1961 (1) TMI 88 - HC - Income Tax

Exemption for Commissioner of Income Tax from Court Fees Upheld, Ad Valorem Fees Based on Tax Amount

The court held that the exemption of the Commissioner of Income Tax from paying court fees is justified and does not violate Article 14 of the ... - Issues Involved:1. Discrimination in Court Fees between Assessee and Commissioner of Income Tax.2. Retrospective application of the Court Fees Act, 1959.3. Proper computation of ad valorem court fees under the new Act.Issue-wise Detailed Analysis:1. Discrimination in Court Fees between Assessee and Commissioner of Income Tax:The petitioner argued that while the assessee is liable to pay court fees when making an application under Section 66(2) of the Income Tax Act, the Commissioner of Income Tax is not required to pay similar fees. This was claimed to be discriminatory and a violation of Article 14 of the Constitution. The petitioner relied on entries in the relevant Schedules to the Court Fees Act to support this contention.The court observed that the classification made by the legislature between the State and the litigant taxpayer does not amount to unreasonable classification or discrimination. The court noted that the government, whether it is the Union or the State, is vitally interested in the collection of income tax, and therefore, exempting the Commissioner of Income Tax from paying court fees is justified. The court also referred to Article 270 and Article 285 of the Constitution, which recognize exemptions in favor of the Union from state taxation. The court concluded that the classification has a rational relation to the object sought to be achieved by the statute and does not violate Article 14.2. Retrospective application of the Court Fees Act, 1959:The petitioner contended that the levy of court fees under the Act of 1959 should be prospective and not retrospective. The petitioner argued that the petition arises out of matters relating to years prior to the coming into force of the Act of 1959, and therefore, the court fees should be governed by the law in force at the time when the assessment year began or the order was made.The court examined the relevant provisions of the Court Fees Act, 1959, including Sections 5, 36, and 49. Section 36 explicitly states that all fees shall be charged and collected under the Act at the rate in force on the date on which the document chargeable to court fees is presented. The court concluded that the second proviso to Section 49, which states that all fees shall be charged and collected under the Act at the rate in force on the date on which the document is presented, is clear and unambiguous. The court held that the Act of 1959 applies to all documents presented after its commencement, regardless of the period to which the document relates.3. Proper computation of ad valorem court fees under the new Act:The petitioner argued that the ad valorem court fees leviable under entry 16 in the first Schedule of the new Act should have reference to the amount of tax in dispute and not to the amount of income on which the tax is assessed. The petitioner contended that the expression 'amount in dispute' should mean the difference between the amount actually assessed and the amount admitted by the assessee as assessable.The court agreed with the petitioner, stating that the expression 'assessed' in entry 16 of the first Schedule should be interpreted in the context of the second stage of assessment, which is the precise fixation of the amount of tax or fee. The court held that ad valorem court fees should be levied on the amount of tax in dispute and not on the amount of income. The court also noted that if a penalty was levied by the income tax authorities, the amount in dispute would be the amount of the penalty and not the income assessed.Conclusion:The court directed that the petitioner should pay court fees in accordance with entry 16 of the first Schedule, which is one half of ad valorem fees leviable on the amount of tax in dispute. The petition will be placed for admission after the proper court fees are paid by the petitioner. Each party was ordered to bear its own costs. Similar orders were issued for other petitions raising the same questions.