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National Tax Tribunal Act, 2005:History of promulgation of NTT Act - Discussed.Whether High Courts which discharge judicial functions, can be substituted by an extra-judicial body such as NTT and whether the NTT in the manner of its constitution undermines a process of independence and fairness, which are sine qua non of an adjudicatory authority - Held: It was impermissible D for the legislature to abrogate/divest the core judicial appellate functions traditionally vested with the High Court, and to confer! vest the same, with an independent quasi-judicial authority, which did not even have the basic ingredients of a superior Court, like the High Court (whose jurisdiction is sought to be E transferred) - Jurisdiction vested in the High Courts u!Articles 226 and 227 of the Constitution, is not only in respect of the rightful implementation of statutory provisions, but also of supervisory jurisdiction, over courts and tribunals and cannot be curtailed under any circumstances.Whether while transferring jurisdiction to a newly created court/tribunal, it is essential to maintain the standards and the stature of the court replaced - Held: Parliament was not precluded from establishing a court under a new name, to exercise the jurisdiction that was being exercised by members G of the higher judiciary, at the time when the constitution came into force - But when that was done, it was critical to ensure, that the persons appointed to be members of such a court/ tribunal, should be appointed in the same manner, and ,should be entitled to the same security of tenure, as the holder of the judicial office, at the time when the constitution came into force - High Court.Whether the transfer of adjudicatory functions vested in the High Court to the NTT violates recognized constitutional B conventions - Held: Recognized constitutional conventions pertaining to the Westminster model, do not debar the legislating authority from enacting legislation to vest adjudicatory functions, earlier vested in a superior court, with an alternative court/tribunal - Exercise of such power by the C Parliament would per se not violate any constitutional convention.s.5 - Validity of- Clause that NTT would ordinarily have its sittings in the National Capital Territory of Delhi - Role of the Central Government in determining the sitting of benches D of the NTT - Held: It is not appropriate to allow the Central Government to play any role, with reference to the places where the benches would be set up, the areas over which the benches would exercise jurisdiction, the composition and the constitution of the benches, as also, the transfer of the E Members from one bench to another - Sub-sections (2), (3), (4) and (5) of s.5 are unconstitutional.s. 6 -- Validity of- Clause that a person would be qualified for appointment as a Member, if he is or has been a Member of the Income Tax Appellate Tribunal or of the Customs, F Excise and Service Tax Appellate Tribunal for at least 5 years - Held: Only a person possessing professional qualification in law, with substantial experience in the practice of law, will be in a position to handle the onerous responsibilities which a Chairperson and Members of the NTT will have to shoulder G - Accountant Members and Technical Members cannot said to have the stature and qualification possessed by judges of High Courts - s. 7 is declared unconstitutional.s. 7 - Validity of - Appointment of Chairperson and other Members by Central Governf'Ylent - Held: NTT has been H constituted as a replacement of High Courts - The manner of appointment of Chairperson/Members to the NTT will have to be by the same procedure (or by a similar procedure) to that which is prevalent for appointment of judges of High Courts - s. 7 cannot be considered to be constitutionally valid, since it involves participation of Secretaries of Departments of the Central Government in the process of selection and appointment of the Chairperson and Members of the NTT - s. 7 is declared as unconstitutional.s. 8 - Validity of - Appointment of Chairperson/Member to the NTT, in the first instance, for a duration of 5 years and reappointment, for a further period of 5 years - Held: A C provision for reappointment would itself have the effect of undermining the independence of the Chairperson/Members of the NTT - Every Chairperson/Member appointed to the NTT, would be constrained _to decide matters, in a manner that would ensure his reappointment in terms of s. 8 of the Act - o His decisions may or may not be based on his independent understanding - s. 8 is declared as unconstitutional.s.13(1)- Whether s.13(1) insofar as it allows Accountants to represent a party to an appeal before the NTT is valid - Held: A perusal of s.13 reveals, that a party to an appeal (other than the Revenue) may appear either in person, or may authorize one or more Chartered