KSLU Solved Question Papers
Law of Taxation
Previous Year Question Paper with Solution
B.A. LL.B. (Five Years) · Sem 7
2025 Jun Examination
munotes.in
Mumbai
B.A. LL.B. (Five Years) Sem 7 Law of Taxation 2025 Jun 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 2025 Jun examination.
Contents
The questions below are the paper as Karnataka State Law University set it at the 2025 Jun examination, in the order it was set.
MarksPage
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2025 Jun 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 five Units. (2) One essay type question and short notes is compulsory. (3) Figures to the right indicate the marks. (4) Answer 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)Define tax. Explain the characteristics of tax.[10]
Answer
For full marks, cover: the definition of tax (article 366(28) and the Supreme Court's definition in Shirur Mutt); each characteristic of a tax, explained and tied to the law or a case: compulsory, by authority of law (article 265, Bhailal Bhai), by a public authority, for public purposes, no quid pro quo, a common burden on a chosen base, subject to fundamental rights (Moopil Nair), may be double (Avinder Singh), usually prospective (Vatika Township), strictly construed (Dilip Kumar); a short conclusion.
Definition of tax
The Constitution gives only an inclusive meaning. Article 366(28) says "taxation" includes "the imposition of any tax or impost, whether general or local or special". The Supreme Court supplied the working definition in Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, AIR 1954 SC 282. A tax is "a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered".
So a tax is money the State takes by law from people, for the common good, without promising any particular return.
Characteristics of a tax
1. It is compulsory. The payer cannot refuse it. The law provides for assessment, interest, penalty and recovery. In Shirur Mutt the Court stressed that a tax is an "exaction", not a voluntary payment.
2. It is levied only by authority of law. Article 265 says: "No tax shall be levied or collected except by authority of law." An executive order cannot impose a tax.
State of Madhya Pradesh v. Bhailal Bhai, AIR 1964 SC 1006, decided on 20 January 1964, shows the force of this rule. Sales tax was charged on tobacco brought in from outside the State but not on local tobacco, and dealers paid it. The tax was held bad. The Supreme Court held that a High Court may, under article 226, order the State to repay money collected without authority of law. The relief is discretionary and may be refused for unreasonable delay.
3. It is imposed by a public authority. Only Parliament, a State Legislature, or a local body acting under a statute can impose a tax.
4. It is for public purposes. The money goes to the Consolidated Fund, or to a local fund, and is spent on public needs such as defence, roads and schools.
5. There is no quid pro quo. The payer receives no special service in return. That is what separates a tax from a fee, as Shirur Mutt holds: "a tax is levied as part of a common burden, while a fee is a payment for a special benefit or privilege".
6. It is a common burden on a chosen base. The legislature picks a base: income, property, a sale, an import or a transaction. Everyone within the base pays at the rates fixed. The legislature has wide freedom to choose the base and the rate.
7. It must respect fundamental rights. A tax law is still law under article 13 and must satisfy Part III.
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, whether fertile or barren forest. The Supreme Court struck it down under article 14. A tax that treats unequal lands alike, ignoring their capacity to yield income, is discrimination.
8. It may fall twice on the same thing. Avinder Singh v. State of Punjab, AIR 1979 SC 321. A tax of one rupee per bottle on liquor sales was attacked as double taxation. The Court upheld it, holding that nothing in article 265 bars double taxation. The legislature may also leave the rate to a local body, if it lays down the policy.
9. It is usually prospective. Commissioner of Income Tax v. Vatika Township Private Limited, decided on 15 September 2014 by a Constitution Bench. A proviso added in 2002 imposed a surcharge on block assessments. The Revenue applied it to earlier periods. The Court held that a law imposing a new burden is presumed to be prospective, unless the legislature clearly says otherwise. The principle rests on fairness.
10. It is construed strictly. Commissioner of Customs (Import), Mumbai v. Dilip Kumar and Company, AIR 2018 SC 3606. Five judges held that every taxing statute is read strictly. An ambiguity in a charging provision helps the taxpayer, but an ambiguity in an exemption helps the Revenue. No tax is imposed by inference or analogy.
11. It may be direct or indirect. Income tax is borne by the payer himself. GST is collected by the seller and borne by the buyer.
In short
| Characteristic | Source |
|---|---|
| Compulsory exaction | Shirur Mutt |
| By authority of law; refund if collected without it | Article 265, Bhailal Bhai |
| No quid pro quo; common burden | Shirur Mutt |
| Subject to article 14 | Moopil Nair |
| Double taxation not barred | Avinder Singh |
| Presumed prospective | Vatika Township |
| Strict construction | Dilip Kumar |
Conclusion. A tax is a compulsory exaction by a public authority, under law, for public purposes, with no special return to the payer. It must rest on a valid law under article 265 and respect the fundamental rights, as Bhailal Bhai and Moopil Nair show. It may fall twice on the same thing, it is presumed to operate prospectively, and its words are read strictly.
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