TMI Blog1941 (4) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case to all persons interested in agriculture in this Province, this Special Bench has been constituted to hear the matter. In para 1 of the plaint, it is stated that the plaintiffs are zamindars holding a permanently settled estate. Then follow a number of paragraphs purporting to describe the position of zamindars before and after the Permanent Settlement Regulation (Regulation 1 of 1793). In para 6 it is said that the Permanent Settlement Regulation is an Act of Parliament, and in para 7 it is pleaded that as the Bihar Agricultural Income tax Act is repugnant to a Governor General's Act or a Parliamentary Statute and purports to alter the character of the permanent settlement the previous sanction of the Governor General was necessary to the introduction of the Bill in the Legislature and further that the Bill should have been reserved for signification of His Majesty's pleasure. In para 8 it is stated that the Bihar Agricultural Income tax Act directly infringes the rights granted by Regulation 1 of 1793 and as it repeals either directly or indirectly such regulation it is ultra vires. In para 9 it is pleaded that the Bihar Agricultural Income tax Act is ultra v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y called upon under the provisions of the Bihar Agricultural Income tax Act to render a return of their income for the previous year for the purposes of assessment to agricultural income tax. The defendants deny that the plaintiffs are entitled to any relief whatsoever. Certain other pleas were taken in the written statement, but as those pleas were not pressed before us it is unnecessary to set them out in this judgment. In the Court of the Subordinate Judge the following issues were framed : 1. Is the suit as framed maintainable ? 2. Is the suit bad for any want of or defect in the notice under Section 80, Civil Procedure Code ? 3. Does the impugned Acts require the previous sanctions of the Governor and the Governor General under Sections 299(3) and 108(2), Government of India Act, 1935, or should they have been reserved for the signification of His Majesty's pleasure under the said Act ? Was the previous sanction and approval of the Governor obtained ? 4. Were the impugned Acts illegal, inoperative, repugnant and ultra vires ? 5. Can the impugned Acts be questioned in the civil Court ? 6. Does Art. 41 in List 2, Government of India Act, 1935, empower the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature by the Government of India Act, 1935, and further because it does not tax all agricultural income as defined in the Government of India Act, 1935. (2) The said Act purports to deal with rights and privileges relating to land revenue and repeals or modifies the terms of the permanent settlement and as the previous sanction of the Governor was not obtained to the introduction of the Bill as required by Section 299, Government of India Act, the Act was not validly enacted and is not binding on the plaintiffs. Further, the Bill was not validly enacted as it was not reserved for the consideration of the Governor General as required by the Instrument of Instructions issued to the Governor of the Province. (3) The said Act purports to repeal or modify the Permanent Settlement Regulations and in particular Regulation 1 of 1793 which is an Act of Parliament or a Governor General's Act. The said Act was not validly enacted by reason of the fact that the previous sanction of the Governor General was not obtained for the introduction of the Bill as required by Section 108(2), Government of India Act, 1935. (4) Even assuming the said Act to be validly enacted, it does not on its true ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kind of any process ordinarily employed by a cultivator or receiver of rent in kind to render the produce raised or received by him fit to be taken to market, or (iii) the sale by a cultivator or receiver of rent in kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in sub clause (ii) ; (c) any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator, or the receiver of rent in kind, of any land with respect to which, or the produce of which, any operation mentioned in sub clauses (ii) and (iii) of clause (b) is carried on : Provided that the building is on or in the immediate vicinity of the land, and is a building which the receiver of the rent or revenue or the cultivator or the receiver of the rent in kind by reason of his connexion with the land, requires as a dwelling house, or as a storehouse, or other out building. Section 110(b)(ii) prohibits a Provincial Legislature except in so far as is expressly permitted by any subsequent provisions of the Government of India Act, 1935, to make any law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n they are entitled to do. The greater must include the less, and if the Provincial Government are entitled to tax all agricultural income as defined in Section 2(1). Income tax Act, then they are clearly entitled to tax a part only of such income. It is impossible to hold that the omission to tax some forms of agricultural income could render the whole of the Bihar Act ultra vires and of no effect. In the Income tax Act definition the words used are : Agricultural income ' means (a) any rent or revenue derived from land which is used for agricultural purposes. . . . . . . . . In the Bihar Agricultural Income tax Act the words used are : Agricultural income ' means any rent or income derived from land which is used for agricultural purposes. . . . . . . . . It was argued that there was some difference in this part of the definition, though it was not stated with any clearness as to what that distinction was. In my view the word revenue in the Income tax Act is used to denote income or a revenue receipt as opposed to a capital receipt and therefore covers all income from agricultural land other than rent. No real distinction can be drawn between the expressions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o a local rate assessed and collected by officers of the Crown as such, whereas under the Bihar Act income from revenue free agricultural land would be agricultural income if it was derived from land subject to a local rate or cess assessed and collected under the provisions of certain Local Acts, no matter how such local rate or cess was assessed or collected or by whom. In other words, in the definition contained in the Income tax Act the local rate must be assessed and collected by officers of the Crown as such, whereas under the Bihar Act income from revenue free agricultural land would be agricultural income if it was derived from land subject to a local rate or cess assessed and collected under the provisions of certain Local Acts, no matter how such local rate or cess was assessed or collected or by whom. In other words, in the definition contained in the Income tax Act the local rate must be assessed and collected by officers of the Crown as such, whereas under the Bihar Act the local rate or cess may be assessed or collected by persons other than officers of the Crown. It is said that cess in this province is not assessed and collected by officers of the Crown as such. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the Act in respect of any arrears of cess may be realized by such Collector in the manner provided for the realisation of a public demand. Section 4 defines Collector and the term includes any person specially invested with the powers of a Collector for the purposes of this Act. By Section 100 the Board of Revenue may at anytime invest any person with the powers of a Collector under the Act such powers to be exercised by such person under the control or supervision of the Collector or independently of such control and supervision, as the Board of Revenue shall direct. Section 9 of the Act provides that the proceeds of the local cess in each district shall be paid into the district fund of the district and district fund is defined in Section 4 as meaning the fund formed under Section 52, Bengal Local Self Government Act of 1885. From these provisions it is clear that the rate of cess to be levied is fixed by the District Board and the proceeds are paid into a district fund. It is however clear that the assessment and collection of cess is ordinarily made by the Collector, and it is conceded that a Collector is an officer of the Crown. It is however urged that when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, and he performs his duties not as a servant or agent of the District Boards but as a Collector. In my view even such a person invested by the Board of Revenue must be regarded as a Collector and he performs his duties as a Collector, that is, as an officer of the Crown as such. That being so, it appears to me that cess in this Province is assessed and collected by officers of the Crown as such and that being so there is no real difference between the two definitions as far as the assessment and collection of cess is concerned. Cess however is not payable in respect of any estate within the limits of municipality : See the present proviso to Section 2, Cess Act. Such lands however are assessed to local rates : See Section 98 