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VodafoneCase:ItsConsequencesVodafoneTaxation
VodafoneCase:ItsConsequences
Vodafone Case : Its Consequences
CA Rashmin Sanghvi
CA Naresh A. Ajwani
CA Rutvik R. Sanghvi
"If I had a world of my own, everything would be nonsense. Nothing would be what it is,
because everything would be what it isn't. And contrary wise, what is, it wouldn't be. And
what it wouldn't be, it would. ALICE IN WONDERLAND (LEWIS CARROLL)
The world of Tax Havens is as strange as Alices Wonderland. Expect the unexpected.
Rashmin
Contents
Sr. No.
Topics Covered
1.
Introduction.
2.
3.
4.
Consequences on FDI.
Annexures
1.
5.
Note : The same article by the authors has been published in the magazines Taxmanns
International Taxation and in Chamber of Tax Consultants Income Tax Review (February
2012 issues).
I. Introduction.
I.1 In this case two issues are involved :
i. Taxability of the transaction. Paragraphs II.1 to II.18
ii. Vodafones liability to deduct tax at source. Paragraph II.19
In our submission, the income is taxable in India and Vodafone is liable to deduct tax at
source. For failing in its duty to deduct the tax despite advance warnings, Government
is entitled to proceed against Vodafone.
Since Honourable Supreme Court (SC) has decided differently, today the law prevalent in
India is that the income is not taxable and hence Vodafone is not liable to deduct the tax at
source. In our humble submission, with respect to the Honourable Supreme Court, the
decision is incorrect. Income is taxable & hence Vodafone is liable to deduct tax at source.
This is a fit case for retrospective amendment in law. Not doing so has serious
consequences. Wide scale aggressive tax avoidance through tax havens and their approval
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VodafoneCase:ItsConsequencesVodafoneTaxation
Wide scale aggressive
tax avoidance through tax havens and their approval
by honourable SC creates a risk of equally wide & harsh tax provisions. These will affect
all: aggressive tax planners as well as honest tax payers.
VIH
CGP
HEL
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For the sale, HTIL invited
bids for sale of its equity interests in HEL. Vodafone
Group Plc bid for the equity interest. The legal transaction was purchase of 1 share of
CGP from HTIL. A Share Purchase Agreement (SPA) was signed on 11.2.2007
between VIH and HTIL, whereby HTIL agreed to procure the sale of CGP share.
The parties made application to FIPB in India, where it was declared that Vodafone
was purchasing from Hutchison its stake in the Indian business.
HTIL made declaration to the stock exchanges that it was selling its stake in the
Indian business to Vodafone. It made several such communications to the
shareholders and public at large.
I.4 Short forms used in this Article.
ABA Azadi Bachao Andolan.
CIT Commissioner of Incometax.
DTA Double Tax Avoidance Agreement.
GOI Government of India.
ITA Incometax Act.
LOB Limitation of Benefits.
NRI NonResident Indian.
SC Supreme Court.
SPV Special Purpose Vehicle. A company formed for a special purpose.
UAE United Arab Emirates.
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regular countries like India, Germany, France etc. During the American & European
financial crisis (September, 2008 onwards) there has been a huge uproar that these tax
havens are bleeding the tax revenues of regular countries. Global attempts are being
made to curb this tax evasion and avoidance.
In Vodafones case, clearly a series of tax havens and SPVs have been used to avoid
Indian taxes.
By holding this transaction as a tax free transaction, Honourable SC has given a licence to
the tax payers to use tax havens, abuse treaty shopping and bleed Indias tax revenue.
Not recognising the true character of tax havens and their SPV despite a global uproar
against them is, in our submission, an error.
II.6 Tax Avoidance Mechanisms :
(i) Transfer Pricing Mechanism in short means shifting or transferring taxable profits to
a tax haven by use of SPVs and elaborate paper work. This mechanism is used in regular
trade.
(ii) For shifting capital gains out of the host country and into a tax haven a different
mechanism is used. Hold the operating companys shares through an SPV in a tax haven.
