The new law and telecom minister on Tuesday hinted that his government may avoid retrospective taxation and provide stable policies so that there are no uncertainties for foreign investors. The comment holds out a glimmer of hope on sorting out the long-drawn tax dispute with British mobile operator Vodafone. "Retrospectivity in law should normally be avoided, as it is very evident that India needs foreign investment," Ravi Shankar Prasad told reporters on assuming charge of the law ministry at Shastri Bhavan. He did not name any company in this context, refusing to speak on "individual cases".
In 2012, the Indian government amended its tax code retrospectively to reopen a Rs 11,000-crore tax liability dispute with Vodafone, despite the Supreme Court having ruled in favour of the telecom company earlier. The move invited global criticism and hurt India's image as an investment destination. An attempt at conciliation has also failed. Vodafone has since invoked international arbitration to resolve the issue, but has indicated that it is still open to an out of court settlement.
Retrospective taxes should be avoided: Ravi Shankar Prasad
The 59-year-old minister also promised a "stable fiscal, taxation and policy regime" so that foreign investors do not face any problems in India. At the same time, he said, corruption would not be tolerated. "The statutory regime will be fair, transparent and nondiscriminatory." Prasad, who will hold the portfolio a second time in his political career, assured quick steps to ensure greater access to justice. "It will be a priority area. More infrastructure, more courts, more judges, creating an enabling atmosphere for accessing justice. Good governance means a good legal access to justice," he said.
Arbitration is another key priority for the Narendra Modi-led government, according to the minister. "India should become a hub of international arbitration,"Prasad said. At present, Singapore and London are the most preferred arbitration hubs of the corporate world. India is at the bottom of this list because of the procedural delays and the multi-layered judicial scrutiny involved thereafter.
The minister promised to focus on the National Judicial Commission— another commitment in BJP's manifesto —which is expected to ensure a broader consultative process in the appointment of superior court judges and give the political executive a say in the process. "There is an existing Bill on this. We will hold more consultations on this and consider it," he said. Under the current collegium system, the judiciary has the final say on all such appointments. The judiciary arrogated this supremacy through a court ruling.