1954 (7) TMI 26 - HC - Income Tax

Summary

Issues Involved:
1. Legality of arrest and detention under Section 48, Madras Revenue Recovery Act.
2. Violation of Articles 14, 21, and 22 of the Constitution.
3. Procedural differences between the Revenue Recovery Act and Civil Procedure Code.
4. Discretionary power of the Collector under Section 46(2), Income Tax Act.

Detailed Analysis:

1. Legality of Arrest and Detention under Section 48, Madras Revenue Recovery Act:
The petitioner was arrested under Section 48 of the Madras Revenue Recovery Act for non-payment of Income Tax arrears. The warrant issued by the Collector of Malabar stated that the petitioner was wilfully withholding payment and had been guilty of fraudulent conduct. The petitioner was given no opportunity to be heard or to show cause against the warrant. The court noted that Section 48 does not provide any procedure for representation or appeal by the defaulter. The court found that the arrest and detention under Section 48 were not in accordance with the principles of natural justice, as the petitioner was not given a chance to defend himself.

2. Violation of Articles 14, 21, and 22 of the Constitution:
The court examined the application of Articles 14, 21, and 22 of the Constitution in this case. Article 22(1) states that no person who is arrested shall be detained without being informed of the grounds for such arrest and shall have the right to consult a legal practitioner. Article 22(2) mandates that every person arrested must be produced before the nearest Magistrate within 24 hours. The court found that the petitioner was denied these rights, as he was not informed of the grounds for his arrest, nor was he given the opportunity to consult a legal practitioner. The court held that Section 48 of the Madras Revenue Recovery Act is "ultra vires" and offends Articles 22(1) and (2) of the Constitution. The court also noted that the detention of the petitioner was punitive and not preventive, thus requiring adherence to Articles 14 and 21, which ensure equality before the law and protection of personal liberty.

3. Procedural Differences between the Revenue Recovery Act and Civil Procedure Code:
The court compared the procedures under the Revenue Recovery Act and the Civil Procedure Code (CPC). Under the CPC, before a judgment-debtor is committed to prison for a civil debt, the debtor must be given an opportunity to appear before the court and show cause. The court must be satisfied that the debtor has the means to pay and is wilfully defaulting. In contrast, under Section 48 of the Revenue Recovery Act, the Collector can arrest and imprison a defaulter without any such hearing or opportunity for the defaulter to defend himself. The court found this lack of procedural safeguards under the Revenue Recovery Act to be unjust and discriminatory.

4. Discretionary Power of the Collector under Section 46(2), Income Tax Act:
Section 46(2) of the Income Tax Act allows the Collector to recover tax arrears as if they were arrears of land revenue. The Collector can choose to proceed under the Revenue Recovery Act or the Civil Procedure Code. The court found that this discretionary power vested in the Collector is unfettered and allows for potential discrimination. The court held that such discretion violates Article 14 of the Constitution, which ensures equality before the law. The court emphasized that the power to arrest and detain should be exercised with proper safeguards and should not be left to the arbitrary discretion of an executive authority.

Conclusion:
The court held that Section 48 of the Madras Revenue Recovery Act is "ultra vires" and violates Articles 14, 21, and 22 of the Constitution. The arrest and detention of the petitioner were declared illegal, and the petitioner was ordered to be released. The court recommended that the legislature should amend the Income Tax Act to include penal provisions for wilful default in tax payment, which would allow for proper judicial proceedings and safeguards.