rticle 265 of the constitution mandates that no tax shall be levied

or collected except by the authority of law. It provides that not

only levy but also the collection of a tax must be under the
authority of some law. The tax proposed to be levied must be
within the legislative competence of the Legislature imposing the
tax. The validity of the tax is to be determined with reference to
the competence of the Legislature at the time when the taxing law
was enacted. The law must be validly enacted; i.e., by the proper
body which has the legislative authority and in the manner
required to give its Acts, the force of law. The law must not be a
colourable use of or a fraud upon the legislative power to tax. The
tax must not violate the conditions laid down in the constitution
and must not also contravene the specific provisions of the
Constitution. The tax in question must be authorised by such valid
law. Taxation, in order to be valid, must not only be authorised by
a statute but, must also be levied or collected in strict conformity
with the statute, which authorises it. No tax can be imposed by
any bye-law rule or regulation unless the statute under which the
subordinate legislation is made specifically authorises the
imposition and the authorisation must be express not implied.
The procedure prescribed by the statute must be followed. Tax is a
compulsory exaction made under an enactment. The word tax, in
its wider sense includes all money raised by taxation including
taxes levied by the Union and State Legislatures; rates and other
charges levied by local authorities under statutory powers. Tax
includes any impost general, special or local. It would thus
include duties, cesses or fees, surcharge, administrative charges
etc. A broad meaning has to be given to the word tax.
The tax, duty, cess or fee constituting a class denotes to
various kinds of imposts by State in its sovereign power of
taxation to raise revenue for the State. Within the expression of
each specie each expression denotes different kind of impost
depending on the purpose for which they are levied. This power
can be exercised in any of its manifestation only under any law

authorising levy and collection of tax as envisaged under Article

265 which uses only expression that no tax shall be levied and
collect except authorised by law. It in its elementary meaning
conveys that to support a tax legislative action is essential, it
cannot be levied and collected in the absence of any legislative
sanction by exercise of executive power of State under Article 73
by the Union or Article 162 by the State Under Article 266(28)
taxation has been defined to include the imposition of any tax or
impost whether general or local or special and tax shall be
construed accordingly. Impost means compulsory levy.
The well known and well settled characteristic of tax in its wider
sense includes all imposts. Imposts in the context have following
characteristics: (I) The power to tax is an incident of sovereignty;
(ii) Law in the context of Art, 265 means an Act of legislature and
cannot comprise an executive order or rule without express
statutory authority; (iii) The term tax under Article 265 read with
Article 266(28) includes imposts of every kind viz., tax, cess or
fees; (iv) As an incident of sovereignty and in the nature of
compulsory exaction, a liability founded on principle of contract
cannot be a tax in its technical sense as an impost, general, local
or special.
Article 246 deals with the distribution of legislative powers as
between the Union and the State legislatures, with reference to
the different lists in the Seventh Schedule. The gist of the article,
in short is, that the Union Parliament has fully and exclusive
power to legislate with respect to matters in List I and has also
power to legislate in respect to matters in list III. The State
legislatures, on the other hand, has exclusive power to legislate
with respect to matters in List II, minus matters falling in Lists I
and III and has a concurrent power with respect to matters
included in List III. The Parliament and the State legislature can
legislate only in respect to the matters contained relating to tax in

such List. One cannot travel beyond the power conferred under
the said Article.
Taxes are levied and collected to meet the cost of governance,
safety, security and for welfare of the economically weaker
sections of the Society. It is well established that the Legislature
enjoys a wide latitude in the matter of selection of persons,
subject-matter, events, etc., for taxation. The tests of the vice of
discrimination in a taxing law are less rigorous. It is well
established that the Legislature is promulgated to exercise an
extremely wide discretion in classifying for tax purposes, so long
as it refrains from clear and hostile discrimination against
particular persons or classes.