That’s what we call ‘Robbed by choice’

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In less than three years India has seen some notable multi-billion tax evasion cases. While the archaic tax laws are helping MNCs to indulge in tax evasion and walk out without any hassle, the government still lacks the desired motivation to bring in the most required radical changes to hit back hard at them.

A large section of the country got shocked in August 2009, when Minister of State for Finance S S Palanimanickam in a communiqué disclosed the amount that country’s top 100 tax defaulters owed to the exchequer. Cumulatively the amount stood at a mind-boggling Rs 1.41 lakh crore – over three times the amount that the government spends every year on National Rural Employment Guarantee scheme. But then it was just the list of people who defaulted their payments in a country where the largest segment believes that tax evasion is their birth right, be it legally or illegally. And the latest name that has surfaced in this regard is US-based confectionery giant Kraft Foods.

It all started when a Delhi-based law firm acted as whistleblower and filed a public interest lawsuit late last year citing irregularities in terms of tax liabilities related to sale of shares and other assets in the event of Kraft’s $19 billion acquisition of Cadbury. While the law firm, Kanth & Associates asserts that it is a clear case of tax evasion resulting into substantial loss to the economy, Kraft is yet to speak on the issue. In the meantime, a letter written by Salil Mishra, Under Secretary, Ministry of Finance, to Gaurang Kanth, Managing Partner, Kanth & Associates, indicates that “action has been initiated in the matter under the Income Tax laws”. However, irrespective of the outcome of the investigation and the long legal battle to follow, the fact that cannot be ignored is that the company managed to escape the eyes of the tax department without any hitch.

But then, this is not the first of its kind in India. Vodafone has already become a case study in this regard being found liable to the Indian exchequer for nearly $2 billion in capital gain taxes related to its $11 billion takeover of Hutschison Essar in 2007. So the question remains, how does these MNCs manage to skip the eyes of law causing a loss to the exchequer? Focussing on the backdrop in discussion – acquisition and capital gain taxes – Gaurang Kanth answers, “India lacks a strong legal framework in this context. For example, while other key countries (even China) have a franchisee law in place, India has no specific legislation to regulate franchisee arrangement in the country... and on most occasions such regulatory gaps end up helping these companies to evade tax.”

Though Vodafone and Cadbury are two multi-billion dollar cases related to takeovers, there are numerous other examples of tax evasion by MNCs operating in India under various other clauses. In 2008, soft drink major Coca Cola and German airline Lufthansa were slapped with demand notice from the Anti Evasion Wing of the Commissionerate of Service Tax. While Coke was said have to evaded Rs 8.55 crore in terms of service tax on the out of pocket expenses (expenses over and above the contract amount), Lufthansa was given a ticket of Rs 6.16 crore for allegedly evading service tax on full value of the fare it received. For that matter Nokia, the largest mobile handset player in India, had faced a penalty of Rs 1.14 crore in 2006 for furnishing inaccurate income particulars in financial year 2001-02 with an intention to avoid income tax. Going by experts, the number of cases where companies get caught and pay penalty is just the tip of an iceberg if we consider the number of companies that evade tax and move on without getting caught.

Adding another view point to how the MNCs manage to escape Indian taxmen, Dheeraj Malhotra, Director, MPartners, says, “They (MNCs) are deriving benefit from the mismatch between domestic legislation and sovereign treaties and taking advantage from the fact that treaties take precedence over law and exempt non-Indian source income of residents of certain jurisdictions from Indian taxation. Each transaction that has hit the limelight has been structured within such a framework.” To avoid such a scenario, the best way forward, perhaps, would be a proactive legislature that assists the revenue department and closes such loopholes to address these issues in the correct way.

However, the root cause of all these problems is the complex and archaic tax laws prevailing in the country. Irony is that time and again global companies have blamed these laws as a deterrent, yet they have used them beautifully to pocket more bucks by avoiding tax. Though Finance Minister Pranab Mukherjee has been promising radical reforms in tax laws, simplification of laws related to M&As and stricter norms related to compliance, it just doesn't seem to take off. What can be a better example than the New Direct Tax Code that is now expected to be implemented from April 1, 2012 despite Finance Minister’s high hopes at Pravasi Bhartiya Divas, 2010 where he had said, “We are working on tax reforms. I am hopeful that the Direct Taxes Code will be implemented from April 2011.” Thus, it’s not only the laws that needs to be changed. If the government wants to check the number of corporte tax evasion cases, the system as such needs to go through a complete overhaul with radical changes infused at all steps, be it the laws, or the execution of it. And that can only be possible if ample support can be mustered from both the lawmakers and the executives. Else, while India will continue to struggle with widening deficits, MNCs will continue to be rich with window dressed profits.

