by Promod Nair.The Supreme Court of India has often played the role of a steward of the environment. An era of judicial activism, often spurred on by public interest litigation, has seen the Indian courts engage frequently and courageously with environmental issues and fashion innovative remedies to prevent degradation of the environment in the face of general apathy from the executive..Whilst such methods have not been without controversy, the latest intervention by the court in imposing a green tax on the purchase of diesel cars above 2000cc is unprecedented..The imposition of a symbolic cess as a pre-condition for the registration of new cars has been criticised in some quarters as an unjustified volte-face by the Supreme Court. It signalled a hasty withdrawal from a decision which, equally controversially and to the consternation of automobile manufacturers, banned the registration of high-engine-capacity diesel cars in December last year..Irrespective of whether the tax will dissuade consumers from purchasing diesel cars, the court’s imposition of a green cess has certainly struck at the heart of the principle of separation of powers provided for under the Indian Constitution- a principle considered so fundamental that it has been described as part of the “basic structure” of the Indian Constitution by the Supreme Court itself..By appropriating for itself the power to impose a tax by judicial fiat, the Supreme Court has embraced, in the words of Justice Kennedy of the US Supreme Court, “an expansion of power in the judiciary beyond all precedent”. It has failed to recognise the fundamental principle that taxation is not a judicial, but an exclusively legislative, function under our constitutional scheme..Taxation is not a Judicial Function.Cooley, in his treatise Constitutional Limitations, defined taxes as a “burden or charge imposed by the legislative power upon persons or property to raise money for public purposes”..The proper authority to determine what should and what should not constitute an appropriate burden is therefore the legislative arm of the State. The Indian Constitution adopts this principle and provides that a tax (which inevitably deprives a person of property) must be supported by the “authority of law”. This phrase has been interpreted, by a long and venerable line of judicial precedents of the Supreme Court itself, to refer to legislative action. No tax may, therefore, be imposed by either executive or judicial action..Confining the power to tax to the legislative branch reflects the intention of the framers of the Constitution, and based upon the experience of colonial rule, that the power of taxation must be under the control of those who are taxed. Under our system of government, the legislative wing alone “has access to the pockets of the people”. In the words of Cooley,.“in imposing a tax, the legislature acts upon its constituents. This is, in general, a sufficient security against erroneous and oppressive taxation.”.Providing for the power of taxation to be exercised exclusively by the legislature also tackles the “no taxation without representation” problem since legislators represent the will of, and are also accountable to, the electorate..A tax imposed by judges who are not representative of, or responsible to, the people in a political sense is wholly without “the authority of law” under our Constitutional scheme..Lacking in Legitimacy .It also lacks legitimacy. Will a 1% cess on diesel vehicles of 2000 cc and above effectively tackle the serious issue of pollution in Delhi and the NCR region? Why should the cess be limited to registration of vehicles in Delhi and the NCR region and not extended nationally? What is the projected cost of tackling air pollution in the Delhi and NCR region? What measures have to be taken for this purpose? Will the court-imposed cess raise sufficient revenue to meet this cost? Will a 1% cess deter prospective buyers from opting for diesel vehicles?.Are diesel vehicles with an engine capacity less than 2000 cc pollution-free so as to be exempt from the scope of the tax? In circumstances where a 4% cess on diesel vehicles was mooted by the Finance Minister in his budget speech earlier this year, what purpose would an additional 1% cess serve? Would it have been more appropriate to levy a cess on the polluting fuel (diesel) rather than on automobiles which use such fuel? Why should the cess be limited to automobiles and not extended to diesel-run generators which are equally, if not more, polluting? Sadly, the Supreme Court has not even engaged with these issues or considered if the token cess imposed by it will achieve its intended objectives..No Safeguards Available Against Judicial Taxation.In addition to the unconstitutionality and illegitimacy of a judge-imposed tax, judicial taxation also has other perils. A tax which falls outside the scope of legislative competence of a legislature or one which is plainly discriminatory or confiscatory can be invalidated by the courts. No safeguards are however available against a court-imposed tax, especially in circumstances where it is imposed by an institution whose orders are not subject to challenge before a higher authority..The Supreme Court is the highest judicial authority in our country and a tax imposed by it is not amenable to challenge before any other forum. A citizen who is adversely affected by such a tax simply has no recourse to challenge the legality of such a measure..In withdrawing its earlier ban and replacing it with a cess on the registration of diesel vehicles, the Supreme Court seems to have been unduly influenced by the fact that automobile manufacturers consented to the levy of such a tax. It however overlooked the fact that the burden of the tax will, in reality, be borne by consumers who were not even represented before the court. Such consumers have also been deprived of the right to challenge the legality of such a tax..Conclusion.In confronting various constitutional challenges, from the enforcement of civil rights to reviewing the conduct of government institutions and authorities, it is permissible (and often necessary) for the judicial power to fashion new tools to provide effective relief. However, whilst the remedies devised by the courts must be adequate to the task, such powers are not unlimited..Fundamentally, judges are auditors of legality and not makers of policy. However, the visual attractiveness of an activist court blowing away the smog filled air of Delhi has resulted in judicial encroachment into the legislative power of taxation. Such steps jeopardise the legitimacy that justifies judicial independence and warrants a course correction by the court..Promod Nair (promod.nair@aristachambers.com) is an advocate practising at the High Court of Karnataka
