When Foreign Investment was not there, we did not eat Lizards - Pranab Finance Bill 2012 Passed by Lok Sabha - Vodafone Amendment to stay
THE Lok Sabha yesterday passed the Finance Bill 2012 with the Finance Minister strongly defending retrospective amendments to tax laws. The FM said,
“I have explained that retrospective effect, to clarify the legislative intention, must be with reference to the date of enactment. How can the intentions of the legislature have any other reference point than the date of enactment, whether it is 1961 or 1951 or 1948? If clarificatory retrospective arrangement is to be made, it will be with reference to the date of enactment. But, the effect of the retrospective amendment in respect of the taxation will be covered by other laws. Here, the Income Tax Act Section 161 says that no tax can be levied beyond six years. Therefore, the mention of 1961 is academic, but the tax liability will arise retrospectively, six years before, from the current date of assessment.
We cannot declare India as a tax haven simply to attract the foreign investment. I want foreign investment for technology, for development, for resources. Please remember that when the investment was also not there, we did not eat lizards. Till today, the investment requirement is substantially met by the rate of our domestic savings. Today it has come down to 33 per cent or 34 per cent, but it had reached as high as 35 per cent or 36 per cent of GDP. The rate of investment was 37 per cent or 38 per cent. Therefore, we are not in that distressed a situation that a country of 121 crore people will be treated as tax haven like Cayman Island, The Isle of Man or Virgin Islands. We cannot be equated with them. Either you pay tax here or you pay tax in your own country with which we have a Double Taxation Avoidance Agreement. It is as simple as that.”
Judiciary vs Legislature: Our Supreme Court has given a verdict. Somebody has said how we could go against the judgement of the Supreme Court. I am fully aware of my right as a legislator. Law-making power only vests with the Parliament. The Supreme Court may interpret law, but equally the Parliament has the right, Legislature has the right to express its intention by making amendment to correct the judgement of the Supreme Court. The very first amendment to Constitution of India, which is not an ordinary law, for insertion of Article 35A and introducing certain other relevant changes, was done in 1951. It arose out of the judgement of the then Supreme Court. Parliament considered that the Supreme Court did not reflect the intention of the law-makers. So, the Constitution, the basic document, was changed. When did we not fight with the Supreme Court? Did we not fight against it in Golaknath case and Keshvanand Bharati case? From 1950 to 1968, the general perception was that Indian Parliament can make any amendment to the Constitution. In Golaknath case, the verdict came that Parliament cannot alter Fundamental Rights, and a series of legal enactments, social legislations, were declared null and void by the Supreme Court, including the Banks Nationalisation Act, Privy Purses (Abolition) Act. Then, Lok Sabha was dissolved in 1970. The then Prime Minister, Shrimati Indira Gandhi, went to the electorate saying ‘I want to bring social legislations. I want to transform the society. I want the power to amend the Constitution.' She said, “I do not have two-thirds majority, give me two-thirds majority.” The Indian electorate gave her two-thirds majority, and there came the Twenty-fourth Amendment to the Constitution where the ‘constituent power' was vested in Parliament. If you read the text of the Constitution from 1950, before the Twenty fourth Amendment made to Article 368, you will not find the word ‘constituent power'. ‘Constituent power' of Parliament was first invented and put in the text of the Article 368 of the Constitution through that Twenty-fourth Amendment.
Not only in India but everywhere, in all developed societies, Legislature's intention is what matters because we are representing more than 70-crore people of this country. Each constituency has 1.5 million or 1.6 million voters. Therefore, their intention is what matters. Yes, as far as the Supreme Court and the Judiciary is concerned, the Constitution has given them the power to interpret the law. However, the law is to be framed by us. If we find that there is a conflict between the ‘intent' of the Legislature and the ‘interpretation' of the Constitution, most respectfully I submit that by interpretation of the law, our right of amending it or asserting our right is not taken away. That is the power of the Constitution, which is vested in us”.