Then claim that the SPV is a separate legal entity. Whenever you want to sell the
operating company (or your stake in the operating company), transfer the shares of the
SPV. You have shifted the situs of entire operating company to a tax haven and avoided
the tax.
Both these mechanisms are there to be seen by everyone. Now the issue is, do we need
specific legislation to curb these practices?
(i) TP : Our submission is if something is sham, one does not need any legal provision to
ignore the sham and go for substance. In cases of under invoicing and over invoicing,
the Incometax department was disallowing expenditure and making additions to taxable
income decades before the TP provisions were introduced into the law. However, proving
under/ over invoicing is difficult. TP provisions provide a mechanism to the department
for taxing such transactions. They also bring in reporting requirements and shift the onus
for proving that the transactions are armslength on to the assesses. The fact that TP
provisions exist in the Incometax Act, does not mean that in the absence of TP provisions
the assessing officer was not able to tax income transferred outside India.
(ii) Capital Gains : In the present case it is apparent that Hutchison had a preordained
corporate structure to shift its taxable transaction from India to a tax haven through the
use of tax haven SPVs. Apart from the operating companies, rest of the structure was and
is sham. It does not need any specific provision in law to ignore this structure, to
recognise that the controlling shareholding in an Indian company has been sold.
Department is fully entitled to ignore all tax haven SPVs and tax the income arising in
India.
This income is covered within the Scope of Total Income under Section 5 itself. There is
no need even for the deeming provision of Section 9. Honourable SCs observations that
Government of India failed in bringing about the requisite legal provisions is, in our
humble submission, an error.
II.7 In paragraph 73 Honourable SC has laid down a five step test to determine whether a
structure is Preordained transaction which is created for tax avoidance or an
investment to participate in India. Honourable SC considers all the business done and
taxes paid by HEL. Again in paragraph 91 on page 101 the decision says: From 200203
to 201011 the Group has contributed an amount of Rs. 20,242 crores towards direct and
indirect taxes on its business operations in India and concludes that neither HTIL nor VIH
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Para 12. On 22.12.2006, a press release was issued by HTIL in Hong Kong and New York
Stock Exchanges that it had been approached by various potentially interested parties
regarding a possible sale of its equity interests (not controlling interest ) in HEL. That,
till date no agreement stood entered into by HTIL with any party.
Observations :
Equity interests and Controlling interest are distinguished. Does it suggest that
Equity interest and Controlling interest are to be treated differently? The revenue has
claimed that HTIL has sold its Controlling interest in HEL the same phrase as used by
VIH while reporting to SEC in Washington and London stock exchanges. (See para 23 of
the judgement).
Para 21. On 11.02.2007, VIH and HTIL entered into an Agreement for Sale and Purchase of
Share and Loans (SPA for short), under which HTIL agreed to procure the sale of the
entire share capital of CGP which it held through HTIHL (BVI) for VIH. Further, HTIL
also agreed to procure the assignment of Loans owed by CGP and Array Holdings
Limited [Array for short] (a 100% subsidiary of CGP) to HTI (BVI) Finance Ltd. (a direct
subsidiary of HTIL). As part of its obligations, undertook to procure that each Wider
Group Company would not terminate or modify any rights under any of its Framework
Agreements or exercise any of their Options under any such agreement. HTIL also
provided several warranties to VIH as set out in Schedule 4 to SPA which included that
HTIL was the sole beneficial owner of CGP share.
Observations :
It was HTIL which procured sale of shares of CGP assignment of loans owed by CGP
each Wider Group company would not terminate or modify any rights under any of its
Framework agreements etc. HTIL also provided several warranties to VIH.
An application was made to FIPB for transfer of share of CGP. In one such
communication, it was stated as under :
Para 32. .. However, in practice the directors of HEL have been appointed pro rata
to their respective shareholdings which resulted in 4 directors being appointed from
the Essar Group, 6 directors from HTIL Group and 2 directors from TII.
Observations :
The directors were appointed by HTIL group and not CGP which was supposed to be the
investment vehicle that was sold. The directors were not even appointed by the
immediate shareholder companies of HEL. This shows who was the real owner of HEL.
