Kolkata , Nov. 6 ... The Calcutta High Court has stayed, till November 11, the notification of the National Tax Tribunal (NTT), constituted by the Union Government through an Ordinance promulgated by the President on October 16.

On an application filed by Mr Amar Nath Sen, an advocate of the Calcutta High Court, challenging the constitutional validity of the National Tax Tribunal Ordinance, 2003, Mr Justice Kalyan Jyoti Sengupta, after hearing the matter, today granted an interim injunction, restraining the Central Government from issuing any notification till November 11, when the matter will be heard again.

The Ordinance provides for adjudication by the tribunal of disputes with regard to levy, assessment, collection and enforcement of direct taxes, and the determination of rates of duties on Customs and Central excise on goods for the purpose of assessment of such duties as well as in matters relating to levy of service tax.

Most importantly, the NTT takes away completely the jurisdiction of the High Court in matters of revenue, raising the hackles of the legal fraternity and tax practitioners alike. Talking to Business Line soon after the stay was granted, Dr Debiprosad Pal, senior counsel arguing the case for the petitioner, said the Ordinance was taking away the jurisdiction of the High Courts in all matters of revenue like income-tax, gift tax, Customs, Central excise and service taxes.

Describing the Ordinance as an attempt to undermine the independence of the judiciary, which was one of the basic structures of the Indian Constitution, he said it was therefore "invalid and violates the Constitutional guarantee of independence of judiciary". He said there was also a question over whether such a Tribunal could actually retain its independence as it could be controlled by the Executive.

Describing the judiciary as one of the pillars of democracy, Prof N.P.Jain of the West Bengal National University for Juridical Sciences, said the growing trend of attempts to bypass the judiciary by setting up more and more tribunals should be arrested.

In a sense, such Ordinances may give the common people the idea that the Executive was fast losing faith in the judiciary, he pointed out. He said there existed no emergent circumstance, which warranted the promulgation of the Ordinance, taking away the power and jurisdiction of the high courts.

He said the stay should be viewed in the background of the recent Supreme Court comment on attempts at direct encroachment into the judicial functions by the bureaucracy. He said a petition challenging the Ordinance was also being filed by the All-India Federation of Tax Practitioners (AIFTP) in the Mumbai High Court on Friday.

Source : The Hindu Business Line dtd. 7.11.2003

KOLKATA, NOV 6:  The Union Government’s move to set up a National Tax Tribunal (NTT) was stayed by a Calcutta high court judge on Thursday. Justice Kalyan Jyoti Sengupta granted an interim injunction restraining the government from issuing any notification relating to the National Tax Tribunal Ordinance 2003 till November 11, when the matter will be heard again.

The stay was granted on an application moved by an advocate.

The Cabinet had cleared the NTT on August 23, and the Ordinance was issued on October 16. The NTT is to hear all appeals against orders of income-tax appellate tribunals lying before the various high courts.

Appearing for the petitioner, Mr Debi Prosad Pal, a senior advocate and former Union minister of state, contended that there was no need to create a tax tribunal that will take away the power and jurisdiction of the high courts in all revenue matters — income tax, gift tax, customs, central excise and service tax.

Mr Pal, who is also a former high court judge, argued that the creation of a NTT will erode the independence of the judiciary.

The notification was to be issued under Section 3 of the Ordinance for appointing its chairperson and members, and also specifying its powers and jurisdiction.

According to Mr Narayan Jain, a tax expert here, the Ordinance contained many new provisions with far-reaching effect on the delivery of justice.

The NTT will take up only those appeals in which substantial question of law is involved, as the high court also does. The bench of the NTT will consist of a judicial member and a technical member.

“The technical member may be a chartered accountant or any person who has served for one year as chairman or member of the Central Board of Direct Taxes or Central Board of Excise & Customs,” Mr Jain told FE. Mr Jain pointed out that chartered accountants also get the right to represent cases before the NTT, although the Advocates Act of 1961 reserves this right for advocates.

