2017 (12) TMI 1232 - HC - VAT and Sales Tax

Appointments of administrative member (technical member) of the tribunal - Constitutional validity of Section 11 of the VAT Act and Rule 6 of the VAT Rules - concept of independence of judiciary - it was alleged that the provisions are violative of the basic structure of the Constitution of India - Government Resolution dated 2nd June 1973 issued by the Finance Department, Government of Maharashtra - amendment to the said resolution. Held that - no Member covered by clauses (a), (b) or (c) of sub rule (1) of Rule 6 of the VAT Rules shall be appointed without making effective consultation with the High Court of Judicature at Bombay. A Bench of two or more Members shall always be headed by a Judicial Member appointed under clauses (a), (b) or (c) of sub rule 1 of Rule 6 of the VAT Rules. The matters which are required to be decided by the Members sitting singly shall always be placed before a Judicial Member only. In case of emergency, when none of the Judicial Members are available, the matters where an urgent ad interim or interim relief is sought can be placed before the Administrative Member sitting singly. As far as selection of the Members covered by clauses (d), (e) and (f) of sub rule (1) of Rule 1 of Rule 6 is concerned, the State Government shall constitute a proper Selection Committee preferably headed by a retired Judge of this Court, in the light of observations made in this judgment and order. The State shall also ensure that the Members shall be judicially trained in the sense that they have long experience of dealing with quasi judicial proceedings and/or adjudication proceedings. High court disposed off the petition with detailed instruction to the government.

Issues Involved:
1. Challenge to statutory provisions under the VAT Act and VAT Rules.
2. Issues concerning infrastructure provided to the Maharashtra Sales Tax Tribunal.

Detailed Analysis:

1. Challenge to Statutory Provisions:

The petition challenges the constitutional validity of Section 11 of the VAT Act and Rule 6 of the VAT Rules, arguing that these provisions violate the independence of the judiciary, a part of the basic structure of the Constitution of India. The petitioners argue that the power to appoint members of the Tribunal, including the President, is vested solely in the State Government without any consultation with the judiciary, which undermines judicial independence. The qualifications for Tribunal members, particularly the inclusion of non-judicial members such as Joint Commissioners of Sales Tax, are also contested. The petitioners emphasize that the Tribunal exercises significant judicial functions and should, therefore, be composed solely of judicial members.

The respondents counter that the inclusion of technical or administrative members is constitutionally acceptable and necessary for the Tribunal's effective functioning, given their expertise in tax matters. They argue that the existing practice ensures that Benches are always headed by judicial members and that administrative members do not sit singly.

The court acknowledges the need for judicial independence and the importance of having judicially trained members on the Tribunal. It highlights the inconsistency in Rule 6 of the VAT Rules, which allows for the appointment of Joint Commissioners with only two years of experience, and mandates that such members should have a judicially trained mind and legal qualifications. The court also emphasizes that the selection committee for appointing members should include judicial representation to ensure that candidates possess the necessary qualifications.

2. Issues Concerning Infrastructure:

The petition also addresses the inadequate infrastructure provided to the Maharashtra Sales Tax Tribunal. Although not explicitly prayed for in the petition, the court has previously issued orders addressing these concerns. The petitioners acknowledge that most infrastructure issues have been resolved following a judgment in a related Public Interest Litigation (PIL).

The court reiterates that the State has a constitutional obligation to provide adequate infrastructure to the Tribunal. It directs the State Government to undertake a scientific study to determine the number of Tribunal members required to handle current and future caseloads, appoint additional members as needed, and provide the necessary infrastructure for their functioning. The court also mandates that all Tribunal orders be digitized and uploaded on a dedicated website, aligning with the e-Court Project initiated by the Supreme Court's e-Committee.

Order:

The court issues several directives to ensure the Tribunal's effective functioning and judicial independence:

1. Judicial members' appointments must involve effective consultation with the High Court.
2. Benches of two or more members must always be headed by judicial members.
3. Matters requiring single-member decisions should be assigned to judicial members, with exceptions for urgent interim relief.
4. The selection committee for administrative members should preferably be headed by a retired High Court judge.
5. The Government Resolution dated 2nd June 1973 is quashed.
6. Administrative members must be legally qualified and judicially trained.
7. The State Government is advised to amend the rules to specify members' tenure and retirement age.
8. Vacancies should be filled promptly, with steps initiated six months before anticipated vacancies.
9. A committee should be formed to assess the required number of Tribunal members, with appointments and infrastructure adjustments made accordingly.
10. The State Government must respond promptly to infrastructure requisitions from the Tribunal.
11. The Tribunal must digitize its records and upload all orders online.
12. The validity of current members' appointments remains unaffected.
13. The petition is disposed of with partial acceptance of the rule, and compliance with the court's directions will be monitored.

The case will be listed for compliance review on 18th January 2018, with the State Government required to file an affidavit of compliance by 15th January 2018.

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