Take the chains off business

Recent moves to decriminalize violations of corporate and tax law are welcome, writes Nitin Mittal

With the Central Board of Direct Taxes (CBDT’s) recently introduced circular, on 9 September, which eases norms for initiating prosecution for delay in depositing tax deducted at source (TDS) and filing of income tax returns, among others, hopefully the stage has been set for the decriminalization of business laws.

Finance Minister Nirmala Sitharaman set the tone by tweeting: “I have instructed the revenue secretary to come up with measures to ensure that honest taxpayers are not harassed, and those who commit minor or procedural violations are not subjected to disproportionate or excessive action.” Similarly, the Ministry of Corporate Affairs is looking to decriminalize two-thirds of the Companies Act and introduce a bill in the winter session of parliament.

India’s criminal law is unique for the serious sanctions of incarceration and public condemnation that it imposes for violation of its rules. Each country defines what constitutes a crime or a criminal offence. One could argue that a crime or a criminal offence is an act harmful not only to some individual but also to a community, society or the state. For an act to be criminal, both actus reus (the act of doing something criminal) and mens rea (the intention to do something criminal) are necessitated. Actus non facit reum nisi mens sit rea means the act does not make a person guilty unless there is a criminal intent.

The moot point is whether non-compliance with commercial laws entails a criminal intent coupled with a public wrong, and whether criminal sanction should be imposed for an action that is not defrauding the public or harmful to the society at large. Should there not be a distinction for regulatory and administrative violations vis-à-vis more serious public crimes?

Nitin Mittal is the head of legal and company secretary at Signify India. The author’s views are personal.