Untitled Document

Our Constitution's Provisions Relevant to the comprehension of the Treat-Making Power of the Union of India

by Shiva Kant Jha

(i)

THE PROVISIONS OF OUR CONSTITUTION

[Extract from the Petitioner's Written Arguments filed before the Del. High Court in WP (C) No.1357 of 2007 Shiva Kant Jha vs. Uniom of India (coram: Sanjay Kishan Kaul And Ajit Bharihoke JJ. (Dated: November 11, 2009)]

8. It is considered most appropriate to submit on the provisions of our Constitution before the issues involved in this Writ Petition are considered. Our Supreme Court quoted with approval, in Bengal Immunity (AIR1955 SC 661 at 671 para 13 ), what Justice Frankfurter had said so perceptively:

"….the ultimate touchstone of constitutionality is the Constitution itself and not what we [court] have said about it".

"If we take the Brown opinion as it is written, it certainly ranks as one of the great opinions of judicial history --- plainly in the tradition of Chief Justice Marshall's seminal 1819 dictum that the Court must never forget that it is a Constitution it is expounding." {italics supplied) [1] . And Higgins J. observed:

"…..although we are to interpret the words of the Constitution on the same principles of interpretations as we apply to the any ordinary law, these principles of interpretation compel us to take into account the nature and the scope of the Act we are interpreting, to remember that it is a Constitution, a mechanism under which laws are to be made, and not a mere Act which declares what the law is to be." [2]

Any determination of the issues deserve to be made in accordance with the language of our Constitution as there can be no better pointer to the intent of the makers than the language they used. For proper exposition of our constitutional provisions, the aspects of the matter under consideration are divided into the following Sections:

(a). The Historical Context,

(b) The Provisions under our Constitution, and

(c ) Deductions from our Constitutional provisions.

(a).

The Historical Context,

9. The American Constitution, which provided us with a model of a written constitution with fundamental rights, provides an appropriate perspective for comprehending constitutional issues under our Constitution. The Attorney-General, addressing the court in the Five Knights' Case ( one of the state trials of Stuart England ) for the Crown asked, "Shall any say, The King cannot do this? No, we may only say, He will not do this." [3] It was precisely to ensure that in the American system one would be able to say, "The State cannot do this," that the people in America enacted written Constitution containing basic limitations upon the powers of government [4] .

10. Our Constitution does not grant our Executive any external sovereignty through affirmative grants. Under our Constitution it is wrong to think that power over external affairs, in origin and in its essential character, is different from that over internal affairs. The President speaks or listens as a representative of the nation but only within Constitutional limitations. The Executive under our Constitution cannot preempt law, or go counter to it not only in the domestic sphere but also at the international plane. The constitutional limitations, within which all executive powers are to be exercised, are set forth in our Constitution itself. The sovereign status of the Constituent Assembly had been boldly acknowledged by the great Indian leaders. Granville Austen very perceptively observed [5] :

" Gandhi expressed the truth first ---that Indians must shape their own destiny, that only in the hands of Indians could India become herself -when in 1922 he said that Swaraj would not be a gift of the British Parliament, but must spring from 'the wishes of the people of India as expressed through their freely chosen representatives'. Twenty-four years later these words were repeated during the opening session of the Constituent Assembly; they were, some said, the Assembly's origin; all agreed that they were its justification."

"The Assembly was the people's. As Nehru said, the British could now dissolve the Assembly only by force. 'We have gone through the valley of the shadow, and we will go through it again for true independence, he said."

11. Jawaharlal Nehru had declared that India's constitution-making could not be "under the shadow of an external authority". The Cabinet Mission had come to New Delhi to help the Viceroy set up in India a machinery by which Indians could devise their own constitution. Our Constitution was not to be one written in the colonial office of the imperial powers and passed by the British Parliament. Austen aptly points out that the desire for a "home-made' constitution is the source of what K.C. Wheare has named the "principle of constitutional " autochthony", or desire for a constitution sprung from the land itself. [6] The Constituent Assembly arrogated to itself an absolute authority to control its being. It declared:

"The Assembly shall not be dissolved except by a resolution assented to by at least two-thirds of the whole number of members of the Assembly." [7]

The Constituent Assembly had a sovereign competence for the constitution-making as it was for the sovereign republic of India. Austen says:

"India was an emergent , formerly colonial territory, where a sovereign people framed their Constitution in a Constituent Assembly while at the same time working a federal government that pre-existed independence --the federal system of 1935 Act."

The Indian Independence Act came into effect on 15 August 1947, merely recognizing what was fait accompli. In terms of Public International Law it was a mere recognition of an accomplished fact. It did not transference sovereignty from the British Crown to the 'We, the People" of India.

(b)

The India Independence Act, 1947

12. The Indian Independence Act 1947 was by the U.K. Parliament getting royal assent on July 18, 1947. It sought to set up two dominions, India and Pakistan, on August 14; and with this the British Government's responsibility as well as suzerainty were to 'cease' making the two Dominions self-governing in matters pertaining to internal and external affairs. Section 8 of that Act provided: "In the case of the new Dominions, the powers of the Legislature of the Dominion shall, for the purpose of making provision as to the constitution of the Dominion, be exercisable in the first instance by the Constituent Assembly of that Dominion". First, this was said what was the implied authority of a sovereign nation. Secondly, our Constitution was adopted, enacted and given to ourselves on Nov 26, 1949, when we were a sovereign nation..

13. Our Constitution was framed when we had self-governing powers in the widest amplitude. Our Constitution is not a grant from the Imperial Power, nor was it minted in any foreign chancellery, nor was it regulated and commanded by the colonial masters. . Let the status of the Constituent Assembly that framed our Constitution be compared with the way in which some other constitutions were framed.

13A. Our Constitution was framed under circumstances different from the circumstances under which the USA was formed. The material specifics of the U.S. polity was in the mind of Justice Sutherland who was led to believe in Curtiss Wright Case [ 299 U S A 304 (1936)] that the USA possessed 'extra-constitutional" [8] : he said:

"And since the states severally never possessed international powers, such powers could not have been carved out from the mass of state powers but were transmitted to the U.S. from some other source. During the colonial period , those powers were possessed exclusively by and were entirely under the control of the Crown. ……."

