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TMI Blog2023 (1) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioners - Association of Old Settlers of Sikkim and Others have prayed for an appropriate writ, direction or order striking down Section 10(26AAA) of the Income Tax Act, 1961 (hereinafter referred to as the "Act, 1961"), more particularly, the definition of "Sikkimese" in Section 10 (26AAA) to the extent it excludes Indians who have settled in Sikkim prior to the merger of Sikkim with India on 26.04.1975. The petitioners have also prayed for an appropriate writ, order or direction striking down the Proviso to Section 10(26AAA) of the Act, 1961, insofar as it excludes from the exempted category, "Sikkimese women" who marries a non-Sikkimese after 01.04.2008. 2. Section 10(26AAA), the vires of which is under challenge reads as under:- "[(26AAA) in case of an individual, being a Sikkimese, any income which accrues or arises to him- (a) from any source in the State of Sikkim; or (b) by way of dividend or interest on securities: Provided that nothing contained in this clause shall apply to a Sikkimese woman who, on or after the 1st day of April, 2008, marries an individual who is not a Sikkimese. Explanation.- For the purposes of this clause, "Sikkimese" shall mean- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Union of India in 1975. Originally the Kingdom of Sikkim held a large territory ranging from parts of present-day Bhutan, Bihar, West Bengal, Nepal and Bangladesh. In the 18th and 19th Century, a lot of territory was ceded to the British Empire in various conflicts. The Imperial British Government took over the control of the erstwhile Kingdom of Sikkim in the year 1888. However, there were conflicts with China. 4.2 In 1890, a Convention was signed between Great Britain and China to settle the boundaries of Sikkim and Tibet. The British control over Sikkim was recognized by China in the year 1890. Following British taking control of Sikkim, British Indian Subjects were allowed to hold Government employment in Sikkim. 4.3 In supersession of all earlier treaties, a fresh treaty was entered into between the British Government and the King of Sikkim in the year 1861. Under this treaty, the territory of Sikkim was restored to the King of Sikkim under certain conditions. These conditions included Article 8 under which the Government of Sikkim was to abolish all restrictions on travelers and monopolies in trade between the British territories and Sikkim. Under the said treaty, Brit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , open to the President or the Parliament to extend any law to the State of Sikkim, or repeal any existing law of Sikkim. 4.7 On 21.06.1975, the Home Department issued a notification stating that "all Sikkim Subjects (under the Sikkim Subjects Regulations, 1961) before 26.04.1975 were to be deemed Indian citizens". Therefore, this effaced the distinction between the persons of Indian origin residing in Sikkim (without giving up Indian Citizenship) and others who had taken up Sikkimese Citizenship. 4.8 Since a large number of eligible persons had been left out of the Sikkim Subject Register and were consequently denied Indian citizenship, Government of Sikkim issued a Memorandum that for the purposes of seeking employment, those claiming to be "Locals" should be able to show whether their parents' names are maintained on or before 15.05.1975 in the relevant Government Register. In the year 1980, notification was issued that domicile/ residential certificate issued by sources, other than District Collector, shall not be accepted as valid. 4.9 In the year 1988, a petition was moved in the Lok Sabha by a few MLAs of Sikkim stating that at the time of merger of Sikkim with India, onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of India and the Government of Sikkim formed a joint committee consisting of the members from the Central Government and Government of Sikkim to resolve the differences for implementation of the Income Tax Act, 1961 in Sikkim. It appears that while discussing the matters relating to implementation of the Income Tax Act, 1961 to the State of Sikkim, the committee representing the State Government of Sikkim insisted on exemption for persons holding the Sikkim Subjects Certificate and their descendants and were made Indian Citizens vide the Sikkim Citizenship Amendment Order, 1989. It appears that these two categories essentially consisted of the Bhutia Lepchas, Sherpas and the Nepalis who constituted together about 94.6% of the total population. Discussions were held for four long years to secure exemptions to Sikkim Subjects Certificate holders and the people made citizens of India vide the Government of India orders dated 07.08.1990 and 08.04.1991 and their descendants. 4.17That in the year 2008, the Government of India, gave in to the demands of the State of Sikkim, and passed an amendment to the Income Tax Act, by the Finance Act, 2008, wherein Clause 26AAA was introduced in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcluded for getting the benefit of exemption under Section 10(26AAA). 5. Feeling aggrieved and dissatisfied with the definition of "Sikkimese" in Section 10(26AAA) to the extent it excludes Indians (having Indian citizenship), who have settled in Sikkim prior to the merger of Sikkim with India on 26.04.1975 and thereby not granting the benefit of exemption under Section 10(26AAA) of the Income Tax Act to such Indians and being aggrieved by the Proviso to Section 10(26AAA), insofar as, it excludes from the exempted category "a Sikkimese woman, who marries a non-Sikkimese after 01.04.2008", the present writ petitioners have prayed to strike down Section 10(26AAA) to the extent it excludes Indians, who have settled in Sikkim prior to the merger of Sikkim with India on 26.04.1975 and insofar as it excludes from the exempted category "a Sikkimese woman, who marries a non-Sikkimese after 01.4.2008, being arbitrary, discriminatory and violative of Article 14 of the Constitution of India. 