Report No. 79

II. Various Alternatives

17.4. Need for devising ways and means to ensure disposal.-

This is hardly a satisfactory situation. We have to devise ways and means so as to ensure that not only the arrears of references pending in the High Courts are cleared, but also that the number of references disposed of by the High Courts in a year is commensurate with the number of references made to the High Court during that period. Care would have, therefore, to be taken that as far as possible the number of references disposed of is not less than those made to the High Court in a year.

It is apparent that the early disposal of references in tax matters is of importance, both from the point of view of the assesses and from the point of view of the State. So far as assesses are concerned, they would, by and large, be interested in the early disposal of matters relating to their tax liability and the extent of such liability. As regards the State, its interest in the recovery of revenue and avoidance of delay in such recovery is so obvious that it hardly needs any dilation.

17.5. Need for certain measures to deal with delay in regard to taxation matters.-

From the figures to which we have referred above1 it is evident that concerted efforts are needed to-

(a) increase the strength of judges in the High Courts to deal with taxation references; and

(b) constitute separate benches in High C9.14rts wherever the volume of work so justifies, for disposing of tax cases.2

On the question whether any structural or procedural changes are needed in the machinery for finally determining questions arising in taxation matters, considerable labour has been devoted in the past to ' examining various alternatives.3

1. Para. 17.3, supra.

2. See also para. 17.9, infra.

3. Paras. 17.6 to 17.17, infra.

17.6. Separate Benches.-

One way of expediting the disposal of income-tax references and of preventing accumulation of arrears in such matters is to constitute one or more separate Benches in the High Court to deal with such references, depending upon the volume of work. It is also plain that to get the optimum disposal, we should put those judges on such Benches as have some grounding in the subject. The constitution of a separate Bench for the disposal of tax cases might necessitate an increase in the strength of Judges. In view of the fact that delay in the disposal of tax matters impinges upon the revenue, the burden on the exchequer which would fall as a result of the increase in the strength of judges should not be grudged.

17.7. Central Tax Court.-

One of the questions which has attracted attention in the matter of tax cases is the creation of one or more Central Tax Courts. This question was considered by the High Courts Arrears Committee presided over by Mr. Justice Shah, which expressed its view against the creation of such courts.1 The Law Commission, in its 58th Report2 also considered the pros and cons of the proposal to create such a Court and ultimately came to the conclusion that the idea of a National Tax Court could not be recommended.

1. High Courts Arrears Committee Report (1972), p. 69, para. 81-82.

2. Law Commission of India, 58th Report (January, 1974), paras. 6.12 to 6.18.

17.8. Recommendation of Chokshi Committee.-

As against the above, the Direct Tax Laws Committee (more popularly known as the Chokshi Committee), in its Report of September 1978 has recommended the creation of a Central Tax Court with Benches at Ahmedadad, Bombay, Calcutta, Delhi, Kanpur, Nagpur and Madras. According to the Committee each Bench of the proposed Court should consist of two judges. Highly qualified persons should be appointed as judges of this court from among persons who are High Court judges or who are eligible to be appointed as High Court judges. According to the Committee, in the matter of conditions of service, scales of pay and other privilegss, the judges of the Central Tax Court should be on par with High Court Judge.1

Such courts, in the words of the Committee, "will be special kind of High Courts with functional jurisdiction over tax matters and enjoying Judicial independence in the same manner as the High Courts". The Committee has also recommended that the jurisdiction of the Central Tax Court should be appellate, and not advisory. As such, appeals on questions of law would lie to the Central Tax Court and it would not be necessary to make a reference as is being done under the existing law to the High Courts. The Committee was conscious of the fact that implementation of this recommendation may necessitate amendment of the Constitution and that might take time.

The Committee has accordingly suggested the desirability of constituting, in the meanwhile, special tax Benches in the High Courts to deal with the large number of tax cases by continuous sitting throughout the year. The judges to be appointed to these special Benches, in the view of the Committee should be selected from amongst those who have special knowledge and experience in dealing with matters relating to direct tax laws.

1. Direct Tax Laws Committee Report (September 1978), pp. 173-175, paras. II-6.10 to 11-6.22.