(c )

The Constitution of the U.K.

14. The U.K. Constitution is the product of the the nation's constitutional struggle over the centuries. Courts and Parliament have stripped the Crown of many powers by subjecting that to certain constitutional discipline. Whatever is still left to it belongs to that realm of the Executive's powers which are called 'the Crown's Prerogative' generally invoked in matters pertaining to the foreign affairs and the exercise of the Treaty-Making power. This aspect of the matter has been thus brought out by Oppenheim [9] thus:

'The departure from the traditional common law rule is largely because according to British constitutional law, the conclusion and ratification of treaties are within the prerogative of the Crown, which would otherwise be in a position to legislate for the subject without parliamentary assent. Since failure to give any necessary internal effect to the obligations of a treaty would result in a breach of the treaty, for which breach the United Kingdom would be responsible in international law, the normal practice is for Parliament to be given an opportunity to approve treaties prior to their ratification and, if changes in law are required, for the necessary legislation to be passed before the treaty is ratified."

(d)

The Federal Constitution of Malaysia.

15. The Constitutional Conference, held in London in 1956 suggested a commission to frame Malaya. It was accepted by Her Majesty Queen Elizabeth II and the Malay Rulers. Lord William Reid, a Lord of Appeal in ordinary, headed that commission. Its report provided basis for the Constitution. It became operative from August 27, 1957 whereas independence was achieved only on August 31, however, i.e. much after the grant of Constitution to Malaysia.

(e)

The Constitution of Canada

16. Till 1982 Canada was 'governed by a constitution that was a British law and could be changed only by an Act of the British Parliament' with the Queen of England as the Head of the State. The Canadian government was cast in the parliamentary form. Lord Atkin in Attorney General for Canada v. Attorney General for Onterio ( P.C.) stated two points:

(a) The Privy Council stated the typical British approach in this case emanating from the Canadian jurisdiction as the Preamble to the British North America Act, 1867 stated that :

"Whereas the Provinces of Canada, Nova Scotia, and New Brunswick have expressed their Desire to be federally united into One Dominion under the Crown of the Crown of the United Kingdom of Great Britain and Ireland, with a Constitution similar in Principle to that of the United Kingdom;"

Art. 9 stated :

'The Executive Government and Authority of and over Canada is hereby declared to continue and be vested in the Queen."

(b)The Privy Council held that legislation implementing an international convention was void as it contravened Sections 91 and 92 of the British North America Act, 1867.

(f)

The Constitution of Australia

17. The Commonwealth of Australia was the creation of the British Parliament. The Constitution Australia, operative from 1 January 1901, had been made operational by by an Act of the U.K. Parliament. It adopted a parliamentary form of government with the Queen as the Head of the State having in Australia her representative, the Governor General, wielding executive powers. It took the passing of the Statute of the Westminster Adoption Act 1942 and the Australia Act 1986 to dissociate Australia constitutionally from the U.K. Till the Australia Act 1982 the Privy Council was the highest Court for Australia. Now Australia can amend its Constitution. Despite all these the 1900 Act is still on the British list of laws with a narration : "The Constitution is not necessarily in the form in which it is in force in Australia".

(g)

The Constitution of the USA

18. The American War of Independence (1775-1783) ended with the Treaty of Paris in 1983 in terms of which the British Government gave up sovereignty over the United States. The Constitutional Convention in Philadelphia adopted the U.S Constitution on 17 September 1787 and was ratified by the constituent states in the name of "the People".

(H)

THE PROVISIONS UNDER OUR CONSTITUTION

19. Our Constitution organizes and distributes the whole of the State power through its well-knit structure leaving the Executive with no hip-pocket with reserve power outside the ken of the Constitution. This deduction is amply borne out by the provisions of our Constitution when analytically examined viz.:

20. Art. 53 of our Constitution

It says:

(i) The executive power of the Union is vested in the President;

(ii) This power is to be exercised in accordance with the Constitution; and

(iii) In terms of Art 53(3), Parliament can clip the wings of the Presidential power.

(iv) It deserves to be contrasted with the powers of the U S Constitution in whom the executive power is vested in the President, not specifically subject to the constitutional restraints and limitations.

21. Art. 73 of our Constitution

It says:

(i) The entire gamut of the President's executive power is "subject to the provisions of this constitution;

(ii) The extension is granted to the 'executive power' alone;

(iii) The said 'extension' is delimited by Art 73(1)(a) & (b).

It deserves to be noted that our Constitution puts on the exercise of the 'executive power' to specific riders:

(a). The exercise of the 'executive power' would be ultra vires if exercised fraudulently,

(b) The exercise of the 'executive power' must not transgress the constitutional limitations in order to be constitutionally valid,

( c) The exercise of the 'executive power' must not breach the mandatory norms of our Administrative Law as judicially interpreted,

(d) The exercise of 'executive power' is subject to the constitutional discipline whether it is exercised domestically or at the international plane,

(e) The Art. 73(1)(b) (like Art 253) deals with, to quote from the Peoples Commission (p.150): "an ex post facto situation, that is, a consequential situation arising out of an international treaty, agreement or convention already entered into." [10]

22. Art. 245 of our Constitution

It says:

(i) Art. 245 mandates that the law made by Parliament and the Legislatures of the States must be "subject to the provisions of this Constitution"

(ii) It follows a fortiori that the law thus framed must be valid by conforming to (a) our Fundamental Rights, (b) our Constitutional Rights which are not eo nomine Fundamental Rights, (c) the Basic Structure of our Constitution as judicially expounded,

(iii) It does not say that the 'legislative power' is vested in Parliament (as does the Art. I(1) of the U.S. Constitution in the case of the U.S. Congress). But almost the same result emerges because of the exclusivity of legislative power granted to the legislature is specifically stated in Art 246(1) of our Constitution.

Art 253: what it means.

23. Art 253 of our Constitution;:

"Notwithstanding anything in the foregoing provisions of this Chapter, Parliament has power to make any law for the whole or any part of the territory of India for implementing any treaty, agreement or convention with any other country or countries or any decision made at any international conference, association or other body."

