Government firm on tax law changes, relents on tribunal postings

The discussion in Rajya Sabha saw a lively sparring session between Finance Minister Arun Jaitley and Congress leader P Chidambaram.

Written by Amitabh Sinha | New Delhi | Updated: March 30, 2017 8:44 am
tax law changes, tribunal postings, Finance Bill, Parliament, Companies Act, Income Tax Act, judicial appointments, finance bill passed, Arun Jaitley, indian express news, india news, business news Union Finance Minister Arun Jaitley (File Photo)

Addressing one of the major concerns of the Opposition on the Finance Bill, the government Wednesday assured Parliament that all judicial appointments in regulatory bodies or tribunals, many of which are being restructured in one go through provisions in the Finance Bill, will continue to be made in consultation with the judiciary.

But it ignored the objections of the Opposition on many other issues including provisions in the Finance Bill that enable changes to the Companies Act and Income Tax Act. The discussion in Rajya Sabha saw a lively sparring session between Finance Minister Arun Jaitley and Congress leader P Chidambaram.

The Opposition managed to have its say, forcing four amendments in the Finance Bill since the government lacks majority in Rajya Sabha. The amendments are likely to be short-lived though, as changes made by the Upper House to any money Bill, like the current Finance Bill, is subject to approval by Lok Sabha. The Rajya Sabha cannot do anything if Lok Sabha refuses to endorse these amendments.

The Opposition has been questioning the intent of the government ever since it became known that the Finance Bill contained provisions to amend several other laws. Such amendments ordinarily happen through separate stand-alone legislation. The Opposition alleged that these were incorporated into the Finance Bill to circumvent the Rajya Sabha. Jairam Ramesh of the Congress said what the government had
brought was not the Finance Bill but “an agenda for reducing Parliament to complete irrelevance”. “It is the Finance Bill terrorism,” he said.

Among the many provisions that had the Opposition protesting were those related to restructuring of at least 27 tribunals and several regulatory bodies. Seven tribunals are proposed to be shut down and some others merged. The Opposition also pointed out that the provisions enable the government to make appointments to these tribunals and regulatory bodies on its own, without consulting the judiciary, for posts on which only judges can be appointed.

Jaitley argued that many of these tribunals had little or no work and some had overlapping duties. He pointed out that there were seven inter-state water tribunals. “What is wrong if the government says that let us have one river water tribunal,” he asked. When CPM’s Tapan Kumar Sen intervened to say that many tribunals were overburdened with work as well, Jaitley said in such cases additional benches could be constituted.

But Jaitley did make the Opposition happy on one count. He assured the House that all judicial appointments in these bodies would be done only in consultation with the judiciary, as it is done now.

“If it is judges (whose appointment is to be made in these tribunals and other bodies), please rest assured that it will be done in consultation with the judiciary,” Jaitley said. He had to repeat the assurance at least three times as Jairam Ramesh, Kapil Sibal and Chidambaram stood up to point out that the related provisions in the Finance Bill did not contain any such assurance.

At that point, Jaitley said the government intended to include that provision in the Rules of the legislation. Rules stipulate how a legislation will be implemented, and are framed after the legislation has been passed by both houses of Parliament and turned into law. Jaitley’s assurance was welcomed with loud thumping of desks by the Opposition. But that was the only time the two sides agreed.

Chidambaram and Sibal, and Sitaram Yechury of CPM, took the government to task for provisions related to Income Tax Act and Companies Act as well. Chidambaram and Jaitley had a long argument over the specific proposals that seek to ensure that a person under investigation for tax evasion cannot be given access to information which formed the basis of the probe against him. Income Tax authorities have to prepare a written ‘satisfaction note’ giving reasons for initiating a tax probe against an alleged defaulter. The reasons in this note can be challenged in a court of law.

Chidambaram and some of his colleagues argued that by denying the person any access to this information, the government was proposing to take away his ability to challenge it legally and thus putting him at the mercy of tax bureaucracy. Such provision could be easily misused, they argued.

Jaitley, on the other hand, claimed that providing such information to alleged tax evader could compromise the source which had brought it to the notice of tax authorities. He said the information could be provided to the courts to establish whether these were robust reasons to initiate investigation or not, but not to the target of the investigation.

Chidambaram and his colleagues also objected to the proposals that seek to make Aadhaar compulsory for a income tax accounts and bank accounts. Chidambaram said even if it is conceded that there might be some merit in these decisions, the government had not made it clear what it was doing to address the privacy concerns of the people.

“The larger question, that is being raised, and I think you should answer is, how will you protect the privacy of transactions in bank accounts? How will you protect the privacy of facts, material in the income tax returns? The Pentagon has been hacked, and five hundred million accounts have been hacked… What is the guarantee that you have the technology to prevent hacking of bank accounts, hacking of income tax accounts through the Aadhaar number?” he asked.

Jaitley said just because it is possible to hack a network did not mean that technology must not be deployed. “The Pentagon got hacked even without the Aadhaar being there… the fact that technologies can be broken into, can never be an argument to say don’t have technology. The answer is that your firewalls… must be strong enough,” he said.

A number of MPs mentioned the case of former cricket captain Mahendra Singh Dhoni, whose Aadhaar number had been made public on Tuesday. Jaitley said the person who had done that had already been apprehended and blacklisted. “ This was the case where some individual indulged in misconduct for the craze of a selfie or a photograph. And he has been blacklisted for ten years. It was an immature behavior of the person who went there,” Jaitley said.

Unhappy with Jaitley’s response to the objections raised to various issues, the Opposition decide to use its numerical advantage in the Upper House to embarrass the government. It forced — and won by a comfortable majority of about 30 votes — four amendments to the Finance Bill. Three of them, moved by Digvijaya Singh of the Congress, related to provisions that sought to make changes in the Income Tax Act. The fourth, moved by Yechury, sought to delete the provision that sought to amend the Companies Act to remove the ceiling applicable to corporate funding of political parties.

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