Sanika Deshpande-
Published On: October 23, 2021 at 14:45 IST
The Supreme Court held that the nomenclature ascribed to Tax does not determine Nature of Ievy or its True Character.
A bench comprising Justice DY Chandrachud, Justice Vikram Nath and Justice BV Nagarathna observed :
“The nomenclature that the legislature has ascribed to the tax does not determine either the nature of the levy or its true and essential character. The legislature may choose a label for a Tax. The label however will not determine or for that matter clarify the nature of the levy. The nature of the levy has to be deduced from the nature of the Tax, the Provision which specifies the Taxing event and, as in the Case of Section 52, the unit upon which the levy is to be Imposed. The legislature may choose a label or the Tax based on the nature of the levy. “
“On the other hand, the legislature may choose a label having a relationship with the function of the authority which imposes the Tax as in the present Case. The tax has been labelled as the water tax or a sewerage tax simply because it is imposed by the Jal Sansthan constituted under the UP Water Supply and Sewerage Act. That does not alter the nature of the levy which in substance is a tax on lands and buildings within the meaning of Entry 49 of List II of the Seventh Schedule.”
The Case considered the following Issues:
- Whether the demand of water tax and sewerage tax was sustainable with reference to the Provisions of the Uttar Pradesh Water Supply and Sewerage Act
- Whether the State Legislature had the legislative competence to levy the Tax under the Provision of Section 52(1)(a)
The Supreme Court’s Analysis was on the following three points:
- Levy under Section 52 of the UP Water Supply and Sewerage Act Is A Tax And Not Fee
- Levy under Section 52 Is In Consonance With Entry 49 List II: Taxes on Lands and Buildings
- Para 23 of Union of India v State of UP is Overruled
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