Shaw and I Told Not to Speak Up: Mohandas Pai on ‘Tax Terrorism’

“Political leaders have failed us,” says Mohandas Pai as he weighs in on India’s broken tax assessment system.

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Corporate India is gripped with fear and the reason is ‘tax terrorism’.

Café Coffee Day owner VG Siddhartha’s note citing the harassment he faced from a senior Income Tax official, has once again highlighted the fear Indian corporates live in. Chairman of Manipal Global Education and former Infosys Director, Mohandas Pai, recounted his experience while speaking to The Quint.

“Corporate India is very scared but this is not something that has been happening for the last five years, it has been there for 20 years under the radar. In Infosys, as CFO, I faced this tax terror. I was threatened by commissioners that if you don’t cough up this money, we will block this account and take coercive action for something which is very wrong. We won the case in the Supreme Court.”
Mohandas Pai, Chairman of Manipal Global Education andformer Infosys Director     

In this context, Pai also told The Quint that Biocon Chairperson Kiran Mazumdar Shaw “is the only one who has spoken up.” “Kiran told me that an officer called her up saying that if she and Mohandas Pai speak up, it won’t be right…,” he added.

On Sunday, 4 August, Shaw confirmed to The Telegraph that “a government official” told her not to speak about issues such as income tax harassment.

“He just said that ‘please don’t make such statements. Even Mohandas Pai should not. I am telling you as a friend’,” she was quoted as saying by The Telegraph.


Pai also found the Income Tax press release, rebutting Siddhartha’s claim of harassment, in poor taste and insensitive. The I-T Department had even questioned the authenticity of the late coffee tycoon’s letter and listed down the amount owed by him and his company.

“This is insensitive and in poor taste. Why do they need to clarify? In their (I-T) clarification, they mention Rs 300 - Rs 400 crores. This is confidential information, not public information. By doing this they damaged the reputation of a citizen. They make it seem like someone is a thief but that will be decided by the court, not the Tax department.”
Mohandas Pai, Chairman of Manipal Global Education and former Infosys Director 

The former Infosys director has written to Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman seeking an independent probe into the matter.


‘India Has A Broken Assessment System’

Pointing out that tax disputes in the country have doubled in the last five years, Mohandas Pai also shed light on the treatment received by individuals by tax officials that are sometimes inhumane, torturous and illegal.

“If you talk to chartered accountants and others whose clients have been through this rigour of tax raids, then you find that the treatment given to them is inhuman, torturous and very illegal. The law doesn’t give them the power to take coercive action… They don’t allow you to go outside for days, in the end you break down, they make you write something and then threaten you,” he said.

“In the Siddhartha case, the department issued a press note to say that he admitted to Rs 300-400 crores. Now, if you are coerced, somebody will admit to anything just to get out. We have heard of these things happening in totalitarian Stalinistic states.” 
Mohandas Pai, Chairman of Manipal Global Education and former Infosys Director 

‘I-T Dept Should not be Given Powers to Arrest’

Pai chalks up the key reason for tax officials being emboldened over the years to high targets set for them to achieve by the Central Board of Direct Taxation (CBDT). In a bid to achieve these targets, tax officials in turn terrorise businessmen.

“What is the remedy for wrongful arrest? Nothing. The parliament should not have given tax officials the power to arrest. If they did, they should have made it clear that they must first make submissions before a court and only when the court grants a warrant, can they make arrests. This is wrong and being misused.” 
Mohandas Pai, Chairman of Manipal Global Education and former Infosys Director 

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