Ret­ro­spec­tive Taxes Should be Avoided: Prasad

The Economic Times - - Modi Sarkar -

Law & tele­com min­is­ter’s views hold out a glim­mer of hope on sort­ing out on­go­ing tax dis­putes with Bri­tish tele­com gi­ant Voda­fone The new law and tele­com min­is­ter on Tues­day hinted that his govern­ment may avoid ret­ro­spec­tive taxation and pro­vide sta­ble poli­cies so that there are no un­cer­tain­ties for for­eign in­vestors.

The com­ment holds out a glim­mer of hope on sort­ing out the long-drawn tax dis­pute with Bri­tish mo­bile op­er­a­tor Voda­fone.

“Ret­ro­spec­tiv­ity in law should nor­mally be avoided, as it is very ev­i­dent that In­dia needs for­eign in­vest­ment,” Ravi Shankar Prasad told re­porters on as­sum­ing charge of the law min­istry at Shas­tri Bha­van. He did not name any com­pany in this con­text, re­fus­ing to speak on “in­di­vid­ual cases”. In 2012, the In­dian govern­ment amended its tax code ret­ro­spec­tively to re­open a .` 11,000-crore tax li­a­bil­ity dis­pute with Voda­fone, de­spite the Supreme Court hav­ing ruled in favour of the tele­com com­pany ear­lier. The move in­vited global crit­i­cism and hurt In­dia's im­age as an in­vest­ment des­ti­na­tion. An at­tempt at con­cil­i­a­tion has also failed. Voda­fone has since in­voked in­ter­na­tional ar­bi­tra­tion to re­solve the is­sue, but has in­di­cated that it is still open to an out of court set­tle­ment.

The 59-year-old min­is­ter also promised a “sta­ble fis­cal, taxation and pol­icy regime” so that for­eign in­vestors do not face any prob­lems in In­dia. At the same time, he said, cor­rup­tion would not be tol­er­ated. “The statu­tory regime will be fair, trans­par­ent and nondis­crim­i­na­tory.”

Prasad, who will hold the port­fo­lio a sec­ond time in his po­lit­i­cal ca­reer, as­sured quick steps to en­sure greater ac­cess to jus­tice. “It will be a pri­or­ity area. More in­fra­struc­ture, more courts, more judges, cre­at­ing an en­abling at­mos­phere for ac­cess­ing jus­tice. Good gov­er­nance means a good le­gal ac­cess to jus­tice,” he said.

Ar­bi­tra­tion is an­other key pri­or­ity for the Naren­dra Modi-led govern­ment, ac­cord­ing to the min­is­ter. “In­dia should be­come a hub of in­ter­na­tional ar­bi­tra­tion,” Prasad said.

At present, Sin­ga­pore and Lon­don are the most pre­ferred ar­bi­tra­tion hubs of the cor­po­rate world.

In­dia is at the bot­tom of this list be­cause of the pro­ce­dural de­lays and the multi-lay­ered ju­di­cial scru­tiny in­volved there­after.

The min­is­ter promised to fo­cus on the Na­tional Ju­di­cial Com­mis­sion— an­other com­mit­ment in BJP’s man­i­festo —which is ex­pected to en­sure a broader con­sul­ta­tive process in the ap­point­ment of su­pe­rior court judges and give the po­lit­i­cal ex­ec­u­tive a say in the process. “There is an ex­ist­ing Bill on this. We will hold more con­sul­ta­tions on this and con­sider it,” he said.

Un­der the cur­rent col­legium sys­tem, the ju­di­ciary has the fi­nal say on all such ap­point­ments. The ju­di­ciary ar­ro­gated this supremacy through a court rul­ing.

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