text stringlengths 5 5.67k |
|---|
The fact that the buses belonging to the appellants have (1) ; (2) ; 730 not been acquired by the Government is also not material. Ratio |
The property of a business may be both tangible and intangible. Ratio |
Under the statute the Government may not deprive the appellants of their buses or any other tangible property but they are depriving them of the business of running buses on hire on public roads. Ratio |
We think therefore that in these circumstances the legislation does conflict with the provision of article 31(2) of the Constitution and as the requirements of that clause have not been complied with, it should be held to be invalid on that ground. Ratio |
The next point that requires consideration is, whether the Act or any of its provisions are discriminatory in their character and conflict with the rule of equal protection embodied in article 14 of the Constitution ? Mr. Pathak has raised a two fold contention on this point. Ratio |
He has argued in the first place that no discrimination could be made in favour of the State as against private individuals in the matter of carrying on the business of plying buses for hire on public roads. ARG |
The State as a person, it is conceded, comes under a different class or category from private citizens; but the contention is that when the State carries on trade as merchants it occupies the same position as private traders and its acts in this respect cannot be regarded as acts of the sovereign. ARG |
Much reliance has been placed by the learned counsel in sup port of this view on the judgment of Sir Barnes Peacock in P. and O. Steam Navigation Co. vs The Secretary of State(1). ARG |
The other objection taken by the learned counsel is, that the Act gives an unguided and unfettered discretion to the State to associate such persons as it likes in the transport business and thereby allows it to discriminate between one citizen and another. ARG |
No rules are laid down to regulate the choice of the State in such cases. Ratio |
So far as the first ground is concerned, it is well settled that mere differentiation does not make a legislation obnoxious to the equal protection clause. Ratio |
The Legislature has always the power to make classification and all that is necessary is that the classification should not be arbitrary but must bear a reasonable (1) (1861) 5 B.H.C.R.Appendix 1. 731 relation to the object which the legislation has in view. Ratio |
There is no doubt that classification is inherent in the concept of a monopoly; and if the object of legislation is to create monopoly in favour of the State with regard to a particular business, obviously the State cannot but be differentiated from ordinary citizens and placed in a separate category so far as the runn... |
No doubt if the creation of a monopoly in favour of the State is itself bad on the ground of violating some constitutional provisions, the statute would be invalid for those reasons and the question of discrimination would not be material at all. Ratio |
In our opinion, the argument of Mr. Pathak that the State ceases to function as a State as soon as it engages itself in a trade like ordinary trader cannot be accepted as a sound proposition of law under the Constitution of India at the present day. Ratio |
In the last century, when the laissez faire doctrine held the field, the primary function of a State was considered to be maintenance of law and order and all other activities were left to private competitors. Ratio |
That conception is now changed and in place of the 'police State ' of old, we are now having a 'welfare State. ' Chapter IV of our Constitution which lays down the Directive Principles of State Policy clearly indicates what the functions of a State should be and many things which could not have been considered as State... |
Steam Navigation Co. vs The Secretary of State (Supra), was decided would certainly come within the legitimate scope of State duties Vide in this connection Lokanath Misra vs State of Orissa(supra). Ratio |
The other contention of Mr. Pathak in regard to article 14 though somewhat plausible at first sight does not appear to us to be sound. Ratio |
Section 3 of the Act authorises the State Government to declare that the road transport service in general or on particular routes should be run and operated by the State Government exclusively or by the State Government in conjunction with railway or partly by the State Government and partly by others in accordance wi... |
The learned Advocate General pointed out however that the State is only to choose the routes or portions of routes on which the private citizens would be allowed to operate and the number of persons to whom permits should be given, and that the granting of permits would necessarily be regulated by the provisions of Mot... |
