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Article 14 of the Indian Constitution states that “the State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.” It is quite evident from that this provision keeps every person on equal footing. The provision can be broken into parts –
1. Equality before Law.
2. Equal Protection of Laws.
Equality before law has in itself remained a debatable topic for a long period of time. But, it would be very interesting and obvious to notice that this rule or the provision mentioned under the Indian Constitution is not absolute, and is subjected to certain conditions. It allows state to treat certain section of the society differently than rest of the society. There can be various reasons behind differentiating these sections of the society, but this has become a well settled and accepted principle. Coming to the main topic which we are concerned with under this article, which is to discuss the classification of various kinds of taxes in accordance with the Indian Constitution. Article 14 of the Constitution applies not only to human being, but to other objects also which are taxable.
According to Black’s Law Dictionary, term “Equality” can be defined as the condition of possessing the same rights, privileges, and immunities and being liable for the same duties.
Under the same dictionary, ‘Tax’ can be defined as a ratable portion of the produce of the property and labour of the individual citizens, taken by the nation, in the exercise of its sovereign rights, for the support of government, for the administration of laws, and as the means for continuing in operation the various legitimate functions of the state.
Article 14 permits the legislature to enact such laws which are based on classification of objects, persons, things etc. But, there should be a nexus between the object to be achieved and the said classification i.e. a reasonable classification. It would not be wrong to say that everyone is not placed, or living under the same situations and conditions. And, it would also not be wrong to say that income of everyone would not be the same, and also that services provided by various commercial organizations would not be the same, which ultimately creates the difference among their economic structure. And, same rate of tax for everyone, or for all kinds of services would be unjust. Courts are very careful while deciding issues pertaining to tax structure, and usually courts do not interfere with the laws enacted by Parliament related to tax structure. But, it is also the duty of the court to keep check on the laws enacted by the parliament so as to make sure that these laws have been enacted properly and have taken into consideration the provision mentioned under the Indian Constitution.
In Western U.P. Electric Power and Supply Co. Ltd. v State of Uttar Pradesh AIR 1970 SC 21, it was held by the Supreme Court that article 14 of the Indian Constitution doesn’t bar legislature to enact any law on a reasonable, and it is the duty of the person denying such reasonable classification must prove that there was no such nexus between the classification and the object to be achieved.
In Laxmi Khandsari v State of Uttar Pradesh AIR 1981 SC 873, it was again held by this court that legislature is competent to enact a law based on reasonable classification in order to achieve specific ends. It laid down two tests –
1. It should not be arbitrary, artificial or evasive. It should be based on an intelligible differentia, some real and substantial distinction, which distinguishes persons or things grouped together in the class from others left out of it.
2. The differentia adopted as the basis of classification must have a rational or reasonable nexus with the object sought to be achieved by the statue in question.
It can be clearly understood from the above case laws that a reasonable classification would be justifiable and any law enacted on the basis of such classification would not be unreasonable. And, classification of the objects and persons who are to be taxed can also be classified on such basis. Imposing the same rate of tax on a rickshaw puller and an industrialist would not be reasonable, and law makers have to take care of this. Tax is the major income source of the government, through which it perform all its functions. Moreover, it is a well settled principle that equals should be treated alike and treating unequal alike would be a clear violation of Article 14 of the Indian Constitution.
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