Analysis Paralysis

1. Identify at most 5 sentences which reflect the central idea of the passage

2. Identify Keywords

3. Describe the color coding

4. Identify cases of topic statement and elaboration

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Chief Justice V N Khare’s remark at the time of the hearing relating to the appointment procedure of the newly-constituted competition commission that the commission’s constitution is a direct encroachment on the judicial functioning of the high courts and also the spate of litigation in various high courts challenging the validity of the October 16 ordinance creating the National Tax Tribunal (NTT) raises questions about the need, independence and effectiveness of the NTT. Is the NTT a milestone in the ongoing tax reforms or an encroachment on the judicial system?

The October 16 ordinance abrogates the jurisdiction of the high court in tax appeals. All pending tax references and appeals are also required to be transferred to the NTT. However, the NTT does not touch upon the constitutional powers of the high court. 
    The ordinance envisages the creation of 25 NTT benches to hear appeals from the apex, direct and indirect tax tribunals. The appeal against the orders of the NTT would be to the Supreme Court. The NTT, being a quasi-judicial body, would grant adequate opportunity to the litigants before passing the order. But unlike many other tribunals where the opportunity of being heard is limited, the NTT has widened the scope of representation. An appellant can appear before it either through a lawyer, a chartered accountant, in person or any other authorised person. The NTT has been granted the powers of the civil court, and like a high court, has the power to punish any offender for contempt.

These provisions ensure the transparency and independence of the NTT. It is well known that the independence of a judicial or quasi-judicial tribunal depends largely on the way its personnel are selected. The ordinance ensures the independence of the NTT by providing for an objective selection of its chairperson and members. It will be manned by qualified persons with enough experience. Its chairperson will have been a Supreme Court judge or the chief justice of a high court. The NTT will function as a bench comprising judicial and technical members. The judicial member has to be a person who has been a judge or advocate of the high court for about 20 years. 
  Members of the NTT will be selected by a committee consisting of the chief justice, (or his nominee), the chairperson of the NTT, and the law and revenue secretary. The chairperson and the member have been given a fixed tenure of five years. To ensure its independence further, the salary and emoluments of the members of the NTT have been kept at par with that of a high court judge.

The creation of the NTT has been mooted by various jurists, economists and tax experts for about 30 years. Manmohan Singh, in his budget speech 92-93, announced the setting up of a national court of direct taxes, but it has come into existence only now. It is undoubtedly a step in the right direction. The reduction of the burgeoning fiscal deficit and the generation of high tax revenue are imperative for fast economic development.

The simplest way to raise additional revenue is to collect out of the arrears demands but statistics indicate that about Rs 45,000 crore in tax demand cannot be collected due to litigation. The high courts, with a pendency of 35 lakh cases and huge expected appeals which would arise out of 2.7 crore pending cases with subordinate courts, are so choked that even the recent creation of 95 additional posts would not make any serious dent in the inordinate delay that takes place in the disposal of tax appeals. The NTT being an exclusive body, would settle tax disputes speedily and in the process the high courts would get spare time to deal with other cases.

The creation of an NTT will also correct a system which has led to an unmanageable growth of tax litigations. The appellate jurisdiction of the high court in tax matters has instead of curbing the litigation increased it. This is because of the federal nature of the Indian polity. Every state has a high court and each high court is independent of the other. There are situations where contrary decisions are rendered by the high courts in regard to Central enactments like the Income Tax Act. This invariably leads to unproductive litigation as every taxpayer likes to keep the dispute alive until finally settled by the Supreme Court.

Although the legal validity of the ordinance creating the NTT is sub judice, there can be no denying its necessity. It is an important measure towards tax reforms. It will also help the tax administration to curb the adverse impact of malpractices arising out of the abuse of discretion by subordinate functionaries. It is a cardinal rule of jurisprudence that if the discretion of the enforcement authorities, which is considered the root cause of many evils, is to be curbed, verdicts settling disputes must come quickly.

Further, increasing globalisation and professionalism require the speedy settlement of disputes. Disputes between the state and subjects are likely to arise more frequently, impacting on the economy and international relations. Any efficient and modern tax administration must have a system to settle disputes quickly. The NTT will do it.