This does not appear to us to be an unreasonable construction to be put upon the relevant portion of section 3 of the Act and it receives support from what is laid down in section 7(c) of the Act. Ratio |
On this construction the discretion to be exercised by the State would be a regulated discretion guided by statutory rules. Ratio |
We hold therefore that the appellant cannot make any grievance on this score and that the statute does not offend against article 14 of the Constitution. Ratio |
The last point that remains to be considered is, whether the Act conflicts with the guarantee of freedom of inter State and intrastate trade, commerce and intercourse provided for by article 301 of the Constitution ? Article 301 runs as follows: " Subject to the other provisions of this Part, trade ' commerce and inter... |
" Article 302 authorises the Parliament to impose such restrictions on the freedom of trade, commerce and intercourse between one State and another or within any part of the territory of India as may be required in the public interests. Ratio |
Under article 304(b) it is competent even for the Legislature of a State to impose reasonable restrictions upon the freedom of trade, commerce and intercourse mentioned above in the interests of the public, but it is necessary that any bill or amendment for this purpose should first receive the sanction of the Presiden... |
Article 301 733 corresponds to section 92 of the Australian Constitution and is even wider than the latter inasmuch as the Australian Constitution provides for the freedom of inter State trade only. Ratio |
The High Court has negatived the contention of the appellants on this point primarily on the ground that article 301 of the Constitution has no application to the present case. Ratio |
What is said is, that article 301 provides safeguards for carrying on trade as a whole as distinguished from the rights of an individual to carry it on. Ratio |
In other words, this article is concerned with the passage of commodities or persons either within or outside the State frontiers but not directly with individuals carrying on the commerce or trade. Ratio |
The right of individuals, it is said, is dealt with under article 19(1) (g) of the Constitution and the two articles have been framed in order to secure two different, objects. Ratio |
The question is not quite free from difficulty and in view of the fact that we have declared the Act to be unconstitutional on the two grounds mentioned above, we do not consider it necessary to record our decision on this point. Ratio |
We would only desire 'to indicate the contentions that have been or could be raised upon this point and the different views that are possible to be taken in respect to them so that the Legislature might take these matters into consideration if and when they think of legislating on this subject. Ratio |
We desire to point out that in regard to section 92 of the Australian Constitution, which so far as inter. Ratio |
State trade is concerned adopts almost the same language as article 301 of our Constitution, it has been definitely held by the Judicial Committee in the case of Commonwealth of Australia vs The Bank of New South Wales (supra), that the rights of individuals do come within the purview of the section. Ratio |
It is true, as Lord Porter observed, that section 92 does not create any new juristic rights but it does give the citizens of the State or the Commonwealth, as the case may be, the right to ignore and, if necessary, to call on the judicial power to help him to resist legislative or executive actions which offend agains... |
It follows from this, as his Lordship pointed out, that 94 734 the application of section 92 does not involve calculations as to the actual present or possible future effect upon the total value of inter State trade, the difficulty in applying such a criterion being too obvious. Ratio |
If this view is adopted in regard to article 301 of our Constitution it can plausibly be argued that the legislation in the present case is invalid as contravening the terms of the article. Ratio |
The question of reasonable restrictions could not also arise in this case, as the bill was not introduced with the previous sanction of the President as required by the proviso to section 304(b). Ratio |
It is true that the consent of the President was taken subsequently but the proviso expressly insists on the sanction being taken previous to the introduction of the bill. Ratio |
It may be argued that freedom of trade does not, as Lord Porter observed in the Australian Bank case referred to above, mean unrestricted or unrestrained freedom and that regulation of trade is quite compatible with its freedom. Ratio |
As against this it may be pointed out that the Constitution itself has provided in articles 302 and 304(b) how reasonable restrictions could be imposed upon freedom of trade and commerce and it would not be proper to hold that restrictions can be imposed aliunde these provisions in the Constitution. Ratio |