Amongst the several steps undertaken after the receipt of FIPB approval, one was the
payment of consideration for sale by VIH to HTIL. (Para 46 (xi)). The funds were not
even paid to the shareholder of CGP. These were straight remitted to HTIL!
CGP did not even have any accounts prior to 2007. It did not even have a bank account.
The companies in between HTIL and CGP also did not have a bank account. The funds
were paid directly to HTIL. All parties involved in the transaction had ignored the
existence of CGP. Only when the taxman asked, they claimed that CGP shares were sold.
II.11 Share Purchase Agreement (SPA) :
11.1 VIH and HTIL entered into a SPA for sale of CGP share. It should be noted that the
agreement was signed by HTIL and not by the shareholder of CGP. There were 3
companies between HTIL and CGP. It clearly suggests that other companies were
treated as nonexistent.
The revenue highlighted some of the features (para 72) :
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(v) the SPA ignores legal entities interposed between HTIL and HEL enabling
HTIL to directly nominate the Directors on the Board of HEL
(vi) Qua management rights, even if the legal owners of HELs shares (Mauritius
entities) could have been directed to vote by HTIL in a particular manner or to
nominate a person as a Director, such rights existed dehors the CGP share
(vii) Vide clause 6.2 of the SPA, HTIL was required to exercise voting rights in the
specified situations on the diktat of VIH ignoring the legal owner of CGP share
[HTIHL (BVI)]. Thus, according to the Revenue, HTIL ignored its subsidiaries and
was exercising the voting rights qua the CGP and the HEL shares directly,
ignoring all the intermediate subsidiaries which are 100% held and which are non
operational. According to the Revenue, extinguishment took place dehors the CGP
share. It took place by virtue of various clauses of SPA as HTIL itself disregarded
the corporate structure it had set up
(viii) As a holder of 100% shares of downstream subsidiaries, HTIL possessed de
facto control over such subsidiaries. Such de facto control was the subject matter of
the SPA.
This was one of the most important issues of the facts. One cannot look at only one
aspect that a share of CGP was transferred. The company by its own admission has
stated that it was the owner of Indian companys share.
11.2 The Supreme Court has observed as under :
At the outset, we need to reiterate that in this case we are concerned with the sale
of shares and not with the sale of assets, itemwise. The facts of this case show sale
of the entire investment made by HTIL, through a Top company, viz. CGP, in the
Hutchison Structure. In this case we need to apply the look at test.
It further states :
If one applies the look at test discussed hereinabove, without invoking the
dissecting approach, then, in our view, extinguishment took place because of the
transfer of the CGP share and not by virtue of various clauses of SPA.
With due respect, we do not agree with the observations. The SPA states what is
the real contract. CGP share is only a title document of what is actually
transferred. If one considers only the title document, and not the main transaction,
is it correct!
The department has filed several documents as a part of its submissions. The
entire set of documents represent exactly what were the real assets. None of the
same have even been referred to in the decision!
II.12 Alterego :
The Honourable Supreme Court has observed as to what is alter ego. In para 74 it states:
For instance, take the case of a oneman company, where only one man is the
shareholder perhaps holding 99% of the shares, his wife holding 1%. In those
circumstances, his control over the company may be so complete that it is his alter ego.
But in case of multinationals it is important to realise that their subsidiaries have a great
deal of autonomy in the country concerned except where subsidiaries are created or
used as a sham.
MNCs like Unilever Plc & Colgate USA have their subsidiaries in India. These are
autonomous companies. But same cannot be said about tax haven companies. CGP did
not have any independent existence. HTIL was taking decisions. Agreement was entered
into with HTIL and not the immediate holding company of CGP. CGP did not even have
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a bank account. CGP Yet it was considered not as an alter ego but an independent
company!
In our view, this was not even a case of substance versus form. It was simply a case of
looking at facts as announced by the assessee. What more can one look at!
If a person holds up a veil (a corporate veil), hides behind the veil, then probably he can
ask you not to look behind the veil. But when the person himself throws away the veil,
he is exposed before the whole world. Then he has no right to claim that you must look
at the absent veil.
Having considered the decision by Honourable SC, let us see some principles of law.
