Part XII: Finance, Property, Contracts and Suits

Article 265: Taxes Not to Be Imposed Save by Authority of Law

Original Article:

No tax shall be levied or collected except by authority of law.

Explanations:

Article 265 establishes a fundamental principle of fiscal governance in India. It ensures that no tax can be imposed or collected without legislative authorization, thereby safeguarding citizens against arbitrary taxation. This provision underscores the supremacy of the rule of law in financial matters, mandating transparency and accountability in taxation processes.

Legislative History:

Article 265 was adopted to ensure fairness in taxation during India's post-independence era. The framers of the Constitution intended to prevent arbitrary or excessive taxation by embedding this provision. It reflects the colonial grievances that arose from oppressive tax practices and aligns with the principle of "no taxation without representation."

Real-Life Examples:

• The introduction of the Goods and Services Tax (GST) regime in 2017 is a key example of compliance with Article 265. Every tax under GST was legislatively sanctioned to ensure uniformity and legality.
• The 2012 Vodafone tax case highlighted the significance of this article. The Supreme Court ruled in favor of Vodafone, emphasizing that taxes must be legislatively backed and not imposed arbitrarily.

Historical Significance:

Article 265 reflects the Constitution's commitment to protecting citizens' financial rights. It draws from colonial India's oppressive tax regime, where arbitrary taxation was a significant grievance. By mandating legislative approval for taxation, this article ensures democratic accountability and safeguards against exploitation.

Debates and Deliberations:

During the Constituent Assembly debates, members emphasized the need for a robust legal framework for taxation. Key highlights included:

• Dr. B.R. Ambedkar: Advocated for the inclusion of Article 265 to establish a clear boundary for taxation powers.
• K.T. Shah: Stressed the importance of protecting citizens from excessive taxation through legislative checks.

References:

• Constituent Assembly Debates: Insights into the inclusion of Article 265.
• The 101st Amendment Act, 2016: Introduction of GST and its compliance with Article 265.
• Vodafone International Holdings BV v. Union of India: A landmark case emphasizing the principle of lawful taxation.