Accountants, or legal practitioners, or any person duly authorized by him, to present his case before the NTT - The Members of the NTT would most definitely be confronted with the legal issues emerging out of Family Law, Hindu Law, Mohammedan Law, Company Law, Law of Partnership, Law related to Territoriality, Law related to Trusts and Societies, Contract Law, Law relating to Transfer of Property, Law relating to Intellectual Property, Interpretation of Statutes, and other Miscellaneous Provisions of Law, from time to time - The NTT besides these statutes, will not only have to interpret the provisions of the three statutes, out of which appeals will be heard by it, but will also have to examine a challenge to the vires of statutory amendments made in the said provisions, from time to time - Chartered Accountants at best would be specialist in B understanding and explaining issues pertaining to accounts - Allowing them to appear on behalf of a pctrty before NTT would be unacceptable - s. 13 insofar it allows Chartered Accountant to represent a party to an appeal before the NTT is declared unconstitutional.s. 15 - Whether Company Secretaries should be allowed to appear before the NTT to represent a party to an appeal in the same fashion, and on parity with, Accountants - Held: Keeping in mind the fact, that in terms of s. 15, the NTT would C hear appeals from the Income Tax Appellate Tribunal and the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) only on "substantial questions of /aw': it is difficult to appreciate the propriety of representation, on behalf of a party to an appeal, through either Chartered Accountants or D Company Secretaries, before the NTT - The determination at the hands of the NTT is shorn of factual disputes - It has to decide only "substantial questions of law" - The Company Secretaries cannot be allowed to represent a party to an appeal before the NTT - The claim of Company Secretaries, E to represent a party before the NTT is rejected.s. 5, 6, 7, 8 and 13 - Since these provisions of the NTT Act have been held to be illegal and unconstitutional, the remaining provisions have been rendered otiose and worthless, and as such, the provision$ of the NTT Act, as a whole, are set aside - Since the said provisions, constitute the edifice of the NTT Act, and without these provisions the remaining prov1s1ons are rendered ineffective and inconsequential, the entire enactment is declared unconstitutional.Constitution (Forty-second Amendment) Act, 1976 - Constitutional validity of, assailed on the ground that the same violates the basic structure of the Constitution of India, by impinging on the power of "judicial review" vested in the High Court- Discussed - Income Tax Act - Customs Act, 1962 - Central Excise Act, 1944.Constitution of India, 1950:Basic structure - Does the NTT Act violate the "basic structure" of the Constitution - Held: Jurisdiction transferred by the NTT Act was with regard to specified subjects under tax related statutes - That was permissible - However, the NTT Act has not transferred power vested in courts by the Constitution - The power of 'judicial review" vested in the High Court u!Articles 226 and 227 of the Constitution, has remained intact - Since the above jurisdiction of the High Court has not been ousted, the NTT will be deemed to be discharging a supplemental role, rather than a substitutional role - The Parliament has 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 the 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 - National Tax Tribunal Act, 2005.Arts 129, 131, 132 to 134A, 136, 141, 145, 214, 215, 225, 226, 227, 368 - Powers of High Courts and Supreme Court - Scope of, discussed.Art.227 - Scope of - Held: The superintending power of the High Courts under Art. 227 is to keep courts and tribunals F within the bounds of the law - Hence, errors of law that are apparent on the face of the record are liable to be corrected - In correcting such errors, High Court has necessarily to state what the law is by deciding questions of law, which bind subordinate courts and tribunals in future cases - Code of G Civil Procedure, 1908 - s. 100Code of Civil Procedure, 1908: s.100 - Scope of- Held: The superior courts alone are vested with the power to, decide questions of law - Hitherto Parliament has entrusted a superior court of record with decisions on questions of law substantial questions of law - It is obvious, that substantial questions of law which relate to taxation would also involve many areas of civil and criminal law - It is, therefore, not correct to say that taxation, being a specialized 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 and the superior courts alone.Income Tax Legislation in India - Historical background - Discussed. Customs Legislation in India - Historical background - Discussed. Central Excise - Legislation in India - Historical background - Discussed. |
