TIOL-DDT 49 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b><font color="#0000FF" size="3">TIOL-DDT
49</font><br>
8 2 2005<br>
Tuesday</b></font></p>
<p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Loot
or legislation? </b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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.<br>
<br>
Fiscal legislation by Ordinance and retrospective effect, though unacceptable
to many right-thinking people, has been a fact of life with us.<br>
<br>
Is this the first time that the President is promulgating an ordinance to
nullify a court judgement? <br>
<br>
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.<br>
<br>
It was exactly 25 years ago that the President issued an ordinance called
<b>"Central Excise and Salt and Additional Duties of Excise (Amendment)
Ordinance', 1979 </b>(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 <b>Finance Minister at that time was Mr. R. Venkataraman, who went
on to become the President of India.<br>
</b><br>
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 <b>new explanation was added to Section 4 with effect from
1.10.1975.</b> 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.<br>
<br>
Section 84 of the Finance Act 1988 had the effect of retrospectively realising
AED on sugar from 1986. FM - Mr. ND Tiwari<br>
<br>
In 1997, the restricted credit on petroleum products was made effective from
the previous year. Author? Our very own PC.<br>
<br>
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?<br>
<br>
Coming to recent times, the <b>Finance Act 2000 witnessed several retrospective
amendments.</b> 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!<br>
<br>
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<br>
<br>
<b>The 2002 budget also had its fair share of retrospective legislation but
not very consequential. FM: Mr. Yashwant Sinha</b><br>
<br>
<b>The year 2003 witnessed several retrospective amendments, including the
famous (?) ones in Service Tax and amendment of certain exemption notifications.
FM: Mr. Jaswant Singh. </b><br>
<br>
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. <br>
<br>
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.<br>
<br>
<font color="#006633"><b>Why retrospective legislation? </b></font><br>
<br>
The theory that emerges is that almost every retrospective legislation is
with the lofty aim of protecting the guilty. The babus who have made a bad
law with their poor drafting skills cannot bear the beating from the judiciary.
Most of them believe that they are the law makers endowed with great skills
as proved by the few questions they answered while writing the civil services
examination and if the courts are not good enough to understand their language,
they, poor ones, have no other go except to bring in retrospective legislation
to protect the interests of this nation - you may also read their own
interests. They are capable of convincing any Finance Minister and here party
affiliations do not matter. The FM's job is to protect the bureaucracy
by getting these retrospective laws passed and even a bureaucrat turned politician
Finance Minister cannot escape. <br>
<br>
Somebody forgot to notice that there was no provision for lapsing credit;
no provision to levy Service tax on the receiver; that the rules were not
saved and this somebody will always be protected while the unsuspecting beneficiary
of their incompetence will one day be made to pay a big price. It is proved
beyond doubt that retrospective legislation is so much taken for granted that
even the retrospective amendments are not properly drafted. The ITC ordinance
is no exception as was pointed out by us - it leaves out a month! <br>
<br>
The point is when others do it, it is called loot, and when you do it? <br>
<br>
<font color="#FF0000"><b>Until tomorrow with more of DDT<br>
<br>
Have a Nice Day<br>
<br>
Mail your comments to </b></font><b>vijaywrite@taxindiaonline.com </b><br>
</font> </p>
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