Mr Parthasarathi Shome, Director and CEO of Indian Council for Research on International Economic Relations (ICRIER), has criticised the Finance Ministry's move for retrospective taxation on overseas transactions.
According to Mr Shome, such a taxation system would create a conflict between the judiciary and the legislature.
“It (taxation) has to be prospective and not retrospective. It is even banned in some countries constitutionally.”
There is an assumption that the legislature can actually go back and change the view of the judiciary, which is based on the current law, he told the media on the sidelines of an interactive session on tax administration organised by Bharat Chamber of Commerce, Kolkata, today.
It would also allow the legislature to ‘change the functioning and judgment of the Supreme Court retro-actively', he pointed out.
“Retrospective taxation will, of course, have an impact. If the Supreme Court's judgement is altered retro-actively, ‘what is the efficacy of the judgment given by the judiciary',” he asked.
Lacunae in GST
Pointing out gaps in designing the Goods and Services Tax, Mr Shome said that there are lacunae in GST.
While he urged that the tax rates should be same for goods and services, the State Finance Ministries should give their tax revenue earned from alcohol.