Excise ordinance does immense long-term damage

By issuing an ordinance to take away the excise relief won by ITC, the government has acted like the proverbial bully, who when he finds he can’t win through fair means, simply alters the rules of the game to his advantage. Lest this be confused with sympathy for a company that purportedly tweaked the law to deny the exchequer its dues, we would like to set the record straight.

Whatever the merits of the tax authorities’ case against ITC, the fact is the Supreme Court has ruled against the order of the Customs, Excise and Gold (control) Appellate Tribunal (Cegat), squashing the cigarette major’s plea for excise relief. The matter should have ended there, especially since the ruling came after a 17-year-old legal battle that went all the way up to the apex court. In any other country it most certainly would. But not in India, it would seem. Here, the government is not used to being on the losing side. If it can’t armtwist the parties concerned into falling in line, then it simply rewrites the law. And to add insult to injury, it does so with retrospective effect.

The government may think it has won. The amount involved—Rs 450 crore—is not to be scoffed at, especially for a government strapped for funds. But this is small change compared to the irreparable damage that such actions do to the reputation of the country, long-term. It is our proud boast that we are a democracy, one where the rule of law prevails, in contrast to our big neighbour to the east, with whom we are always being compared. In that case, the very least we can do is to suit action to words. Instead, if the government itself shows such scant respect for the law of the land, then no potential investor will want to invest in the country. For all the smooth-talking done by the Prime Minister and his cabinet colleagues, investors will not buy their story. If the government is to realise its fond hope of attracting $150 billion over the next 10 years to fund infrastructure, we have to do better than that.

As distressful as the government’s cavalier disregard for the law is its tendency to issue ordinances on the flimsiest of pretexts. In an elected democracy, the ordinance route must be resorted to very sparingly and only where the issue is so pressing that it cannot wait for formal legislative approval. In the present context, that is not the case. Parliament is to meet in less than four weeks from now and there was no earth-shattering reason to rush through with an ordinance. The government stands well and truly exposed.