Economic
Times: New Delhi: Thursday, 16 July 2015.
The Central
Information Commission (CIC) has ordered the tax department to make public
certain information on the first batch of five advance pricing agreements (APA)
signed in India.
An APA is a
voluntary negotiation between the tax authority and a company with
international holdings covering future transactions, with a view to solve
potential disputes in a cooperative manner.
APAs and APA
negotiations are considered confidential the world over and companies disclose
sensitive information to authorities on condition that it would not be made
public.
India had
initiated the APA scheme in July 2012. The Central Board of Direct Taxes signed
the first batch of agreements with multinational firms on March 31, 2014.
Though the
CBDT has been parrying RTI queries on the names of these companies, the CIC has
directed it to divulge the estimated amount of transactions to which the APAs
pertain to and the currency that is recognised for the proposed transaction
under each APA.
The tax
department had earlier denied information on APA agreements citing Section 8
(1) (d) of the RTI Act, which reads: "Notwithstanding anything contained
in the RTI Act, there shall be no obligation to give any citizen information
including commercial confidence, trade secrets or intellectual property, the
disclosure of which would harm the competitive position of a third party,
unless the competent authority is satisfied that larger public interest warrants
the disclosure of such information."
In a response
to an application by RTI activist Venkatesh Nayak, the CIC order, while asking
for partial disclosure of information, did not take a view on divulging the
names of the companies.
Information
Commissioner MA Khan Yusufi said: "The Commission is of the considered
view that the applicant has been deprived by the respondents (CBDT)
deliberately from having the benefits of the RTI Act 2005... Thus, the
respondents have defeated the very purpose of the RTI Act 2005 for which it was
legislated by Parliament of India."
During the
course of APA negotiations, in order to secure a favourable pricing scheme, a
company may have to divulge different types of proprietary information to the
tax authority. This could include information about future product launches,
which if divulged could compromise the competitive position of the company.
The
confidential information is provided with explicit requests to maintain
confidentiality.
The CBDT has
maintained that APA programme's success depended on procuring such information
and analysing it carefully.
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