and the following sections of the Bihar and Orissa Municipal Act (Act VII of 1922). These rates are not collected by the Collector but are collected by officers or servants of the municipality : See Section 120 and the following sections of the Bihar and Orissa Municipal Act. It is, therefore, contended that the definition of agricultural income in the Bihar Agricultural Income tax Act covers income from revenue free agricultural land in a municipality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricultural income of such tenure holders and raiyats is taxable under the Bihar Agricultural Income tax Act though such income is not within the definition given in the Government of India Act, 1935, and the Income tax Act. The income of a raiyat does not fall naturally within Section 2(a)(1), Bihar Agricultural Income tax Act, but rather falls within Section 2(a)(2)(i) of that Act. His income is derived from land by agricultural and clearly falls within the definitions given in both Acts. A tenure holder of revenue free land not himself cultivating lands does derive income from land used for agricultural upon which cess is payable by the proprietor and that cess is assessed and collected by the Collector who is an officer of the Crown, and, as I have already held, it is assessed and collected by the Collector as such. Therefore income of tenure holders of revenue free land falls within the definition given in both the Bihar Agricultural Income tax Act and the Income tax Act and, therefore, the Bihar Agricultural Income tax Act cannot possibly be held to be ultra vires upon this ground. The only instance, therefore, where the Bihar Agricultural Income tax Act taxes income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Marketing Act, 1934, as amended by the Natural Products Marketing Act, 1935, was so inextricably interwoven with the other portions of the Act that the whole Act must be held to be ultra vires. In my view, however, it is possible in the present case to hold that the Bihar Agricultural Income tax Act, in so far as it taxes agricultural income falling within the definition given in the Income tax Act, is intra vires and only ultra vires in so far as it taxes income which falls outside the definition of agricultural income given in that Act. It is, in my judgment, open to this Court so to limit the definition given in the Bihar Act as to bring it within the competence of the local Legislature. In Macleod v. Attorney General for New South Wales (1891) A.C. 455, their Lordships of the Privy Council construed a definition of bigamy given in Section 54, Criminal Law Amendment Act, 1883, so as to bring the Act within the competence of the New South Wales Legislature. Section 54, Criminal Law Amendment Act, 1883, enacted that whosoever being married marries another person during the life of the former husband or wife, wheresoever such second marriage takes place, shall be li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rwise. The definition of the debt was wide enough to cover debts due on negotiable instruments, and Sulaiman, J., was of opinion that in so far as it dealt with such debts the Act was ultra vires but only to that extent. Varadachariar, J., though he held that the point did not strictly arise, observed at page 196 (of 3 F. L. J.) : The argument of total invalidity need not be dealt with at any length, not only because it was not seriously pressed, but also because there is little force in it. If an enactment deals in part with matters beyond the competence of the Legislature which enacted it, it must be held to be wholly invalid only in cases where the valid and invalid provisions are inseparably intermixed or the innocent provisions are merely ancillary to the offending provisions. This cannot be said to be the position in the present case. Further as there is no provision in the Act dealing in terms with negotiable instruments, any objection based on the wide scope of the Act may be obviated by so interpreting the general terms used in the Act as to limit them to cases with which alone the Legislature was competent to deal. From these observations it would appear that Va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax income of zamindars holding permanently settled estates and in the alternative it was argued that if the Act is not ultra vires it should be held that on its true construction it did not tax income of zamindars holding permanently settled estates but only the income of zamindars holding estates temporarily settled. Shortly stated, the argument was that the rights and privileges of permanently settled zamindars are governed by the Permanent Settlement Regulation (Regulation 1 of 1793) which is an Act of Parliament or a Governor General's Act. By Section 108(2) no Provincial Legislature can enact legislation which repeals, amends or is repugnant to any provision of an Act of Parliament or any Governor General's Act without the previous sanction of the Governor General. As the previous sanction of the Governor General was not given in this case, the Provincial Legislature had no power to legislate in a manner affecting the rights and privileges of permanently settled zamindars. It was also contended that by reason of Section 299, Government of India Act, no Bill affecting the zamindar's rights or privileges in respect of land revenue could be introduced in the local L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions of the Courts. Their Lordships, however, are of opinion that there is here no occasion for any pronouncement by them upon the question of the exact nature of the rights and interests in relation to the land which existed in the governing authority before 1793, but that this appeal falls to be determined upon a consideration of the language of the Regulations and of the Indian Income tax Act, 1922. It will appear later that their Lordships of the Privy Council were called upon in Probhat Chandra Barua v. Emperor [1930] 58 Cal. 430 to consider much the same argument as that addressed to us in this case, and in my judgment it is unnecessary in this case to come to any definite conclusions as to the respective rights of the governing authority and the zamindars in the land before the Permanent Settlement Regulations, and this case as Probhat Chandra Barua v. Emperor [1930] 58 Cal. 430 falls to be decided upon a consideration of the Regulations themselves. The state of affairs immediately preceding the Permanent Settlement Regulations is clearly described by Ghosh, J., in Emperor v. Probhat Chandra Barua [1927] 54 Cal. 863. At page 895 he observed: From the period of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive cases of the said Rajas, zamindars, etc., to give orders and instructions to the several Governments and Presidencies in India, for effectually redressing, in such manner as shall be consistent with justice and the laws and customs of the country, all injuries and wrongs which the Rajas, zamindars, polygars, talukdars and other native land holders, may have sustained unjustly in the manner aforesaid, and for the settling and establishing upon principles of moderation and justice, according to the laws and constitution of India, the permanent rules by which their respective tributes, rents and services shall be in future rendered and paid to the said united Company'. Thereafter enquires and investigations followed and in 1790 91 a complete Code of Regulations for the conclusion of a new settlement of the land revenue for Bengal, Bihar and Orissa was promulgated by Lord Cornwallis. Decennial settlement of 1790 91 was made permanent by Regulation 1 of 1793. The settlement embraced, roughly speaking, the tracts of the country now comprised in the divisions of Burdwan, the Presidency, Rajshahi, Dacca, Chittagong, Patna and Bhagalpur, exclusive of part of the Santal Parganas. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icular regulation only purported to deal with some matter incidental to the permanent settlement. In the opinion of their Lordships, this part of the case falls to be determined primarily upon a consideration of the language of Regulation 1 of 1793. While bearing in mind the passages in other regulations to which their attention was drawn, their Lordships feel that the above mentioned regulation is the master regulation for the immediate purpose before the Board, and that its provisions constitute the overriding feature in the present case . In that case their Lordships were called upon to consider what was the precise assurance or undertaking given to the zamindars by the permanent settlement, and in the view of their Lordships such would have to be gathered from Regulation 1 of 1793. In my judgment the observations of Lord Russell apply with equal force to the present case, and this case also falls to be decided primarily upon a consideration of the language of Regulation 1 of 1793. Regulation 1 of 1793 bears date 1st May 1793, but is retrospective and operates as from 22nd March 1793. The last mentioned date was the date of a proclamation to certain articles of which the regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired of them under the regulations above mentioned, the Governor General in Council now notifies to the