The Supreme Court read the central government the riot act last fortnight, declaring in no uncertain terms that “the issue of bringing back black money” cannot be left to the government. It demanded within 24 hours the names of all Indians holding black money in overseas accounts, even as Attorney General Mukul Rohatgi made plaintive pleas that such a move could backfire.
Luckily, a showdown was avoided, with the government handing over to the court a list of 627 account holders. But that did not avert doubts over the deleterious effects downsides that may come with the Supreme Court’s earnest attempt to do good.
The court insisted on the submission of the names, although, as Finance Minister Arun Jaitley clarified, it already had them. On June 27, the Centre had handed over the details to the special investigation team established by the court and headed by two of its retired judges. That investigation team was founded by a court order in July, 2011. Acting on a public interest litigation filed by lawyer Ram Jethmalani, demanding the return of Rs 70 lakh crore stashed in accounts abroad, the court had decided to proceed as it deemed fit because the government displayed only inaction.
Breaching separation of powers
Perhaps the court wanted the exercise to be a warning against the kind of dilatory tactics the previous Congress government had unsuccessfully tried to employ. Nevertheless, it did not mitigate questions on judicial overreach, which had started some years ago.
By vesting the special investigation team with extraordinary powers – overriding of specialised government agencies and the authority to directly negotiate with foreign governments without the ministry of external affairs’ involvement – in its order of July, 2011, the court had perhaps overstepped the line separating the powers of the executive and judiciary. Ironically, in paragraph 44 of the same order, the court had observed that it would neither be feasible nor valid for it to take over the whole investigation.
Tax deals endangered
But this too may not compare to the fallout on the confidentiality clauses of taxation treaties. The court had accepted Jethmalani’s contention that the confidentiality clauses, integral to double taxation avoidance agreements, were irrelevant. But by most accounts, they are anything but that.
For instance, the taxation treaty with Germany in 1995 mandates that identities of account holders be disclosed only when prima facie evidence exists of wrongdoing. Only a proper investigation can provide such proof. As per the treaty, no one but the tax authorities can carry out an investigation or call for mandatory disclosure of holdings.
So, when the court recently forced the Central government to disclose the names, even in a sealed envelope, it effectively forced a breach of the confidentiality clause. The 88-odd countries with which similar tax treaties have been signed now can easily refuse to share information, without which no investigation can be conducted.
The Supreme Court’s actions, no doubt, exemplify earnest ardour to do good. But the steep cost of its orders to legality and judicial principles has the potential to derail the very task it set out to perform. Can Attorney General Rohatgi be faulted then for telling the court that the blame for any obstruction in a future investigation may squarely lie at its door?
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Luckily, a showdown was avoided, with the government handing over to the court a list of 627 account holders. But that did not avert doubts over the deleterious effects downsides that may come with the Supreme Court’s earnest attempt to do good.
The court insisted on the submission of the names, although, as Finance Minister Arun Jaitley clarified, it already had them. On June 27, the Centre had handed over the details to the special investigation team established by the court and headed by two of its retired judges. That investigation team was founded by a court order in July, 2011. Acting on a public interest litigation filed by lawyer Ram Jethmalani, demanding the return of Rs 70 lakh crore stashed in accounts abroad, the court had decided to proceed as it deemed fit because the government displayed only inaction.
Breaching separation of powers
Perhaps the court wanted the exercise to be a warning against the kind of dilatory tactics the previous Congress government had unsuccessfully tried to employ. Nevertheless, it did not mitigate questions on judicial overreach, which had started some years ago.
By vesting the special investigation team with extraordinary powers – overriding of specialised government agencies and the authority to directly negotiate with foreign governments without the ministry of external affairs’ involvement – in its order of July, 2011, the court had perhaps overstepped the line separating the powers of the executive and judiciary. Ironically, in paragraph 44 of the same order, the court had observed that it would neither be feasible nor valid for it to take over the whole investigation.
Tax deals endangered
But this too may not compare to the fallout on the confidentiality clauses of taxation treaties. The court had accepted Jethmalani’s contention that the confidentiality clauses, integral to double taxation avoidance agreements, were irrelevant. But by most accounts, they are anything but that.
For instance, the taxation treaty with Germany in 1995 mandates that identities of account holders be disclosed only when prima facie evidence exists of wrongdoing. Only a proper investigation can provide such proof. As per the treaty, no one but the tax authorities can carry out an investigation or call for mandatory disclosure of holdings.
So, when the court recently forced the Central government to disclose the names, even in a sealed envelope, it effectively forced a breach of the confidentiality clause. The 88-odd countries with which similar tax treaties have been signed now can easily refuse to share information, without which no investigation can be conducted.
The Supreme Court’s actions, no doubt, exemplify earnest ardour to do good. But the steep cost of its orders to legality and judicial principles has the potential to derail the very task it set out to perform. Can Attorney General Rohatgi be faulted then for telling the court that the blame for any obstruction in a future investigation may squarely lie at its door?