Law against Economic Offenses
Preamble
The proliferation of economic offenses is one of the most difficult problems of our society. Corruption in Government Departments is rampant. Evasion of income tax , sales tax and exercise duty is common. Stamp Duty is evaded by under valuation of property and paying part of the price in cash. Foreign exchange laws are violated at will and Indians are stashing billions of dollars in foreign bank accounts. Financial companies take fixed deposits from the public, invest large sums as private placements and become insolvent. Bank frauds are common. Banks and financial institutions make huge loans to friends and relatives and politicians without following norms and obtaining securities. Cheques are issued without funds to cover them and no action is taken or action is delayed. Financial results are changed through creative accounting and the audit authorities seem to have no liability. Exporters and importers are under invoicing or over invoicing and making money. The net result is that every day the Government is loosing revenue. People are loosing their life savings. The Government deficit is rising. There is shortage of money to carryout any development work. So the Government is going around with a begging bowl to the developed countries, the IMF and World Bank and foreign investors and trying to get foreign direct investment or loans at any cost. This has to be stopped.
This Ordinance is a step in this direction. The aim is not to rewrite the rules at this stage. That can be done by the elected Parliament. The aim is to ensure compliance of existing laws by redefining punishments and generating accountability. The aim is also to recover misappropriated funds if possible and to ensure that the offender cannot benefit from his misdeeds.
Classification of Economic Offenses
All economic offenses involving more than Rs one Lakh will hereafter be treated as criminal offenses.
Evasion of Income Tax, Exercise Duty and Sales Tax
Any individual who is liable to pay income tax and fails to do so, will, if convicted in a court of law, be punished by an imprisonment equivalent to a minimum of one year or one year for every Lakh of rupees evaded. Financial penalties as applicable under existing rules will also be recovered.
Any individual who pays less tax than liable will, if the evasion is proved to be malafied and not due to a genuine mistake, will if convicted in a court of law, be imprisoned for a minimum period of one year or one year for every Lakh of rupees evaded. He will be also be required to pay his tax dues along with a penalty of 4 percent per month if the evasion is proved to be malafied and 2 percent per month if not malafied.
In case of companies as defined under the Companies Act, business establishments, societies, non government institutions or trusts , political parties, the liability for payment of income tax , sales tax or exercise duty will rest with the managing director or the proprietors or the treasurer of the political party. They will be liable to undergo imprisonment and be personally responsible for payment of unpaid taxes or duties with interest as applicable in cases above.
It is mandatory for all individuals, Hindu undivided families, companies, business establishments, societies, trusts or any other organizations liable to pay tax, to file their returns and pay their taxes by due dates. Any failure to do so will be punished with imprisonment of one week. The liabilities will be as defined in Clause 1, 2 or 3 above.
These offenses are bailable.
All voluntary disclosure schemes are canceled. An amnesty period of two months is available to those who would like to file their returns and pay their taxes with an interest of 2 per cent per month including taxes payable but evaded. There will be no bar on investigation of evaded income by any authority.
Offenses Related to Bank Frauds and Frauds Relating to Government Accounts or Treasuries
Any person found guilty of perpetrating a fraud on a bank or Government Account or Treasury by a court of law will be sentenced to death by torture. If the perpetrator of the offense becomes an approver and the conspirators are arrested and the money is recovered, the punishment will be commuted to life imprisonment.
Any person or bank employee or government employee or a minister or an elected representative, who is charged with conspiring or colluding with the perpetrators of the fraud will, on conviction by a court of law, be sentenced to death by torture. The sentence will be commuted to life imprisonment if the person turns approver and provides clinching evidence to establish guilt of the accused and deposits the pecuniary benefits gained from the transaction in a Government treasury.
Any person who stands to benefit from such fraud; whether he directly participates in the fraud or not; will be treated as a co-accused and undergo the same punishment.
These offenses are not bailable. However, the families of the accused will be paid a non refundable ex-gratia payment equal to two thirds of their salaries or Rs 10,000 whichever is less during the period of trial.
Offenses Related to Misappropriation of Public Funds
Any person or company or business establishment, who misappropriates funds collected from the public as fixed deposits, will on being found guilty by a court of law, be sentenced to death by torture. The sentence will be commuted to life imprisonment if the money misappropriated is recovered and the other conspirators are convicted.
