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2016 Union Budget proposal to tax EPF: Khemka says corporate lobbying behind proposal, High Court issues notice to Centre, CBDT

Stating that all the citizens have a right to information and the file notings are an integral part of that information, Khemka in the plea further said there “cannot be a liberal interpretation” of the exemptions provided under Section 8 of the RTI Act.

Written by Sofi Ahsan | Chandigarh | Updated: May 4, 2019 9:03:24 am
ashok khemka, punjab and haryana court, CBDT, arun jaitley, tax on epf Ashok Khemka.

THE PUNJAB and Haryana High Court Friday issued notices to the Union Ministry of Finance and Central Board for Direct Taxes (CBDT) on a petition filed by senior Haryana-cadre IAS officer Ashok Khemka against the rejection of his RTI application seeking information related to a 2016 Union Budget proposal to impose tax on withdrawal of 60 per cent of employees’ provident fund (EPF). The plea alleges that corporate lobbying and commercial interests of private players were behind the proposal mooted by Finance Minister Arun Jaitley.

The March 2016 application under the RTI Act was rejected by the CBDT in October 2017 on the ground that the information pertained to the legislative process and the “information including the file noting related to the proposal (withdrawn later)” was exempted from public disclosure as they were “confidential and based on fiduciary relationship between the officers concerned”. The CBDT also claimed exemption under the Section 8(1)(a), (d), and (e) of the Act. In November 2017, the appellate authority rejected the appeal. Central Information Commission in April 2019 upheld the decisions of the CBDT.

Challenging the orders against the rejection of his RTI request and seeking directions for disclosure of the information, Khemka in the plea, filed through advocate Shreenath A, argued that the papers forming part of the legislative process are not exempted from disclosure under Section 8 of the Act as claimed by the CBDT. The plea also said that the budget was passed without the proposal, which means the legislative proposal has ended and is no longer under active consideration. On Friday, Justice Augustine George Masih sought a reply from the respondents fixing September 30 as the next date of hearing.

According to the petition, Finance Minister Arun Jaitley, in February 2016, made a proposal to tax 60 per cent withdrawal from the EPF, on retirement, or any other recognized provident fund with the exclusive exemption to those who had invested the money in private funds. However, the proposal was withdrawn a month later following an outcry from the labour unions and government employees.

“Concerns of crony capitalism and politico-corporate corruption were highlighted across public discussion on the aforesaid proposal. Petitioner being conscientious citizen, sought to examine the reasons behind such an ostensibly arbitrary policy decision; and the reasons for its swift redaction through an RTI application in March 2016,” the plea said.

The information sought includes “the copy of file noting, proposal received or study reports leading to the budget proposal to introduce the income tax on 60 per cent withdrawals from EPF in the speech of the finance minister and the file noting leading to the withdrawal of the proposal on March 8, 2016”.

Stating that all the citizens have a right to information and the file notings are an integral part of that information, Khemka in the plea further said there “cannot be a liberal interpretation” of the exemptions provided under Section 8 of the RTI Act. Section 8 (1) (a) of the Act allows the authorities to withhold information, which could prejudicially affect the sovereignty and integrity of the State or security, strategic, scientific or economic interest of the state.

Khemka’s plea reads, “The information merely seeks to understand the material, which formed the part of the proposal and the reasons which lead to its redaction.

The authority must demonstrate how the disclosure of said information would lead to the perils highlighted in the sub-section. Anything to the contrary would give arbitrary and wide ranging powers to the State to deny information, without even assigning an ostensible reason for non-disclosure”.

On exemption taken under Section 8 (1) (d), which pertains to withholding information pertaining to the private commercial interests of third parties, the plea said, “The very fact that the clause has been invoked in the present case means that commercial interests of private players were behind the aforesaid proposal…the concerns of corruption and corporate lobbying in the proposal are strengthened”.

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