PROPOSED COURSE MANUAL

TAXATION LAW

(B.A, LL.B)

Course Instructor

Mr. Kinshuk Jha

Ms. Ashrita Kotha

Part I

Course Title / Taxation Law
Course Code
Corse Duration / One semester
Level / Fourth year of B.A,LL.B
Medium of Instruction / English
Pre-requisites / Nil
Pre-cursors / Nil
Equivalent courses / Nil
Exclusive courses / Nil

Part II: Course Aim

India has a comprehensive tax structure. The power to levy taxes and duties is distributed among the three tiers of Government, in accordance with the provisions of the Indian Constitution. There is a broad classification of taxes done under the categories of direct and indirect taxation. The Central government, the state governments and the local bodies levy and collect different types of taxes in accordance with the provisions of the relevant legislation. It is to be noted that any of these legislations shall not be in violation of the provisions of the Constitution. The taxes levied shall not be arbitrary or without legislation. The efficient collection of both, the income based and the consumption based taxes, contribute towards the development of the nation and also in meeting the costs of governance.

The tax system in India has under gone a radical change in line with the liberalization of policies since 1991. Some of the changes include:- rationalization of tax structure reduction in corporate tax rate; alignment of customs duty in accordance with bilateral treaties; introduction of value added tax and widening of the tax base. It would be apt to say that tax laws form an integral part of the fiscal and trade policies of the nation.

Even though several tax laws have been simplified to ensure better compliance, they still represent a complex system of legislations for the layman. The Indian courts have played a pivotal and incessant role in curtailing arbitrary taxation by the authorities and have laid down several guidelines for the effective implementation and valid interpretation of the tax laws. Contrary to the popular notion of it being a vast and arid subject, the study of tax laws is quite intriguing. It is highly utile for students of law as it elevates their general awareness of taxation principles from personal as well as practice perspective.

This course –

provides students with the knowledge of the basic principles of taxation, for both direct and indirect taxes, in India

develops comprehension and application of these principles as they have been interpreted by the Indian courts

develops an awareness of the concurrent issues in the domain of taxation laws through periodic case studies of the relevant domestic and international judicial pronouncements

introduces students to the co-relation between domestic taxation laws, fiscal policies and international trade

introduces students to basic practical skills required to conduct research in the domain of taxation of corporations and commodities

Course Intended learning outcomes

Course objective
By the end of the course students
should be able to: / Teaching and Learning Activities / Assessment
Tasks/ Activities
Analytically and critically describe and explain the substantive principles of direct and indirect taxation pertaining to the topics to be covered in the syllabus.
Analyse and critically evaluate:
  • issues and concerns in the fields of direct and indirect taxation
  • the operation of the principles of corporate taxation and taxation of commodities
  • the practical implications of the taxation principles on international trade and commerce
  • the practical implications of the taxation principles and their social contexts.
Apply the principles of corporate taxation to solve legal problems by:
  • researching issues of corporate taxation
  • analysing and innovating to resolve problems concerning issues of corporate taxation.
  • communicating their solutions orally and in writing clearly, coherently and accurately in their own words and in plain language
/ 50 % Weightage
30% Weightage
20 % Weightage / Reading of relevant cases and other material and research.
Students will acquire knowledge of the scheme of direct and indirect taxation pertaining to the topics to be covered in the syllabus.
Students willbe encouraged to participate in class discussion to develop their analytical and critical skills.
Lectures
Students will be given guidance
on their reading and research for their lectures and tutorials.
Students will, by responding to questions and performing exercises, develop their analytical and critical capabilities to discuss important issues of taxation on corporations and commodities.
Students will be introduced to issues and concerns and aspects of the operation of the principles of direct and indirect taxation.
Preparation for tutorials
Students will research on the issues of direct and indirect taxes, corporate taxation and international taxation.
Tutorials
Students will give presentations on selected topics in which they will scrutinise, analyse and evaluate issues and concerns in the topics related to taxation of corporations and commodities, domestic and international.
Lectures
Students will be shown how legal problems are solved applying principles of corporate and international taxation. / End-of-course closed book, timed examination
(50% of marks)
Tutorials (25% of marks for attendance, presentation and participation)
Assignment/s(25% of marks for case reviews/case studies, etc.)
Students’ ability to describe and explain the main substantive rules of direct and indirect taxation on topics covered in the syllabus will be tested on all three assessment parameters.
End-of-course examination +Tutorials +Assignments
Students’ ability to analyse and critically evaluate will be tested by all three assessment tasks/activities to determine their ability to apply the legal principles to a given factual situation.
End-of-course examination
Students’ ability to apply the principles of law to given situations and resolve problems will be examined.
Tutorials
Students will be required to make presentations on problems and questions allotted to them and all students will be required to participate and contribute to tutorial discussions whether they are making a presentation research, analyse and resolve problems, and communicate solutions orally will be tested.
Assignment/s
Students’ ability to research, analyse and resolve problems, and communicate solutions in writing will be tested.

