Arulmurugan and Company reported in (51 STC 381) 1982. The Full bench, while holding that the statutory 'C' Forms could be filed even at the second appellate stage viz the Appellate Tribunal has held that the function of the appellate authority is co existing with the assessing authority and the appellate proceedings are continuation of the assessment proceedings/adjudication proceedings. The Union of India therefore submits that the GSTAT is only an Appellate body discharging judicial functions and it is not a Court or Judicial Tribunal which has substituted the power of High Court. It has only the powers conferred by the statute. 53. The Union of India submitted that, since the minimum quorum of two members has already been prescribed under the GST Act, the apprehension entertained by the petitioner herein that there would be preponderance of technical members over judicial member is wholly untenable; That too in circumstances when the President or State President who are essentially judicial members have a say in the matter. 54. The Union of India further states that Section 110(3) of the CGST Act provides that the Technical Me....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er Article 323-A and B of the Constitution of India. He would also submit that the tribunals in a tax legislation are co-extensive/ co-terminus with that of the assessing authority, in the exercise of quasi-judicial functions and thus may not be governed by Article 50 which deals with separation of judiciary from the executive. He would state that the limitation that the number of technical members shall not exceed the judicial members as laid down in the first Madras Bar Association case, is not an inviolable rule in law. He would argue that the constitution of the tribunal ought to be examined keeping in view the nature of the issues that may have to be adjudicated by the tribunal. He would state that if the nature of issues that are to be adjudicated are highly specialized requiring more technical members it may permissible to have greater number of technical members than judicial. He would submit that the composition of the tribunal would depend upon the nature of disputes that is to be adjudicated and there cannot be any straight jacket formula applied as suggested by the Petitioner. He would state that the GST is an amalgam of all the above fiscal legislations and the members....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... cannot contend that a person's right to be considered is taken away. The fact that Advocates were being considered for appointment to various tribunal does not mean that they have a constitutional / legal right to be considered for appointment as a member of any tribunal. The observations made in R.K.Jain's case were made only because the Act provided that the Advocates will be eligible to be considered for appointment as members of the tribunal. In the absence of any constitutional right, the vires of a section 110 (1)(b) cannot be struck down, because it does not include Advocates to be eligible to be appointed as Judicial Members. As stated earlier, there is no vested right for being considered for appointment to a post. Right to be considered is always subject to eligibility conditions prescribed from time to time. In P.Suseela Vs. UGC (2015 (8) SCC 129), the Hon'ble Supreme Court at paragraph No.16 has observed as under. "16. Similar is the case on facts here. A vested right would arise only if any of the appellants before us had actually been appointed to the post of Lecturer/Assistant Professors. Till that date, there is no vested right in any of the ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eason given by the Union of India in their counter as to why lawyers have been excluded from the zone of consideration. For deciding the issues arising under the CGST Act and more particularly under Chapter III, it is necessary that the Judicial Member must have knowledge of various legal topics for which purpose a lawyer with sufficient experience and particularly with experience in Taxation Laws will be ideal to be appointed as a Judicial Member. Keeping in mind the existing practice in appointing lawyers to various Tribunals as Judicial Members and the various issues that are likely to arise while adjudicating disputes under the CGST Act, we recommend that the Parliament should reconsider the issue regarding the eligibility of lawyers to be appointed as Judicial Members in the Appellate Tribunal. 62. The challenge to appointment of a person, who is or has been a member of Indian Legal Service and has held a post not less than Additional Secretary for a period of three years, is no longer res integra. The issue stands settled. Paragraph No.120 in Union of India Vs. R.Gandhi reported in 2010(11) SCC 1, categorically states that a person who has held a position under the Indian ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2008 contemplates that any member of Indian Legal Service or Indian Company Law Service (Legal Branch) with only ten years service, out of which three years should be in the pay scale of Joint Secretary, is qualified to be appointed as a Judicial Member. The speed at which the qualifications for appointment as Members is being diluted is, to say the least, a matter of great concern for the independence of the Judiciary." No doubt, the said observations have been made while deciding the qualifications of the members of NCLT & NCLAT, which exercises jurisdiction, previously exercised by the High Court. This dictum of the Hon'ble Supreme Court would apply to the appellate tribunal constituted under the CGST and TNGST also. The Members of Indian Legal Service cannot be considered for appointment as Judicial Members. 