EDITORIAL | Tax terrorism: smell the coffee

V G Siddhartha, the affable Kannadiga entrepreneur who made drinking coffee a fashion in a country of tea lovers through a network of over 1,500 Café Coffee Day (CCD) outlets, has ended his life, blaming his insurmountable debt, pressure from a private equity partner and the harassment of the taxman for his predicament. Siddhartha’s suicide is another pointer to the depressed economic sentiment in the country, which has brought many homebred businessmen and their businesses to the point of no return. While there is no excuse for defaulting on loans and taxes, over-reach by the authorities can have disastrous consequences, destroying large corporations which contribute significantly to the economy through revenues and employment generation. In addition, the severe cash crunch in the market, arising out of the Centre’s inability to deal with the liquidity crisis has brought the industry to its knees.

The coffee king’s troubles peaked when the I-T department attached his and CCD’s shares in Mindtree Ltd. on the eve of the company’s stake sale to Larsen and Toubro, leading to serious liquidity problems. Why the department blocked Mindtree shares, before subsequently releasing it, when it could have attached Siddhartha’s holding in CCD or other assets is still a mystery. Strangely, though the Mindtree sale was expected to be a lifesaver, it did not inspire investor confidence as the sale proceeds did not significantly reduce the consolidated debt of CCD. From March 2018, when the stake sale was announced, CCD shares witnessed a steady tumble. Siddhartha also found it increasingly difficult to liquidate his assets — which supposedly outweigh his liabilities — or raise funds from the market. He was thus forced to obtain large personal loans from friends, to buy back shares from the private equity partner who had donned the role of a Shakespearean Shylock. There are also allegations that he was being pressurised by certain central agencies to implicate a prominent Congress politician in a money laundering case. The politician is incidentally a protégé of Siddhartha’s father-in-law, former chief minister SM Krishna, whose move a couple of years ago to the BJP after a lifetime in Congress had raised eyebrows.

Though industrialists are no saints, the question remains if this first-generation entrepreneur, who created over 50,000 jobs and a global brand out of Karnataka, became a victim of tax terrorism. Siddhartha himself does say so in his parting letter. The authorities must probe the abetment to suicide angle under Section 306 of the Indian Penal Code considering that he has made a specific charge against a particular officer. Siddhartha may have departed much ahead of his time, but the happy memories that CCD has left in the minds of millions of people across the country and abroad will linger on.