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Supreme Court
Sastri C.J., Mahajan, Das, Ghulam Hasan & Jagannathdass, JJ.
The Union of India - Appellant
Versus
Madan Gopal Kabra - Respondents
Case No. 296 of 1951
Decided On : December 16, 1953
The words "any period" cannot be taken to mean any period after March 31, 1950, for the period referred to in the next clause is expressly limited in the sense. Those limiting words cannot be read into sub-clause b(i) which must, therefore, be under-stood as referring to any period before or after March 31, 1950. (Para 8)
All that sec. 2 (14-A) does is to define what the expression "Taxable territories" means in certain casess and for certain purposes wherever that expression is used in the various provision of the Indian Act. And as the expression is used in the charging sec. 4 in connection with the conditions which are to determine liability to sub-cl. (iii) of cl. (b) of the definition must, when read with sec. 4 of the Indian Act, have reference to charge ability of Income. The result is that secs. 3 and 4 of the Indian Act, in the light of the definition in proviso (b) to the amended sec. 2 (14-A) and sec. 2 of the Indian Finance Act, 1950 authorise the imposition of the Indian income-tax and supertax on the income derived by a resident in year 1949-50 in the territory of Rajasthan. (Para 9)
Sec. 13 saves the operation of the state law only in respect of 1948-49 or any early period which is period not included in the previous year (1949-50) for the purposes of the assessment for the year 1950-51. (Para 11)
While it is true that the Constitution has no retrospective operation, except where a different intention clearly appears, it is not correct to say that in bringing into existence new legislatures and conferring on them certain powers of legislation, the Constitution operated retrospectively. The legislative powers conferred upon Parliament under Art. 245 and Art. 246 read with list 1 of Seventh Schedule could be exercised only after the Constitution came into force and no retrospective operation of the Constitution is involved in the conferment of those powers. But it is a different thing to say that Parliament in exercising the powers thus acquired is precluded from making a retroactive law. The question must depend upon the scope of the powers conferred, and that must be determined with reference to the terms of the instrument by which affirmatively, the legislative powers were created and by which, negatively, they were restricted. Art. 245 of the Constitution enacts that subject to its provisions Parliament may make laws for the whole or any part territory of India Art 246 proceeds to distribute legislative powers as between Parliament and State Legislatures in the country. Thus, these articles read with entry No. 82 of list I of the Seventh Schedule empower Parliament to make laws with respect to taxes on income for the whole of the territory of India, and no limitation or restriction is imposed in regard to retroactive legislation. It is, therefore, competent for Parliament to make a law imposing a tax on the income of any year prior to the commencement of the Constitution. (Para 14)
2. The respondent resides and carries on business in the District of Jodhpur in Rajasthan which is one of the States specified in Part B of the First Schedule to the Constitution (hereinafter referred to as Part B States). In May, 1950, the respondent was required to file a return of his income for the previous year, that is the year ending March 31, 1950, for assessment to income-tax, and subsequently was also failed to produce the relevant account books before the Income-tax Officer, Jodhpur on August 11,1950. There-upon the respondent presented the petition, out of which this appeal arises, on August, 23, 1950, invoking the jurisdiction of the High Court under Art. 226 of the Constitution for the issue of "a writ of mandamus or certiorari or other appropriate writ" directing the appellant not to take any action under the Indian Income-tax Act, 1922, (hereinafter referred to as the Indian Act) as amended by the Indian Finance Act, 1950, for the assessment or levy of income-tax on the income which accrued or arose to the respondent or was received by him prior to April 1, 1950, on the ground that such income was not liable to be charged "under the provisions of any law validly in force in Rajasthan".
3. The petition was heard by a Division Bench of the High Court (Nawal Kishore and Kanwarlal Bapna JJ.) who accepted the petition and issued a writ as already stated, overruling sundry preliminary objections to which no reference need be made as they have not been raised by the appellant before us.
4. As is well-known, after the Indian Independence Act, 1947, came into force, various Indian States (as they were then known) which had been recognised, subject to certain restrictions and limitations not material here, as independent principalities were brought into the Dominion of India from time to time under arrangements with their Rulers, and this process of accession and integration resulted in the expansion of the territory of India in successive stages. So far as Rajasthan is concerned, the Rajputana States, as they were then called, integrated their territories into the United State of Rajasthan, and the new State acceded to the Dominion of India by an Instrument of Accession executed by the head of the State (Rajpramukh) on April 15,1949, and accepted by the Governor-General of India on May 12, 1949. By cl. (3) of the Instrument the Rajpramukh accepted "all matters enumerated in Lists I and III of the Seventh Schedule to the Act (the Government of India Act, 1935) as matters in respect of which the Dominion Legislature may make laws for the United State, provided that nothing contained in the said Lists or in any other provisions of the Act shall be deemed to empower the Dominion Legislature to impose and tax or duty in the territories of the United State or prohibit the imposition of any duty or tax by the Legislature of the United State in the said territories". This limitation on the power of the Dominion Legislature thus imposed by agreement between the two States was given effect to as a constitutional limitation by sec. 101 of the Government of India Act, 1935, as adapted by the Governor General in August, 1949, in exercise of the powers conferred on him by the Indian Independence Act, 1947. That section provided that "nothing in this Act shall be construed as empowering the Dominion Legislature to make laws for an Acceding State otherwise than in accordance with the Instrument of Accession of that State and any limitations contained therein". The position thus was that the Dominion Legislature had no power to make any law imposing any tax or duty in
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