(a) It empowers Parliament to make any law, for the whole or any part of the territory of India, for the purposes specified in the Article.

(b) The opening words of the Article "Notwithstanding anything in the foregoing provisions of this Chapter" mean that this power is made available to Parliament by collapsing the division of powers between the Centre and States effected by Article 246 read with the Seventh Schedule.

(c ) A close reading of Articles 253 and 73 suggests. on the terms of their text, the following:

(a) Whereas Entry 14 of the Union List refers to Parliament's legislative competence to frame law both pertaining to the formation and implementation of a Treaty, Article 253 contemplates only implementation, not formation, of a Treaty. The act of implementation is a distinct from and posterior to the act of formation.

(b) Art. 253 contemplates Parliament's " power to make any law…." for implementation of a treaty. Art. 73 contemplates merely the frontiers of the province of the Executive power. The Article does not deal with formation or implementation of a Treaty. But as the Executive power is exercised only in accordance with and subject to the Constitution, even the formation of a Treaty is within the constitutional limitations.

(c) Art 253, even on its terms, collapses the scheme of the distribution of legislative powers as distributed under the 7^th Schedule. The power under Art 73 can stand extended only when Power is exercised by framing actual legislation in terms of Art. 253. Unless the appropriate law is framed, Parliament has not evidenced its power to collapse the federal structure. As all powers granted under Constitution are subject to the constitutional limitations, there must be specific occasions:

(i) for our Parliament to consider if it would exercise a particular power to ride roughshod over people's Fundamental Right, or in breach of other Constitutional limitations including the norms governing Basic Structure;

(ii) for our Superior Courts to examine the constitutional validity of the exercise of the legislative power under Art. 253 of the Constitution by examining whether a particular law made by Parliament is constitutionally valid;

(iii)for our people, as the political sovereign to judge our Parliament at work.

The concept of the extended legislative power can not be construed to subsume notional power widened mere logically in vacuo.

In Ajaib Singh v. State of Punjab [11] where the Court held:

"Neither of Articles 51 and 253 empowers the Parliament to make a law which can deprive a citizen of India of the fundamental rights conferred upon him".

ThePeoples' Commission Report on GATT [headed by V R Krisna Iyer, O Chinappa Reddy, D A Desai, and Rajinder Sachar] quotes (at p. 127) Dr. Basu who had expressed the view analogous to that stated in Ajaib:

"Basu makes a significant observation about Art. 253. He says that Parliament shall be competent to legislate on List II items, if necessary, to implement treaties or agreements. "But other provisions of the Constitution, such as the Fundamental Rights, cannot be violated in making such law". [Constitution of India by Basu 1994Edn. P. 858]

(d) After a close examination of Articles 73 and 253 the Peoples' Commission Report on GATT [by V R Krisna Iyer, O Chinappa Reddy, D A Desai, (all the former Hon'ble Judges of the Supreme Court); and Rajinder Sachar (the then Hon'ble Chief Justice of Delhi High Court)] explains the correct constitutional position in our country thus:

" Article 253 and 73 (1) (b) both deal with an ex-post facto situation, that is, a consequential situation arising out of an international treaty, agreement or convention already entered into. They confer the necessary legislative and executive power to implement such treaty, agreement, etc. however made but must be one made according to the Constitution and not contrary to the Constitution. For example, the Union Government cannot barter away the sovereignty of the people of India by entering into a treaty making India a vassal of another country and then invoke Articles 253 and 73 (1) (b) to implement the treaty. Such a treaty would be void ab initio being repugnant to the basic features of the Constitution, namely, the sovereignty of the people.

Thus, an international treaty or agreement entered into by the Union Government in exercise of its executive power, without the concurrence of the States, with respect to matters covered by Entries in List II of the Seventh Schedule, offends the Indian Constitutional Federalism, a basic feature of the Constitution of India and is therefore void ab initio. The Final Act (of Uruguay Round) is one of that nature. This is our prima facie opinion on the question whether the Final Act is repugnant to the Federal nature of the Constitution and we strongly urge the Union Government to do nothing which abridges that principle.

Thus, an international treaty or agreement entered into by the Union of Government in exercise of its executive power, without the concurrence of the States, with respect to matters covered by Entries in List II of the Seventh Schedule, offends the Indian Constitutional Federalism, a basic feature of the Constitution of India and therefore void ab initio. The Final Act is one of that nature. This our prima facie opinion on the question whether the Final Act is repugnant to the Federal nature of the Constitution and we strongly urge the Union Government to do nothing which abridges this principle." [12] (emphasis supplied)

(e) The view of this Petitioner gets support from the following view of some distinguished former Judges of our Superior Courts [Justice V.R. Krishna Iyer, former Judge of the Supreme Court of India; Justice P.B. Sawant, former Judge of the Supreme Court of India; and Justice H. Suresh, former Judge of the Bombay High Court]: to quote from their recent Declaration (vide the Writ Petition para 18C at p. 26 and Annex 'E' pp. 201-204; and P.B. II pp. 224-226] ) of the Writ Petition. This Petitioner's stand gets support from the following view of some distinguished former Judges of our Superior Courts [Justice V.R. Krishna Iyer, former Judge of the Supreme Court of India; Justice P.B. Sawant, former Judge of the Supreme Court of India; and Justice H. Suresh, former Judge of the Bombay High Court]: to quote---

"1. The Executive has no power to enter into any agreement, either with a foreign government or a foreign organization, which is binding on the nation. The agreement will be binding only when it is ratified by Parliament…There is no provision in the Constitution which gives such authority to the executive. We have a written Constitution and, therefore, we must have a written provision in the Constitution which gives such authority to the Executive.

