Article 265 of the Costitution of India with Case law
Here is a complete explanation of Article 265 of the Constitution of India, including its text, meaning, and important case law:
🧾 Article 265 – Taxes not to be imposed save by authority of law
🔹 Text of Article 265:
"No tax shall be levied or collected except by authority of law."
📌 Explanation & Key Concepts
| Concept | Explanation |
|---|---|
| No taxation without law | The government cannot impose or collect any tax unless it is authorized by a valid law passed by a competent legislature. |
| "Levy" vs "Collection" |
Levy = Imposing a tax through legislation
Collection = Actual recovery or taking of the tax money
Both must be backed by law. |
| Rule of Law | Article 265 enforces the constitutional principle of legality: no individual can be taxed arbitrarily. |
| Constitutional Safeguard | Protects citizens from unauthorized or excessive taxation by the executive or administrative authorities.
⚖️ Important Case Law on Article 265
1. Chhotabhai Jethabhai Patel & Co. v. Union of India, AIR 1962 SC 1006
Held:
Tax cannot be collected unless it is validly imposed by a statute.
Delegated legislation (like rules, orders) cannot impose a tax unless specifically permitted by the parent Act.
Significance: Clarified that only Parliament or State Legislature can authorize taxation.
2. Commissioner of Income Tax v. B.C. Srinivasa Setty, (1981) 2 SCC 460
Facts: Whether capital gains tax could be imposed when computation mechanism failed.
Held: Taxation must be accompanied by a clear method of computation, otherwise law is incomplete and invalid.
Relevance: Reinforces that authority of law must be complete to be valid under Article 265.
3. India Cement Ltd. v. State of Tamil Nadu, (1990) 1 SCC 12
Issue: Whether state could impose cess on royalty for mining leases.
Held: Royalty is a Union subject; State law imposing tax was unconstitutional.
Relevance: Ensures division of taxing powers under Constitution is respected.
4. Southern Pharmaceuticals & Chemicals v. State of Kerala, AIR 1981 SC 1739
Held: A tax collected without proper authority is illegal and refundable.
Even if taxpayer did not object initially, principle of unjust enrichment does not apply to illegal taxes.
5. Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536
Relevance: Addressed refund of taxes collected without authority.
Supreme Court laid down guidelines for refund of unconstitutional taxes.
⚠️ Key Implications of Article 265
No government (Centre or State) can:
Impose a new tax without a statute
Increase or alter tax without legislative backing
Collect tax through executive instructions or circulars only
Protects against arbitrary fiscal actions and ensures legislative oversight.
✅ Summary Table
| Feature | Details |
|---|---|
| Article | 265 |
| Principle | No tax without legal authority |
| Applies To | All forms of taxes (income tax, GST, excise, property tax, etc.) |
| Legislative Requirement | Tax must be imposed by law made by competent legislature |
| Key Case Laws | Chhotabhai Patel (1962), B.C. Srinivasa Setty (1981), India Cement (1990), Mafatlal Industries (1997) |
🔄 Related Articles
| Article | Subject |
|---|---|
| Article 265 | No tax shall be levied or collected except by authority of law |
| Article 246 | Distribution of legislative powers (incl. taxation) |
| Article 300A | Right to property (taxation must not violate property rights) |
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