THE STATE OF GUJARAT & ANR. versus PARESH NATHALAL CHAUHAN
[2024] 3 S.C.R. 1141, Supreme Court of India, 2024
Outcome: Disposed off
Segment: Issues
* Author
[2024] 3 S.C.R. 1141 : 2024 INSC 277
The State of Gujarat & Anr. 
v. 
Paresh Nathalal Chauhan
(Civil Appeal No 4618 of 2024)
12 March 2024
[Pamidighantam Sri Narasimha* and Aravind Kumar, JJ.]
Issue for Consideration
Matter pertains to expunction of the observation by the High Court 
in an interim order that statutory protection contemplated u/s. 157 
of the GST Act, in the nature of a good faith clause, not available 
to the officers of the State conducting search as their conduct, 
“may not” justify protection.
Headnotes
Central Goods and Services Tax Act, 2017 – s. 157 – Protection 
of action taken under this Act – Interim order by the High 
Court, criticising the prolonged stay of the search party at 
the residence of the respondents as unauthorized and illegal 
– Observation by the High Court that statutory protection 
contemplated u/s. 157, in the nature of a good faith clause, may 
not be available to the officers of the State conducting search 
as their conduct, “may not” justify protection – Challenged to:
Held: Statutory functionary is equally entitled to take a defense of 
good faith – It is for the court to adjudicate and decide – High Court 
was not conducting a suit, prosecution, or other legal proceeding 
against a statutory functionary – High Court was conscious of 
the principles governing good faith clauses and thus, couched its 
displeasure and distress by stating that such officials “may not” 
be protected or that it “may be difficult” to accept
the contention of 
good faith – Observations were in the nature of advance rulings, 
because even before the initiation of a suit, prosecution or legal 
proceeding, the High Court expressed a tentative opinion – If 
such observations remain, they would affect the integrity and 
independence of that adjudication, compromising the prosecution 
and the defence equally – Observation of the High Court is 
expunged since the context as well as the conclusions of the High 
Court were wrong. [Paras 9-12]
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Words and phrases – Good faith – Scope and ambit of:
Held: Good faith clauses in statutes, explained in the vocabulary 
of the rights and duties regime, can be said to be a provision 
of immunity to a statutory functionary – Such provisions are in 
recognition of public interest in protecting a statutory functionary 
against suits, prosecution or legal proceedings against officials 
exercising statutory power– This immunity is limited – It is confined 
to acts done honestly and in furtherance of achieving the statutory 
purpose and objective – s. 3(22) explains ‘good faith’ as an act 
done honestly, whether it is done negligently or not – Good faith 
clause in a statute will be a defense – If successfully pleaded, 
it not only legitimises the action but also protects the statutory 
functionary from any legal action – If statutory functionary invokes 
the defence of good faith, it is for the court or a judicial body to 
adjudicate and determine whether the action was done in good 
faith or not – Such scrutiny or examination is done only in a 
proceeding against the statutory functionary, which would depend 
upon the facts and circumstances of each case – General Clauses 
Act,1897 – s. 3(22) – Central Goods and Services Tax Act, 2017 
– s. 157. [Paras 8, 9]
Case Law Cited
Goondla Venkateswarlu v. State of AP [2008] 12 SCR 
608 : (2008) 9 SCC 613; Army Headquarters v. CBI 
[2012] 5 SCR 599 : (2012) 6 SCC 228 – referred to.
List of Acts
Central Goods and Services Tax Act, 2017; General Clauses Act, 
1897.
List of Keywords
Expunction; Expunction of the observation by the High Court; 
Interim order; Statutory protection; Good faith clause; Statutory 
functionary; Tentative opinion; Rights and duties regime; Immunity 
to a statutory functionary; Defence of good faith.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No.4618 of 2024
From the Judgment and Order dated 24.12.2019 of the High Court 
of Gujarat at Ahmedabad in SCA No. 18463 of 2019
[2024] 3 S.C.R. 
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The State of Gujarat & Anr. v. Paresh Nathalal Chauhan
Appearances for Parties
Ms. Deepanwita Priyanka, Adv. for the Appellants.