II.13 Company :
It is presumed that a company is a separate legal entity distinct from its shareholders
as well as directors. This is a legal presumption. Considering company to be a separate
entity law grants limited liability to the shareholders. However a registration certificate
and one file in a tax haven consultants office does not mean a company. The
shareholders also have to act as if the company is a separate legal entity companys
assets are separate assets.
When the company is simply a paper company, when the tax payers themselves ignore
its existence and treat the companys assets as their own assets, that paper certificate has
no value. Company does not have an independent existence. It needs to be ignored for
all practical purposes.
Courts may lift the Corporate Veil when a controlling interest is being considered or
when a company is incorporated with improper objective. Tax evasion is an improper
objective. Courts may not knowingly permit people abusing the legal entity & status
granted to a company when that status is being abused.
In CIT Vs. Sri Meenakshi Mills Ltd., AIR 1967 SC 819, the Supreme Court held that: The
Income tax Authorities were entitled to pierce the veil of corporate entity and to look at
the reality of the transaction to examine whether the corporate entity was being used for
tax evasion. In this case, a separate legal entity was brought into existence outside the
taxable territory with the ulterior motive of evading the tax obligation by the assessees.
II.14 Title Document :
When HTIL transferred the shares of a Cayman Island company, what was the value of
the share certificates? These shares are just like a Warehouse Receipt (WR). A WR by
itself has no value. It represents the goods. Every time the WR is sold, in substance, the
goods are being sold. If the goods are lying in a ware house in India and the WR is
transferred outside India, it is still a transaction liable to Indian taxes.
The form is: the WR is being transferred. The substance is, the goods in India are being
transferred.
In Vodafones case, the shares of the Mauritius Company as well as the shares of the
Cayman Island Company were nothing more than warehouse receipts or title
documents. In themselves, the CGP shares had no value. The companies had no
substance and no independent existence.
One can go by Form when the Form represents the facts. However, when the form
does not represent facts, one has to look at the real facts substance. Form has to be
ignored. It is the duty and right of the assessing officer to ignore the form.
II.15 International Holding Structures :
In which cases would an interposed company be held to be a sham or tax avoidant?
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Where offtheshelf shell companies are used and conduct of the holding and
operational group companies shows that these shell companies are treated as non
existent the Revenue has the power to disregard the structure and accordingly tax the
gains in India.
Of course, not all interposing companies are sham or tax avoidant. This would be the
case where proper board meetings are held amongst independent directors discussing
strategic and commercial matters at regular intervals. If these facts can be proved
conclusively through board meeting minutes, conduct and correspondence, it would be
very difficult for the Revenue to look through such an interposed company even if it
is incorporated in a lowtax jurisdiction.
However, it is apparent from the facts presented by the Revenue department before both
the Honourable Bombay High Court and the Honourable Supreme Court that the all
intermediary companies in the Hutchisons holding structure were acting as puppets
with common directors, taking synchronised decisions, on an automatic basis, as per
instructions from the main holding company. Unfortunately, the Honourable Supreme
Court has not considered these facts. On the contrary, it has held that this structure was
a bonafide holding structure on the basis of the duration the shell structure existed, the
period of business operations in India, the amount of taxes paid, the timing of the exit,
the continuity of the business on such exit, etc.
In our humble submission, the Honourable Supreme Court has incorrectly held that the
Hutchison structure in this case is not a sham!
II.16 Assessees Conduct :
This was one of the most important aspects which seems to have been ignored by the
Honourable Supreme Court. HTIL, Hutchison Whampoa Ltd. and Vodafone
communicated with the shareholders, various Government authorities and public at
large that what was been transacted was the equity interests of HEL. In almost all these
statements, CGP was ignored. Hutchison Chairman also wrote to its shareholders in its
annual report for the year 2006 as under: I am particularly pleased to report on the
proposed sale of the Groups interests in India, .. attracted some of the worlds
leading mobile operators to approach and ultimately make an offer for the Groups
entire interests in its Indian mobile telecommunications operation comprising
Hutchison Essar Limited and its subsidiaries (Hutchison Essar). Most of these
statements are available even today on relevant websites. It is only from 2007 that CGP
was mentioned in the annual reports. CGP is not even mentioned in the list of important
subsidiaries.
