Indian government says global trade bodies cannot pressurise in Vodafone case

Trade bodies are no one to pressurise on what to tax and what not to and similar retrospective amendment was made in UK last month and Vodafone was made to pay tax there, then why are they having problems in India? a senior official from the Indian government asked

New Delhi: The Indian government on Thursday brushed aside the pressure being built by the global trade bodies in the Rs11,000 crore Vodafone tax dispute case and asserted that the British telecom major cannot invoke the India-Netherlands investment treaty as the $11.2 billion deal was signed in Cayman islands, reports PTI.

"The trade bodies are no one to pressurise the government on what to tax and what not to. Similar retrospective amendment was made in UK last month and Vodafone was made to pay tax there. Then why are they having problems in India?" questioned a senior Finance Ministry official.

Several global bodies have written letters to Prime Minister Manmohan Singh and other ministers saying that the government's proposal to amend Income Tax Act to bring into tax net Vodafone-type overseas deals involving domestic assets would hurt foreign investment.

They have asked US Treasury Secretary Timothy Geithner to raise the controversial issue at ongoing IMF-World Bank Spring Meetings at Washington and also with Finance Minister Pranab Mukherjee during the bilateral talks.

Referring to the recent threat of Vodafone to invoke bilateral investment treaty with the Netherlands on the tax issue, the official said the arbitration clause in the Bilateral Investment Protection Agreement (BIPA) cannot apply in Vodafone-Hutchison deal as it was signed in Cayman islands.

"The deal happened in Cayman islands and they are invoking India-Netherlands BIPA," the finance ministry official said, adding "while in the Supreme Court Vodafone said that the deal happened outside India, under BIPA it is saying it has made substantial investment in India."

Earlier this week the Dutch Subsidiary of UK-based Vodafone served a 'dispute notice' to the government threatening international arbitration under the bilateral investment treaty between India and the Netherlands for retrospective amendment of Income Tax Act.

The proposed amendment in Finance Bill 2012, when approved, would bring overseas deals such as Vodafone's purchase of Hutchison under tax net and the UK-based telecom firm would be liable to pay Rs11,000 crore tax for its acquisition of Hutchison's stake in Hutchison Essar Ltd in 2007.

Vodafone, it may be mentioned, had earlier won the tax dispute case in the Supreme Court which held that the company was not liable to pay Rs11,000 crore stemming from its 2007 acquisition of Hutchison's stake in Hutchison-Essar.


Chief Justice's remarks may dampen RTI journey says Information Commissioner

Shailesh Gandhi, in a letter, underlined that transparency law has started making small difference in the "power equation between citizens and government," given hope of bringing correction, making citizens effective monitors of government, and helping to unravel corruption

New Delhi : Information Commissioner Shailesh Gandhi has written to Chief Justice of India (CJI) SH Kapadia about his recent remarks that irrelevant queries filed under the right to information (RTI) hampered the work of judiciary, saying this may "dampen the RTI journey" of the country, reports PTI.

In his letter to the CJI, Mr Gandhi said, "I would like to submit to you that transparency in governance is a cherished goal and all functionaries and instrumentalities of the Government should be striving for greater transparency and accountability. Your comments -- correctly reported -- may dampen the RTI journey of India."

The Chief Justice had said that while the RTI law was "good", certain information being sought such as about invitations, attending lunches and the like went beyond the limit. "There should be some limit to all these," the CJI had observed.

Contesting this, Mr Gandhi said, “Ideally there should be very few limits to fundamental rights of the citizens. These limits can only be set by Parliament which has already done this by codifying Right to Information in the RTI Act."

Mr Gandhi underlined that transparency law has started making small difference in the "power equation between citizens and government," given hope of bringing correction, making citizens effective monitors of government, and helping to unravel corruption.

"Sir, the Nation has very great respect for you, and your remarks could have significant negative impact on RTI. Various functionaries would quote your remarks to justify putting fetters on the citizen's right," he wrote.

Conceding that some people are using the RTI Act for trivial purposes, the Information Commissioner  said, "this would apply to all rights and in fact to all actions of human beings in the society."

"It is possible to show cases where RTI may have been used in a trivial manner. Similarly, it would be possible to show that various progressive laws -- such as dowry Act.

Atrocities Act etc. -- may have been used in trivial manner or to harass innocent people. But all of us recognise the beneficial results of these, and do not talk of criticising them," Mr Gandhi said.

The Information Commissioner said most public authorities -- including information commissions and courts have not fulfilled the requirements of section four of the RTI Act, mandating suo moto disclosure of information, consequent to which they are then complaining about increasing RTI requests.

"The press reports claims that the time of judges is being occupied. This need not happen at all. In the information commission, public information officers (PIOs) send the information based on the records to various applicants without reference to the Commissioner. Ultimately the PIO's job is only to provide information that are available on records," he said.

The letter was in response to observations made by Chief Justice SH Kapadia during the hearing by a Constitution bench headed by him on the issue of laying down guidelines for media on covering court proceedings.

"In RTI matter, I have given all disclosures except in certain areas. Still questions are coming," he said and mentioned some of them, including invitations for lunch and his association with eminent jurist Nani Palkhivala.

"Different types of information are being sought. We have to save this institution of judiciary also and not only the press. We cannot accept all these. It is going beyond a limit. There should be some limit to all these," the CJI observed.


Public Interest Exclusive
Right step to weed out corruption: ‘On Time’ service delivery enactments

The introduction of Right to Service Acts by various state governments is a step in the right direction that will help in bringing about transparency, accountability and efficiency in public service, thereby reducing corruption in public places

“Government work is God’s work” so proclaims the entrance to the Vidhana Soudha, the seat of the government of Karnataka in Bangalore. In pursuance of this objective, the state government  recently passed the Karnataka Guarantee of Services to Citizens Act, 2011, under which delivery of 151 services to citizens of the state have been made mandatory to be rendered in a time-bound manner with effect from 1 January, 2012.

