This blog post has been authored by Shivam Sharma, a 4th year law student of IME Law College, Delhi NCR.
21st century World Economy, is not only more complicated and dynamic, but highly integrated. National economies have moved closer and become virtually borderless due to rapid movement of resources from one country to another because no country is self-sufficient in all resources to produce all goods and services. There is simultaneous movement of goods and services across borders. It won’t be an exaggeration to call the world a “global village”. The concept of cross-border transactions, Multinational Corporations (MNCs) and Non Residents has gained popularity and practical relevance. This free movement of goods, services and capital has important implications for both direct and indirect taxation which led to the emergence of “International Taxation”. What is International Taxation? International Taxation is an aspect of Public International Law. There is no definite concept of “International Taxation”. However, attempts have been made to define the term. Kevin Holmes described International Taxation as “the body of legal provisions of different countries that covers the tax aspects of cross-border transactions.” It is concerned with Direct Taxes and Indirect Taxes. In other words, it is an area of knowledge pertaining to the International aspects of tax laws and global tax treaties. At the onset, it is important to note that there is no codified International Tax Law. There are no generally accepted taxation laws by all countries. Further there is no separate Court to interpret International tax regime. There are provisions in domestic taxation laws of the countries to handle Cross-Border direct and indirect taxes. Nations make attempts to reconcile domestic taxation laws for cross-border transactions by way of taxation treaties. What is “Taxation Treaty”? OECD (Organization for Economic Co-operation and Development), in their glossary of terms, has defined “tax treaty” as “An agreement between two (or more) countries for the avoidance of double taxation. A tax treaty may be titled a Convention, Treaty or Agreement.” In simpler words, a tax treaty is a formally concluded and ratified agreement between the two nations (bilateral treaty) or more than two nations (multilateral treaty) on matters concerning taxation. There are a number of model tax treaties (Called Model Conventions), published by various national and international bodies, such as United Nations (UN), OECD etc. which forms the basis for large number of treaties. Three major MODEL CONVENTIONS are a. OECD Model Convention b. UN Model Convention c. US Model Convention India has entered into more than 90 Bilateral or Multilateral Tax Agreements with various countries. Income Tax Act, 1995 empowers the Central Government to enter into agreements with other nations with respect to taxation and its effects under section 90. Also, there is no requirement in India to incorporate a treaty into the domestic law to make it. Contained in the definition given by OECD, the primary purpose of Tax Treaty is avoidance of double taxation. However, there are various other purposes for having a taxation treaty in place, some of which are:- a. Reduction in tax rates of individuals and corporations b. Establishing procedure for easy recovery of Tax Dues c. Promotion of International trade and business d. Providing for Dispute resolution mechanism. How is International Taxation incorporated in Indian laws ? Two important principles associated with International Taxation are- Residence Principle (what is the residence of assessed) & Source Principle (What is the origin of assessee's income). In International Taxation, a country where a person generates income is very important to decide tax liability. Similarly, it is important that there is a connection between the country and its residents as the Government of a country cannot tax foreign sourced income of Non-Residents. In this regard, section 5, Section 6 and Section 9 of Income Tax Act, 1995 are of utmost importance for understanding the legal implications of International Taxation in Indian context. It is important to know the residential status of the assesses as scope of taxable income varies according to such status. Section 6 helps in determining the residential status of the Individual, Hindu Undivided Family and Other assesses (Companies, societies etc.). Furthermore,residential status for individuals can be divided into- Resident (Ordinary or Not Ordinary) & Non- Resident. Once, the residential status is determined, Section 5 comes into the picture. A careful reading of section 5 and 6, provides that the Act levies tax on those earnings of the overseas companies and Non-Residents, which are accumulated in India. Section 5(2) lays down that such Non-Resident is responsible to pay tax only on the income which is received