National Tax Tribunal Ordinance, 2007 – Should have been introduced after having A dialoGUe with bar council of india and petitioners – COSMETICS CHANGES MADE MAY NOT SERVE THE DESIRED OBJECT OF INDEPENDENCe OF THE JUDICIARY

Apex Court in their order dated 9th January, 2007 (AIFTP Journal, January, 2007, P. 38) directed the Government to make appropriate amendments in the National Tax Tribunal Act, as per the affidavit, other provisions of the Act and thereafter the matter will be taken up for hearing. The petitioners and the professional organizations were eagerly waiting to have an interactive discussion meeting with the Government for the proposed amendments. However, without discussing with the petitioners or any of the professional organizations, and without any justifiable reason hurriedly promulgated the National Tax Tribunal (Amendment) Ordinance, 2007 No. 3 of 2007 by making only three amendments. The members of All India Federation of Tax Practitioners are very much concerned for the Judicial Independence of the National Tax Tribunal. Federation is not satisfied with only three amendments which are proposed in the National Tax Tribunal (Amendment) Ordinance, 2007. Federation is of the opinion that the Government should have initiated a dialogue with the Bar Council of India and the petitioners before promulgation of the ordinance.

Federation is of the considered opinion that, for the independent functioning of the National

Tax Tribunal the Government must make necessary amendments, at least in respect of followings:–

1. Appointment of members for a period of five years

As per section 8, the Chairperson and every other member shall hold the office, as such for a term of five years from the date on which he enters his office, but shall be eligible for reappointment. Once the members are appointed they should be allowed to continue till their retirement. Appointing the members for a period of five years and reappointing thereafter will effect the judicial functioning of the institution. It is contrary to the ratio of the Supreme Court in S. P. Sampat Kumar vs. Union of India AIR 1987 SC 386. When the Income Tax Appellate Tribunal was constituted in the year 1941 the appointment of members of the Income Tax Appellate tribunal was on tenure basis, on five years contracts. However since 1948 onwards, the appointment of members on a contract basis was given up and appointments were on the permanent basis in a regular cadre. The Federation is of the opinion the members should be appointed on permanent basis and not for a period of five years and renewal should not be at the mercy of Government officials.

2. Appointment of Chairman and members

As per section 7(1) the Chairman and members shall be appointed by the Chief Justice of India or Judge of Supreme Court nominated by him and other two members of the committee are, the Law Secretary and Finance Secretary, even for the appointment of the Chairman of the National Tax Tribunal. For the appointment of members the Chairman of the National Tax Tribunal is not one of the committee member. A serious thought is required to be given as to why the Government desire to have two secretaries in the selection Committee. Federation is of considered opinion that, secretaries should not be the members of the Selection Committee. members should be appointed by the interview headed by senior most Judge of Supreme Court, Chairman of National Tax Tribunal and Collegium of Judges of Supreme Court nominated by the Chief Justice of India.

3. Power of transfer

As per section 5 (5) the power of transfer of members vests with the Government. According to the Federation, the power of transfer must be with the Chairman or the Collegium consisting of Chairman & Senior Members of National Tax Tribunal and not with the Ministry. For the independency of the National Tax Tribunal, power of transfer must be given to the Chairman and it should not be with the Ministry.

4. Touring Bench

As per the proviso to section 5(2), the Chairman has power to constitute a touring bench for not more than 15 days. Such a restriction will hamper the judicial functioning of the National Tax Tribunal. The Chairman should not have any restriction to constitute a touring bench. He should have the power to constitute the touring bench depending upon the circumstances may demand.

5. Power to Condone the delay

As per section 15 (2) proviso, the National Tax Tribunal has power to condone the delay of not more than 60 days. Such a restricted power will affect the judicial function. There should not be any restriction on the powers of the Members of the National Tax Tribunal to condone the delay in deserving matters.

6. Substitution to High Court

As the forum is to substitute the High Court to decide the “substantial question of law” all other terms and conditions applicable to Judges and other proceedings may be applicable to the National Tax Tribunal. 

7. Faith and Confidence in the Judiciary

People are having faith and confidence in the judiciary, therefore, it is very essential that to enjoy the confidence of the people complete independence must be given to the National Tax Tribunal.

As per Article 50 of the Constitution of India, independence of Judiciary is basic structure of the Constitution.

Federation is of the opinion that, some of the provisions of National Tax Tribunal Act require amendments for maintaining the independence of the Institution of National Tax Tribunal. Federation is of the opinion that, when you substitute a forum, it should be equal in all respects. It cannot be inferior to the existing one. The Federation is very much concerned with the appointment of Members, terms of employment, transfer of members, etc.

Federation is of the opinion that, if Government would have initiated the discussion with the petitioners before promulgation of ordinance, substantial time of the court would have been saved. Federation is very positive that, in case the constitutional validity of the National Tax Tribunal is upheld by the Apex Court, Apex court may strike down some of the provisions of the National Tax Tribunal Act, which affect the independence of the National Tax Tribunal. We are hopeful that the nation and tax-payers will benefit.

Members may send their suggestions to the office of the Federation, which will enable us to consider the same objectively.