603.

INDER SINGH & ANR. v.

STATE OF PUNJAB & ORS.

April, 10, 1967

[K. SUBBA R.Ao, C.J., M. HIDAYATULLAH, R.

BACHAWAT,

J.M. SHELAT

AND C. A. VAIDIALINGAM, JJ.]

Pepsu Tenancy and Agricultural Lands Act, 1955 (Pepsu 13 lff 1955) s. 32-FF-Limit of holding by Hindu undivided family, if defeats right of its member-If infringes Art. 19 and protected by Art. 31-A.

Constitution of India, Arts. 19 and 31-A-Validity of s. 32-FF of Pepsu Tenancy and ARricultura/ Lands Act

While ascertaining the surplus land under the Pepsu Tenancy and Agricultural Lands Act, the excess over 30 acres owned by the appellants, a Hindu 11Ddivided family was declared surplus. In ascertaining the surplus, the authorities ignored the transfer of land by the Karla of the family to "1ll oulllider by a registered deed. The appellants unsuccessfuily filed writ petition. In appeal to this Court, the appellants contended that s. 32-KK deprives a coparcener in a Hindu undivided family of his rights of property in that it takes away the rights of the descendants of the land-owner to claim for themselves the permissible area and vest them in the head of the family alone so that there is not only an infrinAOment of the right to hold property under Art. 19(1)

(f) but also discrimination in favour of the head of the family infringing thereby Art. 14 and that the section cannot be said to be legislation whose object is agrarian refonn and, therefore, is not protected by Art. 31-A.

IjELD : The appeal must fail.

In Priram Singh v. State of Punjab [(1967) 2 S.C.R. 536] this Court upheld the validity of s. 32-FF and held that that section was prptected by Art. 31-A against any challenge under Art. 19. If a transfer or a disposition of land. can validly be ignored under s. 32-FF for the purpose of ascertaining smplus land and acquisition of such surplus land by the State and that section is protected by Art. 31-A, it is difficult to say why s. 32-KK which, 09uates a Hindu undivided family with an individual landowner for the limited purpose of the Act without affecting the other rights of its members is not equally protected by that Article. The object of enacting s. 32-KK was to prevent the landowner and his descendants by reason of their constituting a Hindu undivided family from each of them claiming in his own right the permissible area from the joint holding of the family and thus retain for themselves in the aggregate area larger than 30 standard acres and preventing thereby distribution of surplus area. !608 F-Hl The contention that the section is not one relating to agrarian reform is hardly sustainable in view of the objects of the Act in general and of s. 32-KK u, particular. Similarly. the contention that the section has the

affect of defeating the rights of a member of a Hindu undivided family from the family proryerty also cannot be sustained because his rights in the

permissil>le area retained by the landowner and his right to compensation in respect of the surplu. area are not touched by the section. Nor is it possible to say that the section results in the transfer of rights of the descendants of a landowner in th~ permissible or surplus area in favour of

<Uch landowner. The section does not effect any change in the rights of

the descendants as members of a Hindu undivided family or the relationship of the family inter se except to the extent of depriving th~ descendants of their right to claim the ceiling area for each .of them.

[609 B-BJ

The decision of Ranjit Singh v. The State of Puniab ([1965] I S.C.R.

82) points out that the fixing of ceiling on lands and provisions refatiog

to it would form part of and constitute agrarian reform and, therefore, such provisions would have the protection of Art. 31-A. [607 HJ

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 92 of !966.

Appeal from the order dated May 30, 1963 of the Punjab High Court in Letters Patent Appeal No. 148 of 196:3.

R. V. S. Mani and M. L. Agarwal, for the appellants.

Dipak Dutt Chaudhuri and R. N. Sachthey, for the respondents.

S. K. Mehta, and K. L. Mehta, for the interveners.

The Judgment of the Court was delivered by

Shelat, J.

The appellants are members of a Hindu undivided family of which the firs~ appellant is the Karta. Prior to August 21, 19 5 6, the family owned 64. 3 5 standard acres. of land in village Kurali, District Patiala.

The land stood in the revenue records in the name of the first appellant. On December 23, 1957, the first appellant transferred 26 standard acres to one Babu Singh by a registered deed. According to them, they had planted an orchard in 10 acres of land. Their contention was that the said 26 standard acres and the said 10 standard acres could not be taken into account while ascertaining surplus land under the Pepsu Tenancy and Agricultural Lands Act, XIII of 1955.

