JAMIA MILLIA ISLAMIA, NEW DELHI

FACULTY OF LAW

SESSION: 2018-2023

SUBJECT: TAX LAW

TOPIC: TAXING POWER OF CENTRE AND STATE AND THE

FEDERAL STRUCTURE OF CONSTITUTION.

SUBMITTED TO: SUBMITTED BY:

Dr. EKRAMUDDIN SHAYAN ZAFAR

ASSOSCIATE PROFESSOR IIIrd Year(R)

ROLL NO.:57

STUDENT ID.: 20182859

 ACKNOWLEDGEMENT

The success and final outcome of this assignment required a lot of guidance and assistance from
many people and I am extremely fortunate to have got this along the completion of my
assignment work. Whatever I have done is only due to such guidance and assistance and I could
not forget to thank them. I respect and thank Dr. Ekramuddin Sir, Tax law teacher for giving
me an opportunity to do this assignment and providing me all support and guidance which made
me complete this assignment on time. I am extremely grateful to him for providing such a nice
support and guidance in this pandemic situation. Thank you Sir for your support without your
help and guidance it was impossible to bring up this assignment.

----SHAYAN ZAFAR
 INTRODUCTION

The word tax is based on the Latin word taxo which means to estimate. To tax means to impose a
financial charge or other levy upon a taxpayer, an individual or legal entity, by a state or the
functional equivalent of a state such that failure to pay is punishable by law. Taxation has existed
since the birth of early civilization. In ancient times taxes were either material or money like
goods or services in the primitive society. The subjects used to pay a share of their income to the
Head of a tribe or to the King who in return provided them with the administration security from
foreign aggression and other civic amenities.

In the medieval centuries feudalism was founded, so the origin of modern tax system also was
founded. Feudal market dues, tolls for protection and use of road, bridges, ferries, land rent, and
other payment in goods and services were gradually transferred into money payment with the
rise of money economy, Kings liked to receive money and the people preferred to pay money
instead of goods and services. Step by step the old feudal revenue system changed into taxation.

Then with the development of economic sciences and with the passage of time, the functions of
modern state appeared and taxation gradually became a tool of usage with more than one goal
and became important source of revenue. During 19th and 20th centuries, there has been both
qualitative and quantitative change in the public expenditures. Taxation has passed through the
stages with passage of time, and tax’s functions and objectives also have changed from the
ancient communities to medieval societies to modern societies also, so the tax system has
evolved with the evolution of the functions of the modern state.

Taxation is a payment from natural persons or legal entity and it is levied by government ,for
which no goods or services is received directly in return, so taxes is that amount of money, the
people pay which is not related directly to the benefit of people obtained from the provision of a
particular goods or services1.

Until the early 1930s, it was universally accepted in principle that governments should balance
their budgets. Thus, the principle reason for taxation was to pay for government expenditures. Of
course, governments had from time to time resorted to borrowing in order to pay for their

1
Vikas Mundra, Tax Laws & Practices, (Law Point Publication, Kolkata).
expenditures and government borrowing was relatively quite large during some war periods.
Government borrowing may be from the private sector or from abroad. Alternatively,
governments may borrow from the central bank of the Country. A portion of taxes also goes to
pay off the state’s debt and the interest accumulates. The taxes collected have been used by the
government to carry out many functions.

Some of these include:

i. expenditures on war,
ii. the enforcement of law and public order,
iii. protection of property,
iv. economic infrastructure (roads, legal tender, enforcement of contracts, etc.),
v. public works,
vi. social engineering, and
vii. the operation of government itself.

Governments also use taxes to fund welfare and public services. These services can include :

i. education systems,
ii. health care systems,
iii. pensions for the elderly,
iv. unemployment benefits, and
v. public transportation, energy, water and waste management systems, common public
utilities, etc.

Governments have also financed expenditures in recent years through the sale of publicly owned
assets. Although asset sales were an important source of funds to the government, however, they
are necessarily limited since assets can only be sold once. Thus, governments still have to raise
most of the revenue needed to finance their expenditures through taxation or by charging directly
for government services (user charges). Governments uses different kinds of taxes and vary the
tax rates, this is done to distribute the tax burden among individuals or classes of the population
involved in taxable activities, such as business, or to redistribute resources between individuals
or classes in the population.
Modern social security systems are intended to support the poor, the disabled, or the retired
person by taxes on those who are still working. In addition, taxes are applied to fund foreign aid
and military ventures, to influence the macroeconomic performance of the economy or to modify
patterns of consumption or employment within an economy, by making some classes of
transaction more or less attractive. Thus, there is no doubt that most government expenditures
must be paid through the taxation system and it is reasonable to see this as the principle function
of taxation. Yet there have always been a variety of subsidiary objectives of taxation.

