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TMI Blog1951 (1) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... es Union, hereinafter compendiously referred to as the Pepsu. By Article III (6) of the Covenant the then Ruler of Patiala became the first President or Raj Pramukh of the Council of Rulers and he is to hold the office during his lifetime. Article VI of the Covenant is as follows : " (1) The Ruler of each Covenanting State shall, as soon as may be practicable; and in any event not later than the 20th of August, 1948, make over the administration of his State to the Raj Pramukh, and thereupon, (a) all rights, authority and jurisdiction belonging to the Ruler which appertain, or are incidental to the Government of the Covenanting State shall vest in the Union and shall hereafter be exercisable only as provided by this Covenant or by the Constitution to be framed thereunder; (b) all duties and obligations of the Ruler pertaining or incidental to the Government of the Covenanting State shall devolve on the Union and shall be discharged by it; (c) all the asset and liabilities of the Covenanting State shall be the assets and liabilities of the Union, and (d) the military forces, if any, of the Covenanting State shall become the military forces of the Union. " Article X provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g in any such Covenanting State. " Section 6 provides for the adaptation of the laws etc. enforced under Section 3 and, amongst other things, any references in these laws etc. to the Patiala State and the like was to be construed as a reference to the State of the Union. A Notification (No. 35, dated 27-5-05/11-9-1948) was issued over the signature of the Revenue Secretary notifying that the Patiala Income-tax Act of 2001 and the Rules there under had come into force in the various Covenanting States from August 20, 1948. thereby repealing the law or laws in force in that behalf in those States before that date, except as to pending proceedings. It may be mentioned here that prior to that date there was no law in the Nabha State imposing income-tax on the subjects of that State. On November 14, 1948, the Commissioner of Income-tax issued a notification (No. 4, dated 29-7-2005) intimating that persons belonging to the Covenanting States of Nabha and Nalagarh would be assessed to income-tax under the Patiala Income-tax Act, 2001. It was mentioned that persons of those States whose income reached the taxable limit "should henceforward keep regular and proper accounts for purposes of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rh now in Pepsu but which formerly formed part of the Nabha State. The petitioner has been carrying on his business at Ateli for a number of years under the name and style of Raghunath Rai Ram Prashad. He never paid any income-tax as no such tax was imposed by any law in the Nabha State. On October 20, 1949, the petitioner was served with a notice under Sections 22(2) and 38 of the Patiala Income-tax Act, 2001, requiring him to submit a return for the Income-tax year 2006 (13-4-1949 to 12-4-1950) disclosing his income during the previous year (13-4-1948 to 12-4-1949). The petitioner on December 4, 1949, filed his return for the year 2006 and on February 14, 1950, he was assessed to income-tax. On May 23, 1950, the petitioner received a notice under Section 34 calling upon him to file his return for the year ending the last day of Chet, 2005, i.e., for the year 13-4-1948 to 12-4-1949. In this return he had to specify his income of the previous year, namely, 2004, (i. e., 13-4-1947 to 12-4-1948). It appears that the petitioner along with other assessees of Ateli and Kanina submitted a petition before the Income-tax Officer on July 9, 1950, asking him not to proceed with the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including Kapurthala. This allegation which is not denied in the affidavit filed by the petitioner in reply must be taken as correct. The assessment of Kapurthala assessees for the year 2005 at the old Kapurthala rate was obviously made under the proviso to Section 3 of Ordinance No. 1 of 2005, which was reproduced in the proviso to Section 3(1) of Ordinance No. XVI of 2006 and both of which required all pending proceedings to be completed according to the law applicable to those proceedings when they were initiated. No case of assessment was pending as against any Nabha assessee on August 20, 1948, for there was no Income-tax Act in Nabha prior to that date and, therefore, there could be no occasion for completing any pending proceedings against any of such assessees. In the premises, there can be no grievance by them on the score of discrimination. The discrimination, if any, was not brought about by the two Ordinances, but by the circumstance that there was no Income-tax Act in Nabha and consequently there was no case of assessment pending against any Nabha assessees. In any case the provision that pending proceedings should be concluded according to the law applicable at the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any cogent or convincing answer to refute the conclusion put to him. In our opinion the protection against imposition and collection of taxes save by authority of law directly comes from Article 265, and is not secured by clause (1) of Article 31. Article 265 not being in Chapter III of the Constitution, its protection is not a fundamental right which can be enforced by an application to this Court under Article 32. It is not our purpose to say that the right secured by Article 265 may not be enforced. It may certainly be enforced by adopting proper proceeding. All that we wish to state is that this application in so for as it purports to be founded on Article 32 read with Article 31(1) to this Court is misconceived and must fail. The whole of Dr. Tek Chand's argument was founded on the basis that protection against imposition and collection of taxes save by authority of law was guaranteed by Article 31(1) and his endeavour was to establish that the Pepsu Ordinances could not, in law, and did not, on a correct interpretation of them, impose any income-tax retrospectively, that the Income-tax Officer on an erroneous view of the law had wrongly assessed the tax on income accrued p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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