Making A Case for International Tax Tribunals

By: Sriram P Govind, Symbiosis Law School

The proliferation of Double Taxation Avoidance Agreements entered into by India with several foreign countries has created a new branch of tax law.
These Agreements come into play when a resident of one state has income sourced in another state. The interpretation of DTAAs becomes tricky as most of these agreements have been drafted on the basis of the OECD model, the UN model or the US model, all three of which have mostly similar provisions.
So, similar provisions with similar wording are interpreted by Courts all over the world in different ways. Thus, there is no uniformity in interpretation of tax treaties and thus, no conclusive, accepted body for international tax jurisprudence as such. The major problem that arises is that Courts all over the world have different attitudes towards law and interpretation of statutes and this varies from territory to territory. Interpretation of tax treaties is incidental to normal adjudication for courts and interpretation varies from system to system i.e. common law systems and civil law systems. Tax treaties transcend national law and become international law and there is no body like the ICJ to deal specifically with international tax cases and hence, there is no uniformity in tax jurisprudence.
Moreover, internationally renowned methods of resolution of tax disputes like MAP and arbitration work on a case to case basis and provides no real precedential value, especially when baseball arbitration, as is famous in the US, is followed. In this regard, suggestions for Mediation and for a Panel of Experts, as has been put forward by renowned academician Prof. Kees Van Raad in various publications, also cannot solve the issue as these still depend on the facts and circumstances of each case and do not stand to create a uniform tax body.
As has been proven in India, Tax tribunal decisions have hugely contributed in making a sound body of tax jurisprudence in India. Owing to the specialized skill and knowledge of the members of the Tribunal, most of its decisions, though not binding on any Court in India, have had persuasive value over its decisions. Moreover, various decisions on International Taxation which have been delivered by the Tribunal have been considered as authorities by various academics and researchers all over the world.
The Indian tribunal has been particularly pro-active in developing jurisprudence for International Taxation. It has received critical acclaim for its decisions that have logically set forth the stance of tax jurisprudence as is existent in India.
Sonika Dutta, a graduate of the LLM programme in the International Tax Centre, Vienna and budding academician, has in a paper, cited with approval, the ITAT Mumbai bench decision in Hindalco Industries Ltd., wherein principles for interpretation of tax treaties were laid down. Moreover, basic tenets of International taxation like