In the words of our present Chief Justice of India,“….. the citizens’ faith in the judicial system will begin to wane because justice delayed is justice forgotten, excluded and finally discharged “ The quote certainly does not auger well if one were to look at pendency of tax cases in different layers of our judicial hierarchy – 28,000 cases in high courts with disposal rate of roughly 6000 each year. Ironically, the situation is worse in Mumbai, Delhi, Kolkata & Chennai where the wait time ranges between 10-15 years. Not to forget the figure of 2 lac crores often debated in the Parliament as arrears of tax in dispute. These could be more staggering in the future.
Menace of Tax pendency
The National Tax Tribunal (NTT) Act 2005, was enacted with an objective to replace the High Courts and render speedy adjudication of disputes on Direct & Indirect Tax matters. The NTT is expected to act like ‘Court of first instance’; a concept akin to Tax Court in matured tax jurisdictions. The necessity for uniformity in the administration and judicial interpretation of tax law from the orders of Income Tax and the Central Excise & Service Tax Tribunals (hierarchically lower than the High Courts) is of paramount importance – an area fraught with most uncertainty.
The proposal for NTT was initiated in late 80’s by the ‘Arrears Committee’, followed by a Bill in the Parliament in 2004 and thereafter notification in December 2005. It was supposed to be followed by the formation of 15 Tribunals; 10 for Direct Tax and five for Indirect Tax matters. It also sought constitution of a special 5 member bench to resolve conflicting decision on question of law should the benches differ in their view.
NTT mired in litigation & outcome scenarios
You call it a salient feature of our Constitutional system or a habitual necessity; most new legislations are first tested in the Court of law -- either on its constitutional validity or legal principles.
So is the fate of NTT - despite a noble intent, it still hangs in balance. The Act was challenged before various High Courts on several grounds, though, the most important were:
* Who is eligible to appear before NTT or rather more specifically, can a Chartered Accountant appear; and
More From This Section
* Judicial review & sovereignty with respect to writ jurisdiction of the High Courts & composition of the selection committee for appointment of members, respectively. The debate being, if the three member committee can include the Law & the Finance Secretary in addition to the Chief Justice.
During the pendency of the petitions, the legislators proactively amended the Law in 2007. The petition was finally heard by the Apex court in January 2009 by a 5 member bench and the judgment is still reserved.
As a Chartered Accountant in practice and Law graduate by education, I am conflicted from expressing any view on entitlement to appear. As regards judicial sovereignty, the 2007 amendment seems to fair well in terms of securing the independence of the Judiciary. The seven member Constitutional Bench decision of the Apex Court in Chandra Kumar’s case holding that Tribunals are supplementary in their role and the power of Judicial review vests with the High Court and Supreme Court acts as an inviolable basic structure of the Constitution. The Courts would therefore not be replaced insofar as the Tax related writ jurisdiction in concerned; nevertheless, the NTT would play a pivotal role in speedy adjudication of Tax disputes.
Justice delayed is justice denied !
A phrase coined by William Ewart Gladstone, one of UK’s PM in 19th century has become a rallying cry for legal reformers who view Courts and/or Governments acting too slowly in resolving disputes either because the legal framework is too complex & overburdened or the issue in question lacks political favour. In India, the most worrying aspect is speed of Justice. Leading Jurist Nani Palkhivala commented that though Justice in common parlance is blind, in India it is lame and hobbles on crutches. In landmark cases, the apex Court has criticized delay in delivering judgments. This is an opportunity for the Supreme Court to ‘walk the talk’.
I hope that in 2010 when the judgment is delivered, we are not encountered with shortage of members to man the NTT. And if that is the case, I have a simple suggestion.. elevate few deserving members of the Tax Tribunal as some of our Tribunal decisions are being hailed by foreign courts.
(The author is a partner with BMR Advisors and views are entirely personal)