"Karnataka High Court strikes down cess law for violating Article 14 equality guarantee"
Cess
an earmarked levy whose proceeds must be applied exclusively to the designated statutory purpose, distinct from a general tax.
Article 14
guarantees equality before the law and equal protection of the laws; prohibits arbitrary state action.
The power to levy taxes and cesses in India flows from the constitutional division of legislative competence under Schedule VII of the Constitution. Parliament derives authority to impose cesses — earmarked levies collected for specific purposes — from Entry 97 of the Union List (residuary powers) and from specific entries such as Entry 84 (duties of excise on tobacco and other goods). A cess differs from a general tax in that its proceeds must be applied to the designated purpose, making it a hypothecated revenue instrument. The Health Security se National Security Cess Act, 2025 was enacted by Parliament to levy a cess on pan masala manufacturers, ostensibly to fund health and national security objectives.
Article 14 of the Constitution guarantees equality before the law and equal protection of the laws. The Supreme Court has over decades evolved a two-pronged test for Article 14 challenges: first, whether a classification has an intelligible differentia (a clear basis for distinguishing one group from another); and second, whether that differentia has a rational nexus with the object of the legislation. Arbitrary laws — those that treat unequals equally or equals unequally without justification — fail this test. The doctrine of arbitrariness, crystallised in E.P. Royappa v. State of Tamil Nadu (1974) and reaffirmed in Maneka Gandhi v. Union of India (1978), holds that arbitrariness itself is antithetical to equality and thus unconstitutional.
High Courts exercise original writ jurisdiction under Article 226 of the Constitution, which is broader than the Supreme Court's jurisdiction under Article 32 — High Courts can issue writs not only for enforcement of fundamental rights but for any other purpose. This makes them the primary forum for challenging the constitutional validity of central and state legislation.
The constitutional validity of a tax or cess is tested on several grounds: legislative competence (does the enacting legislature have the power to make this law?), procedural compliance (was the law enacted following prescribed procedures?), and substantive compliance (does the law violate any fundamental right, particularly Articles 14, 19, or 21?). The Karnataka High Court in this case upheld Parliament's legislative competence to impose the cess — meaning the subject matter fell within Parliament's domain — but struck down the method of levy as unconstitutional.
The impugned method levied cess based on the assumed production capacity of machinery rather than actual output. This is a form of presumptive or capacity-based taxation, which is not inherently unconstitutional — Section 3A of the Central Excise Act has historically used similar mechanisms for certain industries. However, presumptive taxation must still satisfy the Article 14 test: the presumption must be reasonable and the classification must be rational. …
With reference to Indian judiciary, consider the following statements:
1.Any retired judge of the Supreme Court of India can be called back to sit and act as a Supreme Court judge by the Chief Justice of India with prior permission of the President of India.
2.In India, any High Court has the power to review its own judgement as the Supreme Court does.
Which of the statements given above is/are correct?
With reference to the Constitution of India, prohibitions or limitations or provisions contained in ordinary laws cannot act as prohibitions or limitations on the constitutional powers under Article 142. It could mean which one of the following?
With reference to Article 14 of the Constitution of India, consider the following statements:
1.Article 14 prohibits the State from making any classification among persons or objects.
2.A law satisfies Article 14 if the classification it makes has an intelligible differentia and that differentia has a rational nexus with the object of the law.
3.The doctrine of arbitrariness under Article 14 was first articulated in Maneka Gandhi v. Union of India.
Which of the statements given above is/are correct?
Consider the following statements about the writ jurisdiction of High Courts under Article 226 of the Constitution:
1.The jurisdiction under Article 226 is narrower than the Supreme Court's jurisdiction under Article 32 because it is limited to enforcement of fundamental rights.
2.A High Court can issue writs against both governmental and non-governmental bodies performing public functions.
3.Article 226 jurisdiction can be invoked even when no fundamental right is violated, provided a legal right is infringed.
Which of the statements given above is/are correct?
Which of the following best describes a 'cess' in the Indian constitutional and fiscal framework?
Assertion (A): A law may be struck down under Article 14 even if the legislature had the constitutional competence to enact it.
Reason (R): Legislative competence and constitutional validity are distinct inquiries — the former concerns the subject matter of the law, while the latter concerns compliance with fundamental rights.
Which of the following is correct?
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