LexTalk World talk show with Harish Bindumadhavan, Retainer Counsel at Deloitte


Harish is a dual qualified (India and England & Wales) Tax, Civil and Commercial lawyer with more than 17 years of experience in litigation and advisory across various sectors and verticals. He has obtained an LL.M degree from University of Warwick, UK. He is also a retainer counsel and Senior Advisor to Deloitte Haskins and Sells handling indirect tax litigation for their clients across various administrative and judicial forums including the Tribunal, High Courts and the Supreme Court. In addition to litigation, Harish is also a visiting faculty for the CA and the CS Institutes and has taken several lectures for professionals and students alike.


Interview:-

Host: Please brief us about your journey as a legal professional so far?


Harish: That is actually a very intriguing question. I started my graduation in the field of commerce and towards the end of my third year I wanted to get into the legal profession . It was quite a jump into the legal profession because I do not have any person to look up to at that point in time and I am a first generation lawyer in my family. It was quite a challenging proposition as to even after deciding to do law, I was wondering, how I am going to sustain being a law practitioner. But after 17 years of being in this amazing profession, I think it was the correct choice that I had taken.


I graduated law in the year 2003 from Dr. Ambedkar Govt Law College Chennai and immediately after that I did my Master's in the UK at University of Warwick and I came back to India and joined one of the top firms in indirect taxation(even now) Lakshmikumaran and Sridharan . Having spent almost five years there, what I did was I tried to foray into the area of the big four accounting firms. There I jumped into Ernst and Young for a year and joined their litigation practice. From 2011 onwards I have had independent practice. In addition to that I am also a retainer counsel to Deloitte Haskins and Sells.


That is it about the legal journey as a lawyer, starting from a student , a graduate , then a post graduate and a young professional and perhaps now a seasoned professional.


Host: Tell us something about your most memorable case so far and your key takeaways if we may discuss that?


Harish: I have handled several cases at the Tribunal, High Court and perhaps a few cases at the Supreme Court but what impressed me most is the area of classification. So when it comes to tax law, especially Indirect tax law i.e. customs or central excise specifically, there is an element of classification of goods. So I will actually break this question up into two parts. The factum of classification was something that I experienced in two different cases. One is classification of a tractor of goods imported into India and whether these goods or vehicles that were imported could be classified as a tractor or an off-roading vehicle.


So the amount of research that went into the classification was immense and it is imperative that when you are looking at goods per se, the deep dive that you must do is very important because you are before the Tribunal members who have the legal knowledge and technical knowledge because at the tribunal level you have a judicial member and a technical member. So it means that your preparation is all the more important. So the understanding of technical aspects of the working of a particular case , how the agreement between two parties are entered into to determine what is the purpose of the import, the nitty-gritties of each and every function, and not just the Indian aspect of it, but also commercially how is it understood in market and globally whether there are any precedents on the classification of these particular goods.


So that was one case that actually opened my mind to this whole new world of taxation, because taxation typically a lot of people do not get into, because of the complexities involved. But the deeper that you get into it, the more fun it becomes.


So sticking with the classification, I also handled the classification of a particular intermediate product in the alcohol industry. As a teetotaler myself, I actually had the pleasure of visiting a distillery to understand the entire process that led to the manufacture of malt spirit/consumable alcohol basically. I have never had a drop of liquor in my life, but the understanding of the entire process helped.


With the commerce background, the technical and the technological understanding are considerably less, but the pleasure that you get out of these classification issues is the understanding of not just the aspects of tax law but also the business and the commodities that are governed by this tax law.


So I think these two cases that I have handled before the tribunal have helped me a lot when it comes to ensuring that every aspect of a subject, any case that is taken, it is not just the legal aspect that you need to look at, but also the business and the commodities that are involved in this as well.


Host: how do you look at indirect taxation in this particular year?


