1955 (10) TMI 2 - SC - Income Tax

Constitutionality upheld for tax laws based on territorial classification

The challenge to the constitutionality of Section 46(2) of the Indian Income-tax Act and Section 13 of the Bombay City Land Revenue Act was dismissed. The ... Whether section 46(2) of the Indian Income-tax Act under which the Income-tax Officer issued the recovery certificate to the Additional Collector of Bombay is void under article 13(1) of the Constitution in that the same offends article 22(1) and (2), article 21 and article 14 of the Constitution? Whether section 13 of the Bombay City Land Revenue Act, 1876, under which the warrant of arrest was issued by the Additional Collector is void under article 13(1) of the Constitution as the same is repugnant to article 14 of the Constitution? Held that:- The law impugned before us has only adopted, for its own purpose, the same coercive process which was devised by the States for their own purposes which are closely akin or similar to the purpose of the Union. To deny this power to the Union on constitutional grounds urged before us will lead us to hold that no new offence created by law can be made triable according to the procedure laid down in the Code of Criminal Procedure, for that Code sanctions different modes of trial in different areas, namely, by section 30 Magistrate in some areas, by the Sessions Judge with assessors in certain areas, and by the Sessions Judge with jurors in other areas. Adoption of an existing machinery devised for a particular purpose cannot, if there be no vice of unconstitutionality in the machinery, render it unconstitutional if it is made to subserve a purpose closely akin or similar to the purpose for which it had been devised. The first objection formulated by learned counsel for the petitioner must, therefore, be rejected. It is only after the sale proceeds were found to be insufficient to satisfy the assessed amount and the assessee failed to pay up the balance that the question of the arrest of the defaulter arose. By that time section 13 had been amended and the warrant of arrest was issued on the 7th June, 1955, that is to say, long after the amendment of the section. In our opinion the second ground urged by the learned counsel must also be negatived. Appeal dismissed. Issues Involved:1. Constitutionality of Section 46(2) of the Indian Income-tax Act under Articles 13(1), 22(1) and (2), 21, and 14 of the Constitution.2. Constitutionality of Section 13 of the Bombay City Land Revenue Act, 1876, under Article 13(1) as it relates to Article 14 of the Constitution.Detailed Analysis:Re. (a): Constitutionality of Section 46(2) of the Indian Income-tax Act1. Article 22(1) and (2) Objection:- The objection that Section 46(2) contravenes Article 22(1) and (2) was not pressed due to the precedent set by the Supreme Court in The State of Punjab v. Ajaib Singh & Another.2. Article 21 Objection:- Article 21 guarantees no deprivation of personal liberty except according to procedure established by law. Since the arrest and detention were executed under Section 13 of the Bombay City Land Revenue Act, 1876, and Section 46(2) of the Indian Income-tax Act, which constitute a procedure established by law, there is no violation of Article 21 unless these sections are void.3. Article 14 Objection:- The petitioner argued that Section 46(2) provides two alternative methods for recovery, allowing the Collector to discriminate between defaulters. However, the Court clarified that Section 46(2) does not prescribe two separate procedures but directs the Collector to recover the amount as if it were an arrear of land revenue, with additional powers under the Code of Civil Procedure. Thus, there is no discrimination.- The petitioner also argued that different State laws for land revenue recovery lead to discrimination. The Court noted that while State laws differ, the Union's adoption of these procedures for income-tax recovery is based on a reasonable classification with a rational nexus to the object of the Act, thus not violating Article 14.Re. (b): Constitutionality of Section 13 of the Bombay City Land Revenue Act, 18761. Discrimination within Bombay:- Prior to October 8, 1954, Section 13 allowed for harsher detention periods compared to Section 157 of the Bombay Land Revenue Code, 1879. Assuming this was inconsistent with Article 14, the amendment on October 8, 1954, aligned Section 13 with Section 157, removing any disparity and thus any constitutional violation.- The argument that the assessee should be governed by the unamended Section 13 was dismissed as the warrant of arrest was issued after the amendment.Conclusion:- The application challenging the constitutionality of Sections 46(2) of the Indian Income-tax Act and Section 13 of the Bombay City Land Revenue Act, 1876, was dismissed.- The Court found that the classification based on territorial considerations was reasonable and had a rational nexus to the object of the law, thus not violating Article 14.- The amendment to Section 13 removed any potential constitutional inconsistency, ensuring compliance with Article 14.Separate Judgment:- One judge expressed reluctance in agreeing with the majority judgment, emphasizing the need for uniformity in the enforcement of Central tax laws like income-tax, but ultimately concurred with the reasoning and the conclusion reached by the majority.