Judicial inertia on matters such as indirect transfer of Indian assets to avoid paying tax here has paved the way for the introduction of General Anti-Avoidance Rules (GAAR) by the tax administration.

Vodafone was one such example, according to Pramod Kumar, member, income-tax appellate tribunal ( ITAT), who told a congregation of tax experts that what looked like the transfer of one share in an obscure Cayman Islands-based company was undisputedly the transfer of Vodafone's entire business in India.

"Vodafone may have won the battle in court, but what about the hundreds of similar transfers currently under the taxman's lens?" asked Kumar at the recently-concluded international tax conference even as the Prime Minister's Office ( PMO) is fine tuning GAAR - the controversial set of tax laws governing transactions like Vodafone's purchase of stake in Hutchison International, the erstwhile parent of Indian telecom company Hutchison-Essar.

GAAR, for the uninitiated, is a set of laws to check tax evasion by a series of seemingly legal transactions, but undertaken exclusively for the purpose of evading tax. For speakers like Kumar, the need for GAAR would not have arisen at all, if the judiciary had been consistent in its treatment of "substance over form".

Substance is the reason for undertaking a transaction, which could be for commercial reasons or simply to avoid tax. Substance over form implies the taxman's attention to why a transaction has taken place rather than what it is being made to look like.