One of the main highlights of the 2021 budget is the introduction of the National Faceless Income Tax Appellate Tribunal Center, which replaces the existing Income Tax Appellate Tribunal.
The Income Tax Appellate Tribunal (ITAT) is often referred to as the “Mother Tribunal” and is considered to be the oldest tribunal in the country. It has been said that it is the success of ITAT that has led the Indian government to set up similar indirect tax appeals courts, i.e. Customs, Consumption, Services Tax Appeal Court (CESTAT), Central Administrative Court (CAT), Railroad Action Court, Foreign Exchange Appellate Board etc. Nonetheless, the Union budget has now taken this ambitious move, which would consequently eliminate the crucial part of promoting justice – the “oral hearing”.
Common Law Nations and Civil Law Nations
Legal systems around the world largely fall into two categories: (i) common law systems as in England and India (ii) civil law systems such as in the Netherlands, Germany or Indonesia.
Among other differences between Common Law Nations and Civil Law Nations, one of the essential facets of Civil Law Nations will be the minimal emphasis on oral arguments and tests. In civil law nations, written communications predominate, and clarifications and replies are made in writing after the Court has been asked for permission. On the contrary, the common law system plays a much larger role in oral hearings. The question now arises whether the introduction of the National Faceless Income Tax Appellate Tribunal Center, which completely eliminates the oral hearing aspect, is interpreted as a departure from the common law aspect of the Indian legal system.
Principles of natural justice
Audi alteram partem (“hearing the other side”) is one of two principles of natural justice. (The other principle is Nemo Judex in Cause Sua, which posits that Noman should be a judge on his own cause. “)
A consequence of the above-mentioned rules of natural law was derived: “Anyone who should decide something without the other side being heard, although he has said what is right, will not have done what is right”. These principles of natural justice are also part of the indestructible law afforded by Article 14 of the Constitution of India. One wonders whether a faceless tribunal, lacking oral hearings, will deprive litigants of this natural fundamental right. Proponents of a “faceless trial” will argue that the right to be heard is not eliminated, only the oral hearing is waived. The main benefit of “faceless litigation” is an accelerated rate of sale as the volume of cases increases.
Are oral hearings the rule?
Although a hearing is usually an oral hearing, there seems to be a clear norm that an oral hearing cannot be substituted. In other words, there has to be a hearing, although not necessarily an oral one.
A number of judgments have been drafted by eminent lawyers as to the origin and scope of the “oral hearings,” but the Constitutional Bank judgment in the PN Eswara Iyer v. Chancellor of the Supreme Court of India (1980 AIR 808) will, in our humble opinion, be that Jewel in the crown. The Supreme Court in this case dealt with the powers of a sub-rule that included oral arguments in a petition for review, but allowed additional written arguments. The court agreed that the normal rule of legal process is the hearing and the elimination of an unusual exception. It was stressed that “the magic of the spoken word, the power of the Socratic process and the instant clarity of the bar-bench dialogue are too precious to be separated from it”. The bank further noted, “The bank cannot do without the bar. In our system, advocacy becomes functional when viva voce is present and is weakened when presented in subdued pressure. We are not claiming that orality is a permanent vacation can get … “
Income Tax Appellate Tribunal, the final investigative authority
The faceless initiative started with the exam. As a result, appeals before the Commissioner of Income Tax (CIT) were made “faceless”, eliminating the interface between the assessee and the agency. In this case, an oral tax dispute hearing normally only takes place after a third-tier appeal to the competent high court. A legal remedy against the decision issued by ITAT is only available if an essential legal question is established. The expansion of the faceless procedure therefore leads to the fact that an oral hearing is inadmissible when assessing facts and laws. ITAT is the final investigative body on the road to tax disputes, and even the high court on appeal cannot reverse a factual finding by ITAT. In addition, it is also considered a “civil court”. Needless to say, proceedings before the ITAT are “judicial proceedings”. Therefore, giving an “oral hearing” in the present scenario is an unprecedented measure.
The faceless experiment is undoubtedly a pragmatic development of case law as it can potentially produce results in terms of efficiency, effectiveness, and convenience. However, as a lawyer or practitioner, it hits the very roots of what you stand for by virtue of your profession, and leaves a helpless pinch in your stomach.
However, the aspect to consider is the extent to which such muting procedures are performed. An oral hearing is much more convincing and real. It enables a higher level of reception compared to written submissions. An oral presentation engages the recipient far more than just simple words, no matter how well worded they are. History and tradition testify to the superiority of language over words.
Would the conspirators have been driven from Rome without Antony’s ‘speech’? Lincoln’s Gettysburg speech more than a hundred years ago has become an inevitable part of American political culture. Language is irrefutably an irreplaceable form of communication. To refuse advice from his oral hearing would be to rob a shooter of his thumb.
Moving away from oral hearings at the so-called “National Faceless Income Tax Appellate Tribunal Center” would certainly have far-reaching effects. The benefits promised to the assessee, its lightness and simplicity, remain to be seen. Nevertheless, it will certainly shape the landscape of tax law practice. Neither the practitioners nor the examiners will be silent bystanders. It will be immensely fascinating to see how the courts discuss this aspect in the event of a judicial challenge and even more to see how professionals will accept this change. They say change is the only constant in the world. However, this change may not be the right one.
(Pawan Jhabakh and Salai Varun are attorneys at Madras High Court. Views expressed are personal.