Input:
vil Appeal Nos.
1631 33 of 1987 etc.
From the judgment and order dated 10.7.1987 of the Bombay High Court in W.P. Nos. 941, 986 and 1012 of 1987.
A.S. Bobde.
General.
section K. Dholakia and A.S, Bhasme for he Appellants.
Soli J. Sorabjee, R.N. Sachhar, Mrs. Aruna Mathur, J. Wad, K.J. John and A.K. Sanghi for the Respondents.
The judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
These civil appeals and special leave petitions centre around one point, namely, the validity of the Bombay Motor Vehicles Tax Act, 1958 as amended by Section 3 of the Maharashtra Act, XIV of 1987 as well as Section 6 of the said Act as amended by Maharashtra Act XXXlll of 1987 as well as the Maharashtra Act IX of 1988.
PG NO 486 The Bombay Motor Vehicles Tax Act, 1958 prior to its amendment in 1987 provided for levy of tax on vehicles annually or quarterly.
In 1987, by Section 3 of the Maharashtra Act No. XIV of 1987, sub section (IC) was added to provide for levy of one time tax at 15 times the annual rate on all motor cycles used or kept for use in the State.
The said provisions further provided that in case of motor cycles used or kept for use by a company or other commercial organisation, the one time tax was to be levied at thrice the rate.
Section 6 of the Maharashtra Act 14 of 1987, added sub section (6) to Section 9 of the principal Act.
The new sub section (6) enabled a registered owner of motor cycle or tricycle to obtain refund of "one time tax" in cases where (a) the vehicle is removed outside the State; and (b) the registration of vehicle is cancelled due to scrapping of the vehicle, or for a similar reason.
The refund was to be paid in accordance with the Fourth Schedule.
The Third and Fourth Schedules were introduced by the Maharashtra Act 14 of 1987.
In the case of Luna Mopeds, the one time tax comes to Rs.2925 which according to the petitioners in the S.t.P. Nos.
1 1673 75/87, is 86% of the ex factory price of the Moped.
In that view the petitions were filed by the respondents in the first batch of appeals and the petitioners in the second batch challenging the amended provisions of the Bombay Motor Vehicles Tax Act, 1958.
On or about 9/10th July. 1987, a Division Bench of the Bombay High Court, Nagpur Bench held that the levy of one time tax was beyond the legislative competence of the State Legislature and also beyond Entry 57 of List II of the Seventh Schedule.
It further held that the provisions for imposition of levy at thrice the rates so far as the vehicles owned by the firm or the company, were neither discriminatory nor arbitrary.
The High Court, however, in view of the fact that the refund was restricted to the circumstances mentioned above.
struck down Act 14 of 1987.
According to the High Court, the absence of provisions for refund in cases of temporary non user made the Maharashtra Act XlV of 1987, confiscatory in character and not regulatory or compensatory which alone was in the competence of the State Legislature.
The State preferred applications for leave to appeal against the impugned judgment and the special leave having been granted, are the subject matter of Civil Appeals Nos.
1631 33/877.
The petitioners also, filed special leave applications which are the subject matter of Special Leave Petitions Nos. 11673 75/87 which have been heard along with these appeals.
While the State 's appeal against the High Court 's judgment was pending before this Court, the Maharashtra Legislature enacted Maharashtra Act XXXIII of 1987.
It deleted Section 3(4) of the principal Act, as PG NO 487 amended by Maharashtra Act XIV of 1987.
That provision made the existing provisions of refund for temporary non user inapplicable in cases of motor cycles and tricycles, restricting the right of refund to Section 9(6) in contingencies mentioned above.
It also introduced sub section (7) to Section 9 conferring right of refund in respect of motor cycles and tricycles in accordance with the rates specified in the Fifth Schedule and prescribed the rates of refund in the Fifth Schedule.
But the said Schedule did not prescribe a separate rate of refund for company owned vehicles.
Therefore, the refund in respect of company owned vehicles would be same as that payable to individual owned vehicles, even though the tax paid on former class of vehicles was three times.
Soon thereafter the Maharashtra Legislature enacted Act 9 of 1988 The only relevant change for the present purpose was that the rate of refund was enhanced to three times in respect of company owned vehicles.
Before the contentions are judged, it is imperative to reiterate that the tax imposed on motor vehicles or a class of motor cycles would not be valid unless it is compensatory or regulatory or does not have any nexus with the vehicles using the public roads.
In such a case the levy would be violative of Act.
301 of the Constitution and would not be protected by Act.
304 of the Constitution.
In this connection reference may first be made to the observations of this Court in Bolani Ores Ltd. vs State of Orissa, ; where at page 155 this Court observed that Entry 57 of List II of the Seventh Schedule was subject to the limitations, namely, the power of taxation cannot exceed the compensatory nature which must have some nexus with the vehicles using the roads.
If the vehicles do not use the roads, notwith standing that these are registered under the Act, these cannot be taxed.
More or less the same view was echoed in G. K. Krishnan vs The State of Tamil Nadu & Anr., [1975 ] 2 SCR 715.
See also Malwa Bus Service (P) Ltd. vs State of Punjab & Ors.
,[1983] 2 SCR 1009.
On behalf of the appellant State, the learned Advocate General submitted that the amendments enacted by the Maharashtra Act No. 33 of 1987 and No. 9 of 1988, have brought the principal Act as amended by the Maharashtra Act No. XIV of 1987 within the constitutional requirements of making `one time tax ' a regulatory and compensatory tax.
It was submitted by him that this development had made it unnecessary for this Court to decide if the Act, as it stood when it was challenged before the High Court, was beyond the legislative competence of the State Legislature.
It was PG NO 488 further emphasised that the fact that the Act at present, does not provide for refund in the 14th & v 15th years, does not make the law outside the competence of the State Legislature.
It was urged that the concept of "regulatory and compensatory tax" does not imply mathematical precision.
In this context one may refer to the observations of this Court in International Tourist Corpn.
vs State of Haryana & Ors.
, ; , where at page 374 Justice Chinnappa Reddy speaking for this Court observed as follows : "But to say that the nature of a tax is of a compensatory and regulatory nature is not to say that the measure of the tax should be 'proportionate to the expenditure incurred on the regulation provided and the services rendered.
If the tax were to be proportionate to the expenditure on regulation and service it would not be a tax but a fee.
While in the case of a fee it may be possible to precisely identify and measure the benefits received from the Government and levy the fee according to the benefits received and the expenditure incurred, in the case of a regulatory and compensatory tax it would ordinarily be well high impossible to identify and measure, with any exactitude, the benefits received and the expenditure incurred and levy the tax according: to the benefits received and the expenditure incurred.
What is necessary to uphold a regulatory and compensatory tax is the existence of a specific.
identifiable object behind the levy and a nexus between he subject and he object of he levy.
" Earlier this principal had been sated in Income tax officer Shillong & Anr.v.
N. Takim Roy Rymbai etc.
,[1976] 3 SAC 413, where this Court observed though taxation law could not claim immunity from the equality clause i n Article 14 of the Constitution, it must be remembered that in view of the intrinsic complexity of fiscal adjustments of diverse element, he State has a considerably wide discretion in the matter of classification of taxation purposes.
the fact that the tax falls more heavily on some in the same category, is by itself no ground to render the law invalid.
Similar are he observations of this Court in Mrs. Meenakshi & Ors.
vs State of Karnataka & Ors., AIR 1983 Sc 1283; Anant Mills Co Ltd. vs State of Gujarat & Ors.,[1975] 3 SC 220 and Khhandige Sham Bhat & Ors.
V. The Agricultural Income ax Office; , PG NO 489 In the instant case, the impugned legislation had been subsequently amended to provide for the refund of a proportionate part of the one time tax in the event of the vehicle not being used for a period of quarter or more than a quarter of a year as mentioned before.
This was provided by substituting a new sub section (7) to section 9 of the Act and also substituting new Fifth Schedule.
Even after the amendment, however, no refund is available in respect of a vehicle which has been registered for more than 13 years.
The effect of the same is that no refund at all is available in respect of the tax paid for a vehicle for the 14th and 15th years, it was urged on behalf of the respondents in the appeals and the petitioners in the S.L.Ps.
It was submitted on their behalf that so far as four wheelers are concerned, Section 9(1) of the act provided for refund of the proportionate amount of tax for every completed calendar month for which the vehicle has not been used.
It was urged on behalf of the respondents in the appeals and the petitioners in the S.L.Ps.
that there is no justification what so ever for the non grant of the refund of the proportionate amount of tax paid in respect of a two wheeler or three wheeler, which is not used in its 14th and/or 15th year.
On this score, it was urged on their behalf that the impugned levy of tax ceases to be compensatory or regulatory and as such is void under Entry 57 of List II and thus violative of Article 301 of the Constitution.
In our opinion the fact that the Act, as at present, does not provide for refund in the 14th and 15th years, does not make the law outside the competence of the State Legislature.
The concept of "regulatory and compensatory" tax does not imply mathematical precision of quid pro quo.
This aspect was emphasised in International Tourist Corporation etc.
vs State of Haryana & Ors.
, (supra) as noted before.
It was further submitted on behalf of the owners of two wheelers that the impugned one time levy of Rs.975 has been worked out at Rs.65 per two wheeler per annum for 15 years and is sought to be recovered from the two wheeler owner as a one time down payment at the time the two wheeler is purchased by him.
