'Vodafone completes trinity of infamous SC judgments'
The Supreme Court, in its landmark judgment in the McDowell case, had said that behind every tax law there was “as much moral sanction as behind any other welfare legislation” and that “it is neither fair nor desirable to expect the legislature to intervene and take care of every device and scheme to avoid taxation”.
Asked about the other reasons why he was not convinced with the Vodafone judgment, Verma said, “The moral 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