6. Shri K.V. Viswanathan, learned Senior Advocate has appeared on behalf of the writ petitioners in Writ Petition (C) No. 59 of 2013. Ms. Pooja Dhar, learned counsel has appeared on behalf of the writ p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndment, one single class of persons, namely, the citizens of India, are sought to be treated differently for the purpose of taxation; (vi) It is urged that to exclude the old Indian settlers from the exemption under Section 10(26AAA) has no nexus with the object sought to be achieved to grant the exemption to the residents of Sikkim; (vii) It is submitted that there is no reasonable classification between the residents/origins of Sikkim whose names were registered as "Sikkim Subjects" under the Sikkim Subjects Regulations, 1961 and those Indian old Sikkim settlers, whose names could not be registered as "Sikkim Subjects" as their forefathers did not surrender the Indian citizenship; (viii) It is further submitted that after the Sikkim became part of the Union of India, all the residents of Sikkim have become the citizens of India. Therefore, being citizen of India, settled in Sikkim, all are to be treated at par. It is contended that therefore, there is no reasonable justification and/or classification to exclude those Indians, who have settled in Sikkim prior to the merger of Sikkim with India on 26.04.1975 solely on the ground that their names were not registered as "Sik ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to do away with discrimination. It is submitted that in the present case, in order to remove the arbitrary discrimination against Indian settlers in Sikkim, the definition of "Sikkimese" in Section 10(26AAA) ought to be read to include Indians, who had settled there as on 26.04.1975. Therefore, it is prayed to treat the word "means" in the definition of "Sikkimese" as an inclusive one and include Indian settlers within this fold. Reliance is placed on the decision of this Court in the case of Vishundas Hundumal Vs. State of M.P., (1981) 2 SCC 410. 7.2 Learned counsel appearing on behalf of the intervenors has, in addition, also relied upon the Parliamentary Report of the Parliament of India (Rajya Sabha Committee) in the 145th Report dated 06.08.2013 recommending that the ambit of Section 10 (26AAA) of the Income Tax Act, 1961, which exempted "Sikkimese Subjects" from payment of Income Tax should also be extended to all the Indian citizens and their descendants, who have been residing in Sikkim prior to 26.04.1975. 8. Now, so far as challenge to the Proviso to Section 10(26AAA), insofar as it excludes from the exempted category "a Sikkimese woman, who marries a non-Sikkimese aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exempted category, "a Sikkimese woman, who marries a non-Sikkimese after 01.04.2008". 10. Shri Vivek Kohli, learned Advocate General appearing on behalf of the State of Sikkim has as such supported the objections. 10.1 It is submitted on behalf of the State that the State has no objection if the Proviso to Section 10(26AAA) depriving the right of a "Sikkimese woman" to exemption from payment of Income Tax under Section 10(26AAA) upon her marriage to a non-Sikkimese after 01.04.2008 is struck down and/or is done away with so as to treat them equally in the matter of income tax exemption. 10.2 Now, so far as, the right of the old Indian settlers to pray for the exemption under Section 10(26AAA) of the Income Tax Act is concerned, it is submitted on behalf of the State that the benefit of Section 10(26AAA) has to be extended to all Indian citizens domiciled in the State of Sikkim irrespective of the fact whether their names have been registered as "Sikkim Subjects" in the "Sikkim Subjects Register" maintained under the Sikkim Subjects Regulations, 1961 or not. 11. Heard the learned counsel for the respective parties at length. 12. The challenge in the present petitions under Art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts", whose names are recorded in the register maintained under the Sikkim Subjects Regulations, 1961 and those Indians, who have settled in Sikkim prior to the merger of Sikkim, but whose names were not recorded as "Sikkim Subjects" in the register maintained under the Sikkim Subjects Regulations, 1961. All are "Sikkimese". Merely because at the relevant time and when the Sikkim Subjects Regulations, 1961 was enacted, the Indians settled in Sikkim did not surrender their Indian citizenship or their fathers/forefathers' names were not entered into the register maintained under the Sikkim Subjects Regulations, 1961, by itself, it cannot be said that they cease to be the "Sikkimese". All of them are similarly situated with those "Sikkimese" / "Sikkim Subjects", who all have settled in Sikkim prior to the merger of Sikkim with India on 26.04.1975. As observed above, the object and purpose of Section 10(26AAA) is to grant benefit of exemption from payment of income tax under the Income Tax Act to the residents of Sikkim. Therefore, there is no nexus sought to be achieved in excluding the Indians, who have settled in Sikkim prior to the merger of Sikkim with India on 26.04.1975 but their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tution. Therefore, any provision, which is arbitrary, discriminatory and violative of Article 14 of the Constitution of India and any classification which is violative of Article 14 of the Constitution of India can be struck down. 14. In view of the above and for the reasons stated above, we are of the firm opinion that Section 10(26AAA) to the extent it excludes the Old Indian settlers, who have settled in Sikkim prior to the merger of Sikkim with India on 26.04.1975, but whose names are not recorded as "Sikkim Subjects", from the definition of "Sikkimese" is ultra vires, being arbitrary, discriminatory and violative of Article 14 of the Constitution of India. The definition of "Sikkimese" in Section 10(26AAA) of the Income Tax Act shall also include all Indians, who have permanently settled in Sikkim prior to the merger of Sikkim with India on 26.04.1975 irrespective of the fact that whether their names have been recorded in the register maintained under the Sikkim Subjects Regulations, 1961 or not. Therefore, it is held that the "Sikkimese" like the petitioners, who are old Indian settlers and who have settled in Sikkim prior to the merger of Sikkim with India on 26.04.1975 sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... woman, who marries a non-Sikkimese after 01.04.2008" has to be struck down. 16. Therefore, Proviso to Section 10(26AAA) inasmuch as it excludes from the provision of exemption a Sikkimese woman merely because she marries a non-Sikkimese after 01.04.2008 is totally discriminatory and violative of Articles 14, 15 and 21 of the Constitution of India, which requires to be struck down. 17. In view of the above and for the reasons stated above, both these petitions succeed. The exclusion of Old Indian settlers, who have permanently settled in Sikkim prior to merger of Sikkim with India on 26.04.1975 from the definition of "Sikkimese" in Section 10(26AAA) is hereby held to be ultra vires to Article 14 of the Constitution of India and is hereby struck down. It is held that all Indians/old Indian