GRADING OF STUDENT ACHIEVEMENT

To pass this course, students must obtain a minimum of 50% in each of the coursework and the examination elements of the assessment. Coursework for this purpose means those ways in which students are assessed otherwise than by the end of session examination. End of semester exam will be in the form of a traditional 3 hours written exam. 5% of the total marks (100) will be awarded for attendance, subject to University policies.

Letter Grade / Grade Value / Total Course Marks
(50 for exam, 25 for assignments & 25 for tutorials) / Grade Definitions and Explanation
O / 7 / 70 and above / Outstanding:Sound knowledge of the subject matter, excellent organizational capacity, ability to synthesize ideas, rules and principles, critically analyse existing materials and originality in thinking and presentation.
A+ / 6 / 65 to 69.75 / Excellent:Sound knowledge of the subject matter, thorough understanding of issues; ability to synthesize ideas, rules and principles and critical and analytical ability.
A / 5 / 60 to 64.75 / Good: Good understanding of the subject matter, ability to identify issues and provide balanced solutions to problems and good critical and analytical skills.
B+ / 4 / 55 to 59.75 / Adequate: Adequate knowledge of the subject matter to go to the next level of study.
B / 3 / 50 to 54.75 / Marginal: Limited knowledge of the subject matter and irrelevant use of materials and, poor critical and analytical skills.
F / 0.0 / Below 50 / Failure: Poor comprehension of the subject matter; poor critical and analytical skills and marginal use of the relevant materials. Will require repeating the course.

Tutorials

To encourage participation, students would be expected to contribute in deciding the content, format, and methodology of tutorial classes. Decided thus, tutorial exercises will be distributed from time to time.

Student Participation

Students are required to prepare for lectures and tutorials and to participate in them. Their participation will be assessed and graded.

Cases and other Reading Material

Corporate Tax Planning and Business Tax Procedures, 2013 Ed, Taxmann by Dr. Vinod Kr. Singhania and Dr. Monica shall be used as the main text book for this coursework. Communication regarding relevant chapters/reading material and specific cases to be studied for each week’s lecture will be sent to students in advance.

Plagiarism

Any idea, sentence or paragraph that the students cull out from the internet must be credited with the original source. Paraphrasing or directly quoting from a web source in the exam, presentation or essays, would require disclosure of the source. The university has strict rules with consequences for students involved in plagiarism.

This is an issue of academic integrity on which no compromise shall be made.

Part III KEYWORD SYLLABUS

Direct and Indirect taxation, Taxable entities, Tax planning, Avoidance and Evasion, Types of companies for tax purposes; Tax incidence, Tax planning in respect to new businesses, Tax planning in respect to nonresident, Restructuring of business, Amalgamation, Demerger, Double taxation avoidance agreements, Transfer pricing, Authority for Advanced Ruling

Part IV DETAILED SYLLABUS

Introduction to General Principles of taxation- tax planning- avoidance- evasion

Key features of direct and indirect taxes, canons of taxation

Constitutional provisions with respect to taxation laws

Corporate taxation in India- Concept of company- Indian company- Foreign Company- Industrial Company- Investment Company- Widely held company- closely held company

Key concepts of the Income Tax and Wealth Tax

Residential Status and tax incidence- incidence of tax

Concepts of Previous Year and Assessment Year, Assessment Procedure

Concept of Residential status

Tax planning with reference to new business- nature and form of new business- tax planning with reference to financial management decisions- tax planning with reference to managerial decisions

Restructuring Business and Amalgamation- Merger- Conversion of Sole Proprietary Business or Firm into Company- Slump Sale- Transfer of Assets between Holding and Subsidiary Companies- Conversion of Company into Limited Liability Company/ Partnership

Tax Planning in Respect of Non Resident

International Taxation- Double Taxation Agreements- Transfer Pricing- Advance Ruling for Non Resident

Taxation on Commodities (Indirect Taxation)

Objects and structure of the Service Tax, Principles and Concepts, Legal Issues and recent developments

Objects and structure of the Customs Act, Principles and concepts of the Customs Act, Legal Issues and adjudication mechanism

Objects and structure of Central Excise, Principles and concepts, Legal Issues and computation methods

Objects and structure of VAT, Principles and concepts, Legal Issues and computation methods

The advent of GST in India

Part V READINGS

The lecture handouts or any other relevant literature will be circulated a week in advance. They will have a significant role as they would be a customized source of pertinent information on the upcoming topics. Students are advised to keep a regular record of them.