On behalf of the respondents/petitioners it was contended that having regard to the extent of road user by a two wheeler, in comparison with the road user by a four wheeler, the Legislature considered that.
a tax of Rs.65 per two wheeler per annum would be a reasonable and adequate compensatory levy.
While the maximum annual rate of tax was fixed at Rs. 200 per annum for motor cars weighing not more than 750 kg and Rs.36O per annum for motor cars PG NO 490 weighing between 750 kg to 1500 kg it may be noted that the tax on four wheelers has not been increased.
But as far as two wheelers are concerned the one time tax for the period of 15 years is exactly 15 times the amount of tax of Rs.65 per year.
It is clear from these factors, it was submitted by the owners of the two wheelers, that the Legislature continues to consider the tax of Rs.65 per two wheeler per year to be an adequate compensatory tax.
However, by recovering the tax for the future period of 15 years in advance as a one time levy, the taxing authorities are in fact recovering not Rs.65 per two wheeler per year but in reality about Rs.356.79 per two wheeler per year.
The respondents/petitioners sought to explain the position by submitting that if the two wheeler owner has an amount of Rs.975 with him at the time of purchase of the vehicle, and is not compelled to make one time payment, then he would initially pay only Rs.65 as the tax for the first year.
That would leave a balance amount of Rs.9.10 which could be invested by him at an interest yield of 15% per annum.
It was urged that the rate of interest that is recoverable as well as paid under the Income Tax Act is 15% per annum.
The said amount of Rs.910 would yield an interest of Rs. 136.50 in the first year.
Out of that amount of Rs. 136.50 an amount of Rs.65 would be paid by the two wheeler owner as tax at the beginning of the second year.
Consequently, an amount of Rs.71.50 would be available from out of the said interest earning of Rs. 136.50, which also could be invested at a yield of 15% per annum.
Consequently, the amount of interest that would be earned by the vehicle owner in the second year would come to Rs. 147.
23, out of which only Rs.65 would have to be paid as tax in the beginning of the third year, leaving a balance of Rs.82.23 available for further investment.
It was submitted that by compelling the vehicle owner to make the one time down payment of Rs.975 at the time of the purchase of the vehicle, the owner is in reality being deprived of a total amount of Rs.4376.
19 over the said period of 15 years.
If this amount is divided by 15, the resultant figure will be Rs.291.79.
The effective tax burden has thus in fact been multiplied by about 5 times only as a result of the one time levy, it was urged.
It was submitted that the said one time levy was unreasonable, discriminatory and not regulatory or compensatory.
The fact that a tax on motor vehicles must be compensatory and regulatory in order to be valid, was emphasised in the decision of this Court in Stare of Karnataka vs K. Gopalakrishna Shenoy and another, A.I.R. 1487 S.C. 1911 where at page 1915 of the report, it was observed that tax on motor vehicles is a compensatory tax levied for the use of the roads and it is not a tax on ownership or possession of motor vehicles.
It was emphasised on behalf of the owners of the vehicles that the impugned legislation is based on PG NO 491 the assumption that two wheelers and three wheelers have an approximate life of 15 years.
It is on that basis and footing that the rates of tax have been fixed.
It was contended that the life of two wheelers and three wheelers is as much as 25 to 30 years and therefore, the recovery of the one time tax for the period of 15 years actually constitutes the conferment of a benefit on the owners of two wheelers and three wheelers.
In this connection, on the other hand it is of importance to note that the Department of Heavy Industry, Ministry of Industry, Government of India, had commissioned a report from an eminent firm of Chartered Accountants on Long Term Demand Projections for Automotive Vehicles (including two wheelers and three wheelers).
The said report concludes, after an exhaustive analysis of statistical data including the data provided by vehicle manufacturers and also studies made in the past, that the average life of scooters is 10 years, that of motor cycles c) years and that of mopeds 5 years.
But what was emphasised was that one time levy of tax compelled owners of two wheelers to incur a further expenditure of about 70% of the cost of the vehicles purchased by them at the time they acquire the vehicle and that imposes heavy additional liabilities.
It was, therefore, submitted that it was neither compensatory nor regulatory and further more, it was discriminatory.
It was further submitted that section 3(IC)(c) exempts public trusts and recognised institutions.
That was bad.
In our opinion, after the amendment the mischief mentioned in the judgment and order of the High Court of Bombay has been remedied.
On an examination of the various provisions of the Act as amended, we have come to the conclusion that after the amendment the Act comes within the constitutional requirement of making the one time tax a regulatory and compensatory tax.
It is true as was emphasised that the Act has not provided for refund in the 14the and 15th years but does not make the law outside the competence of the State Legislature.
It is not mathematical precision that is necessary nor can it be.
There is in the provisions as amended, a discernible and an identifiable object behind the levy and a nexus between the subject and the object of the levy.
In this matter two principles have to be emphasised, firstly.
that the tax must be regulatory and compensatory and secondly, there must be no discrimination.
About discrimination it is well to remember that a taxation law cannot claim immunity from the equality clause in Article 14 of the Constitution.
But in view of the intrinsic complexity of fiscal adjustments of diverse elements, a considerably wide discretion and latitude in the matter of classification PG NO 492 for taxation purpose is permissible.
See the observations of this Court in Income Tax Officer, Shillong and Anr.
vs N. Takim Roy Rymbai etc.
, (supra).
Also see the observation in Mrs. Meenakshi and others vs State of Karnataka, (supra); Anant Mills Co. Ltd. vs State of Gujarat & Ors., (supra) and Khandige Sham Bhat and Ors.
vs The Agricultural Income tax Officer, (supra).
The evidence on record shows that the life of motor cycles and tricycles normally exceeds 25 years.
The so called non refund for certain period is not conclusive of the matter.
Even if mathematical precision is not possible, we cannot say that it is wholly unmathematical.
The collection of tax for a period of 15 years at one point of time is a convenient method enabling the owner to use the vehicle for more than 25 years, without having to visit the office to pay the tax periodically, and pay enhanced tax that may be levied during the 25 years of life of the vehicle.
Regulatory and compensatory tax can be levied to the extent the State is required to pay for rendering the services.
According to the State, the evidence on record shows that the cost of services is twice the total amount recovered from all types of vehicles.
The balance of expenditure is met by the State from the general revenues.
Even from this half collection, the motor cycles and tricycles contribute only 6.4 per cent.
The percentage of motor cycles and tricycles is 56 to 58 percent of all vehicles.
Thus, even insubstantial increase in their rates cannot be said to be not a "regulatory or compensatory" tax measure.
The Act, as at present, is not violative of Article 14 of the Constitution.
The fact that company owned vehicles are taxed at three times the rate payable by individuals, does not make the legislation violative of Article 14.
Historically, the company owned vehicles have always been taxed at a rate higher than the individually owned vehicles.
As appears from the records produced.
the motor cycles and tricycles constituting 56 to 58 per cent of all types of vehicles contribute only 6.4 per cent of the total revenue earned through the tax imposed by the Act.
It is well settled that the Legislature has the power to distribute tax burden in a flexible manner and the Court would not interfere with the same.
This principle has been reiterated in G.K. Krishnan etc.
vs The State of Tamil Nadu & Anr.
, (supra) where this Court observed that in the context of commercial regulation, Article 14 is offended only if the classification rests on grounds wholly irrelevant to the achievement of the objective and this lenient standard is further weighted in the State 's favour by the fact that a statutory discrimination will not be set aside if a state of facts may reasonably be conceived by the PG NO 493 Court to justify it.
Tax laws have to respond closely to local needs and Court 's familiarity with these needs is likely to be limited.
Therefore, the Court must be aware of its own remoteness and lack of familiarity with the local problems.
Classification is dependent upon peculiar needs and specific difficulties of the community.
The needs and the difficulties of a community are constituted out of facts and information beyond the easy ken of the Court.
It appears that in the instant case, the State Government has specifically averred that the company owned vehicles travel more and use roads more often.
No evidence have been produced to the contrary.
In view of the well settled principles, we cannot say that there was without any basis and as such there was discrimination.
It further appears that the Government of lndia has liberalised the licensing policy and granted large number of industrial licences for the manufacture of two wheelers.
In Maharashtra itself following is the new registration of two wheelers during the last four and five year: " 1983 84 1,13,949 1984 85 1,24,877 1985 86 1,66,124 1986 87 2,01,904" In 1986 87 per working day on an average 929 new two wheeler have been registered.
There was tremendous strain on Motor Vehicles Department due to increase in the number of two wheeler.
The following statistics and figures indicate the position that one time tax on two wheelers have beneficient effect: "As on 1.4.1987 there were 10,93,170 two wheelers in Maharashtra and total number of vehicles was 1841 lakhs.
In 1985 86 the total revenue by way of Motor Vehicles Tax was Rs.98 crores out of which only Rs. 6 to 7 crores was from two wheelers.
That means 58% vehicles (3 wheelers) used to give only 6.4% Motor Tax for which 22,000 man days were required to be spent.
All the two wheeler owners were required to come to R.T.O. for payment of tax every year.
PG NO 494 Almost 70 to 75% Motor Vehicle Tax arrear cases were of 2 wheelers.
Because of new system of one time tax if the owner pays it, he is not required to pay the tax again during the life time of the 2 wheeler.
