A Few Words of Caution for SIT on Black Money
TIOL – COB( WEB) – 428
DECEMBER 25, 2014
By Shailendra Kumar, Editor, Taxindiaonline.com
RECENTLY, the findings of a Study conducted by the Washington-based research and advisory organisation Global Financial Integrity (GFI) stunned the tax jurisdictions across the globe. It revealed that illicit fund flows from developing and emerging economies are leapfrogging at 9.4% per year. In 2012 alone, the developing world lost close to USD one trillion. In the last one decade, the loss of scarce wealth of poor countries has been as Himalayan as USD six trillion. And India stands fourth in the list of nations that lost this wealth. And the question is – where did this money go? How was it conduited out of India? And the answer to the first question is – a bunch of tax havens or call them tax shelters which trace back their genesis to ancient Athens. When two per cent trade tax was levied by the then government, the traders began avoiding the city and conducted their business on the surrounding islands. And those Greek islands are believed to be the first generation tax havens. The 20th Century witnessed a mushroom growth in the number of tax shelters across the world. And they continue to sip a mouthful of red wine over the piles of hugely disproportionate wealth stolen from both poor as well as rich economies by artful tax cheats. And how do they do it? – GFI finding is that as high as 78% of such illicit fund flows are accounted by trade misinvoicing.
Keeping in mind these twin key findings let’s go straight to the Supreme Court-constituted SIT on Black Money. The SIT has been charged with a huge responsibility to ensure proper conduct of investigation in all those cases where allegations of unreported foreign bank accounts and conduiting of huge wealth to tax havens have been levelled. Apart from ensuring fair probe the SIT has also been tasked with the responsibility of repairing the institutional breakdowns in our law enforcement agencies besides recommending ways to bring back the lost treasure of the nation.
In this backdrop, I would like to offer a guided tour to TIOL netizens to the Second Edition of “On The Loom Of Time”, an autobiographical memoir of former Chief Commissioner of Income Tax and a great exponent of law and socialistically democratic values, Mr Shiva Kant Jha. In less than three years the septuagenarian author has revised his memoir by incorporating a great deal of fresh ‘memories’ to various chapters of topical interest, including the one on SIT on black money. Referring to the valuable experiences of the Patna High Court-monitored SIT on Fodder Scam, the author has weaved a bouquet of recommendations for the SC-ordered SIT to avoid pitfalls; what should be its goals; where to focus and not to take rest until institutional breakdowns are repaired and the legal loopholes are fully plugged.
While praising the Apex Court and also the Modi Government for its support to the SIT, the author fears that over the passage of time, the Apex Court’s directions may be subjected to creative narrowing which would be unfortunate. He suggests that the reach of the Supreme Court’s diktat should be read in the first part of the decision in the case of Ram Jethmalani vs UoI. He wants the SIT to discover the deeds of Khans and Tapurias. His fear is that their wealth should not turn out to be camphor that could vanish in thin air. He also hopes the SIT must discover how the authorities made castle in the thin air, and explore what made the Revenue authorities build such castles. Whenever such things happen, the people’s trust in administration and the governance by the Executive reaches its vanishing point. It is wished that the SIT would trail its odyssey outside India; and again its intrusion into India in many ways – one of which is round tripping.
The author wants the SIT headed by great jurists to throw light on how funds are creatively managed from the Ugland House in the Cayman Islands, or from the Cathedral Square in the Mauritian capital Port Louis. The ways of the stock market must be understood and exposed. The author mourns how indiscriminate welcome of FDI has done a great deal of harm to our country. He observes that in the passionate pursuits for more and more FDI, corruption flourishes, black economy is patronised and black money thrives. Although all swear by transparency, yet they all work for ‘darkness’ – a necessary condition for corruption and black money to grow more and more. Referring to the most controversial CBDT Circular 789 he wants the SIT to work for its withdrawal as this Circular happens to be a major abettor of black money-promoting activities. He notes that this administrative Circular is evidently illegal and abuses the provisions of Income Tax Act to enable wrong doers to rob the country of its share of taxes. He wants the SIT to focus on review of bilateral investment promotion agreements (BIPA) which seek to override our laws and oust the jurisdiction of our superior courts and grant the benefits of treaty shopping to all foreign investors. The most effective solution to black money issue, as per the author, will be to withdraw Circular 789 and declare all BIPAs domestically inoperative. He also wants the SIT to review all the statutory provisions introduced in various Acts in the recent years as he feels these changes in economic laws were sponsored by external forces to make loot easier for crooks. Some of these laws are FEMA, PMLA and DTAAs.
