About the definition of the word ‘tax’, the Constitution Bench of the Honorable Supreme Court of India, in its judgment in The Commissioner, Hindu Religious Endowments, Madras vs. Sri Lakshmindra Thirtha Swamiar of Sri Shirpur Mutt. Judgment dated 16/04/1954, has made following observations:
“A neat definition of what “tax” means has been given by Latham C. J. of the High Court of Australia, in Matthews v. Chicory Marketing Board(1). A tax”, according to the learned Chief Justice, “is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered”. This definition brings out, in our opinion, the essential characteristics of a tax as distinguished from other forms of imposition which, in a general sense, are included within it. 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 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.”
The Honorable Supreme Court has, in M/s Om Prakash Agarwal Etc. Etc. vs. Giri Raj Kishori & Ors. Etc.Etc., Judgment Dated: 28/01/1986, reaffirmed its views expressed in the judgment referred to in the foregoing paragraph as follows:
“The primary meaning of taxation is raising money for purposes of Government by means of contributions from individual persons, a compulsory exaction of money by a public authority for public purposes enforceable at law and not a payment for services rendered.”A tax is a compulsory exaction of money by public authority for public purposes enforceable by law and is not a payment for services rendered” is a famous statement of Latham C.J. in Matthews v. Chicory Marketing Board., 60 C.L.R. 263, 276. The above statement truly brings out the essential characteristics of a tax. This statement has been quoted with approval by our Court in The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt.,  S.C.R. 1005. Mukherjea, J. who delivered the opinion of the Constitution Bench in the above case –“
” The three principal characteristics of a tax noticed by Mukherjea, J. in the above passage are: (i) that it is imposed under statutory power without the tax-payer’s consent and the payment is enforced by law; (ii) that it is an imposition made for public purposes without reference to any special benefit to be conferred on the payer of the tax; and (iii) that it is a part of the common burden, the quantum of imposition upon the tax-payer depending generally upon the capacity of the taxpayer to pay.”
If we keep these observations in our mind then we can safely conclude that-
(i) tax being compulsory exaction of money; it is imposed without taxpayer’s consent. Where any amount is leviable as tax, the person made liable for payment of tax falls under obligation of payment of tax levied, he cannot take liberty of not paying amount of tax;
(ii) purpose of tax levy is to collect revenue for public purposes and therefore, benefit of tax cannot be given to taxpayer;
(iii) tax is not a charge for any service rendered;
(iv) tax is collected by public authority i.e. the Government; and
(v) tax levy is enforceable by law.
Article 265 of our Constitution of India also provides that “No tax shall be levied or collected except by authority of law.” Therefore, where the law does not provide levy of any amount as tax, neither such amount can be levied as tax nor such amount or any part thereof can be collected as tax.