US Supreme Court rejects bid to tax India’s UN mission

June 28th, 2011 - 10:20 pm ICT by IANS  

Washington, June 28 (IANS) The US Supreme Court has rejected New York City’s bid to collect $42.5 million from India in unpaid property taxes for its mission to the United Nations as diplomatic missions are exempt from such taxes.

The court Monday upheld a federal appeals court ruling that rejected New York’s city contention, pointing to a 2009 State Department notice that said UN missions were exempt from local property taxes.

“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.

The appeals court ruling had overruled judgments the city had won against India and Mongolia in seeking to tax the parts of foreign diplomatic missions used to house employees and their families.

In India’s case, that meant the top 20 floors of its 26-floor building on East 43rd Street. Mongolia’s mission occupies five floors on East 77th Street, with two used for employee housing.

A federal trial judge had awarded New York $42.5 million in taxes, charges and interest against India and $4.4 million against Mongolia.

After the trial court ruling, the State Department issued its notice. The New York-based 2nd US Circuit Court of Appeals then reversed the judge’s decision, rejecting the city’s contention that the State Department lacked authority to pre-empt local tax laws.

New York sued India, Mongolia, Turkey and the Philippines to collect claimed taxes in 2003. Turkey and the Philippines settled with the city, agreeing to pay a total of $12 million.

The Supreme Court ruled in 2007 that the city’s suit could go forward, rejecting India’s contention that it was immune.

(Arun Kumar can be contacted at arun.kumar@ians.in)

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