Both these claims were rejected by the authorities.

By his order dated January 20, 1961, respondent No. 3 declared 34.35 standard acres out of the said 64.35 standrd acres as surplus land.

The appeal filed by the appellants against the said order was rejected.

They then filed a revision application before respondent No. 1.

While that was pending they filed a writ petition in the High Court. During the pendency of that writ petition, the Punjab Legislature passed the Amendment Act, XVI of 1962 insert.mg s. 32-KK in the principal Act.

The learned Single Judge, who heard the writ petition, held ( 1) that the finding that the appellants had not planted the said orchard within the statutory period was one of fact and could not be challenged in the writ petition and (2) that the said transfer of 26 standard acres was hit by s. 32-FF and therefore was rightly ignored while ascertaining the surplus land.

The main contention urged before the High Court, however, was that each of the three appellants who constituted the said family was entitled to retain 30 standard acres, that as the total holding was only 64.35

standard acres, there was no surplus land liable to be acquired under the Act and, therefore, the order declaring 34.35 siandard acres as surplus land was illegal. The High Court following its earlier decision in Bhagat v. State of Punjab(') diSmissed the writ petition. A Letters Patent Appeal against that judgment was dismissed in limine. The present appeal by certificate is directed against the dismissal of the said writ petition.

Mr. Mani's contentions were : ( 1) that under Hindu Law every coparcener in a Hindu undivided family acquires right in the property of such coparcenery on birth and is entitled to a right of joint possession and enjoyment of its entire property, that s. 32-

KK deprives such a coparcener of his rights of property in that that it talces away the rights of the descendants of the landowner to claim for themselves the permissible area and vest them in the head of the family alone so that there is not only an infringement of the right to hold property under Art. 19 (I)( f) but also discrimination in favour of the head of ihe family infringing thereby Art. 14; (2) that ihe effect of s. 32-KK is that where an undivided family is possessed of land, insteap of each of the descendants getting a ceiling area of 30 standard acres, tlie head of the family alone gets 30 standard acres and therefore the section is violative of Art. 31; ( 3) that the section, being applicable only to Hindu undivided families infringes Art. 15(1) inasmuch as it discriminates by reason only of religion such families as against other undivided families in Punjab amongst communities other than Hindus and ( 4) that the section cannot be said to be legislation whose object is agrarian reform and, therefore, is not protected by Art. 31-A.

Section 32-KK, the validity of which is impeached in this appeal, reads as follows :-

"Notwithstanding anything contained in this Act or in any other law for the time being in force :-

(a) where, immediately before the commencement of this Act, a landowner and his descendants constitute a Hindu undivided family, the land owned by such family shall, for the purposes of this Act, be deemed to be the land of that landowner and no descendant shall, as member of such family, be entitled to claim that in respect of his share of such land he is a la11.downer in his own right".

The section first lays down a fiction and then its result.

The fiction is that where a landowner and his descendants form a Hindu undivided family, the land owned by such a family shall be deemed to be the land of that landowner. The fiction so en-

(!) J.L.R. (1963) 16 (lJ Punjab 500.

.acted is limited only for the purposes of the Act. The result of .the fiction again for the purposes of the Act is that no descendant shall, as a member of such family, be entitled to claim that in Iespect of his share of such. land he is a landowner in his own right. There is no doubt that the section has a direct adverse .effect on the rights of the descendants of a landowner. It treats such a family as one unit equating the landowner and, his des- .cendants with an individual landowner depriving by such equation the descendant of the right to hold a ceiling area for himself.

Prima facie, such a provision would infringe Art. 19.(l){f) and Art. 31 and would be hit by Art. 13. Article 31-A, however, provides that notwithstanding anything contained in Art. 13, no law providing for the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights shall be deemed to be void on tl:je ground that it is mconsistent with or takes away or abridges any of the rights conferred by Arts. 14, 19 or 31. If, therefore, s. 32-KK falls within th.e scope of Art. 31-A, it is obviously protected thereunder and the validity of the section is placed beyond any •Challenge on the ground of its infringing any of the rights under Arts. 14, 19 or 31.