Essential Reading-

Dr. Vinod K. Singhania and Dr. Monica Singhania, Corporate Tax Planning and Business TaxProcedures, Taxmann Publications, 17thEdition, 2013

Supplementary Readings-

Dr. Vinod K. Singhania and Dr. Monica Singhania, Students Guide to Indirect Tax Laws,Taxmann Publications, 49thEdition, 2013

Roy Rohatgi, Basic International Taxation (Vol. I and II), Taxmann Publications, 2nd Edition

Scholarly Articles-

Infanti, Anthony C., Tax as Urban Legend (January 24, 2011). Harvard Blackletter Law Journal, Vol. 24, 2008; University of Pittsburgh School of Law Legal Studies Research Paper No. 2007-13. Available at SSRN:

Martin, Isaac William and Mehrotra, Ajay K. and Prasad, Monica, The Thunder of History: The Origins and Development of the New Fiscal Sociology. THE NEW FISCAL SOCIOLOGY: TAXATION IN COMPARATIVE AND HISTORICAL PERSPECTIVE, Isaac William Martin, Ajay K. Mehrotra, Monica Prasad, eds., New York: Cambridge University Press, 2009; Indiana Legal Studies Research Paper No. 147. Available at SSRN:

Mankiw, N. Gregory and Weinzierl, Matthew and Yagan, Danny, Optimal Taxation in Theory and Practice (June 11, 2009). Harvard Business School BGIE Unit Working Paper No. 09-140. Available at SSRN: or

Thomas Sowell, “Trickle Down” Theory and “Tax Cuts for the Rich”,

Malloy, Robin Paul, Adam Smith in the Courts of the United States (May 1, 2010). Loyola Law Review, Vol. 56, No. 3, p. 33, 2010. Available at SSRN:

Bandyopadhyay, Sankha Nath, The Problem with Tax: Planning, Avoidance or Evasion? (July 8, 2012). Available at SSRN: or

Slemrod, Joel B. and Yitzhaki, Shlomo, Tax Avoidance, Evasion, and Administration (January 2000). NBER Working Paper No. w7473. Available at SSRN:

Infanti, Anthony C. and Crawford, Bridget J., Critical Tax Theory: An Introduction (January 1, 2009). CRITICAL TAX THEORY: AN INTRODUCTION, Cambridge University Press, 2009; U. of Pittsburgh Legal Studies Research Paper No. 2009-04. Available at SSRN:

Vann, Richard J., 'Liable to Tax' and Company Residence under Tax Treaties (November 23, 2010). RESIDENCE OF COMPANIES UNDER TAX TREATIES AND EC LAW, EC AND INTERNATIONAL TAX LAW SERIES, Vol. 5, pp. 197-271, G. Maisto, ed., IBFD: The Netherlands, 2009; Sydney Law School Research Paper No. 10/131. Available at SSRN:

Shaviro, Daniel, The Forgotten Henry Simons (November 27, 2012). NYU Law and Economics Research Paper No. 12-39, read pp. 30-47. Available at SSRN:

or

Cockfield, Arthur J., Introduction: The Last Battleground of Globalization (August 23, 2010). GLOBALIZATION AND ITS TAX DISCONTENTS: TAX POLICY AND INTERNATIONAL INVESTMENTS, Arthur J. Cockfield, ed., pp. 3-17, University of Toronto Press, 2010. Available at SSRN:

Nguyen, Xuan-Thao and Maine, Jeffrey A., The History of Intellectual Property Taxation: Promoting Innovation and Other Intellectual Property Goals? (July 12, 2011). Southern Methodist University Law Review, Vol. 64, 2011. Available at SSRN:

Gupta, Sayantan, Cross-Border Mergers and Acquisitions: Addressing the Taxation Issues from an Indian Perspective (December 4, 2008). Corporate Professionals Today, CPT, Vol. 13. No. 6, p. 525, 2008. Available at SSRN:

Goutam, Swapneshwar, Concept of Slump Sale & Taxation Issues in India (November 28, 2010). Available at SSRN: or

Chaturvedi, Nishant and Sharma, Priyesh and Makkar, Karandeep, Applicability of Minimum Alternate Tax in India (February 11, 2011). Available at SSRN:

or

Raju, Dr. K. D., Intellectual Property Taxation in India: Need for a Comprehensive Policy and Law (July 21, 2008). Available at SSRN: or