2. Articles 73 and 253 and entries 6, 13, & 14 in the Union List of the Constitution refer to the powers of the Executive. Article 73, among other things, states that, "…the executive power of the Union shall extend (a) to the matters with respect to which Parliament has powers to make laws, and (b) to the exercise of such rights, authority and jurisdiction as are exercisable by the Government of India by virtue of any treaty or agreement." This means that the matters n which Parliament has no powers to make laws are also matters on which the Union Government cannot exercise its executive power. It also means, conversely, that the Union Government cannot exercise its executive powers beyond the legislative powers of the Union. Both these propositions have an underlying assumption that, before the Union Government exercises the executive power, there is a law enacted by the Parliament on the subject concerned. Some argue that the provisions of Article 73(1)(a) gives power to the Executive to act on subjects within the jurisdiction of Parliament, even if the Parliament does not make a law on those subjects. This is both a distortion and a perversion of the said provision and a subversion of Parliament's supreme control over the Executive. If this interpretation is accepted then the Union Executive can act on all subjects on which Parliament has to make law, without there being any law made by Parliament. You can thus do away with Parliament and the Parliament's duties to make laws. We will then have a lawless Government. Democracy presumes there should be a rule of law and all Executive actions will be supported by law and that there shall be no arbitrary action by any authority, including the Union Executive. It may also be necessary in that connection to remember that it is for this very reason that when Parliament is not in session and, therefore, unable to enact a law, that the power is given to the President to issue an ordinance (which is a law), so that the Executive may act according to its provisions. These ordinances are to be placed before the Parliament within six weeks of its reassembly, and if Parliament approves they become law. The Constitution-makers were, therefore, clear in their mind that the Executive cannot act without the authority of law and it has no power independent of law and it has no power independent of law made by Parliament."[ italics supplied]

(f ) Wherever power is granted to create a thing, it is done in a different phraseology. Art 246 says: " Parliament may make laws…….". Section 90 of the Income-tax Act, 1961 empowers the Central Government thus:

" (1) The Central Government may enter into an agreement with the Government of any country outside India…..".

Article 73 of the Constitution does not say:

"to the formation of an Agreement in respect of the matters with respect to which Parliament has power to make laws".

(g) Lord Atkin's view in Attorney General for Canada v. Attorney General of Ontario holding the formation and implementation as two acts, the former being an exclusive exercise of the Executive power at the International plane, and the latter needing legislation does not survive as our Constitution contemplates both under its legislative competence of our Parliament. Our Freedom-Fighters. at work in our Constituent Assembly) could not have forgotten how disastrous were the Treaties like the Treaty of Allahabad, or the Treaty of Severs . The historical reasons were in the conciousness of the makers of our Constitution.

(h) The word "implementation", as used in Art. 253 is now to be read in a generic way, rather in the technical sense as it was understood in olden days when we were not a democratic republic under the Constitution which subjects all the organs of the State to its rigorous control. When Lord Atkin used this expression in Attorney General for Canada v. Attorney General of Ontario, the exercise of foreign affairs powers had not much impact on the citizenry. Acts at the international plane were the preserve of the high chancelleries hardly of much concern to the common people. This point gets revealed from the fact that the World War I was declared by the UK. by the prerogative power of the King alone people smarting under the the nation that the War was to be a brief affair at the international plane. But things in the Globalised economy of days have changed so much so the most Treaties have tremendous impact on the lives of people. There is now a clear mismatch between the national, political and the global economic structure. The line which divided the international from domestic has virtually vanished. Besides, people under our Constitution must in our interest hold the Executive under vigilance. Even conclusion of a Treaty generates great consequences for the nation. Do the following do not affect our rights and interests?

(a) The outsourcing of judicial powers to the foreign fora depriving our Judiciary of any say thus going back to the East India Company's diarchy and two judicial systems; [13]

(b) The outsourcing of the legislative powers to the international institutions, viz the WTO;

(c) The modification of our socialist mission under the Constitution by substituting it a new paradigm crafted by the neo-liberal economic philosophy;

(d) The subversion of the Income-tax Act by depriving the lawful jurisdiction of the statutory authorities by providing the resolution of DTAA tax disputes under the MAP procedure, and also providing when such disputes can be taken to the Council for Trade in Services: [14] and thereafter paving the way to the ICJ, and then to the Security Council (then, perish the thought, to the cruise missiles) .

24. Article 265 of Constitution: the constitutional dimension of taxation

Its effect is stated in the following propositions:

(i). Art 265 states the great constitutional principle of the British Constitution which we have accepted under our Constitution..

(ii) The law framed in pursuance to the power under Art. 265 must be constitutionally valid to be treated as the tax law authorized under Art. 265 of our Constitution.

(iii)Even where a tax treaty is made in exercise of power under the Act framed under Art. 265, our Courts would examine. if the terms and stipulations of a treaty conform to the law framed under Art. 265, and is in constitutionally valid.

In very plain words Art 265 of our Constitution expresses a profound constitutional principle which was forged, after much struggle and suffering, to control the absolute power of the kings, and then the no less brute power claimed by the executive government.. The history of the constitutional law is at its core the history of the efforts to tame the executive. As power is most delicious, the executive, whether the absolute monarchy of the dead past, or of a democratic polity of our days, has shown itself mad after power. The greatest, and perhaps the most efficacious effort was done in the past in the U.K. when the Bill of Rights was framed primarily to tame the executive. It provided that "TAXATION in England must be authorized by statute." The Bill of Rights 1688, which is still the living law in England, declare " Late dispensing Power" illegal.

Hood Phillips explains what was at the heart of the struggle for constitutional liberty in these words:

The New Encyclopedia Britannica ( Vol.28 p.402) made an insightful observation highlighting the importance of the democratic control of the executive through the provisions pertaining to taxation: it said --

" The limits to the right of the public authority to impose taxes are set by the power that is qualified to do so under constitutional law. ….. The historical origins of this principle are identical with those of political liberty and representative government - the right of the citizens."

The constitutional position was crisply and roundly stated by Hood Phillips (in Constitutional and Administrative Law 7 th ed at p.45) thus:

"One of the central themes of English constitutional history was the gaining of control of taxation and national finance in general by Parliament, and in particular the Commons; for this control meant that the King was not able to govern for more than short periods without summoning Parliament, and Parliament could insist on grievances being remedied before it granted the King supply. This applied at least to direct taxation."

