Page 17 - Banking Finance October 2023

LEGAL UPDATE

defaults in payment of the tax to the Indian Penal Code. Law Commission sumption of constitutionality; it has no
government treasury, ITC cannot be reports exert considerable influence on bearing on the provision's constitution-
claimed and in fact, if it has been both the government and the Supreme ality itself. Instead, I will restrict my-
claimed - there will need to be a re- Court and, given that the provision's self to its discussion of the court's free
versal of such credit," Abhishek Jain, constitutionality is pending, it is impor- speech jurisprudence, as that forms
partner and indirect tax head at KPMG tant to closely read a document that the basis of its proposed substantive
India, said. will likely form an important part of amendment, and the absences that
In the case of Aastha Enterprises, the any future judgement on the matter. mark the text.
HC said that ITC by its very nomencla- The report walks the reader through
ture contemplates a credit being avail- sedition law's history in India, the Law Can't refuse education
able to the buyer in its credit ledger by Commission's previous reports that dis- loan over student's CIBIL
way of payment of tax by the supplier cussed the law, Constituent Assembly
to the government. "The contention of debates, and the courts' public-order score: Kerala HC
double taxation does not impress us, jurisprudence. After discussing the The Kerala High Court stayed an order
especially since the claim is denied only threats to India's security and the law's passed by single-judge PV
when the supplier who collected tax "alleged" misuse (the Commission Kunhikrishnan which said that a
from the purchaser fails to pay it to the passes the buck onto the police instead student's credit score cannot be a fac-
government. Taxation, as has been of the "political class," as if the police tor in rejecting an education loan ap-
held, is a compulsory extraction made are an autonomous body) and under- plication.
for the purpose of public good by the taking a wide-ranging comparative Acting on an appeal filed by the State
welfare state and without the levy be- survey of sedition law in diverse juris- Bank of India (SBI), a Bench of Acting
ing paid to the government; there can dictions (the UK, US, Australia, and Chief Justice SVN Bhatti and Justice
be no claim raised of the liability to tax Canada!), the report concludes with Basant Balaji temporarily stayed an or-
having been satisfied and hence, there why the law should be retained on the der dated May 30, directing the banks
is no question of double taxation," the books. to sanction educational loans to stu-
court order said. It adds a series of recommendations dents without rejecting them on the
that ignore the Supreme Court's post- basis of a low CIBIL or credit score.
The Law Commission's Re- Kedar Nath jurisprudence, set out The bank had challenged the order on
port on Sedition misun- vague procedural guidelines, and in- grounds that the credit sanctioning
crease the punishment for the offence. has to be carried out according to the
derstands what the courts
I will not examine the report's history applicable rules and guidelines such
said of the provision as, beyond establish- as the Credit Information Companies

The 22nd Law Commission of India re- ing the purpose of the provision, it Act, 2005, which deals with the
cently submitted its final report ("Us- serves no purpose. Highlighting the regulation of credit information com-
age of the Law of Sedition") on the colonial origins of the provision is only panies and facilitates efficient credit
constitutionality of section 124A of the relevant insofar as it displaces any pre- distribution.

21 proposals with potential to succeed identified: RBI Governor

To align cross-border payments ecosystems with G20 priorities, 21 innovative proposals with the potential to suc-
ceed have been identified, Reserve Bank of India (RBI) Governor Shaktikanta Das said. "In collaboration with the
Bank for International Settlements (BIS), 21 proposals in total were shortlisted...they have the power to provide
solutions to maintain the integrity of the financial system, empower the underserved, reduce frictions in cross-bor-
der payments and amplify the resilience of financial systems," Das said at the G20 TechSprint Finale in Mumbai. The
G20 TechSprint is a global long-form hackathon series that the BIS Innovation Hub co-hosts annually with the G20
Presidency.

BANKING FINANCE | OCTOBER | 2023 | 17