zamindars, independent talukdars and other actual proprietors of land whose lands are held khas, that they shall be restored to the management of their lands upon their agreeing to the payment of the assessment which has been or may be required of them, in conformity to the regulations above mentioned, and that no alteration shall afterwards be made in that assessment, but that they, and their heirs and lawful successors, shall be permitted to hold their respective estates at such assessment for ever; and he declares to the zamindars, independent talukdars and other actual proprietors of land, whose lands have been let in farm, that they shall not regain possession of their lands before the expiration of the period for which they have been farmed (unless the farmers shall voluntarily consent to make over to them the remaining term of their lease, and the Governor General in Council shall approve of the transfer), but that at the expiration of that period, upon their agreeing to the payment of the assessment which may be required of them, they shall be reinstated, and that no a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r an augmentation of the public assessment in consequence of the improvement of their respective estates. It was contended that this regulation contains a promise, undertaking or assurance that the public demand would never be increased. According to the plaintiffs, this public demand was in the nature of a tax, and as the agricultural income tax is a tax on such profits, the passing of the Bihar Agricultural Income tax Act is a breach of the assurance or undertaking given by Lord Cornwallis and is an attempt to repeal or modify the provisions of the Permanent Settlement Regulation. It is true that the amount of the jama fixed at the time of the permanent settlement was fixed after a consideration of the profits or income then derived from the land, but in my view Regulation 1 of 1793 contains no assurance or undertaking to the zamindar that he would for ever thereafter be immune from taxation such as that imposed by the Bihar Agricultural Income tax Act. The regulation merely contains an assurance that the jama or land revenue payable by the zamindar would never be increased. It must be remembered that Regulation 1 of 1793, as its name implies, was a settlement regulation. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxation, or that the income of a zamindari should not be subjected with other incomes to any future general taxation of incomes. Accordingly, they held that under the income tax Act, 1922, the zamindar of a permanently settled estate was assessable to tax under the Act in respect of income, profits and gains derived from his zamindari, subject to the exemptions in Section 4, sub section (3), of the Act (agricultural income), and the assessment should be computed after making proper allowance under Section 12, sub section (2), in respect of the jama assessed and paid. In this case their Lordships had to consider the effect of the Permanent Settlement Regulation (Regulation 1 of 1793) which they pointed out was the master regulation and which contained the provisions most favourable to the assessee, the zamindar. At page 446, Lord Russell, who delivered the opinion of the Board, observed: Their Lordships, after careful consideration of the regulations, have arrived at the conclusion that the argument of the appellant cannot succeed. They are unable to find in the regulations any statement or assurance that a zamindar will never be liable to taxation in respect of the income deri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from those Regulations that the proprietors of land in India had an absolute ownership and dominion of the soil; that the soil was not vested generally in the Sovereign; that the proprietors did not hold at the will of the Sovereign; but held the property as their own with the power of disposing of it absolutely; and if not disposed of, that it descended to their families. It is liable, indeed, to a tribute to the Government but it appears that the tribute was not fixed but was increased at the arbitrary will of the Government; and it appears further that if the tribute was not paid Government had the power of taking possession of the lands for the purpose of obtaining payment. Still notwithstanding these circumstances and these charges I think it impossible to read those Regulations which were prepared obviously with great caution and consideration by persons well acquainted with the subject and possessing every means of obtaining the most accurate information on it, and as far back as 1793, without coming to the conclusion that the zamindars and the talukdars were owners of the soil subject only to a tribute such as I have stated to Government, and it was the object of those R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... force to agricultural income. Counsel for the plaintiffs was compelled to concede that if the exemption of agricultural income from taxation in the Income tax Act was removed Probhat Chandra Barua's case [1930] 58 Cal. 430 would apply, and we would be bound to hold that agricultural as well as non agricultural income would be taxable. It was contended, however, that different principle applies when an Act was passed which purported to tax agricultural income only. It was argued that as the Bihar Act taxes agricultural income only, it imposes not a tax on income but a tax on land in the nature of a public demand as that expression is used in the Permanent Settlement Regulations. It was said that income tax is a tax on income generally without reference to its source and that a tax on income with specific reference to its source is not in reality a tax on income from that source but rather a tax on the source itself. Reference was made in support of the argument to London County Council v. Attorney General [1901] A.C. 26, in which Lord Macnaghten observed: Income tax, if I may be pardoned for saying so, is a tax on income. It is not meant to be a tax on anything else. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 430 cannot apply, and the tax must be regarded as a breach of the assurance contained in the Permanent Settlement Regulations. It is clear however that the tax imposed by the Bihar Agricultural Income tax Act is not a tax on zamindars only. It imposes a tax on income derived from lands used for agriculture and from agriculture. Tenure holders and raiyats are liable to taxation just as much as zamindars, and zamindars of non permanently settled areas are in the same position as zamindars holding permanently settled estate. The Act applies generally to persons deriving income from agriculture and lands used for agriculture. It does not create a special tax upon the income of permanently settled zamindars. Further this Act merely abolishes the exemption in favour of agricultural income contained in the Income tax Act, 1922 What was specifically exempted from taxation is now made liable to taxation, and persons deriving income from agriculture and lands used for agriculture are placed on a similar footing to persons deriving income from other sources. There is only one difference, and that is that the tax on agricultural income is to be imposed under the terms of the Government of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haracter of the permanent settlement, such failure to reserve the Bill for consideration would not make the present Act invalid. The Instrument of Instructions to Governor was issued under the provisions of Section 53, Government of India Act, and sub section (2) of that section provides that the validity of anything done by the Governor of a Province shall not be called in question on the ground that it was done otherwise than in accordance with any Instrument of Instructions issued to him. There is no provision in the Government of India Act itself requiring such a Bill to be reserved for the consideration of the Governor General, and that being so the Act cannot be held to be invalid by reason of the Governor's failure to reserve the Bill as directed by para 18 of the Instrument of Instructions. On the other hand, however, if the Bihar Agricultural Income tax Act, 1938. varies, modifies or repeals any portion of the Permanent Settlement Regulation (1 of 1793) the Act would require the previous sanction of the Governor General if the Permanent Settlement Regulation (1 of 1793) is an Act of Parliament. Section 108 (2), Government of India Act, provides that unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, an Act of Parliament is an Act which has been passed by the House of Commons, the House of Lords and assented to by the King. Regulation 1 of 1793 was an enactment of the Governor General in Council in India and was never before Parliament in England. It is clear, however, that this Regulation together with the other Permanent Settlement Regulations were enacted pursuant to the provisions and directions contained in Section 39. Pitt's India Act of 1784 (24 Geo. III, C. XXV). That section, which I have earlier in this judgment quoted at length, required the authorities in India to give orders for settling and establishing upon principles of moderation and justice, according to the laws