That the Tax Treaties are approved by a resolution of the House of Commons, which means, in effect, the British Parliament itself. This effect inevitable follows from certain provisions of the Parliament Act, 1911 similar to which we have incorporated in our Constitution. Pointing out this aspect of the matter Keir & Lawson points out the following in their Cases of Constitutional Cases [5^th Ed p. 54]:

"Once the House of Commons had, by the Parliament Act, 1911 (1 & 2 Geo. 5,c. 13), secured the full and exclusive control of taxation, there was no reason why taxation should not be levied at once under the authority of a resolution of the House".

In the U.K a Tax Treaty is done through an Order in Council after a resolution is passed by Parliament, and is communicated to the Crown

25. That the Executive Power under Article 73 of the Constitution cannot be exercised for framing tax treaties. The conjoint effect of Articles 265, 109, 110 and 265 of the Constitution of India is that the Executive can do only what it is permitted to do (and in the manner it is permitted to do) by Parliament through an enactment [15] . It cannot grant any exemption from tax as even exemption is integral to the concept of the levy of tax. These Articles of our Constitution draw on the provisions of the United Kingdom's Parliament Act 1911, and the Bill of Rights. In the Indian context this power is granted under section 90 of the Income-tax Act, 1961 which authorizes the Central Government to enter into double taxation agreements with other countries." [16] But the ambit and reach of this power are determined by the provision of Article 265 of our Constitution which states preciselt that which is stated by the abpve quoted provisions of the Bill of Rights 1688.

26. It is precisely for this reason that in every country a Tax Treaty is not only to be specifically authorized by a statute, it is specifically approved by Parliament so that nothing goes by default, or nothing happens through stealth to erode that great constitutional principle [vide fn.,…at p.]

Art 265 of our Constitution states precisely that principle of the British constitutional law but it elevates it to a higher status by making it a constitutional right which is justiciable. It is part of the effort to tame the executive which is merely a constitutional creature with constitutionally granted powers. This Article states: "No tax shall be levied or collected except by authority of law." Law refers to a valid law.

27. The Executive Power under Article 73 of the Constitution of India cannot be exercised for framing tax treaties. The conjoint effect of Articles 109, 110 and 265 of the Constitution of India is that the Executive can do only what it is permitted to do (and in the manner it is permitted to do) by Parliament through an enactment. Invocation of Art 73 would be a patent breach of our Constitution because taxation is not under the executive domain. In short, we conceive of two types of treaties involving on certain material point distinct jural considerations.

28. Art. 265 of the Constitution authorizes the income-tax law to be made under the legislative field prescribed by the entry 82 of the Union List of the 7^th Schedule to our Constitution. As per the preamble and the scheme of the Income tax Act, 1961, the OBJECT of the Act CANNOT be anything else that what Lord Hewart observed in Rex v. Special Commissioner (20TC 381 at 384) that the duties imposed upon the Commissioners of Income tax are "in the interest of the general body of tax payers, to see what the true assessment ought to be, and that process, a public process directed to public ends." To use a law framed in pursuance to the power granted under Article 265 of the Constitution would be a culpable exercise of power if objects extraneous to Art. 265 are sought to be promoted.

Under our Constitution even grant of exemption is a legislative act. It is a constitutional principle of highest importance that neither we can be taxed through an executive fiat, nor untaxed through an executive concession. To tax or grant exemption form the two facets of the same thing. It was aptly stated by the Rajasthan High Court in H.R.& G. Industries v. State of Rajasthan ( A I R 1964 Raj. 205 at 213)

: "It is well established that the power to exempt from tax is a sovereign power and no State can fetter its own much less the future legislative authority of its successor. See Associated Stone Industries Kotah v. Union of India ILR (1958) 8 Raj 700 and Maharaja Shree Umed Mills Ltd v. Union of India ILR (1959) 9 Raj. 984"

.30. The power under Article 265 is clearly subject to the Fundamental Rights and other Constitutional limitations. Though Parts XII (which contains Art. 265) and XIII of our Constitution do not declare that the provisions contained therein are subject to other provisions of the Constitution, there can not be an iota of doubt that this power under Art. 265 is also subject to the Constitutional limitations as the entire gamut of the legislative power (Art. 245) is subject to the constitutional limitations.

31B. Art. 265 continued …..

1 "…….wherever legislative power to impose a tax is intended to be fettered, express provisions is made for that purpose either in the Article of the Constitution or in the legislative entries."

Vide H M Seervai, Const Law III p. 2608 fn, 2

2. Though difference in approaches towards Direct Taxes and Indirect Taxes ceased to exist after the Bill of Rights 1688, certain core differentia still persist in the judicial attitudes apropos these two species of the genus, perhaps for historical reasons. [17]

3. The Income-tax Act, 1961, ( a premier direct tax law) is closely structured regulating the whole gamut of the power of taxation coming within the province of the Act leaving absolutely no power to the Executive Government to go counter to anything in it whatever be the reason, or do anything for which a specific warrant is not granted under the statute. . The same position substantially exists in the Indirect Taxes Laws. This analogous character was recognized in the Bill of Rights 1688, and is under our Constitution is illustrated in Article 265. If this discipline imposed under Art 265 is evaded, we would allow our polity to hark back to the days of the Tudors

4. But on account of historical reasons certain differences are evident between the Direct Taxes and the Indirect Taxes Laws, one of which is the attitude of the relevant statute towards the provisions pertaining to grant of 'exemption' from taxation. Under the Income-tax Act our Parliament has granted exemptions, wherever it did, only through the specific provisions in the Act itself, not through the Rules or notifications, even if framed/issued under the provenance of the statute itself. . But in the Indirect Taxes Act the 'exemptions' are granted even through the Rules, or Notifications framed or issued under a specific statutory authority granted by the relevant statute. [The principles stand illustrated in Pandit Banarsi Das v. M.P (AIR 1958 SC 906; Gwaliar Rayon Mills v. Asst Comm. Of S.T. AIR 1974 SC 1660 wherein in his concurring Judgment Justice Mathew had said, after a review of the Privy Council, United States, and our Supreme Court:

' It is well known that the English Parliament may, by legislation, give anybody of its choosing , the power to modify or add to a given Act of Parliament…"]

5. As a Tax Treaty has domestic impact, and alters domestic law it can be implemented only through a specific legislation, or through the resolution of the Lok Sabha passed after deliberation [ as is done in the U. K. where tax treaties are subjected to the discussion and voting in the House of Commons the sole custodian of public revenue after the Parliament Act 1911.] Sec 90 of the Income-tax Act does not implement [18] a Tax Treaty but requires the Central Government make provisions "as may be necessary to for implementing the agreement.." If we treat our polity framed under the protocol of the Parliamentary form of government on the British model, then we must follow the procedure of complete and clear Parliamentary control on Tax Treaties. This is what our law requires, and propriety demands.