Any further increase in one time tax rate will not be applicable to the 2 wheelers which have already paid the one time tax.
Statistics show that the 2 wheelers are being used for more than 25 years.
The rate of increase of 2 wheelers because of easy availability and affordability is almost 25%.
The total number of two wheelers projections in the State will be as follows: By the end of 1986 87 10.94 lakh 1987 88 13.33 lakh 1988 89 16.20 lakh 1989 90 19.69 lakh 1990 91 23.77 lakh 1991 92 28.73 lakh Existing vehicles will have to pay one time tax in sliding scale rate.
Older the vehicles, less will be the tax.
This tax system is already in existence in Karnataka since 1.4.1986 and also in Gujarat, Rajasthan.
This new system will definitely give relief to the two wheeler owners as they will not be required to come to R.T. Office for annual payment." Having regard to these factors and having regard to the principles applicable to taxation laws, we are of the opinion that the Maharashtra Act as amended from time to time and mentioned hereinbefore, does not suffer from any vice of being not regulatory or compensatory taxation nor from the vice of being violative of Article 14 of the Constitution.
In that view of the matter, the challenge to the provisions of the Act as amended after the judgment of the PG NO 495 Bombay High Court cannot be maintained.
In that view of the matter, Civil Appeals Nos.
1631 1633 of 1987 are disposed of by saying that after the amendments noted here in before the Act does not suffer from the vice mentioned in the judgment of the High Court of Bombay.
The appeals are, therefore, allowed and disposed of accordingly.
In that view of the matter the challenge made in the special leave petitions Nos. 11673 75 of t987 is dismissed.
In the facts and circumstances of the case, there will be no orders as to costs.
Interim orders, if any, are vacated.
The taxes will be realised in accordance with the Act and necessary adjustments will be made accordingly.

Output:
These Civil appeals and special leave petitions centred round one point, namely, the validity of the Bombay Motor Vehicles Tax Act, 1958 as amended by Section 3 of the Maharashtra Act XIV of 1987 and Section 6 of the said Act as amended by Maharashtra Act XXXIII of 1987 and the Maharashtra Act IX of 1988.
Section 3 of the said Act XIV of 1987 added sub section (IC) to provide for the levy of one time tax at 15 times the annual rate on all motor cycles in the State.
The said provisions further provided that in the case of motor cycles owned by a company or other commercial organisation, the one time tax was to be levied at thrice the rate.
Section 6 of the said Act XIV of 1987 added sub section (6) to section 9, enabling a registered owner of a motor cycle or tricycle to obtain refund of `Lone_time tax" under certain conditions.
Petitions were filed in the High Court by the respondents in the appeals and petitioners in the special leave petitions, challenging the amended provisions of the principal Act.
The High Court held that (i) the levy of the one time tax was beyond the legislative competence of the State Legislature and also beyond Entry 57 of List II of the Seventh Schedule, and (ii) the provision for imposition of levy at thrice the rates on the vehicles owned by a firm or company, were neither discriminatory nor arbitrary.
The High Court struck down Act XIV of 1987.
The appeals by leave were filed by the State and the special leave petitions were fixed by the petitioners in this Court against the decision of the High Court.
In the meanwhile, the Maharashtra Legislature enacted Maharashtra Act XXXIII of 1987, which deleted Section 3(4) of the principal Act as amended by the PG NO 482 PG NO 483 Maharashtra Act XIV of 1987, whereby the existing provisions of refund for temporary non user were made inapplicable in cases of motor cycles and tricycles, restricting the right of refund to Section 9(6) in the contingencies mentioned therein.
It also introduced sub section (7) to section 9 conferring the right of refund in respect of motor cycles and tricycles in accordance with the rates specified in the Fifth Schedule.
But the said schedule did not prescribe a separate rate of refund for the company owned vehicles.
Therefore, the refund in respect of the company owned vehicles was the same as that payable to individual owned vehicles even though the tax paid on former class of vehicles was three times.
Soon thereafter, the Maharashtra Legislature enacted Act IX of 1988, whereby the only relevant change for the present purpose was that the rate of refund was enhanced to three times in respect of the company owned vehicles.
Before this Court, the appellant State submitted that the amendments enacted by the Maharashtra Acts XXXllI of 1987 and IX of 1988 had brought the principal Act as amended by the Maharashtra Act XIV of 1987 within the constitutional requirements of making one time tax 's regulatory and compensatory tax and that it was not necessary to decide if the Act as it stood when it was challenged before the High Court? was beyond the legislative competence of the State Legislature.
The respondents in the appeals and the petitioners in the special leave petitions urged that as even after the amendment no refund was available in respect of a vehicle which had been registered for more than 13 years? the effect of that was that no refund al all was available in respect.
of the tax paid for a vehicle for the 14th and 15th years.
The impugned levy of tax ceased to be compensatory or regulatory and was void under Entry 57 of List II and was violative of Article 301 of the Constitution.
Disposing of the appeals and dismissing the special leave petitions the Court.
HELD: The tax imposed on the motor vehicles or a class of motor cycles would not be valid unless it is compensatory or regulatory or does not have any nexus with the vehicles using the roads.
In such a case.
the levy would be Section of the said Act XIV of 1987 added sub section (IC) to provide for the levy of one time tax at 15 times the annual rate on all motor cycles in the State.
The said provisions further provided that in the case of motor cycles owned by a company or other commercial organisation, the one time tax was to be levied at thrice the rate.
The fact that the act, as at present, did not provide for refund in the 14th and 15th years, did no make the law outside the competence of the State Legislature.
he concept PG NO 484 of "regulatory and compensatory" tax does no imply mathematical precision of quid pro quo.
[489E] After the amendment, the Act came with in the constitutional requirements of making he one time tax a regulatory and compensatory tax.
It was true that the Act has no provided for refund in the 14h and 15h years but that does no make he law out sides the competence of the State Legislature.
It is no mathematical precision that is necessary nor can it be.
there is in the provisions as amended, as amended, a discernible and an identifiable object behind the levy and a nexus between the subject and the object of the levy, [491E F] Two principles have to be emphasised, firstly, that the tax must be regulatory and compenstaory and secondly, there must be no discrimination.
A taxation law cannot claim immunity from the equality clause in Article 14 of the Constitution, but in view of the intrinsic complexity of fiscal adjustments of diverse elements, a considerable wide discretion and latitude in the matter of classification for taxation purpose is permissible.
The life of Motor cycles and tricycles normally exceeds 25 years.
Non refund for certain period is no conclusive of the matter.
Even if mathematical provision is no possible, it cannot be said that it is wholly unmathematical.
The collection of ax for a period of 15 ears at one point of time is a convenient method enabling the owner o use he vehicle for more than 25 years without having to pay the tax periodically and pay the enhanced tax at may be levied during the 25 years of life of the vehicle.
Regulatory and compensatory tax can be levied to the extent e State is required to pay for rendering the services.
[491G;492A C] The Act, as at present, is not violative of Article 145 of the Constitution.
The fact that the company owned vehicles are taxed that three times the rate payable by individuals, does not make the legislation violatvie of Article 14.
Histrocially, the company owned vehicles are always been taxed at a rate higher that the individually owned vehicles.
he legislature has he power to distribute tax burden in a flexible manner and the Court would no interfere with the same.
It could not be said that there was differentiation without any basis and as such there was discrimination.
[492E H] In view of the principles applicable to the taxation laws and various other factors, the Maharashtra Act as amended from time to time does not suffer from any vice of being not regulatory or compensatory taxation nor from the vice of being violative of Article 14 of the Constitution, and the challenge to the provisions of the Act as amended PG NO 485 after the judgment of the High Court could not be maintained.
[494G ;495A] After the amendments afore mentioned the Act does no suffer from the vice mentioned in the judgment of the High Court .
The appeals were allowed thus, and the challenge made in the special leave petitions was dismissed.
[495] The taxes would be realised in accordance with the Act and the necessary adjustments would be made accordingly.
[495C] Bolani Ors.
Ltd. vs State of Orissa.
; ; G.K. Krishnan vs The State of Tamil Nadu & Anr., [1975] 2 S.C.R. 715; Malwa Bus Service (P) Ld.
vs State of Punjab and Ors.
, ; ' International ouris Corporation vs State of Haryana & Ors., ; ; Income tax Officer, shillong & Anr.
vs N. Takim Roy Rymbai, etc., ; Mrs. Meenakshi & Ors.
vs, State of Karnataka & Ors., AIR 1983 SC 1283; Anant Mills Co. Ltd. vs State of Gujarat and Ors., [1975] 3 S>.C.R. 220; Khandige Sham Bhat & Ors.
vs The Agricultural Income tax Officer; , and State of Karnataka vs K. Gopalakrishna Shenoy and Another, ; , refered to.


Input:
Appeals Nos. 384 and 385 of 1957.
Appeal by special leave from the Order dated November 28, 1952, of the Income tax Appellate 303 Tribunal (Calcutta Bench) in I.T.A. No. 4067 and E.P.T. Appeal No. 391 of 1951 52.
N. C. Chatterjee, B. Sen Gupta and B. P. Maheshwari, for the appellant.
K. N. Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the respondents.
March 2.
The Judgment of the Court was delivered by KAPUR, J.
