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If there were to an international survey on stability of tax laws or the absence of it, India should undoubtedly be at the top in absence of it. Governments, both state and centre, work overtime to churn out amendments and new circulars/notifications everyday, and that is, after making dozens of such changes through Finance Act, annually which is about the only thing most consistently done by Government (legislative government, I mean) in India. Then come frequent drives for rationalization and simplification in these laws which leave them even more presumptive, fictional and complex. Whole things sounds like Comedy Circus with the only unfortunate part being unlimited sufferings by a nation called India, through the hands of its own nationals. A perfect recipe for Anna’s next movement already!

Leave aside tax laws, if we consider our Constitution, which was adopted in 1950, it has been amended 98 times already, that is, more than three amendments every two years! And this is when those who drafted or at least participated in drafting of the constitution are held in extremely high esteem, and held out to be visionaries and celebrated as revolutionary leaders!

Compare this with some of the British laws like Indian Penal code 1860, or Indian Contract Act 1872 which could be expected to be far more dynamic given the developments in society, commerce and human nature in last 6 decades. While I am unable to find exactly how many amendments have been made to each of these two enactments, I am pretty sure the total amendments would be far less than those made to our Constitution.

As regards tax laws, the amendments are simply infinite, far too many to be even counted. I am sure, Income Tax Act, 1961 must have gone through thousands of amendments in last 52 years, and yet they were not enough, compelling our visionary finance ministers like P.Chidambaram or Pranab Mukherjee to consider replacement of the entire act through Direct Tax Code altogether.

Since everything, including even terms and definitions, like here is no capital asset anymore, it is now investment asset in the DTC, will be changed in the new act, one can imagine that India, a litigation hungry country anyway, could easily go crazy and flood the courts in no time. Whole litigation of last 6 decades into freezing of concepts and definitions in the outgoing statute will go down the drain opening new gates for fresh doze of massive litigation for each definition and concept. Someone said, India would take more than 300 years to dispose off all pending cases in courts. If DTC indeed comes into being, you can expect courts and lawyers to be assured of their job for next 600 years. India heaven for lawyers? That was an observation several decades ago but the expression cannot be improved for limitation of language, as there is no superlative of heaven, not yet.

Same applies to Indian Companies Act, 1956 where one would expect least opportunity for making amendments, and yet, phenomenal amendments were made and since even those were not enough, the entire act has been replaced with another one recently. The entire profession of Chartered Accountants and Company Secretaries have been provided with business for next year or two, to figure out the specifics and practicalities of the new law. We Indians are really masters at creating job opportunities indeed. Hat’s off to us!

Law used to be nothing but common sense. Not any more. Laws in modern India are quite opposite of this. Indian laws are more fiction than realistic. Even a small one man company has to contend with at least 20 kilos of Guide to Company Law and another 20 kilos of Guides to Income Tax and Excise & Service Tax laws. It is impossible for a 10 year old business not be present in some court or the other for tax relates cases. Revenue Interest has de factobeen accepted as Public Interest giving free licence to entire government machinery to book any business under whatever pretext. Spirit of law has ceased to be relevant for the government machinery even for pretext. The adjectives used in laws defining situation for exercising extra ordinary powers over the hapless citizens/businessmen like suppression of facts with intention to evade duty for instance, for stretching limitation in excise laws is conveniently used for any mistake in making declaration without making any effort to establish the intention to evade duty which is simply assumed for all adjudication purposes.

Tax laws are extremely complex and increasing presumptive, and only going worse every day. Criminal laws are increasing retrograde to an extent where difference between bail and actual trial, or rape and molestation is dangerously thinning. To make matters worse, bad laws are implemented in worse manner, making doing business in India a nightmare. No wonder, India ranks 134 on the list of 184 countries on ease of doing business index, and is 60 in the competition index. If doing business is so difficult (Singapore is no.1), how could India even hope to be competitive, and without being competitive, how could India even hope to make sufficient exports to be able to pay for its imports. Large current account deficits and ever weakening currency are inevitable, no matter who is RBI’s Governor.

The conclusion is alarming. Indian law factory is hyper productive and can easily beat the whole world, taken together. I think it needs to rest a while and can do with a five year break. Let us freeze our laws for five years and send parliament and state assemblies on five year vacation overseas. May we, we could even defer our elections for 5 years. That will be really cost-effective for us, highly price sensitive or cost-conscious Indians. Isn’t it?


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Category Constitutional Law, Other Articles by - Anil Kr Garg 



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