Judgement

SATYANARAYANA RAJU, J.: This appeal, by special leave, against the judgment and order of the Kerala High Court, dated July 25, 1963 in Income-tax Referred Case No. 10 of 1962 (Agricultural) raises the question as to the true scope and operation of S. 2 of the Kerala Surcharge on Taxes Act, 1957 (Ker. Act XI of 1957), hereinafter called the Surcharge Act.

2. The facts which have given rise to this appeal may be briefly stated. For the assessment year 1957-58, the appellant company was assessed to agricultural income-tax under the Kerala Agricultural Income-tax Act, 1950. In the assessment, a surcharge at the rate of 5 per cent on the agricultural income-tax and super tax was also levied and collected from the appellant under the provisions of the Surcharge Act.

3. The appellant appealed to the Deputy Commissioner of Agricultural Income-tax and Sales Tax, South Zone, Quilon, objecting to the imposition of surcharge on the ground that the law applicable to assessment for 1957-58 under the provisions of the Agricultural Income-tax Act was the law in force on April 1, 1957 and as the Surcharge Act which came into force only from September 1, 1957 did not have any retrospective effect the surcharge could not be levied for that year. By his order, dated November 14, 1959, the Deputy Commissioner rejected these objections.

4. Thereupon, the appellant preferred a further appeal to the Kerala Agricultural Income-tax Appellate Tribunal, Trivandrum. By its order, dated August 2, 1961, the appellate Tribunal upheld the contention of the appellant holding that the Surcharge Act could not have retrospective operation unless there was a specific provision therein to that effect.

5. On the application of the respondent, the Tribunal stated a case to the Kerala High Court and referred the following question of law :

"Whether any surcharge can be levied on the agricultural income-tax payable for the assessment year 1957-58?"

By judgment, dated July 25, 1963, the Division Bench of the High Court answered the question in the affirmative, against the appellant. The appellant then applied to this Court and obtained special leave to appeal against the judgment and order of the High Court.

6. It is contended for the appellant, by Mr. Setalvad, learned counsel, that the Surcharge Act having come into force on September 1, 1957 and the said Act not being retrospective in operation, it could not be regarded as law in force at the commencement of the year of assessment, viz., 1957-58. It is also contended that in the absence or express enactment or necessary intendment, the provisions of a statute which affect a right in existence at the time of the passing of that enactment are not to be applied retrospectively and that the interpretation placed by the High Court on the scope of sub-s. (3) of S. 1 of the Surcharge Act is erroneous.

7. Before dealing with these contentions, it would be convenient to read the material provision of the Surcharge Act. Sub-section (3) of S. 1 reads :

"It shall come into force on such date as the Government may, by notification in the Gazette, appoint."

By a notification dated August 27, 1957, the Government of Kerala appointed the first day of September 1957 as the date on which the said Act shall come into force. By a further notification, dated November 28, 1957, the Government of Kerala, in exercise of the powers conferred on it by S. 6 of that Act notified that surcharge shall not be levied on assessments on the turnover or income of the year 1956-57 onwards but that it shall be confined only to assessments made on or after September 1, 1957 and that where the turnover or income for periods prior to 1956-57 is pending assessment, surcharge shall not be levied on such assessments when made. We are not now called upon to determine the validity of these regulations.

8. Now, it is well-settled that the Income-tax Act, as it stands amended on the first day of April of any financial year must apply to the assessments of that year