These two appeals pursuant to special leave are brought against two orders of the Incometax Appellate Tribunal (Calcutta Bench) dated November 28, 1952, passed in appeal No. 1.
T. A. 4067 of 1951 52 in respect of income tax assessment for the assessment year ending 31st March, 1944, and in appeal No. E. P. T. A. 391 of 1951 52 in respect of Excess Profits tax assessment of the appellant for the chargeable accounting period ending March 31, 1943.
The original assessee was R. B. Seth Teomal who was the manager of a Hindu undivided family.
On Seth Teomal 's death on May 30, 1944, Seth Ottanmal became the manager.
He is now the appellant representing the Hindu undivided family.
He will be termed as the appellant in these appeals.
Seth Teomal was carrying on the businesss of a railway contractor at Lalmonirhat in the district of Rangpur which is now in Pakistan.
In April 1943 a notice was served on him under section 22(2) of the Income tax Act (hereinafter called the Act).
He filed the return on February 28, 1944.
The Income tax Officer,Rangpur, served notices on him under sections 22(4) and 23(2) for production of books, etc.
It appears that assessment proceedings continued before the Income tax Officer Rangpur, but no final assessment was made.
According to an affidavit which has now been filed in this Court the Central Board of Revenue by an order passed under sub section
(2) of section 5 of the Act assigned the appellant 's case along with some other assessment cases to the Commissioner of Income tax (Central), Calcutta.
The order contains the following endorsements which give an indication of the reason for the case being assigned to the Commissioner of Income.
tax (Central): 304 " Copy forwarded to (1). . . . . . . . . . (2) Commissioner of Income tax (Central), Calcutta.
These cases are reported to have E. P. T. liabilities ".
Thus the appellant 's case which was before an incometax Officer within the area in charge of the Commissioner of Income tax, Bengal (Mofissil) was withdrawn from him and was assigned to the Commissioner of Income tax (Central), Calcutta.
On February 11, 1948, the Income tax Officer District N C (I. T. cum E.P.T.) to whom it appears the appellant 's assessment case was assigned issued notice again under sections 22(4) and 23(2) of the Act.
That officer after making the usual enquiries made the assessment order on March 15, 1948.
The order for Excess Profits Tax assessment was made on March 30,1948.
Against these orders two appeals were taken to the Appellate Assistant Commissioner on April 30, 1948.
In the appeal against income tax assessment the appellant inter alia raised the following two grounds in regard to the jurisdiction of the Income tax Officer, Calcutta: " 5.
For that the petitioner is not aware of any order passed for the transfer of the case from Rangpur to Calcutta and it is submitted that without such an order and communication of such order the assessment is challengeable for want of jurisdiction ".
For that the appellants challenge the jurisdiction as there was no proper order of transfer and the business was carried on outside Calcutta and assessments had never before been made in Calcutta".
But no such ground was taken in the appeal against Excess Profits Tax assessment.
The Appellate Assistant Commissioner dismissed both these appeals.
In regard to jurisdiction he held: " It however appears from records on band that the principal place of business of the concern was at Rangpur and as the income attracted E. P. T. liability the case was transferred to Calcutta under Orders of C. B. R.
Hence there is no substance in the contention of the learned Advocate which fails 305 The appellant then took two appeals to the Incometax Appellate Tribunal.
In the appeal against incometax assessment he took two objections in regard to jurisdiction : " For that the objection taken before the learned A. A. C. on jurisdiction should not have been summarily disposed of by passing reference to an order of transfer of the case from Rangpur to Calcutta without at the same time discussing when the question of jurisdiction was seriously raised and how and under what circumstances and to, whom was the case transferred and for what purpose " 2.
For that the appellant begs leave to repeat that transfer was not legal or proper and was not made by any proper authority to legalise such transfer ".
In the Excess Profits Tax appeal also this time an objection was taken as to jurisdiction : " For that the assessment is bad in law having been made without jurisdiction ".
The Appellate Tribunal held against the appellant in a short paragraph: " So far as the first objection is concerned, in our opinion, it is not within our jurisdiction to go into this matter.
The objection relates to the place of assessment.
As held in Brothers, & Co. Ltd vs Commissioner of Income tax, Bombay, Sind and Baluchistan, Federal Court) the question as to the proper place of assessment is not one for adjudication by a Court or by any Appellate Authority.
Consequently we overrule the first contention of the Assessee.
" The Tribunal thus held that as the objection related to the place of assessment the Tribunal was not competent to go into that question.
Upon this the appellant applied for a reference to be made under section 66(1) of the Act and prayed for five questions to be referred.
The two questions relating to jurisdiction were: (1)" Had the Income tax Officer (Non Companies Income tax cum Excess Profits Tax ' District, Calcutta, jurisdiction to make the assessment ? 39 306 (2)Was the Income tax Appellate Tribunal correct in the circumstances in holding that it has no jurisdiction to determine the competence of the Income tax Officer in making the assessment ?" In the " facts of the case " attached to the grounds of Appeal it was stated that the accounts were produced before the Income tax Officer, Calcutta, under protest because the jurisdiction of that officer was being challenged.
In reply to this the Commissioner after referring to Wallace Brothers ' case (1) stated that it did not appear from the assessment record that the assessee ever raised any objection to the jurisdiction of the Income tax Officer and if it had been taken the matter would have been referred by the Income tax Officer to the Commissioner as required by law.
This application under section 66(1) was dismissed on the ground that the question of jurisdiction could not arise out of the order of Tribunal and reliance was placed on Wallace Brothers ' case (1) and Seth Kanhaiyalal vs Commissioner of Income tax (2 ).
The appellant applied to the High Court under section 66 (2) of the Act and prayed for the following two questions and some others to be referred : (i)" Had the Income tax Officer (N. C. 1.
T. Cum E. P. T. District Calcutta) jurisdiction to make the assessment ? (ii)Was the Income tax Appellate Tribunal correct in the circumstances in holding that it had no jurisdiction to determine the competence of the Income tax Officer in making the assessment?" The High Court dismissed this application on July 23, 1954.
No appeal has been filed in this Court against the order of the High Court but an appeal has been filed against the order passed by the Income tax Appellate Tribunal.
On behalf of the Revenue a preliminary objection was taken that as no appeal had been filed against the order of the High Court that order had become final and this Court, therefore, should not entertain the appeal against the order of the Tribunal and reliance was placed on the observations of Venkatarama (1) ; (2) 307 Aiyar, J., in Govinda Rajulu Mudaliar vs Commissioner of Income tax (1).
At p. 810 it was observed: " The present appeal is against the decision of the Tribunal itself It is no doubt true that this Court has decided in Dhakeswari Cotton Mills Ltd. vs Commissioner of Income tax, West Bengal (2) that an appeal lies under article 136 of the Constitution of India to this court against a decision of the Appellate Tribunal under the Indian Income tax Act.
But seeing that in this case the appellant had moved the High Court and a decision has been pronounced adverse to him and this has become final, obviously it would not be open to him to question the correctness of the decision of the Tribunal on grounds which might have been taken in an appeal against the judgment of the High Court.
All the points urged before us were taken in the reference under section 66 (2) of the Indian Income tax Act.
It would therefore follow that these grounds are not open to the appellant".
But counsel for the appellant relied on Dhakeswari Cotton Mills Ltd. vs Commissioner of Income tax (2) where the scope of appeals under article 136 were set out by the learned Chief Justice.
In this case however it is not necessary to go into this question because in our opinion there is little substance in the appeal itself.
Counsel for the appellant has urged two grounds in support of his appeal: (1) that his place of business was Lalmonirhat and under section 64 (1) and (2) of the Act he was entitled to be assessed by the Income tax Officer of that area and (2) that assessment by the Income tax Officer of Calcutta was an illegal assumption of jurisdiction and therefore he was entitled to have the order of assessment quashed.
In order to decide these questions reference has to be made to the scheme.
of the Act.
The provisions relevant to the issue of jurisdiction are sections 5 and 64.
The former is headed " Income tax authorities " and the latter " Place of assessment ".
Assessment is made by the Income tax Officer under section 23 (3).
Against an order of assessment or the liability to be assessed an appeal (1) , 810.
(2) ; , 949.
308 lies under section 30 to the Appellate Assistant Commissioner and a further appeal to Income tax Appellate Tribunal under section 33 of the Act.
And then a reference can be made by the Tribunal to the High Court under section 66 (1) of the Act and if the Tribunal does not make such reference the High Court can under section 66 (2) be moved and it can then direct that such reference be made.
The heading of section 64 is " Place of assessment ".
Sub section (1) of section 64 provides that the assessee shall be assessed by the Income tax Officer of the area in which he carries on his business.
Sub section (2) lays down that in all other cases an assessee shall be assessed by the Income tax Officer of the area in which he resides.
Under these two sub sections therefore the appellant, because he was carrying on business at Lalmonirhat, had to be assessed by the Income tax Officer of that area, i.e., by the Income tax Officer of Rangpur.
Sub section (3) of that section provides that if a question as to the place of assessment arises, it is to be determined by the Commissioner of Income tax or by Central Board of Revenue according as the case may be.
Under the first proviso to this sub section before the question as to the place of assessment is determined the assessee has to have an opportunity of representing his views and under the second proviso the place of assessment cannot be called into question by the assessee if he has made a return in response to the notice under sub section
(1) of section 22 and has stated therein the principal place where he carries on his business or if he has not made such a return, the time specified in the notice has expired.
