AUGUST 01, 2018

By Vijay Kumar

IS THE GST APPELLATE TRIBUNAL LEGAL?

It has been reported in the Press that the GST Appellate Tribunal will come into existence soon as approved by the GST Council in its last meeting. This information is supposed to have been given by a senior government official privy to the deliberations of the council , though the official Press Notes have been silent on this issue.

Now that GST has completed one year of simple existence, this Good and Simple Tax looks ready to launch thousands of disputes with no clear route map on how to go about litigating. Nothing is simple in the appellate maze. We will start with the Goods and Services Tax Appellate Tribunal, which is yet to be established. This Tribunal's constitution itself is complex and constitutional lawyers are already challenging the very constitution.

This is a two-tier Tribunal. The CGST Act provides elaborate details of the Tribunal which would consist of:

1. A National Bench and its Regional Benches.

2. A State Bench and its Area Benches.

The National Bench : The National Bench will be at New Delhi and the Regional Benches will be constituted as recommended by the GST Council. It is reported that the above-mentioned senior government official privy to the deliberations of the council has confided that the Regional Benches will be located at Mumbai, Chennai and Kolkata. The National Bench will be presided over by a President and shall consist of one Technical Member (Centre) and one Technical Member (State).Regional Benches shall consist of a Judicial Member, one Technical Member (Centre) and one Technical Member(State).The National Bench or Regional Benches of the Appellate Tribunal shall have jurisdiction to hear appeals against the orders passed by the Appellate Authority or the Revisional Authority in the cases where one of the issues involved relates to the place of supply.

The State Bench : Each State and Union Territory will have a State Bench, with as many Area Benches as are recommended by the GST Council on request by the State Governments.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 when place of supply is one of the issues.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.

A comparison on the constitution.

You think it is confusing? This is only the beginning. In this One Nation, One Tax, you will have two Tribunals criss-crossing each other and to your misfortune, if the two Tribunals are situated in the same building, more confusion can be assured. It is not known as to what would happen if you file the appeal in the wrong tribunal? Why can't there be just one tribunal?

Lawyers on the other side of the bar, don't try to jump into the bench . Do you miss somebody in the qualifications? No lawyer or for that matter chartered accountant is eligible to become a Member of the Tribunal! To be a judicial Member, one has to be either a High Court Judge or a District judge or an Indian Legal Service officer. Lawyers are excluded. A lawyer can be appointed straight from the bar as a Supreme Court judge (as some lawyers have been, recently), but by no chance can he be a Member of the GST Tribunal. And look at who are going to be the Technical Members? An IRS Officer with 15 years experience. That means an Additional Commissioner. This Additional Commissioner will sit in judgement over orders passed by a Commissioner (Appeals). The Judicial Member from the Indian Legal service is of Additional secretary cadre while the Technical Member is of Additional Commissioner grade. Will they be able to sit comfortably on that rank conscious bench? And these Benches will consist of one Judicial Member and two Technical Members, with the Judicial side being in a horrible minority of one. The Technical Members are supposed to provide specialised knowledge, not to plough their way through LAW. Just imagine what will happen in a Bench consisting of one Judicial Member and two technical Members. You can see the example in - 2015-TIOL-527-CESTAT-DEL-LB wherein the erudite conclusions arrived at by the President after extensive research into the amazing realms of judicial interpretation of various shades of legislation - was overruled by three technical members interpreting legislative principles. Can this kind of Tribunal get the approval of the high Courts and the Supreme Court?

Anyway, the matter is being agitated in several High Courts.

The Gujarat High Court, while issuing notice to the Government noted,

Petitioners have challenged the constitutional vires of Section 109 of the Central Goods & Services Tax Act, 2017 as also that of the Gujarat Goods & Services Tax Act, 2017 pertaining to constitution of the Central as well as State Appellate Tribunals. Main contention of the petitioners is that the Act envisages constitution of such Tribunals comprising of one Judicial and two Technical members. The petitioners' contention is that this would leave the judicial member in minority. These Tribunals would be called upon to decide important and complicated questions of interpretation of taxing statutes. The composition of Benches is in violation of the judgment of Supreme Court in case of Union of India v. R. Gandhi - 2010-TIOL-39-SC-MISC. Counsel also relied on a decision of Division Bench of Madras High Court in the case of S. Manoharan v. Deputy Registrar & Ors., reported in 2015 Lab.IC 2580 in which the Court relying on the judgment of Supreme Court in case of R. Gandhi [Supra] held that the larger Bench of Central Administrative Tribunal cannot be formed by including two Administrative members vice one Judicial member .

An advocate V. Vasanthakumar has challenged it in the Madras High Court, submitting that:

The Technical member is for Technical expertise support and should not assume judicial powers and cannot be allowed to hear a case solely in absence of a Judicial Member.

It is necessary that those who adjudicate upon these matters should have legal expertise, judicial experience and modicum of legal training, as on many an occasion, different and complex questions of law, which baffle the minds of even the trained judges would arise for discussion and decision. Therefore, in the bench of the Appellate Tribunal, the number of Technical Members should not be more than the number of Judicial Members.

That the daily practice in the courts not only gives training to Advocates to intersect the rules but also to adopt the conventions of courts. In built experience would play vital role in the administration of justice and strengthen and develop the qualities, of intellect and character, forbearance and patience, temper and resilience which are very important in the practice of law. Practicing Advocates from the Bar generally are endowed with those qualities to discharge judicial functions.

The Supreme Court had in the R. Gandhi case observed,

A lifetime of experience in administration may make a member of the civil services a good and able administrator, but not a necessarily good, able and impartial adjudicator with a judicial temperament capable of rendering decisions which have to (i) inform the parties about the reasons for the decision; (ii) demonstrate fairness and correctness of the decision and absence of arbitrariness; and (iii) ensure that justice is not only done, but also seem to be done.

As far as the Technical Members are concerned, the officer should be of at least Secretary Level officer with known competence and integrity. Reducing the standards, or qualifications for appointment will result in loss of confidence in the Tribunals. We hasten to add that our intention is not to say that the persons of Joint Secretary level are not competent. Even persons of Under Secretary level may be competent to discharge the functions. There may be brilliant and competent people even working as Section Officers or Upper Division Clerks but that does not mean that they can be appointed as Members. Competence is different from experience, maturity and status required for the post.

What is a matter of concern is the gradual erosion of the independence of the judiciary, and shrinking of the space occupied by the Judiciary and gradual increase in the number of persons belonging to the civil service discharging functions and exercising jurisdiction which was previously exercised by the High Court.

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.

Already some orders have been passed by adjudicating authorities and appellate authorities, but with no tribunal in place for further appeal. With these issues haunting the government even before the birth of the Tribunal, it may be difficult to ensure the seamless flow of much loved (by the Government) litigation.

As David Pannick said in his famous book "Judges",

Judges do not have an easy job. They repeatedly do what the rest of us seek to avoid: make decisions.

We would not allow a man to perform a surgical operation without a thorough training and certification of fitness.

More on the dispute resolution maze next week.