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TMI Blog2019 (11) TMI 1143X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment employees, it was held that the employees of government companies cannot claim the same legal rights as government employees. We therefore, reject the present petition, insofar as the petitioners challenge to the provisions of Section 10 (10AA) is concerned. We are however of the, prima facie, view that the grievances of the petitioner with regard to exemption limit under Clause (ii) of Section 10 (10AA) not being raised since 1998, appears to be justified. This is so because over the decades, the pay-scales admissible to government servants, and even employees of the Public Sector Undertaking and Nationalised Banks and all others have been upwardly revised, keeping in view, the financial growth in the country as well as on account of rising inflation. The last drawn salaries have increased manifold since time and notification issued under Clause (ii) of Section 10 (10AA) was lastly issued, as taken note of hereinabove, on 31.05.2002. We therefore, issue notice to the respondents limited to this aspect. - MR. VIPIN SANGHI AND MR. SANJEEV NARULA JJ. Petitioners Through: Mr. Saju Jakob, Ms. Lily Thomas, Ms. Nancy Shah and Mr. Ravinder Kumar Singh, Advs. Respondents Through: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment employees and their tax exemption, considering highest salary of the highest official of our Government in the following manner: a. Notification to raise exemption limit from 3 lacs to 9 lacs wef.1.1.2006. b. Notification to raise exemption limit of tax on leave encashment from 9 lacs to 25 lacs with effect from 1.1.2016. d) To effect the said enhancement of tax exemption with retrospective effect as mentioned in the prayer (b) and to direct the Respondents and income tax authorities to refund excess tax received, with interest at 10% from the date of payment till date of refund: e) To issue an order for making effect of such changes with immediate effect, till the Respondents make suitable modifications/ notifications/ amendments. 2. The case of the petitioner is that the petitioners are retired employees of various nationalised banks. The grievance of the petitioners is that in respect of the leave encashment amounts drawn by them upon their retirement, they are subject to payment of income tax except to the extent the same is exempted under Section 10 (10 AA) of the IT Act. Sub-section 10AA of Section 10 of the Income Tax reads as follows: (10AA) (i) any payment received by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion or otherwise. However, all others, including the employees of the Public Sector Undertaking and Nationalised Banks are granted exemption only in respect of the amount of leave salary payable for a period of 10 months, subject to the limit prescribed. He submits that the government has issued a notification in terms of Clause (ii) of sub-section 10AA of Section 10 whereby the limit to which such income is exempted is prescribed as ₹ 3 lacs. The submission of the petitioner is that the last such notification was issued on 31.05.2002 which reads as follows: S.O.588 (E). In exercise of the powers conferred by sub- clause (ii) of clause (10AA) of section 10 of the Income Tax Act, 1961 (43 of l961), the Central Government, having regards to the maximum amount receivable by its employees as cash equivalent of leave salary in respect of the period of earned leave at their credit at the time of their retirement, whether superannuation or otherwise, hereby specifies the amount of rupees 3,00,000(Rupees three lakhs only) as the limit in relation to employees mentioned in that sub-clause who retire, whether on superannuation or otherwise after the 1st day of April, 1998. [Notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ramed and altered unilaterally by the Government. In other words, the legal position of a Government servant is more one of status than of contract. The hallmark of status is the attachment to a legal relationship of rights and duties imposed by the public law and not by mere agreement of the parties. The emolument of the Government servant and his terms of service are governed by statute or statutory rules which may be unilaterally altered by the Government without the consent of the employee. It is true that Article 311 imposes constitutional restrictions upon the power of removal granted to the President and the Governor under Article 310. But it is obvious that the relationship between the Government and its servant is not like an ordinary contract of service between a master and servant. The legal relationship is something entirely different, something in the nature of status. It is much more than a purely contractual relationship voluntarily entered into between the parties. The duties of status are fixed by the law and in the enforcement of these duties society has an interest. In the language of jurisprudence status is a condition of membership of a group of which powers an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State Government employees. It has been held in multiple decisions that employees of Public Sector Undertakings are not at par with government servants (Ref: Officers Supervisors of I.D.P.L. v Chairman M.D. I.D.P.L. AIR 2003 SC 2870 ). In the noted case of A.K.Bindal v Union of India (2003) 5 SCC 163 , while considering the issue of revision of the pay scales of employees of government companies/PSUs at par with government employees, it was held that the employees of government companies cannot claim the same legal rights as government employees. The relevant extract from the said judgment reads as under: 17. The legal position is that identity of the government company remains distinct from the Government. The government company is not identified with the Union but has been placed under a special system of control and conferred certain privileges by virtue of the provisions contained in Sections 619 and 620 of the Companies Act. Merely because the entire share holding is owned by the Central Government will not make the incorporated company as Central Government. It is also equally well settled that the employees of the government company are not civil servants and so are not ent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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