Ever since Justice Sarosh Homi Kapadia was appointed as an Additional Judge of the High Court of Judicature at Bombay in 1991 (before his appointment as a Judge of the Supreme Court of India in 2003 and later, Chief Justice of India in 2010), he has been known for his contributions to the development of Indian tax law.
The wide range of areas within tax law on which he has delivered several landmark judgments is remarkable and only a few are mentioned here to highlight those areas where he has made the most impact in the development of tax law jurisprudence in India.
In the area of international taxation, his judgments, have gone a long way in clarifying the law relating to, transfer pricing (Morgan Stanley), deduction of taxes on salaries paid to expatriates (Eli Lilly), deduction of taxes on royalty payment on software (GE India Technology), and definition of permanent establishments for the purposes of double taxation avoidance agreements (Morgan Stanley). In a time where the growing liberalisation and globalisation of India's economy has presented new and complex forms of economic activity, his judgments on such areas as the taxation of income under production sharing contracts for oil and natural gas (Enron Oil & Gas), and dividend stripping (Walfort Stocks & Shares) have helped lay down a certain and decisive course for tax law to follow in many years to come.
Analysing his judicial output over the last 20 years, two things strike the discerning reader; the clarity and simplicity of his judgments, and a willingness to refer to non-legal sources such as accounting standards, academic works, and business practices to lay down the law. In an era when the quantity of tax cases being heard and decided in judicial fora can overwhelm even the most conscientious tax practitioner, Justice Kapadia's clear and precise judgments present a welcome relief from the verbose and contradictory dicta that plague much of tax jurisprudence.
His attempt to adopt a more holistic approach to taxation that moves beyond narrow legal disputes and acknowledges its place in the arrangement of human affairs in business and trade must be welcomed.
Before completing his tenure as the Chief Justice of India in September 2012, Justice Kapadia is also poised to lay down the law on the taxation of offshore mergers and acquisitions of Indian companies in the legal challenge to the tax demand on Vodafone International's acquisition of Hutchison Essar's telecommunication business in India from the Hong Kong based Hutchison Group which was heard by a three-judge bench headed by him.
This is probably the first case of its kind being heard by the highest judicial authority, not only in India but anywhere in the world, and Justice Kapadia's judgment in this landmark case is likely to have a decisive impact on the future development of international tax jurisprudence. At a time when several multi-billion dollar cross-border M&A transactions are coming under the scanner of revenue authorities, Kapadia's judgment is likely to lay down the marker for revenue authorities and tax practitioners everywhere on the taxation of such transactions.
Chief Justice Kapadia is highly acclaimed for his deep knowledge of law, impeccable integrity, for being a hard taskmaster and for restoring the institutional integrity as well.
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