{"id":233007,"date":"2015-02-26T16:00:59","date_gmt":"2015-02-26T10:30:59","guid":{"rendered":"http:\/\/www.tehelka.com\/?p=233007"},"modified":"2015-02-26T16:00:59","modified_gmt":"2015-02-26T10:30:59","slug":"tax-terror-vs-tax-errors","status":"publish","type":"post","link":"https:\/\/tehelka.com\/tax-terror-vs-tax-errors\/","title":{"rendered":"Tax terror vs tax errors"},"content":{"rendered":"

\"Mixed
Mixed signals <\/b>The Bombay HC decided that the income tax authorities did not have any arguments against Vodafone, which was slapped with a 3,200 crore claim, Photo: AFP<\/figcaption><\/figure>
\nFinance Minister Arun Jaitley consistently referred to the \u201ctax terrorism\u201d regime pursued by UPA-2. Days after his first Budget in July 2014, he told Parliament that his government wished to \u201crevive investor sentiment, which has been disturbed\u201d to spur growth. He added that there was a need to end the previous regime\u2019s environment of \u201cwhat some call tax terrorism\u201d.
\nTo pursue these objectives and due to global pressures from countries such as the US, the government recently decided that it would not appeal against any cases in which foreign multinationals (MNCs) had got favourable orders from the lower courts in tax disputes. Thus, after this January decision, NDA-2 gave up its democratic and constitutional right to approach a higher court, including the Supreme Court, to pursue these cases to their logical ends.
\nThe beneficiaries are, obviously, big business houses, both domestic and foreign. Among them is Shell, the Anglo-Dutch oil major, which won the Rs 18,000 crore case \u2014 slapped against it by the income tax department \u2014 in a high court. The Bombay High Court decided that the income tax authorities did not have any arguments against Vodafone, which was slapped with a Rs 3,200 crore claim. Other MNCs that may get a reprieve include Nokia, IBM and Cairn India.<\/p>\n

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\nThe decision was taken weeks before the government claimed it would go after powerful corporate lobbyists and middlemen, who access secret and confidential documents from critical economic ministries (oil and gas, coal and power) to influence policies, manipulate stock markets and earn windfall profits. Not appealing against lower court orders seems a contradiction as it is akin to reverse lobbying, where the government publicly helps the big companies.
\nClearly, the finance ministry, with its objective to woo private investments, is batting for the rich class, even as it contends that it has to reduce the subsidies (food, fuel and fertiliser) for the poor. How can any regime justify it? How can any government say it will let go of its right to contest a lower-court order in a higher one?
\nFour questions are involved here. First, doesn\u2019t every individual and institution, including the government, have an inherent right in a democracy to approach the highest court, especially when the issue concerns public interest? Second, isn\u2019t it the purpose of \u2018a court of last resort\u2019, or the apex court, to take a final call on the differing views given by the lower courts?
\nThird, can any outsider \u2014 except the courts and specifically the apex court \u2014 determine the legal position in case of any disagreement? Finally, aren\u2019t there larger issues, which generally emerge from such cases, which can only be dealt with by the Supreme Court to set future precedents?<\/p>\n

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\nJudicial review<\/strong>
\nThe ideas behind the importance of judicial review \u2014 from the lowest court to the highest one \u2014 are integral to past legal debates. One, as a former US judge said: \u201cThe irreplaceable value of judicial review lies in the protection which it has accorded to constitutional rights that has maintained public esteem for the judiciary and has permitted peaceful existence of counter majoritarian implications of judicial review and the democratic principles on which our federal system rests.\u201d
\nTwo, as an American writer said that a court \u201chas not been infallible. It has made mistakes. It has run counter to the deliberate and better judgment of the community.\u201d In India, we have witnessed cases, where the lower courts were misguided, even manipulated, by witnesses and\u00a0powerful people (money and politics). Who can possibly forget the initial grave injustices in the Jessica Lall or the BMW\u00a0murder cases! In such a scenario, how can a government believe in the orders of the lower courts and give up its right to earn huge revenues that can be spent on public welfare?
\nContradictory orders<\/strong>
\nGo through various court orders and it is inevitable that different courts interpret the same issue differently. In fact, most arguments by lawyers for the petitioners and defendants in a particular case quote portions from various judgments to prove their respective points.
\nUltimately, it is the Supreme Court that gives the final interpretation. This is crucial to provide clarity about existing laws, and force the lawmakers to change them, if required. In a recent case, the apex court said that no tax could be deducted at source in the global transaction between the Hong Kong-based Hutch and Vodafone; it forced UPA-2 to introduce the controversial retrospective tax.<\/p>\n

