The AGR case is a triumph of bureaucratic obstinacy over good sense

The ‘second National Bank of the United States’ was created by the Federal Government in 1816. Many state governments resented the bank for calling in loans it had made to them. Consequently, some states passed laws designed to hinder the bank’s operation. Others simply tried to tax it. Maryland imposed an annual levy of $15,000 on the bank, hoping to tax it out of existence.

When the challenge to the tax reached the Supreme Court, a unanimous Court speaking through Chief Justice Marshall held that the tax was invalid. The Court also used a phrase that has come to be one of the enduring clichés of taxation law: “The power to tax involves the power to destroy.”

If the events leading up to it and the judgment in the ‘AGR case’ are anything to go by, it’s a cliche that the Indian government and the Supreme Court have taken to heart.