II.17 Ratio of Ramsays decision.
The Honourable SC in Vodafone case has considered some English Court decisions. Let
us analyse these observations.
17.1 Ramsay decision though a landmark decision is only one of the many antitax
avoidance decisions ruled by UK Courts. The UK Supreme Court (or the House of
Lords as it was called previously) has moved on and incorporated several other
principles in adjudicating on antitax avoidance cases. The SC in Vodafone has
totally disregarded the later decisions which have analysed and modified the
Ramsay Principle to quite some extent. However, even if the SC had based its
decision only on Ramsay, the ruling would have been in favour of the tax revenue.
This is because of the misinterpretation of the decision by the SC as mentioned
further.
17.2 The SC has used the principle of look at from Ramsay to justify that the
transaction should be looked at in a holistic manner. Ramsay never says this! The
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transaction should be looked
at in a holistic manner. Ramsay never says this! The
phrase look at is mentioned only twice in the whole decision.
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Extract from Late Mr. Palkhivalas commentary on Section 1 (on page no. 4 of Chapter I
Eighth Edition)
Those sections which impose the charge or levy should be strictly construed but those which
deal merely with the machinery of assessment and collection should not be subjected to a
rigorous construction but should be construed in a way that makes the machinery workable ( 8
ITR 442 CIT Vs Mahaliram). Sections which merely provide a machinery for collection of a
charge which is imposed in general terms elsewhere, cannot restrict the attachment of the charge,
being in aid and not in derogation of it (13 TC 563 IR Vs Countess of Longford).
19.1 Does the Government of India have jurisdiction to force a NonResident to deduct
Indian tax at source? Does the Parliament have jurisdiction to make laws with
extra territorial operations?
19.2 Honourable SC the majority bench decision in paragraph 89 states that since the
transaction is not liable to Indian tax, the question of TDS does not arise.
As we have already submitted earlier, this transaction is liable to tax in India.
In GVK industries case Honourable SC has decided that :
(i) Normally Parliament cannot enact a law which requires operations outside the
territory of India.
(ii) However, where sufficient nexus exists, in the interests of India and Indians,
Parliament can enact such laws.
Vodafone had admitted before FIPB that it will comply with the Indian law. It
cannot go back on its commitment.
19.3 In the minority judgement, Honourable justice K. S. Radhakrishnan decides that in
section 195 the term Person covers only Indian residents. It does not cover non
residents.
In our submission, the term Person covers all residents as well as nonresidents.
Very simple illustration: A nonresident has a permanent establishment in India.
Say, a foreign banks branch in India. The nonresident conducts its business in
India and makes several payments. Can it claim exemption from TDS provisions
because it is a nonresident? Certainly not.
The issue is :
Does the nonresident have sufficient nexus with India? In this case Vodafone had sufficient
nexus and it had agreed to abide by the Indian law. In our view, Vodafone is liable to comply
with Indian TDS provisions.
Conclusion :
Hutchisons income is taxable in India. Vodafone is liable to deduct tax at source and pay to
the Government of India.
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compulsory. Government doesnt trust CITs with any discretion. And in some cases,
even Courts are not given discretion. These harsh provisions become the tools in the
hands of the assessing officer to beat the tax payer. Then honest people doing honest
transactions can be/are victimised.
The commissioner who is out to make money meets with dishonest tax payer and
greedy tax consultant. All of them are happy. They make money at the cost of the
nation.
However, when the greedy tax commissioner meets an honest tax consultant or an
honest tax payer, there is friction. And the draftsmen have not made provision for this
eventuality. They do not build in protection for the honest assessees. There are appellate
provisions. However the AO has an array of tools available to frustrate the tax payer
despite appellate provisions. Ultimately the honest tax payer suffers. His sufferings are
due to the aggressive tax planning done by some smart people.
III.4 Impractical law :
When the Government goes on adding strict, far reaching deeming provisions in the
law, one day it becomes an Impractical law.