63. A perusal of the issues that are likely to arise with the tribunal shows that they are not merely technical matters, wherein which does not involve interpretation of law or adjudication on the basis of legal principles. The said tribunal is an appellate body against which an appeal, lies to Hon'ble Supreme Court. In this scenario it cannot be said that the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....un by a majority consisting of non-judicial members. 68. The Hon'ble Supreme Court in L.Chandrakumar Vs. Union of India, reported in 1997(3) SCC 261, after analysing the provisions in S.P.Sampath Kumar Vs. Union of India, reported in 1987 (1) SCC 124 and M.B.Majumdar Vs. Union of India, reported in 1990 (4) SCC 501, went on to hold that the tribunals created under Articles 323 and 323-B would not be a substitute for the High Court for the purpose of exercising Articles 226 & 227 of the Constitution of India. If that being so, then and in such of those cases, in order to maintain independency of judiciary, the expert members cannot outnumber the judicial members. Paragraph No.80 of the said judgment reads as under. "80. However, it is important to emphasise that though the subordinate judiciary or Tribunals created under ordinary legislations cannot exercise the power of judicial review of legislative action to the exclusion of the High Courts and the Supreme Court, there is no constitutional prohibition against their performing a supplemental--as opposed to a substitution - role in this respect. That such a situation is contemplated within the constitutional sche....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., which is intended to supplant the High Court, is legal training and experience, and judicial acumen, equipment and approach. When such a tribunal is composed of personnel drawn from the judiciary as well as from services or from amongst experts in the field, any weightage in favour of the service members or expert members and valuediscounting the judicial members would render the tribunal less effective and efficacious than the High Court. The Act setting up such a tribunal would itself have to be declared as void under such circumstances. The same would not at all be conducive to judicial independence and may even tend, directly or indirectly, to influence their decision making process, especially when the Government is a litigant in most of the cases coming before such tribunal. See S.P. Sampath Kumar v. Union of India reported in : (1987)ILLJ128SC. The protagonists of specialist tribunals, who simultaneously with their establishment want exclusion of the Writ jurisdiction of the High Courts in regard to matters entrusted for adjudication to such tribunals, ought not to overlook these vital and important aspects. It must not be forgotten that what is permissible to be supplant ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xistent. This is of greater importance in view of the fact, that the Tribunal is discharging Judical Function. 73. It would be useful to refer to the provisions of the Income Tax, Act, 1961, qua a bench of the ITAT, which is extracted below: 255. Procedure of Appellate Tribunal.- (1) The powers and functions of the Appellate Tribunal may be exercised and discharged by Benches constituted by the President of the Appellate Tribunal from among the members thereof. (2) Subject to the provisions contained in sub-section (3), a Bench shall consist of one judicial member and one accountant member. [Emphasis Supplied] 74. Thus, even under the Income Tax Act, 1961, the Parliament consciously chose to create a tribunal, which would comprise of a single judicial member, and a single accountant member. This would ensure that the matter before the ITAT, would have both a Judicial mind and an accountant mind applying to it, and both would have equal weight in the matter. 75. The position is that the Impugned Act, is different. The issue regarding dominance of the technical members and constitutional validity of the same shall have to be examined keeping in min....
X X X X Extracts X X X X
X X X X Extracts X X X X
....legislation, judicial review of administrative or legislative actions are treated as partial exceptions which need explanation. 319. There can be no liberty where the legislative and executive powers are united in the same person or body of Magistrates, or, if the power of judging be not separated from the legislative and executive powers. Jefferson said: "All powers of Government - legislative, executive and judicial - result in the legislative body. The concentration of these powers in the same hands is precisely the definition of despotic Government. It will be no alleviation that these powers will be exercised by a plurality of hands and not by a single person. One hundred and seventy-three despots would surely be as oppressive as one." And, Montesquieu's own words would show that where the whole power of one department is exercised by the same hands which possess the whole power of another department, the fundamental principles of a free Constitution are subverted. In Federalist No. 47, James Madison suggests that Montesquieu's doctrine did not mean that separate departments might have "no partial agency in or no control over the acts of each other".....
