M/s Torque Pharmaceuticals Pvt Ltd VS Union Of India

The case involves multiple parties and legal representatives, including Sri Navin Sinha, a senior advocate, along with other counsel representing various interests. The primary focus is on Writ Tax No. 655 of 2018, which serves as the leading petition concerning the constitution of the Goods and Services Tax Appellate Tribunal (referred to as ‘the Tribunal’) under the Central Goods and Services Tax Act, 2017 (‘the CGST Act’)/ U.P. Goods and Services Tax Act, 2017 (‘the U.P. GST Act’).

Agreement among the counsels has been reached to concentrate solely on the issue of the Tribunal’s constitution, leaving other matters undecided.

The specific reliefs sought in Writ Tax No. 655 of 2018 include:

1. Mandating the constitution of ‘Regional Bench’ and ‘State Bench’ for Uttar Pradesh, along with additional ‘Area Benches’ as recommended.
2. Quashing of certain orders issued by respondents.
3. Challenging a Circular issued by a respondent regarding the revival of certain rules.
4. Seeking a declaration regarding the mandatory nature of specific notifications.
5. Requesting any other appropriate writ, order, or direction as deemed fit by the court.
6. Challenging the validity of a document submitted by one of the respondents and its approval, alleging it to be without legal authority and contrary to relevant statutes.
7. Petitioner costs.
8. Mandating the restoration of a decision made in a previous meeting concerning the creation of a State Bench of the Tribunal in Allahabad and four Area Benches in Ghaziabad, Lucknow, Varanasi, and Agra, along with directing the issuance of necessary notifications.

These reliefs encompass various aspects of the Tribunal’s constitution and operational procedures, reflecting the complexity of the legal issues at hand.

The case involves several writ petitions challenging impugned orders that are appealable before the Appellate Tribunal under the CGST Act/U.P. GST Act. However, the petitioners have filed these writ petitions because the Tribunal under Section 109 of the CGST Act has not been constituted by the Central Government. Given that the challenge to the impugned orders relates to questions of fact and the Appellate Tribunal is the final fact-finding authority, the petitioners are left with the option to challenge the impugned orders before the Appellate Tribunal once it is constituted in Uttar Pradesh.

The reliefs being considered in this bunch of writ petitions include:

1. Mandating the constitution of ‘Regional Bench’ and ‘State Bench’ for Uttar Pradesh, along with additional ‘Area Benches’ as recommended.
2. Challenging the validity of a document submitted by one of the respondents and its approval, alleging it to be without legal authority and contrary to Section 109 (6) of the Central Goods & Services Tax Act, 2017.
3. Mandating the restoration of a decision made in a previous meeting concerning the creation of a State Bench of the Goods and Services Tax Appellate Tribunal at Allahabad and four Area Benches in Ghaziabad, Lucknow, Varanasi, and Agra, along with directing the issuance of necessary notifications.

The court has heard arguments from learned counsels for the parties extensively on multiple occasions. During one such hearing, the provisions of Section 109 (6) of the Central Goods & Services Tax Act, 2017 were discussed. It was highlighted that the determination of the location of the State Bench remains within the domain of the Central Government, while the role of the State is limited to deciding the place of Area Benches. The court observed that a previous judgment had not considered these provisions adequately and directed the Central Government to proceed in accordance with Section 109 (6) of the CGST Act. Additionally, a proposal was made by the High Court Bar Association, Allahabad, suggesting a location for the State Bench, which was welcomed by the court.

The matter was listed for further consideration on a later date, granting time for the Assistant Solicitor General of India to file a status report regarding the decision taken by the Central Government.

The central issue in the present controversy revolves around the relevant provisions of Article 279A of the Constitution of India, Section 109 of the CGST Act, and Section 109 of the U.P. GST Act. These provisions outline the establishment of the Goods and Services Tax Council and its functions in relation to the implementation and administration of the Goods and Services Tax (GST) regime in India. Here’s a detailed breakdown of the key provisions:

Article 279A of the Constitution of India:

1. Establishment of the Goods and Services Tax Council (GST Council) within sixty days from the commencement of the Constitution (One Hundred and First Amendment) Act, 2016.
2. Composition of the GST Council, which includes:
– The Union Finance Minister as Chairperson.
– The Union Minister of State in charge of Revenue or Finance as Member.
– The Minister in charge of Finance or Taxation or any other Minister nominated by each State Government as Members.
3. Selection of the Vice-Chairperson by the Members of the GST Council.
4. Functions of the GST Council, which include making recommendations to the Union and the States on various aspects such as:
– Taxes, cesses, and surcharges to be subsumed in the GST.
– Goods and services to be subjected to or exempted from the GST.
– Model GST laws, principles of levy, apportionment, and place of supply.
– Threshold turnover for GST exemption.
– GST rates, including special rates during natural calamities.
– Special provisions for certain states.
– Any other matter relating to the GST.
5. Recommendation of the date for levying the GST on specific petroleum and energy products.
6. Guiding principles for the GST Council, emphasizing the need for a harmonized GST structure and a national market.
7. Quorum and decision-making process of the GST Council.
8. Determination of procedure by the GST Council.
9. Weightage of votes of the Central Government and State Governments in GST Council decisions.
10. Validity of GST Council acts and proceedings despite vacancies, defects, or procedural irregularities.
11. Establishment of a mechanism to adjudicate disputes arising from the GST Council’s recommendations or implementation.

These provisions establish the framework for the functioning of the GST Council, ensuring collaborative decision-making between the Union and State Governments in matters related to GST administration and policy formulation.

In the present batch of writ petitions, the arguments presented by learned counsels for the parties primarily revolve around the interpretation of Section 109(6) of the CGST Act/U.P. GST Act and the specific facts of the case. With the submissions of the parties duly considered, the court now proceeds to adjudicate the controversy.

Section 109(6) of the CGST Act stipulates that the Central Government is obligated to specify, through notification, a State Bench of the Appellate Tribunal for each State or Union Territory (excluding Jammu and Kashmir). Furthermore, the provision outlines that the Central Government shall establish Area Benches in a State as recommended by the council upon receiving a request from the concerned State Government. Additionally, the provision allows for the notification of the Appellate Tribunal in one State to act as the Tribunal for another State or Union Territory, subject to prescribed terms and conditions.

Section 109(2) of the U.P. GST Act aligns the constitution and jurisdiction of the State Bench and Area Benches within the State with the provisions outlined in Section 109 of the CGST Act or its accompanying rules.

Therefore, it is evident that Section 109(6) of the CGST Act mandates the constitution and notification of the “State Bench of the Goods and Services Tax Appellate Tribunal” by the Central Government. However, the establishment of Area Benches, in numbers as requested by the concerned State Government, falls within the purview of the Central Government, contingent upon recommendations from the council.

This interpretation clarifies the roles and responsibilities assigned to the Central Government and the council in the establishment of Appellate Tribunal benches, ensuring compliance with the statutory framework outlined in the CGST Act and U.P. GST Act.

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