and constitution of India, the permanent rules by which their respective tributes, rents and services of the rajas, zamindars, polygars, talukdars and other native holder should be in future rendered and paid to the United Company. As I have already stated, the Marquis Cornwallis arrived in India in 1786 and immediately instituted enquiries into the land system and the assessment of revenue, and in 1793 the Permanent Settlement Regulations, including Regulation 1 of 1793 were promulg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sovereign of the territories affected by the permanent settlement and as such undoubtedly claimed the right to legislate for such territory and its inhabitants. It appears to me that the Marquis Cornwallis must have enacted these regulations by virtue of the powers of legislate given to or assumed by the Governor General in Council, and that being so, it cannot be said that the Permanent Settlement Regulation (1 of 1793) is in any sense an Act of Parliament. The plaintiffs, however, contended that the Governor General in Council has no such power to legislate as to enable him to enact Regulation 1 of 1793, consequently that regulation must be regarded as an executive order or as a kind of regulation or by law made in pursuance of powers given by an Act of Parliament. If such was the case, it is urged that the regulation forms part of the Act of Parliament itself. Reliance was placed on the case in Willingale v. Noris [1909] K.B. 57, in which it was held that where a statute gives power to an authority to make regulations, a breach of the regulation so made is an offence against the provisions of the statute. In that case the Commissioners of Police were empowered to make regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lastly, it was contended that assuming that the provisions of the Bihar Agricultural Income tax Act are repugnant to Regulation 1 of 1793 and assuming further that the Bihar Act was validly enacted the latter Act on its true construction should not be held to repeal or affect in any way the provision of Regulation 1 of 1793. It was argued that the Bihar Agricultural Income tax Act is a general Act, whereas Regulation 1 of 1793 is a special Act dealing with permanently settled estates. On a true construction of the Bihar Act, it was contended that this Court should hold that it applied to non permanently settled estates only and not to permanently settled estates. In the view I have taken of the effect of Regulation 1 of 1793 the question as to the true construction of the Bihar Act does not really arise, but I refer to the question shortly in deference to the elaborate argument which has been addressed to us. Regulation 1 of 1793 is undoubtedly a special enactment dealing with permanently settled estates, whereas the Bihar Agricultural Income tax Act deals generally with income derived from agricultural lands and from agriculture within the Province of Bihar. It must be remember ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .C. 429. In that case the occupiers of certain hereditaments situate in the City of London and forming part of the area reclaimed from the river Thames, were rated to so much of the general rate levied under the City of London (Union of Parishes) Act, 1907, as represented the consolidated rate and the police rate, which was imposed by the City of London Police Act, 1939. The land had been reclaimed under the provisions of 7 Geo. III, C. XXXVII and under Section 51 of that Act owners of such reclaimed lands were to be free from all taxes and assessments whatsoever. The city of London Sewers Act, 1848, which provided for the levying of the sewer rate and the consolidated rate, enacted by Section 169 that every such rate shall be made upon every occupier of any house or building in the city whether such person shall be now liable in respect of such house or building to be assessed to the relief of the poor, or be not liable to be assessed to the relief of the poor in respect thereof by reason of such house or building being situate in any precinct or extra parochial place, or otherwise. It was held (Lord Summer dissenting) that Section 169, City of London Sewers Act, 1848, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tta High Court in Emperor v. Probhat Chandra Barua [1927] 54 Cal. 863. As I have stated however the point does not really arise in this case. For the reasons which I have given, I am satisfied that the plaintiffs are not entitled to the relief claimed, and would dismiss their suit with costs. The questions as to whether the Bihar Agricultural Income tax Act is ultra vires the powers of the Provincial Legislature or is ultra vires in so far as it purports to tax agricultural income of permanently settled zamindars involved substantial points of construction of the Government of India Act, 1935, and I would, therefore, grant a certificate to the plaintiffs under Section 205(1) of that Act. FAZL ALI, J. The plaintiffs who are the proprietors of a permanently settled estate in the district of Patna have brought this suit against the Province of Bihar as defendant, for a declaration that the Bihar Agricultural Income tax Act (VII of 1938) and the Bihar Agricultural Amendment Act (V of 1939) are ultra vires of the Provincial Legislature and that at any rate they cannot affect the permanently settled estates of the Province including the plaintiffs' estate. According to the pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the former Act. The Bihar Act VII of 1938 which is the main Act, received the assent of the Governor of Bihar on 20th August 1938 and was published in the Bihar Gazette of 12th October 1938. Section 2 of the Act defines agricultural income and Section 3 provides that the agricultural income tax at the rate or rates specified in the schedule to the Act shall be charged for each financial year in accordance with and subject to the provisions of the Act on the total agricultural income of the previous year, of every person. Sections 5 to 15 which are the remaining sections in Chapter 2 contain provisions as to the limits of taxable income and other cognate subjects such as what class of owners of agricultural property are to be exempted and how the tax on other class of persons is to be assessed. Chapter 3 enumerates the class of income tax authorities appointed under the Act and Sections 17 and 18 of Chapter 4 provide respectively for the submissions of return of agricultural income and assessment of tax upon such income by the Agricultural Income tax Officer. The other provisions of the Act deal with a number of other matters with which we are not concerned in the present ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sanction of the Governor General in his discretion. Now in order to appreciate the argument which was advanced before us it will be useful to set out the definition of agricultural income as given in the Income tax Act side by side with the definition of that expression as given in the Bihar Agricultural Income tax Act: Section 2(1), Income tax Act: Section 2(a), Bihar Agricultural income means: (a) Agricultural Income tax any rent or revenue derived from land Act: which is used for agricultural purposes, and is either assessed to land Agricultural income revenue in British India or subject to means: (1) any rent or a local rate assessed and collected by income derived from land officers of the Crown as such; (b) any which is used for agriculincome derived from such land by: (i) tural purposes, and is either agriculture, or (ii) the performance by assessed to land revenue in a cultivator or receiver of rent in kind Bihar or subject to a local of any process ordinarily employed by cess or rate assessed and a cultivator or receiver of rent in kind collected under any Bengal to render the produce raised or receiv Act or under any Bihar ed by him fit to be taken to market, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s referred to in clause (c), Income tax Act if and when it chooses to do so in future. The Legislature has therefore in no way exceeded its power and I am not prepared to hold that it has contravened the provisions of the Government of India Act by merely adopting a definition which is narrower than the definition given in that Act. The second contention however is a more serious one, because the substance of that contention is that clause (i), Bihar Act, is wider than clause (a), Income tax Act, and so the definition enables the Bihar Legislature to tax income which it has not been empowered to tax under the Government of India Act. For the purpose therefore of determining whether this contention is correct, we have to compare carefully the two corresponding provisions. The first difference which has been pointed out to us between the two provisions is that the Bihar Act substitutes the word 'income' for revenue in clause (i). But as revenue in clause (a), Income tax Act, is used in the same sense as income, the difference in the two provisions is merely a difference in phraseology and not a difference in substance. The Bihar Legislature was also perfectly justified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess shall be assessed and levied at such rate as may be determined