or is deemed to be received in India or on behalf of such person or income which accrues or arises or is deemed to accrue or arise to it in India. Section 9 provides for different types of income that are deemed to accrue or arise in India under certain circumstances. Thus, only that income of Non-Resident which falls under the scope of Section 5 and Section 9 can be. Is “Environment Tax” the new innovation in International Taxation ? The global talks and mounting pressure on developed and developing states to tackle the problem of environmental pollution has been on the rise since the United Nations recognized pollution as a global threat to mankind. An innovative way of increasing the environmental responsibility of governments is to tax by imposing “Environment Tax” to target the pollutant or polluting behavior. OECD defines such tax as “a tax whose tax base is a physical unit (or a proxy of it) that has a proven specific negative impact on the environment. Four subsets of environmental taxes are distinguished: energy taxes, transport taxes, pollution taxes and resources taxes”. To ensure effective environmental taxes, OECD recommended the following guidelines while forming policies 1. The tax base must be carefully designed to target the pollutant or polluting behavior. 2. The scope of an environmental tax should be as broad as the scope of the environmental damage. For e.g. - Soil pollution affects lesser area as compared to air pollution. Thus, tax on soil pollution might be imposed at the local level and tax on air pollution can be imposed at global level. 3. Efforts should be made to apply such taxes uniformly with as few exceptions as possible. 4. The tax rate should commensurate with the environmental damage. However, environmental taxation has also been criticized and rightly so for the following reasons:- 1. Since it is as its initial stage, the actual impact of such taxation on desired result to reduce the pollution cannot be accurately ascertained. 2. Taxes alone cannot bring about the intended environmental outcome by ensuring awareness amongst the masses. Imposition of such taxes might be seen as a financial burden than as a social responsibility, especially in developing countries. 3. It is not always possible to ascertain the environmental damage with mathematical precision, nor is it possible to impose burden on accurately identified persons or entities. 4. It is yet to be seen how global organizations ensure that the governments of all countries fulfill their environmental responsibilities through “Environment Tax Policies”. Thus, in order to produce desired results, the taxes have to be properly designed and levied as close to the environmentally damaging pollutant or activity as possible. What are the Critical Issues in applying International Taxation & Conclusion? International law has always been criticized for being an imperfect law or soft law, as it is not consistent, codified and generally does not override domestic laws. It is no surprise, that being a subset of International law, International Taxation comes with its own problems. Some of the prominent issues are- 1. There is no uniformity in International Tax structure as it is governed by Tax Treaties. This makes such law highly complicated and unclear. 2. Tax treaties are written in complex manner and it is extremely difficult for a layman to understand the implications of such treaties. 3. Tax treaties create various disagreements and disputes which are to be tackled by domestic courts and tribunals. The main problem is the lack of availability of precedents to be followed due to difference in provisions of treaties. 4. Developed nations are in a better position to dictate their terms upon developing nations. This has often led to unfair, unjust and exploitative treatment of developing and under-developed nations. 5. International trade and business is highly dynamic in nature. In such a rapid commercial environment, treaties sometime fail to provide a solution for a peculiar taxation problem. It takes years to enter into agreements and treaties with other nations. 6. There are issues related to governance, transparency and adjudication which are yet to be solved by the International Organizations. To conclude, contemporary considerations for international taxation require smooth administration and revenue efficiency. Social justice and commercial factors must be balanced while designing International Taxation structure, especially by a developing nation like India. There should be equity, clarity and economy in international taxation structure for a particular.
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9/13/2019 Justifying India’s Surgical Strikes: A Case for Anticipatory Self-Defence in International LawRead NowThis blog post has been authored by Manas Raghuvanshi, Junior Legal Associate in the Chambers of Ms. Heena Mongia.
