ITAT – The Wire

SC Slams Union Govt for ‘Cherry Picking’ Names from Selected List for Tribunal Appointments

‘In service law, you can’t go to the waitlist ignoring the select list. What kind of selection and appointment is this?’

New Delhi: The Supreme Court on Wednesday, September 15, said that the manner in which the Union government has made appointments to tribunals clearly indicates a “cherry picking” of names.

The court expressed grave dissatisfaction with appointments at the National Company Law Appellate Tribunal and Income Tax Appellate Tribunal and the manner in which they were made.

The apex court also took a dim view of the large number of remaining vacancies and asked the Centre to make appointments within two weeks to the tribunals which are facing a severe crunch of presiding officers as well as judicial and technical members, and apprise it of reasons if persons from the recommended list are left out in the process.

A bench headed by Chief Justice N.V. Ramana and Justices D.Y. Chandrachud and L. Nageswara Rao said the condition is pitiable at the tribunals due to the vacancies and the litigants cannot be left in the lurch.

Last week, the apex court had raised concerns, saying the Centre was “emasculating” tribunals by not appointing officials to the quasi-judicial bodies that are facing staff crunch.

“The appointment letters which have been issued clearly indicate they have selected cherry picking three names from the select list and others from the waitlist, ignoring others in the select list. In service law, you can’t go to the waitlist ignoring the select list. What kind of selection and appointment is this?” the bench asked the Attorney General K.K. Venugopal.

Venugopal told the bench that the Centre would make appointments in two weeks from the list of persons recommended by the search and selection committee.

Senior advocate Arvind Datar said that for the ITAT, while the search-cum-selection committee selected 41 people, only 13 were chosen on a basis which “we don’t know”.

“This is nothing new. Every time it is the same story,” the bench said.

Also read: ‘Fill Vacancies or Shut Them’: SC Hauls Up Union Govt Over ‘Sorry’ State of Tribunals

The CJI said the Supreme Court judges undertook an elaborate exercise to shortlist the names during the pandemic and its efforts are going in vain.

“We travelled across the country. We spent a lot of time. During COVID, your government requested us to conduct interviews as early as possible. We wasted so much time,” the CJI said.

The CJI highlighted that five of those selected as judicial members are already 64 years old and have tenure of 65 years. He said, “Which judge will go to join this job for one year?”

The AG then pointed out that the judges will have the job till they are 67, according to Indian Express.

On the issue of non-acceptance of names recommended by the selection committee, Venugopal said the government has the power not to accept the recommendations made. To this, the bench disagreed.

“We are a democratic country in which rule of law is followed and we are working under the constitution. You can’t say that I don’t accept,” the CJI said.

“What is the sanctity of the process if the government has the last word? Selection committee undertakes an elaborate process to short-list the names,” the bench said.

There are around 250 posts lying vacant in various key tribunals and appellate tribunals across the country.

The top court was hearing a clutch of petitions on the issue of vacancies in tribunals and the new law governing quasi-judicial bodies.

NCLAT appointment

The Supreme Court bench also slammed the “hurried” appointment of Justice M. Venugopal as Acting Chairperson of the National Company Law Appellate Tribunal and asked AG Venugopal to take instructions on the issue for the September 16 hearing.

“I am in advance telling you (AG) to appear tomorrow, it’s regarding premature retirement of Justice Cheema as NCLAT Chairman. It appears he has been replaced. It says that 10 days before his retirement Mr Cheema, NCLAT chairman, hurriedly Mr Venugopal was appointed. I don’t know how this is happening,” the bench said.

The Centre on Saturday, September 11, approved the proposal for appointment of eight judicial members and 10 technical members in the National Company Law Tribunal (NCLT).

Justice M. Venugopal was appointed as the Acting Chairperson of the NCLAT, as the key appellate tribunal continues to be without a permanent head now for more than one-and-a-half years.

