Full Judgment Text
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PETITIONER:
INCOME-TAX OFFICER, ALLEPPEY
Vs.
RESPONDENT:
M.C. PONNOOSE & ORS.
DATE OF JUDGMENT:
28/07/1969
BENCH:
GROVER, A.N.
BENCH:
GROVER, A.N.
SHAH, J.C. (CJ)
RAMASWAMI, V.
CITATION:
1970 AIR 385 1970 SCR (1) 678
1969 SCC (2) 351
CITATOR INFO :
R 1972 SC2427 (9)
RF 1980 SC2181 (104)
C 1984 SC 87 (21)
R 1987 SC1399 (18)
R 1987 SC2239 (8)
R 1988 SC1263 (10)
ACT:
Income-tax Act, 1961, s. 2(44)---Definition of Tax
Recovery Officer in section amended by s. 1 of Finance Act
1963--Notification under section extending
definition--Certain revenue officials including Taluka
Tehsildar brought within definition--Such Notification being
executive act cannot be given retrospective
effect---Subordinate legislation cannot ordinarily be
retrospective.
HEADNOTE:
By a notification dated August 14, 1963, issued by the
State of Kerala the Taluka Tehsildar was authorised to
exercise the powers of a Tax Recovery Officer under the
Income-tax Act, 1961. The notification was made effective
from April 1962. The shares of the assessee, who was in
arrears of his income-tax, were. attached by the Taluka
Tehsildar after April 1, 1962 but prior to August 14, 1963.
A petition under Art. 226 of the Constitution was filed
challenging the, action of the Tehsildar. The High Court
held that the notification empowering the Tehsildar to
exercise the powers of a Tax Recovery Officer with
retrospective effect was invalid and consequently quashed
the attachments. This view was affirmed by the Division
Bench in appeal. Dismissing the appeal by the Revenue, this
Court,
HELD: The courts will not ascribe retrospectivity to new
laws affecting rights unless by express words or necessary
implication it appears that such was the intention of the
legislature. The Parliament can delegate its legislative
power within the recognised limits. Where any rule or
regulation is made by any person or authority to whom such
powers have been delegated by the legislature it may or may
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not be possible to make the same so as to give retrospective
operation. It will depend on the language employed in the
statutory provision which may in express terms or by
necessary implication empower the authority concerned to
make a rule or regulation with retrospective effect. But
where no such language is to be found it has been held by
the courts that the person or authority exercising
subordinate legislative functions rule, regulation or
bye-law . which can operate with retrospective effect.
[681 F--H]
It can hardly be said that the impugned notification
promulgates any rule, regulation or bye-law ’all of which
have a definite signification. The exercise of the power
under sub-cl. (ii) of cl. (44) of s. 2 of the Income-tax
Act, 1961 is more of an executive than a legislative act.
[682 B]
Dr. Indramani Pyarelal Gupta v.W.R. Nathu & Ors.
[1963] 1 S.C.R. 721, Strawboard Manufacturing Co. Ltd. v.
Gutta Mill Workers [1953] S.C.R. 439, followed.
Phillips v. Eyre, 40 Law L Rep. (N.S.) Q.B. 28 at p.
37, referred to.
Modi Food Products Ltd. v. Commissioner of Sales-tax
U.P.A.I.R. [1956] All. 35, India Refineries Ltd. v. State of
Mysore, A.I.R. 1960 Mys. 326 and General 8. Shivdev Singh &
Anr. v, The State of Punjab & Ors. [1959] P.L.R. 514,
approved.
679
By saying that new definition of "Tax Recovery
Officer" substituted by s. 1 of the Finance Act, 1963,
"shall be and shall be deemed always to have been
substituted" was to make the new definition a part of the
income Tax Act from the date it was enacted. The legal
fiction could not be extended beyond its legiitimate field
and the aforesaid words occurring in s.4 of the Finance
Act, 1963 could not be construed to embody conferment of ’a
power for retrospective authorisation by the State re.the
absence of any express provision in s. 2(44) of the Income-
Tax Act itself. [682 G]
B.S. Vadera etc. v. Union of India & Ors. [1968] 3
S.C.R. 575, distinguished.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 942
and 943 of 1966.
Appeals by special leave from the judgment and order
dated june 18, 1965 of the Kerala High Court in Writ Appeals
Nos. 139 and 140 of 1964.
Jagdish Swarup, Solicitor-General, T.A. Ramachandran and
D. Sharma, for the appellant (in both the appeals).
S.T. Desai, M.C. Chacko, A.K. Verma, J.B. Dadachanji,
and O.C. Mathur, for respondent No. 1 (in C.A. No. 942 of
1966).
A.G. Pudissery, for respondents Nos. 2 and 3 (in C.A.
