THREE PRINCIPAL CHARACTERISTICS OF A TAX

FRIENDS!

                In reference to what is tax, the Honorable Supreme Court of India, in the case, the Commissioner, Hindu Religious Endowments, Madras vs. Sri Lakshmindra Tirtha Swamiar of Shri Shirpur Mutt. judgment dated 16 April, 1954, has held as under:

"A tax is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered."

In this regard, the hon'ble judge has observed as follows:

"A neat definition of what "tax" means has been given by Latham C. J. of the High Court of Australia, in Matthews v. Chicory Marketing Board(1). A tax", according to the learned Chief Justice, "is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered". This definition brings out, in our opinion, the essential characteristics of a tax as distinguished from other forms of imposition which, in a general sense, are included within it. It is said that the essence of taxation is compulsion, that is to say, it is imposed under statutory power without the taxpayer's consent and the payment is enforced by law. The second characteristic of tax is that it is an imposition made for public purpose without reference to any special benefit to be conferred on the payer of the tax. This is expressed by saying that the levy of tax is for the purposes of general revenue, which when collected revenues of the object of a tax is not to confer any special benefit upon any particular individual, there is, as it is said, no element of quid pro quo between the taxpayer and the public authority. Another feature of taxation it; that as it is a part of the common burden, the quantum of imposition upon the taxpayer depends generally upon his capacity to pay."

               The three principal characteristics of a tax summarized by Hon'ble Mukherjea, J. are as follows:

(i) that it is imposed under statutory power without the tax-payer's consent and the payment is enforced by law;

(ii) that it is an imposition made for public purposes without reference to any special benefit to be conferred on the payer of the tax; and

(iii) that it is a part of the common burden, the quantum of imposition upon the tax-payer depending generally upon the capacity of the tax payer to pay.