Honourable as it may sound, finance minister Arun Jaitley has made a wrong call by recusing himself in the Vodafone matter, leaving all decisions to be taken by his deputy Nirmala Sitharaman who will, presumably, take directions from PM Narendra Modi if she thinks necessary. Just as few accuse judges of bias if they own some shares of a company whose case they are presiding overone judge recused himself for holding a few thousand rupees worth of shares of a company in a very important case a few years agofew were going to accuse Jaitley of favouring a company whom he charged a fee several years ago for a bona fide business consultation. Indeed, given the finance ministers extensive practice as a lawyer, this becomes precedence for those who want him to recuse himself in matters pertaining to other corporates as well. The Vodafone case is, in reality, not just one pertaining to Vodafone, it is journalistic shorthand for the retrospective amendments brought by Pranab Mukherjee when he was finance minister. To that extent, it affects not just
Vodafone, but even companies like Shell and Cairn who were trying to either bring in money to invest in their local arms or were trying to reorganise their Indian operations.
Jaitleys predecessor P Chidambaram recused himself in the
Hindustan Zinc/Balco case for a similar reason of potential conflict of interest. Just look at the delay that caused in the sale of the governments residual shareholding in the ertstwhile PSUs since the dynamic minister was no longer pushing the case. This is not to doubt Jaitleys deputys capabilities, but Sitharaman could have used Jaitleys expertise as the case has some unusual complications.
On the face of things, the case is simple. The BJP, which has spoken of removing tax terror on various occasions in the past as well as the need to bring in predictability in the tax regime, just needs to move an amendment in the Finance Bill. Once the party says the Mukherjee changes will be prospective in naturesome of them like the one which treats income around share transactions as business income need to be scrappedit has the majority in the Lok Sabha to get the amendments passed. Once the amendments have been passed, presumably any tax demand made on the basis of the retrospective law will automatically fall by the wayside. Heres the rub, they may not. There is