India's Congress bemoans 'tax terrorism' after second tax notice

Congress leaders Rahul Gandhi and Priyanka Gandhi Vadra gesture during a roadshow in Mumbai. — AFP file

India’s main opposition party said on Friday it had been asked to pay an additional 18.2 billion rupees ($218 million) in taxes, which it called an attempt by the tax department to financially cripple it weeks before a national parliamentary election.

Calling the latest notice from the Income Tax Department “tax terrorism”, Congress treasurer Ajay Maken told reporters the party would fight the demand in court.

India will vote in seven phases between April 19 and June 1 in an election Prime Minister Narendra Modi is expected to win and secure a record-equalling third straight term.

“The law is on our side, we have no doubt about it, but by the time we get relief, elections will be over,” Maken said.

The Supreme Court is expected to hear the case on Monday, he added.

A tax department spokesperson did not immediately respond to a request for comment on Friday, which is a public holiday. The tax department has said it cannot comment on individual tax notices as they are confidential.

A source familiar with the tax dispute said income tax assessments of Congress were reopened for seven years following searches in April 2019 and those proceedings were due to get time-barred on March 31 this year under tax laws.

The Congress had violated tax exemption laws, had been given several opportunities to reply to notices and the tax department’s action against the party had been backed by court rulings, the source said.

Congress, which has been ruled by the Gandhi-Nehru family, was once India’s most dominant political party and has accused Modi of trying to “cripple it financially” before the elections through the tax department.

Last month, the party said the authorities froze some of its bank accounts pending a tax case that dates back to 2018-19 involving 1.35 billion rupees, and its bid to contest this in court was dismissed.

Modi’s Bharatiya Janata Party (BJP) has said that the tax case was not politically motivated.

Asked how much the party would be left with to contest the election after the two tax demands, Maken said: “You think there will be anything left after this?”

Congress has ruled India for 54 of its 76 years since independence from Britain, but it has struggled to win over voters since Modi swept to power in 2014.