Author
Assoc Prof Neha Pathakji
Organisation/Institution
NALSAR University of Law
Country
INDIA
Panel
Tax Law
Title
Conflict or Conformity: Indian GAAR and Rule of Law
Abstract
Even as power to tax remains inherent to a sovereign and a wide latitude is granted to the state when it comes taxing matters, fiscal governance is not an exception to the principle of rule of law. Ensuring a rule-based system of governance, the Indian Constitution provides substantive as well as procedural safeguards from any potential abuse committed by the state. Similar to most countries, the Indian Constitution categorically provides that no tax can be levied except under authority of a law. Further, fiscal statutes have been subjected to the scrutiny to doctrine of equality under Article 14 of the Constitution. Consequently, power to tax is not unbridled. A rule of law regime requires that tax legislation must be predictable, consistent, certain, clear, non-retrospective and transparent. However, there always exists some statutory loophole and its exploitation leading to a tension between taxpayers’ strategic attempt to minimise their tax liability and tax authorities’ efforts for equitable and effective revenue augmentation for public finance. Whilst anti-avoidance provisions in tax legislations offers to address the existing vagueness, the principles of rule of law requires that consistency, fairness and predictably of the legal constructs in case of ambiguity. This paper undertakes an appraisal of the substantive and procedural provisions of General Anti-Avoidance Rules(GAAR) comprised in the Indian Income Tax Act, 1961, case laws and its effects of recharacterization of transactions, imposition of heavier tax burden vis-à-vis rule of law. It seeks to examine whether GAAR provisions stands in conflict or conformity with the principles of rule of law.
Biography
Dr.Neha Pathakji is Associate Professor and Head, Centre for Tax Laws at NALSAR University of Law, Hyderabad, India. She has more than fifteen years of experience in teaching and research in Tax laws. She authored ‘Principles of Taxation Laws’ (Taxmann Publication) and revised Halsbury’s Laws - Direct Tax (LexisNexis). She was awarded ‘Cegla Fellowship’ by The Buchman Faculty of Law, Tel Aviv University, Israel and ‘van Calker’ Scholarship by the Swiss Institute of Comparative Law, Lausanne, Switzerland. Her research interests includes taxation laws, disability rights and corporate social responsibility. She completed her postgraduation studies in law from the Maharaja Sayajirao University of Baroda and specialises in Business Laws. She pursued her doctoral studies from NALSAR University of Law. Her thesis was published as a monologue Corporations and Disability Rights: Bridging the Digital Divide by Oxford University Press. Her recent research project ‘Making the Invisible Visible in Law Practice and Legal Education’ funded by United Nations Population Fund(UNFPA) includes looking into gendering legal education.