In the present time, taxation is not just a means of transferring money to the government to spend
it for meeting the public expenditures or raise revenue to the government, but taxes have become
beside that, as a tool for reduce demand in the private sector, redistribution of income and wealth
in the societies in the countries. It is also a means for economic development and for playing
very important role in the case of stabilization of income, protection industrial home from
foreign industrials. Taxation helps to find out solution for some economic problems that face the
state, like unemployment, inflation, and depression. Taxation finds out solution for some
economic problems, but not alone, but there are also a lot of another fiscal instruments. They are
working together for solution of those economic problems. Countries practice sovereignty
authority upon its citizens, through levying of Taxes.
 TAXING POWER

Taxation is the legal capacity of the sovereignty or one of its governmental agents to exact or
impose a charge upon persons or their property for the support of government and for the
payment for any other public purposes which it may constitutionally carry out. The power of
taxation differs from the power of eminent domain, for under taxation the government is required
to make and enforce contribution of money or property by the citizen as his share of the burden
of support of the government. Property taken under eminent domain is much beyond the owner's
share of the burden of government. Eminent domain takes nit a share of the public burden, but
more than a share.

A government cannot exist without raising and spending money. Parliament controls public
finance which includes granting of money to the administration for expenses on public services,
imposition of taxes and authorization of loans. This is a very important function of Parliament.
Through this means Parliament exercise control over the executive because whenever Parliament
discusses financial matters, government's broad policies are invariably brought into focus. The
Indian Constitution devises an elaborate machinery for securing parliamentary control over
finances which is based on the following four principles 2.

The first principle regulates the constitutional relation between the Government and Parliament
in matters of finance. The executive cannot raise money by taxation, borrowing or otherwise, or
spend money, without the authority of Parliament. The second principle regulates the relation
between the two Houses of Parliament in financial matters. The powers of raising money by tax
or loan and authorizing expenditure belongs exclusively to the popular House, viz., Lok Sabha.
Rajya Sabha merely assents to it. It cannot revise, alter or initiate a grant. In financial matters,
Rajya Sabha does not have co-ordinate authority with Lok-Sabha and Rajya Sabha plays only a
subsidiary role in this respect. The third principle imposes a restriction on the power of
Parliament to authorize expenditure. Parliament cannot vote money for any purpose whatsoever
except on demand by ministers. The fourth principle imposes a similar restriction on the power
of Parliament to impose taxation. Parliament cannot impose any tax except upon the
recommendation of the Executive.

2
Dr. S. R Myneni, Principles of Taxation & Tax Laws, (Allahabad Law Agency).
 Constitutional Podium of Taxing Power

The entries in the legislative lists are divided into two groups- one relating to the power to tax
and the other relating to the power of general legislation relating to specified subjects. Taxation
is considered as a distinct matter for purposes of legislative competence. Hence, the power to tax
cannot be deducted from a general legislative Entry as an ancillary power. Thus, the power to
legislate on inter-state trade and commerce under Entry 42 of List I does not include a power to
impose tax on sales in the course of such trade and commerce.

There is no Entry as to tax, in the Concurrent List; it only contains an Entry relating to levy fees
in respect of matters specified in List III other than court-fees. In order to determine whether a
tax was within the legislative competence of the legislature which imposed it, it is necessary to
determine the nature of the tax, whether it is a tax on income, property, business or the like so
that the Entry under which the legislative power has been assumed could be ascertained. The
primary guide for this is what is known as the 'charging section. The identification of the subject-
matter of a tax is only to be found in the charging section, the section which creates the liability
to pay the tax as distinguished from the mode of assessment or machinery by which it is
assessed.

Generally speaking, all taxation is imposed on persons, but the nature and amount of liability is
determined either by individual units, as in the case of a poil-tax, or in respect of the tax payers'
interest in property or in respect of transactions of activities of the tax payers. But the incidence
or the ultimate burden of a tax does not determine its nature or alter the legislative power relating
to it. It is the substance of the levy and not the form that determines th nature of the tax. The
name given by the Legislature is not conclusive for this purpose.