In K. K. Kochuni v. The State of Madras('), this Court laid .down that Art. 31-A properly construed envisages agrarian reform and provides for the acquisition, extingufshment or modification of proprietary and various other kinds of subordinate rights in a tenure called the 'estate' solely for that purpose and must be limited to it. The Court held that the Act impugned there did not .contemplate any agrarian reform or seek to regulate the rights inter se between the landlords and tenants or modify or extinguish any of the rights appertaining to janmam right leavipg all the characteristics intact and, therefore, did not c<ime within the purview of Art. 31-A. In Ranjit Singh v. The State of Punjab('), this Court considered the scope of that decision and held that the word 'estate' in Art . .31-A should be given a liberal mel!ning and that the changes proposed by the Punjab Consolidatipn Acts passed since 1948 and onwards were included in the general scheme of planning of rural areas and the productive utilisation of vacant and waste lands, that if agrarian reforms were to succeed, mere distribution of land to the landless was not enough, that there should be a proper planning of rural economy and conditions and that a scheme which makes villages self-sufficient cannot but be regarded as part of larger reforms which consolidation of holdings, fixing of ceilings on lands, distribution of surplus lands and utilising of vacant and waste lands contemplate. It is not necessary to refer to other decided cases as this decis)on clearly points out that the fixing of ceiling on lands and provisions

(1) [196J] 3 S.C.R. 887,

(2) [1965] l S.C.R. 82.

t '

relating to it would fonn part of and constitute agrarian refonn

and, therefore, such provisions would have the protection of Art. 31-A.

A brief outline of the provisions of the Act will show the objects and the policy the legislature had in mind in passing the Act and while amending it from time to time. The Act declares that it was passed to amend and consolidate law relating to tenancy and agricultural lands and to provide for certain measures of land reforms.

Section 3 defines "permissible limit" as meaning 30 standard acres of land. Section 5 entitles every landowner owning land exceeding the pennissible limit to select for personal cultivation from the land held by him any parcel or parcels of land not exceeding in aggregate .the permissible area.

Chapter III provides for the rights of tenants and section 7 therein lays down that no tenancy shall be tenninated except in accordance with the provisions of the Act or except on any of the grounds therein set out.

Section 7-A lays down additional grounds for tennination of tenancy in cases such as where the land comprising the tenancy has been reserved by the landowner for his personal cultivation or where the landowner owns 30 standard acres or less of land and the land falls within the permissible limit. Section 9 provides the maximum amount of rent payable by a tenant.

Chapter IV deals with acquisition or proprietary rights by a tenant on such tenant paying compensation determined in accordance with the principles set out in section 26. Chapter IV-A, which was added by Act 15 of 1956, deals with ceiling on lands and acquisition and disposal of surplus land.

Section 32-A provides that no person shall be entitled to own or hold as landowner or tenant land exceeding the pennissible limit. Section 32-B obliges a person owning or. holding as landowner or tenant land which exCeeds the pennissible limit to furnish to the Collector a return giving particulars of all his land and stating therein his sel.ection of land not exceeding the permissible limit which he desires to retain and of lands in respect of which he claims exemption from the ceiling. Section 32-D directs the Collector fo prepare a draft statement on the basis of the infonnation given in the said returns showing the total area of land owned or held 6y such person and the land selected by him by way of pennissible limit the exemption claimed by him and the surplus area.

Section 32-E provides that in the case of surplus area of a landowner or a tenant which is not included within the permissible limit such

area shall on the date on which possession thereof is taken by the State Government, be deemed to have been acquired by the State Gove'l!lllent for a public purpose. Section 32-F authorises the Collector to direct the landowner or the tenant in possession of the surplus area to deliver possession thereof within the prescribed time.

Section 3 2-FF provides that no transfer or

other disposition of land made after August 21, 1956 shall affect the right of the State Government to the surplus area to which it would be entitled to but for such transfer or disposition. Section 32-G lays down principles on which compensation in respect of surplus area is .to be determined. Section 23-J deals wit!). disposal of such surplus area. Section 32-KK already recited above was inserted in the Act by Punjab Act XVI of 1962.

It is clear from these provisions that the objects of 'the Act are: (a) to secure the rights of tenants, (b} to provide for acquisition of proprietary rights in the land to the tenant, ( c) to provide for permissible limit of 30 standard acres, (d) to acquire surplus areas and distribute them amongst certain classes of persons including landless persons, and ( e) to provide for compensation at prescribed rates payable by tenants and by Government on its acquiring surplus land. The principle laid down by the Act is that no person, whether a landowner or tenant, should hold land more than the permissible area so that the surplus land can be distributed amongst the more needy sections of society. In following this principle the Act lays down two corollaries, namely, (1) not to recognise any transfer or disposition made by a landowner after a certain date as otherwise the scheme of distribution of surplus land would be frustrated, and (ii) to equate an individual landowner and a Hindu undivided family consisting of a landowner and his descendants so that both the units are entitled to hold only the permissible area of 30 standard acres. In our view, it cannot be gainsaid that section 32-KK deals with an estate within the meaning of Art. 31-A and is concerned with agrarian reform.

