The five-judge Constitution Bench ruled that the National Company Law Tribunal can be set up only after amending the law. But, it did not decide on the fate of the National Tax Tribunal, another important body envisaged as a fast-track alternative disputes resolution mechanism.
Both issues were earlier linked for a common hearing by the same Constitution Bench. However, by a unanimous decision today, the Bench delinked the case of the tax tribunal, as it felt the issues in that case should be dealt with separately.
The challenge to the establishment of the tax tribunal is on more fundamental issues, as the validity of the 42nd amendment introducing Article 323-B to the Constitution, is itself questioned. The provision says the “appropriate legislature” and may set up tribunals to deal with cases involving levy of any tax, foreign exchange, Customs duty and industrial and labour disputes.
The challenge to the tax tribunal is also against the higher weightage given to bureaucrats in the composition of the panel, bypassing judicial members. This affects the independence of the judiciary.
The amendment was challenged in several courts like the Madras High Court and the Orissa High Court. Those petitions were transferred to the Supreme Court for a common final decision. Though the Constitution was amended in 1976 and the tribunals were set up in 2006, their functioning was stalled by litigation which was going on for nearly five years.
With the present order to delink the national tax tribunal case for separate hearing by a new Constitution Bench to be set up by the new Chief Justice, the establishment of this body is likely to take a few years more.
It is indeed a moot point as to whether the objections to the proposed National Tax Tribunal are valid in view of fact that tax laws fall within a very exclusive domain of specialization and, it would be better if IRS officers (with impeccable integrity, honesty and competence alone-and NOT on the basis of seniority or lobbying powers or as good riddance from CBDT) are selected as members. The main fear is the history in India of the manner of selection of bureaucrats to all post-retirement jobs and the public knowledge that these posts are mainly auctioned.