6. In the Income-tax Act (traditionally known as a Direct Tax) grants exemption from the incidence of tax, levied under its charging section 4 read with sec. 5, only, and only, through specifically prescribed precise statutory provisions. Section 295 of the Income-tax Rules grants power to frame rules pertaing to a lot points. Section 295(2)(h) empowers the framing of rules pertaining to:

"the procedure for giving effect to the terms of any agreement for the granting of relief in respect of double taxation or for the avoidance of double taxation which may be entered into by the Central Government under the Act;"

But this rule merely reiterates Section 91)(a) and (b) of the Income-tax Act, but grants no power to the Central Government or the CBDT to grant exemption from taxation on any account [ as had been through the rules framed under the Central Excise Act before the insertion of 5A in 1988 ('Power to grant exemption from duty of excise'), in the said Act in place of Rule 8 which empowered the Central Government to issue notification granting exemption from excise duty.].

7. It follows from the language of Section 90 AND the provisions pertaining to the rule-making power, that the authority under Art 265 has been granted only for one of the objectives: (i) the granting of relief in respect of double taxation or (ii) for the avoidance of double taxation. None of these powers grant competence to (a) 'exempt' income from the taxable event in the territory of India, and (b) to modify or subvert the statutory mode of assessment and appellate control, whether through the statute of the Judicial Review.

8. The Tax Treaties derive constitutional warrant via Sec. 90 of the Income-tax Act only from Art. 265, and not Art 73 of our Constitution. It follows from this that within the province of the tax law the exercise of the executive power simpliciter has no operation. .It is impermissible on the constitutional principle to turn a Tax Treaty a hybrid product of powers under Article 73 and 265 of our Constitution. It also follows, as an inevitable logic, that the provisions of the Act and the terms of the Tax Treaty can be interpreted only in the light of Art. 265 to bring about their conformity with our Constitution (otherwise the impugned provisions would perish for violating Art 265 and Art 14.

9. As the transgression of Article 265 would be an affront to our Constitution as a continuing wrong, any citizen at any point of time can draw the Hon'ble Court's attention to such transgressions. "Acquiescence for no length of time can legalize a clear usurpation of power" for as Dixon J observed, "time does not run in favour of the validity of legislation" [19] . Dames & Moore v. Regan, 453 U.S. 654, 668. But "[p]ast practice does not, by itself, create power." Ibid. quoted by the U S Supreme Court in Medellin v. Texas 128 S.Ct. 1346 (2008) [P.B. Vol. V p. 166 ]

31. Taxation provisions keep on coming up for judicial review for the violation of our fundamental rights and other constitutional limitations. But our courts are still to examine some tax provisions exclusively from the point of view of Art. 265 of our Constitution. It is wished that the Hon'ble Court examine, from this observation-post, the impugned provisions of Section 90 and 90A of the Income-tax Act, 1961

32. Art. 363 of our Constitution

Its effects of this Article can be highlighted by culling out the following propositions:

(i) The bar to interference by the courts pertains to certain treaties comprehensively specified in the said Article (certain pre-existing treaties between the native rulers and the Union before Independence).

(ii) As our courts are prohibited to exercise jurisdiction over certain pre-existing treaties as specified, it is amply clear that the Court can exercise jurisdiction to examine the validity of the Executive's acts in relationship to other treaties.

Art 363 of our Constitution ia analogous to the effect of Art. III (2) of the Constitution of the United States of America. Artic;le III(2) extends the judicial power to " all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority." Justice Holmes in Missouri v. Holland [252 U.S. 416., 433 (1920) had said "It is open to question whether the authority of the U.S. means more than the formal acts prescribed to make the convention." He was suggesting the existence of that segment of power which was later called by the U.S Supreme Court in Curtiss Wright Case as 'extra-constitutional" [20] . It seems Justice Holmes missed the import of Article III of the U.S. Constitution. It grants the power of judicial control of 'Treaties' to the Judiciary, whereas it denied any legislative control to the Congress. The Constitution vests this power in the President. John C. Yoo perceptively observes: [21]

"It was not until 1957, though, that the Supreme Court put to rest the idea that the treaty power was not limited by the Constitution, at least with regard to individual rights….See Reid v. Covert, 354 U S 1, 15-17 (1957). This conclusion might have been reached earlier by looking to Art. II, which extends judicial power to cases arising underthe Constitution, the Laws of the United States, and "Treaties made, or which shall be made under their Authority." U.S. Const. Art III $2. cl. 1. In this provision, the Constitution contemplates that treaties are subject to the Constitution, and to federal statutes as well, rather than vice versa." (emphasis supplied)

Art. 363 of our Constitution excludes from the Court's jurisdiction only specified Treaties thereby allowing it jurisdiction on all Treaties other than those specified to see that the Treaty-making power is not abused by the Executive.

33. Art. 368 of our Constitution (Amendment to the Constitution)

Art. 368 prescribes:

(i) procedure whereby amendments to the Constitution can be effected (Art. 368(1) by following a rigorous voting power.

(ii) procedure for effecting Amendments affecting certain specified provisions (delimiting the reach of the executive powers, pertaining to the President, the Union and the State Judiciary, the province and distribution of the legislative powers of the Union and the states) is prescribed by the proviso to Art. 268(2) mandating that "the amendment shall also require to be ratified by the Legislatures of not less than one-half of the States by a resolution to that effect passed by those Legislatures before the Bill making provision for such amendment is presented to the President for assent."

