Many who did not want to miss an opportunity to witness a landmark judgment live were outside the Supreme Court's court number one in the morning itself, though the order in the Vodafone tax case was to be pronounced only post-noon.

The crowd included journalists, lawyers, public relations executives and tax law fans.

Since the case was concerning a huge tax demand of over Rs 11,000 crore and with implications on tax liability of companies that had done similar deals where assets of Indian companies are involved, many thought that the apex court verdict would favour the Income-Tax Department.

In fact, some went to the extent of even jokingly asking the junior lawyers in the Vodafone legal team about when they were going to file a review petition against the adverse order.

But they were in for a huge shock when the Chief Justice of India, Mr S.H. Kapadia, pronounced the operative portion of the order in a packed court room. It lasted only a few minutes, but it soon became clear that Vodafone had won the case and the counsel for the company -- senior advocate Mr Harish Salve -- was the day's hero.

‘Pleasantly surprised'

A beaming Mr Salve, emerging from the court room, said he was in a state of shock when he heard the verdict, but immediately added that he was pleasantly surprised by the order. He wondered how many countries can boast of such a judicial system which was totally fair and unaffected by the criticism surrounding the case (where many thought Vodafone was ‘looking to avoid tax').

Mr Salve also highlighted the concurring judgment given separately by Mr Justice K.S. Radhakrishnan, who said imposition of tax (on the deal) amounted to “capital punishment on capital investment”.

Mr Salve said the positive ruling from Supreme Court on a foreign investment that has created value in India, will definitely boost investor confidence. Soon, he was hugged and congratulated by many in the Vodafone legal team.

Reporters then desperately tried to elicit quick reactions from some Vodafone executives present there, but all they could get were excited smiles.

Some lawyers present were of the view that the only way out for the Government now is to ensure that Parliament amends the Income-Tax Act by incorporating a provision that brings into the tax ambit such deals – where transaction of an underlying asset in India takes place offshore between two companies incorporated abroad – in the future.

‘Victory for judicial system'

But the day clearly belonged to the Supreme Court as senior advocate Mr Abhishek Singhvi, who also appeared in the case, said “Irrespective of the result, it is a tremendous victory for the Indian judicial system.”

>arun.s@thehindu.co.in

Related Topics