(With PTI inputs)

Centre’s New Rules for Appointing Income Tax Tribunal Members Are Still Problematic

The changes made to the ITAT under the new rules seem to blatantly ignore the principles iterated by the Supreme Court in a number of cases.

The politics of how members are appointed to India’s legal tribunals has always been a contentious issue.

Independence of the judiciary and separation of powers have been held to form part of the basic structure of the Indian Constitution. Considering tribunals perform the functions earlier performed by courts, the Supreme Court has held that such tribunals must also possess a dominant judicial character like courts and adhere to the principles of separation of powers.

Thus, tribunals in India are mandated to be similar to courts in terms of appointment and removal procedures, qualification of members, etc.

Last year, the Supreme Court struck down rules on the qualifications, appointments, removal, and remuneration of members to various tribunals formulated under Section 184 of the Finance Act, 2017, as being violative of the principle of separation of powers, and ordered the government to formulate new rules in strict adherence with the principles laid down by it.

Accordingly, on February 12, new rules were notified. However, the changes made to the Income Tax Appellate Tribunal (ITAT) under the new rules seem to blatantly ignore the principles iterated by the Supreme Court in a number of cases ranging from L. Chandra Kumar v. Union of India in 1997, to Rojer Mathew v. South Indian Bank in 2019.

In the erstwhile rules struck down by the Supreme Court last year, the search-cum-selection committee constituted for the purposes of appointing members of the ITAT – other than for the post of president and vice president of the tribunal – consisted of a minimum of two, and a maximum of four representatives from the government as opposed to just one judicial member.

This arrangement was held to be a direct contravention of the doctrine of separation of powers and an encroachment on the judicial domain. The Supreme Court went on to categorically hold that a committee constituted for the purposes of appointing tribunal members must be dominated by judicial members and not representatives from the government. Despite this, the new rules envisage an equal representation with two judicial members and two representatives from the government, without codifying a method of resolution in case of a tie between the members with judicial members voting alike.

Supreme Court. Photo: PTI

In order to ensure compliance with the Supreme Court’s directives, the judicial members must have the power to outvote government representatives in such situations, to ensure judicial dominance in the appointment process. However, equal representation is unlikely to be viewed by the courts as a means to achieve the desired outcome. While the new rules empower the search-cum-selection committee to formulate its own procedures, and this anomaly could be rectified therein by providing the judicial member with a casting vote in case of a tie. However, it remains to be seen how the search-cum-selection committee acts in this regard.

The composition of the ITAT has been retained from earlier with a president, a vice president, judicial members and accountant members. While the Supreme Court has held that judicial members should be given preference for appointment to the posts of president and vice president, the new rules mandate only the president to be a judicial member and the search-sum-selection committee has discretion over appointing either a judicial member or an accountant member as the vice-president. Thus, the search-cum-selection committee must be mindful while filling up the vacancy for the post of the vice-president, and only resort to appointing an accountant member as the vice president in cases where a suitable judicial member cannot be appointed.

Further, the new rules identify the eligible pool of candidates fit for appointment as judicial members of the ITAT. These include district judges with 10 years of service, members of the Indian Legal Services, and advocates with 25 years of standing. The Supreme Court has time and again held that the members of the Indian Legal Services are not fit for appointment as judicial members of any tribunal. However, the government seems to have failed to comply with this direction of the Supreme Court.

Furthermore, the apex court has categorically held that advocates having 10 years of standing, and district judges with five years of experience are perfectly eligible to be appointed as judicial members of tribunals. Despite that, the eligibility for appointment of advocates as judicial member of the ITAT has been increased, and for district judges, the threshold is above the minimum standard set by the Supreme Court.

While previously, advocates having 10 years of experience were eligible for appointment as members of the ITAT, this limit has now been changed to 25 years of standing experience, thereby narrowing the pool of candidates eligible for appointment as judicial members. This seems odd, given that on several occasions, the government has expressed its concern over its inability to find enough qualified members from the judiciary to be appointed as judicial members of a tribunal.