Once it is held that a legislature has the power to legislate over a particular subject, its
competence is not to be limited by the manner in which the power is exercised. Thus, a taxing
statute may be amended by incorporating a provision in an annual Finance Act. The intrinsic
character of the tax is not to be determined by the mode of measurement or the standard of
calculation prescribed for assessing the amount of the tax3.

3
Dr. M. P Jain, The Constitution Of India, (Lexis Nexis(.
So far as the Entries relating to the taxing power are concerned.- "it is wrong to think that two
independent imposts arising from two different acts or circumstances were not permitted" by
Constitution. Thus, the same article may be subject to a Central excise duty and a State Octori
duty, or a State tax as well as an Ambit of Taxing Power.

If the power to impose a tax is established, the power to collect the same is necessarily implied.
The legislature having the power to impose a tax has also the power to prescribe the means by
which the tax shall be collected and to designate officers by whom it shall be enforced; the
obligation and indemnity of those officers; the means to ensure proper realization of the tax. The
method and manner of collection of tax is no criterion for judging the vires of the tax law. The
following powers flow from the power to tax as ancillary powers:

i. To provide for refund of a tax illegally or improperly collected and the right to claim such
refund.
ii. To provide for the prevention of evasion of the tax imposed to impose restriction upon
iii. To levy a penalty for the proper enforcement of the taxing statute, or collecting any
amount wrongly under colour of that statute, whether by way of fine or forfeiture.

On the other hand, in exercise of taxing power conferred by exercise of a legislative Entry, the
Legislature cannot provide for the following, which cannot be said to be 'ancillary' to the
legislative power in question:

i. that any money collected by a person by a wrong application of taxing law would still be
recoverable by the State as if it were a tax imposed under its legitimate powers, even
though the Legislature may penalize such illegal collection.
ii. The result would be the same if the law required the dealer who has recovered an illegal
sum which was not recoverable under the taxing law to deposit it with the State so that
the State might refund to the person from whom the money had been illegally recovered,
because the requirement of deposit with the State is an exercise of the taxing power over
a subject which was outside that power.
 ATTRIBUTES OF POWER OF TAXATION

We refer this power of taxation as referring to the power of the state to demand from us,
members of the society, our contribution or respective contributions for the operation and
maintenance of the government. It’s a process of raising income, taxation is referred to as the
means by which the sovereign, through its law making body, our congress, raises income to
defray the necessary expenses of the government and for the supreme court of all public needs.

The power of taxation has the following attributes:

i. Inherent in the state - Inherent in the sense that even without any provision in the
constitution or any law for that matter, the state no doubt can exercise this power, just
like the power of imminent domain and police power of the state. This goes with the very
existence of the state, that’s why it is called inherent.
ii. Legislative in character - Primarily lodged in the congress, just like power of imminent
domain and police power.
iii. This power is pervasive, but is subject to some limitations - There are limitations thereon
which are characterized as inherent and there are also limitations which are characterized
as constitutional restrictions or limitations.
When we speak of taxation as referring to the power of the state to levy taxes then when we
speak of taxes, refers therefore that to the income or the revenue raised by the state. Taxes or the
tax is the defined as an enforced proportional contribution from persons or things as levied by the
law making body of the state having jurisdiction over the same or over the persons or things
subject of such imposition, to defray the expenses of the government. Taxation refers to the
process of raising revenue and the tax is the product or the fruit of such process or the exercise of
power of taxation4.

4
Dr. Vandana Bangar, Advanced Tax Laws, (Aadhya Prakashan).
 CONSTITUTIONAL PROVISION OF TAXATION

Article 246(1) of Constitution of India states that Parliament has exclusive powers to make laws
with respect to any of matters enumerated in List I in Seventh Schedule to Constitution (i.e
Union list). Article 246(3) provides that State Government has exclusive powers to make laws
for State with respect to any matter enumerated in List II of Seventh Schedule to Constitution
(i.e. State List). Parliament has restrictive forces to make laws in regard of issues given in Union
List and State Government has the elite locale to enact on the issues containing in State List.