settlers, who have permanently settled in Sikkim prior to the merger of Sikkim with India on 26.04.1975, irrespective of whether his/her name is recorded in the register maintained under the Sikkim Subjects Regulations, 1961 read with Sikkim Subject Rules, 1961 or not, are entitled to the exemption under Section 10(26AAA) of the Income Tax Act. 17.1 Proviso to Section 10(26AAA) insofar as it exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tution of India. I have assigned additional reasons and dealt with the said aspect of the matter in greater detail through the course of my judgment and order. Background facts: 3. Writ Petition (C) No.1283 of 2021 has been filed by the petitioners under Article 32 of the Constitution of India, assailing the validity of the proviso to Section 10 (26AAA) and Explanation thereto introduced to the I.T. Act, 1961 through the Finance Act, 2008 by which Sikkimese (people from Sikkim State) are purportedly exempted from payment of income tax. They have further sought a direction to the respondents to extend the exemption granted under Section 10 (26AAA) of I.T. Act, 1961 to persons such as the petitioners herein. The petitioners have sought a declaration that they are also entitled to exemption from payment of income tax under Section 10 (26AAA) of the I.T. Act, 1961. In other words, they have sought a direction to extend the benefit of the said provision to the petitioners herein. Another direction that is sought against respondent No. 2 is to furnish a list of applicants who have submitted applications seeking income tax exemption pursuant to the Public Notice dated 22nd September, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot recognised and notified for inclusion in the 'Central List of Other Backwards Classes' in the year 1995, namely, 'Bhujel', 'Gurung', 'Manger', 'Kirat Rai', 'Sunuwar', and in the year 1999 namely 'Sanyasi', and in the year 2000 namely 'Jogi'; and (d) the 'Bahun', 'Chettri' and 'Newar' Communities which got recognized and notified in the 'State List of Other Backward Classes of Sikkim in the year 2014. 6. According to the petitioners, the history regarding ordinarily resident 'British Indian Subjects' and the 'Indian Nationals' engaged in trade, commerce and Government employment in the former Kingdom of Sikkim is pluralistic. They comprised of diverse ethnic, religious and socio-cultural backgrounds from across the territories of Undivided British India and later Independent India. The residents of Sikkim are the inhabitants of Sikkim who were permanent residents prior to the year 1975. 7. In the year 1975, the former Kingdom of Sikkim became a part of India and became known as the State of Sikkim. Till then i.e., 26th April, 1975 (which is the 'appointed day' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement with India. In the years preceding the proclamation of Republic of India (i.e. before 26th January 1950), it was agreed that the Kingdom of Sikkim was a Special Protectorate State of Indian Union, having its own separate territory. (v) From 1947 onwards, the Kingdom of Sikkim had continued to allow the British Indian Subjects as well as Indian Nationals to hold Office and employment in the posts and services of the Government Establishment of the Kingdom of Sikkim, i.e. 'Sikkim Darbar'. Such persons of Indian origin serving/appointed in the posts and services of Government Establishment of the Kingdom of Sikkim were referred to as 'Darbar' Employees of British Indian origins and 'Darbar' Employees of Indian Nationality." In view of the above historical developments, persons of Indian origin belonging to diverse ethnic, religious and sociocultural backgrounds from across the territories of Undivided British India and later Independent India, resided in Sikkim for the purpose of their employment in various posts and services or for trade and business. (b) On 5th December, 1950, the Indo-Sikkim Peace Treaty was entered into and under this Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es into Naturalized Sikkim Subjects. Although, these Regulations were promulgated, according to the petitioners no differential treatment was meted out to the Indians as their rights were protected under the Indo-Sikkim Treaty of 1950. (d) In 1965, the Chogyal of Sikkim notified the Sikkim Work Permit Rules, 1965, by which all foreigners required a Work Permit to enter, work and stay in Sikkim. Significantly, the term "Foreigner" under the Sikkim Work Permit Rules, 1965, was defined as meaning a "foreigner not being Indian national". Persons of Indian origin were therefore not considered as foreigners in Sikkim and were not required to obtain a work permit irrespective of the fact that they were not Sikkim Subjects. Many of the Indians were also on the voters list of Sikkim. (e) In 1973, an agreement was entered into between India, the Chogyal and the political parties of Sikkim for the establishment of a democratic Government in Sikkim. In pursuance of the same, India was to assist in the conduct of free and fair elections in Sikkim. (f) Thereafter, on 26th April, 1975, by way of the Constitution Thirtysixth Amendment Act, 1975, Sikkim became a State in India and was incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sikkim Subject Register prior to 1975. 2. A person whose name is not found registered in the Old Sikkim Subject Register but he/she has established beyond doubt that the name of his/her father/husband/paternal grandfather /brother from the same father has been recorded in the Old Sikkim Subject Register, or 3, A person who has or had agricultural land in rural areas and has been ordinarily residing in the State of Sikkim or 4. A person whose father/husband has/had been in Sikkim Government service on or before 31.12.1969." (e) In the year 1988, a petition was moved in the Lok Sabha by a few Members of Legislative Assembly of Sikkim stating that at the time of merger of Sikkim with India, only those people whose names were registered in the Sikkim Subjects Register were made Indian Citizens in terms of Sikkim (Citizenship) Order 1975, but there were many other persons who were present in Sikkim between the period 1946 and 1975 who were otherwise by reason of their residence, domiciled in Sikkim and by allegiance "Sikkimese" and they should also be made Indian citizens. The Government of India conceded to this demand and an exercise was carried out to grant Indian Citize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The legal and factual developments prior to the introduction of the I.T. Act, 1961, in Sikkim could be encapsulated as under as the controversy in these cases arises under