X X X X Extracts X X X X
X X X X Extracts X X X X
....velopments in England and they were conscious of our great tradition of judicial independence and impartiality and they realised that the need for securing the independence of the judiciary was even greater under our Constitution than it was in England, because ours is a federal or quasi-federal Constitution which confers fundamental rights, enacts other constitutional limitations and arms the Supreme Court and the High Courts with the power of judicial review and consequently the Union of India and the States would become the largest single litigants before the Supreme Court and the High Courts. Justice, as pointed out by this Court in Shamsher Singh v. State of Punjab can become "fearless and free only if institutional immunity and autonomy are guaranteed". The Constitution-makers, therefore, enacted several provisions designed to secure the independence of the superior judiciary by insulating it from executive or legislative control. I shall briefly refer to these provisions to show how great was the anxiety of the constitution-makers to ensure the independence of the superior judiciary and with what meticulous care they made provisions to that end. [Emphasis Supplied] ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t fairly, reasonably, free of fear and favour. The term "fear" as explained in various dictionaries, means "an unpleasant emotion caused by threat of danger, pain or harm; a feeling of anxiety regarding the likelihood of something unwelcome happening". (Concise Oxford English Dictionary, 11th Edn., Revised.) On the other hand, "favour" means "approval or liking; unfair preferential treatment, inclination, prejudice, predilection" (Concise Oxford English Dictionary, 11th Edn., Revised and Black's Law Dictionary, 8th Edn.). [Emphasis in Original] 79. In the case of Brij Mohan Lal v. Union of India, (2012) 6 SCC 502, at page 547, it is observed as under "105. The independence of the Indian judiciary is one of the most significant features of the Constitution. Any policy or decision of the Government which would undermine or destroy the independence of the judiciary would not only be opposed to public policy but would also impinge upon the basic structure of the Constitution. It has to be clearly understood that the State policies should neither defeat nor cause impediment in discharge of judicial functions. To preserve the doctrine of separation of powers, it is n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gh it does not accept the strict doctrine of separation of powers, provides for an independent judiciary in the States; it constitutes a High Court for each State, prescribes the institutional conditions of service of the Judges thereof, confers extensive jurisdiction on it to issue writs to keep all tribunals, including in appropriate cases the Governments, within bounds and gives to it the power of superintendence over all courts and tribunals in the territory over which it has jurisdiction." 81. In the case of S.P. Sampath Kumar v. Union of India, (1987) 1 SCC 124 : (1987) 2 ATC 82, at page 128 , Bhagwati C.J. (as he then was, remarked as under:) "3. It is now well settled as a result of the decision of this Court in Minerva Mills Ltd. v. Union of India that judicial review is a basic and essential feature of the Constitution and no law passed by Parliament in exercise of its constituent power can abrogate it or take it away. If the power of judicial review is abrogated or taken away the Constitution will cease to be what it is. It is a fundamental principle of our constitutional scheme that every organ of the State, every authority under the Constitution, derives it....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er authorities. This function is discharged by the judiciary by exercise of the power of judicial review which is a most potent weapon in the hands of the judiciary for maintenance of the rule of law. The power of judicial review is an integral part of our constitutional system and without it, there will be no government of laws and the rule of law would become a teasing illusion and a promise of unreality. That is why I observed in my judgment in Minerva Mills Ltd. case at p. 287 and 288: (SCC p. 678, para 87) "I am of the view that if there is one feature of our Constitution which, more than any other, is basic and fundamental to the maintenance of democracy and the rule of law, it is the power of judicial review and it is unquestionably, to my mind, part of the basic structure of the Constitution. Of course, when I say this I should not be taken to suggest that effective alternative institutional mechanisms or arrangements for judicial review cannot be made by Parliament. But what I wish to emphasise is that judicial review is a vital principle of our Constitution and it cannot be abrogated without affecting the basic structure of the Constitution. If by a constitutiona....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uthority which would be exercising the power of judicial review with a view to enforcing the constitutional limitations and maintaining the rule of law. Therefore, if any constitutional amendment made by Parliament takes away from the High Court the power of judicial review in any particular area and vests it in any other institutional mechanism or authority, it would not be violative of the basic structure doctrine, so long as the essential condition is fulfilled, namely, that the alternative institutional mechanism or authority set up by the parliamentary amendment is no less effective than the High Court. 82. Thus, law has been settled by the Hon'ble Supreme Court, insofar, as the creation of alternative institutions which would exercise judicial function, would be that the alternative institutional mechanism must not be less effective that the High Court. The Parliament, therefore only has the power to set up an alternative institutional mechanism, insofar as such institution offers an effective mechanism which is no less effective that a High Court. To be as effective as a High Court, would not be limited to having powers akin to High Court, it would also include the abilit....