The Supreme Court on Thursday declared the National Tax Tribunal Act, under which a tribunal was to set-up to adjudicate tax cases, as unconstitutional, saying it encroached upon the 'exclusive domain' of superior courts.
A constitution bench headed by Justice RM Lodha faulted the law on the ground that substantial questions of law can only be decided by either the High Court or the Supreme Court. It said the Parliament could not take away the court’s power and vest it in something that is not a court by nature. The law to have the tribunal was passed by in 2005.
Justice RF Nariman wrote in a separate judgement that the government had crossed the line demarcating the separation of powers and that the law curtailed judicial independence.
Authored by Justice JS Khehar, majority of the judgment declared those provisions of the Act illegal that formed the backbone to the constitution of the tribunal. The bench said tribunalisation can only be allowed at the original stage and high court’s jurisdiction cannot be taken away and given to NTT.
“If the jurisdiction of the High Courts is being transferred to the NTT, the stature of the members of the tribunal had to be akin to that of the judges of High Courts,” the bench said.
The Madras Bar Association had challenged the Tribunal’s power to decide “substantial question of law.” It contended that the legislation violates the basic structure of the Constitution by impinging on the power of judicial review of the High Court.
The petitioners said the “NTT in the manner of its constitution undermines a process of independence and fairness...”