Special provisions to pending writs and interim orders passed in the pending petitions. - Income Tax - 1069/CBDT

INSTRUCTION NO. 1069/CBDT Dated : June 28, 1977 The Constitution (Forty - second Amendment) Act, 1976 has brought about significant and far reaching changes in the writ jurisdiction of the High Courts. Section 58 of the Constitution (Forty-second Amendment) Act, 1976 (hereinafter called the 'Act') provides for special provisions as to pending writs and interim orders passed in the pending petitions. The Board have examined the effect of Constitutional amendments in consultation with its legal advisers. 2. The first issue for consideration is the cumulative effect of the amendments to Articles 225,226A and 227 vis-a-vis orders passed by the authorities under the Income-tax Act and other allied tax Acts. Article 226 has undergone an amendment, the effect of which is that the jurisdiction of the High Court has been curtailed. In its amended form, no petition will lie before the High Court unless it satisfies one or the other conditions laid down in sub-clauses (a),(b) and (c). While sub-clause (a) deals with enforcement of fundamental rights, sub-clause (b) of clause (1) deals with redress of any injury of a substantial nature by reason of the contravention of any other provisions of the Constitution or any provision or enactment or ordinance or order, rule, regulation, bye-law or other instrument made thereunder. Sub-clause(c) deals with redress of injury by reason of any illegality in the proceedings by or before any other authority under any provision referred to in sub-clause (b) where such illegality has resulted in a substantial failure of justice. Clause (3) of Article 226 provides that no petition for redress of any injury referred to in sub-clause (b) or sub-clause (c) of clause (1) shall be entertained if any other remedy for such redress is provided for by or under any other law for the time being in force. The question then arises as to what meaning should be given to the term 'remedy' occurring in clause (3) and whether a petition affecting revenue matters is barred under such clause. We have been advised that Article 226 and 226A must prevail wherever any conflict may be supposed to arise between Article 225 and those articles, because Article 225 opens with the words "subject to the provisions of this Constitution". So far as Article 226A is concerned, the exclusion of the considerations of the validity of a Central law is complete and unqualified and High Courts cannot examine the question of validity. This is also made clear by the provisions of Article 131A which vests exclusive jurisdiction in the Supreme Court to consider all such questions. So far as the validity of proceedings with reference to revenue laws is concerned, there is no complete bar by the terms of any of the clauses of article 226. A petitioner under Article 226 indeed will have to establish either that any of his fundamental rights has been violated or that he has suffered some injury of substantial nature because the authority concerned has contravened any of the provisions of the Constitutions or enactment or Ordinance etc. or has committed some illegality in such proceedings, resulting in substantial failure of justice. It is not possible to define as to what will constitute such injury or in what circumstances it can be predicted that there has been substantial failure of justice. This will depend upon the facts and circumstances of individual cases to be examined by the Court whenever that question arises before it. Coming to clause (3) of Article 226 the bar is created in cases covered by that clause. If the words of that clause are given a wider meaning, then Article 226 would practically become an ornamental provision bereft of all utility because barring a very small class of cases some remedy would be found available in some law. Even if there is no specific remedy in a particular statute, normally a suit would be competent in as much as section 9 of the Code of Civil procedure provides a general remedy by way of a suit for all injuries. We have been advised that such a wide interpretation may not be acceptable. Clause 3 should be interpreted to mean that wherever a statute provides a specific remedy it is that remedy and not an application under Article 226 which should be pursued. For instance, where there is a right of appeal from the order which is sought to be challenged or where there is a specific provision for the making of the reference to the High Court, it is conceivable that the Amendment intends to exclude the remedy under Article 226. It has been opined that the remedy has not necessarily to be as convenient as the statutory remedy for creating a bar because whenever there was an equally convenient remedy even before the Amendment, it was recognised that Article 226 was not the appropriate provision to seek relief. 3. The next question for consideration is whether the High Court can issue interim orders in respect of revenue matters or whether it is taken away under clause (6) is not relatable normally to proceedings for assessment and recovery of taxes. Whether in some exceptional circumstances clause (6) would come into play or not will depend upon the facts and circumstances of the case. In an average case where an aggrieved person is pleading nonliability in respect of a public demand, clause (6) may not be relevant but perhaps, in exceptional circumstances it may be possible to urge the bar of clause (6). The nature and the volume of planned evasion of tax may in appropriate cases attract clause (6) of Article 226. It could be that if there is any inquiry into tax evasion on a large scale by well known group or individual (R.K.Dalmia Vs.Justice S.R.Tendulkar and others 1959-S.C.R. 279) or the modus operandi adopted in such a cause is such that it could lead to large scale repercussions and inquiry is ordered, it is possible to hold that such an enquiry is an inquiry into a matter of public importance. 4. The next point for consideration is whether the writ petitions pending in the various High Courts as on 1.2.77 be in the appointed day, when sections 38 and 58 of the Act were brought into force, shall abate automatically and all interim orders passed therein shall stand vacated on that day or the High court will have to go into them in the light of the amended law and decide about the abatement of the writ by passing an order. we have been advised that after the amendment the writ jurisdiction of the High Court is not absolutely barred and it is only restricted. Regarding pending petitions, whether they would automatically abate on 1.2.77, the High Court will have to go into them in the light of the amended law and if the court is satisfied that it has jurisdiction, evenunder the amended Article 226, it will have to dispose them of accordingly. So long as suitable orders are not passed, and they have not been disposed of, the petitions already having been filed before the High Court could technically be taken to be still pending. A question may arise whether the Department will have to move the court for hearing and for necessary order pronouncing abatement of the writ as well as of interim order. We have been advised that if there are petitions pending before the various courts and in the view of the Department, the High Court has no jurisdiction to dispose them of, in view of the amended provisions of the Constitutions, it would be advisable to take steps to move the court for suitable orders in respect of such pending petitions. Under section 58 of the Constitution (Forty-second Amendment) Act, such petitions and interim orders stand vacated. However, as the petitions are technically pending in the High Court, it would be advisable to move the Court to get them dismissed. Where the petitions do not abate under sub-section (2) of section 58 of the Act, interim orders which were made before the first of February, 1977 shall cease to have effect on the expiry of the periods mentioned in clauses (a) and (b) of sub-section (3) of section 58 of the Act. Sub-section (3) of section 58 deals with such interim order which was made before the first February of 1977, on or in any proceedings relating to, a pending petition (not being a pending petition which has abated under sub-section 2) and which will cease to have effect on the expiry of one month from the first of February, 1977 if the copies of such pending petition and the documents in support of the plea for the interim order are not furnished to the other party before the expiry of the period of one month. It will also cease to have effect on the expiry of a period of 4 months from the first of February, 1977, if the copies aforesaid though furnished to the other party within the said period of one month but such party has not been given an opportunity to be heard in the matter before the expiry of the said period of four months. 5. All Commissioners of Income Tax are requested to undertake a review of pending writ petitions filed by the assessee in consultation with the senior Standing Counsel of the Department and take steps to move the court for suitable orders in respect of such pending petitions. Cases of interim orders as well cease to have effect on the expiry of the periods mentioned in clauses (a) and (b) of sub-section (3) of section 58 should be identified and steps be taken to finalise the proceedings well within the limitation period.