Any person who conspires or connives in the execution of the crime and any person or persons who stand to benefit from the misappropriation will be treated as co-accused and will be liable to undergo the same punishment.
Culpability of Auditors
Any auditor or firm of auditors who, in the process of carrying out statutory audits, assists any of his clients in falsification of accounts or fails to bring out clearly and without any ambiguity any irregularity in the maintenance of accounts or offers bribe to any income tax, sale tax or exercise inspector will be made an accessory to the crime and be liable to undergo the same punishment as applicable to the individual or company perpetrating the offense.
Offenses Relating to Corruption
Any minister, elected authority or Government Servant, who is found guilty of demanding or accepting any bribe or gratification in cash or kind for performing any service which is a part of his duty by a court of law, will be dismissed from service and undergo imprisonment for a period of not less than seven years. The individual on being formally charged or being caught red handed will be immediately suspended and arrested.
Any minister, elected authority or Government Servant, who is found guilty of disregarding laid down procedures and showing undue favor to any individual or company and thereby causing a financial loss to the state, will on being found guilty by a court of law, be dismissed and sentenced to death by torture if the amount of loss exceeds Rs. 1 Crore or a minimum of seven years imprisonment if the amount of loss is less. The sentence will be commuted to a lower punishment if the money is recovered. Any person or persons who benefit from the undue favor will be treated as a co-accused whether he is directly connected with giving the bribe or not. In case the beneficiary is a company, the managing director or the proprietor will be held liable.
These offenses are not bailable. The families of the accused will be paid an irrecoverable ex-gratia amount of two thirds their salary or Rs 10,000 per month whichever is less during the period of detention and trial.
Liabilities of the Investigating Agencies
If any member of the police or investigating agency fails to record an FIR or to take cognizance of a crime and fails to carryout a thorough investigation into the allegations , he will be immediately suspended and if found guilty of dereliction to duty will be dismissed from service without any benefit. If the crime is of a serious nature like murder or rape, he will be treated as an accessory to the crime and proceeded against accordingly.
If any investigating agency fails to investigate a crime and file a charge sheet within 90 days of making an arrest without obtaining prior sanction of a court of law, the officer in charge of investigation will be dismissed from service for dereliction to duty.
; Any superior officer who fails to take cognizance of acts of omission or commission by their subordinates in connection with cases even after they are brought to their notice by any individual or through the media, the superior officer will be suspended and if found guilty be dismissed from service on grounds of inefficiency without any benefits.
Any minister, elected representative or superior officer who coerces or induces any investigating agency or subordinate to overlook any crime or to go slow on investigations or to show undue favor to any accused , will be suspended and if found guilty be tried as an accessory to the crime.
Laws against Smuggling
Preamble
Smuggling causes loss of revenue. More importantly, it gives economic power to anti socials and thus poses a threat to the security and law and order. Thus it is essential that smuggling is rooted out.
Punishment for Smuggling of Gold
Any person found to be in possession of more than 100 gm of unaccounted gold at any port, airport, sea shore or border areas will, on being convicted by a court of law , be sentenced to death by torture. The sentence will be commuted to life imprisonment if the person provides information about the source of gold and the party to whom it is consigned. It will be further reduced if the information leads to the arrest and conviction of the consignor or the consignee.
Any person who is found to be in possession of smuggled gold, will, if convicted by a court of law, be sentenced to death by torture. The offense will be commuted to life imprisonment if the person provides information about the source of gold and the party to whom it is consigned. It will be further reduced if the information leads to arrest and conviction of the consignee or the consignor.
Punishment for Smuggling of Narcotics
Any person who is found to be in possession of more than 10 gm of any kind of narcotics, will, if convicted by a court of law, be sentenced to death by torture. The sentence will be commuted to life imprisonment if the person provides full and reliable information about the source and consignee of the narcotics. It will be further commuted if the information provided leads to capture and conviction of other persons engaged in the smuggling of narcotics.
Punishment for Smuggling of Arms and Explosives
If any consignment of weapons or explosives is intercepted at any place, the escort of the consignment if any will, if convicted in a court of law, be sentenced to death by torture. The sentence will be commuted to life imprisonment if the person or persons provide full and reliable information about the source and consignee of the weapons and explosives. The sentence will be further commuted if it leads to the arrest and conviction of the consignors and consignees of the weapons.
These offenses will not be bailable.
Punishment for Smuggling of Other Items
These will be dealt with under existing laws.
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