Tribunal posting: Amended Finance Act rules struck down

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New Delhi | Published: November 14, 2019 5:46:20 AM

A five-judge Constitution Bench led by Chief Justice Ranjan Gogoi directed the law ministry to conduct an impact study and submit a report to the apex court.

The bench said that there is a need-based requirement to conduct ‘Judicial Impact Assessment’ of all the tribunals so as to analyse the ramifications of the changes in the framework of tribunals as provided under the Finance Act, 2017.

Striking down the rules framed under the amended Finance Act 2017 for appointments to tribunals, the Supreme Court has directed the government to reframe fresh norms for such appointments on the basis of existing statutes and not the rules framed under the Finance Act of 2017, which was passed as a Money Bill.

A five-judge Constitution Bench led by Chief Justice Ranjan Gogoi directed the law ministry to conduct an impact study and submit a report to the apex court. It said that there is a need-based requirement to conduct ‘Judicial Impact Assessment’ of all the tribunals so as to analyse the ramifications of the changes in the framework of tribunals as provided under the Finance Act, 2017. However, it referred the issue challenging the validity of passage of Finance Act 2017 as Money Bill to a larger bench of seven judges.

It struck down the Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017, saying it suffers from various infirmities as these Rules formulated by the central government under Section 184 of the Finance Act, 2017 are contrary to the parent enactment.

And in the meantime, it asked the government to make appointments as per the existing laws that govern the tribunals.

The apex court, however, upheld Section 184 of the Finance Act which had entitled the Central government to frame rules to determine appointment, service conditions, removal and other aspects of tribunals. “Section 184 does not suffer from excessive delegation of legislative functions as there are adequate principles to guide framing of delegated legislation, which would include the binding dictums of this Court,” the judgment stated.

The CJI writing the judgment for himself, Justices RV Ramana and Sanjiv Khanna said that the Centre should revisit the provisions of the Finance Act and consult the Law Commission of India or any other expert body and place appropriate proposals before the Parliament for consideration of the need to remove direct appeals to the Supreme Court from orders of tribunals. A decision in this regard should be taken by the government within six months, it said.

“The new set of Rules to be formulated by the Central Government shall ensure non-discriminatory and uniform conditions of service, including assured tenure, keeping in mind the fact that the Chairperson and Members appointed after retirement and those who are appointed from the Bar or from other specialised professions/services, constitute two separate and distinct homogeneous classes,” it directed.

Justice Deepak Gupta and Justice Chandrachud wrote separate but concurring judgments.

The decision has come in a batch of petitions led by Roger Mathew and Revenue Bar Association challenging the Constitutional validity of Finance Act, 2017 and the Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 (Rules). The petitions had stated that the provisions of Finance Act 2017 affected the powers and structures of various judicial tribunals such as National Green Tribunal, Income Tax Appellate Tribunal, National Company Law Tribunal and National Company Law Appellate Tribunal.

The petitioners stated that the provisions of twenty-five different enactments were amended to effect sweeping changes to the requisite qualifications, method of appointment, terms of office, salaries and allowances, and various other terms and conditions of service of the members and presiding officers of different statutory Tribunals.

Attorney-general KV Venugopal had stressed on the need to streamline and harmonise the applicable rules, which he said was attempted through the Finance Act, 2017.

One of the major grounds of challenge to the Finance Act was on the ground that the same was passed as a Money Bill. It was the petitioners’ case that the passage of the Finance Act in the form of a Money Bill’ was entirely inappropriate and amounted to a fraud on the Constitution.

Money Bills are those Bills which exclusively contain provisions for imposition of taxes and appropriation of moneys out of the Consolidated Fund. They can only be introduced in the Lok Sabha. The Rajya Sabha can only suggest amendments to money bills.

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