KSLU Solved Question Papers
Law of Taxation
Previous Year Question Paper with Solution
B.A. LL.B. (Five Years) · Sem 7
2019 Dec Examination
munotes.in
Mumbai
B.A. LL.B. (Five Years) Sem 7 Law of Taxation 2019 Dec Question Paper with Solutions
First published on munotes.in on 21 October 2026.
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The question paper reproduced here is the paper as set by Karnataka State Law University at the 2019 Dec examination.
Contents
The questions below are the paper as Karnataka State Law University set it at the 2019 Dec examination, in the order it was set.
MarksPage
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2019 Dec examination, reproduced as Karnataka State Law University set them, in the order it set them. Long reading passages are shortened to their first and last lines and our summary; the original paper prints them in full. Only the answers are ours. See the original question paper.
Duration 3 hours · Total marks 80 · 20 questions answered
Instructions printed on the paper
- N.B. (1) Answer all 5 Units. (2) One essay type question and short notes/problems is compulsory. (3) Figures to the right indicate marks. (4) Answers should be written either in English or Kannada completely.
How to use this volume
Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.
Q1
Unit I
(a)"The law of taxation is levied in confirmity with the fundamental rights under Indian Constitution". Discuss.[10]
Answer
For full marks, cover: why a tax law must obey Part III (article 13(2); article 265 is not the only test, Moopil Nair); the rights a tax law is tested against: article 14 (classification, arbitrariness, latitude for fiscal laws, R.K. Garg), article 19(1)(g), the old article 19(1)(f) and article 300A, article 21 (privacy and PAN-Aadhaar linking, Binoy Viswam, Puttaswamy), article 27; no waiver of these rights (Basheshar Nath); remedies (Bhailal Bhai); how far the statement is true.
What the statement means
The power to tax comes from Part XI and the Seventh Schedule. Article 265 adds that no tax may be levied or collected without authority of law. The statement says something more. A taxing law must also respect the Fundamental Rights in Part III.
The reason is article 13(2). The State shall not make any law that takes away or abridges a Fundamental Right. A law made in breach is void to that extent. A Finance Act or a tax statute is a "law" like any other. So it is open to challenge under Part III.
The argument that failed: article 265 alone
States once argued that a tax law needs only to satisfy article 265. If it was made by a competent legislature, they said, Part III did not apply.
Kunnathat Thathunni Moopil Nair v. State of Kerala, AIR 1961 SC 552, decided on 9 December 1960. The Travancore-Cochin Land Tax Act, 1955 charged a flat Rs 2 an acre on all land, fertile or barren. The State argued that article 265 was not subject to Part III. The Constitution Bench rejected this and struck the Act down. A flat rate that ignored whether the land could yield any income was not a classification at all, so it broke article 14. The provisional assessment under section 5A, with no procedure, hearing or time limit, was an unreasonable restriction under the then article 19(1)(f).
The rights a tax law must respect
1. Equality: article 14. A tax may treat groups differently only on a reasonable classification connected with its object. It may not fall arbitrarily, as Moopil Nair shows. But courts give fiscal laws wide room.
R.K. Garg v. Union of India, AIR 1981 SC 2138, decided on 20 October 1981. The Special Bearer Bonds (Immunities and Exemptions) Act, 1981 gave bond holders immunity from inquiry into the source of their money. It was attacked as favouring holders of black money. The Constitution Bench upheld it. Economic laws are viewed with greater latitude than laws on civil rights, and the legislature needs "play in the joints". Crudities or possible abuse alone do not make such a law void.
2. Freedom of trade and profession: article 19(1)(g). A tax or a tax condition that burdens a business must be a reasonable restriction in the public interest, under article 19(6). Binoy Viswam, below, applied this test and upheld the law.
3. Property: old article 19(1)(f), now article 300A. The right to property was a Fundamental Right until the Constitution (Forty-fourth Amendment) Act, 1978 omitted it, from 20 June 1979. Article 300A now says no person shall be deprived of property save by authority of law. A tax demand without legal backing can still be challenged, though no longer under Part III.
4. Life and privacy: article 21. Tax laws that collect personal data must meet the privacy tests: a law, a legitimate aim and proportionality.
Binoy Viswam v. Union of India, (2017) 7 SCC 59, decided on 9 June 2017. Section 139AA of the Income-tax Act, 1961 made it compulsory to quote Aadhaar for a PAN and in returns. The Court held it valid under articles 14 and 19(1)(g), reading down the penalty of an invalid PAN to work only prospectively. The privacy question was left to a Constitution Bench. In Justice K.S. Puttaswamy (Retd.) v. Union of India (Aadhaar), (2019) 1 SCC 1, decided on 26 September 2018, the leading opinion found that section 139AA met the privacy and proportionality tests too.
5. Religion: article 27. No person shall be compelled to pay taxes whose proceeds are specifically appropriated to promote or maintain a particular religion or religious denomination.
These rights cannot be bargained away
Basheshar Nath v. Commissioner of Income-tax, Delhi, AIR 1959 SC 149, decided on 19 November 1958. The assessee's case had gone to the Investigation Commission under a section already struck down under article 14. He then settled and agreed to pay Rs 3,50,000. The Revenue said he had waived his rights. The Court held the settlement bad. Bhagwati and Subba Rao JJ held that no Fundamental Right can be waived, because article 13(2) is a command to the State.
Remedies
A tax law that breaks Part III may be struck down under articles 32 or 226. Tax collected under it can be ordered to be refunded. In State of Madhya Pradesh v. Bhailal Bhai, AIR 1964 SC 1006, the Court held that a High Court may order such a refund, but delay can defeat the claim.
Conclusion. The statement is correct: a tax law must satisfy Part III as well as article 265, because it is "law" under article 13(2). Moopil Nair struck down an arbitrary flat land tax, and Basheshar Nath held that these rights cannot be waived. But the test is applied with latitude, as R.K. Garg, Binoy Viswam and the Aadhaar case show. Courts interfere only with arbitrary, unreasonable or disproportionate taxing laws.
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