Articles 285 to 288 of the Indian Constitution: Exemption of Property from Taxes for Union and States

Introduction :

The Indian Constitution includes provisions related to the exemption of property from taxes for the Union and the states. Articles 285 to 288 outline these provisions, focusing on the exemption of property owned by the Union or a state from taxes imposed by the other authority. In this article, we engage in a comprehensive discussion, exploring the relevance of these articles in the modern era and analyzing relevant case laws that shed light on their significance in contemporary India.

Article 285: Exemption of property of the Union from state taxes :

Article 285 grants exemption to property owned by the Union from being subjected to state taxes. This provision ensures the autonomy and independence of the Union in managing its property and finances without interference from the states. The case of Union of India v. State of Bombay provides insights into the interpretation and application of Article 285. The Supreme Court, in this case, held that Article 285 provides absolute immunity to the property of the Union from state taxes, thereby safeguarding the financial sovereignty of the Union. This judgment underscores the importance of preserving the financial autonomy of the Union and protecting its property from encroachment by the states.

Article 286: Restrictions as to imposition of tax on the sale or purchase of goods :

Article 286 lays down restrictions on the imposition of taxes on the sale or purchase of goods. While Article 286 is not directly related to the exemption of property, it assumes significance in the context of modern taxation practices. The case of the State of Madras v. Gannon Dunkerley & Co. provides insights into the interpretation and application of Article 286. The Supreme Court, in this case, interpreted the restrictions imposed by Article 286 on the imposition of taxes on inter-state sales and held that a sale or purchase that is part of a series of transactions in the course of inter-state trade is immune from state taxation. This judgment highlights the significance of Article 286 in harmonizing the taxation of inter-state transactions and avoiding double taxation, which indirectly impacts the taxation of property.

Article 287: Exemption of property and income of a state from Union taxation :

Article 287 provides exemption to property and income of a state from Union taxation. This provision ensures the financial autonomy of the states and protects their property and income from being subjected to Union taxes. While there may not be specific case laws directly related to Article 287, the provision reinforces the federal structure of India and upholds the principle of fiscal autonomy for the states.

Article 288: Exemption from taxation by states in certain cases :

Article 288 deals with the exemption of property and income of the Union and the states from taxation by the other authority in certain cases. This provision aims to prevent the Union and the states from imposing taxes on each other's property and income in certain situations, fostering cooperation and mutual respect. The case of the State of West Bengal v. Union of India provides insights into the interpretation and application of Article 288. The Supreme Court, in this case, emphasized the importance of avoiding conflicts between the Union and the states in matters of taxation and held that the exemption provided by Article 288 extends to the income derived from property as well. This judgment highlights the significance of maintaining harmony and avoiding unnecessary tax disputes between the Union and the states.

Conclusion :

Articles 285 to 288 of the Indian Constitution play a crucial role in regulating the exemption of property from taxes for the Union and the states. Through relevant case laws and practical examples, we have observed the significance of these provisions in preserving the financial autonomy of the Union and the states, preventing double taxation, and fostering cooperation between the Union and the states in matters of taxation. As India progresses in the modern era, it is essential to sustain the discourse surrounding Articles 285 to 288, ensuring a harmonious tax environment and promoting effective fiscal management between the Union and the states. This will contribute to the overall economic growth, financial stability, and cooperative federalism of the nation.