Surcharge on income-tax upheld where federal revenue powers and statutory language supported validity despite wording differences.

The surcharge on income-tax was upheld as within the Federal Legislature's legislative competence and as validly imposed for authorised federal purposes. The Court read the relevant constitutional and fiscal provisions together and held that the expression "Federal purposes" in section 138(1)(b) of the Government of India Act, 1935 was not narrower than the language used in the Finance Acts. It rejected reliance on the General Clauses Act definitions of "Central Government" and "Federal Government", and found that the surcharge formed part of the Federation's revenues. The challenge to validity therefore failed.

---

---

Issues: Whether the surcharge imposed under the Finance Acts was within the legislative competence of the Federal Legislature and validly imposed for the purposes authorised by the Government of India Act, 1935.

Analysis: The challenge turned on the meaning of the expression "Federal purposes" in section 138(1)(b) of the Government of India Act, 1935, and whether it differed from "for the purposes of the Central Government" used in the Finance Act, 1942 and the corresponding Finance Acts. The Court held that the argument based on the definitions of "Central Government" and "Federal Government" in the General Clauses Act, 1897 was unsound. Reading section 100, item 54 of List I, and section 138 together, the Court found that the Federal Legislature had power to legislate on taxes on income and that the surcharge formed part of the revenues of the Federation. The expression "Federal purposes" was not shown to carry a narrower meaning that would invalidate the surcharge, and no different concept was intended by the relevant statutory language.

Conclusion: The surcharge was validly imposed and the challenge to legislative competence failed.

Ratio Decidendi: Where the governing constitutional and fiscal provisions show that a surcharge on income-tax forms part of the Federation's revenues and the taxing power over income is conferred in wide terms, the surcharge is not invalid merely because it is described as being for the purposes of the Central Government rather than in the precise words "Federal purposes".

---