CONSTITUTIONAL ASPECTS By K.S.Naveen Kumar, Advocate, Bangalore

MODULE 1 What is law Scholars views about law Significance of law Objective : To understand the basic description of law and its significance K.S.NAVEEN KUMAR, ADV. 2

WHAT IS “LAW”? Law is nothing but a bundle of common sense. Technical sense: A set of rules and procedures to be followed in general by the members of public or particular section of the society. Eg. Traffic Rules and criminal law, Advocates Act and CAs Act. K.S.NAVEEN KUMAR, ADV. If it is only a bundle of comm3on sense. Then why should we know law. Common sense is the most uncommon among human beings. We (lawyers) are one among them. We read so much of law – over a period of time they loose their common sense and develop legal sense. Eg. Father-in-law – requires Rs.1 lakh urgently – cheque – no time to draw or encash – cash – two days would be returned. Small things common sense would say withdraw cash and then receive back cash or cheque. However, as per IT law it is an offence to give or take loan more than Rs.20000. 3 3

ABOUT LAW…. “Rules of conduct enforced by the State to maintain peace and order in the society” “The system of rights and obligations which the State enforces”. Scholar’s views: Austin – Law is a rule of conduct imposed and enforced by the sovereign. K.S.NAVEEN KUMAR, ADV. 4

SCHOLAR ‘S VIEW ABOUT LAW Salmond – Law is the body of principles recognized and applied by the State in the administration of justice. K.S.NAVEEN KUMAR, ADV. 5

SIGNIFICANCE OF LAW Why law: ‘Law is like oxygen in air, people would not realize its importance unless it is withdrawn’. Man lives in a society – Social animal. Does not live in isolation. Other individuals also co-exist. Rights and obligations to be defined to maintain peace, law and order. Every right has a corresponding obligation. Eg. Listening to music (nuisance – noise pollution), Peaceful enjoyment of property (Trespass), Parking. K.S.NAVEEN KUMAR, ADV. 6

SIGNIFICANCE OF LAW In life or business – survival of the fittest. Without law it would be survival of the most ruthless. Law – makes rights secure. Rule of man will prevail without law (eg. If discretion of tax collection is vested with an officer without any legal basis – subjects will be exposed to arbitrary, capricious and whimsical exercise of power). K.S.NAVEEN KUMAR, ADV. Without law, no rights will be secure. No one can be certain whether rights existing today will be respected tomorrow or not. 7 7

MODULE 2 Source of Law Tax - historical background Nature of tax Objective: (a) To know from where law emerges. (b) To briefly understand history of taxation and its nature K.S.NAVEEN KUMAR, ADV. 8

LAW… SOURCES OF LAW… Currently: a. Legislation i.e. Acts of Parliament and State Legislatures. b. Rules made by Government authorities. c. Judgments i.e. case laws. d. Customs and usages. Olden times: a. Scriptures. b. Customs and usages. c. Ruler’s / King’s mandate/ verdict. K.S.NAVEEN KUMAR, ADV. 9

Historical perspective of Tax 2000 years ago – Decree from Augustus Caesar that all the world should be taxed. Taxes in Greek, Roman and German Empire Basis of turnover or occupation Manu Smriti and Arthasastra – refers to variety of tax measures

Historical perspective Kautilya (Chanakya or Vishnu Gupta) – Arthasastra. Major portion devoted to financial matters including financial administration. Arthasastra – first authoritative text on public finance, administration and fiscal laws in this country. Bhaga, Bali, Kara, Vivita, Hiranya, Rajju, Chora Rajju

Historical perspective Manu said: - Taxes should be related to the income and expenditure of the subject. - Either complete absence of taxes or Exorbitant taxation should be avoided. - King should arrange the collection of taxes in such a manner that the subjects do not feel the pinch of paying taxes.

Historical perspective Mughal rule – taxes prevailed Britishers levied various taxes It was only for the good of his subjects that he collected taxes from them, just as the Sun draws moisture from the Earth to give it back a thousand fold – Kalidas “ The hardest thing in the world to understand is the income-tax” – Albert Einstein

What is tax? Essential characteristics of a tax Not a voluntary payment or donation Enforced contribution exacted pursuant to legislative authority, in exercise of taxing power. Imposed, levied and collected for the purpose of raising revenue Used for public or governmental purposes and not for payment for some special privilege granted or service rendered

Module 3 Constitution Context and background Preamble Fundamental duties Fundamental rights Important Articles w.r.t. taxation Lists – legislative fields w.r.t. taxation Objective: To examine few basic aspects of constitution, which are relevant to indirect taxes

FUNDAMENTAL DUTIES – Article 51A: It shall be the duty of every citizens of India: - To abide by the Constitution and respect its ideals and institutions, the National Flag and the National Anthem; To cherish and follow the noble ideals which inspired our national struggle for freedom;

To uphold and protect the sovereignty, unity and integrity of India; To defend the country and render national service when called upon to do so;

To promote harmony and the spirit of common brotherhood amongst all the people of India transcending religious, linguistic and regional or sectional diversities; to renounce practices derogatory to the dignity of women; To value and preserve the rich heritage of our composite culture; To protect and improve the natural environment including forests, lakes, rivers and wild life, and to have compassion for living creatures;

To develop the scientific temper, humanism and the spirit of inquiry and reform; To safeguard public property and to abjure violence; To strive towards excellence in all spheres of individual and collective activity so that the nation constantly rises to higher levels of endeavour and achievement. Who is a parent or guardian to provide opportunities for education to his child or, as the case may be, ward between the age of 6 and 14 years.