the said Act: (a) In 1948, the Sikkim Income Tax Manual, 1948 (SITM) was promulgated by the Ruler of Sikkim (the Chogyal). Under the SITM, all persons engaged in business were subjected to tax irrespective of their origin. Therefore, there was no difference made out between the original inhabitants of Sikkim, namely, the Bhutia-Lepchas and the persons of foreign origin settled in Sikkim like the Nepalis or persons of Indian origin who had settled down in Sikkim generations back. It is averred that under the SITM, Income Tax was paid by all without any discrimination on the ground of place of birth, race or ethnicity. (b) In the year 1989, the I.T. Act, 1961 was extended to Sikkim by the Finance Act, 1989. Under the said Amendment, any law corresponding to the I.T. Act, 1961 which was in force in the State of Sikkim stood repealed. Of course, since Parliament had no competence to levy a tax on agricultural income, the repeal of the SITM, 1948, would affect only the law insofar as it applied to taxes on incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in: 1.50% and New Settlers including those of Indian Origin 3.84% = 5.34%) (f) In the year 2008, Government of India passed an amendment to the I.T. Act, 1961 by virtue of the Finance Act, 2008, wherein clause (26AAA) was introduced under Section 10 of the I.T. Act, 1961. Clause (26AAA) to Section 10 of the I.T. Act 1961 granted an exemption to Sikkimese people. Thereafter, on 16th June, 2008, the Government of Sikkim issued a Circular stating that the SITM should not be acted upon. Grievance of the petitioners: 11. According to the petitioners in W.P.(C) No. 1283 of 2021, they have settled in Sikkim and their fathers were in Government service on and prior to 31st December, 1969. Therefore, they have come under the fourth category of the Memorandum issued by Government of Sikkim on 09th April, 1981. The petitioners have been issued the Certificate of Identification (akin to domicile or residential certificate) by the Sikkim Government. On account of Certificate of Identification being issued to them, the petitioners are part of the local population of Sikkim and are at par with those persons whose names are found in the old Sikkim Subjects Register. Thus, they have all alon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued in view of the still valid pre-merger laws on the subject, as it enjoyed constitutional protection under Article 371-F. The persons such as the petitioners herein by virtue of being COI holders are covered under Rule 4(4) of Sikkim Government Establishment Rules, 1974, for employment under the State Government and its Public Sector Units (PSUs) which has provisions of employment for locals only. 15. According to the petitioners, due to the injustice being meted out to the persons excluded from exemption from payment of income tax, even though they were clearly permanent residents of Sikkim, the matter was debated in the Sikkim State Assembly. On 24th March, 2011, a Cabinet Memorandum was issued stating that the Government of Sikkim felt that it was appropriate to pass a Resolution in the ensuing session of the Assembly in favour of the left-out categories of persons (including persons such as the petitioners in W.P. (C) No. 1283 of 2021, whose fathers were in Sikkim Government Service before 31st December, 1969 and who are continuously residing in the State of Sikkim) for income tax exemption by Government of India. The Resolution was accordingly passed on 26th March, 2011. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentations which have been made, the completely discriminatory and arbitrary amendments made to the I.T. Act, 1961 have still not been done away with. In fact, further recovery notices for recovery of tax have been sent to some of the persons who are members of petitioner No.1 Association in W.P. (C) No. 59 of 2013. Therefore, in the above circumstances, being aggrieved by the amendment by which clause (26AAA) to Section 10 of the I.T. Act, 1961 was introduced, the petitioner has invoked Article 32 of the Constitution of India by averring that the provision is violative of their fundamental rights. Section 10 (26AAA) of Income Tax Act, 1961: 21. Section 10 of the I.T. Act, 1961, speaks about incomes not included in total income i.e., the incomes mentioned under the clauses of Section 10 of the said Act shall not be included in computing the total income of any person. Clause (26AAA) of Section 10 states that in case of an individual, being a Sikkimese, any income, which accrues or arises to him (a) from any source in the State of Sikkim; or (b) by way of dividend or interest on securities, shall not be income falling within total income of any person. The proviso, however, state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Writ Petition (C) No. 59 of 2013, Ms. Pooja Dhar, learned counsel appearing for the writ petitioners in Writ Petition (C) 1283 of 2021, Sri N. Venkataraman, learned Additional Solicitor General appearing for the Department of Revenue, Union of India, Sri Vivek Kohli, learned Advocate General for the State of Sikkim, and perused the material on record. Submissions of the Writ Petitioners: 23. Learned senior counsel and learned counsel appearing on behalf of the writ petitioners at the outset submitted that Section 10(26AAA) of the I.T. Act, 1961 is ultra vires the Constitution of India, insofar as it excludes from the definition of 'Sikkimese,' migrants/settlers of Indian origin who had settled in Sikkim much prior to the coming into effect the 1961 Regulation, on the sole ground that such migrants/settlers had not been registered as 'Sikkim Subjects' under the 1961 Regulation. Further, the proviso to Section 10(26AAA) of the I.T. Act, 1961 is unconstitutional and violative of Articles 14 and 15 of the Constitution of India because it excludes from the exempted category, a Sikkimese woman who married a non-Sikkimese after 1st April, 2008. 24. As regards the first leg of challe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ategories were to be admitted to the benefits of income tax exemption under Section 10(26AAA) of the I.T. Act, 1961. The fact that migrants/settlers had earlier not been registered as Sikkim Subjects on the ground that they failed to surrender their Indian citizenship at the relevant time, would have no relevance after the merger of Sikkim with the India, since such migrants as well as Sikkim Subjects had been placed in the same class of Indian residents of Sikkim, after the merger. 