SC reserves verdict on Tax Tribunal

The Supreme Court on Wednesday reserved verdict on petitions challenging the constitutional validity of the setting up of National Tax Tribunal (NTT) to take away the jurisdiction of the High Court in deciding tax related matters.

A five judge Constitution Bench comprising Chief Justice R.M. Lodha and Justices J.S. Khehar, J. Chelameswar, A.K. Sikri and Rohinton Nariman reserved the verdict at the conclusion of arguments from senior counsel Arvind Datar, for Madras Bar Association, Attorney-General Mukul Rohatgi and Solicitor-General Ranjit Kumar for the Centre, senior counsel K.V. Viswanathan for the Institute of Chartered Accountants of India and Ardhendumauli Kumar Prasad for the Bar Council of India.

Both the Attorney-General and Solicitor-General had defended the NTT stating that the move was intended to reduce the pendency of cases in the High Courts.

Mr. Datar argued that the NTT ousting jurisdiction of the High Courts was against the basic structure of the Constitution. He said where party before the NTT was always the Ministry of Finance, a quasi-judicial tribunal would not inspire confidence and it would shake the very foundation of the principles of independence of judiciary, rule of law and separation of powers.

The trend of setting up of NTT would destroy the institutional integrity envisaged for the legislature, executive and judiciary. He argued that there was a grave danger that the judiciary would be substituted by a host of quasi-judicial tribunals which would function as departments of various ministries.

Mr. Viswanathan, however, justified the NTT and said only those cases which involved a substantial question of law would qualify for admission in the NTT. He said chartered accountants who had expertise in accounts would be competent to adjudicate intricate and complicated issues.

At this juncture, the CJI asked the counsel as to how chartered accountants would be able to determine questions of law when they were not legally trained for it. The CJI said, “We are not under-estimating the CAs but the question is whether really they can help in determination of questions of law. Even to spell out questions of law is beyond the scope of CAs, leave alone their determination.”

The CJI pointed out that the NTT would not have the power of autonomy as the Chairman could not even constitute the benches, as it would be done by the Central government. He said, “Autonomy is fundamental and even this has not been provided. There are holes and gaps in the Act for NTT.”

Mr. Prasad argued that the NTT was not a competent body to decide substantial questions of law under the scheme of our Constitution. He said as per the Advocates Act only lawyers were entitled to appear before the Tribunals.