The article analyses the judgment of Supreme Court of India in Vodafone tax dispute which rekindled the debate on tax avoidance and tax evasion in India. The dispute relates to the taxability of the alleged capital gains to Vodafone Holdings in restructuring of the group. The author showcases the illegality and perversity committed by the Honourable Supreme Court by not taxing the transaction. It also analyses the curious developments in the form of a validation clause in Income tax laws, post Vodafone verdict. The constitutionality of the validation clause is examined. The article pinpoints the lacunae in the proposed validation clause. The article concludes that the Vodafone transaction was taxable, and the Government has been put to huge loss by none other than the Supreme Court of India which was established to look after the well being of the Constitution and the nation.
Intertax