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\nLegal arbitrator<\/strong>
\nAfter the January decision, which gave huge relief to the MNCs, Attorney General Mukul Rohatgi said: \u201cFirstly, I found that the judgment of the (Bombay) high court (in the Vodafone case) was legally correct. From the other point of view, there is an atmosphere of negativity and a general feeling that the government… are taking every matter up to the Supreme Court, whether big or small.\u201d
\nTelecom Minister Ravi Shankar Prasad added: \u201cThe (Narendra) Modi government wants to convey a clear message to investors the world over that this is a government where decisions would be fair and transparent.\u201d After the Vodafone order, Jaitley said: \u201cUnsustainable demands won\u2019t get you taxes. Unsustainable demands in the books can show you in good glory, but eventually those taxes will be blocked in some judicial court proceedings\u2026 They would have only earned us a bad name as an investment destination.\u201d
\nIf Rohatgi\u2019s arguments are taken at face value, then any senior legal official, and the law minister and Cabinet, can arbitrarily decide which cases should be pursued till the end, and which ones should be given up midway. They can also dictate which cases should be fought at all. How can the lawmakers and executive gain such far-ranging judicial discretionary powers?
\nSurely, Prasad and Jaitley \u2014 both of them are lawyers \u2014 understand that the judiciary is a final arbitrator in legal disputes to decide what is fair and transparent. The previous regimes felt that coal block and spectrum allocations were fair and transparent; the apex court cancelled them. Similarly, an outsider cannot say whether a case can be won or lost in the courts of law; he or she cannot be the lawmaker and judge. This is the principle and philosophy behind an independent judiciary.<\/p>\n

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\nFar-reaching precedents<\/strong>
\nMost cases that are entertained by the Supreme Court have manifold implications. The reason: apart from the immediate questions at hand, it tackles macro issues that deal with constitutional matters and public interest. In the gas asset dispute between the Ambani brothers in 2010, it ruled that natural resources belong to the citizens. In the recent ipl match-fixing case, it said that the bcci, a private society, has to heed the court\u2019s advice since it managed cricket, which concerned the entire nation.
\nSimilar broader issues cropped up in the Vodafone case. Can an Indian subsidiary of a foreign mnc issue shares to the latter at a discount? How can one decide what is a fair price for such deals? Don\u2019t such transactions favour the mnc at the expense of its subsidiary? May be, if the case had gone to the Supreme Court, it would have given observations on these issues.
\nIn the recent past, the country has debated judicial activism or the appropriation of legislative powers by the judiciary. Now we face the opposite scenario, where the legislature will indirectly decide what is legal or not. Both are wrong if taken to the extremes. However, today the people have to decide whether they have more faith in the judges or politicians and bureaucrats?
\nletters@tehelka.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

What happens when the government openly lobbies for big business houses, asks Alam Srinivas<\/p>\n","protected":false},"author":78,"featured_media":233011,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[56],"tags":[9215,9235,9278,334,9282,6365],"_links":{"self":[{"href":"https:\/\/tehelka.com\/rest-api\/wp\/v2\/posts\/233007"}],"collection":[{"href":"https:\/\/tehelka.com\/rest-api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tehelka.com\/rest-api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tehelka.com\/rest-api\/wp\/v2\/users\/78"}],"replies":[{"embeddable":true,"href":"https:\/\/tehelka.com\/rest-api\/wp\/v2\/comments?post=233007"}],"version-history":[{"count":0,"href":"https:\/\/tehelka.com\/rest-api\/wp\/v2\/posts\/233007\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tehelka.com\/rest-api\/"}],"wp:attachment":[{"href":"https:\/\/tehelka.com\/rest-api\/wp\/v2\/media?parent=233007"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tehelka.com\/rest-api\/wp\/v2\/categories?post=233007"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tehelka.com\/rest-api\/wp\/v2\/tags?post=233007"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}