27. It was urged that the rules to the effect that provisions of legislation ought to reflect the object sought to be achieved and that any classification into groups or categories ought to be based on an intelligible differentia, would apply equally to tax legislations, as they apply in any other area of law, vide S.K. Dutta vs. Lawrence Singh Ingty, A.I.R. 1968 SC 658. 28. Sri K.V. Viswanathan, learned Senior Counsel, further submitted that the Explanation to Section 10(26AAA) of the I.T. Act, 1961 begins with the phrase, "'Sikkimese' shall mean," and thereafter lists three categories of persons who shall be considered to be 'Sikkimese' for the purposes of the Act. That the term used in the Explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and G. Sekar vs. Geetha, (2009) 6 SCC 99 to contend that exclusion from the benefits of a provision, on the ground of gender alone, would be liable to be struck down as being violative of Article 14 of the Constitution of India. 33. With the aforesaid averments, it was prayed that the definition of the term 'Sikkimese' as provided for in the Explanation to Section 10(26AAA) of the I.T. Act, 1961, should be read to include Indians who had settled there as on 26th April, 1975 and that the proviso to Section 10(26AAA) of the I.T. Act, 1961 which excludes from the exempted category, a Sikkimese woman who marries a non-Sikkimese after 1st April, 2008, should be struck down as being unconstitutional. Submissions of the Respondents: 34. Per contra, Sri N. Venkataraman, learned Additional Solicitor General appearing for the Department of Revenue contended that the impugned provision is based on a reasonable classification of Sikkim Subjects, as a group, different from migrants/settlers of Indian origin. That such classification was founded on considerations which were designed to maintain peace and harmony within the Sikkimese society, and therefore prayed that the same may not be interf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egories of residents of Sikkim. 38. Those migrants/settlers of Indian origin, who may have been residing in Sikkim prior to the coming into effect of the 1961 Regulation, chose not to get themselves registered as Sikkim Subjects by relinquishing their Indian citizenship. This was a considered choice made by the said class of persons. Having waived their privileges on account of non-registration as Sikkim Subjects, migrants/settlers of Indian origin cannot at this juncture claim to be treated at par with Sikkim Subjects. 39. Insofar as the validity of the proviso to Section 10(26AAA) of the I.T. Act, 1961 is concerned, it was submitted that the same is not discriminatory against women or violative of Articles 14 and 15 of the Constitution. That the disqualification placed on Sikkimese women marrying non-Sikkimese men after 1st April, 2008, was based on the customary laws of Sikkim which provide that descent shall be through a woman's father and any privileges vested by virtue of such descent would continue until such woman is married. That the peculiar customary laws of a society could not be ignored while framing laws to bind such society. 40. With the aforesaid averments, it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... woman was married to a non-Sikkimese prior to 1st April, 2008, there is no such exclusion from the benefit granted under the provision. iii) Thirdly, it is contended that marriage cannot be a basis for a classification between a man and a woman so as to make it discriminatory against a woman. A Sikkimese woman cannot be discriminated against vis-à-vis a Sikkimese man who marries a non- Sikkimese. iv) Fourthly, it is the case of the petitioners that an arbitrary cut-off date of 1st April, 2008 has been inserted in the provision thereby, resulting in discrimination between those Sikkimese women who married a non-Sikkimese prior to the said date and those Sikkimese women who are married after the said date. That those Sikkimese women who married a non-Sikkimese prior to the said date are included in the beneficial clause of Section 10 (26AAA), but those who married subsequent to that date are denied the benefit. v) Another contention is that the definition of the expression "Sikkimese" itself is assailed and therefore, any Sikkimese woman who marries a person who does not fall within the scope of the definition of "Sikkimese", does not have the benefit of the said provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her observed that Section 10 (26AAA) was inserted to the I.T. Act, 1961 by the Finance Act, 2008 w.e.f. 1st April, 1990. The proviso although inserted in the year 2008 has a retrospective effect from 1st April, 1990 i.e., the date on which I.T. Act, 1961 was introduced in Sikkim. Prior to 1990, SITM, 1948, was applicable to Sikkim. This would imply that there was no such discrimination between 1st April, 1990 and 1st April, 2008 for a period of eighteen years. Thus, those Sikkimese women who had the benefit of the exemption have been deprived by the same w.e.f., 1st April, 2008. The retrospectivity of the proviso takes away a vested benefit extended to such category of women covered under the proviso w.e.f., 1st April, 1990 without there being a rationale for the same. 49. Further, it is necessary to analyse the basis of classification in terms of the categories of persons enunciated under Regulation (3) of the 1961 Regulation as under: (i) If a woman is the wife of a person who has his domicile in the territory of Sikkim immediately before the commencement of the 1961 Regulation, such a person shall be a Sikkim Subject if he: a) was born in the territory of Sikkim and is resi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to Section 10 (26AAA) of the I.T. Act, 1961. The Explanation states that, the term 'Sikkimese' shall mean, an individual whose name is recorded in the Register of Sikkim Subjects immediately before 26th April, 1975, or an individual whose name is included in the said Register by virtue of the Government of India Orders dated 07th August, 1990 and 08th April, 1991, or also an individual whose name does not appear in the said Register but, it is established beyond doubt that name of such individual's father or husband or paternal grandfather or brother from the same father has been recorded in that Register. The expression "an individual" in clauses (1) to (3) of the Explanation cannot refer to only a Sikkimese man and exclude a Sikkimese woman. Any other interpretation would mean that a Sikkimese woman has no identity of her own even if she is covered under the Explanation to be a Sikkimese and therefore is entitled to the benefit of the provision. It would also mean that a Sikkimese woman covered under the Explanation would be excluded from the benefit of the provision if she is covered under the proviso. In other words, the Explanation which is in the nature of a definition so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proviso would fall within the main provision. Further, a proviso cannot be construed as nullifying the provision or as taking away completely a right conferred by the enactment. If it does so and is discriminatory then it falls foul of the equality clauses of the Constitution of India. 