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TMI Blog1955 (10) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... s the sole proprietor of a business carried on under the name and style of Indestro Sales and Service Co. at No. 5052, Lohar Chawl Street, in the City of Bombay. Two private limited companies, namely, Indestro India Ltd., and Indestro Eastern Ltd., also carry on business and have their respective offices in the same premises. The assessee is said to have some connection with the two companies, the nature of which, however, is not quite clear on the record before us. In respect of his own business of Indestro Sales and Service Co., the assessee was assessed to income-tax for the years 1943-44 to 1947-1948 and 1951-1952 by the third Income-tax Officer, C-I Ward, Bombay, at and for Rs. 40,178-4-0. The assessee not having paid up the assessed amount of tax, the Income-tax Officer on the 10th April, 1951, issued to the Additional Collector of Bombay, the first respondent herein, a recovery certificate under section 46(2) of the Income-tax Act. It may here be mentioned that the Indestro Eastern Ltd., was also assessed to income-tax at and for Rs. 1,92,000 and a recovery certificate was also issued by the Income-tax Officer to the Additional Collector of Bombay. On the 1st February, 195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sought or obtained. The rule has now come up before us for hearing. In the view we have taken about the merits of the petition it is not necessary for us to consider the question of its maintainability after the dismissal of the petition under article 226 or to make any pronouncement, on this occasion, on the scope and ambit of article 32 of the Constitution in that situation. The principal contentions urged by the learned advocate appearing for the petitioner are as follows, namely, --- (a) that section 46(2) of the Indian Income-tax Act under which the Income-tax Officer issued the recovery certificate to the Additional Collector of Bombay is void under article 13(1) of the Constitution in that the same offends article 22(1) and (2), article 21 and article 14 of the Constitution ; (b) that section 13 of the Bombay City Land Revenue Act, 1876, under which the warrant of arrest was issued by the Additional Collector is void under article 13(1) of the Constitution as the same is repugnant to article 14 of the Constitution. We proceed to deal with the objections seriatim. Re. (a) : Section 46(2) of the Indian Income-tax Act which is impugned before us runs as follows :--- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Code of Civil Procedure for the purpose of the recovery of the amount due under a decree. It is submitted that section 46(2) provides for two different and alternative methods of recovery of the dues and clothes the Collector with the power to apply either of the two methods, that is to say, he may issue a warrant of arrest under section 13 of the Bombay City Land Revenue Act, 1876, against one defaulter and keep him in detention for a period which may work out to be much longer than six months and he may proceed against another defaulter under the Code of Civil Procedure and arrest and detain him for the maximum period of six months. The powers that are thus conferred on the Collector by section 46(2) are unfettered and unguided and enable the Collector, at his will, to discriminate between two defaulters who are similarly situated and thereby violate the behests of the equal protection clause of the Constitution. This argument appears to us to be founded on a misapprehension about the true meaning of section 46(2). On a proper reading, that sub-section does not prescribe two alternative modes of procedure at all. All that the sub-section directs the Collector to do is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng as they were in or outside the City of Bombay. A Collector in the State of Madras in recovering the certified, amount of income-tax has to proceed under section 48 of the Madras Revenue Recovery Act, 1864 (Madras Act II of 1864). When the Collector finds that the certified amount cannot be liquidated by the sale of the property of the defaulting assessee and the Collector has reason to believe that the defaulter is wilfully withholding payment or has been guilty of fraudulent conduct in order to evade payment, the Collector may, under section 48 of that Act, cause the arrest and imprisonment of the defaulter, not being a female. But that section goes on to say that no person shall be imprisoned for a longer period than two years or for a longer period than six months if the arrear does not exceed Rs. 500 or for a longer period than three months if the arrear does not exceed Rs. 50. A Collector in West Bengal proceeding to recover the certified amount under the Bengal Public Demands Recovery Act, 1913 (Bengal Act III of 1913) cannot, under section 31 of that Act, direct the detention of the defaulting assessee in prison for more than six months if the amount is more than Rs. 50 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t all with the recovery of income-tax demand. That machinery is made available for the purpose of recovery of income-tax by virtue only of section 46(2) of the Indian Income-tax Act. In the matter of recovery of income-tax the Collectors adopt the procedure laid down by the State laws, not because the State laws enjoin them to do so, but because section 46(2) directs them to do so. In other words, it is section 46(2) which tells the Collectors of Madras to follow the procedure under section 48 of the Madras Revenue Recovery Act, 1864, as if those provisions are set out in the Indian Income-tax Act in extenso and it tells the Collectors of all other States to adopt the procedure prescribed by their own State laws as if the provisions prescribing that procedure were set out in that section. In such a situation it is a plausible argument to say that all the provisions of all the State laws are, mutatis mutandis, to be read into section 46(2) and that, therefore, if there be any vice of discrimination in the State laws that vice cannot but be regarded as having crept into section 46(2). On the other hand, to hold that