The author wants the SIT to create some mechanism to keep under surveillance the domestic operators under the opaque system. Given the GFI’s finding that a huge chunk of illicit funds are conduited out of India through trade misinvoicing, the Author is very clear that the SIT needs to look into various WTO-sponsored obligations which have led to this situation. In the name of trade promotion, the global financial economy has been badly damaged and what the global community has achieved is the fleecing of exchequer’s money. The modern system has worked well only for crooks who have been siphoning off funds to tax havens. It is true that the USA and the UK have managed to compel some dirty jurisdictions disgorge their wrongfully acquired wealth, but this cannot be treated as the international norm. The USA and the UK are mighty economies so their writs could run but the same cannot be true for India.
In a flashback, gleaning from his experiences in handling Fodder Scam, the author has a few words of caution for the SIT which is bound to run into some operational problems, mostly created by those who do not want the truth to come out. While probing the fodder scam, he had noticed that quite frequently hierarchic issues and ego hassles were out to derail the investigation. Most of the times the response of CBI was unsatisfactory. He fears that the SIT on Black Money is likely to face such problems as several investigating agencies are involved in the black money cases.
Referring to the Apex Court’s decision in the case of Ram Jethmalani, he observes that the Supreme Court has failed to notice the features of the criminal conspiracy at work in the generation of black money, the siphoning-off of the black money and the stashing of the same in foreign tax jurisdictions. In the context of Fodder Scam, the Patna HC had observed: “It is clear that the excess drawals were not isolated act; they were manifestations and results of well-knit conspiracy to commit loot and plunder of public money in a systematic manner, which could not be possible without the support of higher-ups.” Thus, the author has alerted the SC-constituted SIT against ‘creative delay’.
Apart from black money issue, the Second Edition has exhaustive commentaries on topics like The Destiny of Our Nation: The Advent of Narendra Modi; Ambit of the Constitutional Restraints on the Treaty-Making Power and Global Economy – A Deal with the Devil; Anti-Corruption Movement – Challenge & Response. Some of the chapters like 26, 29 & 30 are titled “The Realm of Darkness – The Triumph of Corporatocracy”; “The Portrait of our Time”; and “A Miscellany of my ideas from my personal journal”.
In a nutshell, the Second Edition indeed makes a fascinating reading material even for those who are mesmerised by the glamour of systemic distortions and irreparable ills of the global economy. Some of the words of caution for the SIT on Black Money are indeed vital inputs for the noted jurists who are destined to find themselves pitted against a barrage of inimical forces working against the recovery of lost wealth of India. TIOL is in full agreement with the author when he suggests that its structure should be a honeycomb of hexagonal cells manned by persons of competence from different services and professions out to study everything that would have a bearing on the work of the SIT. Let’s hope our last hope (the SIT) finally triumphs and brings, if not the entire lost treasure, at least a part of it so that the trust of the common taxpayers is restored in our democratic system.
Also see TIOL Review of First Edition of “On The Loom Of Time” – The Tale of a ‘Sparrow’ Battling for ‘Bharat’ Against ‘India Incorporated’
I. From the book’s ‘ Foreword’ (by Hon’ble Mr Justice R.C. Lahoti, Former Chief Justice of India)
“….Autobiography is a hazardous attempt. It needs a clear understanding of oneself, and then the art of articulating the understanding in the choicest words with lucidity of style. Someone has said that history is the essence of innumerable biographies / autobiographies; any departure from truth therein may have the effect of embellishing the history. The best of autobiographies are those which are not ego-centric. An autobiography is worth being written if the author has played a role in life impacting the society and events around. He should have been not a mute spectator but one who has also moved the needles. The narration called autobiography then focuses on contemporaneous events and developments worth being placed on record with the autobiographer’s self in the centre.
