MARCH 02, 2022

By Vijay Kumar

TAX administrators were genetically programmed to List 1 and List 2 (Central and State Lists in the Constitution of India) each trying to increase its harvest of the revenue regardless of the constitutional boundaries of List 1 and List 2. And, these included not only the tax administrators, but also the revenue representatives in the Tribunal (CESTAT)

Now that the 101st amendment has come nearly five years ago, it requires another genetic mutation, both for the practitioners as well as for the tax administration.

And it also requires that we should be globally tuned and more integrated with the global substantive and procedural practices because the world requires to be united now on occasions other than conflict and Covid-19.

These have a pandemic effect, global conflicts and pandemic, but even for harvesting of tax revenues, equitably, gainfully, and sustainably, we are required to have an integration of global models.

OECD is doing a wonderful work in this area and we are also learning.

One thing I noticed at very abstract level is that economic interests make people saner. There was a time in the 18th and pre 18th and 19th centuries when imperialistic tendencies were there, the hunger for land and expansionism which is there to a very small measure in a few countries. But by and large mankind has gone beyond that stage.

Now the economic interests make us saner, and that is why instead of being an Imperial imposition by tax administrators, now there is a consultative process between the consumer, the taxpayer, the generator of the revenue, the harvester of the revenue, the policymaker, and that's a good thing.

We need to have, I noticed in a general perspective in my engagement with law, the problem of policy making, translating into statute law or substantive law is the limitations of the human foresight, the inevitable limitations of the language in which the policy is formulated which has ambiguities, which require interpretive dynamics and the gap in the understanding of the administrator of law and the increasing disrespect of the citizen or the individual towards the policy because of its asymmetric and disproportionate administrative outcomes.

And while general society goes from a state of equilibrium to disequilibrium very fast because of these maladies, in tax administration, it could have very severe consequences on the economy. And economy is very important now and is growing in importance because while governments are accused of increasing and exponentially increasing hunger in harvesting revenues, the outlays are also very complex. Not only do we have to develop and bring many of our people out of their poverty line and economic deprivation, but we also have to invest a lot in building our international image that costs a lot of money. This is political PR at a global level. Also, we need to militarize because the world is increasingly getting unpeaceful, though we are living in the most peaceful times in recorded human history. Barring the second global conflict in the 1930s, the world has been fairly peaceful. But nevertheless, the tensions are there; post nuclear traces are there, which require huge investments for the military regime. And these requires a huge outlay from the exchequer and therefore revenue harvesting becomes very critical. How do we harvest competently, fairly equitably and not pinch only those who are compliant?

The other day, I was having a conversation with some people who were buying some flats and apartments. And they told me that today everybody's taking payment in checks and drafts - big builders. I said, how does it happen; politics is, effective politics is increasingly expensive. How is that being funded if everybody is doing it only in the official currency? They told me that they have devised a method, construction industry, they devised a method where they take it only in the legal tender from the buyer, but in the construction costs from subcontracts, they make it up - that poses a challenge If you have to reach that sector and segment, it poses a challenge, but again, there'll be resistance from the policy makers because their lubrication will dry up. So, these are all competing challenges in a complex polity. The world is growing more and more complex. And both the substantive, procedural and administrative facets of tax administration and harvesting, will have to tune itself to these things.

GST - five years is too less a time for mankind to understand a mutant and GST is a mutant species in our constitutional scheme, from List 1 and List 2 to some sort of, not a concurrent, but some sort of a hybrid mechanism. So, the tax administrators sticking together, particularly in GST council, the state and the central federal administrators - they have to maintain some sort of an equilibrium of conflict, at least on a physical level though it will take a long training and modulation for them to understand that they are part of a process.

GST council has brought about a great change in the federal understanding and federal cooperation. It's really heartening that despite the differences that we have in political colour and rhetoric, GST council has been not only a physically peaceful arena, but also productive of substantial results. That is a great achievement.

These are excerpts from the comments of Justice Goda Raghuram in the TIOL Tax Congress on 26th February 2022.

Justice Raghuram is a former High Court Judge; was the President of CESTAT and headed the National Judicial Academy.

Seven years ago, Justice Raghuram said in a speech,

When I saw the GST Bill, it is mind boggling constitutional complexity. It is neither the exclusive list nor the concurrent list; it's a fourth dimensional animal. It is post Einsteinian Physics. Heisenberg's uncertainty of quantum mechanics is elementary compared to the complexity of this. Even the political complexity of States and Union coming together on a continual basis to ratchet the policy of GST is a huge challenge. It is an economical challenge, it is a political challenge, policy challenge, an administrative challenge; it's an adjudication challenge. So that is the next animal that is waiting to pounce on you. But we have to fight, we have to survive.

Survive, we did.

Until Next Week