Government of India v Taylor [1955] AC 491

Facts: British company (supplying electricity under licence) operating in India stopped its operations, and on return to England began winding up their company (voluntary liquidation). D was a liquidator of the company and refused to pay the tax. A claim was brought by the Indian government in England to recover unpaid capital gains tax. 

Issue: Is the government of India entitled to come to England to enforce Indian income tax law? 

Held (House of Lords): No. The judgement affirmed the exclusionary doctrine of foreign revenue laws, as liability to pay tax is not a contractual obligation, but is imposed through the exercise of the sovereign authority of the state. This sovereign authority cannot be enforced in a foreign country. It is irrelevant whether the foreign state is a member of the British Commonwealth or not. 

Principle: The rationale of the exclusionary rule is that an attempt by a foreign country to enforce its revenue laws is an extra-territorial assertion of sovereign authority, and this is not allowed.