Comptroller of Income Tax v AZP

• Jurisdiction: Singapore
• Judge: Choo Han Teck J
• Judgment Date: 23 May 2012
• Neutral Citation: [2012] SGHC 112
• Plaintiff Counsel: Patrick Nai Thiam Siew, Foo Hui Min, Vikna Rajah and Jimmy Goh (Inland Revenue Authority of Singapore)
• Docket Number: Originating Summons No 320 of 2012
• Date: 23 May 2012
• Hearing Date: 12 April 2012,17 April 2012
• Subject Matter: International Taxation,Double Taxation Agreement,Revenue Law
• Year: 2012
• Citation: [2012] SGHC 112
• Defendant Counsel: K Gopalan (Straits Law Practice LLC)
• Court: High Court (Singapore)
• Published date: 25 May 2012

Choo Han Teck J:

This is an application made by the Comptroller of Income Tax (“the Comptroller”) for the production of records and information relating to Account 1 and Account 2 (collectively, “the Accounts”) held with the Defendant, a bank in Singapore. Account 1 is held in the name of Company X and Account 2 is held in the name of Company Y. The Comptroller made this application following a request for such information by the tax authority in India pursuant to Article 28(1) of the Agreement (“the Agreement”) between the Government of the Republic of Singapore and the Government of the Republic of India for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, as amended by the Second Protocol (“the Second Protocol”) signed on 24 June 2011 which came into force on 1 September 2011. Article 28(1) of the Agreement as amended by the Second Protocol provides for the exchange of information between Singapore and India for the purposes of enforcing tax laws in both states, and in particular, to prevent tax evasion or fraud, and applies only to taxable periods on or after 1 January 2008.

The tax authority in India seized documents from an Indian national (“the Indian national”) and three other persons allegedly associated with him. The tax authority in India believed that the documents indicated the existence of undeclared incomes and of bank accounts (“the Accounts”) in overseas jurisdictions. This was in violation of India’s tax laws. The tax authority in India suspected that monies constituting the Indian national’s undeclared income were remitted to the Accounts. It therefore sent a request for information (“the Request”) to the Comptroller on 12 September 2011. The Comptroller sought clarifications in a letter dated 30 September 2011, and the tax authority in India eventually responded in a letter dated 13 February 2012.

The Comptroller then applied under s 105J of the Income Tax Act (Cap 134, 2008 Rev Ed) (“the ITA”) and O 98 r 2 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“Rules of Court”) for an order requiring the Defendant to, inter alia, produce bank records and information on the Accounts from 1 January 2008 to date including: documents pertaining to the opening of the Accounts (including details of the application form for the opening of the Accounts, the authorised signatories of the Accounts, names of the current, previous account holder(s) and beneficial owner(s) of the Accounts, if any); documents executed by the account holder(s) and the beneficial owner(s) such as those relating to changes in their names or addresses; bank statements for the Accounts, paying-in and disbursement slips, written remittance orders, remittance request forms, records of deposits, withdrawals, and the credit and debit entries of the Accounts; correspondence exchanged and instructions given by the account holder(s) and beneficial owner(s) to the Defendant for the operation of the Accounts; documents containing the name and address of the persons or entities who have paid or withdrawn monies from the Accounts, or to whom major amounts have been credited to from monies in the Accounts; and transaction details of the Accounts if either Account 1 or Account 2 is a wealth management account.

I dismissed the application (without prejudice to the Comptroller making a fresh application) because I was not satisfied that the information requested was demonstrated to be “foreseeably relevant for carrying out the provisions of the Agreement” due to the inadequacy of the supporting documentation provided by the tax authority in India. The relevant and crucial issues I had to determine were: Whether the information requested was “foreseeably relevant” for carrying out the provisions of the Agreement or the administration or enforcement of India’s tax laws, under Article 28(1) of the Agreement as amended by the Second Protocol? Even if the information was “foreseeably relevant”, whether granting the application was justified in the circumstances of the case and was not contrary to the public interest to grant access or to order that copies of the documents sought be produced, under s 105J(3) of the ITA?

Article 28(1) of the Agreement as amended by the Second Protocol facilitates the exchange of information for tax purposes between Singapore and India without the “domestic interest requirement” (ie the requirement that the Comptroller can only obtain and release the information requested where it is relevant to the enforcement of Singapore’s tax laws) (Singapore Parliamentary Debates, Official Report (19 October 2009) Vol 86 at col 1603). Information cannot be withheld on the grounds that it is protected by confidentiality provisions applicable to information held by banks. Given that the exchange of information could impinge on interests such as taxpayer privacy and confidentiality of banking information, it is important that the right balance is struck and that procedural safeguards are put in place to ensure that only specific and relevant requests are entertained. I now turn to the framework that Singapore has adopted to strike a balance between fulfilling our treaty obligations and safeguarding competing interests of taxpayers. In the present case, the information requested under s 105D(1)(a) of the ITA (ie pursuant to an avoidance of double taxation arrangement) is information protected from unauthorised disclosure under s 47 of the Banking Act (Cap 19, 2008 Rev Ed) (“the Banking Act”). Section 47(1) of the Banking Act provides that “[c]ustomer information shall not, in any way, be disclosed by a bank in Singapore or any of its officers to any other person except as expressly...