Analysis

Chief Justice V N Khare’s remark at the time of the hearing relating to the appointment procedure of the newly-constituted competition commission that the commission’s constitution is a direct encroachment on the judicial functioning of the high courts and also the spate of litigation in various high courts challenging the validity of the October 16 ordinance creating the National Tax Tribunal (NTT) raises questions about the need, independence and effectiveness of the NTT. Is the NTT a milestone in the ongoing tax reforms or an encroachment on the judicial system?

The October 16 ordinance abrogates the jurisdiction of the high court in tax appeals. All pending tax references and appeals are also required to be transferred to the NTT. However, the NTT does not touch upon the constitutional powers of the high court. 
The ordinance envisages the creation of 25 NTT benches to hear appeals from the apex, direct and indirect tax tribunals. The appeal against the orders of the NTT would be to the Supreme Court. The NTT, being a quasi-judicial body, would grant adequate opportunity to the litigants before passing the order. But unlike many other tribunals where the opportunity of being heard is limited, the NTT has widened the scope of representation. An appellant can appear before it either through a lawyer, a chartered accountant, in person or any other authorised person. The NTT has been granted the powers of the civil court, and like a high court, has the power to punish any offender for contempt.

These provisions ensure the transparency and independence of the NTT. It is well known that the independence of a judicial or quasi-judicial tribunal depends largely on the way its personnel are selected. The ordinance ensures the independence of the NTT by providing for an objective selection of its chairperson and members. It will be manned by qualified persons with enough experience. Its chairperson will have been a Supreme Court judge or the chief justice of a high court. The NTT will function as a bench comprising judicial and technical members. The judicial member has to be a person who has been a judge or advocate of the high court for about 20 years.Members of the NTT will be selected by a committee consisting of the chief justice, (or his nominee), the chairperson of the NTT, and the law and revenue secretary. The chairperson and the member have been given a fixed tenure of five years. To ensure its independence further, the salary and emoluments of the members of the NTT have been kept at par with that of a high court judge.

The creation of the NTT has been mooted by various jurists, economists and tax experts for about 30 years. Manmohan Singh, in his budget speech 92-93, announced the setting up of a national court of direct taxes, but it has come into existence only now. It is undoubtedly a step in the right direction. The reduction of the burgeoning fiscal deficit and the generation of high tax revenue are imperative for fast economic development.

The simplest way to raise additional revenue is to collect out of the arrears demands but statistics indicate that about Rs 45,000 crore in tax demand cannot be collected due to litigation. The high courts, with a pendency of 35 lakh cases and huge expected appeals which would arise out of 2.7 crore pending cases with subordinate courts, are so choked that even the recent creation of 95 additional posts would not make any serious dent in the inordinate delay that takes place in the disposal of tax appeals. The NTT being an exclusive body, would settle tax disputes speedily and in the process the high courts would get spare time to deal with other cases.

The creation of an NTT will also correct a system which has led to an unmanageable growth of tax litigations. The appellate jurisdiction of the high court in tax matters has instead of curbing the litigation increased it. This is because of the federal nature of the Indian polity. Every state has a high court and each high court is independent of the other. There are situations where contrary decisions are rendered by the high courts in regard to Central enactments like the Income Tax Act. This invariably leads to unproductive litigation as every taxpayer likes to keep the dispute alive until finally settled by the Supreme Court.

Although the legal validity of the ordinance creating the NTT is sub judice, there can be no denying its necessity. It is an important measure towards tax reforms. It will also help the tax administration to curb the adverse impact of malpractices arising out of the abuse of discretion by subordinate functionaries. It is a cardinal rule of jurisprudence that if the discretion of the enforcement authorities, which is considered the root cause of many evils, is to be curbed, verdicts settling disputes must come quickly.

Further, increasing globalisation and professionalism require the speedy settlement of disputes. Disputes between the state and subjects are likely to arise more frequently, impacting on the economy and international relations. Any efficient and modern tax administration must have a system to settle disputes quickly. The NTT will do it.