There is yet another rundown i.e List III (called simultaneous rundown) in the Seventh Schedule
to the Constitution. In regard of the issues contained in List III both the Central Government and
State Governments can practice forces to enact. If there should arise an occurrence of Union
Territories Union Government can make laws in regard of the considerable number of passages
in all the three records.

Rundown III of Seventh Schedule (i.e Concurrent rundown) incorporates sections like Criminal
law and Procedure, Trust and Trustees, Civil Procedures, financial and social arranging,
exchange unions, altruistic foundations, value control industrial facilities, and so forth. There is
no Entry as to tax, in the Concurrent List; it only contains an Entry relating to levy fees in respect
of matters specified in List III other than court-fees. In order to determine whether a tax was
within the legislative competence of the legislature which imposed it, it is necessary to determine
the nature of the tax, whether it is a tax on income, property, business or the like so that the Entry
under which the legislative power has been assumed could be ascertained.

On the off chance that there is a contention between the laws enacted by State Government and
Central Government in regard of passages contained in Concurrent rundown, law made by Union
Government wins.

However there is one exemption to this administer, if law made by State contains any
arrangement disgusting to prior law made by Parliament, law made by State Government wins,
on the off chance that it has gotten consent of President. Indeed, even in such cases, Parliament
can influence crisp law and change, to rescind or fluctuate law made by State.
Presently gives up through the Entries in Union rundown and State list significant to Taxation.

Union List:

Entry No. 82 – Tax on Income other than agriculture income.

Entry No. 83 – Duties of customs including export duties.

Entry No. 84 – Duties of excise on Tobacco and other goods manufactured or produced in India
except alcoholic liquors for human consumption, opium, narcotic drugs, but including medicinal
and toilet preparations containing alcoholic liquor, opium or narcotics.

Entry No. 85 – Corporation tax.

Entry No. 92A – Taxes on sale or purchase of goods other than newspapers, where such sale or
purchase takes place in the course of Interstate trade or commerce.

Entry No. 92B – Taxes on consignment of goods where such consignment takes place during
Inter-State trade or commerce.

Entry No. 92C – Tax on services

Entry No. 97 – Any other matter not included in List II, List III and any tax not mentioned in List
II or List III.

State List:

Entry No. 46 – Taxes on agricultural income.

Entry No. 51 – Excise duty on alcoholic liquors, opium and narcotics.

Entry No. 52 – Tax on entry of goods into a local area for consumption, use or sale therein
(usually called Octroi or Entry Tax).

Entry No. 54 – Tax on sale or purchase of goods other than newspapers except tax on interstate
sale or purchase.

Entry No. 55 – Tax on advertisements other than advertisements in newspapers.

Entry No. 56 – Tax on goods and passengers carried by road or inland waterways.

Entry No. 59 – Tax on professionals, trades, callings and employment. There are also certain
restrictions which have been imposed in our Constitution on the powers of State Governments
and Union Government. So far indirect tax especially the tax on sale and purchase of goods is
concerned certain restrictions imposed in Constitution are provided here below:

Article 286(1) – State Government cannot impose tax on sale or purchase during imports or
exports; or tax on sale outside the State.

Article 286(2) – Parliament is authorized to formulate principles for determining when a sale or
purchase takes place (a) outside the State (b) in the course of import or export.[sections 3,4,5 of
CST Act, 1956 have been legislated under these powers].

Article 286(3) – Parliament can place restrictions on tax on sale or purchase of goods declared as
goods of special importance and the State Government can tax such declared goods subject to
these restrictions[section 14, 15 of CST Act, 1956 imposes restrictions and conditions on the
power of State Governments to levy tax on declared goods.]

Article 301- Trade, commerce and inter -course through out the territory of India shall be free,
subject to provisions of Article 302 to 304 of Constitution.[Entry tax in Haryana was held as
ultra vires of article 301 by Punjab & Haryana High Court in Jindal Strips Ltd. v State of
Haryana and others5,

Article 302 – Restriction on trade or commerce can be placed by Parliament in the public
interest.

Article 303(1), 303(2) – No discrimination can be made between one State and another or give
preference to one State over another. Such discrimination or preference can be made only by
Parliament by law to deal with situation arising from scarcity of the goods.

Article 304 – State can impose tax on goods imported from other States or Union territories, but
a State cannot discriminate between goods manufactured in the State and goods brought from
other States. Proviso to article 304 provides that State legislature can impose reasonable

5
(2007) 29 PHT 385 (P&H)].
restrictions on freedom of trade and commerce within the state in public interest. However, such
bill cannot be introduced in State Legislature without previous sanction of the President. Article
265 – No tax shall be levied or collected except by authority of law.

