NATIONAL TAX TRIBUNAL BILL, 2005 – IRS left out
The NTT Bill is through Parliament and will perhaps soon be a reality. While weighty comments are being made by scholarly analysts, DDT would like to bring to you the views of our Honourable members of Parliament on the subject. Incidentally the IRS officers, whose chance of joining the NTT is very bleak, found favour with some MPs. In the live telecasts we often see the disturbances in Parliament but from the discussion that we bring you here, it can be seen that our Parliamentarians are a well-informed lot. They have covered every aspect that a seminar with tax experts would have covered and with more precision. Most of these members are in the standing Committee on Finance before which august body TIOL had the singular honour of appearing to make submissions on our tax laws.
The Honourable members showed concern that the Tribunal does not have enough place for tax experts, that the recommendations of the standing committee were not accepted. As the bill had its origin in the NDA regime and was taken forward by the present government, there was general acceptance with even the Law Minister stating that the NDA government wisely brought in this bill. When decibels are down our parliament is a citadel of intellectual excellence we can be really proud of. See what our leaders have to say about NTT.
SHRI BACHI SINGH RAWAT : This Bill was introduced in November 2004 and again referred to the Standing Committee. The Committee has given a number of important suggestions and recommendations, but amendments done are only ‘2005’ in place of ‘2004’ and ‘56th’ in place of ‘55th’. Only these amendments have been circulated and no other amendment has come from the Government side. It has been said therein that the order of the tribunal will be final. So, there is a need to consider this point even more seriously.
When a Bench shall have only two Members there will be problem in case there is difference of opinion. In Clause-18 there is a provision that in case of difference of opinion the matter will be referred to the Chairperson. This situation will create a higher Bench. Therefore, it would be better to remove the anomalies in the very beginning and I would suggest that the Bench should comprise of three or five members. In such a situation Clause-18 will not be required.
The Standing Committee and myself had given a suggestion that in case judges are not available or there is shortage of judges, there should be a safeguard for such situations. In this Bill, there is a mandatory provision that the Chairperson of the tribunal will only be a Chief Justice of a High Court or a judge of the Supreme Court. In this regard, the Standing Committee had given a suggestion that Income Tax Chief Commissioner, who belongs to Indian Revenue Service should be appointed in the Tribunal keeping in view his experience in this field. A person who has worked as member in Income Tax Appellate Tribunal or Service Tax Appellate Tribunal for seven years can also be appointed as Chairperson of this Tribunal. If we do so, we shall not have any shortage of judges. In Clause-10 it has been said that judges will be appointed as Chairperson. He will be provided all facilities but no vacations. I would request that they should be allowed to go on vacations. There is a provision that the senior member of the tribunal will take over as acting Chairperson. Therefore, it would be in their interest and I hope hon. Minister will pay attention to it.
In this Bill, it has been state forwardly said that the order of a tribunal shall be final and cannot be challenged in any civil court. In this context Supreme Court has said that their powers should not be curtailed by constituting such a tribunal. Therefore, it requires to be clarified. Standing Committee also wanted this to be clarified. I would urge that some of the recommendations of the Standing Committee should be accepted otherwise this Committee will become meaningless.
SHRI VIJAYENDRA PAL SINGH: I am told that most of the judges on this National Tribunal will be from the High Court and the Supreme Court. So, why is it that only the judiciary is going to be sitting on this Tribunal? Why not the experts, the people who understand the tax laws. I feel that good IRS officers should also be taken.
SHRI K.S. RAO: The Bill states that only sitting and retired judges are eligible. It is not necessary that for everything we need to consider only the judiciary. There are eminent people who are very knowledgeable. Today we require more persons who are knowledgeable in a particular subject, not merely in law. I fully support that the Government must consider in terms of thinking of competent youngsters also. From the records or from the information that is available, one can say around 34,030 cases are pending. Today’s statistics reveal that they could dispose of only 6,000 cases per year. Obviously, to dispose of these cases today pending in the High Court, it takes many more years. The Bill will do very good help to the nation instead of causing delay for years and years to settle these matters.
We are making excellent Acts after careful consideration but then how is it being implemented is also to be monitored.
