Supreme Court said, State Election Commissioner cannot be a Government functionary as this Constitutional body is supposed to be independent body.

From Para 52,

52. Given the fact that the scheme contained in Part XV is bodily lifted into the provisions contained in Part IX-A, the powers exercised by the SEC under Article 243ZA(1) are the same as those vested in the Election Commission of India under Article 324 of the Constitution of India. As has been pointed out in Mohinder Singh Gill (supra) and the aforesaid decisions, the entire supervision and conduct of elections to municipalities is vested in a constitutional authority that is the SEC which is to supervise and conduct elections by giving orders and directions to the State Government as well as authorities that are set up under State statutes for the purpose of supervision and conduct of elections. The power thus conferred by the Constitution is a power given to the SEC not only to carry out the constitutional mandate but also to fill in gaps where there is no law or rule governing a particular
situation during the conduct of an election. The SEC, being anindependent constitutional functionary, is not only to be obeyed by the State Government and the other authorities under local State statutes,but can also approach the writ court under Articles 226 and 227 of the Constitution of India to either enforce directions or orders issued by itor to ask for appropriate orders from High Courts in that behalf.

From Para 63 (Final observations)

63. A conspectus of the aforesaid judgments in the context of municipal elections would yield the following results.
I. Under Article 243 ZG(b), no election to any municipality can be called in question except by an election petition presented to a Tribunal as is provided by or under any law made by the Legislature of a State. This would mean that from the date of notification of the election till the date of the declaration of result a judicial hands-off is mandated by the non-obstante clause contained in Article 243ZG debarring the writ court under Articles
226 and 227 from interfering once the election process has begun until it is over. The constitutional bar operates only during this period. It is therefore a matter of discretion exercisable by a writ court as to whether an interference is called for when the electoral process is “imminent” i.e, the notification for elections is yet to be announced.
II. If, however, the assistance of a writ court is required in subserving the progress of the election and facilitating its completion, the writ court may issue orders provided that the election process, once begun, cannot be postponed or protracted in any manner.
III. The non-obstante clause contained in Article 243ZG does not operate as a bar after the election tribunal decides an election dispute before it. Thus, the jurisdiction of the High Courts under Articles 226 and 227 and that of the Supreme Court under Article 136 of the Constitution of India is not affected as the non-obstante clause in Article 243ZG operates only during the process of election.
IV. Under Article 243ZA(1), the SEC is in overall charge of the superintendence, direction and control of the preparation of electoral rolls, and the conduct of all municipal elections. If there is a constitutional or statutory infraction by any authority including the State Government either before or during the election process, the SEC by virtue of its power under Article 243ZA(1) can set right such infraction. For this purpose, it can direct the State
Government or other authority to follow the Constitution or legislative enactment or direct such authority to correct an order which infracts the constitutional or statutory mandate. For this purpose, it can also approach a writ court to issue necessary directions in this behalf. It is entirely upto the SEC to set the election process in motion or, in cases where a constitutional or statutory provision is not followed or infracted, to postpone the
election process until such illegal action is remedied. This the SEC will do taking into account the constitutional mandate of holding elections before the term of a municipality or municipal council is over. In extraordinary cases, the SEC may conduct elections after such term is over, only for good reason.
V. Judicial review of a State Election Commission’s order is available on grounds of review of administrative orders. Here again, the writ court must adopt a hands-off policy while the election process is on and interfere either before the process commences or after such process is completed unless interfering with such order subserves and facilitates the progress of the election.
VI. Article 243ZA(2) makes it clear that the law made by the legislature of a State, making provision with respect to matters relating to or in connection with elections to municipalities, is subject to the provisions of the Constitution, and in particular Article 243T, which deals with reservation of seats.
VII. The bar contained in Article 243ZG(a) mandates that there be a judicial hands-off of the writ court or any court in questioning the validity of any law relating to delimitation of constituency or allotment of seats to such constituency made or purporting to be made under Article 243ZA. This is by virtue of the non-obstante clause contained in Article 243ZG. The statutory provisions dealing with delimitation and allotment of seats cannot therefore be questioned in any court. However, orders made under such statutory provisions can be questioned in courts provided the concerned statute does not give such orders the status of a statutory provision.
VIII. Any challenge to orders relating to delimitation or allotment of seats including preparation of electoral rolls, not being part of the election process as delineated above, can also be challenged in the manner provided by the statutory provisions dealing with delimitation of constituencies and allotment of seats to such constituencies.
IX. The constitutional bar of Article 243ZG(a) applies only to courts and not the State Election Commission, which is to supervise, direct and control preparation of electoral rolls and conduct elections to municipalities.
X. The result of this position is that it is the duty of the SEC to countermand illegal orders made by any authority including the State Government which delimit constituencies or allot seats to such constituencies, as is provided in proposition (IV) above. This may be done by the SEC either before or during the electoral process, bearing in mind its constitutional duty as delineated in the said proposition.

From Para 68,

68. The most disturbing feature of these cases is the subversion of the constitutional mandate contained in Article 243K of the Constitution of India. The State Election Commissioner has to be a person who is independent of the State Government as he is an important constitutional functionary who is to oversee the entire election process in the state qua panchayats and municipalities. The importance given to the independence of a State Election Commissioner is explicit from the provision for removal from his office made in the proviso to clause (2) of Article 243K. Insofar as the manner and the ground for his removal from the office is concerned, he has been equated with a Judge of a High Court. Giving an additional charge of such an
important and independent constitutional office to an officer who is directly under the control of the State Government is, in our view, a mockery of the constitutional mandate. We therefore declare that the additional charge given to a Law Secretary to the government of the state flouts the constitutional mandate of Article 243K. The State Government is directed to remedy this position by appointing an
independent person to be the State Election Commissioner at the earliest. Such person cannot be a person who holds any office or post in the Central or any State Government. It is also made clear that henceforth, all State Election Commissioners appointed under Article 243K in the length and breadth of India have to be independent persons who cannot be persons who are occupying a post or office under the Central or any State Government. If there are any such persons holding the post of State Election Commissioner in any other state, such persons must be asked forthwith to step down from such office and the State Government concerned be bound to fulfil the constitutional mandate of Article 243K by appointing only independent persons to this high constitutional office. The directions contained in this paragraph are issued under Article 142 of the Constitution of India so as to ensure that the constitutional mandate of an independent
State Election Commission which is to conduct elections under Part IX and IXA of the Constitution be strictly followed in the future.

Citations :

Other Sources :

https://indiankanoon.org/doc/68534005/

https://www.indianemployees.com/judgments/details/state-of-goa-anr-versus-fouziya-imtiaz-shaikh-anr