| DTC likely to miss April 2013 deadline |
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New Delhi, 26 August The much talked about Direct Taxes Code (DTC) appears set to miss the April 2013 deadline, too. Finance Minister P Chidambaram wants a complete reworking of the DTC Bill, which had been substantially changed under former finance minister Pranab Mukherjee from what was initially formulated under Chidambaram's guidance. Ministry officials said another reason why the DTC might not be implemented from the next financial year, as promised by Mukherjee, was the controversies surrounding DTC proposals brought in the Budget such as the General Anti-Avoidance Rules (GAAR). The government would tread cautiously on implementing any DTC proposals that could affect the investor sentiment, said an official. He added that as the Budget for 2012-13 would be the last before the next general elections, the government would not like to bring in any changes in the income tax regime. There is a vast difference between the first DTC draft finalised under Chidambaram and the Bill tabled in Parliament by Mukherjee. Officials in the know said the Bill would be changed appropriately under Chidambaram's guidance. The first draft suggested 10 per cent personal income tax on ~1.6-10 lakh of annual income, 20 per cent on ~10-25 lakh and 30 per cent on ~25 lakh-plus. The current Bill proposes 10 per cent tax on ~2-5 lakh of annual income, 20 per cent on ~5-10 lakh and 30 per cent on ~10 lakh-plus. Parliaments standing committee has recommended 10 per cent tax on ~3-10 lakh of annual income, 20 per cent on ~10-20 lakh and 30 per cent on ~20 lakh-plus. The standing committee's recommendations are closer to the initially suggested rates. Among other provisions, the DTC seeks to replace profit-linked tax incentives with investment-linked incentives and also do away with tax exemptions. It seeks to consolidate and integrate all direct tax laws and replace both the Income Tax Act, 1961 and the Wealth Tax Act, 1957 with a single legislation. ECONOMY, P7 Chidambaram meets Modi forGST roll-out August 2009 Draft legislation and discussion paper issued for public comments June 2010 Revised discussion paper brought in August 2010 DTC Bill, 2010 introduced in Parliament April 2011 The DTC misses deadline March 2012 Standing committee tables its report on the DTC in Parliament March 2012 Implementation of the DTC postponed to April 2013 August 2012 PChidambaram takes over as finance minister again; DTC Bill to be reworked THE TWISTS AND TURNS Chidambaram wants it reworked; GAAR controversy weighs on implementation |
| FM meets Modi foreven GST roll-out |
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New Delhi, 26 August Finance Minister PChidambaram seems to have taken it upon himself to ensure that the Constitutional Amendment Bill on the Goods and Service Tax (GST) is passed at the earliest. In an effort to build greater consensus with states opposing GST, Chidambaram recently met Bihar Finance Minister Sushil Modi, who is also the chairman of the empowered committee of state finance ministers on GST. The union finance minister tried to understand the issues that had been raised by state governments. In the course of the hour-long discussion between the two leaders, Chidambaram assured Modi that he was aware of the doubts and concerns that are being raised by the state governments and he would take a personal initiative to end the grievances at the earliest. The government has been under attack from Opposition parties, especially the Bharatiya Janata Party (BJP), and industry experts for not carrying out financial reforms, which is hurting the economy. Interestingly, while Chidambaram is hopeful that the GST Bill would be cleared this financial year, former finance minister Pranab Mukherjee had told senior leaders of the BJP that implementation of GST was not a possibility in the second term of the United Progressive Alliance (UPA). Mukherjee's view was that there isn't enough time for the general elections and no government will initiate big-ticket reforms just before the Lok Sabha elections. Parliament's standing committee on finance, headed by former finance minister Yashwant Sinha, is also working hard to complete the report on the Constitution Amendment Bill. Though Sinha wanted to submit the report on GST in this session of Parliament, the work was delayed because the finance ministry has not replied to some of the queries raised by parliamentarians in the committee. Meanwhile, during a recent meeting of the consultative committee of the finance ministry, Chidambaram said he hoped that the Bill on GST would be cleared before the end of the financial year. The finance minister is of the view that GST would help build an effective and efficient tax system that would be fair to taxpayers. Chidambaram told the gathering that there were several issues related to GST, but they were not insurmountable. However, states are demanding that the Centre first resolve the issue