Madras Bar Association vs. UOI (Supreme Court – Full Bench)
The NTT Act “crosses the boundary” & is unconstitutional. CAs/CSs are specialists on accounts & facts and are not capable of arguing/ deciding ‘Substantial Questions Of Law’
The Full Bench of the Supreme Court had to consider whether the
National Tax Tribunals Act, 2005, which sought to take away the
jurisdiction of the High Courts in tax matters was constitutional. The
Full Bench has struck down the entire Act as being unconstitutional on
the ground that though
“
tribunalization” has been allowed subject to safeguards, the NTT Act “
crosses the boundary” and “
encroaches the exclusive domain”
of the High Courts. In the course of the judgement, the Supreme Court
had to consider whether Chartered Accountants could be appointed Members
of the NTT and whether s. 13(1) of the Act which permitted Chartered
Accountants to represent a party to an appeal before the NTT was valid
in law. It also had to consider the application by the Company
Secretaries that they are equal in all respects to the CAs and should
also be permitted to appear and plead before the NTT. HELD by the Full
Bench:
A perusal of the reported judgements shows that while
deciding tax related disputes, provisions of different laws on diverse
subjects had to be taken into consideration. The Members of the NTT
would most definitely be confronted with the legal issues emerging out
of Family Law, Hindu Law, Mohammedan Law, Company Law, Law of
Partnership, Law related to Territoriality, Law related to Trusts and
Societies, Contract Law, Law relating to Transfer of Property, Law
relating to Intellectual Property, Interpretation of Statutes, and other
Miscellaneous Provisions of Law, from time to time. The NTT besides the
aforesaid statutes, will not only have to interpret the provisions of
the three statutes, out of which appeals will be heard by it, but will
also have to examine a challenge to the vires of statutory amendments
made in the said provisions, from time to time. They will also have to
determine in some cases, whether the provisions relied upon had a
prospective or retrospective applicability. Keeping in mind the fact,
that in terms of s. 15 of the NTT Act, the NTT would hear appeals from
the Income Tax Appellate Tribunal and the CESTAT only on “substantial questions of law”,
it is difficult for us to appreciate the propriety of representation,
on behalf of a party to an appeal, through either Chartered Accountants
or Company Secretaries, before the NTT. The determination at the hands
of the NTT is shorn of factual disputes. It has to decide only “substantial questions of law”.
In our understanding, Chartered Accountants and Company Secretaries
would at best be specialists in understanding and explaining issues
pertaining to accounts. These issues would, fall purely within the realm
of facts. We find it difficult to accept the prayer made by the Company
Secretaries to allow them, to represent a party to an appeal before the
NTT. Even insofar as the Chartered Accountants are concerned, we are
constrained to hold that allowing them to appear on behalf of a party
before the NTT, would be unacceptable in law. We accordingly reject the
claim of Company Secretaries, to represent a party before the NTT. We
simultaneously hold s. 13(1), insofar as it allows Chartered Accountants
to represent a party to an appeal before the NTT, as unconstitutional
and unsustainable in law.