PETITIONER:
RAMJILAL
Vs.
RESPONDENT:
INCOME-TAX OFFICER, MOHINDARGARH.
DATE OF JUDGMENT:
12/01/1951
BENCH:
DAS, SUDHI RANJAN
BENCH:
DAS, SUDHI RANJAN
KANIA, HIRALAL J. (CJ)
FAZAL ALI, SAIYID
SASTRI, M. PATANJALI
MUKHERJEA, B.K.
CITATION:
1951 AIR 97 1951 SCR 127
CITATOR INFO :
D 1952 SC 115 (7)
D 1954 SC 297 (10)
R 1955 SC 3 (5)
F 1955 SC 661 (6)
RF 1959 SC 149 (52)
R 1959 SC 395 (28)
RF 1961 SC 65 (5,37)
RF 1961 SC 232 (16,37)
R 1961 SC 552 (32)
RF 1962 SC1006 (34,72,75,80,81)
O 1962 SC1563 (15)
RF 1962 SC1621 (12,31,44,46,122,165)
R 1963 SC 630 (25)
R 1966 SC 619 (7)
R 1970 SC 470 (33)
RF 1971 SC 870 (10)
D 1974 SC1105 (12)
ACT:
Constitution of India, Arts. 14, 31 (1), 32,265--Patiala
and East Punjab States Union General Provisions (Administra-
tion) Ordinance (XVl of 2005)--Union of States-Law relating
to Income-tax--Uniform law introduced in all States from
August 20, 1948--Provision that pending proceedings shall be
governed by existing law--Assessment at different rates in
different States--Equality of law--Infringement of fundamen-
tal right--Assessment of income which accrued before August
20, 1948--Legality--Fundamental right not to be deprived of
property save under authority of law--Whether applies to
taxation--Scope of Arts. 31 (1) and 265--Application under
Art. 32 for protection against tax laws--Maintainability.
HEADNOTE:
Section 3 (1) of the Patiala and East Punjab States
Union General Provisions (Administration) Ordinance (No. XVI
of 2005) which came into force on February 2, 1949, and re-
enacted s. 3 of an earlier Ordinance which was in force from
August 20, 1948, provided that as from the appointed day
(i.e., August 20, 1948) all laws in force in the Patiala
State shall apply muutatis mutandis to
17
128
the territories of the said Union, provided that all pro-
ceedings pending before courts and other authorities of any
of the Covenanting States shall be disposed of in accordance
with the laws governing such proeeedings in force in such
Covenanting State immediately before August 20, 1948. In
one of the Covenanting States, viz., Kapurthala, there was a
law of income-tax in force on the said date, the rate of tax
payable under which was lower than that payable under the
Patiala Income-tax Act, and in another Covenanting State,
Nabha, there was no law of income-tax at all. For the ac-
counting year ending April 12, 1948, assessees of Kapurthala
State were assessed at the lower rates fixed by the Kapur
thala Income-tax Act, in accordance with the proviso in s. 3
of the Ordinance relating to pending proceedings, and the
assessees of Nabha were assessed at the higher rates fixed
by the Patiala Act as there was no income-tax law in Nabha
on August 20, 1948, and no income-tax proceedings were
therefore pending in Nabha. The petitioner who was an asses-
see residing in Nabha and who was assessed under the Patiala
Act applied under Art. 32 of the Constitution for a writ in
the nature of a writ of certiorari quashing the assessment
on the ground (i) that he had been denied the fundamental
right of equality before the law and equal protection of the
laws guaranteed by Art. 14 of the Constitution inasmuch as
he was assessed at a higher rate than that at which asses-
sees of Kapurthala were assessed, (ii) that, as the Ordi-
nance bringing the Patiala Income-tax Act into force in
Nabha was enacted only on August 20, 1948, it cannot operate
retrospectively and authorise the levy of tax on income
which had accrued in the year ending April 12, 1948, and
therefore he was threatened with infringement of the funda-
mental right guaranteed by Art. 31 (1) of the Constitution
that no one shall be deprived of his property save under
authority of law:
Held, (i) that the discrimination, if any, between the
assessees of Kapurthala and Nabha was not brought about by
the Ordinance but by the circumstance that there was no
income-tax law in Nabha and consequently there was no case
of assessment pending against any Nabha assessees; and
in any case the provision that pending proceedings should be
concluded according to the applicable at the time when the
right is or liabilities accrued and the proceedings com-
menced, was a reasonable law rounded upon reasonable classi-
fication of the assessees which is permissible under the
equal protection clause;
(ii) that, as there is a special provision in Art. 965
of the Constitution that no tax shall be levied or collected
except by authority of law, cl. (1) of Art. 31 must be
regarded as concerned with deprivation of property otherwise
than by the imposition or collection of tax, and inasmuch as
the right conferred by Art. 265 not a right conferred by
Part III of the Constitution, it could not be enforced under
Art.
