1957 (4) TMI 2 - SC - Income Tax

Whether either section 48 of the Act or section 46(2) of the Indian Income-tax Act or both offend articles 14, 19, 21 and 22 of the Constitution? Whether the respondent was deprived of his personal liberty in accordance with a procedure established by law, i.e., a valid law? Held that - neither section 48 of the Act nor section 46(2) of the Indian Income-tax Act violates articles 14, 19, 21 and 22 of the Constitution. From the affidavits filed in the High Court by the Collector and the Income-tax Officer it is quite clear that there was material upon which the Collector could base his belief that the respondent was wilfully withholding payment of the arrears of tax and had been guilty of fraudulent conduct in order to evade payment. The Collector was, therefore, justified in arresting the respondent.The respondent may, if he is taken into custody again, approach the Collector for his release who could do so, in the circumstances set out in section 59 of the Code of Civil Procedure, in the exercise of his powers under the proviso to section 46(2) of the Indian Income-tax Act.The appeal is accordingly allowed with costs and the judgment of the High Court is aside.

Issues Involved:
1. Constitutionality of Section 48 of the Madras Revenue Recovery Act.
2. Constitutionality of Section 46(2) of the Indian Income-tax Act.
3. Alleged violation of Articles 14, 19, 21, and 22 of the Constitution.
4. Interpretation of Section 46(2) of the Indian Income-tax Act and Section 48 of the Madras Revenue Recovery Act regarding the authority to arrest.
5. Validity of the respondent's arrest without a prior hearing.

Detailed Analysis:

1. Constitutionality of Section 48 of the Madras Revenue Recovery Act:
The High Court had deemed Section 48 of the Madras Revenue Recovery Act ultra vires the Constitution, as it allegedly offended Article 22. However, the Supreme Court held that Section 48 did not violate Articles 14, 19, 21, and 22 of the Constitution. The Court emphasized that the arrest under Section 48 was not for a criminal or quasi-criminal offense but was a mode of recovery for civil debt, thus not infringing on Article 22. The Court also noted that the procedural requirements under Section 48, including the necessity for the Collector to have a reason to believe the defaulter was wilfully withholding payment, were sufficient to meet constitutional standards.

2. Constitutionality of Section 46(2) of the Indian Income-tax Act:
The High Court had found Section 46(2) of the Indian Income-tax Act to be ultra vires as it allegedly offended Article 14. However, the Supreme Court disagreed, referencing previous decisions, including Purshottam Govindji Halai's case, to establish that Section 46(2) did not violate Article 14. The Court reiterated that the provision allowed the Collector to recover arrears of income-tax as land revenue, which was a valid legislative action.

3. Alleged Violation of Articles 14, 19, 21, and 22 of the Constitution:
The Supreme Court considered whether the respondent's arrest under Section 48 of the Act or Section 46(2) of the Indian Income-tax Act violated Articles 14, 19, 21, and 22. The Court held that the personal liberty guaranteed under Article 21 was subject to "procedure established by law," which was satisfied by the provisions of the aforementioned sections. The Court also noted that the rights under Article 19(1)(a) to (e) and (g) could not be exercised by a person lawfully deprived of personal liberty under Article 21.

4. Interpretation of Section 46(2) of the Indian Income-tax Act and Section 48 of the Madras Revenue Recovery Act Regarding the Authority to Arrest:
The respondent's counsel argued that Section 46(2) did not authorize the Collector to arrest the defaulter, and that arrest could only be made under Section 48, which required a prior hearing. The Supreme Court rejected this interpretation, stating that the authority given to the Collector under Section 46(2) included the power to arrest as a mode of recovery. The Court clarified that the arrest was not a punishment but a coercive measure to ensure payment.

5. Validity of the Respondent's Arrest Without a Prior Hearing:
The Supreme Court addressed the contention that the respondent was not given an opportunity to be heard before his arrest. The Court found no requirement in Section 48 for a prior hearing, emphasizing that the Collector must have rational belief based on material evidence that the defaulter was wilfully withholding payment or had engaged in fraudulent conduct. The Court concluded that the Collector had sufficient material to justify the arrest, making it lawful.

Conclusion:
The Supreme Court allowed the appeal, setting aside the High Court's judgment. The Court affirmed the constitutionality of Sections 48 of the Madras Revenue Recovery Act and 46(2) of the Indian Income-tax Act, holding that they did not violate Articles 14, 19, 21, and 22 of the Constitution. The Court also upheld the validity of the respondent's arrest under these provisions, emphasizing that it was a lawful mode of recovery for arrears of tax. The appeal was allowed with costs, and the authorities were permitted to take further steps against the respondent according to law.

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