The decision in Kochuni's case(') cannot, therefore, avail the appellants.

In Pritam Singh v. The State of Punjab(2 ), this Court upheld the validity of s .. 32-FF and held that that section was protected by Art. 31-A against any challenge under Art. 19. If a transfer or a disposition of land can validly be ignored under s. 32FF for the purpose of ascertaining surplus land aad acquisition of such surplus land by the State and that section is protected by Art. 31-A, it is difficult to say whys. 32-KK which, as aforesaid, equates a Hindu undivided family with an individual landowner for .the limited purpose of the Act without aff.ecting the other rights of its members is not equally protected by that Article.

The object of enacting s. 32-KK was to prevent the landowner and his descendants by reason of their constituting a Hindu undivided family from each of them claiming in his own right the permissible area from the joint holding of the family and thus retain for themselves in the aggregate area larger than 30 standard acres and preventing thereby distribution of surplus area. As to

(\) {1960) 3 S.C.R. 887.

(2) [1967J 2 S.C.R. 536.

the pros and cons of such a provision much can be said on either side. The appellants could have perhaps contended that such a provision amounw! to an unreasonable restriction.

But such a contention is debarred by Art. 31-A and a challenge to the validity of that Article is no longer possible in view of the recent decisioP in I. C. Go/ak Nath v. The State of Punjab(').

The contention that the section is not one relating to agrarian refom1 is hardly sustainable in view of the above-mentioned objects of the Act in general and of s. 32-KK in particular.

Similarly, the contention that the section has the affect of defeating the rights of a member of a Hindu undivided family from the family r.roperty also cannot be sustained because his rights in the permissible area retained by !he landowner and his right to compensation in respect of the surplus area are not touched by the section.

Nor is it possible to say that the section results in the transfer of rights of the descendants of a landowner in the permissible or surplus area. in favour of such landowner. The section does not effect any change in the rights of the descendants as members of a Hindu undivided family or the relationship of the family inter se except to the extent of depriving the descendants of their right to claim the ceiling area for each of them. The contention as to the validity of s. 32-KK, therefore, must fail.

The next contention was .that the section infringes Art. 15 inasmuch as by limiting it only to Hindu undivided families it discriminates against descendants forming such families on the ground of religion only. It was argued that the customary law in Punjab recognises joint and undivided families amongst non-Hindu persons also and since .the section affects only the Hindu undivided families, it violates Art. 15. In support of this contention passages from Rattigan's Digest of Customary Law, 14th Ed. pp. 35 to 36 were relied on to show that the institution of undivided family exists amongst certain classes of Muslims in certain districts of Punjab. Support was also sought from the decisions in Banarsi Das v. Wealth Tax Officer(") and Mammad Kevi v. Wealth Tax Officer('). The former was concerned with the question whether a Hindu undivided family is embraced within the term 'intlividuals' in Entry 56 of List I of the Seventh Schedule to the Constitution for purposes of the Wealth Tax Act, 1957. The latter decision does not touch the question under Art. 15.

Neither of the two decisions, therefore, can assist On the other hand, in the case of Bhagat v.State of Punjab(') the High Court of Punjab has held that section 32-KK does not create any discrimination on the ground of religion. In the .present case, it is not possible to give

(l) [1967] 2 S.C.R. 762.

(2) [1965] 56 I.T.R. 224.

(3) [1966] 6) I.T.R. 737.

(4) l.L.R. [1963] 16 (!} Punj. 500.

L7Sup.CI/67-9 t;

any concluding answer to the contention raised by Mr.

Mani firstly because such a point was not raised in the writ petition and secondly because , the appellants have not placed before us sufficient data to enable us to go into the question, We, therefore, refrain from examining that contention.

The appeal fails and is dismissed with costs.

Y.P.

Appeal dismissed.

