The lawyer in leader of opposition in Rajya Sabha Arun Jaitley perhaps had a sudden awakening on Friday when he asked Congress to clarify whether it paid Rs 90 crore to Associated Journals, which ran the now-defunct National Herald daily, saying if it was true it was violation of tax and electoral laws.
Jaitley told reporters that if it was true that such a transfer had taken place then it could lead to various consequences for the Congress party, including withdrawal of tax exemption.

The former law minister maintained that a political party can use its funds only for political purposes and not any business or financial activity.

Janata Party president Subramanian Swamy on Thursday had alleged that All India Congress Committee (AICC) had given Rs 90 crore to Associated Journals Private Limited, publisher of National Herald and Quami Awaz, which was allegedly written off by a new company Young Indian, a Section 25 company in which Rahul and Sonia Gandhi own 38 percent shares each.

Jaitley said he merely wanted a specific answer from the party and not adjectives like baseless and untrue as was used in a communication issued by Rahul Gandhi's office to Swamy threatening defamation case against him.

"As prime minister, Rajiv Gandhi made an amendment to the Representation of the People Act and later the Election Commission also issued detailed guidelines which serve as a code of conduct for the political parties,” Jaitley said.

“Article 8 of the EC guidelines says all political parties will use their financial resources only for political purposes," he said, adding that this is the basis on which both the donors and the political parties enjoy income tax exemption.

"If these charges are true, then it is a gross violation of law, of the Income Tax Act and the Representation of the People Act," Jaitley said.

He insisted that if the money was transferred to a commercial entity then it is a breach of the condition for registration of a political party. If the funds were diverted in this manner then the tax exemption given to Congress should go, he added.

BJP also maintained that this would be the first case of this kind where a political party had given funds to a company. "You cannot collect money on the strength of being a political party and then give it to a commercial entity...

There will be tax consequences. If there was misuse then the CBDT should intervene and the tax exemption should go," Jaitley said.

He also claimed that it would further entail penalties on the political party.

Elaborating on other details of the law, he said this has been in force since 2002. It states that for all donations above Rs 20,000 to a political party, the details of the donor have to be revealed.