1965 (6) TMI 2 - HC - Income Tax

Tax recovery officer - held that no power has been conferred on the State Government, either expressly or by necessary intendment or implication, to give retroactive operation to any authorisation that it may make under section 2(44), the action taken cannot be sustained - reveneu s appeal fails

Summary

Issues:
1. Interpretation of the definition of "Tax Recovery Officer" under the Income-tax Act, 1961.
2. Validity of a notification authorizing State officers as Tax Recovery Officers with retrospective effect.
3. Retroactive operation of subordinate legislation.

Analysis:
The judgment pertains to Writ Appeal No. 139 and Writ Appeal No. 140 arising from original petitions O.P. No. 317 of 1963 and O.P. No. 712 of 1963. The core issue revolves around the interpretation of the definition of "Tax Recovery Officer" under the Income-tax Act, 1961. Initially, Section 2(44) of the Act defined a Tax Recovery Officer, which was later substituted by a new definition under Section 4 of the Finance Act, 1963. The new definition granted the State Government the authority to authorize State officers as Tax Recovery Officers. This change allowed for a State officer to be designated as a Tax Recovery Officer for the first time.

The Government of Kerala issued a notification on August 14, 1963, authorizing specific State officers to act as Tax Recovery Officers for the purpose of income tax recovery. Notably, the notification stated that it would be deemed to have come into force on April 1, 1962. The critical question before the court was whether actions taken by a State officer for income tax recovery between April 1, 1962, and August 14, 1963, based on this retrospective notification, were legally valid.

The court examined the legality of retrospective operation of subordinate legislation in light of precedents. Referring to the decision in India Sugars and Refineries Ltd. v. State of Mysore, it was highlighted that subordinate legislation cannot generally be made retrospectively unless expressly authorized by the legislature. While acknowledging the legal fiction created by Section 4 of the Finance Act, 1963, deeming the new definition to have always been in existence, the court held that no explicit authorization for retrospective effect was provided to the State Government in designating Tax Recovery Officers.

Consequently, the court concluded that neither express authorization nor necessary intendment existed to confer retroactive powers on the State Government for authorizing State officers as Tax Recovery Officers. As a result, the actions taken by the State officer during the specified period could not be sustained. The court upheld the decision that the actions were invalid, leading to the dismissal of the writ appeals. No costs were awarded in the matter.

In summary, the judgment clarifies the limitations on retrospective application of subordinate legislation and underscores the necessity of explicit authorization for conferring retroactive powers, particularly in the context of designating Tax Recovery Officers under the Income-tax Act, 1961.