Giving its verdict on a bunch of petition challenging levy of ‘entry tax’ by states, a nine judge constitution bench of Supreme Court recently upheld its constitutional validity. It directed that individual cases will be decided by the regular benches concerned keeping in mind laws of the respective states. Even as regular benches take their own sweet time to conclude proceedings, the affected companies may get breather for a while to actually pay up. But, ‘Damocles sword’ hangs! The total liability on the companies – mostly in infrastructure and energy sectors which resort to large-scale transportation of goods in bulk across states – is about Rs 30,000 crore plus interest which itself would be a humongous amount considering that these...
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Category: Regulatory environment
Crippled at Bombay House
GOOD CORPORATE GOVERNANCE The revelations made by Cyrus Mistry, ex-Chairman, Tata Sons (letter dated October 25, 2016) immediately following his dismissal point towards a new low in corporate governance in India. If it can happen in one of India’s leading conglomerates which has a turnover of close to Rs 7,00,000 crores, market capitalisation of Rs 8,50,000 crores, operations in more than 100 countries and has about 7,00,000 employees on its rolls, this speaks volumes about the extent of degeneration that has set in corporate board rooms. What is so disconcerting about the recent events at Bombay House? The most worrying point is the brazen muscle-flexing by Tata family-owned trusts (they have 66% share in Tata Sons) which reduced its head...
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Taxing times – judiciary is even slower than bureaucracy
Giving its verdict on a bunch of petition challenging the powers of states to levy ‘entry tax’ a nine – judge constitution bench of the Supreme Court [SC] has upheld its constitutional validity. The SC has also held that individual cases will be decided by the concerned regular benches keeping in mind laws of the respective states. Even as the regular benches take their own sweet time to conclude proceedings, the affected companies may get breather for a while to actually pay up. But, ‘Damocles sword’ hangs. Having already paid 50% of the amount pursuant to interim orders of apex court, they will have to cough up the balance amount sooner than later. The total liability on the companies/dealers –...
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Poorly enforced contracts shatter Modi’s dream
On assumption of office, prime minister, Modi made a huge commitment to substantially improve the ease of doing business in India. He set a very ambitious target of catapulting India’s ranking in this regard to amongt top 50 countries. That was in the mid – 2014. Two-and-a-half years since then, India continue to languish at number 130 out of 189 countries in the ease of doing business as per World Bank’s Doing Business Report 2016 [a mere 4 places up from last year’s adjusted ranking of 134]. When, seen in the backdrop of far reaching reforms implemented by NDA – government [all aimed at achieving the goal set by Modi] in almost all areas of governance, this is a big...
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Don’t fiddle with GST soul
NEW RATE STRUCTURE In its meetings held on Nov 3-4, 2016, the GST (Goods and Services Tax) Council arrived at a consensus on the rate structure even as it failed to hammer an agreement on an equally contentious issue of who (read Centre or states) will exercise administrative control over which tax. For now, the next meeting has been deferred till Nov 23, thus casting shadow over the government’s ability to meet the April 1, 2017 deadline to kick off the new tax regime. The Council has opted for four rates – 5% for essential and daily use items, two standard rates of 12% and 18% and highest rate 28% on so called de-merit goods such as luxury cars, aerated...
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Good governance – slaughtered in Bombay House
The revelations made by Cyrus Mistry ex-Chairman, Tata Sons immediately following his dismissal point towards corporate governance in India reaching a new low. This is a matter of serious concern to investors/shareholders – including foreign investors – who has stakes in Indian companies. If, it can happen in one of India’s leading conglomerates which has a turnover of close to Rs 700,000 crores, market capitalization of Rs 850,000 crores, operations in more than 100 countries and has about 700,000 employees on its rolls, this speaks volumes about the extent of degeneration that has set in corporate board rooms. So, what is so disconcerting about recent events at Bombay House? The most worrying point is the brazen display of muscle flexing...
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Collegium system flawed, restore NJAC
On October 16, 2015, a five-judge Constitution Bench of the Supreme Court [SC] vide a majority vote of four-to-one quashed the 99th Constitution Amendment which established the National Judicial Appointment Commission [NJAC] for appointment of judges to the apex court and High Courts. The court also resurrected the collegium system which NJAC Act had replaced on April 13, 2015. Following this, the SC advised the Union government to draft a Memorandum of Procedure [MoP] for appointment of judges. But, it has been repeatedly turning down suggestions made by latter. Those rejected include (i) government reserving the right to reject names recommended by Collegium if they are not in ‘national interest’ and (ii) recording in writing dissent, if any, expressed by...
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Policy mess getting worse
FDI IN RETAIL : While the Centre wants to welcome FDI, it does not want to displease its core constituency of traders, opposed to FDI per se. The government has set up a committee under the Niti Aayog CEO to look into all issues including the Foreign Direct Investment (FDI) norms pertaining to the fast growing e-commerce industry. Since much of e-commerce is in retail, and trade via this route is a portion of overall retail wherein also contentious issues relating to FDI are involved, it would be apt if the committee examines investment norms in a holistic framework covering both online and offline. At present, the retail sector in India is hamstrung by a policy maze which gives too...
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Effective implementation key
MOMENTOUS REFORM On August 3, 2016, Rajya Sabha (RS) passed the 122nd constitution amendment bill (already cleared by Lok Sabha last year) paving the way for the Goods and Services Tax (GST). This is a ‘transformative’ reform that will convert the Indian Union of 29 states in to a seamless national market enabling free movement of goods and services as a single uniform tax replaces a plethora of existing taxes. Promising multiple benefits for producers, exporters, businesses, consumers and governments via increasing efficiency in supply chain, reducing transaction cost, improving ease of doing business, tax buoyancy and stemming evasion and black money, GST will lay the foundation for putting India on double digit growth trajectory in the next couple of...
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FDI in retail – policy mess getting worse
The government has substantially liberalized the policy environment relating to foreign direct investment [FDI] thereby bolstering the prospects of increasing foreign fund inflows. But, that is hardly true for investment in retail which is the fastest growing sector. The biggest stumbling bloc is the policy maze which gives too many confusing signals and gives scope for varied interpretations. Even worse, it gives too much of ‘discretion’ to the bureaucrats in deciding as to who would be allowed and on what terms. It tantamount to bringing the license raj through the back door. For the purpose of FDI, the retail sector has been divided in to several classes which is completely out of sync with international practice of treating retail as...
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