A tax exemption of Rs.45 crore has been granted to the International Cricket Council (ICC). Of course, the argument of the Sports Minister at the Cabinet Meeting (chaired by the P.M.) that the ICC was making crores of rupees in conducting the world cup, and did not lack any sponsorship, the revenue from taxing of events such as the World Cup could have been used to promote other games in the country and so on, did not cut much ice at the meeting.
The plea in the Cabinet Meeting in favor of the tax exemption was that not granting relief would be a violation of the law. What a touching concern for scrupulous adherence to the provisions of the law, from a Government, which has spawned some of the most spectacular scams- involving lakhs of crores of rupees- perhaps an unparalleled record among all the Government sponsored-scams in the world. This tax exemption figure of about 45crores in favor of the poor ICC will not even be visible to the members of this honourable Government and so, concerned citizens permitting, we shall move on to the tax cuts/exemption running to RS. 5 lakhs crores or so, granted to the industrial barons, IT moguls, import-export racketeers etc, during each of the last four or five years.
With the vanity which is characteristic of writers, I am presumptuous enough to assume that, at least some concerned citizens might have glanced at the article (titled “The Scam which is the mother of the 2g scam’’), which appeared on 31st of January 2011 at this distinguished website, I humbly place it before the concerned citizens that the greatest culprit for paucity of resources in the country is the neoliberal policy followed by the Government, and its (criminal as we should view it) action in the throwing away (as P. Sainath put it) monstrous amounts of revenue by way of tax cut in favor of mainly the manufacturing and service sectors, apart from the vested interests in the import export houses- Rs. 5 lakhs crores in the budget for 2010-11, and similar colossal amounts during each of the last few years. We have been bemoaning that all this money could have been used for providing real food security to aam admi, and massive investment in education, provision of potable water, public health, health care, communication, employment generation, irrigation projects, and infrastructure for Railways, and so on. Only two persons seem to be crying out their hearts over this criminal misappropriation by the Government – Sainath for one, the other being the humble self. It does not seem to make an impression on any others! Probably, the growth rate drone lulls people to sleep!
I argued in that article that these tax cuts of astronomical proportions are totally untenable on the following grounds:
- They are illegal and unconstitutional- being ultra vires of the provisions of Art. 266 of the Constitution of India.
- The tax cuts are violative of the provisions of Art. 38 and Art. 39 ibid.
- The tax cuts/concessions are not subject to any control whatever,
- The Government’s “justification” for these atrocious favors to the industrial, service and other sectors is nothing but a sham. The Government has not come out with any study to show what the (fictitious) growth rate would have been, and what catastrophe would have over taken the country if these lakhs of crores of revenue due from the pampered sections mentioned above, had not been forgone.
- No details are given in regard to the Corporate Houses etc., which were the beneficiaries of this bonanza, how they utilized them for generating employment and raising their productivity, and so on. The industries did not need any propping up, because, for instance, the BSE 500 companies – medium and large companies- saw their net profit for the quarter ended September 2010 increase by 20% over the previous year’s profit. It is reasonable to presume that the bulk of the Rs.5 lakhs crores tossed at them would have gone to speculation on the Stock Exchange, commodities, exchange, futures trading, speculation in real estate- and, of course, funding of the election expenses on a massive scale, with quid pro quo being claimed in due course.
The concerned citizens would have got exasperated by now, and might well ask “Is there anything else to be considered on this question?’’ Yes, sir! I would like to place another important aspect for your kind consideration.
Recently, the redoubtable Minister for Telecommunications was waxing eloquent over the loss to Government on the disinvestment of VSNL, because of the delay in the demerger of part of the land. He was faulting the then Minister, with all the emphasis at his command, saying that the land belonged to the people of India, and delay in its demerger was causing a huge loss to the Government (running to about Rs.1500 crores or more). In turn one feels thrilled that the Government had at last realized and conceded that Government land belonged to the people of India! (Normally, the attitude of the Government functionaries is that, they being the elected representatives, the land and public assets belong to them, to be disposed of by them, as they deem fit.)
