TMI Blog1967 (11) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment years 1959-60, 1960-61, 1961-62 and 1962-63. He challenged the legality of his assessments in Civil Rule No. 127 of 1963 on the file of the High Court of Judicature of Assam. The Assam High Court accepted his petition and quashed the assessments in question holding that section 4(3)(xxi) of the Indian Income-tax Act, 1922, as well as section 10(26) of the Income-tax Act, 1961, to the extent they excluded Government servants from the benefit of the exemption given thereunder are void. The income-tax authorities as well as the Union of India have come up to this court in appeal by special leave. The facts of this case lie within a narrow compass. The respondent belongs to Mikir Scheduled Tribe and is a permanent inhabitant of United Khasi-Jaintia Hills District, an autonomous district included in Part A of the Table appended to paragraph 20 of the Sixth Schedule of the Constitution of India. He is a Government servant. All these are admitted facts. The respondent in his petition before the High Court averred (in paragraph 7 of the petition) at "in all the autonomous districts under Table, Part A of paragraph 20 of the Sixth Schedule of the Constitution of India, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question for decision is whether the legislature had no power to exclude Government servants from the benefit of the exemptions given under the aforementioned sections 4(3)(xxi) and 10(26). It is seen that the income of the members of a Scheduled Tribe included in clause (25) of article 366 of the Constitution and residing in any area specified in Part A or Part B of the Table appended to paragraph 20 of the Sixth Schedule of the Constitution, excepting that of Government servants is exempt from income-tax. In other words, the Government servant alone is excluded from the benefit of the exemption given under the provisions quoted above. It is agreed that the respondent is a member of the Scheduled Tribe included in clause (25) of article 366 of the Constitution, residing in an area specified in Part A of the Table appended to paragraph 20 of the Sixth Schedule to the Constitution, but yet he had been denied the benefit of the exemption in question on the sole ground that he is in the service of the Government. It may be noted that exemption both under section 4(3)(xxi) of the Indian Income-tax Act, 1922, and under section 10(26) of the Income-tax Act, 1961, was given to the memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Government servants is exempt from income-tax be it as salaried officers, lawyers, doctors or persons in other walks of life. Is there any legal basis for this differentiation ? Prima facie it appears that Government servants have been discriminated against and the discrimination in question is writ large on the face of the provisions in question. The learned Solicitor-General contended that the classification in question can be justified on administrative grounds. He urged that a classification based on administrative convenience is a just classification in the matter of levying taxes. According to him, it is easy to collect taxes from Government servants. Therefore, it was permissible for the legislature to deny them the exemption extended to the other members of their tribes. This contention appears to be without merit. It may be that for the purpose of taxation a classification can be made on the basis of administrative convenience. But we fail to see how the case of the Government servants stands on a footing different from that of the employees in statutory corporations or even well recognised firms. That apart, administrative convenience which can afford ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght of basic principles of equality before law, it would be odd to allow the section to continue prospectively for all time to come. After setting out the legislative background of that provision, this court observed : "The legislative background to which we have referred cannot be divorced from the historical background which is to be found, for instance, in article 362. This article provides that in the exercise of the power of Parliament or of any legislature of any State to make laws or in the exercise of the executive power of the Union or of a State, due regard shall be had to the guarantee or assurance given under any such covenant or agreement as is referred to in clause (1) of article 291 with respect to the personal rights, privileges and dignities of a Ruler of an Indian State. This has reference to the covenants and agreements which had been entered into between the Central Government and the Indian Princes before all the Indian States were politically completely assimilated with the rest of India. The privilege conferred on the Rulers of former Indian States has its origin in these agreements and covenants. One of the privileges is that of extra territoriality and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant. The exemption in question was not given to individuals either on the basis of their social status or economic resources. It was given to a class. Hence individuals as individuals do not come into the picture. We fail to see in what manner the social status and economic resources of a Government servant can be different from that of another holding a similar position in a corporation or that of a successful medical practitioner, lawyer, architect, etc. To over-paint the picture of a Government servant as the embodiment of all power and prestige would sound ironical. Today his position in the society to put it at the highest is no higher than that of others who in other walks of life have the same income. For the purpose of valid classification what is required is not some imaginary difference but a reasonable and substantial distinction having regard to the purpose of the law. It was lastly contended by the learned Solicitor-General--a contention which was not taken either in the return or before the High Court or in the appeal memorandum--that it is not possible to strike down only a portion of section 4(3)(xxi) of the Indian Income-tax Act, 1922, and section 10(26) of the ..... 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