India’s Pre-emptive Attack across LoC: Director General of Military Operations Lieutenant General Ranbir Singh on 29th September 2016 announced that India carried out surgical operations against terror launch pads, which are temporary safe houses used by militants to worm their way into India, across the Line of Control (LoC). Indian Army’s Special Forces razed not less than seven launch pads that were situated between 500 metres to 3 kilometres in the Pakistan-administered Kashmir to the ground. Indian media reported casualty of two Pakistani military personnel and roughly 50 terrorists. This article, oblivious to the refutation of such claims by the Pakistan’s administration, delves into the legality of such preventive and pre-emptive use of force. Scholars of international law are of the opinion that pre-emption ought to be restricted to attacks that are imminent and unavoidable. However, such incommodious standard is predicated on circumstances where the potential victim state places reliance on the police powers of the state from which an attack is predicted. In situations where the state from which the attack is anticipated contributes to the attack or is unenthusiastic about its prevention, an accommodative conception of necessity of pre-emption is demanded. Pre-emptive use of force can also muster support from the expansion of the doctrine of self-defence, which is gaining worldwide acceptance as a part and parcel of the international policy against terrorism. The Right of Self-Defence Against Threatened Attacks: The right of self-defence is predicated on the very notion of Statehood , and consequently it is a principle that is a part and parcel of customary international law and , perhaps, a rule of jus cogens. The Charter does not inaugurate the right of self-defence; it merely indicates the situations wherein its exercise is good in the eyes of law. It did not snatch away the “inherent right” of self-defence by taking cognizance of it in Article 51 , and had it not been so, right would have been extinguished. The United Kingdom Commentary on the United Nations Charter[1] makes plain that Article 51 was a belatedly added to the Charter as the states presupposed that “the right of self-defence was inherent in the proposals and did not need explicit mention in the Charter”. In Military and Paramilitary Activities (Nicar. v. U.S.)[2], the International Court of Justice took note of the customary right of self-defence vis-à-vis the interconnection between its status as customary international law and the demands of Article 51, which does not have a final say on the legal use of force in self-defence. It is a universally accepted principle that the use of force in self-defence is illegitimate as long as it transgresses the dual requirements of necessity and proportionality in self-defence. Article 51 allows for the exercise of right of self-defence only in case “if an armed attack occurs”. Nevertheless, the United States and the United Kingdom have diverged from this and asserted that right of self-defence can also be resorted to in cases where an armed attack has not yet materialised but is imminent. Jennings[3] hints at the fact that such standpoint on self-defence can be traced back to the Caroline case of 1837. By and by, the test in Caroline was made use of by the International Military Tribunals both at Tokyo and Nuremburg. This is symptomatic of the fact that a right of anticipatory self-defence against imminent danger of armed attack is a customary international law that has congealed in Article 51 of the Charter. In post- Charter era, it has been confirmed many a times that right of self-defence in the Charter encompasses a right to use of force for pre-emption. Sir Bowett[4] suggests that the Soviet Union was at the beginning averse to the concept of anticipatory self-defence but, later on, itself on a variety of occasions placed reliance on it. Scholarship is fractionated with regards the legality of pre-emptive self-defence. One school of thought exemplified by Gray, Henkin and Brownlie argue that until an armed attack has in all actuality has been initiated, the right of self-defence does not exist. Dinstein also deserts the idea of anticipatory self-defence but concedes that a right of “interceptive self-defence” exists in cases where a state has “committed itself to an armed attack in an ostensibly irrevocable way”. The other school of thought championed by Franck, Bowett, Jennings and Watts, is of the view that a right of anticipatory self-defence subsists against an armed attack that is imminent. Greenwood reasons that both ‘State practice’ and ‘realities of modern military conditions’ dragoon the law into abandoning the restrictive reading of Article 51 of the Charter. Standard for Pre-emptive Self-Defence: Webster’s imagination of pre-emptive use of force is not universally applicable to all actions pursuant to anticipatory self-defence. The Caroline incident clarified that Webster’s rule finds application in circumstance where the state whose territorial sovereignty will be compromised on executing a pre-emptive attack does not contribute to the threat involved and is enthusiastic about preventing the threat concerned. The yardstick that legalises pre-emptive self-defence is the same as that which legalises the use of force: necessity to act in appropriate situations and proportionality of the military action and the existent threat. Such an attitude is predicated on the fact that necessity cannot be proved on the basis of an arbitrary assertion that a threat prevails and this, in turn, requires pre-emption in the eyes of the threatened party. Necessity ought to be ascertained by references to pointers that help in the analysis of the legitimacy of the