Case Note: The Curious Case of Satyam Computers

This case note canvasses the recent decision of the Full Federal Court of Australia in Satyam Computer Services Limited v. Commissioner of Taxation, where the court applied the Australia-India income tax treaty to create a tax liability on royalties paid to a non-resident, which was not provided for in Australia’s domestic law. The author argues that tax treaties serve as a limitation on taxing liabilities: they allocate taxing rights rather than generate new tax liabilities. The author criticizes the court’s decision for failing to apply the doctrine that an income treaty acts as a shield and not a sword.