Ayushman Das, Ajeenkya DY Patil University & Riddhiman Borooah, Symbiosis Law School, Hyderabad
Introduction
As Justice Chinnapa Reddy has elucidated in the case of Mcdowell & Co Limited vs Commercial Tax Officer[1] how the difference between tax evasion and tax avoidance is very less . He says the “art of dodging tax without breaking the law”[2] is tax avoidance. The process is basically to avoid the tax liability at a certain country that could prove to be a burden on the company. The company makes decision’s that could move liabilities from one country to another . Whereas Tax evasion on the other hand is outright breaking the law with deceitful means like non disclosure of income, inflating deductions or expenses, hiding money and asset misappropriation. The judges in the same case had stated that. “The evil consequences of tax avoidance are manifold. First there is substantial loss of much needed public revenue, particularly in a welfare State like ours. Next there is the serious disturbance caused to the economy of the country by the piling up of mountains of black money, directly causing inflation”[3]. Although the differences are always panned out between tax avoidance, tax planning and tax evasion. It is these very differences that are a cause of concern because at times and most times companies use it to their advantage.
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