for such year by the District Board. This last provision seems at the first sight to support the contention of Mr. Das, but when the other provisions of the Act are taken into consideration it becomes manifest that the authority which assesses the cess is not the District Board but the Collector. The District Board has merely an advisory function and its knowledge of the local conditions is utilised for the purpose of determining the rate, but after the rate is so determined, the Collector publishes the rate in the Gazette and otherwise specifies from which date it will take effect. The Collector then fixes the amount of the cess payable by each person or estate upon the valuation of the lands. This shows that the final act of assessment rests with the Collector though the assessment is made according to the rate determined by the District Board. There can also be no doubt that the cess payable under the Act is collected by the Collector. This is clear from a number of provisions which are to be found in the Act, e.g., Section 98 which provides that every amount due or which may be due to any Collector under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al convenience. Thus, in view of its nature and origin the Corporation of Trinity House could not be regarded as an emanation from the Crown. Similarly, the Meat Industry Board could not be regarded as a representative of the Crown, because the powers conferred upon it were to be exercised at its own discretion and without consulting the direct representatives of the Crown, and also because the charges it levied went to its own fund. The position in this case however is not the same. I think that inasmuch as in India both the Government at the Centre and in the Province, is carried on in the name of the Crown, the expression officers of the Crown occurring in an India Statue may be taken to be synonymous with the expression officers of the Government. The Collector of the District undoubtedly exercises his authority as a representative of the Government and the cess is also levied by the Government, though what is collected under the Act is allotted to the District Board for the purpose of maintaining roads, etc. If any person other than the Collector is appointed under the Act to assess and collect cess, he must be deemed also to act as a representative of the Government an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income tax Act, If however the definition is found to be wider, it does not, in my judgment, necessarily follow that the whole Act thereby becomes ultra vires. We have on this point for our guidance a number of authoritative pronouncements which have laid down that if a part of an Act can be held to be valid and another part invalid, then if the offending provisions are so interwoven into the other scheme of the Act they are not severable from the other provision, the whole Act is ultra vires, but if the two parts are severable then the Act will be partly valid and party invalid, it being invalid only in regard to the offending provisions. This view has been clearly set out in the judgment of Sulaiman, J., in Subrahmanyan Chettiar v. Muthuswamy Goundan [1940] 22 P.L.T. 155; 3 F.L.J. 157, at pp. 179 and 180 (of 22 P.L.T.) and in Shyamakant Lal v. Rambhajan Singh [1939] 20 P.L.T. 473; 2 F.L.J. 183, at pp. 487 and 488 (of 20 P.L.T.). In the last mentioned case his Lordship stated the principle in these terms: It is a well established principle that if the invalid part of an Act is really separate in its operation from the other parts, and the rest are not inseverably connected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be ultra vires of the Dominion Parliament of Canada on similar grounds, it being held that in pith and substance the Act was an encroachment upon the Provincial field and that part of the Act which did not encroach were so inextricably mixed up with the offending provisions, that it was impossible to sever them. In my opinion neither of these cases can be of help to the plaintiffs. Agricultural income being one of the subjects mentioned in List II otherwise called the Provincial List of the Government of India Act, it cannot be said that in pith and substance this Act is an encroachment upon the rights of the Central Government. It is true that the definition has been some what carelessly drafted, but all that can be said is that if there is any estate the income of which cannot be regarded as agricultural income according to the definition of that expression as given in the income tax Act then such part of the Act as purports to be income of such estate shall be held to be invalid. The learned Advocate General in meeting the argument of Mr. P.R. Das referred us to macleod v. Attorney General for New South Wales [1891] A.C. 455, Great West Saddlery Co. v. The King [1921] 2 A.C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nconsistent with the Permanent Settlement Regulation without following the procedure laid down by the Government of India Act. In urging this point Mr. P.R. Das, counsel for the plaintiffs, read out to us extracts from certain despatches which bad passed between Lord Cornwallis and the directors of the East India Company and from the minutes recorded by Sir John Shore before the enactment of Regulation 1 of 1793 in order to show firstly that the permanent settlement was made on the footing that the landlords were the proprietors of the soil and secondly, that the jama or the revenue which was fixed at the time of the permanent settlement was a land tax. Learned counsel also read to us all the relevant sections of the permanent settlement regulation and certain other regulations to support his contention that these regulations had declared in clear terms that beyond the jama which, was already fixed there shall be no new or additional demand or assessment upon the permanently settled estates. His next argument was that the Bihar Agricultural Income tax Act being passed in violation of the terms of the Permanent Settlement Regulation had in effect repealed the latter enactment. Lastl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nswered by the Privy Council in Probhat Chandra Barua v. Emperor [1930] 58 Cal. 430, which must be regarded as the last word on the subject and which I accordingly propose to discuss at some length. It appears that prior to 1926 conflicting views had been expressed by the Calcutta High Court as to whether income derived from permanently settled estates was liable to income tax notwithstanding the Permanent Settlement Regulation: See Emperor v. Probhat Chandra Barua [1924] 51 Cal. 504 and Emperor v. Indu Bhusan Sarkar [1926] 53 Cal. 524. In May 1926 Barua's case came up before a Bench consisting of Sanderson, C.J., and Rankin, J., who referred the following question among others for decision to a Full Bench: Whether having regard to the terms of the Permanent Settlement Regulation, income derived from land in permanently settled states subject to the exemptions provided by the Legislature is lible to assessment to income tax. This question was answered by the majority of the Judges constituting the Full Bench in the affirmative and their view was upheld by the Privy Council. He Lordship after referring to certain provisions of the Income tax Act summarised his conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed his conclusions thus: In their Lordships' opinion, while the regulations contain assurances against any claim to an increase of the jama, based on an increase of the zamindari income, they contain no promise that a zamindar shall in respect of the income which he derives from his zamindari be exempt from liability to any future general scheme of property taxation, or that the income of a zamindari shall not be subjected with other incomes to any future general taxation of incomes. His Lordship also quoted with approval the following passage from the judgment of Ghose, J., in the Full Bench case: There was no promise or engagement of any description whatsoever by which the Government of the day surrendered their right to levy a general tax upon incomes of all persons irrespective of the fact whether they are zamindars with whom the permanent settlement was concluded or not. In my opinion the decision of the Privy Council establishes the following points: (1) That for the purpose of deciding the matter in controversy, it is not necessary to decide whether the landlords were proprietors of the soil or what was the exact nature of the rights in relation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The decision of the Privy Council, in my opinion is fully applicable to this case, because the chief point to be decided in Barua's case was the same as in this case and the argument for the assessee as reproduced in certain reports and as summarized in the judgment of the Privy Council was more or less the same as the argument advanced in the present case. Mr. P.R. Das tried to distinguish the Privy Council case by following a different line of argument. He conceded that notwithstanding the Permanent Settlement Regulation, the state may impose a tax on income, but he strenuously contended that the tax which is imposed under the Agricultural Income tax Act is not a tax