FERA was an Impractical law trying to control each & every foreign exchange
transaction. It could not. Smuggling & hawala were wide spread. Hence Government
went on giving absolute powers to enforcement directorate. What happened was wide
scale hawala, flight of capital outside India and weakening of the Indian economy. This
law was violated by anybody who had money & power politicians, bureaucrats and
businessmen. In Jain Hawala case Honourable Supreme Court could not punish the
guilty. Hasan Ali Khans case also shows that the real people behind Hasan Ali Khan
have succeeded in avoiding legal action. So far. FEMA is a law which is not respected by
the powerful in the country. And the powerful are so powerful that even Supreme Court
& Reserve Bank of India cannot punish them. Only people who are punished under the
FEMA are small & medium sized people (SME). This is a series of proofs that an
impractical law fails.
Similarly, Estate Duty Act was an impractical law. 85% estate duty. Almost entire estate
would be wiped out if one were to pay full estate duty. Hence what happened was
massive tax evasion. Hardly a few crores were collected @ 85% rate by the department.
Our experience with Transfer Pricing is fresh. Earlier, people used to resort to under/
over invoicing. Department was making additions on Gross Profit Percentage and
other bases. But MNCs use international tax haven operations and it becomes difficult
for the department to catch them. So they brought about TP provisions.
These provisions give wide deeming powers to the TPO. Many people have suffered so
widely and deeply because of rampant use of the power by TPOs. For every assessee
who has suffered by an absurd TP order, the root cause is the MNC that did transfer
pricing and invited TP provisions.
III.5 Direct Taxes Code will have all the SAAR provisions from the Incometax Act, 1961. (A
list 30 SAAR provisions is given as Annexure 1.) In addition there will be some more
SAAR provisions like CFC. And there will be GAAR. GAAR can be an open licence for
the greedy AO to harass the honest assessee. What is the protection for an honest tax
payer from a greedy tax officer?
GAAR provisions as they have been drafted under DTC bill, already cause shivers for
the tax payers. With such wide deeming provisions, every tax payer is exposed to the
harassment by the greedy officers.
Hutchisons tax avoidance planning justified GAAR provisions. Now honourable SC
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decision can make the Government to expand the GAAR provisions, make deeper and
wide reaching TDS provisions and expose an entire tax paying public to harassment.
Then the Incometax officer can start behaving like the Enforcement Officers under
FERA.
It is better to bring about a specific retrospective amendment. Tax Hutchisons income.
Recover tax from Vodafone. But leave GAAR provisions as reasonable provisions.
Provide adequate safety for the honest tax payer.
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RBI has expressed that Round Tripping is not permitted. Yet the Tatas & Birlas
resorted to it in Idea. Essar resorted to it for investing in HEL. And now it is
rumoured that Essar will claim refund of taxes that it has paid on the latest sale of its
SPV to Vodafone.
If you have smart international tax advisor, you pay zero tax. Otherwise pay full tax.
Is this the consequence that GOI and SC want?
IV.3.1 By now it is clear to the world that : Incometax Department has been consistent in its
approach from 1993 till date. Government has been confused. GOI itself is damaging
its own tax revenue by permitting massive abuse of DTA. All kinds of quick money
flowed into the country through several tax havens. Money laundering through FIIs &
PNs is normal. Open round tripping, treaty shopping and treaty abuse is the norm.
3.2 Western investors are expert in brain washing the authorities. They have succeeded in
spreading Zero Tax Religion. Vodafone is a classic case where they have made huge
capital gains because of Indian operations and succeeded in taking away whole gain
without paying any tax.
3.3 Azadi Bachao Andolan & Vodafone decisions together are open licence to people for
massive abuse of tax havens & DTA. These will cause massive losses to India and
Indians.
3.4 If encouraging FDI is the reason why Honourable SC has ruled in favour of
Vodafone, in our humble submission, it is unfortunate.
3.5 If this abuse is allowed, Direct Taxes Code will be a strange Cocktail of contradictory
legal provisions. On the one hand, long list of SAAR & GAAR. On the other hand,
massive abuse of the law deliberately permitted by GOI and SC of India. Really India
is Incredible!
