Madras Tax Bar Challenges CGST Appellate Tribunal Provisions; Supreme Court Issues Notice

On Friday, the Supreme Court issued notice on a petition filed by the Madras Tax Bar challenging the constitutional validity of Sections 149 and 150 of the Finance Act, 2023 that seek to substitute Sections 109 and 110 of the Central Goods and Services Tax Act, 2017 (CGST Act). The sections in question relate to appointments and conditions of service of members to the Appellate Tribunal under the CGST Act. 

Senior Advocate Arvind Datar, appeared for the petitioner, which is an association of advocates specializing in taxation laws, before a bench comprising CJI DY Chandrachud, Justice JB Pardiwala, and Justice Manoj Misra. Datar pointed out that as per the amendment, Advocates are not eligible to apply as judicial members of the GST Appellate Tribunal. This, he said, was contrary to four judgments of the Supreme Court's Constitution Bench.

"Advocates aren't eligible to apply as judicial members. In no tribunal across the country are advocates barred from being judicial members", he said.

The CJI-led bench issued notice in the matter and granted liberty to serve a copy of the petition to the Attorney General for India.

The PIL challenges Sections 149 and 150 of the Finance Act, 2023 that seek to substitute Sections 109 and 110 of the CGST Act, specifically with respect to Sections 109(9), 110(1)(b), 110(1)(c), 110(1)(d), 110(4)(b)(ii), 110(4)(b)(iv), 110(6), 110(8), 110(9) and 110(10) of the CGST Act which relate to appointments and conditions of service of members to the Appellate Tribunal under the CGST Act. As per the PIL, the provisions are violative of Articles 14, 19 and 21 read with Article 50 as they are in contravention of the principles of independence of the judiciary, rule of law and separation of powers. The petition states that the direct violations include–

a. Exclusion of advocates from being appointed as judicial members [Section 110(1)(b) of the CGST Act].

b. Officers below the rank of Secretaries and Additional Secretaries with vague and non-adjudicatory experience made eligible for appointment of technical members [Sections 110(1)(c) and 110(1)(d) of the CGST Act].

c. Provision requiring Search-cum-Selection Committee to recommend a panel of two names for each appointment [Section 110(6) of the CGST Act].

d. A term of 4 years for the members of the AppellateTribunal with a possible reappointment for 2 further years, with a retirement age of 67 years for the President and 65 years for the other members [Sections 110(9) and 110(10) of the CGST Act].

The PIL stated that the parliament passed the CGST Act on 2017 and under the scheme of the Act, an appellate tribunal was to be constituted known as the Goods and Services Tax Appellate Tribunal under Sections 109 and 110 of the Act. However, the Appellate Tribunal was never operationalised. On 01.02.2023, the Finance Bill, 2023 was introduced by the Union Government in the Lok Sabha. It may be noted that there were no provisions relating to the GST Appellate Tribunal in the Finance Bill, 2023 at this time. The petitions adds that on 22.03.2023, through last-minute amendments, Sections 137A to 137G were added to the Finance Bill, 2023 amending the provisions of the CGST Act. Further, Section 137B proposed to amend Section 109 of the CGST Act and Section 137C proposed to amend Section 110 of the CGST Act. As per the petition–

"Through these amendments, various changes were proposed to be made to the Appellate Tribunal’s constitution, qualifications for members, process of appointment and the conditions of service of the members to be appointed."

It further states that–

"The substituted Sections 109 and 110 will have various provisions that are directly and ex facie in violation of various judgments of this Hon’ble Court wherein similar provisions have been held to be unconstitutional since they affect independence of the judiciary, rule of law and separation of powers, which are part of the basic structure of the Constitution and are sourced in Articles 14, 19 and 21, amongst others."

The petitioner argued that these provisions are contrary to the law laid down in Rojer Mathew v. South Indian Bank (2019), Madras Bar Association v. Union of India (2020), Madras Bar Association v. Union of India (2021), The Secretary, Ministry of Consumer Affairs versus Dr.Mahindra Bhaskar Limaye(2023).

Case Title: Madras Tax Bar v. Union Of India W.P.(C) No. 900/2023 PIL-W

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