India’s law of taxation is built on two central precepts. First, on the idea captured in Article 265 of the Constitution, that a tax may be imposed only with the authority of law. Second, on a principle of sureness, that any levy ought to be clear, consistent, and predictable. Both these precepts emanate out of a larger commitment to the rule of law, in particular to values of legality and certainty.
A reversal of judgments
Upholding these principles requires a commitment not only from the legislature but also from our courts too. But over the course of the last 12 months, there have been instances where the Supreme Court of India has undermined this commitment, by reversing well-reasoned judgments of High Courts, and by virtually enacting into existence taxes that lack legislative support. Two judgments, delivered by Justice M.R. Shah who retired from the Supreme Court on May 15, represent noteworthy examples.
