2003 (11) TMI 66 - HC - Income Tax

Constitutional validity of, the National Tax Tribunal Ordinance dated October 16, 2003, is challenged Considering the submission made by the applicant that the number of cases pending in the High Courts is not much nor are the High Courts passing casual stays in tax matters. Apart from this, the challenge is to the nature of the constitution of the Tribunal, the Chairman and the Members thereof, and that substantial questions of law can be decided by a court of law and not by the Tribunal is also under challenge in these petitions, the respondents restrained to issue any further notification till next hearing. - We are of the opinion that the respondents should be restrained till the next date of hearing from issuing any notification as contemplated by or under section 3 of the Ordinance and we hereby direct accordingly, subject to hearing the other side on the next date of hearing.

Summary

Issues:
Constitutional validity of the National Tax Tribunal Ordinance, 2003 challenged.

Analysis:
The petitioners challenged the constitutional validity of the National Tax Tribunal Ordinance, 2003 on the grounds that the Ordinance was issued without unusual and exceptional circumstances, especially when Parliament was set to meet shortly after. They argued that the proposal for establishing the National Tax Tribunal had been under consideration since 1971, yet no legislation was passed for over 30 years, questioning the urgency of the Ordinance. The petitioners contended that the differing opinions of High Courts on tax matters were not sufficient grounds to establish the Tribunal, as High Courts generally follow each other's decisions on legal questions, unlike the Income-tax Appellate Tribunals. Moreover, they raised concerns about the constitution of the Tribunal, the appointment of the Chairman and Members, and the Tribunal's competence to decide substantial legal issues, which they believed should be within the purview of the courts.

In response to the petitioners' challenge, the Court decided to issue a notice to the Attorney General of India due to the constitutional nature of the matter. The Court also restrained the respondents from issuing any notification under section 3 of the Ordinance until the next hearing, acknowledging the seriousness of the issues raised by the petitioners. This interim measure aimed to maintain the status quo and prevent any immediate implementation of the Ordinance pending further deliberation and hearing from both sides. The Court's decision reflected a cautious approach to the constitutional validity of the Ordinance and the concerns raised by the petitioners regarding the establishment and functioning of the National Tax Tribunal.

This detailed analysis of the judgment highlights the key arguments presented by the petitioners, the Court's response in terms of issuing notices and interim restraints, and the overall significance of the case concerning the constitutional validity of the National Tax Tribunal Ordinance, 2003.