National Tax Tribunal Act, 2005 declared unconstitutional

Supreme Court: Deciding the fate of the National Tax Tribunal, the constitutional bench of R.M. Lodha, CJ and J.S. Khehar, J. Chelameswar, Dr. A.K. Sikri and R.F. Nariman, JJ held that Sections 5, 6, 7, 8 and 13 of the National Tax Tribunal Act, 2005 (NTT Act) to be unconstitutional. It was held that since these provisions constitute the edifice of the NTT Act, the other provisions will automatically be rendered ineffective and inconsequential, hence, the entire legislation was declared to be unconstitutional.

The present case which was represented by A.P. Datar and Attorney General Mukul Rohatgi, it was contended by the petitioner that the NTT Act which led to the constitution of the National Tax Tribunal, a quasi-judicial appellate tribunal empowered to adjudicate the appeals arising from the Appellate Tribunals constituted under the Income Tax Act, the Customs Act, 1962, and the Central Excise Act, 1944, undermined the process of independence and fairness as it intends to substitute High Court’s power of judicial review by the extra-judicial body.

The Court, while writing down an elaborate 270 pages long judgment, held that the Parliament has the power to enact legislation, and to vest adjudicatory functions, earlier vested in the High Court, with an alternative court/tribunal and that the exercise of such power by the Parliament would not per se violate the basic structure of the Constitution. However, the basic structure of the Constitution will stand violated, if while enacting legislation pertaining to transfer of judicial power, Parliament does not ensure, that the newly created court/tribunal conforms with the salient characteristics and standards, of the court sought to be substituted. R.F. Nariman, writing his concurrent opinion, said that a jurisdiction to decide substantial questions of law vests under only with the High Courts and the Supreme Court, and cannot be vested in any other body as a core constitutional value would be impaired thereby. It was concluded that the National Tax Tribunals Act was unconstitutional, being the ultimate encroachment on the exclusive domain of the superior Courts of Record in India. [Madras Bar Association v. Union of India, Transferred Case (C) No. 150 of 2006, decided on 25.098.2014]

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