by Promod Nair.The Supreme Court of India has often played the role of a steward of the environment. An era of judicial activism, often spurred on by public interest litigation, has seen the Indian courts engage frequently and courageously with environmental issues and fashion innovative remedies to prevent degradation of the environment in the face of general apathy from the executive..Whilst such methods have not been without controversy, the latest intervention by the court in imposing a green tax on the purchase of diesel cars above 2000cc is unprecedented..The imposition of a symbolic cess as a pre-condition for the registration of new cars has been criticised in some quarters as an unjustified volte-face by the Supreme Court. It signalled a hasty withdrawal from a decision which, equally controversially and to the consternation of automobile manufacturers, banned the registration of high-engine-capacity diesel cars in December last year..Irrespective of whether the tax will dissuade consumers from purchasing diesel cars, the court’s imposition of a green cess has certainly struck at the heart of the principle of separation of powers provided for under the Indian Constitution- a principle considered so fundamental that it has been described as part of the “basic structure” of the Indian Constitution by the Supreme Court itself..By appropriating for itself the power to impose a tax by judicial fiat, the Supreme Court has embraced, in the words of Justice Kennedy of the US Supreme Court, “an expansion of power in the judiciary beyond all precedent”. It has failed to recognise the fundamental principle that taxation is not a judicial, but an exclusively legislative, function under our constitutional scheme..Taxation is not a Judicial Function.Cooley, in his treatise Constitutional Limitations, defined taxes as a “burden or charge imposed by the legislative power upon persons or property to raise money for public purposes”..The proper authority to determine what should and what should not constitute an appropriate burden is therefore the legislative arm of the State. The Indian Constitution adopts this principle and provides that a tax (which inevitably deprives a person of property) must be supported by the “authority of law”. This phrase has been interpreted, by a long and venerable line of judicial precedents of the Supreme Court itself, to refer to legislative action. No tax may, therefore, be imposed by either executive or judicial action..Confining the power to tax to the legislative branch reflects the intention of the framers of the Constitution, and based upon the experience of colonial rule, that the power of taxation must be under the control of those who are taxed. Under our system of government, the legislative wing alone “has access to the pockets of the people”. In the words of Cooley,.“in imposing a tax, the legislature acts upon its constituents. This is, in general, a sufficient security against erroneous and oppressive taxation.”.Providing for the power of taxation to be exercised exclusively by the legislature also tackles the “no taxation without representation” problem since legislators represent the will of, and are also accountable to, the electorate..A tax imposed by judges who are not representative of, or responsible to, the people in a political sense is wholly without “the authority of law” under our Constitutional scheme..Lacking in Legitimacy .It also lacks legitimacy. Will a 1% cess on diesel vehicles of 2000 cc and above effectively tackle the serious issue of pollution in Delhi and the NCR region? Why should the cess be limited to registration of vehicles in Delhi and the NCR region and not extended nationally? What is the projected cost of tackling air pollution in the Delhi and NCR region? What measures have to be taken for this purpose? Will the court-imposed cess raise sufficient revenue to meet this cost? Will a 1% cess deter prospective buyers from opting for diesel vehicles?.Are diesel vehicles with an engine capacity less than 2000 cc pollution-free so as to be exempt from the scope of the tax? In circumstances where a 4% cess on diesel vehicles was mooted by the Finance Minister in his budget speech earlier this year, what purpose would an additional 1% cess serve? Would it have been more appropriate to levy a cess on the polluting fuel (diesel) rather than on automobiles which use such fuel? Why should the cess be limited to automobiles and not extended to diesel-run generators which are equally, if not more, polluting? Sadly, the Supreme Court has not even engaged with these issues or considered if the token cess imposed by it will achieve its intended objectives..No Safeguards Available Against Judicial Taxation.In addition to the unconstitutionality and illegitimacy of a judge-imposed tax, judicial taxation also has other perils. A tax which falls outside the scope of legislative competence of a legislature or one which is plainly discriminatory or confiscatory can be invalidated by the courts. No safeguards are however available against a court-imposed tax, especially in circumstances where it is imposed by an institution whose orders are not subject to challenge before a higher authority..The Supreme Court is the highest judicial authority in our country and a tax imposed by it is not amenable to challenge before any other forum. A citizen who is adversely affected by such a tax simply has no recourse to challenge the legality of such a measure..In withdrawing its earlier ban and replacing it with a cess on the registration of diesel vehicles, the Supreme Court seems to have been unduly influenced by the fact that automobile manufacturers consented to the levy of such a tax. It however overlooked the fact that the burden of the tax will, in reality, be borne by consumers who were not even represented before the court. Such consumers have also been deprived of the right to challenge the legality of such a tax..Conclusion.In confronting various constitutional challenges, from the enforcement of civil rights to reviewing the conduct of government institutions and authorities, it is permissible (and often necessary) for the judicial power to fashion new tools to provide effective relief. However, whilst the remedies devised by the courts must be adequate to the task, such powers are not unlimited..Fundamentally, judges are auditors of legality and not makers of policy. However, the visual attractiveness of an activist court blowing away the smog filled air of Delhi has resulted in judicial encroachment into the legislative power of taxation. Such steps jeopardise the legitimacy that justifies judicial independence and warrants a course correction by the court..Promod Nair (promod.nair@aristachambers.com) is an advocate practising at the High Court of Karnataka
