The Public Accounts Committee (PAC) of Parliament on Friday interrogated Union Law Secretary B A Agarwal over two “contradictory” opinions of the Attorney General G E Vahanvati on a CAG report on interest payments on tax refunds.
While Vahanvati could not appear before the committee due to his court schedule, it is learnt that many PAC members have expressed their unhappiness over Agarwal’s reply.The PAC had summoned the two over the AG's “contradictory” opinions on a CAG report which said expenditure on interest payment on tax refunds was in contravention of constitutional provisions.
The law secretary has reportedly defended the AG’s opinions saying that the country’s top law officer gave a fresh legal opinion based on the new situation which had evolved after going through certain aspects.
In his first opinion, the AG supported the CAG view that expenditure on interest payment on refund of taxes was in contravention of constitutional provisions. But in his revised opinion, he said the Central Board of Direct Taxes (CBDT) was not at fault. Agarwal also justified the second opinion of the AG which said that the interest component is not an expenditure. PAC Chairman Murli Manohar Joshi wanted to know how Vahanvati interpreted the Constitution in a different way in his second opinion, but Agarwal is understood to have not answered the question.
Agarwal was summoned as the PAC had earlier sought the Law Ministry’s opinion on the issue. But the ministry referred the matter to the country’s top law officer.
The PAC had taken up certain paragraphs of the CAG report on “Expenditure incurred on interest on refunds of taxes” for examination.
It may be noted that the CAG had pointed that expenditure on interest on refunds of taxes amounting to Rs 10,499 crore was incurred by the CBDT in 2010-11 without Parliament’s authorisation.