One would like to ask the Finance Minister (and other Ministers) “Sir, it is rightly observed that Government land belongs to the people of India. Do not the public revenues belong to the people of India? Then, how far is it proper-and legal-to deprive the bulk of the people of India, of such a large share of revenues, by tax cuts, tax exemptions, etc in favor of small segment of the economy?
The Oath of Office administered to a Minister by the President, under Art. 75(4) of the Constitution, reads as follows: “ I, A.B., do swear in the name of God/ solemnly affirm that I will bear true faith and allegiance to the Constitution of India, as by law established, that I will uphold the sovereignty and integrity of India, that I will faithfully and conscientiously discharge my duties as Minister of the Union, and that I will do right to all manner of people in accordance with the Constitution and the law, without fear or favor, affection or ill will.” How far is the Finance Minister true to his Oath of Office to do right to all manner of people, without favor, by gifting away a very substantial portion of the revenue to the people in a few sectors? The question I would like to place before the concerned citizens is “What is the remedy available to the people against such gross breach of the solemn oath taken by the ministers at the time of their assuming office, and the betrayal of the Trust reposed in them?’’ The Constitution pundits should decide whether this Oath of Office administered to the Ministers is of importance and should be adhered to by the Ministers if they want to continue as such, or it is just ornamental and has only cosmetic value. In the latter case, it is hypocritical to retain it in the Constitution. As it is, our netas are hypocrites par excellence. We should not enshrine hypocrisy in the Constitution. Will the country be safe in the hands of such persons of straw? How do they give certificates to themselves about their impeccable integrity?
I request the permission of the concerned citizens to make a brief digression here, before placing some important considerations before them. There are innumerable instances where individuals, organizations, such as Banks, Firms, Companies etc, employ agencies to collect their dues on account of rentals, loan instalments, dues on account of supplies, services, etc. In no case can such agencies tell the debtors that they are waiving off a percentage of amounts due from them, and they can pay the balance in full settlement of their dues. Such an agent will, before long, be cooling his heels in a jail for criminal breach of trust (and for exceeding his brief).
I hasten to explain to the concerned citizens the connections between the above and the Government’s largesse to the industrial and other sectors.
There are different Schemes for levy, collection and distribution of taxes, prescribed by the Constitution, namely:
- Duties levied by the Union but collected and appropriated by the States (Art. 268),
- Taxes levied and collected by the Union but assigned to States (Art. 269),
- Taxes levied and collected by the Union and distributed between the Union and the States (Art. 270),
- Taxes which are levied and collected by the Union and may be distributed between the Union and the States (Art. 272).
It will thus be clear that the Central Government is merely an agent for levy and collection of taxes on income, and the net proceeds of such taxes do not form part of the Consolidated Fund of India, but stand assigned to the States within which the tax is leviable, and have to be distributed among those States in the manner prescribed (Art. 270, 272). Likewise, Union duties of excise are levied and collected by the Government of India, but they should be paid out of the consolidated fund of India, to the States to which the law imposing the duties extends, sums equivalent to the whole or any part of the net proceeds of that duty, as provided by Parliament by law (Art. 272)
It will be apparent from the above that the tax cuts, exemptions etc running to lakhs of crores granted by the Central Government in the garb of “fiscal stimulus” reduce drastically the sum payable to the States under Art. 270 and 272 of the constitution. The action of the Central Government is illegal and unconstitutional. It has undermined the Federal Structure of the Constitution.
The writer fervently hopes the concerned citizens agree that this important issue which relates to enrichment of a small segment of the population by astronomical sums of money, and deprives vast section of the citizenry of those revenues which are vitally needed for the provision of basic needs and amenities, requires to be taken up by the Center for Public Interest Litigation, or by the appropriate Court suo motu, so that this loot of vast amounts of public money is put an end to, and that these revenues are distributed among the States, which have been impoverished so far, in accordance with the provisions of the Constitution referred to above .
I crave the permission of the concerned citizens- if any have had the indomitable patience to have come thus far– to place before them the following for consideration. These are relevant as they relate to tax evasion, money laundering, etc. These relate to one of the outstanding citizens of the country (at least according to this Government!), who has made mind boggling contributions in the fields of tax evasions, money laundering, gunrunning, arms smuggling, terror funding, and so on. In appreciation, the Government is going all-out to see that no harm comes to him from the Investigating agencies such as the enforcement directorate (ED), etc.