129
JUDGMENT:
ORIGINAL JURISDICTION: Petition No. 135 of 1950. Application
under Art. 32 of the Constitution for a writ in the nature
of a writ of certiorari and prohibition.
Dr. Tek Chand (Hardayal Hardy and Jindra Lal, with him)
for the petitioner.
M.C. Setalvad, Attorney. General for India, (S. M.
Sikri, with him) for the respondent.
1951. january 12. The Judgment of the Court was deliv-
ered by
DAS J — This is an application under article 32 of the
Constitution for appropriate orders for the protection of
what the petitioner claims to be his fundamental rights
guaranteed by articles 14 and 31. This is said to be a test
case, for, on its decision, we are told, depend the rights
of numerous other persons whose interests are similar to
those of the petitioner.
There is no serious controversy as to the facts material
for the purposes of this application. They are shortly as
follows: On May 5, 1948, the then Rulers of eight Punjab
States including. Patiala and Nabha with the concurrence and
guarantee of the Government of India entered into a covenant
agreeing to unite and integrate their territories in one
State with a common executive, legislature and judiciary by
the name of Patiala and East Punjab States Union, hereinaf-
ter compendiously referred to as the Pepsu. By article III
(6) of the covenant the then Ruler of Patiala became the
first President or Raj Pramukh of the Council of Rulers and
he is to hold the office during his lifetime. Article VI of
the covenant is as follows :–
“(1) The Ruler of each Covenanting State shall, as soon
as may be practicable, and in any event not later than the
20th of August, 1948, make over the administration of his
State to the Raj Pramukh, and thereupon,
(a) all rights, authority and jurisdiction belonging to
the Ruler which appertain, or are incidental to the Govern-
ment of the Covenanting State shall vest in
130
the Union and shall thereafter be exercisable only as pro-
vided by this Covenant or by the Constitution to be framed
thereunder;
(b) all duties and obligations of the Ruler pertaining
or incidental to the Government of the Covenanting State
shall devolve on the Union and shall be discharged by it;
(c) all the assets and liabilities of the Covenanting
State shall be the assets and liabilities of the Union, and
(d) the military forces, if any, of the Covenanting
State shall become the military forces of the
Union.”
Article X provides for the formation of a Constituent
Assembly to frame a constitution of a unitary type for the
Union within the framework of the Covenant and the Constitu-
tion of India. This Constituent Assembly was also to func-
tion as the interim Legislalature of the Union until an
elected legislature came into being. The proviso to clause
(2) of that Article runs as follows :-
“Provided that until a Constitution framed by the Con-
stituent Assembly comes into operation after receiving the
assent of the Raj Pramukh, the Raj Pramukh shall have power
to make and promulgate Ordinances for the peace and good
government of the Union or any part thereof, and any Ordi-
nance so made shall, for the space of not more than six
months from its promulgation have the like force of law as
an Act passed by the Constituent Assembly;but any such
Ordinance may be controlled or superseded by any such Act.”
This Union was inaugurated on July 15, 1948, and the Raj
Pramukh thereafter took over the administration of the
different Covenanting States. The Administration of Nabha
State was taken over by the Raj Pramukh on August 20, 1948.