No. 942 of 1966).
J.B. Dadachanji, for respondents Nos. 1 and 2 (in C.A.
NO. 943 of 1966).
A.G. Pudissery, for respondents Nos. 7 and 8 (in C.A.
No. 943 of 1966).
The Judgment of the Court was delivered by
Grover, J. These two appeals by special leave involve a
common question relating to the validity of a notification
issued by the Government of Kerala in August 1963 empowering
certain revenue officials including the Taluka Tahsildar to
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exercise the powers of a Tax Recovery Officer under the
Income Tax Act 1961, hereinafter called the Act. The
notification was expressly stated to be effective from 1st
April 1962--a date prior to the date of the notification.
The facts in one of the appeals (C.A. 942/66) may be
stated: One Kunchacko of Alleppey allowed the income tax
dues from him to fall into arrears. The Income Tax Officer
took steps to recover the arrears through the Tahsildar.
Certain shares standing in the name of the assessee were
attached by the Tahsildar. The first respondent Ponnoose
claimed to have obtained a decree for a certain sum against
the assessee. He also got the shares
680
standing in the name of the assessee attached in execution
proceedings, Ponnoose filed a petition under Art. 226 of
the Constitution in the High Court of Kerala in which he
challenged the action taken by the revenue officials
including the Tahsildar for getting the shares, which had
been attached, sold for satisfaction of the income tax dues
of the assessee.
The learned Single Judge held that the notification
empowering the Tahsildar to exercise the powers of a Tax
Recovery Officer under the Act with retrospective effect was
invalid. Consequently’ the attachments made by the
Tahsildar were quashed. This view was affirmed by a division
bench in appeal.
The Act came into force on first April 1962. Section
2(44) defined the expression "Tax Recovery Officer" in the
following. terms:--
"Tax Recovery Officer’ means--
(i) a Collector;
(ii) an additional Collector or any other
officer authorised to exercise the powers of a
Collector under any law relating to Land
revenue for the time being in force in a
State; or
(iii) any gazetted officer of the Central or a
State Government who may be authorised by the
Central Government by notification in the
Official Gazette, to exercise the powers of a
Tax Recovery Officer".
Section 4 of the Finance Act, 1963 substituted a new
definition for the original definition of Tax Recovery
Officer. It was provided that the new definition "shall be
and shall be deemed always to have been substituted". The
new definition was as follows:
"Tax Recovery Officer" means--
(i) a Collector or an additional Collector;
(ii) any such officer empowered to. effect
recovery of arrears of land revenue or other
public demand under any law relating to land
revenue or other public demand for the time
being in force in the State as may be
authorised by the State Government, by general
or special notification in the Official
Gazette, to exercise the powers of a Tax
Recovery Officer;
(iii) any Gazetted Officer of the Central or a
State Government who may be authorised by the
Central Government, by general or special
noti-
681
fication in the Official Gazette, to exercise
the powers of a Tax Recovery Officer."
The impugned notification dated August 14, 1963 which was
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published in the Kerala Gazette dated August 20, 1963
referred to the powers conferred by sub-clause (ii) of
clause (44) of s. 2 of the Act read with sub-rule (2) of
rule 7 of the Income tax (Certificate Proceedings) Rules,
1962 and authorised the various revenue officials mentioned
therein including the Taluk Tahsildar to exercise the powers
of a Tax Recovery Officer under the Act in respect of the
arrears etc. The concluding portion was, "This notification
shall be deemed to have come into force on the first day of
April 1962". The Tahsildar had effected attachment of the
shares subsequent to first April 1962 but prior to August
14, 1963. In other words on the date on which he had
effected attachment he was not a Tax Recovery Officer but he
got the powers of a Tax Recovery Officer by virtue of the
notification dated August 14, 1963. The short question for
determination, therefore, was and is whether the State
Government could invest the Tahsildar with the powers of a
Tax Recovery Officer under the aforesaid provisions of the
Act with effect from a date prior to the date of the
notification, i.e., retroactively or retrospectively.
Now it is open to a sovereign legislature to enact laws
which have retrospective operation. Even when the
Parliament enacts retrospective laws such laws are-in the
words of Willes J. in Phillips v. Eyre(1) --"no doubt prima
facie of questionable policy and contrary to the general
principle that legislation by which the conduct of mankind
is to be regulated ought, when introduced for the first
time, to deal with future acts, and ought not to change the
character of past transactions carried on upon the faith of
the then existing law." The courts will not, therefore,
ascribe retrospectivity to new laws affecting rights unless
by express words or necessary implication it appears that
such was the intention of the legislature. The Parliament
can delegate its legislative power within the recognised
limits. Where any rule or regulation is made by any person
or authority to whom such powers have been delegated by the
legislature it may or may not be possible to make the same
so as to give retrospective operation. It will depend on
the language employed in the statutory provision which may
in express terms or by necessary implication empower the
authority concerned to make a rule or regulation with
retrospective effect. But where no such language is to be
found it has been held by the courts that the person or
authority exercising subordinate legislative functions
cannot make a rule, regulation or bye-law which can operate
with retrospective effect; (see Subba Rao J. in Dr.
lndramani Pyarelal Gupta v. W. R. Nathu &
(1) 40 Law J.Rep.(N.S.) Q.B. 28 at p. 37.