The third proviso to this subsection is: " Provided further that if the place of assessment is called in question by an assessee the Income Tax Officer shall, if Dot satisfied with the correctness of the claim, refer the matter for determination under this sub section before assessment is made ".
Thus under section 64(3) the question of determination as to the place of assessment only arises if an objection is taken by the assessee and the Income Tax Officer has any doubts as to the matter.
But the determination 309 is to be by the Commissioner of Income Tax or the Central Board of Revenue.
The Act does not 'contemplate any other authority.
It was contended on behalf of the assessee that he produced his accounts before the Income Tax Officer at Calcutta under protest.
There is no mention of this protest in the assessment file and that is what was stated by the Commissioner of Income Tax in his reply which he gave on March 3, 1953, before the Income tax Appellate Tribunal and which has been set out above.
If such an objection had been raised the question would have been referred by the Income tax Officer to the Commissioner as required under section 64(3).
That stage never arose because the objection does not seem to have been taken at the stage when it should have been taken, i.e., before the Income tax Officer, Calcutta.
But it is contended by counsel for the appellant that in the present case there is an illegal assumption of jurisdiction as the officer who made the assessment had no jurisdiction at all to make the assessment.
It was also contended that if the Central Board of Revenue wanted to transfer the assessment proceedings from the Income tax Officer, Rangpur, to the Income tax Officer at Calcutta, it could only exercise that jurisdiction by making an order under section 5(7A) and not under section 5(2) of the Act.
He relied on Taylor vs Taylor (1) where it was held that if a mode of exercise of power is laid down in the statute it has to be exercised in that way and no other.
He also relied on Nazir Ahmad vs The King Emperor (2).
He further contended that this was not a case which fell under section 5(2) of the Act.
Section 5(7A) gives to the Central Board of Revenue the power to transfer any case from one Income tax Officer to another which can be mad6 at any stage of the proceedings and does not necessitate the reissuing of a notice under section 22(2) if it had already been issued by the Income tax Officer from whom the case is transferred and in the explanation the word ' case ' in relation to any person whose name is specified in the order of transfer means (1) , 431 (2) (1936) L.R. 63 I.A. 372.
310 all proceedings under the Act which may be pending on the date of the transfer and includes all proceedings which may be commenced after the date of the transfer.
Section 5 although headed I Income tax authorities ' also gives to the Central Board of Revenue and the Commissioners of Income tax certain powers in regard to withdrawing of cases from one area into other and from one Income tax Officer to another.
Sub section (2) of this section gives power to the Central Government to appoint as many Commis sioner 's of Income tax as it thinks fit and they have to perform their functions in respect of different areas, persons and bases or classes thereof.
The relevant portion of the sub section is as follows: S.5(2) " The Central Government may appoint as many Commissioners of Income tax as it thinks fit and they shall perform their functions in respect of such areas or of such persons or classes of persons or of such incomes or classes of incomes or of such cases or classes of cases as the Central Board of Revenue may direct. . . ." In the present case there are more than one Commissioner of Income tax in Bengal and the Central Board of Revenue assigned certain cases including the case of the appellant to the Commissioner of Income tax (Central) at Calcutta for the exercise of his functions as Commissioner.
Now this is a power which the Central Board of Revenue did possess under sub section
(2) of section 5.
As to which Income tax Officer was to deal with that case was for the Commissioner of Incometax to designate.
Sub section 7A of section 5 confers on the Central Board of Revenue the power to transfer any case from one Income tax Officer to the other which can be done at any state of the proceedings.
This sub section is not a provision which in any way modifies or cuts down the power given to the Central Board of Revenue under section 5(2).
The two sub sections are complementary and operate in two separate spheres.
Sub section (2) is for the purpose of specifying as to which of the Commissioners would perform functions in respect of 311 different areas, persons, incomes or cases or classes thereof.
It was argued that section 7A is a special provision and it necessarily excludes the operation of sub section
(2) but as we have said above the two sections are not mutually exclusive.
They operate in two different spheres, their areas of operation are different and therefore the power which the Central Board of Revenue exercised in the present case cannot be said to be illegal .
It was not transferring the appellant 's case from the Income tax Officer, Rangpur, to the Income tax Officer, Calcutta.
It directed the Commissioner of Incometax (Central), Calcutta, to exercise his functions in respect of certain cases including the case of the appellant and that falls under section 5(2) and not under section 5(7A).
Reference was made to Pannalal Binjraj vs Union of India (1).
But that was a case in which the question raised was of constitutional validity of sub section
7A of section 5 and it was held that it was a measure of administrative convenience and was valid and neither infringed the fundamental rights under article 14 nor under article 19(1)(g).
There are no observations in that case which militate against the view that sub sections (2) & (7A) operate in different areas nor did that question arise in that case.
The contention there raised was that sub section
7A conferred arbitrary and uncontrolled powers of transfer and was discriminatory and violative of the provisions of article 14 and imposed an unreasonable restriction on the right to carry on trade or business in contravention of article 19 (1)(g).
Counsel referred to Bidi Supply Co. vs Union of India (2) But that case also does not deal, with the matter now before us.
The simple question to be decided is whether the Income tax Officer, Calcutta, could make the assessment in the appellant 's case.
The submission that there was illegal assumption of jurisdiction by the Income tax Officer of Calcutta is not well founded.
If the Central Board of Revenue had the power to direct the Commissioner of Incometax (Central), Calcutta, to exercise his functions in (1) ; , 266.
(2) ; 312 respect of several cases including the appellant 's mentioned in the order dated November 29, 1946, as indeed it had under section 5(2), then neither that order could be challenged nor the power of the Income tax Officer, Calcutta, to make the assessment.
After an order by the Central Board of Revenue under section 5(2) of the Act the provisions of sub sections
(1) and (2) of section 64 have no application because of sub section
(5a) of section 64 which is as follows : Sub section
5 " The provisions of sub section (1) and subsection (2) shall not apply and shall be deemed never at any time to have applied to any assessee (a)on whom an assessment or reassessment for the purposes of this Act has been, is being or is to be made in the course of any case in respect of which a Commissioner of Income tax appointed without reference to area under sub section (2) of section 5 is exercising the functions of a Commissioner of Income tax".
In view of this provision no objection can be taken on the ground of sub sections (1) and (2) of section 64.
Counsel for the appellant relied on a judgment of the Bombay High Court in Dayaldas Kushiram vs Commissioner of Income tax (Central) (1), where it was held that section 64 was intended to ensure that as far as practicable the assessee should be assessed locally, i. e., by the Income tax Officer of the area in which the assessee carries on business and there must, so far as the exigencies of the case allow, be some reasonable relation to the place where the assessee carries on business or resides.
In that case the assessee was carrying on business in C Ward and the proper officer under section 64 to assess him was the Income tax Officer of that Ward.
As a result of the coming into force of section 5(2) the Commissioner of Income tax (Central) was created without reference to the area.
The case of the assessee on whom the notice had been served but had not been assessed in due course assigned to the Commissioner of Income tax (Central) who designated an Income tax Officer for assessment of the assessee.
The assessee thereupon made an application under section 45 of (1)[1939] 313 the Specific Relief Act and prayed for direction to the Commissioner of Income tax (Central) and the Incometax Officer to whom his case had been assigned to forbear from continuing the proceedings on the grounds that the Income tax Officer had no jurisdiction having regard to section 64 of the Act.
It was held that the Income tax Officer was not the Income tax Officer of the area in which the assessee was carrying on business.
It was also held that in spite of the insertion of section 5(2) of the Act such assessment was without jurisdiction because there was no amendment of section 64.
As a result of this judgment Ordinance IX of 1939 was promulgated which subsequently was enacted as subs.
5 of section 64.
After the Ordinance the assessee Dayaldas Kushiram was assessed by the same Officer and after unsuccessful appeals to the Commissioner of Income tax and the Appellate Tribunal he made an application under section 66(1) on three questions: (1) Whether the order passed by the Commissioner of Incometax deciding the place of assessment of the assessee could be the subject matter of appeal to the Incometax Appellate Tribunal; (2) Whether the Tribunal had the power to entertain an appeal on the question as to the place of assessment of an assessee even in the absence of the order of Commissioner of Income tax and (3) whether the question ,as to the place of assessment is a question of law arising out of the order of the Appellate Tribunal.
It was held that the order of the Commissioner was made under section 5(2) and not under section 64(3) and as the Ordinance had retrospective effect these questions did not arise and that the assessment of the assessee was validly made by the Income tax Officer and the Ordinance removed the invalidity of the orders made prior to the passing of the Ordinance so far as they related to the assessee.
Beaumont, C. J., held that the Income tax Act did not determine the place of assessment but the officer who had to assess and that there could be no appeal under the Act against the order of the Commissioner as to the place of assessment, but only against the order of assessment of the Income tax Officer.
40 314 Counsel for the appellant also relied 'on the judgment of the Allahabad High Court in Dina Nath Hem Raj vs Commissioner of Income tax (1).
In that case the assessee was carrying on business at Calcutta and he was sought to be assessed at Kanpur and an objection was taken to the Income tax Officer, Kanpur, making the assessment.
The Income tax Officer did not proceed in accordance with section 64(3) and therefore it was held that assessment made by him was without jurisdiction.