On the same day the Raj Pramukh, in exercise of the powers
vested in him, promulgated an Ordinance (No. 1 of 2005)
called the Patiala and East Punjab States Union (Administra-
tion)
131
Ordinance, 2005. The following provisions of this Ordi-
nance are relevant for our purpose:
“1. (2) It shall extend to the territories included in
the Covenanting States on and from the date on which the
administration of any of the said State or States has been
or is made over to the Raj Pramukh.
2. * *
3. As soon as the administration of any Covenanting
State has been taken over by the Raj Pramukh as aforesaid,
all laws, Ordinances, Acts, Rules, Regulations, Notifica-
tions, Hidayats and Firrnans-i-Shahi having force of law in
Patiala State on the date of commencement of this Ordinance
shall apply mutatis mutandis to the territories of the said
State and with effect from that date all laws in force in
such covenanting State immediately before that date shall
be repealed:
Provided that proceedings of any nature whatsoever
pending on such date in the Courts or offices of any such
Covenanting State shall, notwithstanding anything contained
in this Ordinance or any other Ordinance, be disposed of
in accordance with the laws governing such proceedings in
force for the time being m any such Covenanting State.”
Section 6 provides for the adaptation of the laws etc.
enforced under section 3 and, amongst other things, any
reference in these laws etc. to the Patiala State and the
like was to be construed as a reference to the State of the
Union. A notification (No.35 dated 27-5-05/11-9-1948) was
issued over the signature of the Revenue Secretary notifying
that the Patiala Income-tax Act of 2001 and the Rules there-
under had come into force in the various Covenanting States
from August 20, 1948, thereby repealing the law or laws in
force in that behalf in those States before that date,
except as to pending proceedings. It may be mentioned here
that prior to that date there was no law in the Nabha State
imposing income-tax on the subjects of that State. On
November 14, 1948, the Commissioner of Income-tax issued a
Notification (No. 4, dated
132
29-7-2005) intimating that persons belonging to the Cove-
nanting States of Nabha and Nalagarh would be assessed to
income-tax under the Patiala Income Tax Act, 2001. It was
mentioned that persons of those States whose income reached
the taxable limit ‘ ‘should henceforward keep regular and
proper accounts for purposes of audit by the Income Tax
Department” on February 2, 1949, Ordinance 1 of 2005 was
repealed and replaced by Ordinance No. XVI of 2005 promul-
gated by the Raj Pramukh and called the Patiala and East
Punjab States Union General Provisions (Administration)
Ordinance, 2006. Section 3 (1) runs as follows:
“3. (1) As from the appointed day, all laws and rules,
regulations, bye-laws and notifications made thereunder, and
all other provisions having the force of law, in Patiala
State on the said day shall apply mutatis mutandis to the
territories of the Union and all laws in force in the other
Covenanting States immediately before that day shall cease
to have effect;
Provided that all suits, appeals, revisions applica-
tions, reviews, executions and other proceedings, or any of
them, whether Civil or Criminal or Revenue, pending in the
Courts and before authorities of any Covenanting States
shall, notwithstanding anything contained in this Ordinance,
be disposed of in accordance with the laws governing such
proceedings in force in any such Covenanting State immedi-
ately before the appointed day.”
By section 2 (a) the “appointed day” was defined as
meaning the 5th day of Bhadon, 2005, corresponding to August
20, 1948. There was a section providing for adaptation
similar to section 6 of the Ordinance 1 of 2005. There was
another Ordinance to which reference has to be made, namely,
Ordinance No. 1 of 2006 called the Finance Ordinance promul-
gated on April 13, 1949, which came into force on that very
date. Section 5 of that Ordinance introduced several amend-
ments to the Patiala Income Tax Act, 2001. It recast
133
sections 3 and 34 of that Act and introduced a new section
as section 23B. Section 6 of that Ordinance runs thus:
“6. For the assessment year beginning on the 1st day of
Baisakh, 2006, that is to say, in respect of the accounting
the income, profits and gains of the previous year ending on
the last day of Chet, 2005,-
(a) income-tax shall be charged at the rates specified
in Part I of the Second Schedule to this Ordinance, and
(b) rates of super tax shall, for the purposes of sec-
tion 55 of the Patiala Income Tax Act, 2001, be specified in
Part II of the Second Schedule to this Ordinance.”
