Grabbing Power by Subterfuge

Raman Swamy

The Opposition leveled seven very serious charges against the Modi government. During a highly-charged debate on the Finance Bill in the Rajya Sabha, the government was accused of "smuggling in 40 different last-minute Amendments" to the Bill with intention of "changing laws by stealth and subterfuge".

The atmosphere in the Upper House turned serious when Congress legal luminary Kapil Sibal began dissecting the Finance Bill with devastating arguments based on specific and pointed instances of what he called "very disturbing trends" that the government had used the Finance Bill as a vehicle to "usurp extraordinary financial powers through the back-door".

Sibal spoke for over 40 minutes during which the House listened in pin-drop silence till the Treasury benches realized what was happening—the government was being unmasked and the Finance Minister's clever attempt to use the fact that the Finance Bill is a "Money Bill" to bring about far reaching changes in election law, to wrest the advantage in corporate funding of elections, to gain administrative control over appointment of judges in Income Tex Tribunals and to give Income Tax officers unfettered power to seize assets on the merest of suspicion without having to give any reasons.

Other Opposition party leaders, awakened to the gravity of Sibal's stunning expose, insisted on having their say after him and pressurized the Chair to extend the debate from the original three hours allotted to over five hours, even spilling over to next day.

Briefly, what Kapil Sibal said was as follows: The Finance Bill was seeking to deliberately weaken the federal structure of the Constitution. It contains several clauses and provisions which give the Government powers to snoop into the lives of the citizens. It aims at instilling fear by investing enormous powers to the Income Tax officers. It has cleverly and surreptitiously dismantled established Constitutional traditions and reduced the Rajya Sabha to a helpless spectator.

On the key issue of political funding, Sibal reminded Arun Jaitley, that when he was in the Opposition he had eloquently stated that "systems in Government must be transparent and we would like to do away with crony capitalism, we would like to make sure that political funding is transparent". But what has he done in this Bill, he asked and then listed the facts.

The original provision in the Companies Act, Article 154 of the Companies Act, he said, had three elements to it in respect of political funding. First, no company can contribute politically to any particular party unless that company has been in operation for three years. Number two, the amount of funding was capped at 7.5 percent of the net profits that company has made in the last three years with reference to the year in which the funding takes place. Number three is that the funding had to be done through a Board resolution and the name of the political party and the acceptance of that political party of the funding were reflected in the Board resolution.

But now in the Finance Bill 2017, the Government has blatantly done away with the cap. In other words, any company can contribute any amount of money to any political party. But that is not all. What it has done away is the fact that the political party that the company will fund will not be known to anybody, in other words, this is what the provision says, "every company shall disclose in its profit and loss account, the total amount contributed by it under this Section during the financial year to which the accounts relate".

Sibal said: Which party it is going to, nobody will know. Even the shareholders will not know because it will be reflected in the profit and loss account. If it is reflected in the profit and loss account, the name of the party will not be reflected there and only the amount will be reflected. So, this is the surest way to ensure that the political party in power gets all the funding that it needs.

He said this is not limited only to Lok Sabha elections. It will apply to State elections. It will apply to local body elections and you can imagine the kind of havoc that it will cause. Companies who are crying for contracts, companies against whom proceedings are going to take place, companies who are financially in bad shape, companies where restructuring is going to be done will be asked to pay money into the kitty of a political party without the name being disclosed and there would be financial havoc.

The Congress member charged the government with playing with the economy of the country, playing with the future of the economic fabric of the nation. Even the shareholder of a company cannot ask any question because he doesn't know. He doesn't know the amount of money that has been funded. He doesn't know which political party and assuming the shareholders are against that party, how will they ever know?

Sibal said: This is a pure amendment to the Company's Act. What has it got to do with the Money Bill? You should have brought it to the House. You should have initiated the amendment either in the Lok Sabha or in the Rajya Sabha. The House would have sent it to the Standing Committee. The Standing Committee would have weighed the pros and cons of it, whether it is acceptable to the people of this country or not.

He added: "You surreptitiously, through the back door, at the last minute, move an amendment, and on the morning of the 22nd of March, when the Bill was to be taken up in the Lok Sabha. Members did not even know what he amendment was and after they have finished their speeches they realized that this is the amendment. So, they can't raise a voice there. They can't raise a voice here because we have no voice. It is a Finance Bill. So, we cannot object. Is this the way to function when you are talking about embracing transparency and accountability?"

The other thing that the Bill does is to amend Section 13A of the Income Tax Act. Under Section 13A of the Income Tax Act, any contribution beyond Rs 20,000 to any political party has to be disclosed and now the contribution has been reduced to Rs 2000. Now, what has that got to do with the Money Bill?

He added: It is a pure electoral reform. It should have come to this House or gone to the Lok Sabha for the Standing Committee to contemplate and discuss the pros and cons of such an electoral reform. But you don't want that discussion to take place in this House. You want to muffle the voice of this House. You don't want the States to have a say in the kind of electoral reform which will have far-reaching impact on the federal structure of this country and on the democratic process.
Another important point raised by Sibal related to the unbridled power that has been given to tax authorities. Under Section 132(1) of the Income Tax Act, a search and seizure can take place after the income tax authorities give an order to the effect that he has reason to believe that certain documents are in the possession of the assesses which he is not likely to disclose or that certain bullion or other undisclosed assets are in his possession which he is not likely to disclose.

But the Income Tax Officer under the old law had to give a reasoned order saying he has reason to believe that the assessee will not so disclose.

Through an explanation to Section 132(1), this has been done away with! He will write down the reasons to disclose, but the explanation says 'for removal of doubts, it is hereby declared that reason to believe, as recorded by income tax authority, under this sub-section, shall not be disclosed to any person or any authority or Appellate Tribunal".

This means that if anyone wants to challenge that order saying that there was no reasons to believe, it cannot be done. Suppose, said Sibal, income tax authorities want to raid a house of a political opponent—even though there is no reason to believe—they raid that house. Now, he has no records! He cannot challenge the raid saying that you had no information with you, because 'the reason to believe' will not be disclosed to any authority.

Sibal added: So, I cannot go to Income Tax Officer. I cannot go to the Appellate Tribunal. I can only go, under Article 226, to the High Court. And, the High Court will say that these are matters which relate to facts why should we interfere in our extraordinary jurisdiction. So, the High Court will not interfere. The authority will never know. And, you will have a field day! What kind of law is this?

Frontier
Vol. 49, No.42, April 23 - 29, 2017