682
Others(1)--the majority not having expressed any different
opinion on the point; Modi Food Products Ltd. v.
Commissioner of Sales Tax U.P.(2); India Sugar Refineries
Ltd. v. State of Mysore(3) and General S. Shivdev Singh &
Another v. The State of Punjab & Others(4).
it can hardly be said that the impugned notification
promulgates any rule, regulation or bye-law all of which
have a definite signification. The exercise of the power
under sub-clause (ii) of cl. (44) of s. 2 of the Act is more
of an executive than a legislative act. It becomes,
therefore, all the more necessary to consider how such an
act which has retrospective operation can be valid in the
absence of any power conferred by the aforesaid provision to
so perform it as to give it retrospective operation. In
Strawboard Manufacturing Co., Ltd. v. Gutta Mill Workers’
Union(5) an industrial dispute had been referred by the
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Governor to the Labour Commissioner or a person nominated by
him with the direction that the award should be submitted
not later than April 5, 1950. The award, however, was made
on April 13, 1950. On April 26, 1950 the Governor issued a
notification extending the time up to April 30. It was held
that in the absence of a provision authorising the State
Government to extend from time to time the period within
which the Tribunal or the adjudicator could pronounce the
decision the State Government had no authority to extend the
time and the award was, therefore, one made without
jurisdiction and a nullity. This decision is quite apposite
and it is difficult to hold in the present case that the
Taluka Tehsildar could be authorised by the impugned
notification to exercise powers of a Tax Recovery Officer
with effect from a date prior to the date of the
notification.
It may next be considered whether by saying that the new
definition. of "Tax Recovery Officer" substituted by s. 4 of
the Finance Act, 1963 "shall be and shall be deemed always
to have been substituted" it could be said that by necessary
implication or intendment the State Government had been
authorised to invest the officers mentioned in the
notification with the powers of a Tax Recovery Officer with
retrospective effect. The only effect of the substitution
made by the Finance Act was to make the new definition a
part of the Act from the date it was enacted. The legal
fiction could not be extended beyond its legitimate field
and the aforesaid words occurring in s. 4 of the Finance Act
1963 could not be construed to embody conferment of a power
for a retrospective authorisation by the State in the
absence of any express
(1) [1963] S.C.R. 721. (2) A.I.R. 1956 All. 35.
(2) A.I.R. 1960 Mys, 326 (4) [1959] P.L.R. 514.
(5) [1953] S.C.R. 439.
683
provision in s. 2(44) of the Act itself. It may be noticed
that in a recent decision of the Constitution Bench of this
Court in B. 8. vadera etc., v. Union of India & Others(1) it
has been observed with reference to rules framed under the
proviso to Art. 309 of the Constitution that these rules can
be made with retrospective operation. This view was,
however, expressed owing to the language employed in the
proviso to Art. 309 that ’’any rules so made shall have
effect subject to the provisions of any such Act". As has
been pointed out the clear and unambiguous expressions
used in the Constitution, must be given their full and
unrestricted meaning unless hedged in by any limitations.
Moreover when the language employed in the main part of Art.
309 is compared with that of the proviso it becomes clear
that the power given to the legislature for laying down the
conditions is identical with the power given to the
President or the Governor, as the case may be, in the matter
of regulating the recruitment of Government servants and
their conditions of service. The legislature, however, can
regulate the recruitment and conditions of service for all
times whereas the President and the Governor can do so only.
till a provision in that behalf is made by or under an Act
of the appropriate legislature. As the legislature can
legislate prospectively as well as retrospectively there can
be hardly any .justification for saying that the President
or the Governor should not be able to make rules in the
same manner so as to give them prospective as welt as
retrospective operation. For these reasons the ambit and
content of the rule making power under Art. 309 can furnish
no analogy or. parallel to the present case. The High Court
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was consequently fight in coming to the conclusion that the
action taken by the Tahsildar in attaching the shares was
unsustainable.
The appeals therefore fail and are dismissed with costs.
One hearing fee.
Y.P. Appeals dismissed.
(1) [1968] 3 S.C.R. 575.
584