1. Appeal to expunge High Court observations regarding the availability of statutory protection under Section 157 of the GST Act for officers during search proceedings. (Para 3 , 4 )
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2024 Supreme(SC) 311
SUPREME COURT OF INDIA
PAMIDIGHANTAM SRI NARASIMHA, ARAVIND KUMAR, JJ.
The State Of Gujarat & Anr. - Appellant
Versus
Paresh Nathalal Chauhan - Respondent
Civil Appeal No. 4618 of 2024 (Arising Out of SLP (C) No. 666 of 2021)
Decided on : 12-03-2024
Important Points
The limited immunity provided by the good faith clause and the need for judicial scrutiny in determining its applicability.
Subject
Civil Law - Tax Law
Act Referred
Headnote
Good Faith Clause - GST Act - Section 157 - Summary: The court expunged a portion of the High Court's order that suggested the good faith clause in Section 157 of the GST Act may not be available to the officers of the State. The court emphasized the limited immunity provided by the good faith clause and the need for judicial scrutiny in determining its applicability.
Fact of the Case:
The civil appeal arose from an interim order passed by the High Court of Gujarat in a writ petition filed by the respondent seeking protection from arrest under the GST Act. The High Court criticized the prolonged stay of the search party at the respondent's residence as unauthorized and illegal.
Finding of the Court:
The court expunged a portion of the High Court's order and disposed of the appeal after accepting the respondent's request not to initiate proceedings against the officers. The court emphasized the limited immunity provided by the good faith clause and the need for judicial scrutiny in determining its applicability.
Issues: The issues revolved around the applicability of the good faith clause in Section 157 of the GST Act to the officers of the State and the need for judicial scrutiny in determining its applicability.
Ratio Decidendi: The court emphasized the limited immunity provided by the good faith clause and the need for judicial scrutiny in determining its applicability.
Final Decision: The court expunged the portion of the High Court's order and disposed of the appeal.
Legal Category Hierarchy
Advocates appeared:
For the Petitioner(s): Ms. Deepanwita Priyanka, AOR
For the Respondent(s): Mr. Rahul Narayan, AOR Ms. Harshita Malik, Adv.
For the Petitioner(s): Ms. Deepanwita Priyanka, AOR
For the Respondent(s): Mr. Rahul Narayan, AOR Ms. Harshita Malik, Adv.
Table of Contents
2. Whether the good faith clause under Section 157 of the GST Act protects officers whose conduct allegedly exceeded statutory authority during search and seizure. (Para 6 , 7 )
3. A good faith clause is a defense to be adjudicated based on facts in a specific proceeding; tentative opinions by courts before such proceedings compromise adjudication integrity. (Para 8 , 9 , 10 )
4. Statutory immunity under a good faith clause is a defense that must be determined by a court during actual proceedings against the functionary, not as an advance ruling. (Para 9 , 10 )
5. The observation regarding the unavailability of statutory protection under Section 157 of the GST Act is expunged and the appeal is disposed of. (Para 2 , 12 )
6. What is the nature and scope of a good faith clause in statutes providing immunity to statutory functionaries?
A good faith clause is a provision of immunity protecting statutory functionaries against prosecution or legal proceedings for acts done honestly in furtherance of statutory objectives, as defined under Section 3(22) of the General Clauses Act, 1897. (Para 8 )
7. How is the defense of good faith adjudicated in legal proceedings?
It serves as a defense that, if successfully pleaded, legitimizes the action and protects the functionary. The court determines if the action was done in good faith based on the specific facts and circumstances of each case. (Para 9 )
8. Why are tentative judicial observations regarding the unavailability of statutory protection problematic before actual proceedings are initiated?
Such observations act as advance rulings that can compromise the integrity and independence of future adjudication, affecting both the prosecution and the defense. (Para 10 )
JUDGMENT :
PAMIDIGHANTAM SRI NARASIMHA, J.
1. Leave granted.
2. We are called upon to expunge a portion from the interim order of the High Court and dispose of the appeal as it is represented to us that the respondent is not interested in initiating proceedings against the officers in the present matter. We have accepted the request and hereby dispose of the appeal.
3. The portion sought to be expunged is the observation of the High Court that the good faith clause in Section 157 of the GST Act1[“157. Protection of action taken under this Act.—(1) No suit, prosecution or other legal proceedings shall lie against the President, State President, Members, officers or other employees of the Appellate Tribunal or any other person authorised by the said Appellate Tribunal for anything which is in good faith done or intended to be done under this Act or the rules made thereunder.
(2) No suit, prosecution or other legal proceedings shall lie against any officer appointed or authorised under this Act for anything which is done or intended to be done in good faith under this Act or the rules made thereunder.”], may not be available to the officers of the State as their conduct, according to the High Court, “may not” justify protection. We have expunged that portion of the order because the context as well as the conclusions of the High Court are wrong. We will explain this after indicating the relevant facts.
4. This civil appeal arises out of an interim order passed by the High Court of Gujarat2[In Special Civil Application No. 18463 of 2019, order dated 24.12.2019.] in a writ petition filed by the respondent seeking a direction for protection from arrest under section 69 read with section 132 of the GST Act. The High Court is still examining the writ petition, but by the interim order impugned herein, it criticised the prolonged stay of the search party at the residence of the respondents as unauthorized and illegal. We need not deal with the merits of the issue as the matter is still pending before the High Court, more so when the respondent has submitted that he is not interested in proceeding against the officers and seeks a quietus to the issue.
5. In fact, while issuing notice in the appeal on 16.07.2021, this Court passed the following order. The order is indicative of the limited scrutiny sought to be made by this Court and it is evident from the following:
“Without in any manner condoning the conduct of the officers which has been commented upon, what persuades us to issue notice is the fact that there are observations to the effect that the statutory protection available to the officers would not be a defence in case proceedings were to be initiated against those officers by the original petitioners or their family members and such an observation has been made in the absence of the officers. Issue notice limited to the aforesaid aspect returnable in six weeks.”
6. The relevant portion in the order of the High Court that the statutory protection should not be made available to the officers is in paragraph 28 and it is relevant for us to extract the same.
“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. An action taken may be said to be in good faith if the officer is otherwise so empowered and he exceeds the scope of his authority. However, in a case like the present one where the authorization was for search and seizure of goods liable to confiscation, documents, books or thing
