Overstepping limits of Finance Bill

G. Srinivasan

The 2017 Finance Bill as passed by the Lower House on March 22 which was subsequently discussed and debated in the Rajya Sabha on March 29 with the Union Finance Minister responding to the concerns of members in both the houses is a unique but unsettling piece of legislation.  After its introduction on the budget day on February 1 till its passage in the Lok Sabha, members from the disparate Opposition parties were rightly agitated over the government’s move and successful passage of as many as 40 amendments as part and parcel of the Finance Bill. That the upper house is upset over non-tax provisions masquerading as tax provisions to bypass the need for their due passage in the Rajya Sabha, is passé. What struck dispassionate observers really is the battle cry from the Opposition benches on the need to revisit the legality of the Lok Sabha Speaker’s right to resolve whether a Bill is a Money Bill or not.
There is a plausible ground for raising such a plea from the house of elders because the Finance Bill has attempted to alter Industrial Disputes Act, 1947, Airport Authority of India Act, 1994, Income Tax Act 1961, Telecom  Regulatory Authority of India Act, 1997, Customs Act 1962, Trade Marks Act 1999, Smugglers & Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, Companies Act, 2013, Administrative Tribunals Act, 1985, Cinematograph Act, 1952, Railway Claims Tribunal Act, 1987, Consumer Protection Act,1986, Securities and Exchange Board of India Act, 1992, Electricity Act,2003, Recovery of Debts due to Banks and Financial Institutions Act, 1993, Armed Forces Act, 2007 and the National Green Tribunals Act, 2010. It is perspicuous from the aforementioned lists of variegated subjects that all of them do not qualify for being amended under the garb of money bill as the changes sought to be introduced and passed need to be brought in the form of a bill and discussed threadbare in the upper house so that requisite safeguards against potential or putative misuse and abuse are inbuilt to insulate the denizens of the nation from being subject to undue harassment or unjust enrichment by the law-enforcing authorities!  
It is rather unfortunate that with a sledgehammer the government has succeeded in amending forty laws through the money bill tack, bypassing any dispassionate discussion about the need and urgency of the proposed reform measures so that the people by and large could be a tad wiser from the crystalline discussions of their elected members in the lower house or the selected members from the upper house. In a multi-party democracy the bicameral legislatures as evolved by Constitutional experts ought not to have been flouted in a fashion that might build resentment and avoidable resistance in the members of the upper house.
A polemical provision that has set alarm bells ringing even among genuine big-ticket taxpayers is the passage of an amendment concerning search and seizures in the Income Tax Act. It has been proposed to insert an Explanation after the fourth proviso to the sub-section (4 of s 132) so as to provide that the reason to believe recorded by the income tax authority specified therein under the said sub-section shall not be disclosed to any person or any authority or the Appellate Tribunal. The amendment would take effect retrospectively from April 1, 1962, the date of the commencement of the Income Tax Act, 1961. Again, it is also proposed to insert an explanation in the subsection (1A) of s 132 so as to declare that reason to suspect recorded by the income tax authority shall also not be disclosed to any person or any authority or the Appellate Tribunal.
In reply to the Finance Bill in the Lok Sabha, the feisty Finance Minister Arun Jaitley referred to this as “a small amendment has been made to the effect that a court can see such a document (reason for search and seizure by the tax sleuths) but this document will not be given to any other person. He further justified the change that under the extant procedure, the copy of the order detailing the reasons had to be given to the individual against whom search is to be carried out but because of this the source of information were drying up.  Tax lawyers and auditors recall that while confidentiality and sensitivity remain the hallmarks of proceedings under Section 132 and section 132 A, certain judicial pronouncements have fostered ambiguity in respect of the disclosure of reason to believe or reason to suspect recorded by the income tax authority to conduct a search under section 132 to make  requisition under section 132A.
They cited a ruling by the Supreme Court in DGIT(Inv) vs. Spacewood Furnishing (P) Ltd (2015) 57 taxman.com 292 (SC) clarified that section 132 would not confer in assessee a right of inspection of document or to a communication of reasons for belief at stage of issuing of authorization. However, at stage of commencement of assessment proceedings after completion of search and seizures, if any, that requisite material may have to be disclosed to assessee. But the latest amendment has annulled the effect of the apex court judgment since no person, authority or even Appellate Tribunal shall be entitled to advert to the reasons to believe or reasons to suspect as the case may be during the course of assessment or appellate proceedings.
While no one faults the zealousness with which the authorities hound out tax evaders, they should also ensure that the new-fangled freedom vested with the income tax authorities is not abused or misused to settle scores or indulge in personal vendettas. As it is, Indian businessmen have of late become tax exiles and fugitives from strangulating fiscal fangs. Every spacious move the government makes should ensure that smart and intelligent taxpayers can keep themselves to onshore, instead of seeking offshore sanctuaries such as Panama and low-tax havens such as Guernsey and Monaco. (IPA)

Friday, 31 March, 2017