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TMI Blog1966 (2) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... ur Act. There were rapid constitutional changes after August, 1947, with respect to the State of Jaipur, and eventually on 26th January, 1950, the Part B State of Rajasthan emerged as the successor State comprising of all the former Rajasthan States. On 31st March, 1950, the Finance Act of 1950 was passed, section 13 whereof was in the following terms: " 13. (1) If immediately before the 1st day of April, 1950, there is in force in any Part B State other than Jammu and Kashmir or in Manipur, Tripura or Vindhya Pradesh or in the merged territory of Cooch-Bihar any law relating to income-tax or super-tax or tax on profits of business, that law shall cease to have effect except for the purposes of the levy, assessment and collection of income-tax and super-tax in respect of any period not included in the previous year for the purposes of assessment under the Indian Income-tax Act, 1922 (XI of 1922), for the year ending on the 31st day of March, 1951, or for any subsequent year, or, as the case may be, the levy, assessment and collection of the tax on profits of business for any chargeable accounting period ending on or before the 31st day of March, 1949 : Provided that any referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Act referred to as the " fund ". Such account shall show separately the amount recovered from each person. 40. (1) Subject to the general control of the Government, the fund shall be operated upon by the Accountant-General with the approval of the Finance Minister to Government. (2) All amounts of the Fund over and above a maximum to be fixed by the Government shall be invested in securities of the Government of India or in War Loans floated by that Government or in such other manner as the Government may approve. 41. All expenses incurred in the administration of this Act shall be met out of the fund and shall be charged against each person in such proportion and in such manner as the Government may prescribe. 42. The amount of excess profits tax recovered from any person, which has not been refunded under section 36, and is shown to be still at his credit in the Excess Profits Tax Account kept under section 39 shall on application be repayable to such person or his legal representative after deducting the expenses allowed under section 41 and twenty per cent. of the excess profits tax, upon the expiration of twelve months after the date of the termination of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied for refund on 18th December, 1951, and on 9th July, 1953, their advocate received a communication from the Assistant Secretary to the Government of Rajasthan, Finance department, saying that, since the appellant's application was made beyond time, the amount had, by virtue of section 44 of the said Act, lapsed to the Government, and could not be refunded. The appellants moved a writ petition under article 226 in the Rajasthan High Court at Jaipur in 1954, but was withdrawn, obviously, in view of a suggestion coming forth from the opposite side that the Commissioner of Income-tax was the competent authority to deal with the matter after the enactment of the Finance Act, 1950, and he had not been made a party. The appellants again filed a writ petition under article 226 in the Rajasthan High Court, which was dismissed on 11th October, 1957, on the ground that the Rajasthan High Court had no territorial jurisdiction to issue a writ on the Commissioner of Income-tax. On 17th December, 1957, the appellants moved an application under articles 132 and 133 for a certificate for appeal to the Supreme Court, which was dismissed on 3rd February, 1959. No application for special leave to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion, the refund of tax due does not fall under any of the three exceptions, namely, " levy ", " assessment " and " collection ". It has been suggested by the revenue that the term " collection " embraces both, the collection of tax by the Government and the claim of refund by the assessee. I am afraid, the context does not admit of that construction. A claim to refund cannot be treated as collection of " income-tax ". Consequently, there was no saving of provisions dealing with the refund of tax. It is pertinent at this stage to point out for completeness that on 26th January, 1950, all rights, liabilities and obligations of the Government of any Indian State corresponding to a State specified in Part B of the First Schedule, " whether arising out of any contract or otherwise ", became the rights, liabilities and obligations of the Government of India, if the purposes for which such rights were acquired or liabilities or obligations incurred before the commencement of the Constitution were, thereafter, to be the purposes of the Government of India relating to any of the matters enumerated in the Union List. This result ensued because of the provisions of article 295(1)(b) of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the United State of Rajasthan and the Government of India. I am prepared to assume that the revenue is right in the contention that only a defeasible obligation devolved on the United State of Rajasthan and the Government of India. Even if that be so, the right of the appellants to claim refund was admittedly alive till 7th May, 1950, but, before that date arrived, the Jaipur Act was repealed on 31st March, 1950, by the Finance Act, 1950, and, as I have said earlier, there was no saving of the provisions with respect to the refund of tax. It follows that such provisions died on 31st March, 1950. Under sections 36 and 37 of the Jaipur Act, the only authority, to whom an application for refund could be made, was the Excess Profits Tax Officer or any other authority appointed by the Government in this behalf. It has not been shown to us that any other authority had been so appointed. If sections 36 and 37 stood repealed on 31st March, 1950, the appellants could make no application, though they had time to apply till 7th May, 1950. By virtue of section 36, the appellants were expected to satisfy the Excess Profits Tax Officer or any other authority appointed by the Government abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twhile States, granting certain exemptions to the assessees, were enforceable after the Finance Act, 1950, came into force, either as contracts or as special laws, and the Supreme Court decided that, irrespective of the nature of those contracts, they stood repealed by the Finance Act, 1950. In Dalmia Dadri's case, it was decided that the new State had not assumed the obligations of the erstwhile Jind State and, therefore, the subjects of the Jind State did not carry with them their rights on the formation of the new State with the result that, for the period covered by the Patiala Income-tax Act, which was introduced in the entire territory of the new State, that Act alone governed the rights and liabilities of the subjects of the old State. Article 295 did not, in the opinion of the Supreme Court, arise for consideration as the rights had come to an end before the enactment of the Constitution. In the other case, the assessees' claim was that, even in respect of the period covered by the Finance Act, 1950, they were liable to be taxed only in accordance with the agreement. This claim was repelled on the ground that the rights stood abrogated by the Finance Act, 1950. The position ..... X X X X Extracts X X X X X X X X Extracts X X X X
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