Friday, September 26, 2014

SC: National taxation tribunal law unconstitutional

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Dinamalar ePaper

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National taxation tribunal law unconstitutional: SC

NEW DELHI, September 25, 2014

J. VENKATESAN

A Constitutional Bench of the Supreme Court headed by Chief Justice R.M. Lodha (in picture),on Thursday struck down the National Tax Tribunal Act, holding it unconstitutional. File photo: S. Subramanium
A Constitutional Bench of the Supreme Court headed by Chief Justice R.M. Lodha (in picture),on Thursday struck down the National Tax Tribunal Act, holding it unconstitutional. File photo: S. Subramanium

It takes away jurisdiction of High Courts, says Bench

The Supreme Court on Thursday declared as unconstitutional the National Tax Tribunal Act under which a national tribunal was set up to decide tax-related cases by taking away the jurisdiction of High Courts in such matters.

A five-judge Constitution Bench comprising Chief Justice of India R.M. Lodha and Justices J.S. Khehar, J. Chelameswar, A.K. Sikri and Rohinton Nariman held that it was the ultimate encroachment on the exclusive domain of the superior Courts of Record in India.

The Bench passed the order on a batch of petitions filed by the Madras Bar Association and others challenging the validity of the National Tax Tribunal, contending that there was a grave danger that the judiciary would be substituted by a host of quasi-judicial tribunals which function as departments of various ministries.

Writing the main judgment, Justice Khehar said Parliament had the power to enact legislation and to vest adjudicatory functions, earlier vested in the High Court, with an alternative court/tribunal. Exercise of such power by Parliament would not per se violate the basic structure of the Constitution. “The basic structure of the Constitution will stand violated if, while enacting legislation pertaining to transfer of judicial power, Parliament does not ensure that the newly created court/tribunal conforms with the salient characteristics and standards of the court sought to be substituted. The National Tax Tribunal encroaches upon the power of higher judiciary, which only can decide issues involving substantial laws and not a tribunal.”

Justice Nariman wrote a separate but concurring judgment.

The Bench said: “It is obvious that substantial questions of law which relate to taxation would also involve many areas of civil and criminal law, for example Hindu joint family Law, partnership, sale of goods, contracts, Mohammedan Law, Company Law, law relating to Trusts and societies, transfer of property, law relating to intellectual property, interpretation of statutes and Sections dealing with prosecution for offences. It is therefore not correct to say that taxation, being a specialised subject, can be dealt with by a tribunal.

“All substantial questions of law have, under our constitutional scheme, to be decided by the superior courts alone. Indeed, one of the objects for enacting the National Tax Tribunals Act, as stated by the Minister on the floor of the House, is that the National Tax Tribunal can lay down the law for the whole of India which then would bind all other authorities and tribunals. This is a direct encroachment on the high courts’ power under Article 227 to decide substantial questions of law which would bind all tribunals.”


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SC strikes down National Tax Tribunal

Dhananjay Mahapatra, TNN | Sep 25, 2014, 11.16AM IST (With inputs from PTI)

SC said since the pith and substance of the Act has been found unconstitutional, the entire law needed to be struck down. 

NEW DELHI: The Supreme Court on Thursday declared the National Tax Tribunal (NTT) unconstitutional.

The tribunal was envisaged to function like National Green Tribunal (NGT) in the taxation field. 

A five-judge constitution bench headed by Chief Justice R M Lodha said that the Act passed by Parliament in 2005 is "unconstitutional" as the National Tax Tribunal (NTT) encroaches upon the power of higher judiciary, which can only decide issues involving substantial laws and not a tribunal.

SC struck down several provisions of NTT Act, which were key to the legislation.

Since the pith and substance of the Act has been found unconstitutional, the entire law needed to be struck down, the top court said.

SC said the legislation was unconstitutional as it failed to transfer the convention and characters of an adjudicatory body, akin to judicial powers, to the NTT.

SC also ruled that chartered accountants cannot represent a tax litigant in a revenue tribunal.

The apex court passed the order on a batch of petitions challenging the constitutional validity of NTT contending that there was a grave danger that judiciary will be substituted by a host of quasi-judicial tribunals which function as departments of various ministries. 

The first petition on the issue was filed in 2006 when the Madras Bar Association had challenged the setting up of NTT and later many other lawyers bodies followed suit. 

The NDA government had justified the creation of NTT, saying that the idea of creating tribunals was to unclog the backlog of cases in the high courts.


Also read the related links

1. Hon'ble SC Constitutional Bench Judgment in PDF Format: http://judis.nic.in

2. Hon'ble SC Constitutional Bench Judgment in Text Format: http://judis.nic.in

3. Bare Act of National Tax Tribunal Act, 2005 at: http://www.indiankanoon.org

4. Gazette Notification of National Tax Tribunal Act, 2005 at: http://lawmin.nic.in

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