The court considered whether the appellants
unlawfully taxed the respondents.
The court held that it is untenable to assert that
the package is taxable merely because of the
manner in which it has been described and
itemized. Further the retrenchment packages as
were given to the respondents are not expressly
or by necessary implication provided for under
Section 19 (1) (a) of the ITA. That that
provision is clear and unambiguous and only
provides for employment income inclusive of
the heads expressly provided for. That the Act
doesn’t expressly provide that the taxable
benefits are only those attained while in active
employment. That if it were the intention of the
parliament, the parliament would have
specifically stated so. That the duty to pay
taxes is sanctioned by the Constitution. Unless
exempted, the obligation to pay income tax is
mandatory.
DISSENT
The fact that the compensation is not defined in
the ITA and the fact that PERD Act provided
for compensation under S. 21 thereof does not
mean in the least that the benefits were subject
to tax.