Taxation

Even where statutes are silent, this principle is constitutionally inherent.

Petitioner sought a direction to the respondent to decide its pending appeal and, in the meanwhile, restrain the department from initiating recovery proceedings

Validity

There should be an adjudication of the grievance by an independent tribunal

An assessee is entitled to adjudication in respect of its disputed tax liabilities by at least one independent forum outside the hierarchy of the respondent department

Constitutional petition was disposed of with a direction to the respondent to hear and decide the appeal within a period of sixty days, and until then, no coercive measures were to be adopted against the petitioner by the department.

Said doctrine, though on one hand premeditated to avoid hardship, simultaneously safeguards the essential compliance of the prerequisites in which the exemption in tax or customs duty are invoked.

Burden rests on the person who claims an exemption or concession to substantiate that he is entitled to the same.

Burden rests on the person who claims an exemption or concession to substantiate that he is entitled to the same.

Said doctrine, though on one hand premeditated to avoid hardship, simultaneously safeguards the essential compliance of the prerequisites in which the exemption in tax or customs duty are invoked.

Non-provision and non-production of documents does not give the taxpayer right to enjoy while sitting on the fence.

Principles of tax equity demand levy of higher tax on individuals with higher ability to pay tax.

Tax cannot be levied on presumptions, assumptions, whims and conjectures for which there is no room in the fiscal statutes.

Transactions undertaken by taxpayer based in part on the interpretation of provision of law by the government revenue service

Courts subsequently interpreting the provision differently resulting in issuances of notices of reassessment by the revenue service imposing tax liability on the tax payer

Whether equitable remedy of rescission of transaction is available in a case where the taxpayer is mistaken about the tax consequences of transaction freely agreed upon]

[Per Brown J: (Majority view): Transactions that do not call for relief as a matter of conscience or fairness are properly outside equity's domain

Nothing is unconscionable or unfair in the ordinary operation/ application of tax statutes to transactions freely agreed upon

Tax consequences do not flow from parties' motivations or objectives

Rather, they flow from their freely chosen legal relationships, as established by their transactions

Taxpayer should neither be denied nor judicially accorded a benefit based solely on what they would have done had they known better

Proper inquiry is into what the taxpayer agreed to do and not into whether there is a windfall for the public treasury or a taxpayer

Court may not modify an instrument/ transaction merely because a party discovered that its operation generates an adverse and unplanned tax liability]

[Per Côté, J: (Minority view): Rescission is, in strictly limited circumstances, an available remedy that can be used to unwind transactions that were undertaken on the basis of a mistaken assumption, even if permitting it would effectively relieve the taxpayer from payment of unexpected taxes

Rescission on the ground of mistake is available in a tax context, but should be granted only in rare circumstances

Equity will not intervene to relieve a taxpayer from the consequences of a risk that was knowingly or recklessly accepted

Taxpayers should not engage in bold tax planning on the assumption that it will be possible to rescind their transactions should that planning fail

Since rescission is a remedy of last resort, it can only be granted if no alternative remedies are available; it is not sufficient for an alternative remedy to merely exist; the alternative remedy must be practical and adequate.

Measure of a tax must have a reasonable nexus with it, the subject matter, and that a tax cannot be levied on the basis of arbitrary valuation.

Tax, levy or charge can only be imposed under a clear mandate and sanction of law.

Measure of a tax must have a reasonable nexus with it, the subject matter, and that a tax cannot be levied on the basis of arbitrary valuation.

Tax, levy or charge can only be imposed under a clear mandate and sanction of law.

Principle is that if a person sought to be taxed comes within the letter of the law, he must be taxed, however great a hardship may thereby be involved, but on the other hand, if the State cannot bring the subject within the letter of the law he is free, however apparent it may be that his case is within what may be called the spirit of the law.

Only the verbiage of the Act may be considered and merits are not be read or implied therein.

Tax avoidance was permissible under law whereas tax evasion entailed penalty as it was always open for taxpayer to arrange his / her matters in such a manner as to lessen his /her burden

Taxpayer could arrange his / her affairs in such a manner so that brunt of taxation falling upon such taxpayer was reduced and same was permissible under law.