Article 300A – No person shall be deprived of its property save by authority of law.

CONSTITUTIONAL LIMITATION UPON TAXING OF POWER

Apart from the limitation by the division of the taxing power between the Union and State
Legislature by the relevant Entries in the legislative Lists, the taxing power of either Legislature
is particularly subject to the following limitations imposed by particular provisions of our
Constitution:

1) It must not contravene Art.13.

2) it must not deny equal protection of the laws, must not be discriminatory or
arbitrary.(Art.14) (3) It must not constitute an unreasonable restriction upon the right to
business.(19(1)(g))
3) No tax shall be levied the proceeds of which are specially appropriated in payment of
expenses for the promotion or maintenance of any particular religion or religious
denomination (Art.27).
4) A State Legislature or any authority within the State cannot tax the property of the
Union.(Art.285)
5) The Union cannot tax the property and income of a State (Art.289).
6) The power of a State to levy tax on sale or purchase of goods is subject to Art.286.
7) Save in so far as Parliament may, by law, otherwise provide, a State shall not tax the
consumption or sale of electricity in the cases specified in Art.287
 DELEGATION OF TAXING POWER

The doctrine of excessive delegation is applied by the courts to adjudge the validity of the
provision delegating the power. Therefore, too board power ought not to be vested in the
executive matters of taxation; the parent act ought to contain policy in the light of which the
executive is to exercise the power delegated to it. The courts uphold delegation of power to
decide "matter of details" concerning the working of the tax law in question. The expression
"matters of details", in truth, is really a euphemism to cover the delegation of significant powers
to the executive in the tax area.

With regard to delegation in taxing legislation, the following principles may be treated as well
settled:

The power to impose a tax is essentially a legislative function, under article 265 of the
constitution no tax can be levied or collected except by the authority of law, and here law means
law enacted by the legislature and not made by the executive. Therefore, the legislature cannot
delegate the essential legislative function of imposition of tax to an executive authority. Subject
to the above limitation, a power can be conferred on the government to exempt a particular
commodity from the levy of tax. A power may also be delegated to bring certain commodity
under the levy of tax. The power to fix the rate of tax is a legislative function, but if the
legislative policy has been laid down, the said power can be delegated to the executive. It is open
to the legislature or executive to fix different rate of tax for different commodities. Commodities
belonging to the same category should not, however, be subjected to different and discriminatory
rates in the absence of any rational basis. Needs of the taxing body is not a test for determining
whether guidance was furnished by the legislature in exercising power to tax. The circumstance
that the affairs of the taxing body (panchayat, municipality, corporation, etc.,) are administered
by the elected representatives responsible to the people is wholly irrelevant and immaterial in
determining whether the delegation is excessive or otherwise. A taxing statute should be strictly
construed. If a provision is ambiguous, the interpretations that favour the assesse should be
accepted. A distinction, however, should always be made between charging provisions and
machinery provisions should be construed liberally so as to make charging provisions effective
and workable. General principles of delegated legislation apply to taxing statutes also.
 RATES OF TAXATION

The power to decide what to tax as well as whom to tax was delegated, there are other varieties
of delegation. The executive or the delegate may be empowered to fix the rates of taxation.
Under the central excise and salt act 1944, the government can by notification increase upto 50%
the excise duty levied by the parliament on commodity. Such a notification is required to be laid
before the parliament. Similarly, under the sea customs act, the executive can vary the rates of
taxation provided under the act by exempting certain goods partially from duty. Is such
delegation valid? In Devi das v. Punjab, the supreme court upheld a provision which authorised
the executive to levy sales tax at a rate between 1 percent and 2 percent. In the same act,
however, where power was given to the government to levy tax at such rates as it deems fit, the
delegation was held to be invalid. In Delhi municipality v. BCS & W Mills, the court upheld a
provision, which delegated power to levy electricity tax, without setting any limits, to the
corporation. The court while distinguishing this case from devi das pointed out that:

i. The delegation was to a local body which was popularly elected and whose decisions
were taken after public debate.
ii. The upper limit to the total levy was provided by the needs of the body which had to be
deduced from the nature of its functions.
iii. The body was subject to government control.

