Fiscal justice

LANDMARK CASES IN DIRECT TAX LAWS 1996-2000 - Volume II: S. Rajaratnam; Company Law Institute of India Pvt. Ltd., 88, Thyagaraya Road, T. Nagar, Chennai-600017. Rs. 500 (For a set of volumes I & II).

JUSTICE HOLMES once remarked in a hot response to his secretary: ``Young fellow, I like to pay taxes. With them I buy civilisation.'' But if government is uncivilised and the law mysterious, the law is ``a riddle wrapped in a mystery inside an enigma.'' What does the victim of the unjust tax demand for frequently changing do? Robert S. Taft answered, in the American context, what soon may be applicable to the levy of taxation in India. I quote Taft: ``When a law becomes so impossible to understand that the ordinary citizen must look to the `super expert', the law becomes a trap and not a viable guideline. For years, the income tax and gift and estate tax laws have been modified and amended to the degree that only tax lawyers and accountants could really make any sense out of them. Now, with the advent of the Tax Reform Act of 1976 and all of its cross implications, not even the tax lawyers and accountants are so sure of themselves. One can no longer give advice in one area of the tax law without worrying about its implications in another area. In the litigious atmosphere of today, the new tax law seems to be a guarantee that more and more lawyers and accountants will be issued by their clients in the future.''

Everywhere, the taxpayer will need the services of an expert who, in turn, may spend hours reflecting on ambiguities in the tax law. In such a perplexing situation S. Rajaratnam's book comes to the rescue of legal pundits.

True, taxes should be ``certain, and not arbitrary... clear and plain to the contributor, and to every other person.'' Today, taxes are uncertain, arbitrary, and unclear. Common sense has stood in its hand. Rajaratnam, with his vast expertise, industrious heading and selection process, has had to devote two heavy volumes to cover landmark cases in direct tax laws covering just a span of five years of inundation of current rulings. The jurisprudence of precedents prevalent in the country is a basic factor. The more the superior courts and the larger the output of judicial pronouncements, the heavier the burden on tax advisers. In this view, it is a boon to own the two volumes. In the earlier volume, I have appreciatively dealt with the contents in a broad way.

The book under review is volume II, a continuation of the earlier volume. A huge heap of additional case-law and new heads of taxation are found in the additional volume so much so the two together are complementing each other. What is admirable is the sensitive and sensible selection of cases and the excellent comments made by the author, which illumine the rulings.

I just illustrate how the author discerningly takes the reader to basic principles, which help understand not merely the sections dealt with but the juristic foundation of the relevant law itself. Where the law is clear it is not open to the courts to interfere with the same.

It had given the following definition of substantive and procedural law: ``Substantive law is that part of law which creates, defines and regulates rights as opposed to `adjective or remedial law' which prescribes the method of enforcing the rights and obtaining redress for their invasion (see Black's Law Dictionary). Procedural law means the mode of procedure by which the legal rights are enforced as distinguished from the substantive law which gives or defines the rights.''

The author is intelligent enough to condone citation of wrong section. Let me make out my point by a quote: ``The law has become so complex that both the assessing officer and the taxpayers are prone to make mistakes, even while making a right claim or decision, as regards admissibility of a claim or taxability of a receipt by quoting a wrong section. An ultra- technical view may justify rejection of the claim because a wrong section is cited or an assessing officer's order may become vulnerable because he had disallowed rightly a claim but by referring to a wrong section. The courts are sympathetic to such mistakes and would not allow justice to go astray because of such wrong citation. Such a view was taken in Nandlal Faiswal & Co. v. CIT (1998) 232 ITR 540 (MP) pointing out, that the fact that the assessing officer had levied penalty by referring to a wrong provision of law, which was non-existent, cannot justify cancellation of penalty as was rightly understood by the Tribunal, where the penalty was found to be justified in the facts of the case with reference to the provision which was actually in force during the year. Such a view has been taken in other cases earlier, as for example in K. P. Kandaswamy v. CIT (1963) 49 ITR 344 (Mad). In yet another case in CIT v. Punjab Bone Mills (1998) 232 ITR 795 (P&H) the fact that the assessee had not claimed weighted deduction with reference to Section 35B, it was held, does not mean that the assessee is not entitled to deduction for the same. The High Court found that the fact that the relevant clauses were not mentioned will not vitiate the claim.'' Various controversial issues of income tax law have been explained with lucidity, a task which is difficult when we remember the number of High Courts and contrary opinions.

Even odd legislations like the Smugglers and Foreign Exchange Manipulators Act have not escaped the author's scanning exercise. Words and phrases and their semantic sweep often lead to logomachy and inevitably we have to turn to a standard work to bail out the interpreter from confusion.

Before I conclude, I must express the gratitude of law persons to the author for the useful service rendered in making fiscal justice accessible to judge, lawyer and litigant.

V. R. KRISHNA IYER

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