INDIA BUSINESS WORLD - FEBRUARY 2006
THE MONTH THAT WAS

HC STAYS MOVE TO SET UP NATIONAL TAX TRIBUNAL

The government's plan to recover tax arrears of Rs 70,000 crore locked up in litigation between taxpayers and tax authorities suffered a major set back as the Bombay High Court clamped a stay on setting up a National Tax Tribunal (NTT).
Bombay is the region from which the finance ministry raises up to 40 % of its revenue. The Bombay High Court's order was preceded by the interim stay orders from other high courts, including Calcutta High Court and the high courts of Punjab & Haryana, Madras and Orissa.

The NTT is expected to take over the burden of tax cases from the High Courts and reduce the period of litigation which, in some cases go even up to 15 years. Tax cases are heard by high courts on appeals from the Income-tax Appellate Tribunal, a quasi-judicial body for settling tax disputes. Under the new dispensation envisaged in the NTT Act. appeals against ITAT decisions will be heard by NTT instead of High Court. NTT's decisions can be challenged only before the Supreme Court.

The petition filed by senior advocate P C Joshi cited alleged impropriety of provisions in the Act, which allows appointment by the government of the chairman and other members of the Tribunal, even though it has to be on the recommendations of a three member committee chaired by Chief Justice of India. The other two members are secretaries in the Ministry of law & Justice and MOF. Soli Duster and N R Jagtap, representing the petitioner, expressed their apprehension that such a system may not be able to ensure independent functioning. Mr Justice H L Gokhale and Mr Justice Abhay S Oka allowed four weeks to the Central Government to file the reply and stayed the operation of the NTT till then. Ever since the government mooted the idea of a NIT, tax professionals have been opposing the moves citing various judicial and technical reasons against setting up such a body