Sunday, March 06, 2011


By K P C Rao., FCS
Practising Company Secretary


Power is a measure of a person's ability to control the environment around, including the behavior of other persons. The term authority is often used for power perceived as legitimate by the social structure.  Power manifests itself in a rational manner: one cannot meaningfully say that a particular social actor "has power" without also specifying the role of other parties in the social relationship.

Political power  is a type of power held by a person or group in a society. There are many ways to hold such power. Officially, political power is held by the holders of sovereignty. Political powers are not limited to heads of states, however, and the extent to which a person or group holds such power is related to the amount of societal influence they can wield, formally or informally. In many cases this influence is not contained within a single State and it refers to international power. Political scientists have frequently defined power as "the ability to influence the behaviour of others" with or without resistance.

Sovereignty is the most important constituent element of the State and there can be no State without a Sovereign power. The sovereignty of the State is unlimited internally as well as externally. It is original and absolute power and it cannot be divided. Division of sovereignty means destruction of sovereignty. Sovereignty represents the unity of the State, and the sovereign State is one which is externally free and internally supreme.

All governmental organs and institutions owe their origin to the constitution and derive their powers from its provisions. These organs and institutions enjoy only such powers as are conferred on them and function within limits demarcated by the constitution. Parliament is no exception and unlike British Parliament, cannot claim unlimited powers. It must function within its limits and its actions are subjected to judicial scrutiny. It is given the power to amend the constitution, but the power to amend must be exercised within the bounds of the constitution. Besides conforming to the procedure laid down for this purpose, the power to amend should not be exercised so as to destroy or abrogate the basic structure or framework of the constitution.

In a sense the constitution may appear to be sovereign as it is the supreme law of the land. However a document cannot be the sovereign. The people of India, according to the Preamble, have given to themselves this constitution. The source of the constitution is the people of India will continue to be governed under the constitution so long as it is acceptable to them and its provisions promote their aims and aspirations. It is true that the constitution was adopted by the constituent assembly which was not directly elected by the people. But that does not necessarily mean that the constituent assembly as it came to be constituted, did not project the feelings of the people. The fact that the constitution has been in operation for about sixty years with a number of general elections from time to time is an evidence of the people having accepted the constitution in its present form. Following the course of Indian history and the pattern of Indian politics, it may be said that, unlike the Western society, it is the elite of the Indian society rather than the people themselves who have set the tone for the reformation of the society. Besides the fact that the Preamble provided that the people of India have enacted and given to themselves the constitution and its continued acceptance by the people over the years leads to no other conclusion that the binding force of the constitution is the sovereign will of the people of India. If at any stage of history, the people find the constitution is not serving the needs of the Indian Society, the people of India may, if necessary, set in motion machinery which provides for a system suited to the aims and aspirations of the people. It may therefore, be rightly observed that the sovereignty lies with the people of India.

Taxing Power

Taxation is the legal capacity of the sovereignty or one of its governmental agents to exact or impose a charge upon persons or their property for the support of government and for the payment for any other public purposes which it may constitutionally carry out. The power of taxation differs from the power of eminent domain, and where as the government under taxation, is required to make and enforce contribution of money or property by the citizen as his share of the burden of support of the government.

A government cannot exist without raising and spending money. Parliament controls public finance which includes granting of money to the administration for expenses on public services, imposition of taxes and authorization of loans. This is a very important function of Parliament. Through this means Parliament exercise control over the executive because whenever Parliament discusses financial matters, government’s broad policies are invariably brought into focus. The Indian Constitution devises an elaborate machinery for securing parliamentary control over finances which is based on the following four principles.

1)     The first principle regulates the constitutional relation between the Government and Parliament in matters of finance. The executive cannot raise money by taxation, borrowing or otherwise, or spend money, without the authority of Parliament.
2)     The second principle regulates the relation between the two Houses of Parliament in financial matters. The powers of raising money by tax or loan and authorizing expenditure belongs exclusively to the popular House, viz., Lok Sabha. Rajya Sabha merely assents to it. It cannot revise, alter or initiate a grant. In financial matters, Rajya Sabha does not have co-ordinate authority with Lok-Sabha and Rajya Sabha plays only a subsidiary role in this respect.
3)     The third principle imposes a restriction on the power of Parliament to authorize expenditure. Parliament cannot vote for raising money by tax for any purpose whatsoever except on demand by ministers.
4)     The fourth principle imposes a similar restriction on the power of Parliament to impose taxation. Parliament cannot impose any tax except upon the recommendation of the Executive.

The legislature having the power to impose a tax has also the power to prescribe the means by which the tax shall be collected and to designate officers by whom it shall be enforced; the obligation and indemnity of those officers; the means to ensure proper realization of the tax. The method and manner of collection of tax is no criterion for judging the vires of the tax law.

The following powers flow from the power to tax as ancillary powers:

1)     To provide for refund of a tax illegally or improperly collected and to impose restriction upon the right to claim such refund.
2)     To provide for the prevention of evasion of the tax imposed.
3)     To levy a penalty for the proper enforcement of the taxing statute, or collecting any amount wrongly under colour of that statute, whether by way of fine or forfeiture.

Article 265 of Constitution of India

Article 265 of the Constitution lays down that no tax shall be levied or collected except by the authority of law. Schedule VII divides this subject into three categories:

1)     Union list (Article 246(1) of the Constitution specifies that Parliament has exclusive powers to make laws with respect of any of the matters enumerated in List I in the Seventh Schedule to Constitution)
2)     State list (As per Article 246(3) State Government has exclusive powers to make laws with respect to matters enumerated in List II)
3)     Concurrent list (both Parliament and State Government can pass legislation with respect to items specified in this list).

Constitutional Limitations

Apart from the limitation by the division of the taxing power between the Union and State Legislature by the relevant Entries in the legislative Lists, the taxing power of either Legislature is particularly subject to the following limitations imposed by particular provisions of our Constitution:

1)     It must not contravene Art.13.
2)     It must not deny equal protection of the laws, must not be discriminatory or arbitrary. (Art.14)
3)     It must not constitute an unreasonable restriction upon the right to business.(19(1)(g))
4)     No tax shall be levied on the proceeds of which are specially appropriated in payment of expenses for the promotion or maintenance of any particular religion or religious denomination (Art.27).
5)     A State Legislature or any authority within the State cannot tax the property of the Union.(Art.285)
6)     The Union cannot tax the property and income of a State (Art.289).
7)     The power of a State to levy tax on sale or purchase of goods is subject to Art.286.
8)     Save in so far as Parliament may, by law, otherwise provide, a State shall not tax the consumption or sale of electricity in the cases specified in Art.287.

------------------------------------------------------------------------------------------------------------[Published in Corporate Secretary of ICSI , October, 2010]

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