Thacker, Sunil, A Study of the Indian Tax System - Part I and II (October 17, 2008). Tax Notes International, Vol. 52, No. 2, 2008. Available at SSRN:

Jha, Raghbendra, Indirect Tax Reform and Fiscal Federalism in India (July 18, 2013). Available at SSRN: or

Anand, Manoj, Doctrine of Unjust Enrichment and Refunds Under Central Excise Law. The Management Accountant, Vol. 30, No. 2, pp. 147-149, February 1995. Available at SSRN:

Dahal, Rajib, Basic Concepts and Features of Goods and Service Tax in India (May 25, 2010). Available at SSRN: or

Singh, Nirvikar and Srinivasan, T. N., Federalism and Economic Development in India: An Assessment (November 6, 2006). Available at SSRN: or

Jain, Tarun, Investments Through DTAA Route in India and Strategic Tax Planning (July 20, 2011). Institute of Business Laws Newsletter, No. 2, August 2011. Available at SSRN:

VanderWolk, Jefferson P., The New World of Tax Information Exchange (February 18, 2010). Asia-Pacific Journal of Taxation, Vol. 13, No. 2, Autumn/Winter 2009. Available at SSRN:

Göx, Robert F. and Schiller, Ulf, An Economic Perspective on Transfer Pricing (February 1, 2006). Available at SSRN: or

Dean, Molly and Feucht, Frederick J. and Smith, Murphy, International Transfer Pricing Issues and Strategies for the Global Firm. Available at SSRN:

Baistrocchi, Eduardo A., The Use and Interpretation of Tax Treaties in the Emerging World: Theory and Implications (September 24, 2008). British Tax Review, No. 4, 2008. Available at SSRN:

Statutory References-

Indian Companies Act, 1956

Limited Liability Partnership Act, 2008

Income Tax Act, 1961

Wealth Tax Act, 1957

Central Excise Act, 1944

Customs Act, 1962

Part VI LECTURE PROGRAMME

The following lecture schedule is tentative and may be revised by the instructor(s).

Week 1Introduction to General Principles of taxation- Ideologies- Fiscal policy

  • Introduction to Fundamental principles of taxation (Concept of Income based taxes and consumption based taxes, purpose and goals of a tax system)
  • Tax Ideology (Ideologies in Direct/Indirect taxes; Ideology of ability, Ideology of Barriers and Deterrents, Ideology of Equity)
  • Levy of Tax(Regulatory, Compensatory), Tax Neutrality (Taxes causing excess burden, Progressive and Proportional tax, Tax neutrality in the light of equity)
  • Introduction to Fiscal Policy Design in India
  • Union-State Financial Relation
  • Limitations of Taxation Policy

Week 2Canons and Sources of Tax Laws, Constitutional Provisions related to Indian Taxation system

  • Canons of Taxation: Main basic principles set to build a good tax system. A brief introduction to the canons proposed by Adam Smith such as Canon of Ability , Canon of Certainty , Canon of Convenience, etc.
  • Sources of Tax Laws
  • Constitutional Provisions with respect to Taxation Laws
  • Art. 265, No taxation without legislation, (Read Ghulam Hussain v. State of Rajasthan, AIR 1963 SC 379 & Mehra Harish Vansh Lal vs State of Maharashtra 1971 (2) SCC 54)
  • Article 265, Right to refund, (Read Mafatlal Industries Ltd. and Ors. Vs. Union of India (UOI) and Ors. (1997) 5 SCC 536)
  • Art 246, Art 248, Scheme of distribution of legislative powers between the Centre and State
  • Art. 301, 304, Freedom of Trade Commerce and Intercourse, restrictions, legality of entry tax, (Read Jindal Stainless Ltd. & Anr vs State Of Haryana & Ors, [2006] 145 STC 544)
  • Art. 280 (Establishment of the Finance Commission of India, Qualifications of members, Role and duties of the Commission)

Week 3Direct Taxes: Introduction to Income Tax

The Central Government has been empowered by Entry 82 of the Union List of Schedule VII of the Constitution of India to levy tax on all income other than agricultural income (subject to Section 10(1)). The Income Tax Law comprises of the Income Tax Act 1961, Income Tax Rules 1962, Notifications and Circulars issued by Central Board of Direct Taxes (CBDT), Annual Finance Acts and Judicial pronouncements by Supreme Court and High Courts.

  • Key concepts and principles of the Income Tax, Tax base and Concept of Income, case laws:

(C. I. T. v. Shaw Wallace, 59 I.A. 206), (Emil Webber v. C. I. T., 200 ITR 483 (SC))