Govt has to rework NTT to SC’s satisfaction
Given the fact that the Choksi Committee recommended the setting up of a Central Tax Court way back in 1978, and that the case against the National Tax Tribunal (NTT) has been going on since 2006—the NTT Act was passed in 2005—it is shocking that it has still not been drafted to the satisfaction of the Supreme Court which, after referring it back to the government for fixing a few times in the past, finally struck down the Act last week after saying it went against the basic structure of the Constitution. While many have argued the NTT is like other tribunals such as TDSAT or Compat, and its chairperson and members are also to be chosen by a body which has the Chief Justice of India in it, the vital difference is that there are already TDSAT-type tribunals for both direct and indirect taxes. The NTT, however, was envisaged as an intermediate court between them and the Supreme Court with the power to decide on substantial questions of law, a privilege that was till now only vested in courts. Indeed, once the NTT came into being, all tax cases pending in various high courts were to be passed on to it. As the Court’s minority—but consenting—judgment puts it, ‘the present Act is a departure made for the first time by Parliament’.
The reason for wanting a single national tax tribunal, as the Choksi Committee argued, was the long delays in various high courts—there are presently around 4 lakh pending cases in courts with around R7.7 lakh crore of tax demands—which was due to both a shortage of benches in the existing high courts as well as the fact that several high courts chose to take decisions on the same point of law despite others having taken a view already; indeed, in many cases, the views were contradictory. While the NTT may be a laudatory objective, the minority judgment makes a powerful point when it says the substantial questions of law which relate to taxation often also involve many areas of civil and criminal law. There is the additional problem of separation of powers—the NTT, being a tribunal, would come under the supervision of the government, but the single-biggest litigant in tax matters is the government itself.
While the issue of the NTT directly encroaching upon the High Court’s power under Article 227 is a serious one, there is the larger problem raised by the Choksi Committee, of the long delays and the fresh addition to the backlog—63,000 of the pending cases are less than a year old—and the impact this has on the larger economy. Appointing more judges in high courts may help but, if each high court is to interpret the same point differently, this is a big problem. All of this requires the judiciary and the government to sit down and find a solution to the matter. Given the nature of the relations between the two, however, this is looking increasingly difficult, at least right now.