on income but is a land tax, or in other words, a tax of the same description as the jama or revenue payable by the zamindar. According to Mr. Das the land tax is different from the income tax, because whereas the former is referable to the land which is being taxed, the income tax is a tax levied on income in general irrespective of and without any reference to the sources from which the income may be derived. This says, Mr. Das, is sufficient to distinguish the present case from Barua's case for that cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch purports to tax income should not refer to the sources of income or as soon as there is a reference to the source the tax would cease to be an income tax. In the Income tax Act, no less than five definite sources of income are set out and agricultural income tax is defined and excepted. It will be fantastic to suggest that the tax levied under the Act is not an income tax, because the sources of the income are indicated. As the Provincial Legislature has now been empowered to tax agricultural income, income may for the purpose of taxation be divided under two broad heads, (1) agricultural income and (2) non agricultural income. Non agriculture income is taxed by the Central Government, whereas the agricultural may be taxed by the Provincial Government. We have therefore first to have a clear notion as to what is the meaning of 'income' and then to find out whether the agricultural income tax is a tax on income or otherwise. As to what is income, though the word is not defined in the Income tax Act we have the most authoritative pronouncement about its meaning and in Commissioner of Income tax, Bengal v. Shaw Wallace Co. [1932] 59 Cal. 1343, and agricultural income h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle in all the native estates of Asia 'that the Sovereign is sole universal proprietory lord of the land; and the ryots, who are husbandmen or peasantry, hold directly of the prince, by immemorial usage, as perpetual tenants in capite; subject to the annual payment of a certain fixed portion of the gross produce of the soil in money or kind......' (Ibid, p. 360). Colonel Wilks thought that the fact which settled the controversy was that the share of the produce which went to the proprietor was an infinitesimal one as compared with the share which went to the King and he expressed himself thus: 'It is absurd to distinguish as proprietor the person entitled to one tenth' (Colonel Wilks subsequently attempted to show that the real share of the zamindar was one twentieth) while the remaining nine tenths are called' a duty, a tax or a quit rent' (Ibid, p. 377). Confronted with these divergent views the Directors of the East India Company pronounced no decision on the historical question but dealt with the matter on ground of expediency. We read in the fifth report. Vol. I, p. 30. that 'Whatever might be the difference of opinion among those who were off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e land for which they undertook to pay the Government revenue. The settlement is expressly made with zamindars, independent taluqdars and other actual proprietors of the soil': See Regulation I, Section 3, and Regulation 8, Section 4. It is clear that since the settlement the zamindars have at least a prima facie title to all lands for which they pay revenue such lands being commonly referred to as malguzari lands . The above passage states very clearly the effect of the Permanent Settlement Regulation of 1793. But in the famous case in Thakooranee Dossee v. Bisheshur Mookerjee [1865] 3 W.R. Act X.R. 29, which was heard by fifteen Judges of the Calcutta High Court Trevor, J., expressed the opinion that though Regulation 1 of 1793 recognized the zamindara as proprietors of the soil, it never recognised them as being possessed of an absolute estate in their zamindari. The actual passage in his judgment in which this opinion is expressed runs as follows: That, though recognised as actual proprietors of the soil, that is owners of their estates, still zamindars and others entitled to a settlement were not recognized as being possessed of an absolute estate in their several z ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one were to examine the matter historically, ore might feel inclined to doubt whether tax is an appropriate expression. The Moghul authorities quoted in Harrington's analysis called it a tribute or rent and in Freeman v. Fairlie [1837] 1 M.I.A. 305, the Lord Chancellor is reported to haw said: Zamindars and talukdars were owners of the soil, subject only to a tribute such as I have stated to Government; and it was the object of those Regulations of the year 1793, to make that tribute which had been considered as dependent in its amount on the will of the governing power, fixed and permanent . Again in Field's Regulation of the Bengal Code we find that zamindari tenure is described as follows: It is an absolute right of proprietorship in the soil subject to the payment of a fixed amount of revenue to the Government. If this revenue falls into arrears, the estate may be put up to auction and sold to the highest bidder. The purchaser acquires the estate free from all encumbrances created since the time of the permanent settlement and obtains statutory title . Such consequences as are described above are seldom attached to the non payment of a mere tax and I thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s India Act of 1784, but, in my opinion, there is no warrant for such a conclusion. The Act of 1784 after reciting certain complaints made on behalf of a number of Rajas, zamindars etc., states that such complaints should be investigated and if founded in truth, should be redressed. It directed the Court of Directors of the East India Company, to adopt, take and pursue such methods for enquiring into the causes, foundation and truth of the said complaints, and for obtaining a full and perfect knowledge of the same and of all circumstances relating thereto, as the said Court of Directors shall think best adapted for that purpose; and thereupon, according to the circumstances of the respective cases of the said Rajas, zamindars, etc., to give orders and instructions to the several Government and Presidencies in India, for effectually redressing, in such manner as shall be consistent with justice and the laws and customs of the country, all injuries and wrongs which the Rajas, zamindars, polygars, talukdars, and other native land holders, may have sustained unjustly in the manner aforesaid, and for the settling and establishing upon principles of moderation and justice according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reach of the statute itself. In the second case it was held that certain duties levied by an Order in Council issued under Section 133, Customs Regulation Act of 1879, must be deemed to have been really levied under the authority of the Act under which the order was issued, because the Legislature had not parted with its perfect control over the Governor and had the power at any moment of withdrawing or altering the power which they had entrusted to him. These decisions are not applicable, because the Permanent Settlement Regulation did not consist of mere bye laws or rules made under an Act of Parliament, but was an independent measure enacted in India by a de facto governing authority. It was contended in this connexion by the learned Advocate General that even if it is assumed that Regulation 1 of 1793 is an Act of Parliament, Section 108, clause (2)(a), does not apply to the present case, because it is not an Act of Parliament extending to British India. The expression British India has been defined in Section 311, Government of India Act, as follows: British India' means all territories for the time being comprised within the Governors' Provinces and the Chief Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead together as if they were quite consistent with each other and the object of the Bihar Act must be taken to tax only such agricultural income as could be taxed consistently with the promise made in the Regulation of 1793. In other words, according to Mr. Das the Bihar Act, when properly construed, cannot be held to apply to agricultural income derived from permanently settled estates, though it may be applicable to similar income from tenures, raiyati lands and the estates which are not permanently settled as for example temporarily settled estates within the Government khas mahal. Now this question can arise for consideration only, if it is held that the tax levied under the Bihar Act is a tax of the same kind as the jama and is in reality an addition to the burden of the land which was fixed in 1793 and which was to remain unalterable for ever. Such a view however as I have already pointed out is not open to us to take in view of the decision of the Privy Council in Barua's case which as I have already stated should be taken to be the last word on the subject. Even however if we assume that such a view is open to us to take, it seems to me that the position is not qui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovince of Bihar. There is nothing in the Act to suggest that it was intended to apply to