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... from courts to tribunals only to expedite the hearing and disposal or relieve from the rigours of the Evidence Act and procedural laws, there is obviously no need to have any non-judicial technical member. In respect of such tribunals, only members of the judiciary should be the Presiding Officers/Members. Typical examples of such special tribunals are Rent Tribunals, Motor Accidents Claims Tribunals and Special Courts under several enactments. Therefore, when transferring the jurisdiction exercised by courts to tribunals, which does not involve any specialised knowledge or expertise in any field and expediting the disposal and relaxing the procedure is the only object, a provision for technical members in addition to or in substitution of judicial members would clearly be a case of dilution of and encroachment upon the independence of the judiciary and the rule of law and would be unconstitutional. ***** 93. If the Act provides for a tribunal with a judicial member and a technical member, does it mean that there are no limitations upon the power of the legislature to prescribe the qualifications for such technical member? The question will also be whether any li....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ice versa (a standard example is the variation of pecuniary limits of the courts). Similarly, while constituting tribunals, the legislature can prescribe the qualifications/eligibility criteria. The same is however subject to judicial review. If the court in exercise of judicial review is of the view that such tribunalisation would adversely affect the independence of the judiciary or the standards of the judiciary, the court may interfere to preserve the independence and standards of the judiciary. Such an exercise will be part of the checks and balances measures to maintain the separation of powers and to prevent any encroachment, intentional or unintentional, by either the legislature or by the executive. ***** 120. We may now tabulate the corrections required to set right the defects in Parts I-B and I-C of the Act: ****** (xiii) 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. ****** 85. Thus, in the case of Madras Bar Association, one of the main defects found in the NCLAT by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....serve their jurisdiction based on their preferences/inclinations in terms of work, and conveniences in terms of place of posting. An unsuitable/disadvantageous Chairperson or Member could be easily moved to an insignificant jurisdiction or to an inconvenient posting. This could be done to chastise him, to accept a position he would not voluntarily accede to. We are, therefore of the considered view, that Section 5 of the NTT Act is not sustainable in law as it does not ensure that the alternative adjudicatory authority is totally insulated from all forms of interference, pressure or influence from coordinate branches of Government. There is therefore no alternative but to hold that sub-sections (2), (3), (4) and (5) of Section 5 of the NTT Act are unconstitutional. **** 126. This Court has declared the position in this behalf in L. Chandra Kumar case and in Union of India v. Madras Bar Assn. case, that Technical Members could be appointed to the tribunals, where technical expertise is essential for disposal of matters, and not otherwise. It has also been held that where the adjudicatory process transferred to a tribunal does not involve any specialised sk....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... reason of sub-section (3) of Section 20. 29. By reason of the provisions of the said Act, therefore, independent authorities have been created. [Emphasis Supplied] 88. The Hon'ble Supreme Court laid great emphasis on the need and importance of independence of the fora, and was one of the factors in upholding the validity of the Act.While the observation of the Court might not in the strict sense be the ratio of the case, it certainly does follow the long line of Judgements of the Hon'ble Supreme Court, which have laid great emphasis on the need for independence in Tribunals, which are meant to exercise Judicial Function. 89. The Hon'ble Supreme Court in Columbia Sportswear Company Vs. Director of Income Tax, reported in 2012 (11) SCC 224, has observed as under: "9. The meaning of the expression "tribunal" in Article 136 and the expression "tribunals" in Article 227 of the Constitution has been explained by Hidayatullah, J., in Harinagar Sugar Mills Ltd. v. Shyam Sunder Jhunjhunwala [AIR 1961 SC 1669] in para 32, relevant portion of which is quoted hereinbelow: (AIR p. 1680) "32. With the growth of civilisation and the problems of moder....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Association Vs. Union of India, reported in 2014 (10) SCC 1, cannot be made applicable to the facts of this case, cannot be accepted in the light of the pronouncements of the Court quoted supra. 91. The hierarchy of forums under the Act provides for an adjudicating authority. The adjudicating authority is defined in Section 2(4) of the CGST Act, which reads as under. (4) "adjudicating authority" means any authority, appointed or authorised to pass any order or decision under this Act, but does not include the Central Board of Excise and Customs, the Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate Authority and the Appellate Tribunal; 92. The appellate authority is defined in Section 2(8) of the CGST Act, which reads as under. (8) "Appellate Authority" means an authority appointed or authorised to hear appeals as referred to in section 107; 93. The appellate tribunal is defined in Section 2(9) of the CGST Act, which reads as under. (9) "Appellate Tribunal" means the Goods and Services Tax Appellate Tribunal constituted under section 109; 94. An appeal from the adjudicating author....