While the new rules suffer from lesser anomalies than the version struck down by the courts last year, some irregularities as identified persist nonetheless. Considering it is an age-old issue which has seen multiple litigations, the government needs to step up and fix these anomalies before it is dragged to courts again.

Nikhil Kapoor is a research fellow with the Tax Law Vertical of the Vidhi Centre for Legal Policy. The views expressed in this article are personal.

‘Immediate’ Tax Demand of Rs 429 Crore is Blatantly Unlawful, Says NDTV

It also characterised recent decisions taken by CBI, ED and income tax department as “attempts to intimidate and paralyse” the news organisation.

NDTV believes that it is being intimidated and harassed by the government. Credit: Reuters, PTI

New Delhi: Broadcast channel NDTV has called a tax demand notice of Rs 429 crores from the income tax department (IT department) “blatantly unlawful” and characterised it as part of a larger attempt by various government organisations to “intimidate and paralyse” the news organisation.

In a statement issued on Friday, the TV channel – which was subject to a series of CBI raids last month over the issue of allegedly causing a loss of Rs 48 crore to ICICI bank – stated that it was currently facing “new attacks from the CBI and enforcement directorate”.

“In short, there is a concerted and orchestrated three-pronged attack on NDTV by the CBI, enforcement directorate and income tax department,” the statement said.

Over the last five years, the income tax department has launched investigations into NDTV over tax liabilities, in the range of Rs 450 to 500 crore. Last week, the Income Tax Appellate Tribunal (ITAT) upheld the IT department’s tax demand on a $150-million investment by a US television network in NDTV in 2008. At the time NDTV said that the ITAT’s order had “numerous inconsistencies and contradictions”.

This week, NDTV received a demand of Rs 429 crores from the IT department, a letter that allegedly stated that the broadcast channel had to pay the amount “immediately now”.

“A demand for immediate payment without any notice period is unheard of and smacks of sinister motives by the IT Department. NDTV will not take such arbitrary and illegal action lying down and will take appropriate action in the matter,” the company said in its statement.

According to the statement put out by NDTV, the income tax department’s letter is blatantly unlawful for four reasons:

1) The IT department has not even completed the assessment of NDTV as directed by the Income Tax Appellate Tribunal (ITAT).

2) The ITAT had told the IT Department to make a fresh assessment on no less than four issues. These instructions have been flat-out ignored by the IT Department in rushing its tax demand to NDTV.

3) It is unknown in law to make this sort of “partial tax demand” without completing the entire tax assessment.

4) Income Tax law only recognises one assessment order – and the IT Department must complete the assessment including the four new factors raised by the ITAT.

In addition to this, NDTV states that it still has 120 days to appeal the ITAT order, and that the tax department has acted before it could do so.

CBI, ED pressure

The news organisation believes that the IT department’s urgency “reflects instructions to punish NDTV” and that is a “warning to the media at large of the consequences of balancer journalism”.

According to the broadcast channel, both the CBI and Enforcement Directorate (ED) have also stepped up pressure over the last week.

“In an undisguised fishing expedition, the CBI has sent NDTV a letter demanding documents from NDTV and its subsidiaries for an unspecified period – this despite NDTV having supplied more than 500 pages of documents only two weeks ago. Strangely, the CBI does not acknowledge the receipt of these documents,” NDTV said in a statement.

The ED, on Thursday, informed the Bombay High Court that it had started investigating NDTV for violations under the Prevention of Money Laundering Act. Over the past five years, the ED has launched investigations into these allegations.

NDTV, however, maintains that it has not been informed of such charges.

“The ED has already spent a good part of the year summoning NDTV management and questioning them repeatedly, without informing the company of what it has done wrong. The government is making clear the implications of fearless journalism. Despite the illegal and massive pressure, NDTV will not allow its coverage to be affected by these shameful tactics.”