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Challenge to levy of surcharge on agricultural income-tax under Karnataka Agricultural Income-tax Act due to amendment through Karnataka Ordinance No. 13 of 1980. Interpretation of the lapsed Ordinance and circular issued by Commissioner of Agricultural Income-tax regarding the levy of surcharge on pending assessments. Analysis: The writ appeals were filed challenging the levy of surcharge on agricultural income-tax pursuant to an amendment by Karnataka Ordinance No. 13 of 1980. The petitioners contended that since the Ordinance had lapsed, no tax could be levied under it. Additionally, they argued that a circular issued by the Commissioner stated that surcharge should not be levied on pending assessments. The single judge did not agree with these contentions, stating that the Ordinance's effect would endure even after its expiry and that the Commissioner's circular had no force of law. The appellate court observed that under the Agricultural Income-tax Act, officials must follow orders and directions issued by the Commissioner. The court compared this provision to section 119 of the Income-tax Act and cited Supreme Court cases where circulars issued by the Central Board of Direct Taxes were held binding on revenue officers even if they deviated from the law. Applying this principle, the court held that the circular issued by the Commissioner was binding on subordinate officers and assessing authorities under the Karnataka Agricultural Income-tax Act. The court disagreed with the single judge's view that the circular was not binding due to being contrary to law. It emphasized that the interpretation of the Ordinance and its effect, as understood by the Commissioner and stated in the circular, was relevant to enforcing the Act. As no challenge was made to the validity of the Commissioner's view, it was deemed binding on all subordinate authorities. Consequently, the court ruled that no surcharge could be levied on pending assessments. Therefore, the court allowed the writ appeals, quashed the orders related to the surcharge levy, and allowed the writ petitions, making the rules absolute without costs.
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