The Hindu Business Line : Work awaits the new Tribunal

RECENTLY, Parliament passed the National Tax Tribunal Bill. This was the second attempt by the Government to put in place a legislation to hear tax matters. The National Tax Tribunal ordinance promulgated by the previous government lapsed. The Bill, now passed, retains most of the features of the previous ordinance.

The purpose of the Bill, as made out by the Law Ministry, is to expedite the disposal of the large number of cases relating to taxation matters pending before various High Courts.

It is contended that such pendency has resulted in blocking of huge revenues due to the government. It is also contended that the judges of the High Courts are not `specialists' and, therefore, a separate National Tax Tribunal (NTT) will be better suited to decide tax cases. The NTT is being set up in terms of Article 323B of the Constitution.

As per the provisions of the Bill, the sitting Benches of the NTT will be ordinarily in Delhi and other places to be decided by the Government.

Each Bench will have two members and the NTT will have one chairperson. The other salient features of the NTT, as envisaged in the Bill, are:

* Appeals against the orders passed by the Income-Tax Appellate Tribunal (ITAT) and the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) can be filed before the NTT. However, the case should involve a substantial question of law. Such an appeal can be filed within 120 days from the date of receipt of the order appealed against. The NTT has powers to condone a delay of 60 days beyond the period of 120 days.

* Proceedings before the NTT will be deemed to be judicial and it will have powers to punish for contempt.

* It will have powers to pass interim orders and grant waiver of pre-deposit of the disputed duty amounts. It can also award costs.

* Further appeal against the orders of the NTT will lie before the Supreme Court and the same have to be filed within 60 days from the date of receipt of the order appealed against. However, the Supreme Court has powers to condone any delay in filing of the appeal without any limit subject to its satisfaction that the appellant was prevented by sufficient cause from filing the appeal in time.

* There is a provision for reference to a third member in case the two members of a Bench take different views and also a provision for constitution of a Special Bench, if two Benches take different views.

* The chairperson of the NTT will be a person who had been a judge of the Supreme Court or the Chief Justice of a High Court.

For appointment as a Member, the qualification will be that a person should be eligible for appointment as a judge of a High Court or should have been a Member of ITAT or CESTAT for at least seven years.

* The designations as Member-Technical and Member-Judicial have been done away with. Now there will be only Members.

* The tax cases pending in the various High Courts are to be transferred to NTT from a date to be notified by the Government.

The earlier ordinance had a provision for appointment of departmental officers as NTT Members. Thus, the chairman and members of the Central Board of Excise and Customs (CBEC) as well as the Central Board of Direct Taxes (CBDT), members of the Settlement Commission, and Chief Commissioners can all hope to become NTT Members. Now that is not possible. A person who is eligible to become a judge of a High Court can be appointed as Member now.

Also, a person who was or is a member of the direct tax/indirect tax tribunals at least for seven years can be appointed to the NTT. Thus, the impression that the NTT will be a secure and rewarding place for bureaucrats about to retire has been removed.

The Bill provides for transfer of all pending cases to NTT from the various High Courts. However, Clause 23(2)(b) of the Bill states that the NTT can proceed to deal with the matter from the stage at which the cases are transferred or from an earlier stage or de novo, as it may deem fit.

It is not explained why option should be given to the NTT to proceed from an earlier stage of a case.

If the purpose is to expedite disposal of the pending cases, then empowering the NTT to deal with a case from an earlier stage will not take the cases forward. Such a measure will not help reduce pendency.

The NTT is given powers to pass interim orders. But this power can be exercised only when documents in support of the plea for interim orders are furnished to the other party and also an opportunity given to the party of being heard.

The High Courts have powers to grant interim relief without such restrictions. Exigencies may demand immediate relief. Hence, there is no justification for the NTT to be denied such powers.

The conditions imposed now only appear to suggest that the Government does not repose full faith in the forum.

Similarly, in respect of the powers granted to the Tribunal to punish for contempt, the Bill makes it mandatory that such cases be heard by a Special Bench consisting of five Members constituted by the chairperson.

When numerous Benches of NTT are proposed to be established throughout the country to hear appeals, then restricting the power to punish for contempt by the above procedure will not help in any manner the implementation of the orders of the Benches in proper spirit and without delay.

One aspect of the current system is that several orders of the Tribunals have not been implemented for years on the ground that the Government has filed further appeals against such orders and even without stay of such orders, the matters are kept pending.

If a Special Bench has to be constituted every time a contempt proceeding is initiated, it can only reduce the overall effectiveness of the NTT.

Again with regard to powers of condonation of delay by the NTT, the Bill proposes powers to condone a delay of 60 days.

At the same time, the ITAT as well as the CESTAT, whose decisions can be appealed against before NTT, are vested with powers to condone delay without any time limit.

Similarly, in respect of further appeals from NTT to the Supreme Court, the latter will have powers to condone delay without limitation. Therefore, limiting the powers of NTT to condone a delay of only 60 days is inexplicable.

One important aspect is that High Courts will still have powers to entertain writs in terms of Articles 226 and 227 of the Constitution. Aggrieved litigants, in appropriate cases, can still approach the High Courts directly for relief.

This apart, in the L. Chandra Kumar vs Union of India (92 ELT 318), a Constitution Bench of the Supreme Court held that the powers vested in the High Courts to exercise judicial superintendence over decisions of all courts and Tribunals within their respective jurisdiction is a part of the basic structure of the Constitution and any exclusion of their power of review will destroy such basic structure of the Constitution.

Accordingly, it was held that all decisions of Tribunals, whether created pursuant to Article 323A or 323B of the Constitution, will be subject to the High Court's writ jurisdiction under Articles 226/227 before a Division Bench of the High Court within whose territorial jurisdiction the particular Tribunal falls.

It remains to be seen how this decision of the Supreme Court will affect the rulings to be given by the NTT, if a litigant wants to challenge the same by invoking the writ jurisdiction of a High Court instead of appealing to the Supreme Court.

The assertion by the Law Minister that High Court judges are not specialists in tax matters and, therefore, a specialised Tribunal should be set up to decide tax cases is debatable. The NTT Bill provides for appeal to the Tribunal only when a substantial question of law is involved. This being the case, the assertion boils down to saying that High Court judges cannot decide questions of law.

The further assumption that huge revenue is blocked because of pending litigation is also questionable because all disputed amounts may not be confirmed as revenue due to the Government. The Government itself is a major litigant before the High Courts in tax matters.

But one thing is certain: When High Courts are overburdened with huge backlog of cases, the establishment of a Tribunal for exclusively handling tax matters will definitely help expedite pending cases which, in turn, can contribute to better tax administration.

(The author is a Chennai-based advocate.)