The lack of an express legislation has always embarked a debate surrounding the issue of double taxation. Taxes are a compulsory imposition but by virtue of the constitution of India, taxes can only be imposed by the force of law. The presence of Article 265 of the constitution gives a statutory recognition to taxability. The jurisprudence on this point is also clear and holds that there must be a law to levy a tax.[i] Not only this but in case of Govind Saran Ganga Saran v. Commissioner of Sales Tax[ii], the Supreme Court went on to enumerate four ingredients taxation viz, (a) Taxable event (b) Taxable person (c) Taxable value (d) Rate of Tax. The Supreme court did not stop here and in the case of Union of India v. Azadi Bachao Andolan[iii], the court went on to say that “liability to taxation is a legal situation and payment of tax is a fiscal fact.”

So, the Jurisprudence is very much clear that there can be no taxation in absence of a law and taxability strictly depend upon the law. But the absence of a law on the point of double taxation gave rise to a conundrum that time and again required the intervention of the courts to get clarity over it.

We will go on to discuss in the later stage of this paper whether such a taxation is allowed or is bad in law, due to lack of express legislation on this point.

Double Taxation


In Chaturvedi and Pithisaria, Income Tax Law page 619,6 the dition (2014) the following observation is made on this count:

“Though taxation of the same thing under different names is none the less‘ double taxation’ in the popular sense, the expertise exposition of the topic seems to also lean in favour of the Revenue, in that the Legislature has been considered to possess the power to levy one or more tax or rates of tax on the same taxable event and since in those areas large latitude and wide discretion have always allowed the State to choose its own method or kind of tax or mode and purpose of levy and recovery, unless there is any prohibition in the Constitution or the very law enacted by the Legislature itself prevents such a thing happening no infirmity can be said to vitiate such a levy. Wherever the taxes areimposedbydifferentLegislaturesorauthoritiesorwhereoneofthetwoaloneisatax or where it is for altogether different purposes or when it is indirect rather than direct, the reisnoscopeeven for making any grievance of double taxation,at all.”

In absence of a express legislation, the Supreme court has defined this term time and again. The apex court in CIT v. P.V.A.L. Kulandagan Chettiar[iv] made the following observation:

“The traditional view in regard to the concept of ‘double taxation’ is that to constitute double taxation, objectionable or prohibited, the two or more taxes must be (1) imposed on the same property, (2) by the same state or government, (3) during the same taxing period and (4) for the same purpose. There is no double taxation, strictly speaking where: (a) the taxes are imposed by different states, (b) one of the impositions is not a tax, (c) one tax is against property and the other is not a property tax, or (d) the double taxation is indirect rather than direct.” It was further held that the question of double taxation must be decided having regard to who the assesse is. If the assesse is different the question of double taxation would not arise.

The court while explaining the ambit of double taxation has held that, “Same property or person can be subjected to tax by the state as well as the municipality or for two different purposes under different statutes and the same would not amount to double taxation.”[v]

Moving ahead to trace the concept of double taxation, the treatise by ‘Kanga and Palkiwala’[vi]explains and sets out the concept in the following words.

“However,where the Legislature clearly in tends double taxation, or where the taxes are imposed by different Legislature or authorities, or where the assesse is different one, or where one of the two impositions alone is a tax, or where the tax is for al together different purposes, or where the double taxation is indirect rather than direct, there is no scope for in validating such taxation. The joint operation of different statutes may therefore result in liability of two different taxes.Thus, royalties from mines were held liable to cess under the Bengal Cess Act,(9 of 1880) as well as to income-tax, and the owner of a building is charge able on its annual value to income-tax and also to the Bombay urban immovable property tax.”

Therefore, it is pertinent to note that the concept of double taxation has a very limited scope in our legislation. Also the Jurisprudential shift of permitting and not permitting double taxation has embarked a debate all around and there is still a clarity that is to be seen on this concept. Moving ahead, the author would deal the jurisprudence in order to better understand the approach of the courts in permitting as well as prohibiting double taxation in Indian Scenario.


The Jurisprudence regarding the context is not new. It was way back in In CIT v. P.E. Polson[1945]13 ITR384(PC)the Privy Council showed complete apathy to the concerns of double-taxation, inter alia, observing thus:

“It is possible that there is here a flaw in the legislative scheme which requires remedy. It would appear prima facieat least that in such a case the burden of so-called double taxation falls upon the tax- payer notwithstanding the plain intention of the section  to  avert  it. But this is a consideration which cannot be allowed to influence the clear interpretation of the section, though it may well afford grounds for amending legislation.”

