US SC rejects NYC plea to collect tax from Indian mission

The Indian mission in New York will not have to pay taxes worth USD 42.5 million on its property here, with the US Supreme Court upholding a Federal Appeals Court decision to exempt taxes on property owned by foreign governments.

In 2010, 2nd US Circuit Court of Appeals in Manhattan upheld the State Department intervention in 2009, which exempts taxes on property owned by foreign governments and UN missions that housed diplomatic staff.

In 2008, a federal district judge had ruled that India, which owns a 26-story property near the United Nations owed USD 42.5 million and Mongolia owed USD 4.4 million.

"It doesn't matter what is fair or not fair," Aaron Stiefel, the Indian mission's lawyer, told PTI, after the Supreme Court denied New York City government's petition yesterday.

Stiefel underlined that the rule of reciprocity applied to the case since US diplomatic buildings in India were not taxed.

"While there is perhaps some unfairness to the City when the federal government retroactively declares property taxes imposed by the City against foreign countries to be null and void, this unfairness inheres in the federal government's unquestioned supremacy in the management of foreign relations," the judges wrote in the judgment.

The State Department had argued that if foreign properties in the US were taxed, then the US would have to pay millions of dollars on taxes for its own diplomatic buildings in many countries.

Stiefel said that the ruling would have a "financial impact" on the city since more diplomatic buildings in the future would also be exempt from paying tax.