Apropos the report, "Retrospective tax laws scared investors away, says Jaitley" (January 3), while the government may be legally competent to levy retrospective taxes, such taxes are morally illegitimate.
Apart from retrospective taxation, what hurts investors as well as Indian taxpayers is the manner in which revenue officials exercise quasi-judicial powers in dealing with disputes. It is axiomatic that they are expected to be fair in their interpretation of the law, irrespective of the amount of money involved in a dispute. They are not expected to be revenue-biased, at least not recklessly. They are expected to act like judges. Finance Minister Arun Jaitley's advice to them, "when in doubt, go straight (without leaning on either side)" is saying the obvious. He is only reminding them the hallmark of an ideal tax administration.
However, the credibility of the officials in resolving disputes is strikingly low. What hurts taxpayers the most is that even in patently undeserving cases officials tend to lean in favour of the department and pass orders contrary to the settled law. For them, wisdom lies in playing safe, leaving the taxpayer to seek justice through the painful route of appeals. The department's miserable success rate in the income tax tribunal as well as courts provides ample proof of the unproductive work done, with no risk of punishment. It is high time the officials took the minister's advice seriously. Otherwise even a meritorious tax, like the goods and services tax, would fail to deliver the expected gains.
T R Rustagi New Delhi
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