(Reuters)
(Reuters)

Opinion | Back-date check

The retrospective application of any law that relates to tax matters is tricky. This is because tax evasion is not always a clear-cut issue of guilt and innocence. Unlike actions that clearly qualify as crimes, tax codes are subject to change and people’s decisions could shift accordingly

The Supreme Court has stayed an order of the Delhi High Court which had held that a tax amendment of India’s black money law, made in April 2016, could not be used with retrospective effect from July 2015 to nab offenders. This comes as a jolt to Gautam Khaitan, an accused in the Augusta Westland chopper scam under the Act. He had argued that the Centre could not apply the law for allegedly undisclosed assets that no longer existed once the relevant section came into force; and that even a notification specifying an earlier efficacy date was not enough. A petition to this effect was filed by Khaitan, represented by senior advocates PV Kapur and Siddharth Luthra, and the high court had agreed. Now the apex court has reversed it.

The Bharatiya Janata Party-led government had passed the law to deal with the scourge of black money. Under it, the tax authorities were empowered to go after undisclosed foreign income and assets. The idea was to prosecute Indians who hid earnings and transferred sums of such unaccounted-for wealth overseas to avoid detection. Some of this was expected to be money made through alleged kickbacks received for scandalous defence deals, and so it surprised few that an accused in the Augusta Westland helicopter case was among those charged.

In principle, however, the retrospective application of any law that relates to tax matters is tricky. This is because tax evasion is not always a clear-cut issue of guilt and innocence. Unlike actions that clearly qualify as crimes, tax codes are subject to change and people’s decisions could shift accordingly. One could end up with a violation only on account of a goalpost that’s shifted—or a grey area clarified—afterwards, which would be unfair. This nuanced difference of what constitutes a crime, however, cannot be an excuse to let evaders who are guilty get away.

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