The Aam Aadmi Party (AAP) on Wednesday came down heavily on newly appointed Law Minister Kapil Sibal claiming he started engaging in “corruption” within a day of taking charge by overturning his predecessor Ashwani Kumar’s decision on Vodafone’s tax liability.
AAP leader Prashant Bhushan said Vodafone’s tax liability arose in 2007, when it bought Hutchison’s Indian telecom business in a Rs 50,000 crore deal.
Vodafone had the duty to withhold and pay the tax of Rs 11,217 crore on this capital gain, which it did not on the grounds that ‘only a share of a holding company in Cayman Islands, a tax haven, was sold and therefore this gain had not accrued from the transfer of an Indian asset’.
The Mumbai High Court rejected Vodafone’s plea stating it was not liable to pay tax, but the Supreme Court accepted it.
“The Supreme Court order met with widespread criticism from jurists and former Chief Justice of India J S Verma had said it was a black judgment, comparing it with the infamous habeas corpus judgment during the emergency. Fortunately, Parliament stepped in to pass a law to retrospectively frustrate such a transparent tax avoidance device adopted by Vodafone and Hutchinson,” said Bhushan.
Bhushan said Kapil Sibal’s go ahead for ‘conciliation’ in the Vodafone matter is significant especially since the main company in the case - Hutchinson Telecommunications International Limited (HTIL) - is his son Amit Sibal’s client.
Highlighting another case, Bhushan said, “Amit Sibal continues to defend HTIL’s illegality before the Delhi High Court in a PIL that highlighted benami investment of HTIL in Hutchinson Essar Limited.”
Kejriwal, highlighting excerpts from a copy of the agreement between Vodafone and Essar said, “Vodafone entered into an agreement with Essar Telecom in 2007 to pay `2,000 crore to the latter as soon as legal cases and proceedings against the company are finally withdrawn or dismissed”
Amit said the allegations were false and that the last time he appeared for a telecom company was on April 22, 2010, much before Sibal became the telecom minister.
“The last time I appeared for Vodafone was over three years ago when the issue of taxation was not there. Essar too rejected the allegations made by Kejriwal,” he said.