Vodafone Notice Shows Government Policy Faces Internal Sabotage

The Rs 14,200 crore tax notice to Vodafone is a clear case of wilful disobedience with an intent to sabotage the government’s economic agenda.

It must be very clear, even to a high school student, that there are elements in the Revenue Department that are a law unto themselves. Their objective is evidently perverse – to undermine the government.

If they can serve a notice within weeks of the Prime Minister promising that the regime of retrospective taxes has ended, it is rather clear to me that it is a case of wilful disobedience with an intent to sabotage ​the government’s economic agenda.​

It reflects rather poorly on the leadership of the Ministry of Finance. Either they are powerless or they are complicit. Elements in the tax department are clearly not aligned with the government’s goal.

There are many on the cultural Right who feel that the government has let them down on their demands to end discrimination against Hindus – principally with respect to education and in the running of their own religious institutions.

They argue that the focus on ‘Vikas’ is not enough. However, the issue is that, even on ‘Vikas’, the government is not being allowed to pursue its goals by a section of the bureaucracy.

The issue of the notice to Vodafone, from all public accounts, appears to be a case of malevolence. It is mala fide. The issue is not about whether there is something inherently wrong with what Vodafone did. Apparently, Vodafone has three disputes with Indian tax authorities.

As R Jagannathan wrote in a different context, one needs to be ‘smart’ and not ‘strong’ when fighting some issues. This notice is not a show of righteous strength. It is a show of arrogance and obstinacy intended to destroy the climate that the government wishes to create. Retrospective taxation is hard to defend, no matter how devilishly clever and evasive the transaction was.

The Livemint report shows some government officials including Revenue Secretary Hasmukh Adia trying to defend the serving of the notice as a procedural matter. Perhaps they have to be seen as defending one of their own colleagues. But the defence is not persuasive and is unhelpful too.

As noted in an earlier Swarajya article in May 2015, this government will not be and is not being allowed to govern. But a smart combatant would have anticipated it and been prepared to handle it. Of course, the preparation required is extensive, thorough and ruthless, but in a smart and sophisticated manner.

​​Not only have all these been missing but there have been plenty of missteps, strategic and tactical errors and self-goals. ​The BJP is scoring self-goals in non-economic matters. On economic matters, it is being stymied by both political and bureaucratic hostility. The BJP will suffer grievously politically and the country will suffer enormously economically.

Something is seriously wrong with the leadership of the party and the nation and not just at the Ministry of Finance. Here is hoping that my conclusion is hopelessly wrong.