Retrospective validating regulation upheld for pending tax assessment in excluded area under plenary gubernatorial power.

Bihar Regulation IV of 1942 was treated as valid validating legislation because, under Section 92(2) of the Government of India Act, 1935, the Governor's power to make regulations for the peace and good government of the excluded area was plenary, subject to the Governor-General's assent. That power was held to extend beyond the legislative lists and to support retrospective and curative measures, including provisions affecting pending tax assessments. The deeming clause in the regulation therefore required the Indian Finance Act, 1939 to be treated as having been in force in the excluded area from 30 March 1939, and the assessment was sustained as legal and valid.

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Issues: Whether the assessment was legally valid in view of the Bihar validating regulations and the Governor's power to give retrospective effect to the Finance Act for the excluded area.

Analysis: The dispute turned on the effect of Bihar Regulation IV of 1942, which expressly deemed the Indian Finance Act, 1939 to have come into force in the excluded area from 30 March 1939. The Governor's power under Section 92(2) of the Government of India Act, 1935 was held to be plenary for making regulations for the peace and good government of the excluded area, subject only to Governor-General's assent. The Court held that such power was not confined by the legislative lists and could validly support retrospective or validating legislation, including legislation affecting pending assessments. The deeming provision was treated as legally requiring the assessment to be dealt with as if the Finance Act had been in force on the relevant dates.

Conclusion: The assessment was held to be legal and valid.

Final Conclusion: The validating regulation was upheld and the tax assessment stood sustained.

Ratio Decidendi: A regulation validly made under Section 92(2) of the Government of India Act, 1935, with the Governor-General's assent, may retrospectively deem a Finance Act to have been in force in the excluded area and thereby validate a pending tax assessment.

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