The ‘suicide note’ purportedly sent out by V.G. Siddhartha mentions aggravations that have earned him much posthumous sympathy. Among the aggravations, almost inevitably, is harassment by tax officials. In response, the income-tax department has put out a detailed note, with the assertion that the late ‘coffee king’ had confessed to an unreported income of about Rs 350 crore.
However, someone presumably informed on the subject has contended that tax officials acted prematurely in seizing shares held by Siddhartha. The full facts will emerge in due course. It is possible that this case, like many others, will testify to the Jekyll-and-Hyde worlds in which many of our businessmen (feel they have to) function.
The charge of tax harassment has struck a responsive chord in the business community and the broader public. The finance minister is well aware of the issue. In her Budget speech, she used picturesque imagery from classical Sangam literature to say that if the elephant enters the paddy field, it will trample far more paddy than it can eat. It is also worth recalling what an earlier finance minister, Jaswant Singh, said in his Budget speech 16 years ago: “Let us, to start with, readily acknowledge that the essential entrepreneurial character and the creative genius of our citizens is our greatest asset.” Later in the speech, he talked of moving “away from a suspicion-ridden, harassment-generating, coercion-inclined regime to a trust-based, ‘green channel’ system. I do this entirely on the basis of my faith in my countrymen and women.”
Singh stood tall at the time for emphasising that taxpayers must be treated with respect. So, it is worth recalling what he committed to: “First, hereafter, stocks found during the course of a search and seizure operation will not be seized under any circumstances. Second, no confession shall be obtained during such search and seizure operations. Third, no survey operation will be authorized by an officer below the rank of Joint Commissioner of Income Tax. Finally, books of account impounded during survey will not be retained beyond ten days, without the prior approval of the Chief Commissioner.”
Businessmen who have been subjected to tax surveys or search and seizure operations will be able to confirm whether these promises have been kept. Meanwhile, on the positive side, the use of digital technology has made tax dealings simpler and safer for the average taxpayer. Most importantly, it has helped to obviate the need for direct personal contact between the taxpayer and assessing officials, removing much of the harassment and (mostly) petty bribery that had been rampant.
In addition, immediately after the new Modi government took office, more than two dozen senior tax officials were sent packing — reportedly because of corruption charges. One presumes that sent a powerful message down the line.
But if power tends to corrupt, and absolute power corrupts absolutely (as Lord Acton famously said), it is notable that there is a fairly consistent pattern to recent tax and other raids: They have tended to focus on those opposed to or critical of the government. Meanwhile, the government has been busy getting parliamentary approval for legislation that arms officials in multiple departments with extra powers to prosecute, arrest, sequester, brand as terrorists, and so on — with fewer safeguards, and with greater concentration of power in the hands of the central government, at the expense of states.
Now, it is possible to make the case for prison terms for traffic offences like speeding. Other countries too provide for it, limiting extreme penalties to extreme cases. And the home minister has assured that the government’s many new powers will not be misused. But can even the most powerful and best-intentioned minister guarantee that in a country where everyone knows that the abuse of power is routine? Wouldn’t it make more sense, then, to opt for a lighter touch, and the Jaswant Singh approach?
Particularly after the scandalous sequence of events at Unnao, what people have been made conscious of is the need for statutory protections that ordinary citizens can be assured of without having to appeal 25 times to the police, and institutional safeguards that buttress them, even as they fret about the danger of disproportionate penalties.
By Special Arrangement with Business Standard