Loot or legislation?
Several newspapers have today quoted Mr Jagdish Shettigar, a former member of the Prime Minister's Economic Advisory Council and an active member of BJP's economic think-tank on the ITC ordinance. "It is nothing but loot", he is reported to have said.
Fiscal legislation by Ordinance and retrospective effect, though unacceptable to many right-thinking people, has been a fact of life with us.
Is this the first time that the President is promulgating an ordinance to nullify a court judgement?
Join me for a short guided tour across the fascinating world of retrospective legislation in indirect taxes (mostly Central Excise). If you are surprised, aghast, appalled, angry and frustrated through the journey, don't blame me. I am only showing you the sights.
It was exactly 25 years ago that the President issued an ordinance called "Central Excise and Salt and Additional Duties of Excise (Amendment) Ordinance', 1979 (Central Ordinance No. 12 of 1979)" bringing out major changes in the law, including the definition of manufacture - of course with retrospective effect! Not only had this ordinance got the approval of Parliament, but it also got the judicial nod from the Supreme Court of India. The Finance Minister at that time was Mr. R. Venkataraman, who went on to become the President of India.
The next ordinance came after three years by the Central Excise Laws (Amendment and Validation) Ordinance, 1982. The year 1982 saw several retrospective amendments in the budget. A new explanation was added to Section 4 with effect from 1.10.1975. This year, a notification - 22/1982 was amended to make it effective from 19.6.1980. This was done to overcome a difficulty as a result of a Madras High Court order. In the same Finance Bill, Rules 9 and 49 of the Central Excise Rules were amended retrospectively with effect from 1944. Going back nearly four decades! Finance Minister of the Year? Mr. Pranabh Mukherjee.
Section 84 of the Finance Act 1988 had the effect of retrospectively realising AED on sugar from 1986. FM - Mr. ND Tiwari
In 1997, the restricted credit on petroleum products was made effective from the previous year. Author? Our very own PC.
In 1999, the Central Excise Rules were amended to retrospectively provide for lapsing of credit as the Supreme Court had ruled that there was no such provision. FM- Mr. Yashwant Sinha. Was it not called a loot then?
Coming to recent times, the Finance Act 2000 witnessed several retrospective amendments. Amendment to Section 3 was made applicable from 1982, Section 11A was amended from 1980(remember Cotspun?), credit of duty paid on HSD denied with effect from 1995. - FM - Mr. Yashwant Sinha - no loot!
In 2001, Section 159A was inserted in the Customs Act with effect from 1.2.1963 and Section 38A was inserted in the Central Excise Act with effect from 28.2.1944 to provide for saving clause for the repealed rules under Customs and Central Excise laws. This was necessary because somebody in North Block forgot to save these rules and the Government was badly mauled in the Courts. (I vividly remember being nastily snubbed by a senior officer, when I pointed out this lapse long ago). This amendment as usual was to undo a Supreme Court order. FM: Mr. Yashwant Sinha
The 2002 budget also had its fair share of retrospective legislation but not very consequential. FM: Mr. Yashwant Sinha
The year 2003 witnessed several retrospective amendments, including the famous (?) ones in Service Tax and amendment of certain exemption notifications. FM: Mr. Jaswant Singh.
The 2004 budget had also made some minor retrospective changes like conferring powers on the officers of the department for what they did twenty years ago - what they ought not have done of course. FM; You know who.
The ITC Ordinance certainly falls into the same pattern. It is surprising that a former advisor to the BJP government calls it a loot, while the BJP government had brought in retrospective legislation in every year of its existence in power! This column is not political, but don't you see the pattern? Every Finance Minister tends to go in for retrospective legislation, whenever the Courts have pointed out major flaw in the law.