(iii) The power of the Constitution's Amendment is made subject to the Doctrine of Basic Structure under the law evolved by the Supreme Court. This Doctrine makes certain features of our Constitution beyond the limit of the powers of amendment of the Parliament of India (Keshvanand Bharti v. State of Kerala AIR 1973 SC 1461).As forming part of the basic structure in our Constitution, the fundamental rights are under express symbiotic relationship with other basic features: viz. in Kesavananda's Case (AIR 1973 SC1461, also S. R. Bommai v. Union of India AIR 1994 SC 1918 ). The Hon'ble Supreme Court determined certain features of our Constitution constituting basic structure: these are (a) Supremacy of the Constitution; (b) Republican and Democratic form of Government; (c) Secular character of the Constitution: (d) Separation of powers between the legislature the executive and the judiciary: and (e) Federal character of the Constitution.

In the context of this Writ Petition the relevance of this reference to Art. 368 is stated as follows:

34. Relevance of this Article: A question comes up: Is it constitutionally permissible to effect changes through its Treaty-Making power which amount to vitually (and in substance) the Amendments to the Constitution. What our Parliament cannot do in exercise of its constituent power cannot be done by the Executive alone through its Treaty-Making Power. It is submitted that to allow this to happen would be a fraud on our Constitution.

35. Art. 372 of the Constitution: They following material points emerge from Art. 372 of our Constitution:

(a). The law operative in the British India could survive only to the extent it is in conformity with our Constitution.

(b) The observations of the courts prior to the commencement of our Constitution do not apply to the extent they go counter to our Constitution as judicially interpreted.

36. Art. 375 of our Constitution

This Article permits courts, authorities and officers to continue to function subject to the provisions of the Constitution. It mandates all the authorities and courts to ignore the law operative in the British period if that offends our Constitution. It would be the duty of the Court to examine how much of the Lord Atkin's statement of Treaty-Making power in Attorney General for Canada v. Attorney General of Ontario [1937] A.C. 326 at 347 can survive under our Constitution. This exercise has not been done by our Courts till now.

(i)

No provisions for limitations on national sovereign powers in the interests of international co-operation

37. In the present context, it is worthwhile to notice that our Constitution has made no express provision for limitations on national sovereign powers in the interests of international cooperation as have been done in the constitutions of many other countries:. [22] eg.

(a) Art 24(1) of the Basic Law of the Federal Republic of Germany;

(b)Art 92 of the Constitution of the Netherlands;

(d) Art 20 of the Danish Constitution;

(e)Art 25bis of the Belgian Constitution;

(f) Art 49bis of the Luxembourg Constitution;

(g) Art 93 of the Norwegian Constitution…;

(h)Art 28(2) and (3) of the Greek Constitution.

The British view of the Law of Treaty, thus, stands overridden by the provisions of our Constitution, vide Art 53, 73, 245, 372 (read with Art 395).

(j)

Justice Homes in Missouri v. Holland [252 U S 416 (1822) ] stands answered in the Constitution of India.

37A. In sustaining the Migratory Bird Treaty Act of 1918, Justice Holmes, delivering the opinion of the U.S Supreme Court, stated his core reason as the following:

"The treaty in question does not contravene any prohibitory words to be found in the Constitution. The only question is whether it is forbidden by some invisible radiation from the general terms of the 10^th Amendment."

It is all clear our Constitution-makers used 'prohibitory words. everywhere in the Articles discussed above. "Subject to the Constitution" is a powerful and all embracing limitations on the Executive's powers. Had the U. S Constitution subjected all powers under specific limitations, Missouri v. Holland would have gone the other way. And Justice Sutherland would not have granted 'blank check' to the President in exercise of foreign affairs powers in Curtiss-Wright. To undo his view Mr. Bricker moved a constitutional amendment [23] to subject the Treaty-making power to the constitutional control. It was passed by the Congress but could not be cleared by the Senate mainly because the President Eisenhower did not like that for obvious reasons. No Executive Government would ever like to subject its brute power to constitutional discipline. But credit goes to the U S Supreme Court which in Reid v. Covert (1957) held certain provisions certain treaties unconstitutional.

CONSTITUTIONAL LIMITATIONS AS IMPOSED BY THE CONSTITUTION OF INDIA
The Executive actions at the international plane	Treaties other than Tax Treaties done in exercise of powers under Art 73 of our Constitution			Under the Discipline of Art. 265 of the Constitution	Treaties in exercise of the Executive power simpliciter
	Art. 253 situations	The Basic Structure situations	Under other constitutional limitations
A	B	C	D	E	F

[1] Quoted in Pollack, Earl Warren: The Judge Who Changed America 209 (1979); referred by Dr Bernard Schwartz in Some Makers of American Law (Tagore Law Lectures) p. 133

[2] A G for N.S.W. v. Brewery Employees Union (1908)6 C.L.R. 469, 611-12

[3] 3 Howell's State Trials 45 (1627)

[4] Bernard Schwartz, Some Makers of American Law Tagore Law Lectures p. 37

[5] . Granville Austen, The Indian Constitution , Corner Stone of a Nation p. 1 & 7

[6] K. C. Wheare, Constitutional Structure of the Commonwealth p. 89

[7] Constituent Assembly, Rules of Procedure and Standing Orders Chapter III. Rule 7

[8] "And since the states severally never possessed international powers, such powrs could not have been carved out from the mass of state powers but were transmitted to the U.S. from some other source. During the colonial period , those powers were possessed exclusively by and were entirely under the control of the Crown. ……."

[9] Oppenheim's International Law 9^th Ed Vol I Peace p. 60-61

[10] Peoples' Commission Report on GATT by V R Krisna Iyer, O Chinappa Reddy, D A Desai, (all the former Hon'ble Judges of the Supreme Court); and Rajinder Sachar (the then Hon'ble Chief Justice of Delhi High Court);

[11] . AIR 1952 Punj. 309 at 319.

[12] The Report of Peoples' Commission on GATT p150

[13] [13]

[14] Art. XII(3) of General Agreement on Trade in Services provides:

"A Member may not invoke Article XVII, either under this Article or Article XXIII, with respect to a measure of another Member that falls within the scope of an international agreement between them relating to the avoidance of double taxation. In case of disagreement between Members as to whether a measure falls within the scope of such an agreement between them, it shall be open to either Member to bring this matter before the Council for Trade in Services. [14] The Council shall refer the matter to arbitration. The decision of the arbitrator shall be final and binding on the Members."

