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India owes New York $16 mn in taxes

April 24, 2007 06:19 IST

The United States Supreme Court will determine whether the country's courts have jurisdiction to resolve a dispute involving two sovereign nations after hearing a case today in which the New York government claims India and Mongolia owes the city more than $18 million in property taxes.

The city claims in the years-old case that as of January 31, 2003, India and Mongolia owed approximately USD 16 million and USD 2 million each in property taxes on buildings they use to house staffers for the United Nations.

The city maintained its claims should be heard as they fall within a federal law that provides certain exceptions to immunity from lawsuits typically granted to foreign countries under international and domestic law.

However, the US government has filed an amicus (Friend of the Court) brief in support of India's and Mongolia's position, arguing that the court lacks jurisdiction over the city's claims as it involves sovereign countries.

Two lower Courts -- the US District Court for the Southern District of New York and the US Court of Appeals for the Second Circuit -- had already decided in favour of New York, saying the claims put at issue "rights in immovable property", thereby fitting within an exception to immunity provided under the Foreign Sovereign Immunities Act.

"We are very hopeful the Supreme Court will find there is a jurisdiction, so that the lower court can decide the merits of the dispute," Corporation Counsel Michael A Cardozo of New York City Law Department said.

"If the City is given its day in court, we are confident that we will prevail, and India and Mongolia will then pay their fair share of real estate taxes," Cardozo said in a statement.

The properties involved are located in Manhattan. The Indian Consulate and mission owns a building in midtown located at 235 E 43rd St, and Mongolia owns a building on the Upper East Side located at 6 E 77th St. India's tax arrears date back to 1991 and Mongolia's date back to 1980.

John J P Howley, of the law firm of Kaye Scholer, LLP, will argue on behalf of India and Mongolia. The Solicitor General's Office of the United States will be represented at today's oral argument by Sri Srinivasan.

The Deputy Commissioner for the NYC Commission for the UN, Bradford Billet maintained that India and Mongolia receive tax exemption for the portions of the properties actually used for their diplomatic mission, but they are obligated to pay taxes on the many floors devoted entirely to housing staff.

"The City ensures that foreign governments are able to carry out their important work, and we expect them to be good neighbours and live up to their obligations under the law," said Commissioner Marjorie Tiven.

The city also said the US government was flip-flopping on the issue as in 1985, in a case pending in the US Court of Appeals for the Third Circuit, "it had taken the opposite position from the one it now advocates, and had urged the court to find jurisdiction over a case virtually identical to the City's."

"As to merits of the dispute, i.e. whether property taxes must be paid on staff housing, the US Government has continuously advised UN missions that they must pay property taxes on such staff housing," New York City said in a release.

Sridhar Krishnaswami in Washington, DC
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