1951 (1) TMI 1 - SC - Income Tax

Whether petitioner has been denied the fundamental right of equality before the law and the equal protection of the laws guaranteed to him by Article 14 of the Constitution.? Held that - 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 proceedings 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 founded upon a reasonable classification of the assessees which is permissible 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. 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 application 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.

Issues Involved:

1. Alleged infringement of the fundamental right under Article 14 of the Constitution.
2. Alleged infringement of the fundamental right under Article 31(1) of the Constitution.
3. Validity of retrospective application of income-tax laws.

Issue-wise Detailed Analysis:

1. Alleged infringement of the fundamental right under Article 14 of the Constitution:

The petitioner contended that he was denied the fundamental right of equality before the law and the equal protection of the laws guaranteed by Article 14. Specifically, he argued that while the people of Kapurthala were assessed income-tax at the old, lower rate fixed by the Kapurthala Income-tax Act for the period prior to August 20, 1948, the people of Nabha, who had no income-tax law before that date, were made liable to pay at the higher Patiala rate. This, he claimed, constituted discrimination.

The court refuted this argument, noting that for the assessment year 2005, Kapurthala assessees were assessed under the Kapurthala Income-tax Act at rates fixed thereunder due to pending proceedings as of August 20, 1948. In contrast, no such pending proceedings existed for Nabha assessees since there was no Income-tax Act in Nabha prior to that date. The court held that the discrimination, if any, was not due to the Ordinances but because there was no income-tax law in Nabha, thus no pending cases. The court found that the provision requiring pending proceedings to be concluded according to the law applicable at the time was a reasonable classification permissible under the equal protection clause. Consequently, the grievance of alleged infringement under Article 14 was deemed unfounded.

2. Alleged infringement of the fundamental right under Article 31(1) of the Constitution:

The petitioner argued that the assessment of tax on his income accrued prior to August 20, 1948, was illegal and unauthorized by the Ordinances. He claimed that the State's insistence on collecting the tax threatened his fundamental right to property guaranteed by Article 31(1).

Article 31(1) states, "No person shall be deprived of his property save by authority of law." The court noted that Article 265, which provides that no tax shall be levied or collected except by authority of law, is distinct from Article 31(1). The court reasoned that if tax collection amounted to deprivation of property under Article 31(1), Article 265 would be redundant. Thus, the court concluded that protection against tax imposition and collection comes from Article 265, not Article 31(1). Since Article 265 is not in Chapter III of the Constitution, its protection is not a fundamental right enforceable under Article 32. The petitioner's application, based on Article 32 read with Article 31(1), was therefore misconceived and had to fail.

3. Validity of retrospective application of income-tax laws:

Dr. Tek Chand, representing the petitioner, argued that the Pepsu Ordinances did not impose income-tax retrospectively and that the Income-tax Officer had wrongly assessed tax on income accrued before August 20, 1948. However, the court did not address this argument in depth, as it had already concluded that the protection against tax imposition and collection is secured by Article 265, not Article 31(1). The questions regarding the retrospective application of income-tax laws could only arise in appropriate proceedings, not in an application under Article 32.

Conclusion:

The court dismissed the petition, concluding that no fundamental right of the petitioner under Article 14 or Article 31(1) had been infringed. The application was dismissed with costs.

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