The manuscript of ‘On The Loom of Time’ is in my hands and I have turned over its pages. I did not have an opportunity of personally knowing Shri Shivakant Jha. His sketch emerges life size from the ‘Loom of Time’. As a member of IRS he has always lived by his conscience and performed at his best. While honouring the discipline of a true government servant he has been bold enough to the occasions, responded to the calls of times and never missed an opportunity of taking decisions and acting thereon as a true citizen of India, as an upholder of the constitution and the laws, and, as a reformist. He has been critic on points of principles but not on personalities. A reading of the autobiography reveals that he is one who has no regrets in his life. He has never looked back. He has marched with the times with firm footsteps and played well his role in life as assigned by the Divine. Teachings of Shrimad Bhagwad Gita have been his guide. For him work has been worship. He has believed in ‘work is thy duty, reward is not thy claim’. He has rightly described ‘On the Loom of Time’ not as an autobiography but as an autobiographical memoir……”
II. By Shri Rajindar Sachar, Chief Justice (Retd.) Delhi High Court
“High Court of Delhi, New Delhi “I am however emphasizing his contribution in exposing the danger of tax havens, like Mauritius purportedly to invite External investments, but in reality has become a storehouse for avoidance of tax both by Indian citizens and foreign corporation resulting in loss of thousand of crore rupees to Indian exchequer. I hope this book will give enough material for some conscientious policy makers to plug this open sieve.”
III. Dr. Justice G.C. Bharuka, Former Actg. Chief Justice, High Court of Karnataka
“Usually, an autobiography is the story of how a man thinks he lived. But it is not true of all the autobiographies. ‘On the Loom of Time’ by Shri S.K. Jha depicts a journey full of turns, achievements, shattering of images, impressions and convictions. Apart from telling the story of his life and family, he has made a sincere effort to raise some issues of social and constitutional importance. These issues have as well been analyzed in the spiritual and moral perspective with rare and remarkable skill of presentation. Upon his retirement in 1998 after having served as a member of the Indian Revenue Service for almost 34 years, he joined the Supreme Court bar. He firmly believed that moral values propounded in Shrimad Bhagwat Gita should be kept in mind while interpreting our Constitution and administrating justice. The later part of the memoirs is more a work on jurisprudence and spiritual expositions and at times, it is the blending of the two.”
IV. Other Comments
(i) A fascinating life story, beautifully rendered.
– Noam Chomsky
Institute Professor & Professor ( Emeritus) of linguistics at the Massachusetts Institute of Technology
(ii) On the Loom of Time “not only gives us an insight into his illustrious life, but also gives us a view of the development of the spiritual philosophy of this great country.”
– Shanti Bhushan
Senior Advocate & a former Law Minister of the Union of India
(iii) I am very impressed by the energy and persistence with which you have pursued the cause of law reform! Congratulations on the publication of your memoir, and many thanks for sharing this interesting material with me.
– John Carry Sims
Professor of Law, University of the Pacific, McGeorge School of Law, Sacramento, CA
(iv) “ While writing is not a daunting task by itself, writing well requires skill. Shiva Kant Jha has mastered this skill in his autobiographical memoirs, succeeding in his endeavour to keep the reader engaged …. ” “This book is a beautiful amalgam of words that stay with you long after you set it down. “
– Shri Gopal Subramanium
Senior Advocate of the Supreme Court of India & Former Solicitor-General of India
(v) I have read with pleasure the book titled ‘On the Loom of Time’. It is written in a simple, direct and lucid style and is eminently readable….His description of his land and people, his father, mother, teachers, about himself, his childhood, his wife, fodder scam, emergency, etc. adds to the beauty and charm of his art of storytelling, and makes the reading of the book a memorable experience. I thoroughly enjoyed reading it.
– M L Upadhyaya
President, Amity Law School; Former Dean, Faculty of Law: Calcutta University and Jabalpur University
(vi) “Former income tax chief commissioner Shiva Kant Jha’s ‘On the loom of time’ turns the lens on the double taxation avoidance treaty India signed with Mauritius, exposing loopholes in it which allow the treaty’s misuse…. The book is an autobiographical account by Jha, a leading authority on taxation in the country and a former union revenue service officer who has held many important posts in the government…… The book is in three parts: first, ‘The fragrance years’ deals with the growing up years of the author; second, ‘A cog in the machine’ delineates his years as a tax man; and the third, ‘Illusion and reality,’ as the title suggests deals with illusions and realities of the world.”
(vii) “For all those who have experienced the joy of river-rafting, this compilation promises a similar joyful ‘flow’, riding the currents of the real-life river of experiences. Although, for serious readers, its heavy size is a joy for many weeks but for some, it may demand an additional ounce of patience to finish it. I personally find it a bundle of precious experiences which would continue to enlighten many generations to come. It is indeed a must read for the students of history, politics and law of all age groups who can extend their support to his Charitable Trust which retains the copyright of this book.”
