Does the last day of 2021 portend what is in store for 2022? If yes, we are in for tougher times. On December 31, 2021, I had tweeted how chartered accountants (CA), as a community, had erupted in anger over the dysfunctional income-tax (I-T) portal on the last day for filing returns. The government not only rejected their plea to extend the date to file returns but defended the glitchy portal saying “58.9 million income-tax returns (ITRs) have been filed on the new e-filing portal as on 31 December 2021.”
This disingenuous claim left many professionals stupefied. Like with the malfunctioning goods & services tax (GST) portal, the extent of pain and bugs encountered are in direct proportion to the complexity of returns filed. So numbers do not tell the real story. What is worse, problems with the portal continue unabated. The year began with taxpayers receiving significantly higher refunds than were due to them some, who had successfully e-verified a tax return on 30th/31st December, were receiving unverified acknowledgements in January.
This malfunction does not give a bonanza to the ‘lucky’ taxpayer; it only creates more work—of answering follow-up demands and reversal! And, yet, neither have tax professionals got a proper hearing from the finance ministry, nor has the company responsible for the dreadful new portal faced any punitive consequences.
The anger among CAs is all the more interesting because many of them are aggressive supporters of the Bharatiya Janata Party (BJP). They have been forced to acknowledge that the government’s refusal to listen or engage is not limited to farmers, anti-nationals, media or andolan-jeevi (perpetual protestors) types. It is universal. One CA, who had great hopes from the NDA (BJP-led national democratic alliance) in 2014, says, “We now have #taxtorture. Atrocious law and highly complicated software making life miserable for taxpayers and tax professionals.” Another supporter tweeted: “Increasingly this BJP govt feels like UPA II in their last three years. Arrogant and not ready to listen, except through street power. #IncomeTaxReturn.”
The government has repeatedly passed legislation, without any debate in parliament. It has only paused or rolled back in the face of strong agitation and street protests by affected groups such as farmers, bankers or even resident doctors. Meanwhile, two slogans of 2014 have been forgotten—‘Ease of Doing Business’ and ‘Minimum Government, Maximum Governance’. The government is everywhere; it is more intrusive, riding roughshod on individual rights and privacy, and forcing compliance through ever-increasing fines, penalties, bans, threat of imprisonment and investigation. All this is a reminder of the disenchantment with UPA2 and its ‘coalition (a)dharma’.
NDA2 Is Mirroring UPA2 Many Ways.
An article I wrote in July 2019, when Modi Sarkar 2.0 had just begun a new innings, offers a good reference point. At that time, it seemed like the ‘clean up of corporate India’ had begun in right earnest. Nine months later, a virus had sent the world into turmoil and India went into a hard lock-down.
Since then, there has been no new action or conclusion to the investigation into Sahara, Infrastructure Leasing & Financial Services (IL&FS) or even Dewan Housing Finance Ltd (DHFL) and Housing Development Infrastructure Ltd (HDIL). Rating agencies have got away with a small slap on the wrist for their failure to alert investors to the precarious financial position of these entities and regulators, who had ignored warning signs and detailed letters from whistle-blowers, have not been touched.
As for our many fugitive industrialists, they remain safely abroad. Mehul Choksi, who is living it up with his girlfriend in the Caribbean islands, even managed to make the Indian government look very foolish in the middle of the pandemic. In May this year, India dispatched a private jet to bring back the absconding diamantaire wanted in the Punjab National Bank scam; but our officials returned looking foolish after failing to obtain a deportation order.
One could argue that it is unfair to expect focused follow-up investigation in the middle of a pandemic. But, on the other hand, the same agencies launched a slew of new investigations, conducted raids and announced major seizures, despite the pandemic. Many have targeted politically-connected persons and businesses. In the past, such investigations dragged on for decades, while the cases were systematically weakened by making crucial documents and witnesses vanish. The photo ops, arrests and leaked documents that mark the initial action are soon forgotten. As a journalist, I have witnessed how sensitive commercial documents leak like a sieve from all government agencies, often directly to powerful corporate competitors. This has remained unchanged under all political formations.