55. It is reiterated that the expression "an individual" in the Explanation to Section 10 (26AAA) of the I.T. Act, 1961, must include all genders including Sikkimese women. There cannot be a discrimination only on the ground of sex and race. Hence, all Sikkimese women are entitled to the benefit of Section 10 (26AAA) of the I.T. Act, 1961, as per the Explanation thereto irrespective of whether they marry a Sikkimese or a non-Sikkimese. 56. Further, pursuant to the merger of Sikkim with India by virtue of which, Sikkim has become one of the States of India and all Sikkim Subjects and all Sikkimese domiciled in the territory of Sikkim have become Indian citizens, there cannot be a discrimination vis-à-vis Sikkimese women marrying a non-Sikkimese individual, whether an Indian citizen or a foreigner, that too, on or after 1st April, 2008. Such discrimination, is therefore, in violation of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sector Undertaking. Justifying its decision, this Court observed that, "there cannot be any cut and dried formula for fixing the age of retirement" and this "would always depend on a proper assessment of the relevant factors and may conceivably vary from case to case". 58. With due respect, I find that the aforesaid two judgments have an underlying emphasis on the physique and physical appearance of women related to their marriage, consequent pregnancy and ageing which cannot be the rationale or basis for making policy decisions or regulations as they are discriminatory on the basis of sex and thus, unconstitutional. 59. As opposed to the aforesaid decisions, it is necessary to also cite the following decisions of this Court: i) The decision of this Court in C.B. Muthamma Vs Union of India AIR 1979 SC 1868 is highly instructive in this regard. The petitioner therein was an officer in the Indian Foreign Service. She filed a writ petition before this Court claiming denial of promotion on the ground of hostile discrimination, as she was a woman. She also brought to the notice of this court, the following two rules, challenging the same as being violative of the right to equality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons and all situations and do not exclude the need to pragmatise where the requirements of particular employment, the sensitivities of sex or the peculiarities of societal sectors or the handicaps of either sex may compel selectivity. But save where the differentiation is demonstrable, the rule of equality must govern. This creed of our Constitution has at last told on our governmental mentation, perhaps partly pressured by the pendency of this very writ petition. In the counter-affidavit, it is stated that Rule 18(4) (referred to earlier) has been deleted on November 12, 1973. And, likewise, the Central Government's affidavit avers that Rule 8(2) is on its way to oblivion since its deletion is being gazetted. Better late than never. At any rate, we are relieved of the need to scrutinise or strike down these rules." (Emphasis by me) This Court struck down the afore-mentioned provisions as unconstitutional and also impressed upon the Central Government, the need to overhaul all Service Rules and remove the stain of sex discrimination. (ii) Mackinnon Mackenzie and Co. Ltd. vs. Audrey D'costa and Another, AIR 1987 SC 1281, is a judgment of this Court upholding the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the concept of equality between two sexes was unknown. The makers of the Constitution intended to apply equality amongst men and women in all spheres of life by virtue of Articles 14 and 15 of the Constitution. The Court was of the view that: "26. When a discrimination is sought to be made on the purported ground of classification, such classification must be founded on a rational criterion. The criteria which in absence of any constitutional provision and, it will bear repetition to state, having regard to the societal conditions as they prevailed in early 20th century, may not be a rational criterion in the 21st century. In the early 20th century, the hospitality sector was not open to women in general. In the last 60 years, women in India have gained entry in all spheres of public life. They have also been representing people at grass root democracy. They are now employed as drivers of heavy transport vehicles, conductors of service carriage, pilots et. al. Women can be seen to be occupying Class IV posts to the post of a Chief Executive Officer of a Multinational Company. They are now widely accepted both in police as also army services." In the said case, this court rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions or to begin a new life altogether. Whichever way one looks at it, the matter requires the serious attention of the State and its authorities, if the dignity of women, as a whole, and respect for them, is to be restored." (vii) Recently in Secretary, Ministry of Defence vs. Babita Puniya and others, (2020) 7 SCC 469, a struggle for equality of opportunity for women seeking Permanent Commissions (PCs) in the Indian Army succeeded after a decade and more spent in litigation in which women engaged in Short Service Commissions (SSCs) in the Army sought parity with their male counterparts in obtaining PCs. In the said case, this Court speaking through Dr. D. Y. Chandrachud, J. (as His Lordship then was) observed as under: "85.....An absolute bar on women seeking criteria or command appointments would not comport with the guarantee of equality under Article 14. Implicit in the guarantee of equality is that where the action of the State does differentiate between two classes of persons, it does not differentiate them in an unreasonable or irrational manner. In this sense, even at its bare minimum, the right to equality is a right to rationality. Where the State, and in this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court held that the Idaho Probate Code's dissimilar treatment of men and women was unconstitutional and was violative of the Equal Protection clause of the Fourteenth Amendment. The Court observed that, "to give a mandatory preference to members of either sex over members of the other, merely to accomplish the elimination of hearings on the