Fundamental Rights Article 13 – Laws inconsistent with or in derogation of the fundamental rights – void Right to Equality Article 14 – Equality before law Article 15 – Prohibition of discrimination on grounds of religion, race, caste, sex or place of birth

Fundamental Rights…. Art.16 – Equality of opportunity in matters of public employment Art.17 - Abolition of untouchability Art.18 – Abolition of Titles

Fundamental Rights …. RIGHT TO FREEDOM Art.19 – Protection of certain rights regarding freedom of speech and expression, assemble peaceably and without arms, form associations or unions, movement throughout territory of India, practise profession and carry on occupation, trade or business. etc.

Fundamental Rights… Art.20 – Protection in respect of conviction for offences ‘No person shall be convicted of any offence except for violation of the law in force at time of commission of the act charged as an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence’ – Art.20(1)

Fundamental Rights… Art.20(2) – “No person shall be prosecuted and punished for the same offence more than once.” Art.20(3) – “No person accused of any offence shall be compelled to be a witness against himself.”

Fundamental Rights… Art.21 – Protection of life and personal liberty – No person shall be deprived of his life or personal liberty except according to procedure established by law.

Fundamental Rights… Art.21A – Right to Education Art.22 – Protection against arrest and detention in certain cases

Fundamental Rights… RIGHT AGAINST EXPLOITATION Art.23 – Prohibition of Traffic in human beings and forced labour Art.24 – Prohibition of employment of children in factories etc.

Fundamental Rights…. RIGHT TO FREEDOM OF RELIGION Art.25 – Freedom of conscience and free profession, practice and propagation of religion Art.26 – Freedom to manage religious affairs

Freedom rights … Art.27 – Freedom as to payment of taxes for promotion of any particular religion Art.28 – Freedom as to attendance at religious instruction or religious worship in certain educational institutions.

Fundamental Rights… CULTURAL AND EDUCATIONAL RIGHTS Art.29 – Protection of interests of minorities Art.30 – Right of minorities to establish and administer educational institutions

Fundamental Rights… RIGHT TO CONSTITUTIONAL REMEDIES Art.32 – Remedies for enforcement of rights conferred by this part

India – discovered in new ST law!! India – section 65B(27) - (27) "India" means,- (a) the territory of the Union as referred to in clauses (2) and (3) of article 1 of the Constitution; (b) its territorial waters, continental shelf, exclusive economic zone or any other maritime zone as defined in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976; (80 of 1976.)

India…. (c) the seabed and the subsoil underlying the territorial waters; (d) the air space above its territory and territorial waters; and (e) the installations, structures and vessels located in the continental shelf of India and the exclusive economic zone of India, for the purposes of prospecting or extraction or production of mineral oil and natural gas and supply thereof;

Distribution of Legislative Powers Art.245 – Extent of laws made by Parliament and by the Legislatures of States Art.246 – Subject matter of laws made by Parliament and by the Legislature of States Art.248 – Residuary powers of legislation

Constitution Art.265 – No tax shall be levied or collected except by authority of law. Art.285 – Exemption of property of the Union from State taxation Art.289 – Exemption of property and income of a State from Union taxation Art.300A – Persons not to be deprived of property save by authority of law

Three organs of the State Parliament/Legislature Judiciary Executive

Art.226/227 – Writ Petition - Types Types of writ – mandamus, certiorari, prohibition, quo-warranto, habeas corpus

Art.366 - Definitions Art.366(28) – taxation includes the imposition of any tax or impost, whether general or local or special, and ‘tax’ shall be construed accordingly. Art.366(29A) – deeming fiction of sale or purchase of goods – 46th amendment - 1982

Constitution of India Union List – few entries 82 – Taxes income other than agricultural income 83 – Duties of customs including export duties 84 – Duties of excise on tobacco and other goods manufactured or produced in India except:

Union list (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance including in sub-paragraph (b) of this entry

Union list .. 85 – Corporation Tax 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 92B – Taxes on consignment of goods where such consignment takes place during interstate trade or commerce.

Union list …. 92C – Tax on services (not yet effective). 97 – any other matter not included in List II, III and any tax not mentioned in list II or III (residual powers)

State List – few entries 46 – Taxes on agricultural income 51 – Excise duty on alcoholic liquors, opium and narcotics 52 – Tax on entry of goods into a local area for consumption, use or sale therein (usually called octroi) 54 – Tax on sale or purchase of goods other than newspapers except tax on interstate sale or purchase

Concurrent list – few entries 35 – Mechanically propelled vehicles including the principles on which taxes on such vehicles are to be levied. 44 – Stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty

Importance of constitution – events/persons (N. A Importance of constitution – events/persons (N.A.Palkhivala & Justice M.N.Venkatachaliah)

About Constitution “If the Constitution is to be taken seriously, the interpretation and fulfillment of these general objects of policy will raise great difficulties for legislatures, and these difficulties will bring the Constitution, the Courts and the Legislature into conflict and disrepute. If these declarations are, however, to be treated as ‘words’ they will bring discredit upon the Constitution also – Prof.Wheare

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