Similar grant of power to a municipal corporation was upheld in corporation of Calcutta vs

liberty cinema, the court is generally more willing to uphold delegation of fiscal power in favour
of elected bodies such as panchayats or municipalities. In Darshanlal Mehra v. India, the
supreme court observed that the rate of tax to be levied and the persons or the class of persons
liable to pay the same was to be determined by inviting objections which were finally considered
and decided by the state government. The tax was to be levied in accordance with the statutory
rules framed by the state government and those rules were required to be laid before each house
of the state legislature. These, power in the opinion of the court, constituted sufficient guidance
and safeguards for valid delegation of legislative

In Nagappa v. IO mines cess commissioner & anor, supreme court held that section 2 of the
iron mines labour welfare act 1958, which authorised the government to levy and collect excise
duty not exceeding 50% tone on iron ore by a notification in the official gazette, was valid. The
proceeds of the levy were to be used for the welfare of labour and the maxima had been laid
down.

Must the law always lay down the maxima subject to which the duty or tax may be levied by the
subordinate law making authority? GB Modi v. Ahmedabad municipality, the supreme court
observed that absence of such a provision per se did not make the delegation of the power to levy
excise duty to the government was upheld because the impugned act specified the purpose for
which it was to be utilised and the duty was to be limited to the expenses required for
discharging the statutory function. In Sbdayul v. Uttar Pradesh the supreme court said:

It is true that the power to fix the rate of a tax is a legislative power but if the legislature lays
down the legislative policy and provides the necessary guidelines, that power can be delegated to
the executive. Though tax is levied primarily for the purpose of gathering revenue, in selecting
the objects to be taxed and in determining the rate of tax, various economic and social aspects
such as the availability of the goods, administrative convenience, the extent of evasion, the
impact of tax levied on the various sections of the society taxation is an instrument of planning.
It can be used to achieve the economic and social goals of the state. For that reason the power to
tax must be a flexible power.
 Role of Judiciary in Taxing Power

In Gwalior rayon silk manufacturing co ltd v. Assistant Commissioner of Sales Tax, S8 (2)(b)
of the central sales tax act which authorised levy of sales tax on sale of goods in the course of
inter state trade and commerce at the rate of 10 percent or at the rate applicable to the sale or
purchase of goods inside the appropriate state, whichever is higher was challenged. The
impugned section was upheld by all the judges, though they differed on the extent of permissible
delegation, Khanna J rejected the argument that since the legislature could repeal the act it had
retained enough control over subordinate legislation and therefore it was not necessary to lay
down legislative policy or guidelines for the delegate. Mathew j. in his dissenting judgment,
upheld the argument, which he again pursued in a majority opinion in N.K Papiah v. Excise
Commissioner.

In Banarasi Das v. State of Madhya Pradesh, the Supreme Court was confronted with the
question as to whether Section 6(2) of Berar Sales Tax Act, 1947 which empowered the State
government to amend the schedule of the Act providing either for exemption from sales tax or to
bring in other goods within the purview of sales tax, was suffering from the vice of excessive
delegation. The Supreme Court speaking through Justice Venkatarama Aiyer held that the
impugned provision was not an impermissible delegation of legislative power. The Supreme
Court relied on Raj Narain's Case and held that the executive can determine details relating to the
working of taxation laws, such as the selection of persons on whom the tax is to be laid and the
rates at which it is to be charged. In the instant case the Court also referred to Powell v. Apollo
Candle Co. Ltd. and Syed Mohammed and Co. v. Madras and Hampton Junior and Co. v. US
and went on to hold that the power conferred by Section 6(2) was not unconstitutional. Actually,
the judicial comprehension of the judgment in Banarasi Das case came to light only after the
subsequent judgments like in the case of Corp. of Calcutta v. Liberty Cinema, wherein the court
held there was no distinction in principle between delegating a power to fix rates of taxes to be
charged on different classes of goods and a power to fix rates simpliciter. Thus, in the instant
case the majority upheld the validity of Section 548(2) of the Calcutta Municipal Act, 1951 was
not void notwithstanding that no guideline was issued6.

