India should not pay $42.3 m tax, says US court
India's persistence paid off, literally, with its Permanent Mission to the United Nations winning an appeal against New York City on a long-drawn court case. Anirudh Bhattacharyya reports.world Updated: Aug 19, 2010 02:40 IST
India's persistence paid off, literally, with its Permanent Mission to the United Nations winning an appeal against New York City on a long-drawn court case. The city had won an earlier ruling, slapping a bill of more than $ 40 million in property taxes with interest on the premises used by the Mission in Manhattan.
The favourable ruling for India came from a three-judge bench of the United States Court of Appeal for the Second Circuit, a federal court, which overturned a previous ruling by a lower court in 2008 under which the Indian Mission would have been liable to pay nearly $ 42.5 million to the New York City Government. The case was first filed in 2003.
In a written ruling, the judges noted, "The city's tax liens are invalid, and no taxes on property owned by foreign governments and used to house staff of permanent missions to the United Nations or of consular posts are due." This ruling was also assisted by a notice issued by the US State Department in July 2009, in which it retroactively exempted diplomatic missions and their staff quarters from property taxes. The bench noted that while there may be "unfairness" towards the City, the issues was that of the Federal Government's "unquestioned supremacy in the management of foreign relations."
The New York City government had originally acted against four Missions — India, Mongolia, Turkey and the Philippines. While the first two continued to appeal the 2008 ruling, Turkey and the Philippines coughed up nearly $ 5 million and $ 10 million, respectively.
The case applied to the 26-storey building owned by the Permanent Mission of India to the UN in Midtown Manhattan. While it was deemed that the part of the building used for the offices of the Mission were not subject to tax, premises allotted to officials of the PMI were.
Meanwhile officials of New York Mayor Michael Bloomberg's administration have threatened to file an appeal before the US Supreme Court.
First Published: Aug 19, 2010 00:01 IST