Tax terrorism

By Nagaland Post | Publish Date: 8/3/2019 12:14:04 PM IST

 India’s most well known entrepreneur and owner of the multi-chain Coffee Day, V.G. Siddhartha took his own life on July 29 and his death has only aroused fierce debate about the fates of hundreds of other corporate honchos fighting off liquidity. Siddartha built a java empire that now boasts more than 1,700 stores - ten times as many outlets as Starbucks Corp. in India - as well as 54,000 vending machines, almost single-handedly introducing his tea-loving country to coffee shops and making his Cafe Coffee Day chain a household name. What had plagued Siddartha was funds crunch. He had to borrow from various sources at high interest rates of 14% but that only pushed his empire deeper into the red. Of course, Coffee Day is still a thriving empire but needed more money to keep the business afloat. He spent much of the two years before his death putting up ever more of his Coffee Day shares to refinance loans for ever shorter periods, at ever higher rates of interest. The fate of Siddartha is similar to that of the most tragic plight of Indian farmers. Indian media was already full of stories of farmers committing suicide after they were left unable to refinance loans amid a crash in crop prices. The crux of the matter perhaps lies in the report that the income tax departments of the states of Karnataka and Goa released a statement saying Siddhartha had admitted to unaccounted income of 3.6 billion rupees ($50 million), and that they had halted his sale of the tech company’s shares until he put up Coffee Day shares as collateral for the unpaid tax, which he did. In a letter circulating on social media since Tuesday and purportedly written by VG Siddhartha to the firm's board and employees, he said he "gave up", blaming tax authorities for "harassment" and decisions that caused a liquidity crunch. The suicide of VG Siddhartha, under investigation by tax authorities, has inflamed anger towards the government among business leaders who feel it is going too far in its crackdown on fraud and tax evasion.In particular the push by tax collectors has been labelled 'tax terrorism' by TV Mohandas Pai, a former director of Indian IT giant Infosys Ltd, even before the Coffee Day Enterprises Ltd founder disappeared and his body was later found floating on Nethravathi river in Mangaluru on July 31. Harassment meted out to Siddartha by the IT director had led to seizure of properties. This spelt doom for a the reputation of the business. The income tax department, part of the finance ministry, has said it acted as per the law in its investigation of Siddhartha and the coffee chain, and its probe was based on credible evidence of transactions done in a concealed manner.The last union budget included a slew of laws giving taxmen of all stripes even more power, including the power effectively to arrest on suspicion- in, of course, “the interest of the revenue.” Perhaps the irony is that the government did not differentiate between failure and fraud. It sought to paint all failing entrepreneurs as frauds. It may be that the government has targeted squeezing successful business in its efforts to reduce fiscal deficits which has made a big hole equal to an entire percentage point of GDP.

Launched on December 3,1990. Nagaland Post is the first and highest circulated newspaper of Nagaland state. Nagaland Post is also the first newspaper in Nagaland to be published in multi-colour.

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