Article 14 challenge to income-tax charging provision failed because the statute supplied clear guiding principles for assessment.

A taxing provision does not offend article 14 where the statute, read as a whole, supplies a discernible policy and guiding principle for assessment. The court held that a prior reference decision bound the parties only on matters actually decided and did not bar a distinct constitutional challenge to the charging provision, so res judicata and constructive res judicata did not apply. On merits, section 3 of the Indian Income-tax Act, allowing assessment of an association of persons or, in appropriate cases, its members individually, was held to be structured by the statutory scheme and not to confer arbitrary or hostilely discriminatory discretion. The constitutional challenge therefore failed.

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Issues: (i) Whether the writ petitions were barred by the earlier decision and by the doctrine of res judicata or constructive res judicata. (ii) Whether section 3 of the Indian Income-tax Act, in so far as it authorises taxation of an association of persons or its members individually, offends article 14 of the Constitution.

Issue (i): Whether the writ petitions were barred by the earlier decision and by the doctrine of res judicata or constructive res judicata.

Analysis: The prior reference had decided only the validity of the assessment and had not adjudicated the constitutional challenge to the charging provision. A decision under the reference jurisdiction binds the parties on matters actually decided, but it does not bar a distinct constitutional attack that was not, and could not have been, determined there. The doctrine of constructive res judicata was not applied so as to shut out the writ petitions, particularly since the present complaint was that the fundamental right itself was infringed.

Conclusion: The writ petitions were not barred on the ground of res judicata or constructive res judicata.

Issue (ii): Whether section 3 of the Indian Income-tax Act, in so far as it authorises taxation of an association of persons or its members individually, offends article 14 of the Constitution.

Analysis: The charging provision was examined in the light of the scheme of the Act, the definition of the principal officer, and the provisions relating to service of notices and double taxation relief. The power given to assess the association as such, or in appropriate cases to proceed against the members individually, was held to be guided by the statutory scheme and administrative necessities, and not to confer naked or arbitrary discretion. The provision therefore did not create hostile discrimination or an unguided power of selection among similarly situated assessees.

Conclusion: Section 3 did not violate article 14 and the constitutional challenge failed.

Final Conclusion: The constitutional attack on the charging section failed, and the petitions were rejected in their entirety.

Ratio Decidendi: A taxing provision does not offend article 14 if the statute, read as a whole, supplies a discernible policy and guiding principle that confines the authority's choice, even though some administrative discretion remains in selecting the proper mode of assessment.

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