TaxTMI 
TaxTMI 
1967 (11) TMI 2
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....ted his petition and quashed the assessments in question holding that section 4(3)(xxi) of the Indian Income-tax Act, 1922, as well as section 10(26) of the Income-tax Act, 1961, to the extent they excluded Government servants from the benefit of the exemption given thereunder are void. The income-tax authorities as well as the Union of India have come up to this court in appeal by special leave. The facts of this case lie within a narrow compass. The respondent belongs to Mikir Scheduled Tribe and is a permanent inhabitant of United Khasi-Jaintia Hills District, an autonomous district included in Part A of the Table appended to paragraph 20 of the Sixth Schedule of the Constitution of India. He is a Government servant. All these are admitted facts. The respondent in his petition before the High Court averred (in paragraph 7 of the petition) at "in all the autonomous districts under Table, Part A of paragraph 20 of the Sixth Schedule of the Constitution of India, there are a large number of persons belonging to Scheduled Tribe who derive considerable income from trade, commerce. and business and other sources and employments and immovable properties. . .". In the return filed....
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....come of the members of a Scheduled Tribe included in clause (25) of article 366 of the Constitution and residing in any area specified in Part A or Part B of the Table appended to paragraph 20 of the Sixth Schedule of the Constitution, excepting that of Government servants is exempt from income-tax. In other words, the Government servant alone is excluded from the benefit of the exemption given under the provisions quoted above. It is agreed that the respondent is a member of the Scheduled Tribe included in clause (25) of article 366 of the Constitution, residing in an area specified in Part A of the Table appended to paragraph 20 of the Sixth Schedule to the Constitution, but yet he had been denied the benefit of the exemption in question on the sole ground that he is in the service of the Government. It may be noted that exemption both under section 4(3)(xxi) of the Indian Income-tax Act, 1922, and under section 10(26) of the Income-tax Act, 1961, was given to the members of certain Scheduled Tribes. For the purpose of the exemption in question the classification was made on the basis of persons being members of a particular tribe. That being so, some of the members of that tribe....
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....ars that Government servants have been discriminated against and the discrimination in question is writ large on the face of the provisions in question. The learned Solicitor-General contended that the classification in question can be justified on administrative grounds. He urged that a classification based on administrative convenience is a just classification in the matter of levying taxes. According to him, it is easy to collect taxes from Government servants. Therefore, it was permissible for the legislature to deny them the exemption extended to the other members of their tribes. This contention appears to be without merit. It may be that for the purpose of taxation a classification can be made on the basis of administrative convenience. But we fail to see how the case of the Government servants stands on a footing different from that of the employees in statutory corporations or even well recognised firms. That apart, administrative convenience which can afford a just basis for classification must be a real and substantial one. We see no such administrative convenience. The learned Solicitor-General next contended that the classification can be justified on the basis of p....
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....d : "The legislative background to which we have referred cannot be divorced from the historical background which is to be found, for instance, in article 362. This article provides that in the exercise of the power of Parliament or of any legislature of any State to make laws or in the exercise of the executive power of the Union or of a State, due regard shall be had to the guarantee or assurance given under any such covenant or agreement as is referred to in clause (1) of article 291 with respect to the personal rights, privileges and dignities of a Ruler of an Indian State. This has reference to the covenants and agreements which had been entered into between the Central Government and the Indian Princes before all the Indian States were politically completely assimilated with the rest of India. The privilege conferred on the Rulers of former Indian States has its origin in these agreements and covenants. One of the privileges is that of extra territoriality and exemption from civil jurisdiction except with the sanction of the Central Government. It was thought that the privilege which was claimed by foreign Rulers and Rulers of Indian States prior to the independence of the....