Normally there are three distinct types of provisions provided under the law namely charging provisions, assessment provisions and collection provisions

Charging provisions relate to levy and charge of tax, assessment provisions deal with the assessment, calculation or quantification of tax whereas collection provisions relate to the mode and manner of recovery or collection of tax.

Tax can only be imposed by a legislative Act and not by an executive order; it thus, embodies the democratic principle "no taxation without representation"

Law imposing a tax must be valid law, that is, it should not violate any provisions of the Constitution and should be within the legislative competence of the legislature

Law will be valid only if it is made in accordance with the procedure prescribed by the statute.

Only such person is to be subjected to the charging section of a taxing statute who falls within the scope of such charging section in view of the clear words used in the statute.

Superior courts could not engage in factual controversies, however an exception had been carved out for situations where a substantial defect in the reading of oral or documentary evidence was pointed out.

Order of adjudication passed on the basis of a ground not stated in the notice was palpably illegal and void on the face of it

Same logic should extend to an order imposing a tax liability for a time period not mentioned in the notice

Purpose of serving a notice on a taxpayer was to notify him of the case against him

When such a document contained incomplete information it could seriously prejudice the taxpayer's defence.

Superior courts could not engage in factual controversies, however an exception had been carved out for situations where a substantial defect in the reading of oral or documentary evidence was pointed out.

Order of adjudication passed on the basis of a ground not stated in the notice was palpably illegal and void on the face of it

Same logic should extend to an order imposing a tax liability for a time period not mentioned in the notice

Purpose of serving a notice on a taxpayer was to notify him of the case against him

When such a document contained incomplete information it could seriously prejudice the taxpayer's defence.

Tax demand should always be based on exact figures and there is no room for presumptions and guess work.

Law existing in a particular tax year or tax period is applicable for the purpose of determining tax liability.

No tax, fee, charge, or levy, by whatever name called, could be imposed by the Government or a public body, except under the authority of a law enacted by a competent Legislature.

Constitutional petition challenging the denial of concession was filed before the High Court and vide interim order the imported plant and machinery was directed to be released on furnishing of indemnity bonds

Final judgment in the proceedings was rendered in favour of the petitioner, however, the same was set aside by the Supreme Court

Petitioner's case was predicated on the premise that before initiating any recovery proceedings adjudication by the department was necessary; that a recovery notice without issuing a show-cause and adjudication was illegal; that provision of notice to a person, who was being proceeded against had to be read into every statute; that in the absence of an adjudication, no surcharge could be imposed; that noting on a goods declaration was not a speaking order and that the High Court could convert one type of proceedings into another

Validity

Petitioner had elected to avoid the departmental hierarchy of dispute resolution from the very onset of its grievance

Doctrine of election denoted that the election to commence and follow an available course, from concurrent avenues, vested with a suitor, however, once an option was exercised then the suitor was precluded from re-agitating the same lis in other realms of competent jurisdiction

Petitioner's plea for invocation of the department adjudication process, albeit twenty five years belated and post exhaustion of the remedial course elected to have been pursued, appeared to be impeded by the doctrine of election

Supreme Court while allowing the appeal had not issued any directions for a departmental adjudication, commencing vide a show-cause notice or otherwise

Constitutional petition, being devoid of merit, was dismissed.

By a rule making power no tax can be imposed or levied as it is only the charging provision of the Statute concerned which can do so.

Tax can only be imposed by a legislative act and not on executive order, it embodies democratic principle 'No taxation without representation'

Law imposing a tax must be a valid law, it should not violate any provision of the Constitution and should be within legislative competence of the legislature

Tax is valid only if it is made in accordance with the proceedings prescribed by statute

Revenue departments are not constitutionally free to ignore all procedures of law

Power to charge tax is not power to destroy

No one can sympathize with Revenue Officers for impatient commitment to their cause for achieving budgetary target who should not culled out budgetary targets of revenue from arteries of taxpayer but must respect to judicial process which rightly termed a small price to pay for civilizing hand of law, which alone can be given abiding meaning to Constitutional freedom

Law makes no difference between great and petty officer, who are all amenable to justice.

