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32 Supremo Amicus [1] (2023)

handle is hein.journals/supami32 and id is 1 raw text is: SUPREMO AMICUS VOLUME 32 1 JANUARY, 2023 ISSN 2456-9704 DECODING TAX STATUTES: A STRICT INTERPRETATION APPROACH By Sushanth Sreeram From NUALS, Kochi INTRODUCTION A tax can be termed as a compulsory contribution to the support of the Government, levied on persons, income, commodities, transactions etc. However, interpreting tax laws becomes quintessential for many reasons. Interpreting tax laws in a clear and consistent manner promotes legal certainty, which helps taxpayers understand their tax obligations and plan their affairs accordingly. Besides, the interpretation of tax laws helps to provide clarity to tax administrators and tax professionals, who can rely on the clear and consistent interpretation of the tax laws to perform their duties. Thus, the strict interpretation of taxing statutes is quintessential for promoting legal certainty, fairness, compliance, the rule of law, and clarity in tax administration. A strict interpretation of taxing statutes refers to the approach of interpreting tax laws and regulations in a literal and precise manner. In this approach, tax laws are viewed as strict and unambiguous, and any ambiguity or uncertainty is resolved in favour of the taxpayer. This interpretation is based on the principle that taxes are the lifeblood and source of income for the Government and 1 Constitutional Rights Foundation, The Income Tax Amendment: Most Thought It Was a Great Idea in 1913, https://www.crf-usa.org/bill-of-rights-in- should be imposed only as authorized by clear and unmistakable legislative intent. HISTORICAL JURISPRUDENCE The interpretation of taxing statutes has a long and complex history. The early days of the United States witnessed the federal Government relying primarily on tariffs and excises to generate revenue. However, in the late 19th and early 20th centuries, the Federal Government began to rely more heavily on income taxes as a source of revenue. This shift in taxation led to several legal challenges, as the constitutionality of income taxes was not firmly established.1 One of the most notable cases in the history of taxing statutes interpretation is Brushaber v. Union Pacific Railroad Co2 (1916). The Apex Court upheld the constitutionality of the federal income tax imposed by the 16th Amendment, which provided Congress with the power to tax incomes 'from whatever source derived.' This decision established the principle that the Federal Government had the authority to tax the income of individuals and corporations and laid the foundation for the modern federal income tax system. Another important case in the history of interpreting tax statutes is the case of Helvering v. Gregory3 (1935). In this case, the Supreme Court established the principle of 'economic reality' as the basis for interpreting tax statutes by laying out the roots for the principle - the substance over form doctrine. The Court observed that the substance over form doctrine applies only action/bria-11-3 -b-the-income-tax-amendment-most- thought-it-was-a-great-idea-in-1913. html/. 2 240 U.S. 1 (1916). 3 Gregory v. Helvering, 293 U.S. 465, 469-470 (1935). www.supremoamicus.org PIF 6.242

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