lands other than those comprised within the permanently settled estates, or to exclude the liability of so large a class of tax payers as are holders of permanently settled estates in Bihar. If these persons were intended to be excluded the Legislature would have used apt words to express its meaning. I think that I might usefully quote here the following observations of Hamilton, J., which were quoted by Rankin, J., in Emperor v. Probhat Chandra Barua [1924] 51 Cal. 504 at p. 520. Can Section 33......in view of that history and of its subject matter, be so read as to make it subject to an unexpressed exception in favour of the rights of Exeter under its charters? After quoting this, Rankin, J., added: There is no rule which entitles Courts of law to demand express words from the Legislature, or to refuse the office of interpreter in the absence of express words; but the point is that the Legislature dealing with a matter, as to which equality or uniformity may well have been thought a cardinal consideration, has used the plainest and the most express language. The head and front o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or otherwise and it will not be correct to hold that by this Act the income from permanently settled estates cannot be taxed. In my opinion the suit must fail and should be dismissed with costs. MANOHAR LALL, J. The plaintiffs, who are zamindars holding permanently settled estates in the district of Patna in Bihar, have instituted this suit on 7th October 1939 for a declaration that the Provincial Legislature of Bihar has no jurisdiction to enact the Bihar Agricultural Income tax Act (Act VII of 1938) as amended by the Bihar Agricultural Amendment Act (Act V of 1939) (hereinafter to be referred to as the Act) imposing agricultural income tax on their estate which was settled under the Permanent Settlement Regulation 1 of 1793 (hereinafter to be referred to as the regulation) so long as the said regulation stands unrepealed, and for a further declaration that the issuing of and serving of the notice on the plaintiffs by the Agricultural Income tax Officer under Sections 17 (2) and 30 of the Act with a view to their proposed assessment for agricultural income tax was without jurisdiction, illegal, invalid and inoperative. The main defence to the action on behalf of the Province of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the regulation. It will be convenient in the first instance to examine the scope of the Act in order to find out the nature of the imposition so that it may be decided to what extent the imposition is inconsistent with the provisions of the regulation. The Act which received the assent of the Governor on 12th October 1938, states in the Preamble that this is an Act to provide for the imposition of a tax on agricultural income and contains the Preamble that whereas it is expedient to impose a tax on agricultural income arising from lands situated in the Province of Bihar; It is hereby enacted as follows . Agricultural income is defined by Section 2(a). The rest of the Act is divided into six chapters of which only Chapter II is relevant for the present purpose. That chapter is entitled charge of agricultural income tax and consists of 13 Sections. Section 3 is so framed as to charge agricultural income tax at the rate which may be specified from time to time; the tax is stated to be charge on the total agricultural income of the previous year of every person and by Section 4 it is enacted that the Act shall apply to all agricultural income derived from land situated in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a zamindar will never be liable to taxation in respect of the income derived from his zamindari or (to put the matter from another point of view) that a zamindar will, as to so much of his property as consists of income derived from his zamindari be exempt from schemes of taxation applicable generally to the incomes of the inhabitants of British India . His Lordship then gives a most valuable parapharase of Art. 6, which may be usefully quoted here: You have in the past been liable to have the amount of the jama increased according as the actual produce of the estate increased; to enable the Government to obtain this you have been subjected to frequent investigations to ascertain the actual produce and you have even been deprived of the management of the estate. All this shall cease. You shall have fixity of payment and fixity of tenure. If you improve the revenue of your zamindari you shall enjoy the fruits of your improvement without fear of the Government claiming that because the revenue produced by the estate has increased, the payment you make to Government as a condition of holding that estate shall be increased also, and a few lines later: In their Lord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plaintiff that that case only decided the taxability of the non agricultural income arising from the estate of the assessee and that therefore the observations of Lord Russel should be taken to mean only that there was no promise that non agricultural income will not be assessed by any future general scheme of property taxation but that either it must be held that the promise under the Regulation was to exempt agricultural income from further taxation or that the point was never decided and remains open to argument. I am unable to accept this contention as sound. At the top of p. 7 (of 5 I.T.C.) the argument of the appellant before the Privy Council has been stated to be in these words: He (that is to say, the zamindar assessee appellant) alleges that the jama was a tax and not a rent or rent charge, and that by the Regulations a legislative assurance or guarantee was given that no tax beyond the amount of the fixed jama would be imposed upon the income of the permanently settled estate . This income of the permanently settled estate, in my opinion, means both agricultural and non agricultural income and it is not permissible to argue that the income to the permanently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Government revenue: Per Sir George Lowndes in Gobinda Narayan v. Shamlal Singh [1931] 58 I.A. 125, al p. 132 approving the well known passage from the judgment of Lord Parker in Ranjit Singh v. Kali Dassi Debi [1917] 44 I.A. 117, at p. 122 . But the assessee, the plaintiff, ignores the position of zamindars which is expressly provided by Arts. 3, 4 and 5 of the Regulation, that is to say the zamindars are allowed to hold their estates at such assessment for ever. In Haradas Acharjya v. Secretary of State [1917] A.I.R. 1917 P.C. 86, Lord Buckmaster while considering the question as to how the external boundaries of a permanently settled estate should be decided made these observations at page 91: Pushed to its extreme it would result in this: that whenever a zamindari had been the subject of permanent settlement and there was any dispute as to its external boundaries the zamindars would never be able to establish title to any portion of it if it happened to be traversed by a navigable river of variable course, unless they could show what were the exact boundaries of that course at the date of the permanent settlement. Such a conclusion their Lordships wholly reject. The o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re made with the zamindars in possession only if they agreed to pay the assessment fixed after an elaborate investigation by the officers and if they did not agree to pay the amount of the proposed assessment the estate was settled with other persons who agreed to make that payment. This conclusively shows that the payment which is being made was made in pursuance of the permanent settlement of the estate which could be made and was made in many cases, not with the old proprietors but with anybody who on agreeing to pay the jama was placed in possession of the estate with a promise that if he or his lawful successors would go on paying the assessment which they have engaged to pay they will be allowed to hold the estate at such assessment for ever. (In the Packets case Secretary of Stale v. Jyoti Prashad Singh Deo [1926] 53 I.A. 100, the kabuliyat will be found quoted in the judgment of Lord Phillimore at p. 108). Upon the view which I take of the applicability of the Barua's case, it is unnecessary for me to consider the elaborate argument which was advanced as to the intention and historical origin of Art. 6 of the regulation. We were taken at great length through many his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tural income and therefore the whole Act is ultra vires. But Section 141 does not seem to be of much assistance as it provides that no Bill or amendment which imposes or varies any tax or duty in which Provinces are interested, or which varies the meaning of the expression 'agricultural income' as defined for the purposes of the enactments relating to Indian income tax, etc., shall be introduced or moved in either Chamber of the Federal Legislature. The Act was not passed by the Federal Legislature. But the important question to consider is whether the power of the Provincial Legislature to impose tax on agricultural income in item 41 in List II of Schedule 7 includes the power to impose tax on