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It is heartening to listen to Mr. Kejriwal’s speech in Delhi Assembly during vote of confidence. He has rightly mentioned that Citizens’ Charter is an integral part of anti-corruption measures. A government official is likely to stop doing anything to thwart anti-corruption measures which will hurt public even more and compel them to revert back to corrupt ways of getting things done. Thus, he has to be compelled to deliver service for which he sought government job in the first place, through Citizens’ Charter.

There are already a few such initiatives in several states starting MP which guarantees 52 public services in 16 departments to be delivered to people in specified number of days as a matter of right. Unfortunately, these are services required by a consumer only but not by business which involves far higher magnitude and frequency of corruption. Normally, a consumer does not need same service frequently and can even afford to resist any demands for bribe. Besides, the amount of bribe he is asked to pay for such services is petty. In contrast, hefty bribes are regularly paid by businesses for routine and regularly required services which are not covered by these Citizens’ Charters, for instance :-

1. Registration with DIC, provisional and then, later as Permanent

2. Registration with Sales tax deptt (for 4 registrations, VAT, CST, Entry Tax and Professional Tax)

3. Registration for central excise

4. Registration for service tax

5. Allotment of land

6. Registration of land/lease

7. Approval of construction plans

8. Temporary connection of electricity

9. Permanent connection of electricity

10. Water connection (if available, mostly it is not available)

11. Permission to dig bore well

12. Registration with Provident Funds department

13. Registration with Employees’ State Insurance department

14. Factory Licence

15. Sanction of loans from state financial institutions/PSU Banks

16. Issuance of C forms from sales tax department

17. Issuance of road permits (form no. 49 in MP – recently computerized avoiding compulsory bribing in most cases)

18. Sales tax, vat and entry tax assessments annually

19. Excise audit annually

20. Excise (evasion) preventive team

21. Excise range office on monthly basis

22. PF inspection on annual basis

23. ESI inspection on annual basis

24. Health & Safety deptt for annual inspection

25. Income tax department whenever scrutiny assessment takes place and so on and so forth.

The extent of bribes involved can be appreciated from statements made during transporters’ strike a few years ago, that total revenue from transport department was about Rs 800 cr whereas the transporters were paying bribes to RTO officials/police upto Rs 1200 cr! If cost of running transport department is estimated at say, Rs 400 cr, government is getting a net revenue of Rs 400 cr for which consumers are paying Rs 2000 cr! Thus, bribes paid by business ultimately end up being borne by consumers only, in higher prices for goods and services consumed by him.

Likewise, monthly payments to excise range office, annual payments to their Preventive Team and separate payments to their Annual Audit teams itself go to several thousands to lacs for each unit. Each assessment with sales tax department requires bribes of several thousands to be paid. Each income tax assessment, once taken up in scrutiny, needs bribes of several thousands to be paid. And all these payments are to be made regardless of whether there is anything wrong with the case or not. It is because the authorities have been given enormous powers which are abused to cause huge discomfort/harassment to the business to force him to pay up.

Apart from massive powers given to them, all these laws also invariably contain a provision protecting all government officials against any punitive action “for any act done in good faith”. In practice, “good faith” is an imperative assumption which doesn’t have to be proved, and no amount of illegality, unfairness, down-right stupidity on the part of such official causing any amount of hardship to the aggrieved is completely irrelevant. In fact, government officials are licensed to be illegal, stupid, unfair or dumb to any extent but they remain protected!

The modus operandi used by these corrupt officials to force one to pay up is simple, invoke any law that maximizes harassment or hardship regardless of its being appropriate or relevant for the issue in question. In one real life case, an official from labour department demanded Rs 5 lacs from a new spinning mill in Rajasthan in late 80s. The amount was big, hence, they refused. The official served them with notice for failing to pay bonus to workers, under Payment of Wages Act. The payment of bonus act did not entail any liability for first 5 years unless there was a profit during this period, and law also specified that profit would mean profit after depreciation as per the income tax law. This means, one had to add-back depreciation (Straight line method) to the P&L figure, and deduct the amount as calculated as per income tax law (WDV method) to arrive at profit as per payment of bonus act which also contains dispute resolution mechanism but not requiring any pre-payment by employer, whereas Payment of Wages Act required pre-payment of amount demanded before making an appeal. This was the reason why the official initiated action under payment of wages act and not payment of bonus act. The story is long, but point is, these officials know how to abuse the law in order to maximize nuisance value and force some-one to pay up. There is no fear of legal action because law protects them completely no matter how stupid, illegal or unfair their action could be proved to be.

The corrupt officials have contaminated the whole system such that they even share their loot with the consultants who get a cut. Hence, the officials invariably insist on bribes being paid through consultants only who will never let them be caught red-handed. All these corrupt officials are safe from whatever anti-corruption measures are taken. Lok Ayukts have not touch them yet, and will never be able to touch them ever.

Thus, citizens’ charter will be meaningless UNLESS it includes ALL SERVICES that citizens of this country require including when they are doing business.

A simplification of some of the situations leading to corruption could also be considered, for instance:-

1. Protection to government officials to be denied in cases where aggrieved is able to make a prima facie case showing illegality, unfair application of law, un-intelligent interpretation of law/facts of the case by the official causing hardship to him. This will bring some accountability.

2. There should be no system of transfers except on periodical basis on pre-determined criterion and frequency. There must not be any punitive transfer. If a person is not fit for doing a job in X location, he must be sacked rather than transferred to location Y to harass those living at that location.

3. All registrations, DIC, Excise, Sales tax, PF, ESI, land allotment, electricity-water connections etc compulsorily Online

4. All returns (excise, service tax, sales tax, PF, ESI etc) compulsorily Online

5. No requirement for any assessment with the assessee. Only sample scrutiny to be taken on specified criterion like in income tax.

6. No system of way bills at all. When India is signing Free Trade Agreements with other countries one after another, it ought to get all its states to sign a similar FTA to permit free movement of goods intra- country first. Anti-evasion measures should include superior intelligence, raids, random checking at border or anywhere etc but not compulsory border checking.

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Category Corporate Law, Other Articles by - Anil Kr Garg