Report No. 79

17. Jurisdiction under special Acts: Tax cases

(95) While the Income-tax Appellate Tribunal is the final authority on facts, a reference lies to the High Court on a question of law in taxation matters. This Jurisdiction has been extensively resorted to. But the rate of disposal does not keep pace with institution. This situation requires to be remedied, as early disposal is important both to the State and to the assessee.1

(96) Strength of judges for dealing with these references be increased, and also separate benches constituted where the volume of work so justifies.2 Judges having a grounding in the subject should be posted to those Benches.3

(97) A proposal for the creation of a Central Tax Court was rejected by the High Courts Arrears Committee presided over by Mr. Justice Shah and by the Law Commission in its 58th Report.4 The proposal was, however, favoured by the Direct Tax Laws Committee (Chokshi Committee), whose Report envisages a Central Tax Court with Benches at seven important cities, and with judges who are to be on par with High Court Judges. According to that Committee, amendment of the Constitution would be required. Until it is constituted, Special Tax Benches should according to the Committee, sit continuously.5

The Commission would, however, agree with the conclusion reached in earlier Reports against the formation of a Central Tax Court. Disposal of tax cases can be expedited by resorting to continuous sittings in the High Court,6 without creating a Tax Court. Frequent changes in the Constitution are also not desirable.7 Moreover, assesses would be subjected to inconvenience if they have to go outside their State for seeking relief against the order of the Appellate Tribunal.8

(98) As regards replacing references by appeal in tax cases, there are pros and cons. Substitution of appeal would eliminate the time taken in hearing before the Tribunal of the application for a reference, and obviate the necessity of filing before the High Court applications directing the Tribunal to make a reference.9

But an appeal would take more time in hearing than a reference.10

Since the matter has been already dealt with by the Law Commission in its 58th Report, and the High Courts Arrears Committee presided over by Mr. Justice Shah, both of which recommended substitution of appeal, this Commission does not propose to say anything further in the matter.11

1. Paras. 17.1 to 17.4.

2. Para. 17.5.

3. Para. 17.6.

4. Para. 17.7.

5. Para. 17.8.

6. Para. 17.9.

7. Para. 17.10.

8. Para. 17.11; as to direct reference to the Supreme Court, see para. 17.12.

9. Paras. 17.13 to 17.17.

10. Paras. 17.13 to 17.17.

11. Paras. 17.13 to 17.19.

12. Appeals to courts subordinate to the High Court