TMI Blog1964 (2) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the court throwing light on the question whether the continuance of the tax was justified : it merely chose to plead its case as on a demurrer. We think that this is a case in which the parties should be given an opportunity to plead their respective cases adequately and to go to trial after the requisite evidence which has a bearing is brought before the court. We accordingly allow the appeal, set aside the order and remand the case for re-trial to the High Court.Appeal allowed. Case remanded. - Civil Appeal No. 491 of 1963 - - - Dated:- 19-2-1964 - Judge(s) : P. B. GAJENDRAGADKAR., K. N. WANCHOO., J. C. SHAH., N. RAJAGOPALA AYYANGAR., S. M. SIKRI JUDGMENT The judgment of the court was delivered by SHAH J.---Bhopal Sugar Industries Ltd. (hereinafter called " the company ") was incorporated under the Companies Act of the former Indian State of Bhopal. In 1953 the State of Bhopal, which was then a Part C State under the Constitution of India, enacted " the Bhopal State Agricultural Income-tax Act (IX of 1953) " providing for imposition and levy of tax on agricultural income. The Act was applied to the territory of the entire State of Bhopal and was brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and issued a writ restraining the State of Madhya Pradesh from enforcing the provisions of Bhopal Act (IX of 1953), observing that the Act was " in clear contravention of the petitioner's right under article 14 of the Constitution and must be declared void ". Authority of the Part C State of Bhopal to enact the Act, as it originally stood, is not in dispute, nor are the provisions of section 119 of the States Reorganisation Act and the Madhya Pradesh Adaptation of Laws (State and Concurrent Subjects) Order, 1956, challenged as incompetent. The plea that there is infringement of article 14 of the Constitution is advanced on the sole ground that in the reorganized State of Madhya Pradesh formed under the States Reorganisation Act, 1956, agricultural income-tax is levied within the territory of the former State of Bhopal and not in the rest of the territories of Madhya Pradesh. Prima facie, a differential treatment is accorded by the State of Madhya Pradesh to persons carrying on agricultural operations in the Bhopal region, because the State subjects them to pay tax on agricultural income, which is not imposed upon agricultural income earned in the rest of the State. But that by i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Dominion of India numerous Unions or States, based upon arrangements ad hoc, an the constitutional set up in 1950 not attempt, on account of diverse reasons mainly political, to make any rational rearrangement of administrative units. Under the Constitution as originally promulgated there existed three categories of States, besides the centrally administered units of the Andaman and Nicobar Islands. Part A States were the former Governors' provinces, with which were merged certain territories of the former Indian States to make geographically homogeneous units. Part B States represented groups formed out of 275 bigger lndian States by mutual arrangement into Unions. Part C States were the former Chief Commissioners' Provinces. These units were continued under the Constitution merely because they formerly existed. Later an attempt was made under the States Reorganisation Act to rationalize the pattern of administration by reducing the four classes of units into two States and Union territories---and by making a majority of the States homogeneous linguistic units. But in the States so reorganized were incorporated regions governed by distinct laws, and by the mere process of bring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the diverse units, before launching upon a process of adaptation of laws so as to make them reasonably uniform, keeping in view the special needs of the component regions and administrative efficiency. Differential treatment arising out of the application of the laws so continued in different regions of the same reorganised State, did not therefore immediately attract the clause of the Constitution prohibiting discrimination. But, by the passage of time, considerations of necessity and expediency would be obliterated, and the grounds which justified classification of geographical regions for historical reasons may cease to be valid. A purely temporary provision which because of compelling forces justified ifferential treatment when the Reorganisation Act was enacted cannot obviously be permitted to assume permanency, so as to perpetuate that treatment without a rational basis to support it after the initial expediency and necessity have disappeared. The High Court observed that even though the State had enacted the Madhya Pradesh Extension of Laws Act, 1958, and had removed diversity in some of the laws of the component regions, no attempt was made to remove discrimination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perate without any modification, the State had violated the fundamental right of the company under article 14 of the Constitution. The State of Madhya Pradesh did not file any affidavit in reply before the High Court, and chose to defend the petition as if its decision depended on a pure question of law, that if for historical reasons the Act in operation in a region incorporated in the new State was not discriminatory at the date when the reorganisation took place, it can never become discriminatory thereafter. The assumptions made by both the parties appear to be erroneous. The High Court was of the view that after the expiry of a reasonable period during which the State has the opportunity of making necessary adaptations so as to make the Act applicable to the entirety of the new State, if the State fails to adapt the law, historical considerations which initially justified the classification must be deemed to have disappeared. That assumption without urther enquiry may not be accepted as correct. It was necessary for the High Court to investigate whether at the date when the petition was filed, special treatment of the Bhopal region in the matter of levy of agricultural income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liberate intention of differentiating between individual and individual " in State of Madhya Pradesh v. Gwalior Sugar Co. Ltd. was not strictly necessary for deciding that case, and was not intended to lay down any special test applicable to taxing statutes in their relation to article 14 of the Constitution. To arrive at a conclusion adverse to the State it was, therefore, necessary to decide whether the differentiation arising from the continuation of the levy of the agricultural income-tax was unfair and not supported by a reasonable standard, and the State having the requisite information and opportunity to make the imposts reasonably uniform, had failed or neglected to do so. No set formula can be devised for solving a problem of this character. It cannot be said that because a certain number of years have elapsed or that the State has made other laws uniform, the State has acted improperly in continuing an impost which operates upon a class of citizens more harshly than upon others. The petition filed by the company was singularly deficient in furnishing particulars which would justify the plea of infringement of article 14 of the Constitution. It cannot be too strongly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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