TaxTMI 
TaxTMI 
TaxTMI 
1960 (9) TMI 9
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment or of the State Government or of any local authority was exempt from taxation. Section 2, clause (i), defined a " person " as inclusive of a Ruler of an Indian State. The appellant in these three appeals is the former Ruler of the State of Sonepur. After the establishment of the Dominion of India on August 15, 1947, the appellant as the Ruler of the State of Sonepur executed an instrument of accession to the Dominion restricted to three subjects--Defence, External Affairs and Communications. On December 15, 1947, he executed a merger agreement whereby the territory of the State of Sonepur became merged with the territory of the Dominion of India. By virtue of the merger agreement, the Government of India acquired full sovereign rights over the territory of the State, but ownership of private properties belonging to the appellant and full enjoyment thereof were under the agreement guaranteed to him under article 3. In exercise of the powers conferred by the Extra ProvincialJjurisdiction Act (47 of 1947), the Government of India by notification dated March 23, 1948, delegated to the Provincial Government of Orissa full powers to administer the merged States of Orissa including t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ons and certain other petitions were heard by a Division Bench of the Orissa High Court. The High Court held that by the guarantee of full ownership, use and enjoyment of the private properties under the merger agreement the properties of the appellant were not rendered immune from liability to pay tax imposed by the Act and that, in the absence of an express provision, his income from lands was liable to pay agricultural income-tax. The High Court also held that even though the appellant was the Ruler of a former Orissa State, he was a " person " within the meaning of the Act and was liable to pay agricultural income-tax. The learned judges, therefore, dismissed the petitions challenging the liability of the appellant for the assessment years 1950-51, 1951-52 and 1952-53 to pay agricultural income-tax, and they cancelled the order of assessment in respect of the year 1949-50 and the orders imposing penalty in respect of the years 1949-50 and 1950-51. Against the orders dismissing the applications for setting aside the assessments in respect of the years 1950-51, 1951-52 and 1952-53, these appeals have been preferred with certificate granted by the High Court under article 132 of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stitution and he must be held exempt from liability to pay tax even though no express provision in that behalf has been made by the Legislature. In our view, there is no force in the contentions raised by the appellant. The privileges guaranteed by articles 4 and 5 are personal privileges of the appellant as an ex-Ruler and those privileges do not extend to his personal property. In dealing with a similar contention raised on the interpretation of article 4 of the merger agreement entered into by the Ruler of Khairagarh (which was in material terms identical with the terms of article 4 of the agreement executed by the appellant), S. R. Das, J. (as he then was), observed in Visweshwar Rao v. State of Madhya Pradesh : " The guarantee or assurance to which due regard is to be had is limited to personal rights, privileges and dignities of the Ruler qua a Ruler. It does not extend to personal property which is different from personal rights. " The Act imposes on the agricultural income of " every person " liability to pay agricultural income-tax. By the proviso to section 3, agricultural income of the Central Government, State Government and of local authorities is exempt from tax, bu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uarantee or assurance given under any covenant or agreement ". Even though article 362 is not restricted in its recommendation to agreements relating to the privy purse and covers all agreements and covenants entered into by the Rulers of Indian States before the commencement of the Constitution whereby the personal rights, privileges and dignities of the Ruler of an Indian State were guaranteed, it does not import any legal obligation enforceable at the instance of the erstwhile Ruler of a former Indian State. If, despite the recommendation that due regard shall be had to the guarantee or assurance given under the covenant or agreement, the Parliament or the Legislature of a State makes laws inconsistent with the personal rights, privileges and dignities of the Ruler of an Indian State, the exercise of the legislative authority cannot, relying upon the agreement or covenant, be questioned in any court, and that is so expressly provided by article 363 of the Constitution. The plea of the appellant that he was not seeking to enforce the terms of the merger agreement and that he was merely resisting the claim made by the authority appointed by the State of Orissa to levy a tax incon....