Supreme Court Expunges Gujarat HC's Adverse Observation Against GST Officials

The Supreme Court (on March 12) expunged the observations made by the Gujarat High Court in an interim order that statutory protection of the good faith clause under Section 157 of the Goods and Services Tax Act may not be available to the GST officers who conducted a search operation in the instant case. A bench of Justices P.S. Narasimha and Aravind Kumar stated that the impugned observations made by the High Court were, in nature, “advance rulings” and expressed a tentative opinion. Reasoning this, the Court said that the High Court expressed such a view without even initiation of the legal proceedings. “We have no doubt that the High Court was conscious of the principles governing good faith clauses and therefore couched its displeasure and distress by stating that such officials “may not” be protected or that it “may be difficult” to accept the contention of good faith. We are of the opinion that these observations are in the nature of advance rulings. This is because even before the initiation of a suit, prosecution or legal proceeding, the High Court expressed a tentative opinion. If such observations remain, they will affect the integrity and independence of that adjudication, compromising the prosecution and the defence equally.” The brief background of the case is such that the High Court is in seisin of a writ petition filed by the respondent seeking protection from arrest and coercive action under the GST Act. The High Court criticized the GST search party for prolonging their stay at respondents' residence and termed the same as “unauthorized and illegal”. Against this backdrop, the High Court made the following observation: “28. Lastly the court may sound a word of caution to the authorities exercising powers under the GST Acts. Sub-section (2) of section 157 of the GST Acts says that no suit, prosecution or other legal proceedings shall lie against any officer appointed or authorized under the Act for anything which is done or intended to be done in good faith under the Act or the rules made thereunder. An action like the present one which is not contemplated under any statutory provision and which infringes the fundamental rights' of citizens under article 21 of the Constitution of India may not be protected under this section.” Aggrieved by this, the State approached the Top Court in an appeal. The Court was also informed that the respondent is not interested in proceeding against the officers.Essentially, good faith clauses in statutes provided immunity against suits, prosecution, or other legal proceedings against officials exercising statutory power. However, the scope of this immunity is limited and confined to acts done honestly and in furtherance of achieving the statutory purpose. The Court observed that this clause of good faith is a defence, and if successfully pleaded, it could protect officials against any legal action. Thus, if any official invokes this clause in a legal proceeding against him, then it is for the Court to scrutinise whether the defence is available or not. Such scrutiny, enquiry, or examination is done only in a proceeding against the statutory functionary, the Court stressed before adding: “It is in the above referred context that we have examined the observations made by the High Court in Paragraph 28 extracted hereinabove. The High Court was not conducting a suit, prosecution, or other legal proceeding against a statutory functionary.” In view of this, the Court allowed the appeal, stating that a statutory functionary is equally entitled to take a defense of good faith. Case Title: THE STATE OF GUJARAT & ANR. V. PARESH NATHALAL CHAUHANCitation : 2024 LiveLaw (SC) 295 Click here to read/ download the judgment

Supreme Court Expunges Gujarat HC's Adverse Observation Against GST Officials

Gyanvi Khanna

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