“In this world nothing is certain except death and taxes.”
-Benjamin Franklin.
Every person pays numerous taxes under different names in his daily life. And then paid income tax at the end of the financial year. I remember reading the quote stating
“A fine is a tax for doing something wrong. A tax is a fine for doing something right.”
Very closely related to these quotes is one of the amendments in our constitution. It is called the sixth amendment of the Indian constitution.
THE CONSTITUTION (SIXTH AMENDMENT) ACT, 1956
| Passed on | Lok sabha 1.05.1956 Rajya sabha 31.05.1956 |
| commenced | 11.september.1956 |
| Introduced by | Mr. M.C. shah (minister of revenue and civil expenditure) |
| No. of amendments made in this Act | 3 |
| object | The cases of inter state sales should be brought under the full control of the union.To remove the disparity created by the court by interpreting Article 286 . |
| Process of making the Amendment under Article 368 | The amendment can be enacted only if passed by ⅔ majority of parliament and ratified by more than half of states.So India had 19 states at that time and it was ratified by 11 states. |
| Assented by president | Dr. Rajendra prasad assented it on 11..september.1956 |
HISTORY BEHIND THE ENACTMENT
Taxes on the sale or purchase of goods other than newspapers are given under Article 286. Before the amendment it suffered from 3 limitations:
- The state government cannot impose taxes on inter state sale-purchase of goods as well as on import -export of goods.
- The state could impose tax on inter state sale only if allowed by Parliament by enacting any law.
- The parliament had the absolute power to declare any good as essential. In this situation if the state imposed tax on such goods or it was under any previous law that was taxed by the government then they need to get the permission of the president in order to make such a law effective. So the central government had enormous power in this area.
- There was some difficulty in interpreting the provisions of the Article.
State of Bombay v. united motors (india ) limited
1953 AIR 252, 1953 SCR 1069
The supreme court by majority decided that the sub clause (a) of clause(1) prohibited the taxation on sale involving interstate sale for all states but the state in which the goods were delivered for consumption can impose tax. The law made by the state to impose the inter state sale would not be affected by the fact that parliament has not made any law removing the ban put by clause(2).
It was overruled by supreme court in the judgment of
Bengal immunity company v. State of Bihar
AIR 1953 Pat 87, 1953 (1) BLJR 48
The Supreme court held that the state government has no power to impose the tax on inter state sale of goods.
EFFECT OF THE JUDGMENT
- The parliament under article 268(3) passed an Act in 1952 and declared a number of foodstuffs such as cloth, raw cotton, cattle feed, iron,steel and coal etc. as essential commodities.
- This declaration now wouldn’t affect the pre existing laws of the state imposing tax on these goods.
- As a result a wide range of differences takes place in tax rates imposed by different states on the same goods.
- The taxation enquiry commission presented the following report on these problems:
- The sales tax being an important source of revenue of the state shall continue to be a state subject.
- But the sales tax on inter state sales shall be brought under the power of the union government.
- The central government should collect the same through state government and it would be appropriated between center and state.
- In order to avoid increase in manufacturing cost these rules should not apply on sale purchase of raw material.
5. Most of the state governments accepted the recommendations of the commission.
SALIENT FEATURES OF CONSTITUTION(SIXTH AMENDMENT) ACT, 1956
| Amendment made on provisions | 7th schedule. Article 286. Article 269 |
| 7th schedule | Entry 92A was added dealing with tax on sale and purchase of goods other than newspapers where such sale or purchase takes place in the course of inter state trade or commerce.Entry 54 in state list stating the tax on sale and purchase of goods other than newspaper , subject to the provisions of entry 92A of list 1. |
| Amendment in Article 269 | Sub clause 269(1)(g) was added dealing with interstate sale of goods other than newspapers.Clause (3) what amounts to interstate sale shall be decided by parliament. |
| Amendment in Article 286 | Clause 286(2) was added stating parliament can enact law to determine when the sale takes place under clause(1)Clause 286(3) was added providing any state law imposing tax on goods declared as essential by the parliament shall be subject to the restriction of the law enacted by parliament in this regard. |
| Consolidated fund of india | Any taxes imposed here in accordance with the law of the parliament shall not form a part of the consolidated fund of india.Such collection of taxes shall accrue to the state and distributed between the state and the center. |
| Center -state relation | As far as the distribution of power in this matter is concerned here it is the center who has an upper hand in this matter. |
| Essential goods | It entirely depends on the discretion of the central government which goods come under this category. But newspapers are expressly excluded here. |
Parting words
Tax is an important source of revenue for the government. It is needed to run the government and the country.but as for the common man, tax helps him to appreciate the subtle things in life that he takes for granted. As said, “a person doesn’t know how much he has to be thankful for until he has to pay taxes on it.”
I am not against the levy or collection of tax. Nothing in this world is free but the things must be valued in proportion to the utility they give to us. Too much taxes can break the back of the common man and increase the inflation, making the necessities a kind of luxury that seems out of the reach of the common man.everything looks good in moderation. Excess of everything is bad and such must be kept in mind while framing policies relating to taxes.
We must keep the system in check else we will reach a situation where this quote will come true:
“The best things in life are free, but sooner or later the government will find a way to tax them.”
BIBLIOGRAPHY
en.m.wikipedia.org
legislative.gov.in
https://indiankanoon.org/doc/424874/
https://indiankanoon.org/doc/1192870/
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