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A market sans money

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Money counts for nothing as commodity exchange on the barter principle is the norm at the historical Jonbeel mela of Assam which binds different tribes from the state and Meghalaya together

At a time when the money market is controlling the entire economy of the world, a unique market, operating on the barter principle, is still held once every year on the first Thursday after Makar Sankranti. Jonbeel mela is held at Jagiroad of Morigaon district. Gova King Deepsing Deoraja inaugurates the fair. When the King takes part in a community feast on the first Wednesday after Makar Sankranti, the mela is considered to be open.

Tribal people of the erstwhile Gova kingdom come down from the neighbouring Khasi and Karbi hills to the mela with their harvest of crops and fruits to exchange them with fish, traditional pitha and sandah and other commodities that are locally produced in the plains.

While the British took over the reins of Assam on February 24, 1826, after the Yandabu Treaty, the Gova kingdom came under British Rule in 1835. But traditional practices continued without any break. The Gova people select the King, abiding by the rule of hierarchy. The present King is a 17-year-old boy from Nongphu in Meghalaya who is studying in the tenth standard.

Hundreds of Khasis, Karbis, Jayantias and Tiwas walk down the hills with loaded bamboo baskets hanging from their forehead. Meanwhile, the people from the plains also gather. They exchange commodities throughout the day. The Tiwa people of the Gova kingdom are busy fishing while the market goes on. Guests are served fresh fish caught in the four beels (lakes) of the Gova King: namely Jonbeel, Arambeel, Khamrangibeel and Thakurdovabeel. There is another lake in the Gova kingdom where the local people do community fishing as the Assamese new year breaks in April.

The Jonbeel mela is a symbol of unity among the people of the plains and the hills. Both these communities address each other as "mama-mami" (maternal uncle and aunt). At a time when even the most remote corners on earth are not insulated from the effects of globalisation, the barter system of exchange gives Jonbeel a unique character.

Though the Gova kingdom obviously does not have any political significance today, it works as a cultural institution of the Tiwa tribe with a 51-member strong royal courtier group. Some of the portfolios are Borbarua, Jela (priest), Bhitarmazi, Bormazi, Muchi, Komar, Kumar Arandhora, Ranua, etc. Actually, these positions were meant to help the King to run the various functions of the Gova kingdom in the older days. Today, the royal courtiers are mainly responsible for organising cultural celebrations like Kharbeel mela in April, Gosai Olowa mela and Lakhimi puja (once in five years) on the bank of the Jonbeel lake.

At the Jonbeel mela, the King collects ‘tax’ from the tributary kings and traders coming to the mela. The tax is taken in the form of money or material.

According to one of the courtiers, Jursing Bordoloi, also a relative of King Deepsing Deoraja, the main problem of the mela is that they have no land of its own. For years, the fair is being held on rented land. “It is the most unfortunate situation,” he laments. The newly formed Tiwa Council has decided to dig a part of the historical wetland, the Jonbeel, to construct a cultural auditorium and a gate carved with traditional Gova designs.

On the last of the three days of Sankranti, King Deepsing Deoraja visited the mela. He arrived in a car and not on the elephant. The tributary King Bhadra Singh Deoraja also came to mark the festival. Meghalaya Governor Ranjit Shekhar Musahari, Member of Parliament Rajen Singh, former president of Tiwa Sahitya Sabha Tulsi Bordoloi were other prominent dignitaries who graced the market with their presence. The Meghalaya Governor said that anthropologically, Lalung, Kachari and Karbi tribes descended from one mother and such a celebration can help strengthen friendly relations among the different tribes.


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Dalit students at a government-aided school study the language of the vedas

Sanskritisation turned turtle

Dalit students at a government-aided school study the language of the vedas at a time when it has been shunned by the Brahmins and upper castes who were supposed to be its sole custodians

Kumbakonam is a historical temple town in Tamil Nadu. Situated on the banks of the Cauvery, this small place had garnered national headlines way back in 2004 when 83 students were burnt alive when a school was ravaged by a massive fire. Today, the town has put the episode of horror behind. And a school, by imparting traditional teaching, has acted as a major vehicle of social change.

