The decision of the Karnataka High Court, earlier this month, to revoke the transaction tax is of immense significance to the channel community. It’s the first time that the courts have ruled against the government, and for the IT community. The verdict also reinforces the fact, that when the cause is justified it’s better to seek a more effective and long-lasting form of justice than resort to threats and boycotts.
But most important of all, the verdict recognizes the channel partner as a law-abiding citizen of the land. It was a touch-and-go judgment that could have gone either way. What swung it in the channel’s favor was the fact that the Supreme Court had earlier ruled that no tax could be imposed retrospectively, except in the case of evasion of tax. AIT’s lawyers argued that as the partners pay their taxes this clause does not apply.
If the ruling had gone against the channel, Karnataka’s channel community would have had to shell out nearly Rs 200 crore in retrospective taxes. But because their books were in order, they could challenge the government’s decision. Hence, I call it the verdict for accountability.
Partners must realize that while tax evasion tactics might gain them short-term benefits, it has a far more damaging effect in the long-term. The damage is not only to the reputation of the defaulting partner, but will also have a rippling effect on the entire community. For, if the prosecution could prove even one case of tax evasion, the government would have won the case.
This verdict doesn’t just have a monetary benefit for the channel, it has also bestowed it with respectability.
But is the channel deserving of this respectability? I would like to think that it is. However, the onus lies with the partner to prove it.