3.6 First time in Independent Indias history, a movement has started against the Court
decision. People are asking for a review of the decision or an appropriate amendment
in the law.
3.7 Our Submission : Any Government that deliberately permits such abuses is inviting
massive scandals. One day these scandals can be too dangerous for the welfare of
India. A retrospective amendment in law and recovery of tax from Vodafone will give
a clear message to: (i) tax consultants of the world that you cannot brainwash GOI
and (ii) investors of the world that if you earn in India, you pay taxes in India.
In some sections of the society, greed has become wide spread. Vivek is forgotten.
Aggressive tax planning is the Cause of all Causes for grievances. Greed needs to be
controlled. If not controlled, the results will be :
Consequence 1 : Harsh & impractical law.
Consequence 2 : The Big Bosses do not care for the law.
Consequence 3 : Wide spread movements against the Big Bosses.
Consequence 4 : If these movements fail, it will lead to next result : Collapse of
Indian society like the American & European collapse.
For all sections of the society consequences of this tax planning & the decision by
Honourable SC are serious.
Annexure 1
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Annexure 2
Honourable Chief Justice S. H. Kapadias speech on the topic Constitutional Morality
Speech at Ahmedabad on 13th March, 2011.
Extracts
I would like to share that I am a believer in God. I owe it to God, my family and certain
great people including Shri PD Desai for what I am today.
There are students here to attend the lecture. I have a message for students coming from poor
families Do not be disheartened. India is a great country. It can make as Chief Justice
someone who started his career as a peon, as class four employee, in a small trust office in
this land of opportunity you can make it.
Now coming to Justice PD Desai, there is a quote imitation is the best form of flattery. I
have imbibed good values from Justice PD Desai. He had great qualities he was truly
independent. He had nothing to fear. He had no personal agenda. This is very important in
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judicial career.
I always claim that the path of righteousness is easier than the path of deviousness. Without
courage there can not be truth. Without truth there can be no other virtue. These apply to life
and character of Justice PD Desai. His advice to me in particular when I joined the Bombay
high court was on clarity of thought.
He had this simple advice for judges which I noted in my diary: Whenever you sit in
judgments on PIL matters, economic matters, always have the consequences in mind. It
should not have an impact that may have adverse effect on larger public interest. This, I keep
in mind and I meticulously follow even today. It has helped me in my work as CJI. That is
the greatest advice he gave me.
He had this simple advice for judges which I noted in my diary: Whenever you sit in
judgments on PIL matters, economic matters, always have the consequences in mind. It
should not have an impact that may have adverse effect on larger public interest. This, I keep
in mind and I meticulously follow even today. It has helped me in my work as CJI. That is
the greatest advice he gave me.
His beliefs were even at that time towards charity, social good. He implemented that in
action setting up trusts including this one. He told me never compromise your strengths and
honor. He gave me number of examples where he did not compromise. He stood on his
principles of strength and honor. He had respect for his work.
I would like to quote a French author who said I should follow a straight route because it
has been found by experience that straight road in the end is the happiest and most useful
track. This is an advice I would like to share with younger people who are likely to join bar
in future.
Now take the balancing part. Which is more important in appointment to higher offices
presumption of innocence or presumption of integrity or presumption of institutional
integrity/competence etc. All these have to be weighed in the context of act placed before
courts.
Similarly in criminal matters decide by evidence, not by personal likes/dislikes. I am of the
view that if courts decide on matters in principles, many of the controversies will be
obliterated.
Constitutional morality can not be separated from ethical morality. Ethical morality is
equally important. Judge should be ethically moral. Intellectualism alone wont suffice. We
do not need exceptional people. We want ethical people that understand nuances. That is
enough for us. That will give credibility to the institution.
Even tension between executive/legislature if it is constructive is to be appreciated as it
contributes to the development of law. We need to be focused for success. And please
remember that ability may take u to the top. But you shall need character to stay at the top.
Source : http://zoomindianmedia.posterous.com/45915172
Note : Vodafone decision has adverse impact on larger public interest. This consequence has
been ignored by Honourable Supreme Court.
Thanks
Rashmin, Naresh & Rutvik.
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