all the provisions of all the State laws for recovery of arrears of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent bases ; namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. It is also well-established by the decisions of this Court that article 14 condemns discrimination not only by a substantive law but also by a law of procedure." The respective contentions now put forward as to the validity or otherwise of section 46(2) of the Indian Income-tax Act have to be judged in the light of the principles so laid down by the Full Court. The Indian Income-tax Act imposes a liability on persons who are amenable to it to pay the tax assessed against them. The assessed amount is a public demand of the Union and has to be recovered, if not voluntarily paid up. The assessees are scattered all over the Union and machinery has to be devised for that purpose. On looking round, the Union finds that there is machinery in every State for recovery of land revenues which are State demands. Each State in its wisdom has devised a machinery which it has considered appropriate and suitable for the recovery of its own public demand. As was said by the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion between the basis of classification and the object sought to be achieved by the Indian Income-tax Act any more than it can be so regarded with respect to the respective State laws. The fact that the income-tax demand is a Union public demand appears to us to make no difference in the legal position. The Indian Income-tax Act classifies people into various groups for the purpose of imposing the tax and taxes them differently, e. g., insurance companies which are taxed differently from an ordinary business concern and in some cases exempts them altogether, e. g., agriculturists and persons with income below a certain level. There can, on the same principle, be no objection to people of a backward area who may be in need of aid in the shape of tax remission to be exempted from taxation either wholly or in part. If this is right when a question of imposition is concerned, it cannot be wrong when the matter is one of recovery. The two together make up the full measure of the burden and if it is permissible to vary the burden at one end it must be equally valid to vary it at the other for the same or similar reasons. It is said that the income-tax demand being a Union demand ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the States the people of different States are not similarly situated and their own States have imposed on them such coercive processes as the circumstances and needs of each State require. The law impugned before us has only adopted, for its own purpose, the same coercive process which was devised by the States for their own purposes which are closely akin or similar to the purpose of the Union. The same or similar considerations apply to both cases. There is the same or similar correlation between the basis of classification and the object sought to be achieved by the Indian Income-tax Act. To deny this power to the Union on constitutional grounds urged before us will lead us to hold that no new offence created by law can be made triable according to the procedure laid down in the Code of Criminal Procedure, for that Code sanctions different modes of trial in different areas, namely, by section 30 Magistrate in some areas, by the Sessions Judge with assessors in certain areas, and by the Sessions Judge with jurors in other areas. Adoption of an existing machinery devised for a particular purpose cannot, if there be no vice of unconstitutionality in the machinery, render it unc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Revenue Act 1876, for the recovery of arrears of land revenue was harsher and more drastic than the procedure laid down in section 157 of the Bombay Land Revenue Code, 1879, in that a defaulter residing in the City of Bombay could be kept in detention for a day for every rupee of the arrears which might considerably exceed the maximum period of six months which is the period limited by the Code of Civil Procedure for the detention of a judgment-debtor in civil jail. The argument is that on the advent of the Constitution section 13 of the Bombay City Land Revenue Act, 1876, became void under article 13(1) in that it denied to the Bombay defaulter equality before the law in comparison with the defaulter outside the City of Bombay, for he could be detained for a longer period of time. In the view we have taken, it is not necessary to express any opinion whether the discrimination brought about by the two sections was supportable on the ground of a reasonable classification based on territorial considerations so as not to offend the constitutional inhibition. Assuming, then, but not deciding, that section 13 of the Bombay City Land Revenue Act, 1876, became inconsistent with the fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e certified demand, in which case there would have been no occasion for the issue of warrant for his arrest. It is only after the sale proceeds were found to be insufficient to satisfy the assessed amount and the assessee failed to pay up the balance that the question of the arrest of the defaulter arose. By that time section 13 had been amended and the warrant of arrest was issued on the 7th June, 1955, that is to say, long after the amendment of the section. In our opinion the second ground urged by the learned counsel must also be negatived. We may mention that our attention was drawn to the decision of the Madras High Court in Erimmal Ebrahim Hajee v. The Collector of Malabar but learned counsel could not rely upon it as an authority as it was itself under appeal before this Court. The result, therefore, is that this application must be dismissed. CHANDRASEKHARA AIYAR, J. --- I agree rather reluctantly. The reluctance is not because there is anything in the reasoning of the judgment pronounced just now by my Lord which does not appear to be sound but because I am not happy about the result. We have to face and accept wholly different consequences for nonpayment of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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