X X X X Extracts X X X X
X X X X Extracts X X X X
....27 of the Constitution of India or not and we are not going into the controversy. This Court is aware of the fact that the National Tribunal cannot adjudicate the vires of the notifications issued under the Act or the constitutional validity of the notifications / regulations and the very consequences of the Act, but nevertheless, it cannot be said that the National Bench is only an extension of the mechanism to determine only the quantum of tax, which is only a subject matter of experts. The quantum of tax is determined on the interpretation of various sections and notifications. It also involves adjudication upon the orders of the appellate authority. It has to be borne in mind that the decision making process has to be scrutinised by the tribunal. In doing so, judicial principles have to be kept in mind. The criticism of the Manlimath Committee, that any weightage in favour of the service members or expert members and value- discounting the judicial members would render the tribunal less effective and efficacious than the High Court, would clearly apply to the Appellate Tribunal. It is well accepted that the tribunal must inspire confidence in the assessee for which purpose t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ether the legal principles and the decision making process are correct and fair. The expert members who are not well trained in law, cannot be permitted to overrule the judicial member on these aspects. 103. A Hon'ble Division Bench judgment of this Court in S.Manoharan Vs. The Deputy Registrar, Central Administrative Tribunal, Principal Bench, New Delhi & Others, reported in 2015 (2) Law Weekly 343, while considering an issue as to whether the number of administrative members can be more than the judicial members in the Central Administrative Tribunal, compared the composition of the National Green Tribunal constituted under the National Green Tribunal Act, 2010. Proviso to Section 4 (4)(c) of the National Green Tribunal Act provides that number of expert members shall be equal to number of judicial members. This Court in para 41 and 42 of the said judgment interpreted Section 21, Section 4(4) read with Section 35 of the National Green Tribunal Act, 2010 and Rule 3(1) of the National Green Tribunal (Practices and Procedure) Rules, 2011 and observed as under. "41. But, Section 21 of the National Green Tribunal Act, 2010 contains a Catch-22 situation. It declares tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n, it will be clear that a Bench of more than three Members cannot be overloaded with Administrative Members. The Parliament itself appears to have understood the difficulty of allowing a Bench of any Tribunal to be overloaded with Administrative or Technical or Expert Members. That is why it sought to provide equality of representation between Judicial and Expert Members in the National Green Tribunal. If substantial questions of law, as per the decision in the National Tax Tribunals Act case, cannot be decided by Tribunals loaded with Administrative Members, it is incomprehensible that a reference made to a larger Bench of an Administrative Tribunal, which would ordinarily require an exposition of a substantial question of law, can be decided by two Administrative Members, making the Judicial Member a minority. What John Marshall said in Marbury v. Madison [2 L Ed 60 : 5 US (1) Crunch 137 (1803)] could be of assistance in resolving the issue on hand and hence, it is extracted as follows: "It is emphatically the province and duty of the Judicial Department to say what the law is.... If two laws conflict with each other, the Courts must decide on the operation of each..." ....