Participants discuss applicability of double taxation avoidance agreements and imposition of voluntary disclosure scheme at a Moot Court
Geetanjali Minhas | February 13, 2012
The 13th D M Harish Memorial Government Law College International Moot Court competition was held from February 9 to 12. Among those participating in discussions on tax heavens, the applicability of double taxation avoidance agreements (DTAA’s) and the imposition of voluntary disclosure scheme (VDS) in relation to India included former justice BN Sri Krishna supreme court of India, V Sridharan senior advocate, Bombay high court, Dinesh Kanabar deputy CEO and head Tax, KPMG, Meera Sanyal country head, RBS and Sucheta Dalal managing editor, Moneylife and others.
Reacting to the issue of black money and getting it back in the country, Justice BN Sri Krishna recalled many personal anecdotes that left the audience in splits.
“My father died when I was sitting judge of the Bombay high court, justice Sri Krishna said adding “I went to the local municipal office to collect his death certificate with required documents. I was told that it will take four months to get death certificate. If I wanted it immediately, it would cost me Rs 500. Since there were no mobile phones at that time, I asked him if I could use the telephone. He refused saying even that would need money. So I pushed him away and called the commissioner of municipal corporation and asked him what was happening in his office? Fortunately, I was a judge and he reacted immediately and the person said sorry and issued me the certificate.”
Recalling another incident the former justice of supreme court said that he refused to buy a house in Mumbai city. “My wife persuaded me to buy a flat in Navi Mumbai which according to her ‘a judge with a meager salary could also afford’. After negotiating its price, I told the person that I wanted to sign the agreement. He said that 65 percent payment would have to be made in cash and he would give me a stamped deed for the balance amount. I said I cannot do that as I am a sitting judge. He said to me “saab aapke saamne koi aata hai, aap uska munh dekhte hain ya kayda dekhte hain?” I said, “main kaida dekhta hoon”, and he retorted, “toh yeh mera kayda hai”.
Giving another account Sri Krishna said that once while coming back from the US he was carrying a camera for his wife who was fond of photography. He paid 200 dollars as duty. When he was stopped by a customs officer, he told him that he was not carrying anything but the camera. He said, “Hold on and asked for a receipt. I showed him the receipt and he started referring to a manual which happened to be some Singapore manual and said this costs 150 bucks? I said yes and the receipt cost me 200 bucks. He then told me, “aap zaroorat se zyaada sharif hain kya,” Sri Krishna said.
While answering a question on international trade that why India does not become a tax heaven so that not only Indian money remains in India but it also invites foreign money, the judge retorted, “I have a counter question. Why don’t we nationalise corruption and put up notices legalising corruption outside Mantralaya and Sachivalaya!”
“When everyone makes legitimate money they cannot break appropriate laws,” the judge said causing people to laugh.
While speaking on whether for economic freedom common man is dependent on Foreign Direct Investment inflows from Mauritius, a tax heaven and financial centre, contributing 42 percent of total inflows, does India need Mauritius or does the world need tax avoidance agreements which could results in tax avoidance, author and business journalist Sucheta Dalal questioned why only in India Chambers of Industry with all their powers is unable to influence the government while in the US, business men are influential enough to make laws.
“Whenever we have spoken to politicians, they say that businessmen talk when they have their vested interests or want a policy passed and this is what is destroying India. Why can’t Chambers of Industry present 10 points before the budget and tell the government to get it passed,” Dalal said.
Assailing the tax system Dalal came down heavily and said that tax avoidance has slipped into being tax evasion through Mauritius and it doesn’t matter if it’s Singapore, Cayman islands or Mauritius. “The reason so much money comes via Mauritius is because of convenience” and added that “the best brains in the country are aligned towards helping people avoiding tax which includes, chambers of commerce, industrialist, top lawyers, consultants and chartered accountants. Factories and shell companies run by lawyers are working to help people 24 hours to shape their money.” She recalled a known lawyer’s comments on a public platform some years ago when he said, “We know how to slice, dice, dissect in a way that helps people shape their money and bring it back.”
Speaking further she said that though some genuine FDI is coming through foreign direct investment, people often tell them that politicians make regressive policies. “Unless supported by a galaxy of brains, politicians alone would not be able to change policies,” she pointed out and asked for a focused, forceful and direct debate. Dalal drew attention to the fact that aviation and railways were making losses and asked how VDIS was going to make life safer and better for ordinary people.
“Rather than tax heavens, the debate should focus on whether we want to clean up the system or not? Do we really want lower taxes? Besides 33 percent taxes we pay direct taxes and bribes for car and house agreement registration. When I go to the municipality and ask them for the rule book, they deny saying rules are not written so you will have to pay a service tax /service fees. This is for someone who wants to follow the rules,” she said.
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