India seeks Swiss' help in probe against Essar firms

India has sought Switzerland tax department's assistance in a probe against six companies of the Essar group, including those into steel and power businesses, according to official documents of the Alpine nation.

Kickstarting the information exchange process, the Federal Tax Administration of Switzerland has issued gazette notifications for the six companies, giving them an opportunity to appeal against India's assistance request as per the Swiss laws.

The six companies for which information has been sought by India are Essar Steel India Ltd, Essar Projects India Ltd, Essar Power Gujarat Ltd, Essar Power MP Ltd, Essar Power (Jharkhand) Ltd and Essar Bulk Terminal (Salaya) Ltd.

When contacted, an Essar group spokesperson said, "The Essar Companies referred to do not have any undisclosed account in Switzerland. Further, we have not received any query or notice from any Switzerland authority in this regard".

Separate but identical notifications have been issued for each of the six Essar companies in Switzerland's federal gazette dated June 18, giving them ten days to nominate a person in Switzerland to appeal against the 'administrative assistance' process.

It could not be ascertained whether any authorised person has already been nominated by the Essar group to communicate with the Swiss tax authority in Berne.

While the public notification has redacted details of the probe for which information has been sought by India, the 'administrative assistance' typically involves sharing of information, including about bank accounts and other financial dealings.

Under the mutual assistance pact between India and Switzerland on tax matters, any request for information needs to contain proper identification and address details of the entity under examination or investigation, as also necessary proof to support at least a prima facie case for tax-related or other wrongdoings.

The request needs to clearly mention the purpose for which information has been sought and the requesting country is supposed to have exhausted all the usual information gathering procedures provided in its local laws.

While these procedural requirements are intended to ensure that no fishing expeditions take place, "these requirements nevertheless need to be interpreted with a view not to frustrate effective exchange of information", as per the treaty.

Also, the requested information cannot be denied solely because it is held by a bank or any other institution and the Swiss tax authorities have the power to enforce disclosure of the information.

The treaty also provides that the provisions of the administrative procedure law in terms of rights of the concerned person or entity is reserved in the event of the exchange of information and a due process is followed to give an opportunity of appeal before transmitting the information to the requesting country.

However, this provision should not prevent or unduly delay the effective exchange of information.

The federal gazette dated June 18 also contains notifications regarding two Indian individuals -- Mahesh Tikamdas Tharani and Savani Vijay Kanaiyalal.

In the last few weeks, such notifications have been issued for more than 50 Indian nationals, including those facing investigations by Indian authorities such as the Income Tax Department and the Enforcement Directorate and those whose names figured in the leaked HSBC and Panama lists.

These individuals largely include businessmen associated with companies in sectors ranging from real estate, financial services, technology and telecom to paints, home decoration, textiles, engineering goods, gems and jewellery, officials involved in the process of mutual administrative assistance between the two countries said.

Switzerland has been striving hard for the past few years to shed a long-standing perception of it being a safe haven for black money, while the issue has been a politically sensitive one in India as well.

When the Modi government first came to power in 2014, it had termed the crackdown on the black money, including those allegedly parked in Swiss banks, as a key focus area. Since then, the two countries have strengthened their mutual assistance, including by signing the global automatic exchange of information framework.

The economic considerations for boosting bilateral business ties have further helped increase the cooperation in this area.

While details of more than 100 Indians nationals have been shared in the past one year by the Swiss government with the Indian authorities, there is a high chance that a large majority of the cases currently under scrutiny would result in the administrative assistance being provided in the coming months, officials said.

Under the Swiss laws, foreign clients of Swiss banks are given an opportunity to appeal against proposed sharing of their details within 30 days (after a ten-day period to nominate an authorised person).

Indian nationals have figured along with these gazette notifications virtually every week since the beginning of this year. However, in many cases, their full names have been redacted to maintain secrecy and only a few details such as their initials, date of birth and the nationality have been made public.

The names that have been made public in recent weeks include Krishna Bhagwan Ramchand, Potluri Rajamohan Rao, Kalpesh Harshad Kinariwala, Kuldip Singh Dhingra, Bhaskaran Nalini, Lalitaben Chimanbhai Patel, Sanjay Dalmia, Pankaj Kumar Saraogi, Anil Bhardwaj, Tharani Renu Tikamdas, Bhaskaran Tharur, Kalpeshbhai Patel Mahendrabhai, Ajoy Kumar and Dinesh Kumar Himatsingka, Ratan Singh Chowdhury and Kathotia Rakesh Kumar.