The Jayendra Saraswati Oriental Higher Secondary School, a government-aided academy, has turned the prerogative of upper castes to learn Sanskrit on its head. Here, learning of the language of the Vedas is imparted to students from Dalit and backward communities.

The school was started by Swami Chandra Shekarendra Saraswati, the then Sankaracharya of Kanchi Mutt in 1966. By the 1990s, the school was tottering; the building had fallen apart, there was little or no funds. Then stepped in Sri Jayendra Saraswati, the current Sankaracharya of Kanchi Mutt. Normally, the Sankaracharya will come, bless the pupils and leave. But on a visit, he called a student from the seventh standard and asked him to recite some slokas. That boy incidentally turned out to be a Dalit student. He recited the Sanskrit slokas so beautifully that Swamiji was impressed.

He spent an hour in the school and the school survived. The Sankaracharya arranged for funds up to Rs 60 lakh. The building was restored and soon the school was back on its feet. 1966, when it started out, the Jayendra Saraswati Oriental Higher Secondary School had just ten students. Today, that strength has gone up to 450.

When the TSI team entered the Jayendra Saraswati Oriental Higher Secondary School, tucked in one corner of the Karna Kollai Agraharam area on the bustling Big Bazar Street, the school was abuzz with recitation of students.

''When our school was in a very bad shape, Swami Jayendra saved us. He has told us that we should not collect higher fees from the students. Here up to the tenth standard, we teach Sanskrit like Tamil and English. Poor and backward class students study this language with a lot of interest. We don't say no to anyone. We admit all. For further studies in computer and to know Hindi, Sanskrit will come very handy. We devote more time to Sanskrit classes," says J. Baskaran, headmaster of the school. While the teachers' salaries are taken care of by the state government, the Kanchi Mutt looks after the administration.

Mostly, the students come from poor backgrounds. They are mostly children of fruit sellers, railway platform vendors, daily labourers, masons.

Thirumalai, a teacher of Sanskrit in the school, is himself an old student of this school. He has done his Masters and M.Phil in Sanskrit as well. He was teaching students of the sixth standard when TSI caught up with him. ''We teach everything, starting from Akshapyasa up to grammar. From the seventh standard onwards, classics are taught. It includes Raghuvamsa, Rathnavali, Kumarasambhavam, Krajathajunya, Kaumudhi, Dharkkasangakaraga, Dhasakumara Sarita, Prathabha Rudriayam," he said.

“These young students are like clay, they can be moulded with ease. They learn quickly,” Thirumalai shared his experience with us.

Vaishnavi, a seventh standard student, is brilliant enough to manage her class while her teacher is away in Chennai on official work. Vaishnavi is a Dalit student, her father sells fruits. She was reading out a line from Raghuvamsa and explained its significance to her fellow classmates: “This means that the Kings of the Raghu clan earned only to give away to the poor.”

Praveen Kumar from the sixth standard secured 72 marks in Sanskrit out of a possible 100 in the recently held half-yearly examinations. His father is a carpenter. Valarmathi, another Dalit student whose father is a daily labourer, is also fond of Sanskrit. Sandhya's father is a labourer; the tenth standard student has got 82 marks in her last examination.

N. Ramakrishnan, secretary of the school, tells TSI, ''Generally, you would not find students from higher sections of the society studying Sanskrit. Mostly, lower class students study the language. We don't differentiate on the basis of caste or religion. Last year, a Muslim student scored the highest marks in Sanskrit. By the way, we just don't teach Sanskrit. In other subjects also, our school students are doing good. They are passing the board examinations with flying colours."

How ironic, once considered the language of the Gods which the sudras (lower castes) were not even allowed to hear, today Brahmins and other upper castes have completely shunned it, leaving it to the Dalits to keep the mother of most Indian languages alive.

''E. V. R. Periyar, the great social reformer of Tamil Nadu, vehemently opposed the systems of caste hierarchy and Brahmin superiority. In the course, he also opposed Sanskrit. Tamils are known for opposing Hindi language when in 1937, it was made compulsory in the schools. Anyone who knows the social history of the Dravidian movement would really wonder about what is happening in this school. It highlights a social change that perhaps the keepers of this language will not necessarily be Brahmins," says Thenuga, an art and social critic from Kumbakonam.

Sanskrit, almost a dead language in India, is being revived at many levels. Perhaps making it a mass language would help it to live longer. May be this school has a bigger lesson for the people of this country.


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