New Delhi: The government is concerned about the growing perception that it is reluctant to bring back black money stashed abroad and has decided to launch a campaign to rebut it.
The issue and Supreme Court’s focus on it triggered a discussion in the Union Cabinet on Thursday. “Supreme Court’s observations are grabbing headlines,” Prime Minister Manmohan Singh is learnt to have said in the meeting. Railway minister Mamata Banerjee also said that black money had become an issue among people. Singh made the remark during a discussion on a proposed treaty with Cayman Islands, a tax haven.
Singh asked finance minister Pranab Mukherjee to brief the meeting on the details of the issue that led the Supreme Court to remark on Wednesday that it involved plunder of national economy. The court was critical of the government for treating the illicit deposits in offshore banks as a tax evasion issue.
Sources said Mukherjee told his colleagues that the government was hamstrung by secrecy provisions in the double taxation avoidance treaties with European Union countries. He said the treaties provided for access to information on deposits in European banks to curb tax evasion, but expressly forbade public disclosure of facts.
DTAA secrecy clause not binding on India
Foreign Bank a/c Details Can Be Given To Court
New Delhi: The Indo-German banking information sharing agreement’s secrecy clause, cited by the Centre before the Supreme Court to refuse making public details of 18 Indians who allegedly stashed Rs 43 crore in Leichtenstein’s LGT Bank, is not supported by the treaty itself.
Article 26 of the Double Taxation Avoidance Agreement (DTAA) says the bank account details provided under it “shall be treated as secret”. But the agreement has many exceptions weaved into it providing ample scope for making the information public, at least during the court hearing.
For, the provision says tax authorities dealing with foreign bank account details “may disclose the information in public court proceedings or in judicial decisions”.
Senior advocate Anil Divan, appearing for petitioner and former law minister Ram Jethmalani, had pointed this out to a Bench of Justices B Sudershan Reddy and SS Nijjar on Wednesday.
Prime Minister Manmohan Singh surprised many by reiterating the government’s
stand before the court — the information obtained for tax purposes could not be used for other possible law violations and could not be shared.
There is another catch. The Indo-German DTAA’s secrecy clause was to protect their nationals from double taxation, that is if one has paid tax in one of the countries, he need not be subjected to the same again in the other.
But, LGT Bank was in a small tax heaven country called Leichtenstein and was not under Germany’s jurisdiction. Berlin had obtained details from a bank official accused of data theft, something similar to what UBS Bank is now charging one of its officials with for sharing data with WikiLeak’s Julian Assange.
Divan said if LGT was not under German control, how could it ask Indian government to enforce the secrecy clause, especially when it involved no double taxation of a German or Indian.
Solicitor General Gopal Subramaniam had argued that since the German authorities had not responded to India’s request for sharing LGT Bank data informally, this country was forced to take recourse to DTAA. India is bound by the secrecy clause because the details came through the DTAA route, he had said.
The issue and Supreme Court’s focus on it triggered a discussion in the Union Cabinet on Thursday. “Supreme Court’s observations are grabbing headlines,” Prime Minister Manmohan Singh is learnt to have said in the meeting. Railway minister Mamata Banerjee also said that black money had become an issue among people. Singh made the remark during a discussion on a proposed treaty with Cayman Islands, a tax haven.
Singh asked finance minister Pranab Mukherjee to brief the meeting on the details of the issue that led the Supreme Court to remark on Wednesday that it involved plunder of national economy. The court was critical of the government for treating the illicit deposits in offshore banks as a tax evasion issue.
Sources said Mukherjee told his colleagues that the government was hamstrung by secrecy provisions in the double taxation avoidance treaties with European Union countries. He said the treaties provided for access to information on deposits in European banks to curb tax evasion, but expressly forbade public disclosure of facts.
DTAA secrecy clause not binding on India
Foreign Bank a/c Details Can Be Given To Court
New Delhi: The Indo-German banking information sharing agreement’s secrecy clause, cited by the Centre before the Supreme Court to refuse making public details of 18 Indians who allegedly stashed Rs 43 crore in Leichtenstein’s LGT Bank, is not supported by the treaty itself.
Article 26 of the Double Taxation Avoidance Agreement (DTAA) says the bank account details provided under it “shall be treated as secret”. But the agreement has many exceptions weaved into it providing ample scope for making the information public, at least during the court hearing.
For, the provision says tax authorities dealing with foreign bank account details “may disclose the information in public court proceedings or in judicial decisions”.
Senior advocate Anil Divan, appearing for petitioner and former law minister Ram Jethmalani, had pointed this out to a Bench of Justices B Sudershan Reddy and SS Nijjar on Wednesday.
Prime Minister Manmohan Singh surprised many by reiterating the government’s
stand before the court — the information obtained for tax purposes could not be used for other possible law violations and could not be shared.
There is another catch. The Indo-German DTAA’s secrecy clause was to protect their nationals from double taxation, that is if one has paid tax in one of the countries, he need not be subjected to the same again in the other.
But, LGT Bank was in a small tax heaven country called Leichtenstein and was not under Germany’s jurisdiction. Berlin had obtained details from a bank official accused of data theft, something similar to what UBS Bank is now charging one of its officials with for sharing data with WikiLeak’s Julian Assange.
Divan said if LGT was not under German control, how could it ask Indian government to enforce the secrecy clause, especially when it involved no double taxation of a German or Indian.
Solicitor General Gopal Subramaniam had argued that since the German authorities had not responded to India’s request for sharing LGT Bank data informally, this country was forced to take recourse to DTAA. India is bound by the secrecy clause because the details came through the DTAA route, he had said.
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