Abstract
In both the United Kindom and in India, no tax can be imposed without the authority of a statute. This principle has lead to what some might consider an unhealthy obsession with statutory language. The idea that a statute’s language has to account for any tax imposed was taken by judges initially to mean only taxes that come within the literal language of the statute would be allowed. As one would have expected, some taxpayers took their cues from this and concocted schemes that stretched the statutory language and eventually the credulity of judges.
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Notes
- 1.
[1979] 1 WLR 974, 97. This passage was quoted by Lord Walker who described this passage as ‘vintage prose’. See Lord (2004, p. 413).
- 2.
[1936] AC 1 (HL).
- 3.
Annuities and wages are both periodic sums of money but while wages are paid on a current basis, annuities are paid for past services rendered.
- 4.
[1936] AC 1 (HL) 2.
- 5.
[1936] AC 1 (HL) 12.
- 6.
See Footnote 5.
- 7.
[1936] AC 1, (HL) 19–20 (Lord Tomlin).
- 8.
[1982] AC 300 (HL).
- 9.
[1982] AC 300 (HL) 323–324.
- 10.
[1984] A.C. 474.
- 11.
Ibid, 527.
- 12.
[2004] UKHL 51, [2005] 1 AC 684.
- 13.
[2004] UKHL 51, [2005] 1 AC 684 [42].
- 14.
Ibid [33].
- 15.
Freedman writes about the judicial decision-making in Barclays in the following terms: ‘Had they believed that the circularity of the scheme was relevant, they would have analysed the transaction as a composite whole. The reason they did not do so related to the nature of the scheme, not the statute. This goes further than pure statutory construction, even of a purposive nature, since the outcome of the application of the statutory words depends upon this special style of transaction analysis and not just a reading of the wording in the statute.’ (Freedman 2007, p. 66).
- 16.
69 F 2nd 809 (1934).
- 17.
[2011] UKSC 19.
- 18.
[1985] 3 SCR 791.
- 19.
Ibid, 811.
- 20.
It is unclear from the judgment whether there was an express contract under which the buyers agreed to pay the excise duty on the liquor. The Supreme Court proceeded on the basis that there was an agreement or an arrangement between the seller and the buyer regarding the payment of the excise duty. For example, on p. 817, the court stated ‘We would like to add, that the position is not different, when under a prior agreement, the legal liability of the manufacturer-dealer for payment of excise duty is satisfied by the purchaser by direct payment to the excise authorities or to the state exchequer.
- 21.
Ibid, 809.
- 22.
Ibid, 824.
- 23.
Ibid, 807.
- 24.
2003 Indlaw SC 823.
- 25.
Ibid [139].
- 26.
Ibid [144].
- 27.
Ibid [143]–[163].
- 28.
Ibid [164].
- 29.
Ibid [133].
- 30.
Ibid [134]–[135].
- 31.
Ibid [136].
- 32.
Ibid [138] where the Supreme Court stated ‘Despite the sound and fury of the respondents over the so called ‘abuse’ of ‘treaty shopping’, perhaps, it may have been intended at the time when Indo-Mauritius DTAC was entered into.
References
Freedman J (2007) Interpreting tax statutes: tax avoidance and the intention of parliament. 123 LQR 53
Hawkes A (2011, May 11). Pop stars among investors hit by taxman’s victory. Retrieved from https://www.theguardian.com/business/2011/may/11/revenue-wins-tax-avoidance-scheme-ruling
Hoffmann L (2005) ‘Tax Avoidance’. BTR 197
Lord W (2004) Ramsay 25 years on: some reflections on tax avoidance. 120 LQR 412
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Nuggehalli, N. (2020). Contracts, Status and the Judiciary. In: International Taxation. SpringerBriefs in Law. Springer, New Delhi. https://doi.org/10.1007/978-81-322-3670-2_3
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