[15] That Art 265 of our Constitution says : "No tax shall be levied or collected except by authority of law." Law refers to a valid law. In the context of Article 265 of the Constitution it means an Act of the Legislature. [15] In its import it states the British position resting on the Bill of Rights that "TAXATION in England must be authorized by statute." Hood Phillips aptly says [15] :

The impact of the Parliament Act of 1911 enacted in the UK is clear on Articles 109 and 110 of a Constitution of India. Article 110 (1) provides definitions of Money Bills which includes a Bill dealing with the imposition, abolition, remission, alternation, or regulation of any tax. This is what we get in the definition of Money Bill given in section 1

(2) of the Parliament Act 1911 with only one change that for "repeal" used in the UK Act, Article 110 (1) (a) uses the expression "abolition." On this point our Constitution prefers the comprehensive definition of the terms pertaining to taxation than the Government of India Act, 1935 used in its section 37. Article 109 of the Constitution of India deals with the special procedure in respect of Money Bills. The Parliament Act, 1911 of the UK put an end to the power of the House of Lords to amend or reject a Money Bill. After this act they can cause delay for a period no more than a month. Under our Constitution a Money Bill originates only in the House of the People. The Council of States has no competence to reject or amend a Money Bill : only suggestion can be made which the House of the People may accept or may not accept. But this must be within 14 days of the receipt of Bill otherwise the Bill is deemed to have been passed by both Houses at the expiration of period of fourteen days from the date of the receipt of the Bill. The Government of India Act 1935 did not draw up distinction between Money Bills and other Financial Bills. It is clear that our constitutional provisions are closely affiliated to the provisions of the United Kingdom's Parliament Act 1911. The Constitutional provisions in our country establish full and exclusive authority of our Parliament in matters of taxation. In effect the full and exclusive authority in matters of taxation is of the House of the People, as it is in the United Kingdom.

[16] Samsher Singh v. Punjab A I R 1974 SC 2192 at 2199(para 35), 2212(para 103, 104), 2222(para 129).;Keir & Lawson's Cases in Constitutional Law Basu, Commentary on the Constitution of India1992 ed ;Attorney-General v.De Keyser's Royal Hotel [1920] A.C 508 ;H.R.& G. Industries v. Rajasthan AIR 1964 Raj. 205;Laker Airways Ltd. v. Dept of Trade [1977]2 All ER182 CA

[17] Hood Phillips says: to quote—

"It was supposed to have been settled by Magna Carta and by legislation in the reigns of Edward I and Edward III that taxation beyond the levying of customary feudal aids required the consent of Parliament. One of the central themes of English constitutional history was the gaining of control of taxation and national finance in general by Parliament, and in particular the Commons; for this control meant that the King was not able to govern for more than short periods without summoning Parliament, and Parliament could insist on grievances being remedied before it granted the King supply. This applied at least to direct taxation. With regard to indirect taxation different considerations might apply. Down to the early seventeenth century import duties, for example, were regarded rather as licenses or concessions than as taxes and, further, the royal prerogative relating to foreign affairs - and hence the regulation of foreign trade in the national interest - was relevant. Issue was joined in two famous cases in the reigns of James I (the "Case of Impositions") and Charles I (the "Case of Ship-Money". O.Hood Phillips' Constitutional and Administrative Law [7^th Edition Pg.45]

[18] The expression "make provision" means: "The action or an act of providing something; the fact or condition of being provided. Freq. In make provision, make prior arrangement or preparation (for ), supply necessary resources ( for)." ( New Shorter Oxford Dictionary); "If you make provision for something, you prepare for it by making arrangements e.g. They made provision for the defence of England…" Collins Cobuild Dictionary. Notification means, as the COD says, "make known; announce or report". Black's has spelt out its sense in the context of International Law as "a formal announcement of a legally relevant fact…" Implementation means, to quote COD, "Law performance of an obligation". If mere 'notification' in the Gazette is enough than a Tax Treaty can be fed with provisions which could have delighted the Tudors of the past.

[19] [H.M. Seervai , Const. Law 4^th ed p.181 quoting Wynes, Legislative,Executive and Judicial Powers in Australia 5^th ed p. 21 and fn 86].

[20] "And since the states severally never possessed international powers, such powrs could not have been carved out from the mass of state powers but were transmitted to the U.S. from some other source. During the colonial period , those powers were possessed exclusively by and were entirely under the control of the Crown. ……."

[21] John C. Yoo, 'Globalism and Constitution: Treaties, Non-self-execution, and the original understanding' The Columbia Law Review (1966) Vol 99 TK

[22] ' Oppenheim fn 6 at p. 125

[23] "Frank E. Holman, president of the American Bar Association (ABA), called attention to state and Federal court decisions, notably Missouri v. Holland, which he claimed could give international treaties and agreements precedence over the United States Constitution and could be used by foreigners to threaten American liberties. Senator Bricker was influenced by the ABA's work and first introduced a constitutional amendment in 1951. With substantial popular support and the election of a Republican President and Congress in the elections of 1952, Bricker's plan seemed destined to be sent to the individual states for ratification. The best-known version of the Bricker Amendment, considered by the Senate in 1953-54, declared that no treaty could be made by the United States that conflicted with the Constitution, was self-executing without the passage of separate enabling legislation through Congress, or which granted Congress legislative powers beyond those specified in the Constitution. It also limited the president's power to enter into executive agreements with foreign powers.Bricker's proposal attracted broad bipartisan support and was a focal point of intra-party conflict between the administration of president Dwight D. Eisenhower and the Old Right faction of conservative Republican senators. Despite the initial support, the Bricker Amendment was blocked through the intervention of President Eisenhower and failed in the Senate by a single vote in 1954. Three years later the United States Supreme Court explicitly ruled in Reid v. Covert that the Bill of Rights cannot be abrogated by agreements with foreign powers.^[1] Nevertheless, Senator Bricker's ideas still have supporters, and new versions of his amendment have been reintroduced in Congress periodically." Wikipedia