In absence of any express legislation, the Supreme Court of India has expressly held that there is no constitutional provision that prohibits the imposition of double taxation. The Supreme Court’s Judgment in case of Avinder Singh Etcvs State Of Punjab &Anr. Etc, clarifies the law, where the court held in the following words that:

“A feeble plea that the tax is bad because of the vice of double taxation and is unreasonable because there are heavy prior levies was also voiced. Some of these contentions hardly merit consideration, but have been mentioned out of courtesy to counsel. The last one, for instance, deserves the least attention. There is nothing in Art. 265 of the Constitution from which one can spin out the constitutional vice called double taxation. (Bad economics may be good law and vice versa). Dealing with a somewhat similar argument, the Bombay High Court gave short shrift to it in Western India The atres (Western India The atres Cantonment Board Poona v. Western India Theatres Ltd., AIR 1954 Bonn261). Some undeserving contentions die hard, rather survive after death. The only epitaph we may inscribe is: Rest in peace and don’t be re- born ! If on the same subject-matter the legislature chooses to levy tax twice over there is no inherent invalidity in the fiscal adventure save where other prohibitions exist.”

There are a plethora of cases that discuss the permissibility of the double taxation and provides that only if a person or a body is double taxed doesn’t mean that this whole concept is bad in law. To this juncture, the decision of the Supreme Court in the case of State of Orissa v. TitaghurPaper Mills Co. Ltd.[vii]becomes important. The court held that, “60….The general rule of construction is that at axing statute will not be so construed a stores ultin taxing the same person twice in respect of the same income or transaction. There is, however, nothing to prohibit the Legislature from so enacting it.”

There a lot of decisions on the same line by both the apex court as well as the High courts. The discussion and the debate is yet not over and we need to see as to what the courts have to say on the non-permissibility of double taxation.


Where the courts have permitted double taxation at many instances, there a lot of judgments where the court have declared double taxation to be bad in law and have ruled against the concept.

One of such decision of the Supreme Court came in Stale of Andhra Pradeshv.Larsen and Toubro Ltd.[viii]observed that  double taxation renders legislation vulnerable to challenge as violative of articles 14, 19(1)(g) and 265 of the Constitution of India and accordingly impelled reconsideration of its earlier decision. However, soon in 2014 this finding was rejected by the 3 judge bench in the case of Larsen and Toubro Ltd. v. State of Karnataka [2014] 65 VST 1 (SC).

Further the Supreme Court in Union of India v. Tata Iron and Steel Co. Ltd.[ix]agreed with the High Court to declare  that  “there  cannot  be  double taxation on the some article” to grant exemption.

The observation of the apex court in Uttar Pradesh v. Raze Buland  Sugar Co. Ltd.[1979]118 ITR 50 (SC)’ observed thus,

“… The principle that is applicable in tax statutes is that the income is subject to tax in the hands of the same person only once. Thus, if an association or a firm is taxed in respect of its income the same income cannot be charged again in the hands of the members individually and vice versa. The trust income cannot be taxed in the hands of the settl or and also in the hands of the trustee or beneficiary or in the hands of both trustee as well as the beneficiary. These principles are, of course, subject to any special provision enabling double taxation in the statute…”

Therefore, the context is still not clear as to when it is permissible and when not. The lack of legislation whether permitting or prohibiting double taxation has sparked this debate. Before we move to conclude this, yet an interesting decision of the apex court becomes important to this point.

The 2003 decision of the apex court in the case of CIT v. Damani Brothers[x] finds some relevance as the court held that,

“…There can be, no dispute that double levy of interest is not permissible. But this principle is applicable only when the interest is chargeable more than once for the same set of refractions. If the provisions under which interests are charged operate in different fields, there is no statutory bar on levying the interest because in essence it does not amount to double levy of interest but levy of interest separately for different refractions.”

So, lastly there has been a number of judgments on the principle of prohibiting the practice of double taxation but the trend still remains ambiguous and there still exists a conundrum.


I would like to conclude by quoting a maxim that best suits the situation surrounding the concept of double taxation, “’duralexsedlex” thereby meaning , “The Law is hard, but it is the law”.

It would be correct to say in the present sense that the judicial trend is such that it neither prohibits this practice of double taxation neither it has permitted it full fledgy. There are decisions on both side to this debatable issue and to our surprise it still remains undefined. The jurisprudence on this line developed way back in 1940s but there is still not  acomplete clarity on this issue.  We would definitely like to witness and learn more clarity on this principle that too when there is a lack of law to this point.

[i]KunnathatThathunniMoopil Nair v. State of Kerela, AIR 1961 SC 552

[ii][1985] 155 ITR 144 [SC]

[iii][2003] 263 ITR 706 (SC)

[iv][2004] 267 ITR 654 (SC)

[v] Sri Krishna Das v. Town Area Committee [1990] 77 SCC 395 (SC)

[vi] kanga and Palkiwala, The Law and Practice of Income Tax, Page no. 44, 10TH Edition (2014)

[vii][1985] 60 STC 213 (SC)

[viii][2008] 17 VST 1 (SC)

[ix][1976] 2 SCC 123

[x][2003] 259 ITR 475 (SC)


Author Bio

More Under Income Tax

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

March 2021