- Mr Singh, instead of tax tribunal let's strengthen ITAT!

Mr Singh, instead of tax tribunal let's strengthen ITAT!

By Shiva Kant Jha

YOU must be knowing the reasons for articulating this idea of setting up of a tax tribunal, but even I can gaze through crystal. The bureaucrats, the Chartered Accountants, and the officers of the Central Legal Services are the lobbyists for the National Tax Tribunal. These reasons are clear enough as not to require any exposition. Much of corruption in superior bureaucracy is on account of this craze to linger long using power, ( most delicious when abused) even after retirement.

The benches of the Income-tax Appellate Tribunal are manned by the best we have, though I would agree that our best are often no good. I wish if something could have been done to lessen, what Justice Shah called, the “Root of all Evil”: the inglorious nexus between the politicians and the bureaucrats. And the chartered accountants? Less said the better. Tulsi Das had said, “animal aakhar arath na japu..”: so I stop. Go-getting has become the best of all pastimes in these locust-eaten years. You are duty bound to see through things however dexterously packaged.

And if you set up this National Tax Tribunal in addition to the existing Income-tax Appellate Tribunal wherefrom you will get persons to man these benches? Already we are experiencing difficulties in getting persons of good calibre. Are we thinking of outsourcing? It is not a realm for such an adventure. If the members of the Income-tax Appellate Tribunal are allowed to climb up it will then be old wine in a new bottle. If we allow the bureaucrats at the apex to man the benches the administration of justice would become a travesty. Even the members of the Central Legal Service would be no good as most of them are sans sound professional experience, sans even good knowledge of tax jurisprudence.

If the national tribunal is manned by the former judges of the High Courts or the Supreme Court (or, even the sitting judges) the tribunal would still be just a tribunal. (I'm using the word tribunal in the specific contextual sense rather than in its generic sense which would include within its meaning even the High Court or the Supreme Court). A tribunal acquires jurisdiction from its statute, and not from the status of persons before their appointment to the tribunal. It would be unwise to make a foredoomed experiment when it is more important to identify and remove the factors which have made the Income-tax Appellate Tribunal, surely the best amongst the tribunals we have, so much open to criticism. Why not ask the Law Commission to undertake a comprehensive study of the Income-tax Appellate Tribunal at work so that appropriate steps for its working can be taken?


Is not the Income-tax Appellate Tribunal working well? Answer is: Yes and No. Better question would be : Are our tribunals working well? If we are really and honestly interested in improving the working of the tribunals in our country we should have an all India institution on the model of the United Kingdom's Council on Tribunals constituted under the Tribunals and Inquiries Act 1958. In the U.K. a large number of tribunals are under its supervision. They include the General Commissioners of Income-tax and the Special Commissioners of Income-tax created under the Taxes Management Act (our counterpart of the Income-tax Appellate Tribunal). Creation of more benches is no solution to any problem. Proper distribution of workload by making even the existing benches work by proper deployment would serve the purpose. It is strange that the government is so vociferous about law's delay when both at the level of the Income-tax Appellate Tribunal and the High Court it alone is most responsible for law's delay. The Supreme Court's decisions in R.K. Jain v. UoI (AIR 1993 S.C 1769) and L Chandrakumar v. UoI (1997 SC 1125) should be studied, and follow-up steps should be taken in the matter of the study of the tribunals and their effective supervision. A wealth of wisdom can be found in the Reports which led to the establishment of the Council on Tribunals in the U.K. Even in absence of an institution like the Council on Tribunals the Law Ministry should have supervised the working of the Income-tax Appellate Tribunal which is under it. It should also have done something to constitute itself as a nodal ministry to supervise all tribunals ( as suggested by the Supreme Court in Chandrakumar's Case). The Ministry of Law did simply nothing of this sort.

Some may think that there is nothing wrong in having a National Tax Tribunal as the final appellate body on the point of law whilst the High Courts would continue to exercise the power of Judicial Review. These gentlemen do not know the reach of Judicial Review as developed in the UK and India in recent years. In CCSU v. Minister of Civil Services [1984] 3 All ER 935 at p. 950 Lord Diplock referred to three broad grounds for Judicial Review: he said “The first ground I would call ‘illegality', the second ‘irrationality' and third ‘procedural impropriety.'” Then he observed:
“That is not to say that further development on a case by case basis may not in course of time add further grounds. I have in mind particularly the possible adoption in future of principle of ‘proportionality' which is recognized in administrative law of several of our fellow members of the European Economic Community; ….” This doctrine has been adopted by the European Court of Justice in Luxembourg in recent years.

The Supreme Court of India has already taken bold steps to recognize the principle of proportionality as a ground for Judicial Review [ case law discussed in AIR 2003 SC 1377 at 1381-1382]. Now the creative reach of this doctrine is so wide that almost every infraction of law, ( and every abuse of executive power) can be questioned by invoking the High Court's power of Judicial Review. See L Chandrakumar v. UoI (1997 SC 1125). And you know that the High Court can never be deprived of this power as it springs from what is the most fundamental of the constitutional fundamentals: the basic structure of the Constitution of India. Any good lawyer can turn with his forensic skill every breach of law a case of abuse of jurisdiction as any act in breach of law is ex facie without jurisdiction. This would frustrate the simplistic view which supports the setting up of the national tax court.

At present there is some operational symmetry in the relationship of the Income-tax Appellate Tribunal and the High Courts. The Income-tax Appellate Tribunal being a creature of the Income-tax Act cannot decide the vires of the provisions of the Income-tax Law [ Venkataraman & Co Ltd v. State of Madras(60 ITR 112 S.C.]. The National Tax Tribunal being a creature under a separate enactment would surely decide the vires of such provisions. Under our juristic pyramid of the court of legal construction this tribunal would simply be a court of first instance subject to control by the jurisdictional High Court under an appellate jurisdiction if granted by the statute, otherwise under Article 226 of the Constitution of India. Then why should we introduce one more layer in what is already a multi-layered structure?

The idea of having a National Tax Tribunal common for income-tax and customs and excise would raise fundamental problems of juristic perspective. These are taxes, but they involve different approaches (which we often tend to forget) in juristic determinations. History of direct taxes and indirect taxes shows different considerations at work. Income-tax has had evident human rights dimension, customs and excise have had linkages with trade and foreign affairs [O.Hood Phillips' Constitutional and Administrative Law 7th ed.p..45]. - Links on Shivakantjha - Links on Shivakantjha

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