COMMENTS AND APPRECIATION
(SECOND EDITION 2014 December)
“But On the Loom of Time is not an ordinary biography. It does not merely give an account of the life of the autobiographer. It is a source of great learning. While taking the reader down the memory lane and giving hindsight [account] of the place & the people and the events of life, the book enlightens him about many contemporary issues like unearthing of black money, tax administration & reforms, corruption, good governance, abuse of international treaties, judicial system, public interest litigation and so on. The book also gives an insight into the working of the government departments and breakdown of constitutional institutions. Shri Jha held important positions in his illustrious official career and had first-hand experience of their working. He has expressed his views on these issues frankly and boldly. Above all, as we turn over the pages we find an undercurrent of ethics and spirituality which reflects the author’s character and philosophy of life.”
Justice S. N. Jha
Former Chief Justice of Jammu & Kashmir and Rajasthan High Courts,
and Chairperson, Bihar Human Rights Commission
“I have had the pleasure of reading the first edition of ‘On the Loom of Time’ and I must admit that I am eagerly awaiting Shiva Kant Jha’s additions to the riveting book. While writing is not a daunting task by itself, writing well requires skill. Shiva Kant Jha has mastered this skill in his autobiographical memoirs, succeeding in his endeavour to keep the reader engaged. I have had the privilege of seeing the author address arguments in a Court of law, reading his articles, and witnessing his views on the vexed subjects of economic investment. I would, however, be giving you an incomplete picture of the man he is, if I did not mention his deep understanding of spirituality.
Mr. Jha is imbued with a deep spiritual background, powerful values and profound learning which is characteristic of the kshetra called Mithila. The teachings of the Bhagavad Gita have been his guide and he has led his life on the principles imbibed in the holy treatise. In the modern world, conflict is bound to arise between a spiritual mind in the loom of its pursuits and the abstruse and opaque reality typifying human greed and selfishness. But to be a voice of reason and intellect, to speak fearlessly, to confront authority and to stand up with honesty, are values which symbolize a rare component of human courage.
This book is a beautiful amalgam of words that stay with you long after you set it down. Not only does it give a first-hand account of one of the biggest Incometax departments, it also elegantly ties in spirituality with life and the law. From Mithila to the Bhagwad Gita; from his birth to his joining the civil services; from the ought to the is of income tax law and administration; from the Mahabharata to the Indo-Mauritius Tax Treaty; the author takes you on a unique journey that gives you both joy and hope alongside glimpses of the past, present and future.”
Shri Gopal Subramanium, Senior Advocate of the Supreme Court of India,
& former Solicitor-General of India
“‘On the Loom of Time’ is not a mere autobiography, but is a reflective & critical treatise presenting not only the portrait of author’s life but also provides a deep study of his times. The book is a great monument of human intelligence that captures the key problems of our days, and provides insightful solution which deserves consideration.
I am highly impressed and enlightened by going through the treatise. His style is lively. If you start reading it you cannot leave it until you come to the last. It is a story told by an honest and sincere officer of his experience, delights and woes of his life. He is true Indian. He has his legs in our proud heritage. His mind is full of love for the country. He has not only realized the problems of the country but has own practical solutions for the same. His sincere wish is India should come out as a model before the entire world in financial field also as it has been in spiritual and religious matter.”
Justice P. C. Agarwal, Senior Advocate, Supreme Court of India;
Former Judge of Madhya Pradesh High Court
“Shri Shivakant Jha has honoured me by inviting me to write about his memorable autobiography “ON THE LOOM OF TIME” (which for reasons I do not deem valid at all he calls only an autobiographical memoir), when its Second edition is almost to be launched. I am not being modest when I say I am honoured by his invitation.
First of all the autobiography is of an intellectual and moral giant not because of its excellent diction but the contents relating to what he has done, what dilemma he encountered, how he resolved them and how he kept away from solutions that could have compromised his morals, integrity or commitment to the good of the nation……..”
Shri Ram Jethmalani, Member of Parliament; Senior Advocate,
Supreme Court of India; Professor Emeritus,
Symbiosis College of Law, Pune
“It is indeed a must read for the students of history, politics and law of all age groups who can extend their support to his Charitable Trust which retains the copyright of this book.”
Shri Shailendra Kumar, CEO & Managing Editor, Taxindiaonline.com
Review on www.taxindiaonline.com