The question would also arise as to what interpretation should be put upon the expression "reasonable restrictions" and whether or not we would have to apply the same tests as we have applied in regard to article 19(6) of the Constitution. Ratio |
One material thing to consider in this connection would be that although the Constitution was amended in 1951 by insertion of an additional clause in article 19(6) by which State monopoly in regard to trade or business was taken out of the purview of article 19(1) (g) of the Constitution, yet no such addition was made ... |
735 The Australian Constitution indeed has no provision like article 19(1) (g) of the Indian Constitution and it is certainly an arguable point as to whether the rights of individuals alone are dealt with in article 19(1) (g) of the Constitution leaving the freedom of trade and commerce, meaning by that expression 'onl... |
We have thus indicated only the points that could be raised and the possible views that could be taken but as we have said already, we do not desire to express any final opinion on these points as it is unnecessary for purposes of the present case. Ratio |
The result is that in our opinion the appeals should be allowed and the judgment of the High Court set aside A writ in the nature of mandamus shall issue against the respondents in these appeals restraining them from enforcing the provisions of the U. P. State Road Transport Act, 1951, against the appellants or the men... |
There will be no order as to costs. RPC |
Appeals allowed. RPC |
l Appeals Nos. 2419 to 2421 and 2423 to 2425 of 1966. FAC |
Appeals by special leave from the judgment and order dated February 22, 1966 of the Bombay High Court, Nagpur Bench in Special Civil Applications Nos. 140 to 142 of 1962. FAC |
A. K. Sen, G. L. Sanghi, Rameshwar Nath, for the appellant (in all the appeals). FAC |
section C. Manchanda, section K. Aiyar and R. N. Sachthey, for the respondent (in all the appeals). FAC |
The Judgment of the Court was delivered by Hegde, J. FAC |
In these appeals by special leave, the only ques tion of law that arises for decision is whether the respondent was competent to initiate proceedings under section 34 of the Indian Income Tax Act, 1922 (which will hereinafter be refer red to as the Act). FAC |
The respondent initiated proceedings under section 34 of the Act against the appellant by issuing notices under that section on December 26, 1960 in respect of the assessment years 1953 54, 1954 55 and 1955 56. FAC |
The appellant challenged the validity of 268 those proceedings by means of a writ petitions under article 226 and 227 of the Constitution in the High Court of Judicature at Bombay (Nagpur Bench) . FAC |
Those petitions were summarily dismissed. RLC |
The appellant thereafter appealed to this Court after obtaining special leave from this Court. FAC |
This Court allowed those appeals on April 8, 1965 holding that the High Court was not justified in summarily dismissing the writ petitions as the allegations made therein merited examination. FAC |
Thereafter the High Court issued rule nisi in those petitions. FAC |
The respondent opposed those petitions. FAC |
After hearing the parties, the High Court again dismissed those writ petitions. FAC |
Hence these appeals. FAC |
The facts of the case material for deciding these appeals have been set out in detail in this Court 's order dated April 8, 1965. FAC |
We shall briefly refer to them. FAC |
The above appeals relate to proceedings under section 34 of the Act in respect of three assessment periods. FAC |
It would be sufficient if we set out the facts relating to the assessment year 1953 54. FAC |
There is no dispute that if the proceedings relating to that year are held to be invalid, similar would be the position regarding the proceedings relating to the other two assessment periods. FAC |
On the other hand, if they are held to be valid, the same would be true in respect of the other assessment periods. FAC |
The appellant, Madhya Pradesh Industries Ltd. (hereinafter referred to as the company), is engaged in the business of mining ,manganese ore. FAC |
On March 18, 1952, the company appointed M/s. J. K. Alloys Ltd. (hereinafter called 'Alloys ') as its selling agents. FAC |
In the account year relating to the assessment year 1953 54, the company paid as commission, Rs. 1,13,052/8/9 to the selling agents and claimed that amount as a revenue outgoing in the computation of its profits for that year. FAC |
The Income tax Officer made the order of assessment without expressly referring to the said deduction but proceeding on the basis that it is a per missible deduction. FAC |
On December 26, 1960, the Income tax Officer issued a notice to the company in exercise of his powers under section 34 of the Act reciting therein that he having "reason to believe that" the income of the company assessable to income tax for the assessment year 1953 54 had (a) escaped assessment and (b) under assessed,... |