It is in this setting that the facts leading to the
present petition have to be considered.
The petitioner is a resident of Ateli in the district of
Mohindargarh now in Pepsu but which formerly formed part
of the Nabha State. The petitioner has been carrying on his
business at Ateli for a number of years under the’ name and
style of Raghunath Rai Ram Parshad. He never paid any
income-tax as no such tax was imposed by any law in the
Nabha State. On October ’20, 1949, the petitioner was
served with a notice under sections 22(2) and 88 of the
Patiala Income Tax Act, 2001, requiring him to submit a
return for the Income Tax year 2006 (13-4-1949 to 12-4-
1950) disclosing his income during the previous year
(13-4-1948 to 12-4-1949). The petitioner, on December 4,
1949, filed his return for the year 2006 and on February 14,
1950, he was assessed to income-tax. On May 23, 1950, the
petitioner received a notice under section 34 calling upon
him to file his return for the year ending the last day of
Chet 2005, i.e., for the year 13-4-1948 to 12-4-1949. In
this return he had to specify his income of the previous
year, namely, 2004 (i.e., 13-4-1947 to 12-4-1948). It ap-
pears that the petitioner along with other assessees of
Ateli and Kanina submitted a petition before the Income Tax
Officer on July 9, 1950, asking him not to
134
proceed with the assessment for the year 2005 but on July
13, 1950, the Income Tax Officer assessed him to the best of
his judgment under section 34(4) read with section 22(4) of
the Income Tax Act. The petitioner along with other asses-
sees similarly situated moved the Income Tax Commissioner
and the Central Board of Revenue, New Delhi, but without any
success. No formal appeal under the Patiala Income Tax Act
appears to have been filed by the petitioner against assess-
ments for either of the two years 2005 and 2006. On August
10, 1950, the petitioner filed his present petition before
this Court under article 32 of the Constitution praying that
a writ in the nature of a writ of certiorari be issued for
quashing the assessments of the petitioner’s income accrued
in the years 2004 and 2005 and other ancillary reliefs.
During the pendency of this petition the income-tax authori-
ties have issued a notice under section 46 intimating that
penalty will be imposed if the tax was not paid up.
The contention of the petitioner in the first place is
that he has been denied the fundamental right of equality
before the law and the equal protection of the laws guaran-
teed to him by article 14 of the Constitution. His griev-
ances are formulated in paragraphs 10 and 11 of his peti-
tion. It is said that while the people of Kapurthala which
is included in Pepsu have been asked to pay income-tax for
the period prior to August 20, 1948, at the old rate fixed
by the Kapurthala Income Tax Act which was lower than the
rate fixed by the Patiala Income Tax Act, 2001, the people
of Nabha who had not to pay any income-tax prior to August
20, 1948, at all have been made liable to pay at the higher
Patiala rate and that such discrimination offends against
the provisions of article 14. This charge is refuted by
paragraph 10 of the affidavit of Sardar Gurbax Singh, the
Additional Director of Inspection (income Tax), New Delhi,
who was formerly the Commissioner of Income Tax, Punjab and
Pepsu, which has been filed in opposition to the present
petition. It is there stated that for the assessment year
2005, in Kapurthala the assessees whose cases were pending
on
135
August 20, 1948, were assessed under the Kapurthala Income
Tax Act at rates fixed thereunder but that for the assess-
ment year 2006 the provisions of the Patiala Income Tax Act
and the rates prescribed thereunder were uniformly applied
in all areas of the Pepsu, including Kapurthala This alle-
gation which is not denied in the affidavit filed by the
petitioner in reply must be taken as correct. The assess-
ment of Kapurthala assessees for the year 2005 at the old
Kapurthala rate was obviously made under the proviso to
section 3 of Ordinance No. 1 of 2005, which was reproduced
in the proviso to section 3(1)of the Ordinance No. XVI of
2006 and both of which required all pending proceedings to
be completed according to the law applicable to those pro-
ceedings when they were initiated. No case of assessment was
pending as against any Nabha assessee on August 20, 1948,
for there was no Income Tax Act in Nabha prior to that date
and, therefore, there could be no occasion for completing
any pending proceedings against any of such assessees. In
the premises, there can be no grievance by them on the score
of discrimination. The discrimination, if any, was not
brought about by the two Ordinances, but by the circumstance
that there was no Income Tax Act in Nabha and consequently
there was no case of assessment pending against any Nabha
assessees. In any case the provision that pending proceed-
ings should be concluded according to the law applicable at
the time when the rights or liabilities accrued and the
proceedings commenced is a reasonable law rounded upon a
reasonable classification of the assessees which is permis-
sible under the equal protection clause and to which no
exception can be taken. In our opinion the grievance of the
alleged infringement of fundamental right under Article 14
is not well-founded at all.
