The Supreme Court on Thursday struck down National Tax Tribunal (NTT) Act, enacted by the UPA-1 regime to set up a tribunal that would function like the National Green Tribunal in the taxation field, saying the legislation was not only unconstitutional but also the worst form of assault on judiciary's independence.
A five-judge constitution bench comprising Chief Justice R M Lodha and Justices J S Khehar, J Chelameswar, A K Sikri and R F Nariman unanimously found NTT Act, 2005 to be a naked attempt to hit at judiciary's independence as the central government would on one hand litigate in every case before the NTT and on the other hand, decide appointment, transfer and extension of service of NTT chairman and members.
Two judgments — a 227-page decision authored by Justice Khehar for himself and three others and a supplementary, concurring 43-page view penned by Justice Nariman for himself — had a common thread that it was a gross attempt to denude the authority of high courts and put up an alternative adjudicatory forum in NTT, which could be easily manoeuvered by the central government.
Nariman put it rather bluntly, "The National Tax Tribunal Act is unconstitutional, being the ultimate encroachment on the exclusive domain of the superior courts of record in India."
The UPA government had introduced the bill in Parliament with a four-point objective — to reduce pendency of cases and huge arrears in high courts all over the country, huge tax recovery held up in litigation before various high courts, to have uniformity of interpretation of tax law, as there were different opinions between high courts. Finally, judges who came from civil courts were not well-versed to decide complicated tax issues.
The bench said legislature had the power to create alternative forums and vest it with adjudicatory powers but at the same time, it had to maintain identical conditions of service and independence of members of the new forum as applicable to high court judges in deciding the disputes.
The apex court was aghast to find that while the government would be a stakeholder in every case before the NTT, the appointment, transfer and extension of service of its chairperson and members would be decided by secretaries to the government, thus creating a huge conflict of interest and an inescapable conclusion that the litigant would be in a position to influence the justice delivery mechanism.
It also objected to the provision making chartered accountants and company secretaries as well as customs collectors with some years of experience eligible to become technical members of NTT.