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The apex court asked attorney general of India Mukul Rohatgi what the value of a tribunal decision substituting that of a high court would be. It then observed that if found binding, the tribunal decision would result in judicial power being taken away and if not, it would just be a mockery of the procedure. Photo: Mint
The apex court asked attorney general of India Mukul Rohatgi what the value of a tribunal decision substituting that of a high court would be. It then observed that if found binding, the tribunal decision would result in judicial power being taken away and if not, it would just be a mockery of the procedure. Photo: Mint

National Tax Tribunal: Spotlight on tribunalization at SC hearing

The court says the proposed National Tax Tribunal would either take away judicial powers or make a mockery of judicial procedure

New Delhi: The Supreme Court on Thursday said the proposed National Tax Tribunal (NTT) would either take away judicial powers or make a mockery of judicial procedure, while the Union government defended it as a “restructuring of dispensation of justice".

The apex court was hearing a writ petition challenging a 2005 proposal to set up the tribunal. The case is being heard by a Constitution bench of five judges headed by chief justice R.M. Lodha and justices J.S. Khehar, J. Chelameswar, A.K. Sikri and Rohinton F. Nariman.

The hearing veered towards the core debate of “tribunalization", even though the petition challenges a quasi-judicial body deciding “substantial questions of law" in appeal. Tribunalization refers to the increasing creation of alternative forums to decide cases, which could take away judicial powers, as submitted by the Madras Bar Association, a petitioner in the case.

Section 260A of the Income Tax Act says substantial questions of law will be decided by the high court. The NTT, however, looks to substitute that in order to reduce pendency of cases.

A “substantial question of law", according to precedent, is one which is of general public importance or significantly and directly affects the rights of the parties involved.

Article 323B of the Constitution, which talks about the creation of tribunals by the executive, was also challenged as being violative of the concept of separation of powers between the executive and the judiciary. The NTT Act allows the executive “extensive control" with regard to appointments of members and procedure of the tribunal.

The apex court asked attorney general of India Mukul Rohatgi what the value of a tribunal decision substituting that of a high court would be. It then observed that if found binding, the tribunal decision would result in judicial power being taken away and if not, it would just be a mockery of the procedure.

Rohatgi said the decisions of the NTT should be binding on all tax issues it decides, subject to the apex court’s decision. Calling it a “restructuring of dispensation of justice", he submitted that the NTT would be a cohesive body deciding appeals from various ITATs, instead of multiple proceedings in various high courts.

Chief justice Lodha added the efficacy of the NTT law could be questionable if the tribunal consisted of only one judicial member in the form of the chairman and 59 other members with non-judicial backgrounds.

Justice Khehar noted that the tribunal would have “far reaching consequences on the financial health of the country".

Hearing will resume on 22 July.

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