The moment this Act comes into force, all the cases that are now lying in the High Court will be transferred to this Tribunal. If those cases were to be transferred to this Tribunal, then, once again, they will have to start from the beginning and it will take a long time. I just wish that some way should be found out to see that those cases which are the in the final stage of hearing and where judgment is awaited can be dealt with by them without delaying them once again. We must take care that the provisions of this Act would not be misused by the officers concerned. That also has to be monitored regularly.
SHRI VARKALA RADHAKRISHNAN : The purpose of the Bill is to provide some assignment to top bureaucrats who are on the verge of retirement. At present twenty-one High Courts are dealing with the tax cases. The pending cases in 21 High Courts will be taken to one Tribunal resulting in accumulation of appeals. There is no need for the continuance of this Bill since tax cases can be dealt with by giving additional Benches in every High court. This way, no additional expenditure is required.
Therefore, we are definitely of the opinion that there is no need for this Bill. It is very unfortunate that the Government has decided to proceed with the Bill to safeguard the interest of the top bureaucrats. By this Bill the pendency would not be reduced and the revenue would not be increased. I expect the Hon. Law Minister, who is a very efficient and learned man, will rise to the occasion and see that the public money is not wasted.
SHRI SHAILENDRA KUMAR : The services of officers of Indian Revenue Services can also be utilized for the purpose. The proposed National Tax Tribunal should also be given full autonomy and it should function in a fair manner.
SHRI SURESH PRABHAKAR PRABHU: All the location to set up the Tribunal has to be selected on the basis wherein it will obviate the difficulties of various types of tax payers. It will be more appropriate to locate it in Mumbai than in New Delhi. The same system which is applicable to the appointment of High Court Judges should be applicable here also. Transfers of High Court Judges are also governed by a system which is prevalent in the country. The same system should be applicable because now, we are actually creating a system parallel to the High Courts.
National Tax Tribunal should not be hearing only the matters which have been disposed of by the Appellate Tribunal but should also be hearing matters in the original jurisdiction, as has happened in the High Court.
SHRI B. MAHTAB: As has been suggested, by creating the National Tax Tribunal, the Government is going to expedite the cases. In the case of tax dispute, the National Tax Tribunal will actually add another layer of judicial intervention and this is one of the major faults with the National Tax Tribunal. Under the current law, indirect tax disputes are heard by the Customs Excise and Service Tax Appellate Tribunal and then by the Supreme Court, in the case of an appeal. I would also like to know from the Government as to what will happen once the National Tax Tribunal comes into force? My basic question to the Government is whether is it not a fact that majority of the cases in the CESTAT are decided against the Government?
SHRI C.K. CHANDRAPPAN: If the Standing Committee has recommended that there are other ways by which the Government could administer the tax regime much better, then why has the Government not accepted it? One of the fears again expressed by the Standing Committee was that by constituting this new tribunal, more retired judges and more bureaucrats who are at the fag end of their service would be provided with kursi and comfortable jobs at the end of their days. I would like to know why such a measure should be taken when other methods are there. While the legislative intention is laudable, I would like to know whether this legislation is the only way by which that intention could be achieved. Why did the Government not agree with the recommendations of the Standing Committee? I would like to know what explanation the Government will give on this matter. We support the legislative intention. But is the new system of Tribunal necessary?
PROF. M. RAMADASS:. This Bill says that members should either be judge or should be a member of Income Tax Appellate Tribunal for at least seven years. Why are the technical persons not included in this provision? I feel that the persons retired from Indian Economic Service may also be considered along with judicial officers and persons from Income Tax Appellate Tribunal etc. The Bill does not mention anything about the number of benches. It should be specifically mentioned. With regard to section 13, I would say that it should include a party to an appeal other than Government may either appear in person or authorize one or more company secretaries, cost and works accountants, chartered accountants or advocates.
SHRI P. S. GADHAVI: It is also seen in places like Delhi that retired persons would like to be appointed in such Tribunals for the sake of retention of their official accommodation or on the grounds of their children studying in such places.