merits, is to make the very kind of arbitrary legislative choice forbidden by the Equal Protection clause of the Fourteenth Amendment...The choice in this context may not lawfully be mandated solely on the basis of sex." (b) In Weinberger vs. Wiesenfeld, 420 U.S. 636, 95 S. Ct. 1225 (1975), the issue was with regard to the Social Security Act which provided survivor's benefits based on the earnings of a deceased husband and father both to his widow and the couple's minor children in her care. However, the benefits based on the earnings of a covered deceased wife and mother were granted only to the minor children and not to the widower. In the said case, the question before the Supreme Court of the United States was whether the gender-based distinction in Social Security Benefits violated the Due Process Clause of the Fifth Amendment. In a un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a unanimous decision, the Court held that Title VII of the CR Act, 1964 made it illegal for an employer to discriminate against any employee on the basis of her sex. The Court observed that, the promise of equal consideration for partnership that went along with Hishon's employment was contractual in nature and subject to the regulations of Title VII of the CR Act, 1964. The Court further observed that by preventing Hishon from obtaining partnership because of her sex, the firm had discriminated against her and had breached the "terms, conditions or privileges of employment". It was therefore held that the firm acted in direct violation of Title VII of the CR Act, 1964. (e) Another question before the Supreme Court in United States vs. Virginia, 518 U.S. 515 (1996) was whether the practice undertaken by the Virginia Military Institute (VMI) of offering education only to men and not women constituted a denial of equal protection under the Fourteenth Amendment of the United States Constitution. In a 7:1 decision, the Court held that VMI's male-only admissions policy was unconstitutional. Justice Ruth Bader Ginsburg was of the view that Virginia failed to show "an exceedingly persua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ried a non-Sikkimese, that too, only on or after, 1st April, 2008, would be excluded from the exemption clause. Such a category of women cannot be deprived of the benefit of the provision under Section 10 (26AAA) of the I.T. Act, 1961. 64. In fact, in my view, the proviso runs counter to the Explanation and is thus manifestly arbitrary. This is because the Explanation intends to give the benefit of Section 10 (26AAA) of the I.T. Act, 1961 to all Sikkimese who are defined under the said Explanation as those 'individuals' whose names have been recorded and registered in the Register of Sikkim Subjects immediately before 26th April, 1975 or included pursuant to the Government of India Order No. 26030/36/90/I.C.I. dated 7th August, 1990 and Order of even number dated 8th April, 1991, or those persons whose names do not appear in the Register of Sikkim Subjects but it has been established that the name of such individual's father or husband or paternal grandfather or brother from the same father had been recorded in that Register. Hence, the benefit of the Explanation must be extended to all Sikkimese women, irrespective of whether they have married a Sikkimese or a non-Sikkimese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons domiciled in Sikkim Territory at the commencement of the Regulation to be Sikkim Subjects: (1) Every person who has his domicile in the territory of Sikkim immediately before the commencement of this Regulation shall be a Sikkim Subject if he- (a) was born in the territory of Sikkim and is resident therein, or (b) has been ordinarily resident in the territory of Sikkim for a period of not less than fifteen years immediately preceding such commencement: Provided that in counting the said period of fifteen years any absence from the said territory on account of service under the Government of India shall be disregarded; or (c) is the wife or minor child of a person mentioned in clause(a) or clause (b): Provided that a person shall not be a Sikkim Subject under this Section unless he makes a declaration to the effect that he is not a citizen of any other country at the time of inclusion of his name in the register of Sikkim Subjects to be maintained under this Regulation: Provided further that in the case of a minor or a person of unsound mind, such declaration may be made by his guardian. Explanation: No person shall *be deemed to have his domicile in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gister of Sikkim Subjects, as he was originally a subject of British India or any of the princely states of India or any other A, B or C state as understood under the Constitution of India, had ordinarily been resident in the territory of Sikkim for business, employment or any such other purposes, is now entitled to be registered in the Register of Sikkim Subjects. This is because Sikkim has now merged with India and has become one of the States of India. Also, persons domiciled in the erstwhile Kingdom of Sikkim i.e., prior to 26th April, 1975, the day Sikkim Kingdom merged with India would now become citizens of India. Therefore, the expression "he is not a citizen of any other country" in the proviso to Regulation (3), after the inclusion of the territory of Sikkim as a part of the Indian territory, must now be read, to exclude a citizen of India ordinarily resident in Sikkim as on 26th April, 1975. This would imply that if an individual from British India or any other part of India after its Independence was domiciled in Sikkim prior to 26th April, 1975 and has become a citizen of India by virtue of Part II of the Constitution and the Citizenship Act, 1955, enacted by the Parli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d particularly, to the expression 'in any other country', as also found in Regulation (4) of the 1961 Regulation, a future cut-off date may have to be indicated by the Union of India by means of a circular or in any other manner for the purpose of enabling the registration of individuals in the Register of Sikkim Subjects who are Indian citizens, domiciled in the territory of Sikkim on or before 26th April, 1975. This is permissible because Government Order dated 7th August, 1990, would indicate that every person who immediately before 26th April, 1975 was a Sikkim Subject under the 1961 Regulation shall be deemed to have become a citizen of India on that day. The object and purpose of the issuance of the Government Order was to ensure that those persons who were eligible to be entered in the Register of Sikkim Subjects but were not so entered because of a genuine omission were enabled to get themselves registered and are accordingly deemed to have become citizens of India with effect from 26th April, 1975 in terms of the Sikkim (Citizenship) Order, 1975. 