He called upon the company to deliver a return of the total income of the company assessable for the said assessment year 1953 54. FAC |
In response to a letter sent by the company, the Income tax Officer informed the company that the notice issued by him was under section 34 (1) (a). FAC |
Thereafter there was some correspondence between the Income tax Officer and the company. FAC |
The Income tax 269 Officer required the company to give him the information called for in the questionnaire issued by him. FAC |
The company did not send any reply to the said questionnaire. FAC |
On December 21, 1961, the Income tax Officer informed the company that since the questions asked were not replied to, he presumed that no correspondence with Alloys existed and the payment of commission had been made without any justification, Alloys having rendered no service as selling agents. FAC |
On April 2, 1962, the company moved the High Court of Judicature of Bombay (Nagpur Bench) praying for the issue of a writ of certiorari under article 226 of the Constitution or an appropriate direction or order under article 227 of the Constitution calling for the record of the case and for the issue of writs in the na... |
The petition, as mentioned earlier, was rejected in limini. FAC |
In the writ petition, the plea taken by the company was that in issuing the notice under section 34(1) (a) of the Act, the Income tax Officer acted without jurisdiction and for a colourable purpose. FAC |
Its case as set out in the writ petition is as follows In its return the company disclosed for the year ending March 31, 1953 Rs. 15,70,587/ as its total profits according to its books of account. FAC |
In the statement under section 38 (3) of the Act filed with the return, the company disclosed that it had paid Rs. 1,13,052/8/9 as "commission sales" "on different dates" by cheques to Alloys and Rs. 6,091/4/ to J. section Williams on October 4, 1952 by cheque as commission on sales. FAC |
In the profit and loss account of the company filed with the return, the amount of Rs. 29,76,067/10/8 was disclosed as received by "sales less com mission". FAC |
On December 7, 1953, R. K. Gupta, a Director of the company made a statement before the Income tax Officer stating that the commission was paid to Williams on the sales accounted for during the year ended March 31, 1953 and that the same should be allowed as deduction and that "similar was the case with the commission ... |
On June 21, 1954, the company filed the certificates and the statements demanded together with the statement showing that out of the sale proceeds, commission paid to Alloys and J. section Williams was deducted. FAC |
In the course, of the assessment proceedings, R. section Agarwal, a representative of the company appeared before the Income tax Officer and agreed that the commission "debited as paid to Williams may be added back ' and about Alloys he said that the commission "had already been paid". FAC |
Thereafter on February 14, 1955, the assessment of the company was com pleted by the Income tax Officer. FAC |
The Income tax Officer rejected the commission said to have been paid to Williams and added back that amount to the gross profits of the company. FAC |
He took no objection to the commission paid to the Alloys. FAC |
The case pleaded by the company in the writ petition is that it had placed before the Income tax Officer all the material facts; the Income tax Officer before making the assessment had examined those facts and was satisfied with the explanation given by the company. FAC |
The company denied that the Income tax Officer had any reason to believe that by reason of the omission or failure on the part of the company to disclose fully 'and truly all material facts necessary for his assessment for the year in question income, profits or gains chargeable to income tax have escaped assessment fo... |
The company dis puted that the Income tax Officer had any reason before him to have the required belief. FAC |
It also denied the fact that it had omitted or failed to disclose fully and truly all material facts necessary for the assessment in question or that any income, profits, or gains chargeable to income tax have escaped assessment in that year. FAC |
Section 34(1) of the Act as at the relevant time read (a) The Income tax Officer has reason to believe that by Mason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly ail material facts necessary for his assessment for that ... |
he may in cases falling under clause ( a) at any time within eight years and in cases falling under clause (b) at any time within four years of the end of that year, serve on the assessee, or, it the assessee is a company, on the principal officer, thereof, a notice containing all or any of the requirements which may b... |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.