A report of the Comptroller and Auditor general of India (CAG) tabled in Parliament recently revealed that Hasan Ali’s wealth multiplied by over hundred times in six years from Rs.529 crore to Rs.54,268 crores. In 2006-07 his taxable income according to the assessment made by the Income Tax authorities, jumped from Rs.528.9 crore in 2001-02, to Rs.5404 crore in 2002-03, and then soared to Rs.54000-68 crore in 2006-07.
Hasan Ali was left completely free for well over 3 years so that he could do what he liked. No one bothered when he went to Singapore for months, allegedly on a fake passport and opened several bank accounts there. When the pressure on the Government mounted to get the details of the bank accounts, money transfers, etc., stashed in banks abroad (Switzerland, Liechtenstein, etc), only then did the Government write to the authorities in Switzerland asking for these details, for investigation of certain crimes against Hasan Ali. The crime against him under investigation was stated to be that he did not file Income Tax returns! The Swiss authorities who do not consider even tax evasions as a serious crime warranting disclosure of the bank accounts particulars etc were amused no end by the request made by the Government of India. After the lapse of a sufficiently long time, the Government furnished copies of documents supposedly pertaining to the criminal charges under investigation. They were found to be -hold your breath, dear citizens-forged copies, quite a few of which were not even relevant! So, by the time the Government braced itself to getting the particulars, it found that the balance in the bank account of the offender was nil, as against several billion dollars slashed away by him. The Government had achieved its objective!
The Supreme Court enquired why the ED was not doing custodial interrogation of Hasan Ali and also wanted the ED to do the investigation from the internal security angle, the terrorist activities angle, etc. A Mumbai Court constituted under the prevention of Money Laundering Act rejected, on March 11th 2011, the ED’s plea for the custodial interrogation of Hasan Ali khan on the ground that the ED had not gathered sufficient evidence to justify its plea, and released him on bail. Acting on a special leave petition filed by the ED, a Bench of the Supreme Court after hearing the Solicitor General (SG) cancelled Hasan Ali’s bail-even without giving him notice. The Bench said in its order “we are satisfied that the material made available on record prima facie discloses the commission of offence by the respondent (Hasan Ali), punishable under the provisions of the Prevention of Money Laundering Act, 2002.
“The order passed by the Principal Judge (MUMBAI), creates an extra ordinary situation which, if allowed to stand even for a moment, may ultimately result in frustration of the very investigation. An extra ordinary situation required an equally effective and equally extraordinary solution. It is for that reason that we propose to interfere with the order even at this stage
“Having regard to the extraordinary circumstances and complexity of the issues involved and magnitude of the case, we considerate it appropriate to authorize the detention of the respondent / accused for custodial interrogation by the ED for a period of 4 days”
When the SG submitted to the Bench that the trial judge (In Mumbai) granted bail to Hasan Ali on remand application for custody by the ED, even though no bail application was filed by Hasan Ali, the judge told the SG “we are deeply disturbed at the manner in which the trial Court judge passed his order” and asked “Why has the learned judge written so much? ’’ On the SG pointing out that bail was not normally granted to an accused under the PMLA, Justice Sudershan Reddy remarked “it seems that is why the trail judge passed a detailed order”.
I fondly hope that the concerned citizens will forgive me for the lengthy piece on Hasan Ali (who is facing an Rs.70, 000crore tax demand notice from the Income Tax Department. It is clear that the care and concern with which the Government is looking after the interests of Hasan Ali can be a lesson even to mothers on how to care for their newborn babies! It looks as if Hasan Ali is the alter ego of the Government. One even wonders whether Hasan Ali is a clone of the Government or vice versa. I may be pardoned for saying
“If there is on earth a republic
Which is worse than a banana republic
It is this, it is this, it is this India of today”!
The only hope is that the movement against corruption will grow from strength to strength in order to pull this country out of the cesspool of corruption into which it is plunged. It is the Supreme Court, which has come to our rescue just in time. But, such (divine) intervention in the form of the Supreme Court may not materialize every time, the concerned citizens have to do their bit too.
By C. A. Balasubramanian, Additional Controller General of Accounts (Retd.), Government of India