In the present case no question has been raised as to the jurisdiction of the Income tax Officer who made the assessment and apart from that the order was made by the Central Board of Revenue under section 5(2) of the Act and section 64(5) becomes operative and sub sections
(1) and (2) of section 64 are inoperative.
See also Seth Kanhaiyalal vs Commissioner of Incometax (2).
The question then arises whether the objection as to the place of assessment, i. e., by the Income tax Officer of Calcutta could be challenged in appeal to the Appellate Assistant Commissioner and then before the Appellate Tribunal.
In our opinion it could not be.
The scheme of the Act shows that no appeal in regard to the objection to the place of assessment is contemplated under the Act.
Under section 64(3) of the Act a question as to the place of assessment, when it arises, is determined by the Commissioner.
Any such order cannot be made a ground of appeal to the Appellate Assistant Commissioner under section 30 of the Act which provides for appeals against orders of assessment and other orders enumerated in section 30 but no appeals is there provided against orders made under section 64(3).
Similarly appeals to the Appellate Tribunal which lie under section 33 of the Act also do not provide for any appeal on the question of the place of assessment.
In Wallace Brothers ' case (3) at p. 79 Spens, C. J., after referring to section 64(3) and the proviso thereto said: " These provisions clearly indicate that the matter is more one of administrative convenience than of (1) All. 616.
(2) (.3) 315 jurisdiction and in any event it is not one for adjudication by the Court. . .
This confirms us in the view that the scheme of the Act does not contemplate an objection as to the place of assessment being raised on an appeal against the assessment after the assessment has been made.
As we have already pointed out, the objection was not raised in the present case even before the Appellate Income tax Officer but only before the Appellate Tribunal ".
There is nothing in the Bidi Supply case (1) which in any way detracts from the efficacy of the decision of the Federal Court in Wallace Brothers ' case (2).
We have already said that Bidi Supply case (1) deals with the vires of section 5(7A).
In this view of the matter the question as to the place of assessment does not arise out of the order of the Income tax Appellate Tribunal and therefore no question of law could be referred nor could the High Court make such order under section 66(2).
In our opinion, the High Court rightly dismissed the appellant 's application for directing the case to be stated under section 66(2) of the Act.
The appeals therefore fail and are dismissed with costs.
In the circumstances of the case there will be only one set of costs.
Appeals dismissed.

Output:
The appellant was carrying on the business of a railway contractor in a place in the district of R.
In April 1943, the Income tax Officer of R which was under the charge of the Commissioner of Income tax, Bengal (Mufassil), served a notice under section 22(2) of the Indian Income tax Act, 1922, on the appellant who in pursuance of the notice filed the return on February 28, 1944.
The Income tax Officer then served notices on him under SS.
22(4) and 23(2) Of the Act for the production of books, etc., but before the final assessment was made, the Central Board of Revenue by an order passed under section 5(2) of the Act, transferred the appellant 's case along with some other assessment cases, to the Commissioner of Income tax (Central), Calcutta.
On February 11, 1948, the Income tax Officer, Calcutta, to whom the appellant 's case was assigned, issued notices again under SS.
22(4) and 23(2) of the Act and after making the usual enquiries made the assessment order on March 15, 1948.
The appellant 's appeals to the Appellate Assistant Commissioner and then to the Appellate Tribunal raising objections to the legality of the transfer of his case to Calcutta and to the jurisdiction of the Income tax Officer, Calcutta, were dismissed.
The Appellate Tribunal held that as the objection related to the place of assessment it was not competent for the Tribunal to go into that question.
The appellant then made an application to the Commissioner of Income tax for reference under section 66(1) of the Act, but this was dismissed on the ground that the assessee never raised any objection before the Income tax Officer to his jurisdiction and that, in any case, the question of jurisdiction could not arise out of the order of the Tribunal.
An application filed by the appellant to the High Court under section 66(2) of the Act was dismissed and though the order of dismissal was not taken up on appeal, the appellant filed an appeal to the Supreme Court against the order of the Appellate Tribunal.
It was contended for the appellant that under section 64(1) and (2) of the Act he was entitled to be assessed by the Income tax Officer of the area within which the place of his business was situate, that the 302 assessment by the Income tax Officer of Calcutta was illegal assumption of jurisdiction and that, in any case, the order of transfer by the Central Board of Revenue under section 5(2) of the Act was not valid because, if it wanted to transfer the assessment proceedings from the file of one Income tax Officer to another it could be done only under section 5(7A) and not under section 5(2).
Held : (1) Sub section (7A) of section 5 which confers on the Central Board of Revenue the power to transfer any case from one Income tax Officer to another is not a provision which in any way modifies or cuts down the power given to the Central Board of Revenue under sub section 2 of section 5 which enables it to specify as to which of the Commissioners would perform functions in respect of different areas, persons, incomes or cases or classes thereof.
The two sub sections are complementary and operate in two separate spheres.
Pannalal Binjraj vs Union of India, ; and Bidi Supply Co. vs Union of India, ; , distinguished.
In the present case, the Central Board of Revenue directed the Commissioner of Income tax (Central), Calcutta, to exercise his functions in respect of certain cases including the case of the appellant and that fell under section 5(2) and not under section 5(7A).
The order of transfer was, therefore, valid.
(2)The jurisdiction of the Income tax Officer, Calcutta, to make the assessment on the appellant cannot be challenged, in view of sub section 5(a) of section 64 of the Act, under which sub sections
(1) and (2) of section 64 have no application to an assessee in respect of whom anorder has been made by the Central Board of Revenue under S.5(2) of the Act.
(3) Objections as to the place of assessment cannot be raised in appeal either before the Appellate Assistant Commissioner or before the Appellate Tribunal.
Wallace Brothers & Co. Ltd. vs Commissioner of Income tax, Bombay, Sind and Baluchistan, and Seth Kanhaiyalal vs Commissioner of Income tax, [1936] 5 I.T.R. 739, relied on.
Dayaldas Kushiram vs Commissioner of Income tax (Central), and Dina Nath Hem Raj vs Commissioner of Income tax, All. 616, distinguished.
Consequently, as the question as to the place of assessment could not arise out of the order of the Appellate Tribunal no such question of law could be referred to the High Court.


Input:
Appeal No. 844 of 1963.
169 Appeal by special leave from the judgment and decree date November 1, 1960 of the Madras High Court in Appeal No. 199 of 1957.
A. Ranganadham Chetty and A.V. Rangam, for the appellant.
A.V. Vishwanatha Sastri and R. Thiagarajan, for respondent Nos. 1 and 2.
The Judgment of the Court was delivered by Shah, J.
Venkatarama lyengar, Kasthuri Iyengar and Ranga lyengar, residents of the village Kariamanikam in Tiruchirappalli District, with the aid of contributions, subscriptions and donations set up a Samaradhanai Fund for feeding Brahmin pilgrims attending Sri Venkatachalapathiswami shrine at village Gunaseelam on the occasion of Rathotsavam festival.
Between the years 1936 and 1940 seven acres of land were purchased for Rs. 10,500 to provide a permanent income for the Fund.
It was found that the expenses incurred for the Rathotsavam festival did not exhaust the entire income and the balance was utilised for Vanabhojanam in Kariamanikam village in the month of Kartigai and on the Dwadesi following Vaikunta Egadesi day.
The President, Hindu Religious and Charitable Endowments Board, sought to levy for the years 135 1 to 1354 Fasli contributions under section 69 of Madras Act 2 of 1927 in respect of the Fund.
But in Suit No. 297 of 1947 of the file of the District Court at Tiruchirappalli that claim was disallowed.
The District Court held that the charity was not a "specific endowment" within the meaning of Act 2 of 1927.
After the Madras Hindu Religious and Charitable Endowments Act 19 of 1951 was enacted, the Deputy Commissioner of Hindu Religious and Charitable Endowments initiated a fresh proceeding under section 57(d) of that Act and held that the Samardhanai Fund was a "religious charity" within the meaning of section 6(13) of the Act.
Against that order an appeal was carried by the trustees of the Fund to the Commissioner of Hindu Religious and Chartiable Endowments.
The Commissioner held that feeding Brahmins in connection with the religious festival of Hindus was a public charity and also a religious charity within the meaning of section 6(13) of Madras Act 19 of 1951.
The trustees of the Fund then instituted Suit No. 181 of 1954 in the Court of the Subordinate Judge.
Tiruchirappalli to set aside the order of the Commissioner on the plea that the Samardhanai Fund was a private charity not associated with any Hindu festival or service in a temple and was not religious charity or a specific endowment or a public charity, and that it could in no manner become subject to control of the Commissioner, Madras Hindu Religious and Charity Endowments.
The suit was resisted by the Commissioner contending that the Fund was held and administered for a religious charity viz. feeding Brahmin pilgrims on the occasion of a Hindu festival.
The Subordinate Judge held 170 that the Fund was a public charity and that it was also "a religious charity" within the meaning of section 6(13) of the Act,.
the charity being associated with the Hindu festival of Rathotsavam at the Gunaseelam temple.
In appeal against the order of the Subordinate Judge dismissing the suit filed by the trustee_, the High Court of Madras held that the Samardhanai Fund was a public charity within the meaning of section 6(13) of the Act, but not being associated with any Hindu festival or observance of a religious character it was not a "religious charity" and the Commissioner had no jurisdiction to bring it under his control.
