1978 (12) TMI 9 - HC - Income Tax

Court dismisses writ petition challenging Central Government notification, estoppel claim unsubstantiated, Article 14 violation lacks proof. Each party bears own costs.

The court dismissed the writ petition, ruling that the Central Government had the authority to issue the impugned notification, the estoppel claim was ... Power to rescind or amend notifications implicit in power to make them - Statutory continuance of subordinate orders under transitional provision - Rule of construction under section 21 of the General Clauses Act - Estoppel against the State in exercise of statutory or sovereign powers - Equality before law under Article 14 and requirement of specific pleadingPower to rescind or amend notifications implicit in power to make them - Statutory continuance of subordinate orders under transitional provision - Rule of construction under section 21 of the General Clauses Act - Validity of the Central Government's notification dated 8th September, 1971 rescinding the earlier declaration of the Mysore palace as an official residence - HELD THAT: - The court held that the power to rescind or amend a notification issued under s.60A of the 1922 Act was inherent in the power to issue such notification and was preserved by clause (1) of s.297(2) of the 1961 Act which continued notifications 'until rescinded by the Central Government'. The proviso later inserted on September 9, 1972 did not create for the first time a rescission power; it only made express what was implicit. Applying the rule of construction in s.21 of the General Clauses Act, the court found no legal barrier to the Central Government's exercise of rescission prior to the 1972 proviso and rejected the petitioner's contention that rescission could be exercised only after formation of an express opinion identical to the original enabling consideration. Consequently the impugned notification of 8th September, 1971 was held to be within the statutory power of the Central Government.Point (a) answered against the petitioner; the Central Government had power to issue the rescinding notification of 8th September, 1971.Estoppel against the State in exercise of statutory or sovereign powers - Whether the petitioner was estopped from challenging the rescission because the Central Government had induced or insisted upon leasing part of the palace - HELD THAT: - The court found the pleaded facts insufficient to establish an estoppel against the State in the exercise of statutory powers. The petition did not allege a representation that the exemption would remain immutable notwithstanding the lease, and the respondents expressly denied the allegation of pressure. The court noted the general rule that estoppel operates differently against the State and will not be readily applied to prevent the State from exercising governmental powers except to prevent fraud or manifest injustice; the circumstances pleaded did not meet that threshold.Point (b) rejected; the plea of estoppel does not bar the Central Government from rescinding the notification.Equality before law under Article 14 and requirement of specific pleading - Whether the impugned rescission violated Article 14 by discriminatory treatment of the petitioner compared to other former Rulers - HELD THAT: - The court held that a challenge to executive action on Article 14 grounds must be pleaded with sufficient specificity so respondents have notice and an opportunity to meet the allegations. The petition's averments of discriminatory treatment were general and unsupported by particulars; respondents denied the allegation and produced examples of other withdrawals. In the absence of specific factual pleadings identifying similarly situated cases and the manner of differential treatment, the claim of hostile discrimination could not be sustained.Point (c) dismissed for lack of specific pleading; no established violation of Article 14.Final Conclusion: Writ petition dismissed and rule discharged; impugned notification of 8th September, 1971 upheld as within the Central Government's power; parties to bear their own costs. Issues Involved:1. Authority of the Central Government to issue the impugned notification.2. Estoppel against the Central Government.3. Violation of Article 14 of the Constitution of India.Detailed Analysis:Re: Point (a) - Authority of the Central Government to Issue the Impugned NotificationThe petitioner contended that as of the date of the impugned notification, the Central Government lacked the authority to amend or rescind the earlier notification since such power was only introduced on September 9, 1972, through a proviso to Section 297(2)(1) of the Income Tax Act, 1961. The court held that this argument was unsound. The power to issue and rescind notifications was inherent in the original statutory power under Section 60A of the Indian Income Tax Act, 1922. The court referred to Section 21 of the General Clauses Act, which provides that the power to issue a notification includes the power to rescind it. Therefore, the Central Government had the authority to issue the impugned notification even before the proviso was introduced in 1972.Re: Point (b) - Estoppel Against the Central GovernmentThe petitioner argued that the Central Government was estopped from withdrawing the exemption because it had induced the petitioner to lease part of the Mysore Palace. The court found that this contention lacked factual and legal basis. The allegation that the government pressured the petitioner to lease out part of the palace was denied by the respondents and was not supported by the petitioner's own earlier representation. Additionally, the court noted that estoppel cannot be applied against the exercise of statutory power by the government unless it is necessary to prevent fraud or manifest injustice. The circumstances pleaded by the petitioner were insufficient to sustain the plea of estoppel.Re: Point (c) - Violation of Article 14 of the Constitution of IndiaThe petitioner claimed that the impugned notification was discriminatory and violated Article 14 because other Rulers who had let out portions of their palaces did not face similar withdrawal of exemptions. The court observed that the allegations were general and lacked specificity. The respondents denied the allegations and provided an example of another palace where the exemption was withdrawn under similar circumstances. The court emphasized that a challenge based on Article 14 must be specifically pleaded and proved. The petitioner's allegations did not meet the required standards of specificity and were insufficient to sustain the plea of hostile discrimination.Conclusion:The court dismissed the writ petition, holding that the Central Government had the authority to issue the impugned notification, the plea of estoppel was not substantiated, and the claim of violation of Article 14 lacked specificity and proof. Consequently, the rule was discharged, and each party was directed to bear its own costs.