Discretion granted to authorities is not discretion of a Mughal Emperor: HC

S Shyam Prasad | NT

Bengaluru: Rejecting the contentions of the Principal Commissioner of Central Tax, GST Commissionerate that the amendment of Section 74(5) where the word “shall” has been replaced by “may” gives it discretion to issue orders without notices, the High Court of Karnataka said the discretion does not make the authorities “Mughal Emperor”.

Justice Krishna S Dixit was hearing a petition filed by Ms Zik Metals against the Joint Commissioner. The Company contended that no notice/intimation was issued to them before an order was passed on the issue of GST.

The counsel for the GST Commissionerate argued that it had discretion powers. But the HC did not agree with this line of argument.

The “contention of learned counsel Jeevan J Neeralgi that after amendment of the Act, the word 'shall' having been replaced by the word 'may' under Section 74(5) read with extant Rule 142(1A), now discretion lies with the Authorities to issue notice/intimation or not, and therefore, non-sending of such notice/ intimation should pale into insignificance, is difficult to countenance,” the HC said.

Further, the HC said that discretion does not make authorities the Mughal Emperor.

“The word ‘may’ ordinarily can be construed to imply some amount of discretion, is true; however that is not the discretion of a Mughal Emperor; Lord Halsbury says that ‘discretion’ means according to the rules of reason and justice; that being the position, the impugned action does not reflect the elements of justice nor reason,” the HC said.

The HC noted that the issue on hand was similar to a case decided by the Madras High Court in which the order of the authority was quashed and the matter remanded.

The counsel for the authorities argued that judgement of other High Courts have only persuasive value and need not be followed. The HC however said that “When a Central Legislation is interpreted by one High Court, ordinarily other High Courts would tread the same path since certainty of law is of immense importance. An argument to the contrary would put the legal position varying depending upon the vagaries of provincial interpretations.”

The HC quashed the orders passed by the GST authority and remitted the matter for fresh consideration after issuing of a notice and giving an opportunity to the Company to be heard before necessary orders are passed. (WP 15433/2023)