What is National Tax Tribunal Act?
Under this act a tribunal was set up to decide tax-related cases by taking away jurisdiction of high courts in such matters.
The tribunal was set up under the Act to speed up decisions in tax disputes. However, the 2005 law was stuck in litigation in high courts. All cases were transferred to the Supreme Court for a final decision.
The NTT Act allowed the executive "extensive control" with regard to appointments of members and procedure of the tribunal.
The tribunal was envisaged to function like National Green Tribunal (NGT) in the taxation field.
The government justified the role of non-judicial members arguing that the tribunals needed experts in various fields in view of the technical and complex subjects which come up before these bodies.
Why was the Act scrapped?
The petitions, filed by Madras Bar Association and others, had challenged a quasi-judicial body deciding "substantial questions of law" in appeal. In reply to the petitions, the Supreme Court gave this judgement scrapping the National Tax Tribunal.
Article 323B of the Constitution, which talks about the creation of tribunals by the executive, was also challenged in the petitions as being violative of the concept of separation of powers between the executive and the judiciary.
What did Supreme Court say while striking down the Act
The apex court said that if judicial powers are transferred to tribunals it would affect the basic structure of the constitution and judicial independence.
The core complaint is that the executive, especially retired bureaucrats, has predominant positions in all tribunals and judicial members are not given sufficient role.
The top court also said, "Since the pith and substance of the Act has been found unconstitutional, the entire law needed to be struck down."
As per a Businessstandard report, "Several laws setting up tribunals have been partially struck down or read down in the past. But in the case of tax tribunal, the entire law was struck down as the main illegal provisions, "the edifice of the law", could not be separated from the rest."
This judgment will have deep implication on the recent trend of setting up tribunals in every sector and at present there are nearly 30 tribunals.