SHRI KHARABELA SWAIN:. I would like to know if the Government had made any study with regard to this. The Government has many other specialized tribunals set up on the same lines. Have cases been disposed of in a quicker way in the case of those tribunals? Regarding the point of eligibility, Clause 6 says, ‘A person shall not be qualified for appointment as a member unless he is eligible to be a judge of a High Court’. Also, does the Minister not think that a situation may emerge in which all the members of this tribunal will be only people from the judiciary in India without holding any specialization in taxation law? As a Member of the Standing Committee on Finance, I have just found that it is not in the High Court, it is actually in the other Tribunals of Customs and Income-tax where there are a very large number of cases which are pending. I do not agree with the suggestion made here that there could be additional Benches in every High Court, which could try everything. I do not agree with that because most of the High Court Judges lack specialization in such topics involving income-tax law or customs law.
SHRI P. C. THOMAS: I would urge upon the Minister to take into consideration the recommendation and suggestions which have been forwarded by the Standing Committee. The other aspect of the Bill is that normally in all these cases, the delay is occurred with respect to the constitution of the Tribunals and implementation thereof. I would like to say that the implementation should not be delayed in this regard.
THE MINISTER OF LAW & JUSTICE, SHRI H. R. BHARDWAJ in his reply stated:-
• This National Tax Tribunal has primarily to deal with the appeals that arise out of the two Tribunals already set up – one under the jurisdiction of the Finance Ministry, that is, on the Customs and Excise and Service Tax and the other is under the jurisdiction of my Ministry.
• A very senior Member of this House – raised a very valid point. He said that the Standing Committee wanted that instead of having this Bill, we should straightaway constitute Special Benches to hear tax matters. Having worked as the Law Minster for more than three times in this country, I know that there is dearth of tax specialists. My experience is that mostly the lawyers practicing on civil side come to the Bench and they lack that expert knowledge on tax matters.
• The House will appreciate that except in one or two cases, I have written letters after letters to High Courts asking them to constitute Special Benches for tax matters. But they have said they do not have expert judges and they can provide judges out of the judges available with them.
• The NDA Government went into this issue and they wisely brought this Bill by saying that in the matter of tax, they would like to have expert people to deal with appeals also. We have carried forward this Bill. We are applying our mind fully as this provision is necessary in the interest of the revenue.
• We are giving more autonomy and independence to this Tribunal because we are not associating the Government, that is, the Finance Ministry. The Finance Ministry is interested in revenue. Their view is not independent and they are an interested party. So, this Tribunal will be exclusively under the domain of an independent Ministry, namely, the Law Ministry, and that aspires more confidence of the litigants.
• There is always a pressure from the Finance Ministry to recover more and more, but here, we do not have any interest. The Government revenues must come and the clients must get independent justice.
• The quality of justice cannot be diluted whatever consideration may be. So, this will be a most independent Tribunal and a Division Bench is provided here.
• So far as selection is concerned, let me say that our selection process is foolproof. We want that selection is made quick and good people are selected. We have kept the component of judicial consultation at a very high level. So, there should be no apprehension in anybody’s mind about the quality
• The Standing Committee did recommend, to consider Chief Commissioners. There is a consensus opinion that they are almost executive members of the Finance Ministry. They are considered as Income Tax Commissioners. If they are selected there, then we will elevate them in the highest tribunal which is equivalent to almost the High Court. Therefore, if we have differed with the Standing Committee’s recommendation, we have done so in the interest of the institution. This is the recommendation we have not agreed to.
• On the issue of age, I have submitted that we cannot really keep the age less than 68 because Supreme Court judges would not come. He can be re-appointed until the age of 68.
• A question was asked about the total pendency in the High Courts. There are about 41471 cases which are pending in different High Courts. They will be transferred to these tribunals.
There seems to be unanimous opinion that the IRS should have found a prominent place in the NTT and every IRS officer that DDT spoke to agreed with this view. “It is ridiculous that to decide tax matters you have to be away from tax administration for at least seven years”, said a senior officer. The hopes of Chief Commissioners and Board members to join the NTT are nipped in the bud. But may be seeing the quality of orders passed by the senior departmental officers, the Finance Minister and the Law minister have taken a conscious decision that it is better to keep them out of the National Tribunal.
But for many long years there is no chance of a customs and Central Excise officer ever making it to the NTT. As of now there is only one technical member in the CESTAT with 7 years experience and none of the members have seven years before they retire. So it is assured that for almost the next decade, no officer from the department can reach the NTT.