Apex court strikes down National Tax Tribunal
26 Sept 2014 5:35 AM IST
A five-judge constitution bench headed by Chief Justice RM 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.
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.
According to experts, the government will now have to look at new ways to reduce pending litigation both on direct and indirect taxes. More than Rs4 trillion of tax demand is locked up in pendency and litigation in tribunals and courts, official estimates show. The tribunal was seen as an alternative to the high court where the tax department or the assessee, unhappy with the decision of the appellate tribunal, could file an appeal. The decision of the NTT could only be challenged in the Supreme Court.
The idea was to move tax cases away from the high court, already burdened with other cases, and thus speed up decision-making.
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.
According to experts, the government will now have to look at new ways to reduce pending litigation both on direct and indirect taxes. More than Rs4 trillion of tax demand is locked up in pendency and litigation in tribunals and courts, official estimates show. The tribunal was seen as an alternative to the high court where the tax department or the assessee, unhappy with the decision of the appellate tribunal, could file an appeal. The decision of the NTT could only be challenged in the Supreme Court.
The idea was to move tax cases away from the high court, already burdened with other cases, and thus speed up decision-making.
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