use of force under the Charter and the international law, including: firstly, the nature and severity of the threat; secondly, the probability that the threat will be effectuated unless pre-emptive action is taken; thirdly, the availability and extinction of alternatives to using force; and, fourthly, whether the use of pre-emptive action is in agreement with the values that pulsate within the provisions of the U.N. Charter and concerned international treaties and agreements. Self-Defence Against Threats from Terrorists: After the carnage on September 11, 2001, it is pertinent to question whether the notion of “armed attack” as postulated in Article 51 of the Charter is inclusive of a terrorist attack. The traditional use of “armed attack” is usually used in terms of an employment of a regular armed force by the state. Greenwood, however, opines that there exists no a priori explanation for the curtailment of the term “armed attack”. It is indubitable that terrorist aggression can amount to an armed attack and, accordingly, a military retaliation is sensible. The U.N. in General Assembly Resolution 1334 appended a variety of terrorist activities pursued by the states in its conception of aggression in 1974. In addition, the International Court of Justice in 1986 Nicaragua case claimed that a stealthy military adventure by a state can be read into an “armed attack” if it is of considerable gravity. The bloodshed in September 11, 2001, attack without an iota of doubt crossed that threshold, and had such an attack sponsored by a state, and not a terrorist outfit such as Al-Qaida, it would have been categorised as an “armed attack” for the purposes of Article 51 and would have animated the right of self-defence against that state. Formalistic attitude towards “armed attack” leads to the assertion that only when the actions of the people who threaten, or cause an attack, can be tracked back to the state can the aggrieved state resort to the right of self-defence and not otherwise. Conclusion: As far as the applicability of the doctrine of pre-emptive force as a matter of self-defence in the Indian context, India has put it in application in a responsible manner. As far as the standard of anticipatory self-defence is concerned, India met, as depicted from its statements in the media, the requirements of necessity and proportionality. In ascertaining the necessity of the requisite military action, all the four pointers were kept in mind by the Indian authorities. In final analysis, India’s unilateral military action in exercise of anticipatory self-defence was congruous to the jus ad bellum and jus in bello essentials and, as a result, are perfectly good in the eyes of law. [1]https://repository.law.umich.edu/cgi/viewcontent.cgi?article=1251&context=mjil [2]https://www.icj-cij.org/files/case-related/70/070-19860627-JUD-01-00-EN.pdf [3]https://www.jstor.org/stable/2190632?seq=1#page_scan_tab_contents [4]https://heinonline.org/HOL/LandingPagehandle=hein.journals/trygs43&div=12&id=&page= This blog post has been authored by Shivang Agarwal, a 5th year B.A.LLB student of NALSAR University of Law, Hyderabad.
Introduction In the wee hours of February 26, 2019, 12 Mirage 2000H fighters of the Indian Air Force (“IAF”) conducted a “non-military pre-emptive” air strike to eliminate key functionaries, trainers, terrorists etc. of Jaish-e-Mohammed (“JeM”) holed up in a training camp near the town of Balakot, s in the restive Khyber Pakhtunkhwa province of Pakistan. The air strikes and subsequent events which ensued have caused much international furore over legality, timing and purpose of the action. The air strikes can simply be construed as an example of the Indian state flexing its muscles in response to the suicide attack on a Central Reserve Police Force convoy in Pulwama district of Jammu & Kashmir. However, their legitimacy when assessed against the established international law norms and doctrines is debatable. The air strikes presupposed a violation of the Pakistani airspace by the IAF in order to drop a payload of SPICE munitions over a madrassa. The target was selected on the basis of “credible intelligence” of imminent terrorist attacks on Indian soil by fidayeens which were being trained and indoctrinated in the targeted madrassa which also functioned as a JeM training facility. Thus, it would constitute a prima facie infringement of Article 2(4) of the Charter of the United Nations which proscribes the use or threat of use of force against the territorial integrity and political independence of any member state. However, the legal validity of the air strikes is further questioned upon by Article 51 of the UN Charter which confers a right of individual or collective self-defence to a member state or states against an armed attack. The terms “self-defence” and “armed attack” are of utmost relevance as they dictate the application of the aforementioned Article to any conflict or military action. At this juncture, it would be important to discuss the language of the statement released by the Ministry of External Affairs, India (“MoEF”) wherein they used terms like “pre-emptive strike” “non-military” etc. Thus, it is evident that the Indian Government has invoked the doctrine of anticipatory self-defence. Prior to the promulgation of the UN Charter, a right to anticipatory self-defence was given to states under customary international law. On the face of it, Article 51 which confers the right of self-defence to member states specifically employs the term “armed attack” instead of an anticipated attack thereby limiting the right to self-defence to the former. However, there is a long-standing controversy as to whether Article 51 excludes a right to anticipatory self-defence as multiple