Case Study 18

Dr X is a leading medical practitioner in the city. He has set up a charitable trust through which he plans to establish a super-speciality hospital in the city to cater to the medical needs of all sections of society. Incidentally, that part of the State had been neglected over the years. The proposed hospital would be a boon for the region.

You are heading the tax investigation agency of that region. During an inspection of the doctor’s clinic, your officers found some major irregularities. A few of them are substantial which had resulted in considerable withholding of tax that should be paid by him now. The doctor is cooperative. He undertakes to pay the tax immediately.

However, there are certain other deficiencies in his tax compliance that are purely technical. If these technical defaults are pursued by the agency, considerable time and energy of the doctor will be diverted to issues that are not so serious, urgent or even helpful to the tax collection process. Further, in all probability, it will hamper the prospects of the hospital coming up.

There are two options before you:

  1. Taking a broader view, ensure substantial tax compliance and ignore defaults that are merely technical in nature.
  2. Pursue the matter strictly and proceed on all fronts, whether substantial or technical.

As the head of the tax agency, which course of action will you opt for and why?


The case raises questions about the ethical principle that must guide our moral actions.

If we look from the lens of the utilitarian principle of Jeremy Bentham and John Stuart Mill, then taking a broader view and ignoring technical issues will have some utility –

  1. Tax agencies will not have a reputation for harassing citizens.
  2. Dr X can focus more on his noble profession of treating patients.
  3. The proposed hospital prospect will not be marred.
  4. The neglected part of the state will get justice in terms of medical facilities.
  5. The social capital of tax agencies may increase resulting in more tax compliance.

However, if we pursue the matter strictly even on technical matters then –

A) I will fulfil my professional duty.

  1. Bhagwat Gita teaches us to do one’s duty as the highest dharma.
  2. As per Kant’s categorical imperative if something cannot be made universal law it cannot be moral. We cannot accept the violation of technical rules universally; hence it cannot be ignored here as well.
  3. Gandhiji remarked that “a duty well performed creates a corresponding right”.

B) The integrity of the process of tax collection will be maintained. Diligence, work culture, and organizational values will be safeguarded. 

C) Values of impartiality and non-partisanship will be safeguarded which provides credibility and legitimacy to bureaucracy.

People should not perceive that the leading medical practitioner of the city has been favoured. 

D) Corruption begins on a small scale and in a benign form. However soon it snowballs into worst forms, detrimental to the socio-economic development of society. 

Based on the above analysis, I will follow the rule in totality. However certain steps can be taken to make the tax filing process for Dr. X and others easy and quick in the spirit of good and ethical governance. 

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