of compensation to states for revenue loss due to cut in Central Sales Tax before moving ahead with GST. This demand was raised by some members of Parliament at the consultative committee meeting, too. Earlier, the Centre had committed itself to paying compensation till 2009-10. However, since GST was not implemented, states are demanding compensation for 2010-11 as well. Mukherjee had cleared compensation of ~20,000 crore for states before leaving the North Block to take over as President. However, no decision has been taken so far. GST roll-out has already missed three deadlines from April 1, 2010. The Constitution Amendment Bill, being vetted by Parliament's standing committee, is just an enabling provision for the Bill to come out. In the current scheme of things, the Centre cannot impose tax beyond manufacturing and states cannot impose service tax. After the passage of the Constitution Amendment Bill, GST Bills have to be passed by the Centre and state legislatures. Chidambaram says would take personal initiative to end states' grievances soon Finance Minister P Chidambaram (left) and Bihar Finance Minister Sushil Kumar Modi |
| LEGAL DIGEST |
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The Supreme Court last week raised the compensation in motor vehicle accidents in two appeals, finding fault with the high courts and motor vehicle accident tribunals for wrong computation. In Kavita vs Deepak, a 30-yearold woman was rendered paraplegic in an accident. The tribunal awarded ~4 lakh. On appeal, the Madhya Pradesh High Court raised it to ~12.76 lakh. On further appeal, the Supreme Court directed the insurance company to pay ~34.38 to the woman. In another case, Rebeka Minz vs United Insurance Company, the tribunal awarded ~10 lakh for death on the road which was reduced by the Orissa High Court to ~5 lakh. On appeal, the Supreme Court raised the damages to ~13.5 lakh.
Govtfree to setcriteria in tenders
The Supreme Court has dismissed the appeal of Michigan Rubber (India) Ltd against the judgment of the Karnataka High Court challenging the change in the pre-qualification criteria set by the state road transport corporation for supply of tyres and tubes. Reiterating the law on judicial review, the Supreme Court remarked that "the government and their undertakings must have a free hand in setting terms of the tender and only if it is arbitrary, discriminatory, mala fide or actuated by bias, the courts would interfere. The courts cannot interfere with the terms of the tender prescribed by the government because it feels that some other terms in the tender would have been fair, wiser or logical."
Bus owners' petition dismissed
The Bombay High Court has dismissed the writ petition of Maharashtra Tour & Travel Bus Owners Association challenging a new rule under the Bombay Motor Vehicles Tax Act. The contract carriage owners argued that there should be no tax while the vehicle is not being actually put to use, though 'kept for use', because they do not have the opportunity to do business. When they do not have business or is for any reason unable to do the business, there should be no tax. The government pointed out that there are 19 million vehicles and it was impossible to monitor them. Many of them are operating without permits. The high court rejected the petition and asserted that there was no arbitrariness in imposing the new tax. It was not double taxation and did not affect their freedom to pursue trade.
MNCplea on trade markrejected
The Delhi High Court has rejected the petition by Lebanese multinational, Consolidated Contractors International Company, seeking injunction against the Indian company, Consolidated Construction Consortium Ltd, which is allegedly using a name and logo similar to that of the former company. The foreign company claimed to be using the logo since 1952 when it conceived and adopted its unique trading name and distinctive logo. It alleged that the logo and name of the Indian company were similar and amounted to infringement of copyright. However, the high court rejected the prayer on the ground that the foreign company approached it after an "abnormal delay" of four years which it could not explain satisfactorily.
Arbitrator's conflictof interest
The Delhi High Court has set aside the arbitral award in a dispute between Shakti Bhog Food Ltd and Kola Shipping Ltd as the constitution of the arbitral tribunal was held to be invalid. One of the main grounds for quashing the award was that the arbitrator failed to disclose the fact concerning his having been an arbitrator on behalf of Kola Shipping in the arbitration on a related issue involving it. It gave rise to "justifiable doubts as to his independence and impartiality." The high court further stated that the award was also opposed to public policy on acollective reading of Sections 12 (3), 13 (5) and 34 (2) (b) (ii) of the Arbitration and Conciliation Act. |
Company Secretary, Chennai
email csarengarajan@gmail.com
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