What is the connection between
truth and tax practice? There are two answers to this question.
Truth is a matter of philosophy.
Its right place is in temples and books. It has no place in tax practice. (1.1)
Truth is applicable to every
human being. Taxpayers, tax practitioners and tax officers are all human
beings. They should also understand and practice truth. (1.2)
Does this mean that there are
two answers to one question? Hence truth depends upon one’s belief?
No. There is only one answer.
But people have different beliefs. And it is no use entering into arguments
with people holding contrary beliefs. People who have similar beliefs and want
to understand the deeper meanings of philosophical concepts, can discuss and
learn together.
Query: Is there any
difference between ‘Truth in Substance’ and ‘Truth in Form’?
Answer: The question
itself is baseless 
The form must always
represent substance. If form does not represent substance, that form has to be
discarded like a dead body without an Atma.
The entire litigation about ‘Form vs. Substance’ has been possible
because certain people believe in the answer 1.1 and not in the answer 1.2 as
mentioned above. If all the taxpayers, tax consultants and tax officers
practised answer 1.2, then 95% of tax litigation would not take place. There
may be genuine differences of opinion between two honest individuals. For them,
the courts would act as arbiters to decide which opinion is correct. This may
form 5% of litigation today.
The
entire debate about ‘BEPS’, anti-avoidance provisions and digital taxation
would not be necessary. SAAR, GAAR and harsh penalty provisions would be
unnecessary. Just imagine – how many intelligent brains are being wasted today
on obviously useless issues!
(The issues are useless from the point of view of society as a whole.)
Issue: Such a belief is Utopian.
It exists only in the minds of dreamers. People will act greedily. They will
avoid and evade taxes. Only the fear of harsh punishment keeps them
disciplined. Society will always need laws and regulations with harsh
punishment provisions.
Responses: Greed is as
prevalent as gravity. People will act greedily. Greed applies to taxpayers,
tax advisers, tax officers and law-makers – politicians, equally. Law
makers’ and regulators’ greed, corruption and ego get boosted with harsh
laws. We have experienced that society cannot throw out the corrupt politicians
even in elections. Harsh laws and punishment have, in reality, failed. Society
becoming spiritual is the only solution. A spiritual person will not abuse law,
will not avoid / evade taxes; nor will he take bribes. Today, a majority of the
global society is not spiritual. The BEPS project is proof. As the late Shri
Nani Palkhiwala said: Society will choose the right solution only after it
experiences failure of all available wrong solutions.
A comment from Maharshi Ved Vyas
in the Mahabharata on ‘Substance vs. Form’: Bhishma Pitamaha did not protect
Draupadi from her extreme humiliation at the time of her Vastra Haran.
He even said, ‘Dharma’s secret 
is complex 
Then Draupadi told the Sabha:
Where there are no wise old
men, it is not a conference. Those who do not support Dharma are not wise old
men. That which is not based on Truth is not Dharma. That which is obtained by
twisted interpretations is not Truth.
When to tell the truth and when
to maintain silence? This shloka provides the answer:
Speak pleasant truth. Do not tell a lie. Do not
tell an unpleasant truth. Never tell untruth even if it is pleasant. This is
Sanatan / Eternal dharma. However, this restriction does not apply to
‘Activists’. They have to tell unpleasant truths to the authorities and others.
Activists are doing a different kind of Karmayog.
