No Immunity from Income Tax Proceedings for Carrying Out Private Business at Consulate: Karnataka HC [Read Judgment]

In Sri. Sai Ramakrishna Karuturi Vs. Union of India & Ors., the Karnataka High Court has held that private business carried out in a Consulate is susceptible to Income Tax Proceedings.

The Petitioner, Sai Ramakrishna Karuturi, the honorary consulate of Ethiopia challenged the IT proceedings against him on grounds of “restrictions of entry into diplomatic premises under the Diplomatic Relations (Vienna Convention) Act, 1972.

The Single bench of the High Court found out that the Ethiopian Consulate was carrying out private business activities which had nothing to do with the consular activities carried on in the Consulate without obtaining any permission from the Government of India. The bench agreed with the action of the Income Tax Department in sending a notice under Section 131.

Sri. Ramakrishna Karuturi had challenged the notice of the assistant commissioner of Income Tax, claiming immunity under the Vienna Convention Act of 1972.

“The said immunity as such cannot be claimed by a person even though he is appointed as Honorary Consulate of Federal Democratic Republic of Ethiopia, when he is carrying on his business activities also in the same premises, so long as the action is being taken under the provisions of the Income Tax Act or other similar enactments. His other business activities have nothing to do with the consular activities carried on in the very same premises. If the noticee under section 131 of the Act himself has violated the sanctity of the consular premises by carrying on his other business activities in the same premises for which no specific permission was given to him, then he cannot claim any such immunity under the Act of 1972 of the Vienna Convention.” Said the single bench. Aggrieved by the decision of the Single Bench, a Writ petition was filed by the petitioner before the division bench of the High Court.

The Division Bench Comprising of Chief Justice Dinesh Maheshwari and Justice B M Shyam Prasad noted that the Single Judge had looked for a practical solution in the matter and had passed an order to the Assistant Commissioner of the Income Tax (ACIT) to allow the petitioner to appear in his office. Despite making such allowance, the court found that the petitioner had failed to appear before the office of the Assistant Commissioner of the Income Tax.  The Counsel for the Petitioner sought 30 days for the petitioner to appear before the ACIT. The division bench, however, declined to grant of any such extensive time and directed the petitioner to appear on April 9^th. The petitioner appeared on April 11^th and complied with the required formalities. Thereafter the petition was disposed of.