Page 40 - ELT_15th June 2020_VOL 372_Part 6th

A194 EXCISE LAW TIMES [ Vol. 372

Non-Exemption Notification
As already discussed above, tax notifications are construed very strictly
for the reason that no tax can be imposed by implication. Imposition of tax is al-
ways considered to be at loggerhead with personal right and property interests
of an individual. On this point, it is indispensable to advert our attention to fol-
lowing pertinent observation given by the Hon’ble Supreme Court in Commis-
sioner of Income Tax (Central)-I, New Delhi v. Vatika Township Private Limited [(2015)
1 SCC 1], that :
“Tax laws are clearly in derogation of personal rights and property interests
and are, therefore, subject to strict construction, and any ambiguity must be
resolved against imposition of the tax.” [Para 39(c)]
The concept of ‘Sovereignty’ which is attributed to a ‘State’ would be glaringly
incomplete for want of ‘Financial Sovereignty’ and ‘Financial Sovereignty’ of a
country cannot be imagined in absence of fluent source of revenue. However, the
imposition of tax makes a huge dent in the personal rights and property interests
of an individual. Article 265 of Constitution of India was engrafted so that the
two interests, viz. personal rights (which includes property interests) and public
interest (in the form of imposition and collection of tax) can be properly balanced
out. Expressing its opinion on this aspect, Hon’ble Supreme Court in the case of
Vatika Township Private Limited ibid observed that -
“… “fairness” doctrine as it lays down that if it is not very clear from the pro-
visions of the Act as to whether the particular tax is to be levied to a particu-
lar class of persons or not, the subject should not be fastened with any liability to
pay tax. This principle also acts as a balancing factor between the two juris-
prudential theories of justice - Libertarian theory on the one hand and Kantian
theory along with Egalitarian theory propounded by John Rawls on the other
hand.”
Therefore, only those tax provisions/notifications/circulars which pass muster
on being scrutinized on the touchstone of Article 265 can be said to be valid oth-
erwise, it will have to face the wrath of Articles 14, 19, and 21 of our Constitution.
For the sake of convenience, Article 265 is reproduced hereinbelow, which reads
as under :
“No tax shall be levied or collected except by authority of law”
In this background, it is indispensable to fully understand the elements which
constitute Article 265. Elucidating on this crucial point, Hon’ble Supreme Court
in Govindasaran Gangasaran v. Commissioner of Income Tax [MANU/SC/
0317/1985: 155 ITR 144] observed that :
“this Court, while explaining the conceptual meaning of a tax, delineated four
components therein, as is clear from the following passage from the said
judgment : The components which enter into the concept of a tax are well
known. The first is the character of the imposition known by its nature which
prescribes the taxable event attracting the levy, the second is a clear indication
of the person on whom the levy is imposed and who is obliged to pay the tax,
the third is the rate at which the tax is imposed, and the fourth is the measure
or value to which the rate will be applied for computing the tax liability. If
those components are not clearly and definitely ascertainable, it is difficult to
say that the levy exists in point of law. Any uncertainty or vagueness in the legis-
lative scheme defining any of those components of the levy will be fatal to its validi-
ty.”
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