US judge asks India to pay up $42m tax

Hyderabad, March 19: Americans have always been known to be litigious, but exactly how much was brought home to India on Wednesday when a federal judge ruled that India owes $42.3 million to the New York City in property taxes. Along with India, the Philippines and Mongolia have also been caught by the long arm of the US law. The ruling released on Monday by Judge Jed S. Rakoff of the US District Court in Manhattan awards a total of $57 million in property taxes and accrued interest to the city from India, Philippines and Mongolia.
The case goes as far back as 2003, when the city filed a suit against the three countries arguing that property taxes need to be paid for non-diplomatic activities. This includes housing of low level staff. In case of Philippines, a bank branch and an airline office were also operating out of the premises. The three countries chose to argue the case, citing the Foreign Sovereign Immunities Act of 1976 generally kept the federal courts from hearing suits against foreign governments. However, the US Supreme Court recently ruled that tax issues are not subject to this law.
This isn’t the first occasion where a foreign government has been sued in a US court. Recently, oil major Exxon Mobil won a ruling against the government of Venezuela. This ruling allowed the company to freeze assets belonging to the South American nation to offset losses from a forced nationalisation. Almost five years ago, when the Russian government had moved against oil billionaire Mikhail Khodorkovsky, once Russia’s richest man, on fraud charges and sought to sell off his company, a stay in the US court threatened to stall the process.
However, the large numbers of lawsuits, which are sometimes frivolous, have also led to a backlash. In 1992, a 79-year-old woman spilt coffee on herself at a McDonald’s outlet. A local court awarded her a $2.9 million settlement. This inspired some wags to institute the ‘Stella’ awards, named after that lady, for wild, outrageous or sometimes ridiculous lawsuits. One suit that takes the cake is that of an American judge who sued a dry cleaner for $65 million for a pair of lost trousers. After an adverse ruling, the plaintiff brought this down to $54 million — to compensate for lost trousers, mental anguish and to help other dissatisfied consumers sue such businesses.