STBA Files Petition Challenging CGST Appellate Tribunal Provisions, Supreme Court Issues Notice

The Supreme Court, in the matter of SALES TAX BAR ASSOCIATION (REGD.) Vs. UNION OF INDIA, has recently issued a writ petition notice challenging the constitutionality of sections 149 and 150 of the Finance Act, 2023, which seek to substitute Sections 109 and 110 of the Central Goods and Services Tax Act, 2017 (CGST Act). These provisions applied to the appointments and service conditions of members of the CGST Act’s Appellate Tribunal.

Section 109 provides for the formation of the Goods and Services Tax Appellate Tribunal, while Section 110 details the appointment, qualification, and terms of service of the President and Members of the Appellate Tribunal.

The petition challenges different sections of the bill based on legal precedents set by Madras Bar Association decisions from 2010 to 2021. Notably, the Bench has linked this petition with a different contest the Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance 2021, currently known as the Tribunals Reforms Act, 2021.

The petitioners challenge the lawful status of these provisions on several grounds:

• First, there is no provision allowing Advocates to become Judicial Members, which conflicts with Union of India v. R. Gandhi, President, Madras Bar Association, 2010 11 SCC 1 (CGST Act Section 110(1)(b)).
• Furthermore, it is suggested that the proposed maximum tenure of 4 + 2 years with age limits of 67 years (for the President) (Section 110(9) of CGST) and 65 years for Judicial and Technical members (Section 110(10) of CGST) is insufficient. A High Court judge would have a 3-year tenure as a judicial member under this setup, and a Supreme Court judge would have a 2-year tenure. The petitioners believe that this time is “insignificant and insufficient” for a tribunal with specialized functions.
• In Madras Bar Association vs. Union of India and Anr., (2022) 12 SCC 455, the Supreme Court mandated that a member’s term be 5 years.
• The provision of section 110(14) allows the President or members to appear, act, or appeal beyond the Principal Bench or the state bench when he was the President or, in the case of a member, violate the principles of prudence and impartiality.
• According to the petitioner, the mandatory requirement of only four members for a principal bench and state is arbitrary and unreasonable. This restriction limits the addition of additional members in a particular area, demonstrating its irrationality.
• Furthermore, the provisions concerning tenure, compensation, allowances, and termination of members are being challenged because they violate the idea of separation of powers. The petitioner claims that the government’s unlimited power and discretion in these situations undermines this theory.

“The government’s unilateral power to assign members severely weakens the principle of separation of powers” according to the petition.

Finally, the petitioner strengthens these arguments by citing the 272nd Law Commission report, which matches its recommendations with the prior judgments. As a result, the petitioners contend that the current provisions are in direct conflict with these suggestions and established principles.

For official Judgement Download the PDF Given Below: