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1964 (2) TMI 5 - SC - Indian LawsWhether the continuance of the Bhopal State Agricultural Income-tax Act in the Bhopal region would be whether the differentiation arising from the continuation of the levy of the agricultural income-tax was unfair and not supported by a reasonable standard, and the State having the requisite information and opportunity to make the imposts reasonably uniform, had failed or neglected to do so? Held that - The petition filed by the company was singularly deficient in furnishing particulars which would justify the plea of infringement of article 14 of the Constitution. It cannot be too strongly emphasized that to make out a case of denial of the equal protection of the laws under article 14 of the Constitution, a plea of differential treatment is by itself not sufficient. The State also did not place evidence before the High Court, which would in the very nature of things be in its possession, showing a rational relation between the differential treatment and the classification and has also not placed any material before the court throwing light on the question whether the continuance of the tax was justified it merely chose to plead its case as on a demurrer. We think that this is a case in which the parties should be given an opportunity to plead their respective cases adequately and to go to trial after the requisite evidence which has a bearing is brought before the court. We accordingly allow the appeal, set aside the order and remand the case for re-trial to the High Court.Appeal allowed. Case remanded.
Issues Involved:
1. Constitutionality of the Bhopal State Agricultural Income-tax Act, 1953 under Article 14 of the Constitution. 2. Validity of differential treatment in taxation within the reorganized State of Madhya Pradesh. Issue-wise Detailed Analysis: 1. Constitutionality of the Bhopal State Agricultural Income-tax Act, 1953 under Article 14 of the Constitution The company challenged the constitutionality of the Bhopal State Agricultural Income-tax Act, 1953, claiming it was discriminatory and violated Article 14 of the Constitution. The High Court agreed, stating that the Act was "in clear contravention of the petitioner's right under article 14 of the Constitution and must be declared void." However, the Supreme Court noted that differential treatment does not automatically render a law unconstitutional. The Court emphasized that "a proper classification bearing a reasonable and just relation to the object sought to be achieved by the statute does not on that account become impermissible." The Court cited previous cases, such as Bhaiyalal Shukla v. State of Madhya Pradesh and State of Madhya Pradesh v. Gwalior Sugar Co. Ltd., which upheld geographical classifications based on historical reasons. 2. Validity of Differential Treatment in Taxation within the Reorganized State of Madhya Pradesh The Court examined whether the differential treatment in taxation within the reorganized State of Madhya Pradesh was justified. It was noted that the States Reorganisation Act, 1956, and the Madhya Pradesh Adaptation of Laws (State and Concurrent Subjects) Order, 1956, continued the applicability of existing laws in newly incorporated regions until altered, repealed, or amended. The Court acknowledged that "continuance of the laws of the old region after the reorganisation by section 119 of the States Reorganisation Act was by itself not discriminatory even though it resulted in differential treatment." However, the Court also recognized that over time, the justification for such differential treatment might cease to exist. The Court stated, "A purely temporary provision which because of compelling forces justified differential treatment when the Reorganisation Act was enacted cannot obviously be permitted to assume permanency, so as to perpetuate that treatment without a rational basis to support it after the initial expediency and necessity have disappeared." The High Court had ruled that the State had sufficient time to harmonize the law but failed to do so, thus violating Article 14. The Supreme Court disagreed, emphasizing that the State must be given an opportunity to justify the continuation of the differential treatment. The Court noted, "It was necessary for the High Court to investigate whether at the date when the petition was filed, special treatment of the Bhopal region in the matter of levy of agricultural income-tax had a rational basis." The Court criticized both parties for inadequate pleadings and lack of evidence. The company had not provided sufficient particulars to substantiate its claim of discrimination, while the State had not justified the continuation of the tax. The Court stated, "An applicant pleading that equal protection of the laws has been denied to him must make out that not only he had been treated differently from others but he has been so treated from persons similarly circumstanced without any reasonable basis, and such differential treatment is unjustifiably made." Conclusion The Supreme Court allowed the appeal, set aside the High Court's order, and remanded the case for re-trial. The High Court was directed to allow the company to amend its petition and the State to file its affidavit in reply, providing all relevant materials. The Court concluded, "We think that this is a case in which the parties should be given an opportunity to plead their respective cases adequately and to go to trial after the requisite evidence which has a bearing is brought before the court." Final Judgment Appeal allowed. Case remanded.
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