The Lok Sabha on 22-3-2017 passed the Finance Bill 2017. Earlier, the Finance Minister Shri Arun Jaitley moved 40 amendments to the Finance Bill proposing amendments in different laws including funding of political parties, use of Aadhar for filing Income Tax returns, cap of Rs.2 lakh on cash financial transactions and rationalisation of Tribunals and Appellate Tribunals. The following are the main features of the amendments moved in the Finance Bill 2017 :
(a) Aadhar made mandatory for PAN and Income Tax
(b) Removal of Cap of 7.5% of average net profit of the last three years for companies making political donations so as to allow higher corporate donations while curbing black money and unknown source of political donations.
(c) Limit on cash transactions has been reduced to Rs. 2 lakh
(d) Competition Appellate Tribunal to merge with National Company Law Appellate Tribunal.
(e) Airports Economic Regulatory Authority Appellate Tribunal to be merged with Telecom Disputes Settlement and Appellate Tribunal (under the TRAI Act, 1997)
(f) EPF Appellate Tribunal to be merged with Industrial Tribunal.
(g) Railways Rates Tribunal to be merged with Railway Claims Tribunal
(h) Appellate Tribunal for Foreign Exchange to be merged with Appellate Tribunal under SAFEMA Act.
(i) Power to impose penalty by adjudicating authority under Securities Contracts (Regulations) Act, 1956.
Major reforms in Tribunals
In major reforms of tribunals, the Government by amendments to Finance Bill 2017, sought to reduce the number of Tribunals and brought parity in the service conditions of Chairmen and Members of these Tribunals.
“There will be uniformity in service conditions and pay structure of all those retired judges who are being appointed in all these tribunals. Where there is less work and there are two-three tribunals, that will now be done by one,” Shri Arun Jaitley, the Finance Minister said in Parliament, moving the amendments as part of the Finance Bill 2017
Shri Arghya Sengupta, Founder and Research Director of think tank Vidhi Centre for Legal Policy which assisted the Law Ministry in the process of streamlining tribunals, stated that Tribunals perform an exceedingly important function in the current system of justice delivery. They have, however, over the course of the past few years, been shown to suffer from some of the same problems, the regular judiciary has in terms of being slow and non-specialized. Some tribunals have also been fairly redundant in terms of not having any case load.
Merger of Tribunals is first step towards administrative streamlining of tribunals. Hopefully, the next step will be that there is reform in the appointment procedure for the Tribunal.
As per the amended Finance Bill, 2017, the following Tribunals are proposed to be merged with existing Tribunals :
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Tribunals to be merged
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Tribunals in which to be merged
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Competition Appellate Tribunal
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National Company Law Appellate Tribunal
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Airports Economic Regulatory Authority Appellate Tribunal
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Telecom Disputes Settlement and Appellate Tribunal
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Cyber Appellate Tribunal
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National Highways Tribunal
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Airport Appellate Tribunal
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Employees Provident Fund Appellate Tribunal
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Industrial Tribunal
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Copyright Board
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Intellectual Property Appellate Board
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Railways Rates Tribunal
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Railway Claims Tribunal
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Appellate Tribunal for Foreign Exchange
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Appellate Tribunal under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976
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Chairmen and Members of Merged Tribunals to be relieved by paying three months’ pay and allowances
The Chairmen/Presidents and other members who are presently occupying posts with Tribunals to be merged, shall be entitled to receive up to three months’ pay and allowances for termination of their office term. Officers on deputation and other authorities of Tribunals that will cease to exist after the merger, shall stand reverted to their parent cadre, ministry or department. However, the present Chairmen/Presidents and Members of the existing Tribunals shall continue to governed by existing service condition and tenure of services.
New appointment to Tribunals for fixed tenure but age of retirement enhanced – Uniform service conditions
(1) Currently, terms of service of Chairpersons and other members of Tribunals, Appellate Tribunals and other authorities are specified in their respective Acts. Amendments to the Finance Bill, 2017, propose that the central government may make rules to provide for the (i) qualifications, (ii) appointments, (iii) term of office, (iv) salaries and allowances, (v) resignation, (vi) removal, and (vii) other conditions of service for these members.
(2) These rules will be applicable to members which include the Chairmen, Vice-Chairmen and Members of specified Tribunals. As per amendments, the term of office for new appointees shall not exceed five years, and that they will be eligible for reappointment. Further, the age of retirement for these persons has been specified, such as (i) 70 years for Chairmen or Presidents, and (ii) 67 years for Vice-Chairmen, Vice-Presidents, and Presiding Officers.
Independence of Tribunal whether being compromised ?
Constitutional experts and top lawyers have opined that empowering the Central Government to decide the terms of service for the Chairmen and Members of the Tribunal and their appointment will impact the independence of the Tribunal as the Executives will have enormous and undue influence in relation to the appointment/reappointment and service conditions of those who men the Tribunal and thus there is a conflict of interest as the Government is one of the litigant party in every case before the Tribunal.
The Hon’ble Supreme Court, recently in 2014 in the case of National Tax Tribunal has held that the Tribunals have similar power and functions as that of High Courts, thus the matter relating to appointment and reappointment and tenure of the Chairmen/Presidents and members must be free from Executive involvement. Earlier in the year 1992, the Supreme Court in the case of R.K. Jain v. Union of India – 1992 (65) ELT 305, has held that to instill public confidence in the Tribunals, the appointment of President to the Tribunals should be made in consultation with the Chief Justice of India. The primacy of the Central Government in the appointment, reappointment and service conditions of the Tribunal are likely to deprive these Tribunals of their independent character.
R.K. Jain