Supreme Court stalls centre's ambitious National Tax Tribunal plan

NEW DELHI: The Central government's ambitious plans to have a National Tax Tribunal to adjudicate on complicated questions of tax law will have to wait, with the Supreme Court on Thursday striking down a 2005 Act that provided for the creation of such a body to take some of the load off the over-stretched high courts. "It is not possible for us to accept that under recognised constitutional conventions, judicial power vested in superior courts cannot be transferred to coordinate courts/tribunals," a five-judge bench said.

"But whenever there is such transfer… the newly created court or tribunal would have to be established in consonance with the salient characteristics and standards of the court sought to be substituted." The constitution bench said though Parliament was well within its powers to transfer adjudicatory functions, earlier vested in the high courts, to an alternative court or tribunal, in this case the proposed tribunal. "Exercise of such power by the Parliament would not per se violate the basic structure of the Constitution."

"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 or tribunal, conforms with the salient characteristics and standards of the court sought to be substituted." The tribunal, to be headed by a Judge of the Supreme Court or the Chief Justice of a High Court, was to ordinarily function from Delhi, another reason the court frowned on it. All tax cases, direct or indirect, would have stood transferred from all high courts to that body from a notified date.

The SC struck it down on several counts such as the government failing to ensure the independence in appointment, functioning and tenure of its members, trappings essential to an independent court or tribunal. The transfer of power to the tribunal in this case, the court said, did not exclude the power of judicial review as it would be "supplemental", not "substitution".