The High Court accordingly allowed the appeal and decreed the suit filed by the trustees.
With special leave, the Commissioner has appealed to this Court.
The only question which falls to be determined in this appeal is whether on the facts found by the Court of First Instance and confirmed by the High Court, the Samardhanai Fund is a "religious charity" within the meaning of section 6(13) of Madras Act 19 of 1951.
Clause (13) of section 6 defines "religious charity" as meaning "a public charity associated with a Hindu festival or observance of a religious character, whether it be connected with a math or temple or not".
The definition prescribes two conditions which go to constitute a religious charity: there must be a public charity and that charity must be associated with a Hindu festival or observance, co of a religious character.
If these be fulfilled, a public charity will be a religious charity, even if it is not connected with a math or temple.
The Subordinate Judge held on the evidence that the "charity in question is a feeding charity conducted during the ten days of the Rathotsavam in the Prasanna Venkatachallapathiswami temple in Gunaseelam in the month of Purattasi.
Only Brahmins are fed and not other community people.
There are similar feeding charities for the different communities conducted by the respective community people.
The charity in question has no connection with the Gunaseelam temple in the sense that the food "prepared is not offered to the deity, and feeding is done not in the temple premises but at a separate place originally in a specially erected pandal and now in Seshagiri Iyer 's choultry (Dharamshalla).
The other communities are not fed at this charity.
The temple authorities have no voice in the conduct of the feeding", and the High Court agreed with that view.
The Subordinate Judge held on those findings that the Samardhanai Fund was a public charity within the meaning of section 6(13) and with that view also the High Court agreed.
The Subordinate Judge also held that the charity was associated with the Hindu festival of Rathotsavam in Sri Prasanna Venkatachallapathiswami temple in Gunaseelam Rathotsavam being an observance of a religious character when the deity is taken out in procession in a chariot and therefore the charity in question was clearly one associated with a Hindu festival and also with the observance of a religious character.
In disagreeing with that view, the High Court observed that the expression "associated with a Hindu festival or observance of a religious character" imported some unity of purpose or 171 common object or common endeavour between the festival and the charity and in the absence of such unity, common object or common endeavour, the charity could not be regarded as a religious charity within the meaning of section 6(13)of the Act.
In the view of the High Court that feeding Brahmin pilgrims during the Rathotsavam festival of Sri Venkatachallapathiswami shrine at Gunaseelam did not constitute an association between the Fund and the Rathotsavam festival itself, for the trustees of the shrine conducting the festival "had no manner of check, control or supervision over the feeding charity or Samardhanai Fund", they could not insist upon the feeding being done during the festival, and "cessation or discontinuance of the feeding by the trustees of the feeding charity may constitute a breach of trust on their part but cannot in the least affect the due performance of the Rathotsavam festival itself".
They further observed that belief of the founders of the charity that feeding Brahmins on the occasion of an important festival was meritorious.
will not establish "any link or connection" between the festival and the charity.
We are unable to agree with the view so expressed by the High Court.
The expression "associated" in section 6(13) of Act 19 of 1951 is used having regard to the history of the legislation, the scheme and objects of the Act, and the context in which the expression occurs, as meaning "being connected with" or "in relation to".
The expression does not import any control by the authorities who manage or administer the festival.
A Hindu religious festival or observance may have a local significance, in that it is celebrated or observed in a particular locality in connection with a shrine, temple or math, or it may be a festival or observance celebrated generally without any connection with any temple or math.
In the case of such general festivals or observances there is no one who can be so said to control the celebrations, and the definition of "religious charity" includes such general festivals and observances.
It cannot be assumed that there must always be a set of persons who control the celebration of a festival or an observance.
The test suggested by the High Court that in order that there should be, between the charity and the festival or observance such a relation that the administration of the charity must be controlled by those who celebrate the festival or observance in a temple or math, besides being inapt in the case of general festivals and observances can only be evolved if words which are not found in the definition of "religious charity" are added thereto.
Mr. Vishwanatha Sastri appearing on behalf of the respondenttrutees contended that the expression "associated with a Hindu festival or observance of a religious character" in the definition of "religious charity" implies that the public charity must be an integral part of the Hindu religious festival or observance.
But there is nothing in the Act which indicates any such intention on the part of the Legislature.
Mr. Sastri sought to give diverse illustrations in support.
of his contention that mere feeding of Brahmins on the occasion of a Hindu festival or observance will 172 not amount to association within the meaning of section 6(13).
It is unnecessary to deal with these illustrations, for the definition contemplates a public charity which alone can be a religious charity if the other conditions are fulfilled.
A voluntary celebration of an event of religious significance by feeding Brahmins does not make it a public charity.
There must be an institution which may in law be regarded as a public charity, before it may by its association with a religious festival or observance be regarded as a religious charity.
The association undoubtedly must be real and not imaginary, but to constitute association it is not predicated that the administration of public charity must be controlled by the persons responsible for celebrating the religious festival in a temple or math or be an integral part of the festival or observance.
On the facts found, it is clear that on the occasion of the Rathotsavam festival of Sri Prasanna Venkatachalapathiswami shrine, pilgrims from many places attend the festival and the object of the charity is to feed Brahmins attending the shrine on the occasion of this festival.
It is not disputed that setting up a Fund for feeding Brahmins is a public charity.
The primary purpose of the charity is to feed Brahmin pilgrims attending the Rathotsavam.
This public charity has therefore a real connection with the Rathotsavam which is a Hindu festival of a religious character, and therefore it is a religious charity within the meaning of section 6(13) of Madras Act 19 of 1951.
Surplus income of the Fund is used in Vanabhojanam in the month of Kartigai, and on the day following the Vaikunta Ekadeshi.
it is not suggested that on that account the Fund is not a "religious charity".
We therefore set aside the order passed by the High Court and restore the order passed by the Trial Court.
There will be no order as to costs throughout.
Appeal allowed.

Output:
A Samaradhanai Fund was started for the purpose of feeding Brahmin pilgrims attending Sri Venkatachalapathiswami shrine at village Gunaseelam (in Madras State) on the occasion of Rathotsavam festival.
On the enactment of the Madras Hindu Religious and Charitable Endowments Act 19 of 1951 the Deputy Commissioner of Hindu Religious and Charitable Endowments initiated proceedings under section 57(d) of the Act and held that the aforesaid fund was a religious charity ' within the meaning of section 6(13) of the Act.
His order was upheld by the Commissioner.
The Trustees of the Fund then filed a suit to set aside the order of the Commissioner contending that the Samaradhanai Fund was neither a public charity nor a religious charity '.
In section 6(13), 'religious charity ' is defined as a "public charity associated with a Hindu festival or observance a religious character, whether it be connected with a math or temple or not".
The trial court decided against the trustees but the High Court held in their favour.
According to the High Court feeding the Brahmins was a public charity but it was not a 'religious charity in as much as those who conducted the celebration of the Rathotsavam at the shrine had no control over the feeding of Brahmins out of the Samaradhanai Fund.
On appeal to the Supreme Court by the Commissioner, with special leave.
HELD: Feeding of Brahmins out of the Samaradhanai fund was associated with the celebration of the Rathotsavam at the Venkatachalapathiswami shrine.
The expression "associated" in section 13 of Act 19 of 1951 is used having regard to the history of the legislation the scheme and objects of the Act and the context in which it occurs, as meaning "being connected with" or "in relation to".
The expression does not import any control by the authorities who manage or administer the festival.
There are many Hindu festivals which are celebrated by the public generally without any connection with any temple or math.
The definition of "religious charities" includes such general festivals and observances.
It cannot be said that there must always be a set of persons who control the celebration of a festival or an observance.
F171 D G] Nor can it be contended that the expression "associated with a Hindu festival or observance of a religious character" in the definition of "religious charity" implies that the public charity must be an integral part of the Hindu religious festival or observance.
There is nothing in the Act which indicates any such intention on the part of the legislature.
[171 H]


Input:
Appeal No. 73 of 1954.
Appeal by Special Leave against the Judgment and Order dated the 11th day of February, 1954, of the Election Tribunal, Allahabad.
in Election Petition No. 252 of 1952.
672 N.C. Chatterjee and G. N. Kunzru, (Rameshwar Nath and Rajinder Narain, with them) for the appellant.
Veda Vyasa (G. C. Mathur, with him) for respondent No. 1. 1954.
September 29.
The Judgment of the Court was delivered by DAB J.
Kunwar Rananjaya Singh, the appellant before us, is the son of Raja Bhagwan Bux Singh of Amethi.
He was the successful candidate at an election to the Uttar Pradesh Legislative Assembly from Amethi (Central) constituency the polling in respect of which took place on the 31st January, 1952, and the result whereof was announced on the 6th February, 1952, and finally published in the Uttar Pradesh State Gazette on the 26th February, 1952.
The respondent, Baijnath Singh, who was one of the unsuccessful candidates filed an election petition calling in question the election of the appellant.
Three other unsuccessful candidates were also impleaded as respondents.
The grounds on which the election was challenged were that the appellant himself, together with his own and his father 's servants and other dependents and agents, committed various corrupt practices of bribery, exercise of undue influence, publication of false and defamatory statements and concealment of election expenses as per particulars set forth in the petition and the schedules thereto.
