Every appeal would go before a Bench comprising a judicial and a technical member. In case of difference of opinion between the two, the dispute would be referred to the Chairperson who would be a person who has been a judge of the Supreme Court or a Chief Justice of a High Court. The Chairperson would resolve the dispute or nominate another member to do so (Section 18 of the NTT Ordinance, 2003).

Thus, under the Ordinance, the composition of the NTT Bench would have been of one technical member along with a judicial member. The appointment of technical members on the Bench was viewed adversely in certain quarters for the main reason that the present right of a litigant to be heard by two judges of a High Court would be withdrawn because under the NTT Ordinance the Bench was to be of just one judicial member.

To appreciate the cause for concern, it is necessary to note that the NTT is sought to be appointed to replace the appellate functions performed by High Courts. Under the scheme of the Income-tax Act, 1961, all questions of fact and law, including mixed questions of fact and law, are decided by the Income-tax Appellate Tribunal (ITAT) as the second appellate authority. Since questions of fact are involved, the Tribunal rightly comprises one accountant member.

The ITAT not only plays a useful role but also is a crucial appellate authority because it is the final fact-finding body. In other words, on issues of facts, the ITAT decision is final and binding on the taxpayer and the tax department.

It is only on a substantial question of law that an appeal can be presently filed before the High Court under section 260-A. Even on a question of law, which is already decided by the Supreme Court where the legal position is reasonably certain, no appeal would lie with the High Court because every question of law cannot be treated as a substantial question of law.

Therefore, at present, High Courts are primarily concerned with interpretation of law not already covered by the decision of the apex Court. Such an interpretation is wholly, solely and exclusively a judicial function. It is with a view to expediting disposal of the backlog of cases in High Courts that the NTT is proposed to be set up.

Such a Tribunal necessarily must have only judicial members because the NTT would be performing the same functions as the High Courts perform at present.

To appoint a member who is not qualified to be appointed as a High Court judge would be fundamentally wrong because under the scheme of separation of powers enshrined in the Constitution, the judicial authorities have their own demarcated field of operations and only those qualified to discharge judicial functions can be so appointed.

To appoint technical members on the NTT who are not qualified to be appointed as judges of a High Court would be contrary to the mandate of the Constitution. It must be remembered that the NTT is not an Administrative Tribunal; it is a judicial Tribunal which is meant to substitute the Bench of the High Court empowered under Section 260-A of the Income-tax Act, 1961 to hear appeals from orders of the ITAT on substantial questions of law.

Since the NTT, as soon as it is constituted and starts functioning, would hear appeals which are presently pending before all the High Courts, to change the NTT's constitution would not only be contrary to the spirit of the Constitution but also be in violation of Section 260-A of the Income-Tax Act, 1961 which enjoins that the appeals from the ITAT order can only be heard by a Bench of the jurisdictional High Court. Indeed, Section 260-A is nothing but a promise given by statute that appeals on a substantial question of law will be heard by a Bench of the High Court.

To change the composition of this appellate forum and include a technical member on the Bench would be in violation of the promise given under the statute.

In my earlier article dealing with the principle of promissory estoppel (Business Line, September 4), a recent decision of the Supreme Court in State of Punjab versus Nestle India Ltd. (269 I.T.R. 97) has been discussed. While in an earlier case of Jit Ram Shiv Kumar versus State of Haryana (3 S.C.R. 689), the Supreme Court held that the plea of estoppel is not available against the state in the exercise of its legislative functions, this view was disapproved by a later three-member Bench of the Supreme Court where it was held that the doctrine of promissory estoppel would not apply only if the Government has acted in a manner which is illegal or which it was not competent to act or is a fraud under the Constitution.

In the case of the NTT Ordinance 2003, it is the other way round. By permitting technical members to be appointed on the NTT Bench, the Government had acted in a manner which is contrary to the Constitution which guarantees to the citizens that judicial functions would be exercised only by persons with judicial qualifications and who are eligible to be appointed as judges of the High Courts. Indeed, Section 260-A is totally in conformity with the constitutional provisions because substantial questions of law can only be decided by persons with judicial qualifications to be appointed as High Court judges.

Since all pending appeals have been filed in the High Courts on the basis that they would be heard by High Court judges, transferring these appeals to the NTT comprising non-judicial members would be contrary to the mandate of the Constitution and the promise given under Section 260-A of the IT Act. Therefore, technical members should not find a place on the proposed the NTT.

While the Cabinet has approved the scheme pertaining to the NTT, the legislation must necessarily amend Sections 5, 6 and 13 of the NTT Ordinance, 2003. The Bench must comprise two judicial members as defined in Section 6(2) of the Ordinance.

Further, only legal practitioners can appear on behalf of a litigant as is the case in matters before the High Courts. Other consequential amendments will need to be made before the new legislation is introduced either as a fresh Ordinance or as a Bill in the coming winter session of Parliament.

To conclude, the NTT needs to be set up as expeditiously as possible. The Government has rightly decided to set up as many Benches of the NTT as there are High Courts but jurisdictions like Mumbai may need an additional Bench in view of the large back-log of cases.

This new institution will certainly be very effective in collecting revenue so long as the supremacy of the judicial process is maintained, that is, the Bench comprises only judicial members and the existing procedure for hearing as adopted in the High Courts continues to be followed.

(The author, a Mumbai-based advocate specialising in tax laws, can be contacted at ranina@bom2.vsnl.net.in)

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