Harish: We have had a very different type of taxation especially from the year 2017 onwards, and prior to that we had a dual system of taxation one at the central level and the state level. So in 2017 we embarked on this journey where we tried to marry the indirect taxation at a uniform level where the central government and the state government have a dual responsibility and dual sovereign authority to levy tax on both goods and services. Now technology has had an impact on how the system of taxation works as well. Unfortunately because of Covid, the past couple of years, it has been a blur and because of the uncertainty involved in how these laws are going to be interpreted at the state government level and the central government level, there is a substantial amount of litigation. There is also a joke that is going around that every section of the GST has been subject matter of challenge, which is not entirely far from the truth. I have been part of a few litigation batches where we have challenged the provisions relating to levy or seizure and so on.


Now to probably focus on this aspect of indirect taxation in the present year, it depends on how easily or how quickly the state government authorities or the central government authorities adapt themselves to the understanding of the business, because business and taxation go hand in hand. You do not have tax without a business. So that is something that the authorities at the central government level and state government level will have to necessarily keep in mind. In order to keep a sustaining business, the department needs to understand how the business works. Every business has a different methodology of working. Every industry has a different way of approaching its business.


The goods that are manufactured, the services that are provided, all these have varied nuances and it is important that the department authorities keep themselves up to date, not only as to what is happening in India, but also at the global level so that they will be able to quickly understand that if a particular transaction is taxable. They need to look at it not just from a legal perspective but also from a business perspective as to why the transaction came about, what is the understanding between the two parties and that will ultimately create the taxability or exemption depending on what the law is all about. So that is very important.


At the departmental level they need to understand. The onus is on us, the consultant lawyers and chartered accountants to ensure that we are able to project the business and take the understanding of how the business works to the department and say this is how a business works, so the tax law that has been created. Because that is a step that is going to be something that is uniform and consistent . Now the interpretations may change depending on the situation, depending on the arguments and depending on how the judges perceive that particular transaction and the law.


So there are times when during the course of the pandemic the department also has to empathize with the businesses. There could be possibilities that the tax liability may not be paid on time. But there is a reason. To be stubborn and go after the assesses for recovery and so on, that is something that the government or the department should restrain themselves from as to what is going to happen. Five years down the line we will probably get some sort of clarity on interpretation of certain provisions and the application of such interpretation to the businesses.


So business always evolves and it is this evolution of business and the complexity in transactional business that is going to impact on how the government is going to earn revenue and how litigation is going to have a bearing on this, the growth of the businesses and growth of the jurisprudence relating to taxation.


Host: How much impact do you think technology will have on litigation in India? At the same time, in the past one and a half years, how much impact do you think technology has made on litigation?


Harish: The impact of technology not just on litigation but on taxation has been profound. One of the purposes of GST I think at the policy level was to ensure that there is a uniform system of collecting data in the form of tax compliance. So all this while each and every state had a different system of compliance, the central government had several legislations and several systems of compliance.


Now they brought this GSTN as this uniform method for complying with the indirect tax law GST compliances. But as with every technology, there will always be glitches. Nothing is perfect, especially technology. Because of the diversity in the country we are presently living in the urban area or the metropolitan area there are pockets of places in the metro cities where the availability of the internet would be less as compared to people who enjoy a better facility of the internet and if we take it to the tier 2 cities or the tier 3 cities or even the rural areas, the penetration of higher speed internet is still lower as compared to as to what is available in the urban areas. So if you are looking at technology as the backbone for the entire GST compliance or indirect tax compliance or even income tax compliance then the high speed internet must be made available to the end person, not just keeping in mind the metropolitan cities or the tier one tier two cities but also the rural areas. The expectation at the government level that everybody should be compliant is a good policy decision/good hope. But they need to keep in mind the practical difficulties that will always be there when it comes to complying with tax law because there are these technical glitches. The technical glitches while uploading returns has been a bone of contention between the assesses and the government and this is something that I had explained earlier.


The government has to understand and empathize with the taxpayers. If they are in a position to have to face technical glitches while uploading their returns or doing any compliance related activity using the GSTN and if there are any delays because of technical glitches they have to have provisions which provide for waiving any interest/penalty. So these are things that the government must take into consideration . You cannot be dogmatic or stubborn saying that we have provided you the backbone, now you comply because we are still in nascent stage as far as tax compliance on a system which is still not completely perfect.


