Tax - Definition / Legal Terminology - Income Tax

As per clause (43) of section 2 of the Income -tax Act 1961 Tax in relation to the assessment year commencing on the 1st day of April, 1965, and any subsequent assessment year means - income-tax chargeable under the provisions of this Act, and in relation to any other assessment year income-tax and super-tax chargeable under the provisions of this Act prior to the aforesaid date and in relation to the assessment year commencing on the 1st day of April, 2006, and any subsequent assessment year includes the fringe benefit tax payable under section 115WA ; In Matthews v. Chicory Marketing Board,147 Latham CJ defined- tax as a compulsory exaction of money by a public authority for public purposes, enforceable by law, and not a payment for services rendered. A tax has the following essential characteristics: (i) it is a compulsory exaction of money by a public authority; (ii) it is imposed under statutory power without the consent of the tax payer; (iii) the demand is enforceable by law; (iv) it is an imposition made for public purposes to meet the general expenses of the state without reference to any special benefit to be conferred on the payer of the tax; and (v) it is part of the common burden. [MINERAL AREA DEVELOPMENT AUTHORITY- 2024 (7) TMI 1390 - SUPREME COURT (LB)] In Commissioner, Hindu Religious Endowment, Madras v. Sri Lakshmindra Thirta Swamiar of Sri Shirur Mutt- 1954 (4) TMI 29 - SUPREME COURT , this Court relied on the above elucidation to enumerate the following essential characteristics of a tax: 44. [ ] It is said that the essence of taxation is compulsion, that is to say, it is imposed under statutory power without the taxpayer s consent and the payment is enforced by law. The second characteristic of tax is that it is an imposition made for public purpose without reference to any special benefit to be conferred on the payer of the tax. This is expressed by saying that the levy of tax is for the purposes of general revenue, which when collected forms part of the public revenues of the State. As the object of a tax is not to confer any special benefit upon any particular individual, there is, as it is said, no element of quid pro quo between the taxpayer and the public authority. Another feature of taxation is that as it is a part of the common burden, the quantum of imposition upon the taxpayer depends generally upon his capacity to pay.