Dr. Tek Chand appearing in support of the petition next
contends that the administration of Nabha State having been
taken over by the Raj Pramukh only on August 20, 1948, and
the Patiala law including the Patiala Income Tax Act, 2001,
having been brought
136
into operation on and from August 20, 1948, the assessment
of the tax on the petitioner’s income which accrued prior to
August 20, 1948, was wholly illegal and not authorised by
the said Ordinances and the State by insisting on collecting
the tax so illegally assessed was threatening to invade the
petitioner’s fundamental right to property guaranteed by
article
31(1) of the Constitution.
Article 31(1) runs as follows:
“(1) No person shall be deprived of his property save by
authority of law.”
It will be noticed that clause (1) reproduces subsection
(1) of section 299 of the Government of India Act, 1935,
without the words “in British India.” Reference has ‘next to
be made to article 265 which is in Part XII, Chapter I,
dealing with “Finance.” That article provides that no tax
shall be levied or collected except by authority of law.
There ‘was no similar provision in the corresponding chapter
of the Government of India Act, 1935. If collection of
taxes amounts to deprivation of property within the meaning
of article 31(1), then there was no point in making a sepa-
rate provision again as has been made in article 265. It,
therefore, follows that clause (1) of article 31 must be
regarded as concerned with deprivation of property otherwise
than by the imposition or collection of tax, for otherwise
article 265 becomes wholly redundant. In the United States
of America the power of taxation is regarded as distinct
from the exercise of police power or eminent domain. Our
Constitution evidently has also treated taxation as distinct
from compulsory acquisition of property and has made inde-
pendent provision giving protection against taxation save by
authority of law. When Dr. Tek Chand was asked if that was
not the correct position, he did ,not advance any cogent or
convincing answer to refute the conclusion put to him. In
our opinion, the protection against imposition and collec-
tion of taxes save by authority of law directly comes from
article 265, and is not secured by clause (1) of article 31.
Article 265,
137
not being in Chapter IIi of the Constitution, its protection
is not a fundamental right which can be enforced by an
application to this court under article 32. It is not our
purpose to say that the right secured by article 265 may not
be enforced. It may certainly be enforced by adopting
proper proceedings. All that we wish to state is that this
application in so far as it purports to be rounded on arti-
cle 32 read with article 31(1) to this Court is misconceived
and must fail.
The whole of Dr. Tek Chand’s argument was rounded on the
basis that protection against imposition and collection of
taxes save by authority of law was guaranteed by article
31(1) and his endeavour was to establish that the Pepsu
Ordinances could not, in law, and did not, on a correct
interpretation of them, impose any income-tax retrospective-
ly; that the Income Tax Officer on an erroneous view of the
law had wrongly assessed the tax on income accrued prior to
August 20, 1948, and that consequently the petitioner was
being threatened with deprivation of property otherwise than
by authority of law. In the view we have taken, namely, that
the protection against imposition or collection of taxes
save by authority of law is secured by article 265 and not
by article 31(1), the questions urged by Dr. Tek Chand do
not really arise and it is not necessary to express any
opinion on them on this application. Those questions can
only arise in appropriate proceedings and not on an applica-
tion under article 32. In our judgment this application
fails on the simple ground that no fundamental right of the
petitioner has been infringed either under article 14 or
under article 31(1) and we accordingly dismiss the petition
with costs.
Petition dismissed.
Agent for the appellant: Naunit Lal.
Agent for the respondent: P.A. Mehta.
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