Thursday, March 09, 2006

Mr FM, You Don't Need IT To Catch These Tax Dodgers


I don't know what's worse. Is it breaking the law by not paying duties and taxes or assuming that you can get away with absolutely anything in this country.

The Directorate of Revenue Intelligence (DRI) impounded actor Sushmita Sen's sports utility vehicle or SUV two weeks ago. The reports say its a Toyota. I think its a Toyota Lexus specifically. The SUV's import papers show that it was manufactured in December 1998. Its value, accordingly, was shown as Rs 6 lakh. And a duty of Rs 9 lakh was apparently paid. Turns out the SUV rolled out in December 2003 and is apparently worth (with duties) around Rs 50 lakh.

The Lexus was brought into the country under the Transfer of Residence rules. Where any Indian resident or non-resident Indian having resided overseas for more than 2 years and owned the car for more than six months can bring home a car without paying customs duties. After all, he may have purchased the vehicle for his personal use. The condition is that the vehicle can't be sold for two years.

Of course in this case the returning Indian is typically a construction worker from the Gulf. Who in turn hands it over to a car dealer in India. The car dealer then goes on to sign a `lease' agreement with the buyer. So, on paper, the car has not been sold. And technically, it is possible that a Sen cannot be hauled up. So, India must have the largest collection of Lexus-owning construction workers in the world.

Obviously, the whole operation is funded backwards. So, Mr Dubai-return must be buying the car with funds sent from India. Or some other well-oiled havala route. Note that a Lexus GX 470 costs upwards of $50,000 (Rs 22.5 lakh) and a Lexus LX 470 upwards of $68,000 (Rs 31 lakh). But this is before customs duty, which is around 110% in India.

Its funny how our importers are so confident of hoodwinking the system that they don't even care about chassis numbers, model, make and so on. At least that's what the Sen case suggests.

Star evaders

Sen is not alone to be charged with this. The DRI has confiscated cars belonging to Saif Ali Khan, Suneil Shetty and Sanjay Dutt as well. The route used to bring in the car was different for Shetty and Dutt. But one thing was common. All of them were evidently trying to escape duties. Which does not make them any different, in effect, from any other form of tax evader or law breaker. And there can be no better case of evidence, as the kind parked in front of you. The impunity is staggering.

Sen's SUV is a spanking new one. I think I have seen it in the neigbourhood. With her driving. Our Customs officials need to get their eyes tested if they could have passed this for a 1998 model. Forget lifting the hood and groping for the chassis number. Or calling up Toyota Motor. A IV Grade student could have told you. So, you and I have possibly reached the same conclusion. Someone or many people have been paid off. And this is not the first time its happened.

The dealer in question came up from what I could see with some equally ridiculous explanation. He said he went by what the import papers said. Hang on, I thought this guy's livelihood depended on being able to spot the good egg from the bad one and the old from the new.

The sad part is that Sen can afford it. I don't know how much she earns but surely her income runs into crores of rupees or a million dollars plus per annum. Actually, regardless of how much she earns, its disgusting how she and her ilk shirk the basic responsibility any citizen has towards the state, that of paying taxes or, in this case, duties.

Unfortunately, under the current dispensation, where the real owner of the vehicle is Mr Dubai-return, a Sen could well argue why she should pay duties on something she does not own. True. In court, driving a leased vehicle may not be tantamount to ownership. So, its a masterly scheme which protects all parties concerned. Except the Customs guys who let it come through.

I have huge problems with the way our taxes are used. But never would I argue that taxes and duties should not be paid. So, why is that an educated person who pontificates liberally on helping poor children rob the state of its dues ?

Don't Spare Them

This form of smuggling has been going on for six or seven years. Which suggests the revenue authorities have been slumbering, at least till now. They must establish how all these SUVs sail into the country so easily. And who abets their smooth ingress. They must not just collect the additional duty but levy massive fines.

And as far as the FM goes, he should accept and acknowledge that as long as his department ignores people who brazenly disregard taxes or duties, he is doing me a great disservice. And while I account for every penny I earn, I have to watch overpaid celebrities flaunt their underinvoiced goods in full public view.

And if the revenue chaps really want to catch more such tax evaders, they can start by parking themselves in the suburb of Bandra in Bombay.

10 comments:

Anonymous said...

Brilliant one GE...what you said is so true....

Anonymous said...

Brilliant one GE...what you said is so true....

Nyayapati Gautam on 5:22 pm said...

Hi! Govind,

You need to give Sushmita Sen a break. She needs the luxury of the Lexus to do all the good work that she does among the downtrodden of the world. All the good work that she has been doing since the time she was the Miss Universe. Remember those days.

What I find offensive is not that the law is flouted by so many of our fellow citizens but, like you pointed out, that they do it with so much impunity. And this is not restricted to celebrities alone. It cuts a wide swathe across the social set up. The day there is respect/fear for the law among all of us is when India will truly achieve greatness.

Nyayapati Gautam
http://www.theindiastory.blogspot.com

Anonymous said...

Well, there are two of us arent there? The ones to whom the law applies; and the ones, to whom it doesn't. Sad.

Anonymous said...

I think we are to blame for this...giving film stars and sport personalities demi-god status. Of course, they can get away with anything!

Raju

Anonymous said...

I think we are to blame for this...giving film stars and sport personalities demi-god status. Of course, they can get away with anything!

Raju

Venkat Ramanan on 5:26 pm said...

Hey Govind!
I find tax officials most corrupt in our country! They let people evade tax who bribe them. Tax department needs an overhaul, or else I don't see our country being a superpower any time! I pay my taxes regularly, but I see that for every one person whom I know paying tax, there are 3 or 4 who don't pay taxes. My neighbourhood provision shop owner, doctor, lawyes, are not accountable to the tax department (when their earnings run to millions of rupees) whereas I get taxed every month, in return for which I get poor roads, poor facilities and shabby public facilities! How could we make our people more accountable?
Will an independatn or autonomous IT department work better?

Anonymous said...

This is nothing new. Contrary to what you say, this racket (Transfer of Residence scheme) has been going on for several years, in complete conspiracy with the customs officials. It comes to notice from time to time. See another story on this: http://72.14.203.104/search?q=cache:n0AH_1MmkekJ:www.indianexpress.com/ie20010618/nat9.shtml+mumbai+port+car+racket&hl=en&ct=clnk&cd=3

Govindraj Ethiraj on 12:00 pm said...

The objective is not to say something `new' my friend..though I did say this has been going on for several years. The idea was to draw attention to two things, the brazenness with which all this goes along.

Second and more importantly..how you and me the tax payers are getting a bloody raw deal because of all this..thanks for the link !

Anonymous said...

hi govind,
if our dear fm and his ministry would rationalise the tax structure we wouldnt have so many twisted examples ways & means of of avoiding tax ameet singh

 

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