resolutions of the UN Security Council and judgements of the International Court of Justice extend the same to Article 51. In spite of the same, extensive state practice points towards acceptance of the view that a right to anticipatory self-defence exists irrespective of the text of the Article 51. The criterion for establishing an anticipatory defensive right was laid down in the Caroline case which involved pre-emptive military action by the British against insurgents on United States soil. The Secretary of State of the United States articulated that anticipatory self-defence should be limited to situations wherein the “necessity of self-defence is instant, overwhelming, and leaving no choice of means, and no moment of deliberation.” Moreover, he also propounded that any act of self-defence must not be “excessive” or “unreasonable” and must be fall within the four corners of the necessities that justified such an action in the first place. These articulations later became transmuted into the requirements of “necessity” and “proportionality” and came to be widely accepted as principles of customary international law. Applying the Caroline Test The legality of the air strikes becomes dubious when assessed against the Caroline test which requires certainty or near certainty that an attack will occur in the near future. Firstly, The Indian government has not been able to adduce any credible evidence that establishes the imminence of an attack perpetrated by JeM. Secondly, the air strikes have largely been construed as retaliation to the Pulwama attacks. The Caroline test does not call for the right to anticipatory self-defence to be employed as a retaliatory measure for an attack which has already taken place. Thirdly, the necessity of self-defence was neither instant nor the only option for the Indian government. It could have actively pursued non-invasive military measures or use diplomatic channels to stultify the activities of JeM as it has tried to do in the past. Moreover, it is argued that the Caroline test has become archaic because the tools of warfare and nature of threats have evolved significantly. Destructive payloads coupled with modern delivery mechanisms and terrorism have changed threat perceptions throughout the world. All the major terrorist attacks which have occurred in the recent past suggest that it has become possible for non-state actors to plan and execute their nefarious schemes in secret without becoming visibly imminent. The state despite having credible information about these non-state actors cannot establish the immediacy or imminence of such attacks. Henceforth, the Caroline test no longer reflects new realities and should be ignored. A More Persuasive Justification After the 9/11 attacks, countries have slowly gravitated towards applying the law of self-defence towards non-state actors also. Resolution 1378 of the Security Council which provided legal backing to Operation Enduring Freedom against Al-Qaeda presupposes the application of Article 51 to non-state actors also. However, attacking non-state actors (who do not have sovereignty over their own territory) involves entering into the territory of another state, more often than not without its consent. This is a prima facie violation of the inalienable rights conferred to a state under international law. In order to resolve this contradiction, additional affirmative obligations have been imposed on states by Security Council resolutions which are binding instruments of international law. Resolution 1373 requires all member states to deny safe havens and prevent those who finance, plan, facilitate or commit terrorist attacks from using their respective territories for those purposes against other states. Henceforth, any state which does not appear to take substantial steps towards fulfilling the aforementioned obligations cannot insulate itself from possible military operations by the target state which involves a violation of the territorial sovereignty of the host state. In the absence of demonstrable and verifiable evidence that documents any concrete steps taken by Pakistan to dismantle jihadi infrastructures and inhibit radicalization, India can take recourse to resolution 1373 to justify the air strikes on the JeM camp. The air strikes are further legitimized by the spate of terrorist attacks which have taken place on Indian soil since 1999. Data collected by intelligence agencies and claims of acceptance of responsibility (such as the JeM coming forward to accept responsibility of the Pulwama attacks) show that these attacks have largely been attributable to handlers of JeM and other terrorist organizations operating from Pakistan. Thus, Pakistan’s failure to suppress recruitment, eliminate supply of weapons & funds, deny safe havens to wanted terrorists etc. presuppose its acquiescence to the same and does not preclude military action by India to deter possible attacks in the future. However, the MoEF has not chosen to invoke either Resolution 1378 or 1373 to justify the air strikes. Instead, it has used words like “pre-emptive” which raises suspicions about references being made to the American pre-emption doctrine developed by the Bush administration to justify the 2003 Iraqi invasion. The American doctrine is not a part of established customary law and also does not distinguish between state actors and non-state actors. Henceforth, the justifications put forth by the Indian government leaves a lot to be desired. They should have incorporated established international norms regulating anticipatory self-defence rather than employing terms capable of multiple interpretations, many of which make the air strikes a questionable exercise. |
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