DELEGATION OF TAXING POWER

The power to levy tax is and essential legislative function The constitution u/A 265 says

"No tax shall be livied or collected except by authority of law"

The legislature has to decide that How much to tax and whom to tax .

The legislature cannot legislate on all aspect of taxation, some delegation in unavoidable

Object for Taxing

Not only to raise revenues for the state but also for regulating the socio, economic or political
structure of the country.

In the case of Avinder Singh v. Stare of Punjab (AIR 1979 SC 321)

Krishna Iyear – J laid down the test for valid delegation. The test goes as:

1- The legislature cannot efface itself.

2- It cannot delegable the plenary or the essential legislative functions.

3- Even if there be delegation, Parliamentary control over delegations should be a living

activity as a constitutional necessity.

He also stated that "While what constitute and essential legislative feature cannot be delineated
in detail, it certainly cannot include a change of policy. The legislature is the master of legislative
policy and if delegation is free to switch policy it may be usurpation of legislative power itself"

In this case Sec 90 (4) of the Punjab Municipal Corporation Act 1976 was under question as it
required various municipalities to impose a tax of Re 1 per bottle of foreign liquor.

On the failure of the municipality to take action the govt. of Punjab imposed the same tax, the
power to impose tax was challenged on the ground of excessive delegation.

"For the purpose of the Act" :- lay down sufficient guideline for the imposition of tax.

Sub - sec (3) of S .90 :- rate of levy to be determined by the state Govt.

- S. Sec (5) :- State Govt. to notify the tax which the corporation shall levy.

These provisions show that the levy of tax shall be only for the purpose of the
Act"

- An expression which sets a ceiling on the total guideline that may be collected
- And also comanlser the objects for which levies can be spent & :- It provides a sufficient
guidelines.

In Darshan Lal Mehra v. UOI AIR 1992 SC 714 I the U.P. Nagar Mahapalika Adhniyam, 1959,
S.2 was in question under taxing power was delegated to the Majapalika and it was contended
that it is abdication of legislative function.

The court rejected this contention that since the act under which this power is given is having a
statutory force as the state government has framed rules and the said rules are paid before the
house and the legislature has the power to modify the rules and therefore it is not an abdication
of legislative power.

In the case of Western Indian theatre, Ltd. v. Cantonment Board PoonaCantonment AIR 1959
SC 582 the different rates of entertainment tax imposed on two different Cinemas was
challenged. The court rejected it saying that keeping in mind the Large accommodation, the
locality, the no of visitors and overall circumstances the imposition of different rate of tax is
justified and is not discriminatory.

In the case of Delhi Municipal Corporation v. Birla Cotton Spinning Weaving. Mills AIR 1968
SC 1232 the power delegated to the corporation to impose electricity tax without prescribing any
maximum limit was upheld on the ground that the corporation is also s representative and
responsive body which stands a guarantee against the misuse of the power. It also held that
"The court is generally willing to upheld delegation of fiscal power in favour of elected bodies
such as panchayats or municipalities"

The underlying factors were:

i) Delegation was to a local body which was popularly elected.

ii) The upper limit of the tax was deducible from the nature of its functions

iii) The body was subject to Govt. control.

In J.R.G. Manufactory Association v. UOI AIR 1970 SC 1589 S.12 (2) of the Rubber Act
empowered the Rubber Board to levy an excise duty either on the producers of rubber or the
infectors of rubber goods. Which was challenged as excessive delegation of power. It was held
that there is no excessive delegation. There are inherent checks on the exercise of such power,
namely, the representative character of the Board and the control of the control Govt.

The Act Provided that tax can be levied only according to the rules made by the Govt. subject to
the laying procedure executive may be empowered to fix the rates of fixation :-

Devi Das v. State of Punjab (Air 1967 SC 1895) wher the court held it valid that the Executive
can levy tax at a rate between 1% and 2% but if the Govt. levys sales tax at such rates an it
“deem fit' it is invalid.

In S.B. Dayal V/s State of up (Air 1972 SC 1168) the apex court meted out the philosophy as “In
a modern society taxation is an instrument of planning. It can be used to achieve the economic
and social goals of the state for that reason the power to tax must be a flexible power”

Therefore we can conclude that

- Taxing power is an essential legislative power.

- It can be delegated once the legislature lags down the policy- sufficient guideline for the
imposition of tax.

- it is sufficient guideline if the power is "for the purpose of the Act"

- Wide expression like above are sufficient policy when power is delegation to a
representative authority.

Legislative power can be validity delegated to exempt any item, bring certain item in the ambit
of tax, determine the rate within the minimum & the maximum limit, even when limits are not
prescribed it should be delegated to a representative body & should be subject to any control and
if different rate of tax is imposed for different commodities then it must satisfy the test of
reasonable classify.
Therefore we can see the phrase "No taxation without representation" being obliterated as now
vide taxing powers are given to the administrative. authorities.

Posted by lawprojectsforfree at 10:59 AM

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