68.7. The Sikkim (Citizenship) Order, 1975, as amended by the Sikkim (Citizenship) Amendment Order, 1989, issued by the Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 68.10. Further, the Government of India has enabled the registration of all such persons who were omitted from the Register of Sikkim Subjects under the 1961 Regulation read with the 1961 Rules. The Government of India Order dated 7th August, 1990 also has a deeming fiction inasmuch as all subjects registered under the Register of Sikkim Subjects have become citizens of India as on 26th April, 1975. 68.11. The rationale for extending the registration of persons who were omitted from the Register of Sikkim Subjects under the 1961 Regulation vide Government of India Orders dated 07th August, 1990 and 08th April, 1991 is in recognition of the fact that individuals who were domiciled in Sikkim, for various reasons could not be registered under the Register of Sikkim Subjects. If the criterion of domicile has been the basis for registration of persons in the Register under the 1961 Regulations, then by the very same basis, individuals such as the petitioners and all similarly situated persons domiciled in Sikkim on or before 26th April, 1975 which is the day on which Sikkim merged with India must be given the benefit of the exemption even if their names are presently not registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.26030/69/88-I.C.I. dated 20th March, 1989, a Committee for the purpose of consideration of the cases of genuine omissions in terms of the Sikkim Citizenship (Amendment) Order, 1989, was formed on 20th March, 1989. Further, by this Order, Guidelines were issued as criteria for considering the names of individuals who had been omitted to be registered in the Sikkim Subjects. The said criteria read as under: - "ANNEXURE TO M.H.A. ORDER N0.26030/ 69/88-I.C.I DATED 20.03.1989 GUIDELINES a. Natural descendants of a person whose names is in the Sikkim Subject Register. b. Person having recorded ownership or tenancy rights on agricultural land or of rural property within Sikkim before 26th April, 1975, and his natural descendants. c. Persons whose name is included in the earliest available voters-list prior to the 26th April, 1975, and his natural descendants. d. Person holding a regular government job before 26th April, 1975 provided that the appointment has not been made under the 'exception' clause pertaining to non-subjects; and his natural descendants. e. Holder of trade license outside notified bazaar areas prior to 26th April, 1975 and his natural descenda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t registered in the said Register. 69.5. Further, even under the Sikkim Work Permit Rules, 1965, an Indian national was not considered to be a foreigner in Sikkim. Thus, all Indian nationals who have become domiciled in Sikkim till 26th April, 1975 must be given the benefit of the exemption clause under the I.T. Act, 1961. This is in order to eliminate the disparity amongst the individuals who are all now citizens of India settled/domiciled in Sikkim prior to 26th April, 1975. Therefore, directions have been issued in this regard so as to save the Explanation from the vice of being ultra vires under Articles 14 and 15 of the Constitution of India. 70. The third category of individuals are those, whose names do not appear in the Register of Sikkim Subjects, but it is established beyond doubt that the name of such individuals' father or husband or paternal grandfather or brother from the same father has been recorded in that register. 70.1. As far as these categories of individuals are concerned, there is a necessity to prove beyond doubt that the name of such individual's father or husband or paternal grandfather or brother from the same father has been recorded in the Regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividuals who fall within the scope and ambit of the said clause of the I.T. Act, 1961, to get their names registered if not yet registered. 73. However, in my view, the Explanation restricts the exemption only to those Sikkimese individuals who fall within the three clauses of the Explanation, as the object and purpose of the exemption is only to exempt the settlers in Sikkim or persons domiciled in Sikkim in terms of the 1961 Regulation or the Government Orders referred to above. Even though the 1961 Regulation has been repealed, nevertheless, the Register of Sikkim Subjects which is maintained under the said Regulation, which had acquired a sanctity, has been the basis for grant of an exemption and particularly in the form of clause (iii) of the Explanation to Section 10(26AAA) of the I.T. Act, 1961. This would imply that all those individuals who fall outside the scope and ambit of the Explanation would not be granted the exemption. Then, the questions of discrimination against persons such as the petitioners and others similarly situated would arise. 74. Individuals having become citizens of India and were domiciled in Sikkim as on 26th April, 1975 are also entitled to the be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption under Section 10 (26AAA). Hence, directions in that regard have to be issued to fill the Legislative vacuum and amendment to the Explanation is necessary. However, those individuals who have been domiciled in Sikkim subsequent to 26th April, 1975 shall not be entitled to the benefit of exemption from payment of income tax. 77. This Court has on previous occasions, sought to enforce rights of citizens even in areas of legislative vacuum. [For instance, in Vishaka and Ors. vs. State of Rajasthan, A.I.R. 1997 SC 3011]. To this end, Article 142 of the Constitution of India has been invoked and the law so declared in order to fill the vacuum has been treated as law declared by this Court under Article 141 until a proper legislation is made. Hence, it has to be directed that till such amendment is made to the down the Explanation to Section 10(26AAA) of the I.T. Act, 1961, all individuals domiciled in Sikkim up to 26th April, 1975 shall be entitled to the exemption under the said provision from the current financial year i.e., 1st April, 2022 onwards. This direction is being issued in exercise of powers under Article 142 of the Constitution so as to eliminate discrimination and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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