In fact, the Bar Council of West Bengal has called an emergency meeting on November 12 to discuss the issue. The NTT also differs from the high court procedure in that the petitioner has to pay upfront at least 25 per cent of the tax and duties payable before moving the tribunal.

This does not happen in cases before the high court.

However, the government’s argument for creating the NTT is that it will reduce the burden on the high courts. According to it, there are 3.15 lakh such appeals pending before the various high courts, involving a total revenue of Rs 42,860 crore.

Source : The Financial Express dtd. 7.11.2003

HC stay order on Nat’l Tax Tribunal

The Calcutta High Court on Thursday restrained the central government from issuing any notification for setting up a National Tax Tribunal.

Justice K.J. Sengupta passed this interim order till November 11 on a petition filed by an advocate, Amarnath Sen, challenging the constitutional validity of the National Tax Tribunal Ordinance, 2003, saying “there were no emergent circumstances to promulgate the ordinance taking away the power and jurisdiction of the high courts in all revenue matters.

The judge has also issued a notice to the Additional Solicitor General to appear in the matter.

Source : The Hindustan Times dtd. 7.11.2003

NEW DELHI, NOVEMBER 6: Within a week of being slammed by the apex court for appointing a bureaucrat as chairman of the Competition Commission, the Centre today suffered another setback on the reforms front as the Calcutta High Court stayed the operation of an ordinance setting up the National Tax Tribunal.

But, unlike in the Competition Commission tangle, the Centre seems well placed to meet the legal challenge to the National Tax Tribunal ordinance which seeks to fast-track the disposal of appeals in tax disputes.

Justice Kalyan Jyoti Sengupta of the Calcutta High Court passed the stay order on a petition alleging that there was ‘‘no emergent circumstance’’ necessitating the promulgation of the National Tax Tribunal ordinance on October 16.

The Calcutta High Court’s intervention is, however, contrary to a slew of Supreme Court judgments categorically ruling that the ‘‘propriety, expediency and necessity’’ of an ordinance cannot be questioned under any circumstances.

The law on the promulgation of an ordinance is clearly loaded in favour of the executive: it can never be asked to justify its decision to invoke this emergency power.

So, if Justice Sengupta does not make amends by November 11, the next date of the case, there is a good chance of the Supreme Court vacating his stay order in line with its own verdicts.

• In K Nagaraj vs State of Andhra Pradesh, the Supreme Court held in 1985 that the executive’s power to promulgate ordinances is ‘‘plenary within its field in the same manner as the power of the legislature to legislate.’’ Though the petitioner can challenge the constitutionality of the provisions of the ordinance, he can never question its promulgation whether on the ground of ‘‘non application of mind’’ or on the ground of ‘‘mala fides.’’

• In the same year, the apex court went further in T Venkat Reddy vs State of Andhra Pradesh where it said: ‘‘Whenever the law is made by a competent legislature it has to be assumed that the legislative discretion was validly exercised. Therefore, the existence of necessity of promulgating an ordinance is non-justiciable. It is legislative action and cannot be tested by the courts as executive or administrative action.’’

• More recently, in 2001, the Supreme Court reiterated the essence of the two 1985 judgments in another case, Gurudevdatta Maryadit vs State of Maharashtra.

Since the Centre cited these rulings, the Delhi high court and the Madras high court refrained from passing any stay order on similar petitions challenging the National Tax Tribunal ordinance.

For the last two days, a bench headed by the Delhi high court Chief Justice, B C Patel, has been hearing a petition filed by another lawyer, H C Bhatia, against the ordinance. Justice Patel adjourned the hearings today without issuing any notice after the high court bar association said that it too wished to file a petition challenging the ordinance.

The Madras high court, on its part, did issue a notice to the Centre on October 30 while declining to stay the implementation of the ordinance. Given the multiplicity of proceedings, the Centre may seek to transfer all the petitions to one high court or the apex court itself.

Source : Indian Express dtd. 7.11.2003

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