From 2017 July onwards we have had several issues with the technological backbone as far as GST compliance is concerned. If you have been noticing, even the income tax compliance/ income tax filing system has moved to a completely different setup altogether and they are also facing glitches. So as with technology it's a trial and error method. So it means that the government should also be given time and at the same time the government should also give the assesses time to ensure that they are compliant.


Now this is as far as tax compliance and technology is concerned. As far as litigation is concerned the pandemic has actually opened several avenues in the sense that we have started having e-filing at the ITAT level and they are slowly starting the e-filing system in the customs and excise appellate tribunal. now we have e-filings which are a mainstay of high court filing and we have also got into and adapted ourselves to the virtual hearing mode of hearings before the high court and the supreme court and the supreme court recently has ensured that the judges have a very high speed internet because they are going to be bombarded with traffic from all over the country. So it is important that the high courts and the supreme court and also the subordinate courts are also equipped with high level technology to ensure that litigation happens without any break that was I think the pandemic also told us where we stand as far as adapting to technology is concerned.


I think initially there were a lot of hiccups in adapting to the technology. But over a period of time as advocates we have accepted that virtual hearings are here to stay and in a way it helps us as well because we are in a position to attend multiple hearings sitting in the comfort of our office without having a necessity to travel. So that is one good aspect of technology.


But then, some lawyers including me look at the downsides of having a virtual hearing. Whether the impact of our arguments is the same as it would have been had we been physically present before a judge. So that is something that we need to probably over a period of time we will get to understand whether there has been any impact . Again, adopting any new technology does take time. So patience is an important virtue. A lot of advocates do take change as something that is not acceptable to them, but again we have to adapt ourselves to technology. We have to adapt ourselves to any changes that may come and not be stubborn. You were alluding to my career path earlier. When I was in Duke studying law, tax was a subject that I promised myself I would never get into and from 2003 onwards perhaps tax has been my main stake as far as my professional practice is concerned. So that is an important lesson that I have learned over a period of time.


Host: what should a young lawyer keep in mind while looking at a career in tax law?


Harish: That is an important question. I have had several opportunities to mentor students at the CA institute, the company secretary institute and also as a visiting faculty to one of the law schools in Bangalore. So my instructions to younger professionals has always been not to be rigid. That is an important learning that I have always wanted to pass on and as far as becoming a lawyer is concerned, to ensure that your fundamentals are strong. There is always a chance of us getting lost in the first few years of our professional life as to what is the career path that we want to take and if you have set your mind, heart and soul into tax law, it would be brilliant. But at the same time, you need to understand that in addition to tax, it is always good to have some other field of practice that you can focus on, because tax law is such a practice that if you are able to understand and interpret the intricacies of the fiscal law/ tax law, you are in a position to understand and interpret any other statute. That is the uniqueness of a fiscal statute because every aspect of interpretation is something that you are able to see day in and day out when you interpret tax law and that learning is something that you can transform and translate and take forward to any other statute.


As far as tax law is concerned for young lawyers, understand the business. Tax law is sometimes a post-mortem approach to any particular transaction .Litigation and tax law happens when you are given demand by the government (either income tax demand or indirect tax or a GST demand) .So which means that everything has happened and then you are looking at fighting the case for the government. But in order to understand you need to foresee as to how the business is structured, what are the transactions, what are the goods that are manufactured, what are the goods that are supplied, what are the services that are provided, are these local transactions, are they international transactions. So to understand at a macro level what the business is all about. Because once you are able to understand the business and you have your fundamentals strong you will be able to anticipate what the government could do as far as that is concerned so the takeaway for young lawyers would be to ensure that before or rather when you get into tax law not look at tax law as one straight jacketed field of practice. There are a lot of allied laws which have an impact on it and the important part is the understanding of the business.

 

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