"Under the direct tax enactments, an appeal lies to the High Court on a substantial question of law. Due to pendency of a large number of cases in the High Courts, huge revenue is blocked in such litigation. This is adversely affecting the national economy. Hence urgent measures are required to be taken to speed up taxation matters pending before the High Courts. To achieve the aforesaid objective, it is proposed to establish a Tax Tribunal to be known as the National Tax Tribunal to hear the cases of substantial question of law from the decision of the Income-tax Appellate Tribunal and the Customs, Excise and Service Tax Appellate Tribunal."

Originally, the Government had made an attempt to constitute a National Tax Tribunal by an ordinance issued by the President in October 2003. The provisions of the ordinance and the manner of in which the new Tribunal was sought to be introduced by way of ordinance without waiting for the Parliament session raised a serious doubt as regards the real intention of constituting the National Tax Tribunal. Such introduction was strongly protested by the professionals and the public. The courts granted stay of the operation of the ordinance. Ultimately the ordinance lapsed. Considerable improvement has been made in the new Act. Some more improvement may be necessary for achieving the object in real sense. An attempt is required to be made so as to achieve the standard and quality of justice that would have been available from the High Courts. It would be of utmost importance to take care in respect of the independence of the Tribunal and that there would be no executive or Government interference, direct or indirect, in the judicial function of the Tribunal.

All appeals and references under direct and indirect tax laws that are pending before the High Courts on the notified date are required to be transferred to the National Tax Tribunal. The National Tax Tribunal will dispose of such matters. After the notified date the assessees and the department aggrieved by an order passed by the Appellate Tribunals under direct and indirect taxes will have to file appeal before the National Tax Tribunal. Such an appeal is required to be filed within a period of 120 days from the date of receipt of the order of the Appellate Tribunal. The National Tax Tribunal has power to condone the delay of only 60 days if the appellant gives sufficient cause. Sub-section (4) of section 15 requires that the assessee appellant has to pay 25% of the disputed tax before filing the appeal. Further the proviso therein empowers the National Tax Tribunal to wave this requirement and admit the appeal if the assessee satisfies that undue hardship will be caused if the condition for deposit is insisted upon. Such waiver of the condition can be subject to some safeguard by way of security in the interest of revenue.

Constitution of the National Tax Tribunal is a new solution to the old problem. In 1998, considering the pendency of references a new section 260A providing for appeal to High Court was introduced. That did not solve the problem. Instead of addressing the reasons and appointing the required number of judges for tax matters in the High Court the Government has opted for a new trial by constituting the National Tax Tribunal. In due course we would come to know the drawbacks in this new system and again will be trying to find a new solution in a similar manner. Instead, it may be better to have a new look to the issue and the problem and solve the problems faced by the High Courts in disposing of the tax matters. At least in Bombay High Court, the main problem is that the department is not ready to go on with the matter. If this problem is addressed where the solution is with the Government and the department substantial pendency of tax matters in the High Courts will be reduced and there would be on reason to justify the new set up of National Tax Tribunal. Therefore, it would be necessary to have a new look to the real problem before giving effect to the new Act and transferring the matters from the High Courts to the National Tax Tribunal.

Special Story – Securities and Taxation

With the introduction of Securities Transaction Tax and the consequent changes in income tax the Journal Committee felt the need of the Special Story on "Securities and Taxation". In this Special Story it is intended to explain the concept of securities and to analyse the relevant provisions of taxation. I thank Shri Bhavesh Vora and Shri Yatin Vyavaharkar for designing the Special Story. I am also thankful to all the authors for giving their articles in time.