The difference is that India is no longer a closed economy and multinationals have the option of invoking international arbitration, bilateral treaties and accessing international courts, which is leading to repeated global embarrassment. Here are two recent examples. At the end of December, two Indian entities of retail giant Amazon filed a writ in the Delhi High Court challenging the jurisdiction of the enforcement directorate (ED) in an investigation opened under the Foreign Exchange Management Act, 1999 (FEMA). Its point is that the ED is using the investigation to demand information on transactions that have nothing to do with foreign exchange and are beyond its remit.
We hold no brief for Amazon which has used legal teams to dance around Indian rules and brazenly evaded responsibility for the sale of fake products. This happened under the benign watch of various ministries, most notably the ministry of consumer affairs. In the past two years though, it has been subjected to a public tongue-lashing by a minister and its founder Jeff Bezos was childishly snubbed and refused appointments when he visited India in January 2020 (Government Snubs Jeff Bezos; Was Refused Appointment With PM, Say Sources). Discerning corporate watchers note that Amazon’s concerns about a fishing expedition are valid and the government’s change in attitude to the company has coincided with the aggressive retail expansion of a powerful business house. Mainstream media wrongly attributed the change to a concern for retail traders.
After decades of litigation, Vodafone, Cairn Energy (Cairn) and Devas Multimedia (Devas) have successfully embarrassed the government in 2020 and 2021 with significant international victories.
In July 2021, when Cairn’s legal victories continued to be ignored by an arrogant Modi government, Cairn secured an order from a (Cairn Energy Allowed To Takeover Indian Assets in Paris To Recover Part of $ 1.2 Billion Arbitration Award) French court to seize about 20 properties in Paris belonging to the Indian government to recover a portion of the US$1.2bn (billion) owed to it by India. Cairn’s action came after India had confiscated its shareholding in Vedanta shares and withheld dividends and tax refunds.
The French court order, finally, shamed the government to amend the retrospective I-T law introduced in 2012. India then closed out the issue with Cairn in November 2021 (Cairn Energy Agrees To Indemnify Indian Govt; Drops Litigation for Rs7,900 Crore Tax Refund) but not with Devas. On the contrary, in May 2021, the national company law tribunal (NCLT) ordered the liquidation of Devas calling it a fraudulent incorporation.
The NDA government’s actions defy logic and explanation because all three issues were inherited from the Congress-led united progressive alliance (UPA) government which is reviled and trolled by its leaders every day. The Devas dispute goes back to 2005 when it signed a deal with Antrix Corporation to lease communication satellites for 12 years. The UPA government had cancelled the deal arguing that spectrum allocated was required for national security purposes. Foreign investors in Devas approached the Permanent Court of Arbitration and won an arbitration award of US$1.2bn in 2015 which the government refused to honour. India also ignored bilateral agreements covering the matter and has even lost appeals against these orders.
Devas went on to secure favourable orders from the Canadian and US courts, allowing it to seize Indian assets in those countries. Through all of this, the Indian government refused to engage with Devas. Earlier this week, in a major embarrassment for India, Devas and two others secured favourable orders from a Canadian court to seize money collected by the International Air Transport Association on behalf of the Airport Authority of India and Air India.
The Canadian court order, says a source, described the NCLT proceedings as being “illegal, arbitrary, vexatious and in contravention to the basic tenets of law being violative of the principles of natural justice.” This telling comment by a global court about our new and shining bankruptcy forum has even bigger implications for Indian companies that do not have the same legal options. This is just the beginning. If India wants to be taken seriously as a future superpower, the government has to get serious about ‘Ease of Doing Business’ as well as fair and equitable treatment of job-creators. Vendetta-driven actions have to stop and investigation agencies, regulators and those with fiduciary responsibility, have to be made more accountable to stakeholders.
Source from: https://www.moneylife.in/article/governments-refusal-to-listen-leads-to-repeated-embarrassment/66055.html?s=09