In his final speech at the retirement ceremony, Chief Justice D.Y. Chandrachud expressed his desire to hear as many cases as possible before presiding over the Ceremonial Bench that would mark his farewell from the Supreme Court. “It is this court which keeps me going … we meet the people we possibly don’t know. I conclude by thanking all of you and each one of you, I learned so much about life today, and there is no case similar to an earlier case,” he reflected.
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On November 10, 2024, Chief Justice D.Y. Chandrachud retired from the Supreme Court, leaving behind a legacy of transparency, fairness, and a commitment to constitutional integrity. Let’s take a look at some of his tax rulings:
Mineral Taxation and Federal Authority: Upholding State Taxing Rights
In Mineral Area Development Authority v. M/S Steel Authority Of India & Others, Justice Chandrachud ruled regarding the division of taxing powers between the Union and state governments. In a rare nine-judge bench ruling, the Court affirmed that state governments have the authority to tax mineral rights independently of the Union’s regulatory control under the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act). This decision by an 8:1 majority clarified the legislative boundaries, allowing states to levy taxes on mineral-bearing lands.
Justice Chandrachud held that royalties on mining leases do not qualify as taxes, overruling previous judgments like India Cement Ltd. v. State of Tamil Nadu (1990). He explained that royalties are contractual payments from lessees to lessors and do not infringe on the states’ authority to impose taxes on mineral resources. This ruling was essential for state revenue systems, affirming states’ rights over their natural resources within the constitutional framework.
Revisiting the Taxation of Nuns and Priests: Upholding Uniform Tax Obligations
In another notable judgment, Chief Justice Chandrachud upheld the mandatory deduction of tax at source (TDS) on salaries paid to nuns and priests working as teachers in state-aided educational institutions. Petitioners argued that their religious vows, which involved surrendering earnings to religious institutions, should exempt them from TDS. Justice Chandrachud ruled that salaries received in individual capacities are subject to TDS as religious commitments do not alter tax obligations under the law.
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This judgment reinforced the principle of uniform tax application, affirming that personal income, regardless of religious affiliation, is taxable without specific statutory exemptions. Justice Chandrachud’s decision upheld equality in tax obligations.
Union of India v. Rajeev Bansal: Extending Reassessment Timelines Under COVID-19 Relief Provisions
In this case, Justice Chandrachud addressed the application of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions Act) (TOLA) 2021 in extending reassessment timelines under the Income Tax Act. The main issue was whether TOLA extended time limits for reassessment notices issued after April 1, 2021, following the COVID-19 pandemic.
The Supreme Court overturned lower court rulings that denied TOLA’s application post-April 2021, affirming that TOLA and the Income Tax Act should be read harmoniously. This judgment clarified that TOLA’s provisions applied to ongoing tax actions during the pandemic period, ensuring lawful extensions in reassessment timelines to address the pandemic’s disruptions. By balancing statutory timelines with procedural flexibility, this judgment upheld the adaptation of legal frameworks in extraordinary circumstances.
Canon India Revisited: Restoring DRI’s Authority in Customs Enforcement
A recent ruling redefined customs law enforcement, Chief Justice Chandrachud led the bench that overturned the 2021 Canon India Private Ltd. v. Commissioner of Customs judgment. Initially, the Court had ruled that the Directorate of Revenue Intelligence (DRI) officers did not qualify as “proper officers” to issue show cause notices under Section 28 of the Customs Act. However, the Supreme Court allowed the Customs Department’s petition, recognizing DRI officers as “proper officers” and restoring their authority to issue reassessment notices.
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The reversal was grounded in the Court’s acknowledgment of previously overlooked circulars and notifications that designated DRI officers as proper officers. This decision resolved procedural ambiguities and restored the DRI’s power to issue show cause notices, thereby reinforcing its role in customs enforcement and clarifying its jurisdictional authority.
M/S Radha Krishan Industries v. State of Himachal Pradesh: Balancing Revenue Interests and Taxpayer Rights
In this case, Chief Justice Chandrachud addressed the powers of provisional attachment under the Himachal Pradesh Goods and Services Tax Act. The Court upheld the state’s authority to attach assets during tax investigations but set strict standards to ensure this power was used judiciously. Justice Chandrachud emphasized that while provisional attachment could safeguard state revenue, it should not be exercised indiscriminately.
This judgment established procedural safeguards for taxpayers, requiring that such attachments be justified by a genuine risk to revenue. By balancing taxpayer rights with the state’s financial interests, Justice Chandrachud’s judgment highlighted the importance of procedural fairness in tax enforcement under GST.
Union of India v. Mohit Minerals: Addressing Double Taxation in GST
In this case, Justice Chandrachud addressed the contentious issue of double taxation in GST on ocean freight for imported goods. Importers argued that the IGST imposed on ocean freight constituted double taxation, as the freight component was already included in customs valuations. Justice Chandrachud found that taxing the same service component twice was unconstitutional, delivering a major relief for importers.
By holding that IGST on ocean freight was an undue burden, Justice Chandrachud ensured fair taxation as a key principle in India’s GST framework.
Rojer Mathew v. South Indian Bank Ltd.: Safeguarding Judicial Independence in Tribunal Appointments
In this case,Justice Chandrachud examined the structural framework for tribunal appointments, focusing on the independence of tax and administrative tribunals. The case challenged the constitutionality of Part XIV of the Finance Act, 2017, which gave the executive control over tribunal appointments. Justice Chandrachud’s judgment emphasized that tribunals should remain insulated from executive influence to preserve their judicial integrity.
The Court called for legislative reforms to strengthen tribunal independence, underscoring that tribunals must function autonomously to uphold citizens’ rights.
Konkan Railway Corporation v. Chenab Bridge Project Undertaking: Enforcing Contractual Integrity
In this case, Justice Chandrachud, one of the bench members, delivered an important judgment on contract interpretation in public infrastructure. The decision emphasized strict adherence to contractual terms, particularly regarding toll taxes and price variations. It underscored the necessity of fiscal discipline and transparency in public contracts, setting a precedent for upholding contractual obligations in projects involving public funds.
End of an Era, Start of an Age
Justice Chandrachud’s tenure in the Supreme Court has left an incredible mark. As he retires, Justice Sanjiv Khanna will take over as the 51st Chief Justice of India on November 11, 2024. Justice Khanna, the senior-most judge of the Supreme Court, was nominated by Justice Chandrachud to carry forward the judiciary’s commitment. Currently serving as the executive chairman of the National Legal Services Authority (NALSA) and a member of the governing council of the National Judicial Academy (NJA), Justice Khanna is expected to bring a lot of experience and a commitment to making justice accessible to everyone in his new role.
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