Sovereign Power to Levy and Collect Taxes

The authority of an independent Republic to levy and collect tax forms an intrinsic part of its inherent sovereign functions, circumscribed solely by the requirement of being exercised within the strict authority of law under Article 265 of the Constitution. While nations engage in bilateral or multilateral double taxation avoidance agreements to foster economic growth, foreign investment, and diplomatic balance, such treaties do not divest the sovereign State of its underlying right to tax. The legislature retains full discretion to evolve new methods to tap revenue and establish safeguards against novel tax evasion devices. Courts must cautiously ensure that tax authorities act strictly within constitutional, statutory, and treaty contours while respecting legislative fiscal wisdom. (The authority for advance rulings Vs Tiger Global International II holdings) | 2026 INSC 60)