Once limitation starts to run and comes to an end, the taxpayer acquires vested right of escapement of assessment by lapse of time.

Tax shall be imposed on the subject with unambiguousness and in clear terms.

Tax shall be imposed on the subject with unambiguousness and in clear terms.

Quoting of wrong provisions of law in a show cause notice would not necessarily vitiate the entire process initiated thereunder

In deciding the legal validity of the show cause notice, it was important to first see whether the recipient/assessee of the said notice had been put to any prejudice in preparing and putting up its defence to the allegations made therein; and whether the issuer of the notice had the authority to issue the same, provided the notice had all the necessary facts leading to the alleged acts or omission of the recipient constituting the stated contravention of provisions of law, and thus, to be meaningfully responded by the assessee.

"Cess" was levied to develop only a particular service or sector and was introduced to promote a particular scheme which, according to government, needed attention

"Cess" was an imposition more like tax blended with certain attributes of fee since it was imposed for some specified and declared purpose.

Tax, however, was a common burden for raising revenue, which became part of public revenue of State whereas "fee" was exacted for specific purpose and for rendering services or providing privilege to particular individuals or class or community or specific area

For a "levy" to be a "fee", relationship between purpose and the persons from whom "levy" was being exacted was also to be established.

Charge of money by Government, if the same was not against a service provided by Government, then such levy could not be termed as "fee"

"Fee" could not be regarded as a general levy as same was meant for those who wanted to avail benefit of service(s) provided by the Government

In case of imposition of parking fee, parks fee, tuition fee, registration fee, license fee etc., direct beneficiary of such payment was the person who paid it and got reciprocated, though not in exact terms, the benefit out of such payment

"Tax" was not co-related to a particular service to be provided by Government to taxpayers and was in fact is a compulsory exaction of money by public authority for public purposes enforceable by law and was not a payment for service rendered.

Principles enumerated.

Person can be taxed only if he comes within the letter of law otherwise, he is free even though his case falls within the spirit of law.

No presumption or guess work is allowed to be the basis of tax demand/assessment rather the demand/assessment, essentially requires to be in exactness.

No room for intentment and no presumption as to tax.

Tax cannot be charged and levied unless it falls squarely within the purview of the charging provisions.

Person was to be taxed only if he comes within the letter of law otherwise, he is free even though his case falls within the spirit of the law.

Quoting of wrong provisions of law in a show cause notice would not necessarily vitiate the entire process initiated thereunder

In deciding the legal validity of the show cause notice, it was important to first see whether the recipient/assessee of the said notice had been put to any prejudice in preparing and putting up its defence to the allegations made therein; and whether the issuer of the notice had the authority to issue the same, provided the notice had all the necessary facts leading to the alleged acts or omission of the recipient constituting the stated contravention of provisions of law, and thus, to be meaningfully responded by the assessee.

No presumption was available against the bona fide or the honesty of a taxpayer and normally the authorities would not be justified in refusing to a taxpayer a reasonable opportunity of representing his views before deciding a matter

No presumption of bad faith against taxpayer was available unless there was sufficient material on record to establish and ascertain the bad faith

Pure guess or bare suspicion or stock phrase was not sustainable while framing assessment; there must be something more than bare suspicion.

Nobody could be convicted merely on the basis of assumptions or presumptions and there was no room for any intentment in the fiscal matters and there was no presumption as to tax.

Concept, meaning and scope.

Rule against double-taxation was a Judge-made law and did not have Constitutional basis, and High Court in the exercise of power of judicial review under Art. 199 of Constitution could only declare a provision unconstitutional if the same ran counter to the express mandate of the Constitution.

Tax could not be levied automatically through a delegated legislation until and unless it was leviable under the charging provision of the fiscal statute.

No tax could be levied "automatically" through an SRO until and unless such tax was otherwise leviable under the charging section of a fiscal statute.