foundation is as much available to tax laws as it is to welfare legislation. It is therefore necessary that while interpreting taxation laws you have to bear that fact in mind. Also, see the implication. While the law permits legitimate avoidance of tax by tax planning, illegitimate tax avoidance by adopting a subterfuge is not permissible. This should be shunned by the courts. This is something that has been settled by most cases. McDowell settled this and is the law of the land.”
He, however, clarified that he was not suggesting that the courts couldn’t take a view different from settled law. “But, the different view can’t be treated as law if it is taken by a three-judge bench. The bench should have referred it to a larger bench. I don’t think the CJI-led bench could have bypassed or distinguished from McDowell,” Verma added.
“However, there is a much bigger reason. Judges need to be committed to constitutional philosophy and not the philosophy of the ruling party. The constitutional philosophy in this case as laid out in Articles 38 and 39. The effect of benefiting a corporate is to cast a higher tax burden on the common man and when you uphold an illegal tax avoidance, then you cast a higher tax burden on the honest tax payer. According to me the Vodafone judgment has all these implications,” the former chief justice said.
“That is why, unfortunately and sadly, Vodafone completes the trinity of infamous judgments of the SC, which, the sooner they are forgotten or overcome, the better it would be.”