Retrospective pay fixation cannot be restricted to association members; similarly situated employees are entitled to equal benefits.

The applicants were retired Income Tax Department employees who had served as Inspectors of Income Tax and Income Tax Officers on 1 January 1996, and some were later promoted to higher posts before retirement.

Under the Fifth Central Pay Commission, their pay scales were initially fixed at ₹5,500–9,000 and ₹6,500–10,500 respectively.

By Office Memorandum dated 21 April 2004, the scales were upgraded to ₹6,500–10,500 for Inspectors and ₹7,500–12,000 for Income Tax Officers, but the benefit was granted prospectively.

The Income Tax Gazetted Officers Association challenged the prospective operation of the revised scales before the Mumbai Bench of the Tribunal in OA No. 86/2008.

The Tribunal directed notional fixation from 1 January 1996, and subsequent proceedings before the Calcutta and Hyderabad Benches, the Bombay and Telangana High Courts, and the Supreme Court resulted in decisions recognising similar relief.

The CBDT thereafter issued Office Memorandum dated 27 June 2025, restricting the benefit to persons who were members of the Income Tax Gazetted Officers Association as on 31 January 2008, the date connected with the filing of the original Mumbai proceedings.

The applicants, who were not covered by that restriction, challenged the Office Memorandum under Section 19 of the Administrative Tribunals Act, 1985, seeking notional pay fixation from 1 January 1996, actual monetary benefits from 21 April 2004, and consequential pensionary and retiral benefits.

Whether the CBDT was legally justified in restricting the benefit of notional pay fixation from 1 January 1996 only to employees who were members of the ITGOA as on 31 January 2008?

Whether similarly situated Inspectors of Income Tax and Income Tax Officers who were not parties to the earlier proceedings or members of the Association on the specified date were entitled to the same revised pay-scale benefits under the principles of equality and parity?

Whether the applicants were entitled to notional pay fixation from 1 January 1996, actual monetary benefits from 21 April 2004, and consequential pensionary and retiral benefits?

The Tribunal exercised jurisdiction under Section 19 of the Administrative Tribunals Act, 1985, and applied the equality principle under Article 14 of the Constitution, holding that similarly situated employees must receive समान treatment.

Relying on State of Karnataka v. C. Lalitha, (2006) 2 SCC 747, it held that the fact that only some employees approached the court cannot justify denying the same benefit to others similarly situated.

The Tribunal also relied on K.L. Shephard v. Union of India, (1987) 4 SCC 431, as reaffirmed in Lt. Col. Suprita Chandel v. Union of India, Civil Appeal No. 1943/2022, for the principle that non-litigating employees should not be penalised merely because they did not approach the court.

The decisions of the Hyderabad Bench, the Telangana High Court and the Supreme Court were treated as confirming the retrospective pay fixation principle for similarly situated employees.

The revised pay benefits were to be implemented in accordance with the Central Civil Services (Revised Pay) Rules, 1997.

The Tribunal found that the Special Anomaly Committee had recognised the pay anomaly and recommended notional fixation from 1 January 1996 and actual monetary benefits from 21 April 2004; that recommendation had been accepted and implemented for employees covered by earlier litigation.

The Tribunal rejected the respondents’ contention that the earlier judgments were strictly in personam and that the benefit could therefore be confined to ITGOA members as on 31 January 2008.

It held that the anomaly arose from the post and the duties attached to it, not from membership of an employees’ association.

The Tribunal also noted that CBDT and CBIC function under the same Department of Revenue and that similarly situated CBIC employees had received the benefit without any comparable membership-based restriction.

Consequently, the impugned classification lacked a rational basis and produced discriminatory treatment between employees who were otherwise identically situated.

Restricting the benefit by reference to association membership on a particular date was therefore arbitrary and inconsistent with Article 14.

The respondents were directed to refix the applicants’ pay under the CCS (Revised Pay) Rules, 1997, granting notional benefits in the grades of Inspector of Income Tax and Income Tax Officer from 1 January 1996 and actual monetary benefits from 21 April 2004.

The applicants were also held entitled to consequential arrears, revision of pensionary and other retiral benefits, and all related consequential benefits.

The exercise was directed to be completed within three months from receipt of the Tribunal’s order.

There was no order as to costs.