The Punjab and Haryana High Court has issued notice to the Centre, the Goods and Service Tax (GST) Council, and the States of Punjab and Haryana on a petition challenging Section 96 and 99 of the GST Act which provides for constitution of Authority of Advance Ruling (AAR) and the Appellate Authority of Advance Ruling (AAAR) and the amendments brought in the constitution of these authorities in Haryana and Punjab.
A bench of Justices Ajay Kumar Mitta and Manjari Nehru Kaul issued notices on a petition filed by Umang Goyal, an advocate by profession, contending that the constitution of AAR and AAAR and the subsequent amendments brought in the constitution of these authorities is violative of Article 14 and 50 of the Constitution by being contrary to the doctrine of separation of powers and independence of judiciary.
Petitioner’s counsel Sandeep Goyal said under Section 96(2) of the Haryana GST Act and the Punjab GST Act, the AAR consists of one member from the office of Central Tax and one member from amongst the offices of the state tax to be appointed by the Central government and the state government, respectively.
The AAAR is comprised of Chief Commissioner of Central Tax as designated by the board and the Commissioner of the State Tax.
Haryana, however, issued a notification on October 18 last year by virtue of which the AAR was to be constituted of two members, i.e., Additional Excise and Taxation Commissioner, Haryana and Joint Commissioner (GST), Panchkula. Another notification issued the same day provided that the AAAR is to be constituted of Chief Commissioner of Central Tax as designated by the board and the Commissioner of State Tax.
Likewise, the Punjab government amended the constitution of AAR and thereby replaced Joint Commissioner, Chandigarh was replaced by Joint Commissioner, CGST and Joint Commissioner of State Tax, Punjab, was replaced by Commissionerate, Jalandhar, to be appointed by the Centre.
The petitioner said the AAR and the AAAR do not contain any judicial member even as the Supreme Court had in Union of India vs. R Gandhi, President of Madras Bar Association, while considering the constitution of National Company Law Tribunal and National Company Law Appellate Tribunal, held that, “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”. It had also said that “only Judges and Advocates can be considered for appointment as Judicial Members of the Tribunal”.
The petition also referred to the case titled Columbia Sportswear Company vs Director of Income Tax Bangalore to say that the AAR and the AAAR exercise judicial powers and should, therefore, have judicial members.
It also said that the constitution of AAR and the AAAR makes it clear that “the Legislature has subsumed the power of judiciary and in fact passed on to Executive in gross violation of basic structure of Doctrine of Separation of Power”.
He stressed how in the pre-GST era, AAR was headed by a retired Supreme Court judge and was later amended to include a retired Chief Justice of a High Court or a high court judge having seven years’ experience. The other members were from the Indian Revenue Service who have served as members of the Central Board of Direct Taxes or CBEC or from the Indian Legal Service of the rank of an Additional Secretary.