This service is named as ‘Sakala’ in Kannada meaning ‘On Time’, and eleven government departments, namely local authority, transport, revenue, food and civil supplies, rural panchayat raj, home, education, health & family welfare, labour, women & child welfare and finance are required to provide services to the citizens within the time stipulated under the Act, failing which penalties will be levied on the employees who are responsible for the delay.

Services like birth and death certificates are to be delivered within three to seven days, caste certificates, age certificates, tax clearance certificates, identity cards for senior citizens, etc, are to be delivered within 21 days, driving licence, learner’s licence, ration cards, etc, are to be delivered within seven to 30 days according to the time stipulated under the rules. As per the Act, if these services are not delivered within the stipulated time, the government will compensate the applicant for the delay/default in rendering the services at the rate of Rs20 per day with a maximum of Rs500 per case. This compensation will be collected from the employee concerned who is responsible for such delay or default. A comprehensive methodology has been laid down in the Act with regard to claiming compensation, filing appeal against rejection, etc and if it is scrupulously followed, it will make life a little easier for the citizens of this state.

The purpose of this enactment is two-fold, i.e. to provide time-bound service to the citizens and to ensure that the need to give a bribe is totally avoided.  The actual impact will be known only after sometime and hopefully, if it succeeds, it would be a great improvement over the present state of affairs in this state. Besides Karnataka, many other states, too, have introduced such enactments and the common framework of all these legislations in various states is granting of ‘right to public services’ and any failure to provide such service will result in levying penalty on the public servant for dereliction of duty. Madhya became the first state in India to enact the Right to Service Act on 18 August 2010. As per the information available on the Internet, the following states have introduced such enactments during this year

The Haryana government has introduced this system of service guarantee through an administrative order instead of an enactment and has implemented the same already. The central government too has introduced a Bill called: The Citizens Right to Grievance Redress Bill, 2011 and same is yet to be passed by Parliament. It is not clear why many other state governments have not taken this initiative so far. However, these enactments are applicable only to the departments of the state governments concerned. There is a need to ensure that such regulations should be made applicable to all public utilities whether in the public or private sector, so as to make life a bit more comfortable for the common man.

The Reserve Bank of India (RBI) should take a cue from these regulations and come out with guidelines for all commercial banks in the country. RBI should identify all services rendered by banks to the customers and stipulate a time-frame for delivery of all such services. Appropriate penalties should be imposed for delay or default in delivery of such services, so to give a new orientation to the customer service practices in the country. Very often we find banks asking a customer to call on the bank on the next day to collect his pass book or cheque book when such jobs are required to be attended to instantly, on the same day. This tendency can be curbed only by levying a penalty for non delivery and enforcing it strictly without exception.

In fact RBI has already made a beginning by levying a penalty of Rs100 per day, if the bank concerned does not refund within seven days the amount that was not dispensed by the ATM of the bank but debited to the customer’s account. This has served as a wake-up call for all banks to own up the responsibility for failure of their ATMs in dispensing cash to the customers. Similar penalties should be imposed for all services rendered by both the private and the public sector banks, and create a new benchmark for customer service in the banking industry in our country.

This is a good example for all the other regulators in this country, like the Securities and Exchange Board of India (SEBI), Insurance Regulatory & Development Authority (IRDA) and Telecom Regulatory Authority of India (TRAI), etc to learn from this novel initiative and introduce penalties for a delay in providing service, both in the public and private sector, and this will improve customer service.

For instance, in the case of insurance policies, there is always a delay in payment of terminal benefits and the insurance companies do not pay any interest for the delayed payment, though they collect interest on the delayed payment of premium by the assured. As per the principle of insurance, the insured amount becomes due on the happening of the event covered under insurance like death, accident, etc, and hence IRDA should insist upon payment of interest from the date of happening of the event till the payment of the insured amount and any delay in payment beyond reasonable period should also be penalized by appropriate penalties. This will help in creating accountability on the part of service providers.

Similarly, delay in payment for securities sold is a very common phenomenon in the capital market and the brokers, while ensuring that they collect advance from their customers when buying shares, are not prompt in payment when they sell the shares. These temptations to delay payment can be controlled only by levying penalty for such delay and SEBI, too, should come out with appropriate guidelines and enforce them without fear or favour.

The purpose of this article is to keep the readers of Moneylife informed about these developments to weed out corruption in public service in their respective states, as the success of these systems will depend on the awareness among the citizens about their right to timely service. Besides, if this article can spur the regulators of various public utilities to emulate the example initiated by state governments and formulate similar systems in all private and public utilities, it will go a long way in bringing about transparency, accountability and efficiency in public service, thereby reducing corruption in day to day life of citizens considerably.

Reference & credits:  [email protected]  Photo courtesy:

(The author is a financial analyst and he writes for Moneylife under a pen-name ‘Gurpur’.)





5 years ago

An Indian government job is a rent seeker's paradise. He cannot be fired for incompetence or non-performance, but only for getting caught for taking unacceptably brazen amounts of bribe which he's forgotten to share with others. There should be a way for the hapless public to throw out useless government employees, who lord over and fleece the government as well as the people..

Nagesh Kini FCA

5 years ago

I understand that Maharashtra, once considered the most progressive of all states, is nowhere in the scene when it comes to notifying and implementing of this citizen-friendly enactment.
No wonder it is floundering in all indices?
Our neta-babus are busy accumulating flats at Adarsh - so much so every Babu who touched the file got a flat allotted just for affixing his/her dhobi mark.
They simply don't get the time or energy to get citizen friendly acts together.
God help amcha Maharashtra!

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