Rahul Narayan, Ms. Harshita Malik, Advs. for the Respondent.
Judgment / Order of the Supreme Court
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, 
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 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 
1	
“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.”
2	
 In Special Civil Application No. 18463 of 2019, order dated 24.12.2019.
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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 things and the 
concerned officer converted it into a search for a person 
and in investigation, which is not otherwise backed by 
any statutory provision, it may be difficult to accept that
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The State of Gujarat & Anr. v. Paresh Nathalal Chauhan
such action was in good faith. Protection of such action 
under section 157 of the GST Acts may unleash a regime 
of terror insofar as the taxable persons are concerned.”
7.	
In the above-referred paragraph, the High Court was of the view 
that the protection contemplated under section 157 of the GST Act, 
which is in the nature of a good faith clause, “may not” be available 
to the officers. This is the issue with which we are concerned, and 
we will dwell upon it.
8.	
A good faith clause, explained in the vocabulary of the rights and 
duties regime, can be said to be a provision of immunity to a 
statutory functionary. Such provisions are in recognition of public 
interest in protecting a statutory functionary against prosecution or 
legal proceedings. This immunity is limited. It is confined to acts 
done honestly and in furtherance of achieving the statutory purpose 
and objective. Section 3(22) of the General Clauses Act, 1897 best 
explains ‘good faith’ as an act done honestly, whether it is done 
negligently or not.3 Good faith clauses in statutes providing immunity 
against suits, prosecution or other legal proceedings against officials 
exercising statutory power are therefore limited by their very nature, 
that far, and no further. The scope and ambit of good faith has been 
explained in a number of decisions of this Court,4 which need not 
be elaborated herein again.
9.	
A good faith
clause in a statute will therefore be a defense. If 
successfully pleaded, it not only legitimises the action but also 
protects the statutory functionary from any legal action. If a statutory 
functionary invokes the defence of good faith in a suit, prosecution 
or other legal proceedings initiated against him, it is for the court 
or a judicial body to consider, adjudicate, and determine whether 
the claim that the action was done in good faith is made out or not. 
Such a scrutiny, enquiry, or examination is done only in a proceeding 
against the statutory functionary. This Court has held that the scrutiny 
3	
Section 3(22) of the General Clauses Act, 1897 defines ‘good faith’ as follows:
“3. Definitions.—In this Act, and in all Central Acts and Regulations made after the commencement 
of this Act, unless there is anything repugnant in the subject or context,—
(22) a thing shall be deemed to be done in “good faith” where it is in fact done honestly, whether it 
is done negligently or not;”
4	
See Goondla Venkateswarlu v. State of AP, [2008] 12 SCR 608 : (2008) 9 SCC 613, paras 22 and 23; 
Army Headquarters v. CBI [2012] 5 SCR 599 : (2012) 6 SCC 228, paras 69-78
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whether the act is done in good faith or not would depend upon the 
facts and circumstances of each case.5 
10.	 It is in the above referred context that we have examined the 
observations made by the High Court in Paragraph 28 extracted 
hereinabove. The High Court was not conducting a suit, prosecution, 
or other legal proceeding against a statutory functionary. We have no 
doubt that the High Court was conscious of the principles governing 
good faith clauses and therefore couched its displeasure and distress 
by stating that such officials “may not” be protected or that it “may be 
difficult” to accept the contention of good faith. We are of the opinion 
that these observations are in the nature of advance rulings. This 
is because even before the initiation of a suit, prosecution or legal 
proceeding, the High Court expressed a tentative opinion. If such 
observations remain, they will affect the integrity and independence 
of that adjudication, compromising the prosecution and the defence 
equally. 
11.	 We say no more than reiterate that a citizen of this country has a 
right of accountability, for which he is entitled to initiate and adopt 
such legal remedies as are available to him, and in such proceedings 
the statutory functionary is equally entitled to take a defense of good 
faith. It is for the court to adjudicate and decide. 
12.	 In view of the above, we expunge paragraph 28 and dispose of the 
appeal.
Headnotes prepared by: Nidhi Jain
Result of the case: 
Appeal disposed of.
5	
 See, for example, Army Headquarters (supra), paras 76-78.