He prayed that the election of the appellant be set aside and that he, the said respondent, be declared to have been duly elected.
The appellant alone contested the petition.
In his written statement he denied each and every one of the charges of corrupt practices levelled against him and he also filed a petition of recrimination challenging the conduct of the said respondent at the election.
The said respondent denied the charges imputed to him.
Altogether 15 issues were raised, namely, eight.
on the election petition and 7 on the petition of recrimination.
All the 7 issues arising out of the petition of recrimination were found by the tribunal constituted for hearing of the election petition against the appellant and the petition of recrimination was dismissed.
The appellant has not 673 contested the correctness of those findings before us and nothing further need be said about them.
As regards the issues arising on the main election petition the election tribunal found in favour of the appellant on issues Nos. 1, 2, 4,5, 6 and 7 but decided issue No. 3 against the appellant.
That issue was as follows:3 Did respondent No. I employ for election more persons than authorised by law? Did respondent No. I incur the expenditure shown in the list as "Heads of other concealed expenditures?" Did he exceed the prescribed limit of expenditure for election ?" The above issue related to charges made out in paragraph 6 of the election petition and the list of particulars set out in Part III of the schedule thereto.
The particulars in that part were grouped under two main heads, each containing several items.
The first head referred to persons alleged to have been employed on payment far in excess of the prescribed number and not shown in the return of election expenses.
The second bead of particulars contained other alleged concealed expenditures.
The election tribunal held in favour of the appellant on all items of charges under both heads in Part III, except items (ii) and (iii) of the first bead.
Item (ii) charred that all the paid Ziladars of Amethi estate who were about 20 in number assisted by their peons and orderlies worked for the appellant and item No. (iii) complained that the Manager and the Assistant Manager of that estate also worked for him.
The tribunal held that the number of all these persons coming within these two categories far exceeded the prescribed number of persons who could be employed in an election and their salary for the period they worked for the appellant in connection with the election, if added to the admitted election expenses, would exceed the maximum expenditure permissible for contesting a single member constituency.
The tribunal, therefore, held that the appellant was guilty, under both these heads, of corrupt practice as defined, in section 123(7) of the Representation of the People Act, 1951, and was consequently liable to be dealt with under section 100(2) (b) and section 145 of that Act.
674 These findings as to employment of extra persons on payment and the expenditure of money in excess of 7h the permissible maximum election expenses necessarily led to the further finding that inasmuch as these expenses had not been shown in the appellant 's return of election expenses the appellant was also guilty of a minor corrupt practice as defined in section 124(4) of the Act and was liable to be dealt with under section 100(2) (a) and section 145 of the Act.
In the result, the tribunal under the general issue No. 8 only declared the election of the appellant to be void.
Hence this appeal filed by the unseated candidate with the special leave of this Court.
Section 77 of the Representation of the People Act, 1951, provides that the maximum scales of election expenses at elections and the numbers and descriptions of persons who may be employed for payment in connection with election shall be as may be prescribed.
As regards the maximum expense, rule 117 lays down that no expense shall be incurred or authorised by a candidate or his election agent on account of or in respect of the conduct and management of an election in any one constituency in a State in excess of the maximum amount specified in respect of that constituency in Schedule V.
The maximum amount specified in that schedule in respect of a singl emember constituency in the Uttar Pradesh is only Rs. 8,000.
Rule 118 prescribes that no person other than or in addition to those specified in Schedule VI shall be employed for payment by a candidate or his election agent in connection with an election.
Schedule VI allows I election agent, 1 counting agent, 1 clerk and 1 messenger at all elections.
It also allows, in addition to these, 1 clerk and 1 messenger for every 75,000 electors and 1 polling agent and 2 relief agents for each polling booth and I messenger at each polling booth.
The contravention of the provisions of section 77, read with rules 117 and.
118 and Schedules V and VI, is made a corrupt practice by section 123(7) Section 123(7) clearly shows that in order to amount to a corrupt practice the excess expenditure must be incurred or authorised by a candidate or his agent and 675 the employment of extra persons must likewise be by a candidate or his agent.
The charge against the appellant was, inter alia, that the Manager, Assistant Manager, 20 Ziladars of Amethi estate and their peons and orderlies had worked for the appellant in connection with the election.
The tribunal took the view we think quite erroneously that although the estate belonged to the father of the appellant, nevertheless, as the appellant was the heir apparent and actually looked after the estate on behalf of the old and infirm proprietor, these servants of the estate were "virtually" his "own" servants and could properly be regarded as having been employed for payment by the appellant.
The Learned advocate appear ing for the respondent frankly and properly conceded that he could not support this part of the finding of the tribunal.
He, however, contended, relying on the language used in section 77, that if the number of persons who worked for payment in connection with the election exceeded the maximum number specified in Schedule VI, the case fell within the mischief of the relevant sections and the rules, no matter who employed them or who made payments to them.
It is true that section 77 uses the words "who may be employed for payment" without indicating by whom employed or paid but it must be borne in mind that the gist of a corrupt practice as defined in section 123(7) is that the employment of extra persons and the incurring or authorising of excess expenditure must be by the candidate or his agent.
The provisions of rules 117 and 118 are to be read in the light of this definition of a corrupt practice.
Indeed, these rules follow the language of section 123(7) in that they prohibit the employment of persons other than or in addition to those specified in Schedule VI, and the incurring or authorising of expenditure in excess of the amount.
specified in Schedule V, and in both cases by a candidate or his agent.
Section 77 must, therefore, be read in a manner consonant with section 123(7) and rule 117 and and 11 8.
In this view of the matter the observation made by Phillimore J. in Joseph Porster Wilson and, 676 Another vs Sir Christopher Furness(1), relied on by the appellant and referred to in the judgment of the tribunal are quite apposite.
There can be no doubt that in the eye of the law these extra persons were in the employment of the father of the appellant and paid by the father and they were neither employed nor paid by the appellant.
The case, therefore, does not fall within section 123(7) at all and if that be so, it cannot come within section 124(4).
It obviously was a case where a father assisted the son in the matter of the election.
These persons were the employees of the father and paid by him for working in the estate.
At the request of the father they assisted the son in connection with the election which strictly speaking they were not obliged to do.
Was the position in law at all different from the position that the father had given these employees a holiday on full pay and they voluntarily rendered assistance to the appellant in connection with his election? We think not.
It is clear to us that qua the appellant these persons were neither employed nor paid by him.
So far as the appellant was concerned they were mere volunteers and the learned advocate for the respondent admits that employment of volunteers does not bring the candidate within the mischief of the definition of corrupt practice as given in in section 123(7).
The learned advocate, however, contended that such a construction would be against the spirit of the election laws in that candidates who have rich friends or relations would have an unfair advantage over a poor rival.
The spirit of the law may well be an elusive and unsafe guide and the supposed spirit.
can certainly not be given effect to in opposition to the plain language of the sections of the Act and the rules made there under.
If all that can be said of these statutory provisions is that construed according to the ordinary, grammatical and natural meaning of their language they work injustice by placing the poorer candidates at a disadvantage the appeal must be to Parliament and not to this Court.
(1) 6 O 'Mally and Hardcastle 's Report of Election Cases, page I at page 6, 677 On a consideration of the relevant provisions of the Act and the rules and the arguments advanced before us we are of opinion that the appellant cannot in the circumstances of this case be held to be guilty of any corrupt practice under section 123(7) as alleged against him.
It follows from this that not having incurred any expenditure over and above what was shown by him in his return of election expenses he cannot be said to have concealed such expenditure and, therefore, he cannot be held to have been guilty of any minor corrupt practice under section 124(4) of the Act.
In the view we have taken, namely, that these extra men were not employed or paid by the appellant, it is unnecessary, for the purpose of this appeal, to discuss the question whether, if one 's own servants are also utilised or employed in the conduct of the election, their salary for the period they are so utilised or employed should be regarded as election expenses and shown in the return.
On that we prefer not to express any opinion on this occasion.
No other point having been raised we allow this appeal with costs.
Appeal allowed.

Output:
Section 123(7) of the Representation of the People Act, 1951, shows clearly that in order to amount to a corrupt practice the excess expenditure must be incurred or authorised by a candidate or his agent and the employment.
of extra persons must likewise be by a candidate or his agent.
The charge against the appellant was, inter alia, that the Manager, Assistant Manager, 20 Ziladars of Amethi and their peons and orderlies had worked for the appellant in connection with the election.
The view taken by the Election Tribunal that though the estate belonged to the father of the appellant, nevertheless as the appellant was the heir apparent and actually looked after the estate on behalf of the old and infirm proprietor, these servants of the estate were "virtually" his "own" servants and could properly be regarded as having been employed for payment by the appellant, was untenable because though section 77 of the Act uses the words SC who may be employed for payment", without indicating by whom employed or paid, the gist of a corrupt practice as defined in B. 123 (7) of the Act is that the employment of extra persons and the incurring or authorising of extra expenditure must be by the candidate or his agent.
The appellant accordingly, could not in the circumstances of the present case, be held to be guilty of any corrupt practice under section 123(7) as alleged against him and therefore could not be held to have been guilty of any minor practice under section 124(4) of the Act.
, Joseph Forster Wilson and Another vs Sir Christopher Furness (6 O 'Mally & Hardocastle 's Report of Election Cases, p. 1), referred to.