agricultural income beyond what is defined in the Income tax Act. In other words, has the definition in the Act substantially varied the definition of agricultural income in the Income tax Act? I do not think by the changing of the words British India to Bihar any variation has been made. The Provincial Legislature having power to impose a tax only in Bihar must have the power to mould the definition so as to suit the provincial condition. Nor does the omission of (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luation of the lands has been ascertained and determined by the Collector. By Section 22 the Collector is empowered, if he is not satisfied as to the correctness of the return, to fix an annual value of the lands by making independent enquiry. These provisions show that the assessment is made by a Collector who is an officer of the Crown. The rate at which the cess is to be assessed on the annual value of the land determined under Chapter 2 is fixed in the manner provided in Chapters 1 and 3. The collection of the cess is provided in Section 41 which enjoins every holder of an estate to pay to the Collector annually the entire amount of local cess and by Section 45 it is provided that if the instalment of the local cess or a part thereof payable to the Collector is not made within the time fixed the amount of such instalment may be recovered with interest thereon at 6 1/4 per cent. per annum. It seems to me therefore that this local cess is assessed and collected under the Cess Act by the Collector, an officer of the Crown. But it was argued that as the proceeds of the local cess in each district and all sums levied or recovered as interest or otherwise in respect thereof are to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fined under the Cess Act becomes an officer of the Crown the moment he is invested with the powers of the Collector for the purpose of the Cess Act. The Collector is almosts invariably a member of the Indian Civil Service and the Provincial Civil Service. It was then argued that as the definition admittedly embraces lands which may be subject to a local cess or rate like that under the Bihar Municipal Act which is neither assessed nor collected by an officer of the Crown as such, the whole definition becomes ultra vires as it is not permissible to dissect it so as to make it applicable to those lands which are subject to local cess and rate assessed and collected by officers of the Crown as such. A sufficient answer to this argument is afforded by the case in Macleod v. Attorney General for New South Wales [1891] A.C. 455. In that case the question for consideration was the extent of the definition of Section 54, Criminal Law Amendment Act, 1883, (45 Vic., C. XVII), That section enacted that whosoever being married marries another person during the life of the former husband or wife wheresoever such second marriage takes place shall be liable to penal servitude for seven years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing for those who were actually within their jurisdiction, and within the limits of the colony . It. has not been shown to us that the Bihar Legislature had meant to exercise so wide a jurisdiction that they intended to impose a tax on agricultural income from those lands which could not be reached by India Act definition. The more reasonable theory to adopt is that the language was used bona fide believing that they were legislating only for those lands which were actually within their jurisdiction. But reliance was placed upon the observation of the late Sir Shah Mohammad Sulaiman in the Federal Court judgment in Subrahmanyan Chettiar v. Muthumswany Goundan [1940] 3 F.L.J. 157, at p. 183: But I am not aware of any case in which the same section containing similar provisions for contract as for the decree based on it has been considered to be severable so as to make the latter valid, while the former is invalid, and therefore it was argued that it is not permissible to dissect the definition of agricultural income in the Act in order to find out that some portion is invalid and the rest is valid. I do not agree with this argument because, as pointed out by Varadachariar, J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income tax Act (which is the definition under the India Act) in order to find out whether the land, the agricultural income whereof is sought to be taxed, satisfied the requirements of that definition. In other words, the definition given in the Act may be either ignored or construed so as to make it apply to the subjects within the ambit of the definition given in the Income tax Act. Perhaps this question is not of importance in this case because it is not shown that the land of the plaintiff from which agricultural income is derived, which is proposed to be taxed, is not subject to land revenue, nor has it been shown to be the subject of local cess or rate which is not collected and assessed by the officer of the Crown as such. If there is such a land the agricultural income from that land will, as seated above, not be liable to taxation under the Act. Secondly, as to the want of the sanction of the Governor General. The argument advanced was based upon the terms of Section 108(2)(a) of the India Act which provides that: unless the Governor General in his discretion thinks fit to give his previous sanction, there shall not be introduced into, or moved in a chamber of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act of Parliament. It is true that the position of the East India Company was somewhat anomalous and it is impossible to discover the precise date when the Company exchanged the character of subject for that of sovereign and obtained for the Crown the rights of sovereignty. But for the purposes of this case it is sufficient to make reference to the following observations made by Sir Arthur Wilson while delivering the judgment of the Board in Hemchand Devchand v. Azam Sakarlal Chhotamal [1906] 33 I.A. 1. The passage is at page 15: the time under consideration divides itself naturally into two periods, that of the Government of British India by the East India Company down to 1858, and that of direct government by the Crown after that date. The legal and constitutional position of the Company during the former of these periods was established in a series of judicial decisions and was finally and fully definied in Secretary of State v. Kamachee Boye Sahaba [1859] 7 M.I.A. 476. The Company exercised a delegated sovereignty over the territories under its Government with all the powers in connection with the external relations of those territories incidental to the exercise of that so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... created it; and it can, of course, do nothing beyond the limits which circumscribe these powers. But, when acting within these limits, it is not in any sense an agent or delegate of the Imperial Parliament, but has, and was intended to have, plenary powers of legislation, as large, and of the same nature, as those of Parliament itself. But if on the other hand the East India Company or the Governor General of Bengal had not power to make this legislation then how can it be held that it was an Act of Parliament? Mr. P.R. Das, who argued the case as an amicus curiae on behalf of the plaintiff, with his usual ability and ingenuity, argued that Section 36, Regulation Act of 1773, is the only section under which the Governor General was given the power to legislate for the East India Company and that upon a true construction of this section it must be held that the power to legislate was only confined to the city of Calcutta. He, therefore, argued that the regulation was a piece of legislation which must be attributed to the Parliament and, therefore, was an Act of Parliament. In the first place, I do not agree that Section 36 did not give the power to the Governor General to leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (c) of this clause have been violated and, therefore, the assent given by the Governor to the Act on 12th October 1938 was a disregard of these express instructions. Section 13 of the India Act contains provisions as to the Instrument of Instructions which is issued to the Governor General and Section 53 contains provisions as to the Instrument of Instructions which is issued to the Governor of a Province. But by sub clause (3) to Section 53 it is distinctly provided that the validity of anything done by the Governor of a Province shall not be called in question on the ground that it was done otherwise than in accordance with any Instrument of Instructions issued to him. It follows that the violation of the provisions of clause 18(c) of the Instrument of Instructions to the Governor of Bihar cannot be called in question as expressly provided in the Indian Act. But it may also be observed that notwithstanding the provisions in clause 18(a) of the Instrument of Instructions provisions have been made in Section 108(2)(a) that no Bill shall be introduced in a Provincial Legislature if it is repugnant to the provisions of any Act of Parliament extending to British India. This shows th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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