6
Dr. J. N Pandey, Constitution Of India, (Allahabad Law Agency).
Two years later in the year 1967 in the case of Devi Das v. State of Punjab, the Supreme Court
was confronted with the question as to whether Section 5 of the Punjab General Sales Tax
(Amendment) Act, 1948 suffered from the vice of excessive delegation. The provision
empowered the executive to levy sales tax at the rate not exceeding 2%. The Court stated that it
was alright to confer a reasonable area of discretion on the Government by a fiscal statute, but a
large statutory discretion by means of a wide gap between the maximum and the minimum rates
and thus enabling the government to fix an arbitrary rate is not sustainable. While over the other
provision in the same case which gave a power to the government to impose tax at any rate from
time to time was held to be void. Justice Subba Rao, speaking for the constitution bench held that
the power conferred on the provincial government to levy every year on the taxable turnover of a
dealer a tax at such rates as the said government might direct was an uncontrolled power. He also
added that the legislature practically effaced under that section as no guidance could be gathered
under that section or any other provisions of the Act.

In the case of CST, UP v. Bakhtawar Lal Kailash Chand Arhtiit was that it is immaterial
whether a completed sale precedes the movement of goods or follows the movement of goods or
takes place while the goods are in transit. What is important is that movement of goods and the
sale must be inseparably connected, moreover the movement shall be physical and such
movement must be inextricably connected with sale. This Sale need not precede the inter State
movement. Sale can be either before the movement or after the movement.

As the purposes differ, the nature and the modes of exercise of sovereign power by the
Parliament, as the Peoples' delegate, under Parts XI and XX, differ. The exercise of Power by the
Parliament under Part XI is ordinary legislative Power, within the prescribed limits of authority.
The exercise of Power by the Parliament under Part XX, being special in nature, is extra-
ordinary, in its mode of exercising the law making Power within its prescribed limits of
authority. Considering, the special nature with reference to the mode of exercising the
extraordinary power, under Part XX, the un-enumerated power to amend Part III under Art. 368
of Part XX, the exercise of which by any organ in the state, is expressly forbidden under
Art.13(2), as an incident of the Peoples' exercise of sovereign power of retaining Fundamental
Rights under Part III, in the process of exercising the Rights of Self-Determination, the un-
enumerated power to amend Part III under Art.368 of Part XX cannot be construed as one
identical with un-enumerated ordinary legislative power, under Entry 97, List I, Schedule VII
read with Art.248 of Part XI as is held in the decision of I.C Golak Nath v. The State of Punjab.
 CONCLUSION

The Government has attempted to accomplish the target of social welfare by giving different
motivations to training, wellbeing, lodging, investment funds, benefits plans, gifts, senior
subjects and ladies assesses, and producing work and so forth. These motivating forces are
apparent as these are connected with the fundamental necessities of a typical man. Be that as it
may, if there should arise an occurrence of a few motivating forces the money related roof is by
all accounts outlandish or low as it has not been changed since quite a while e.g. restorative
costs, enthusiasm on self involved lodging credit, sparing plans. The above articles of the
Constitution are vital in connection to tax assessment and must be profoundly comprehended by
each duty proficient. Another framework will likewise mean the appropriation of focal
government assets to nearby specialists should be assessed and balanced. The trust that nearby
specialists with bring down expense bases ought not miss out because of any such move in
framework, while holding important neighborhood adaptability in levels of nearby tax collection.
Nearby specialists will likewise need adequate means under the new framework to moderate
dangers by overseeing variances in incomes over the monetary cycle, in-year and amid holes
between obligation emerging and receipt of installment.

The trust this is an ideal opportunity to change neighborhood tax collection. They have led more
top to bottom examination of potential types of assessment accessible than any time in recent
memory to educate wrangle about and the development of nitty gritty recommendations. They
have inferred that there is nobody perfect expense however we have demonstrated that there are
methods for planning a superior assessment framework. There is currently a genuine prospect of
starting a program to make neighborhood tax assessment more attractive – more dynamic, more
steady, more effective and all the more locally enabling. Elucidation of each law, legitimacy of
subordinate enactment's and regulatory activities must be judged out of sight of the arrangements
of Constitution. Thus these are the constitutional provisions with is relating to the taxation in
India.
 BIBLIOGRAPHY

S.NO BOOKS REFERRED AUTHOR

01. TAX LAWS & PRACTICES VIKAS MUNDRA

02. INDIRECT TAXES & PRACTICES V.S DATEY

03. PRINCIPLES OF TAXATION & TAX LAWS Dr. S. R MYNENI