INDER SINGH & ANR

STATE OF PUNJAB & ORS

M. HIDAYATULLAH

BACHAWAT,

J

M. SHELAT

s. 32

Art. 19

Art. 31

Constitution of India

Arts. 19 and 31

s. 32

s. 32

Art. 19(1)

Art. 14

Art. 31

(1967) 2 S.C.R. 536

s. 32

Art. 31

Art. 19

s. 32

Art. 31

s. 32

s. 32

s. 32

Art. 31

R. V. S. Mani

M. L. Agarwal

Dipak Dutt Chaudhuri

R. N. Sachthey

S. K. Mehta

K. L. Mehta

Shelat

August 21, 19 5 6

Kurali

Patiala

December 23, 1957

Babu Singh

January 20, 1961

Punjab Legislature

s. 32

s. 32

Mani

s. 32

Art. 19

Art. 14

s. 32

Art. 31

Art. 15(1)

Punjab

Art. 31

Section 32

Art. 19

Art. 31

Art. 13

Article 31

Art. 13

Arts. 14, 19

s. 32

Art. 31

Arts. 14, 19

Art. 31

Art. 31

Art. 31

Section 3

Section 5

section 7

Section 7

Section 9

section 26

Section 32

Section 32

Section 32

Section 32

Section 32

Section 3

August 21, 1956

Section 32

Section 23

Section 32

section 32

Art. 31

Kochuni

Art. 31

Art. 19

s. 32F

Art. 31

s. 32

1960) 3 S.C.R. 887

Art. 31

s. 32

s. 32

Art. 15

Art. 15

Art. 15

High Court of Punjab

section 32

[1967] 2 S.C.R. 762

Mani


STATE OF ASSAM & ORS. v.

LABANYA PROBHA DEBI April 11, 1967

[K. SUBBA RAO, C.J., M. HIDAYATULLAH, R. S. BACHAWAT,

J. M. SHELAT AND C. A. VAIDIALINGAM, JJ.]

Con.!litution of India, 1950; A.rt. 301, Entry ~? of f:ist II and E!fll{; 35 of List Ill-Taxation of motor vehicles and Prmc1p/es of tax•twn of motor vehicles, difference-Art. 301, scope of.

Under the Assam Motor Vehicles Taxation Act, 1936, no motor vehicle could be wed in the Assam Province .unless the owner .thereof had paid in respect of it a tax at the appropr1ate rate specified 1_n the Schedule to the Act.

The Schedule was amended from time to 11me by the substitution of new Schedules and as a result of such amendments in 1963 and 1966, the tax O'll stage carriage motor vehicles was gradually raised.

In a writ petition, filed by the respondent, challenging the validity of the Amending Acts of 1963 and 1966, the High Court. held. that the

Amendin~ Acts were made in respet !'f the matter .contained in Entry 35 of the Concurrent List, namely prmc1ples of taxation of motor vehicles, and, as the provisions of the Amending Acts were inconi!ltent with those of the existing Jaw, namely, the 1936 Act, the Amendmg Acts were void, because, the assent of the President as required by Art. 254 was not received.

In appeal .to this Court,

HELD : (i) Taxes on vehicles connote the' liability to pay taxes at the rates at which the taxes are to be levied, while, the ex:.pression ", Principles of taxation" denote5 rules of guidance in the matter of taxa. t1on.

The Amending Acts do not come into conflict with the existing law in respect of any principles of taxation within the meaning of Entry 35 of the Concurrent List, but only deal with a subject matter, namely, taxes on vehicles within the meaning of Entry 57 of the Stato List which is exclusively within the legislative competence of the State Legi'stature; and "' wch. there is no scope for invoking Art. 254.

[615A-C] . (iiJ_ lt is only a comparatively sm11l proportion of the general expend1.lure incurred on new roads and the mainte.nance of the old roads that was realised through the impugned taxation. Therefore, the Amending ct~ re only regulatory measures imposing compensatory taxes for faci~ htating trade, comme-rcc and intsrcourse.

The Acts arc, hence. not hit by Art. 301 of the Constitution.

[616CJ

The Automobile Transport (Raj1Utha11) Ltd. v. The State of Rajasthan, [1963] 1 S.C.R. 491, followed.

CIVIL APPELLATE JURISDICTION : Civil Appeal No, 38 of 1967.

Appeal from the judgment and order dated December I, 1966, of the Assam and Nagaland High Court ill' Civil Rule No. 145 of 1964.

S. V. Gupte, Solicitor-General and Naunit Lal, for the appellants.

Ram Labhaya Obhrai, I. M. Obhrai, S.K. Mehta and K. L.

Mehta, for the a-espondent.

The Judgment of the Court was delivered by Subbarao C.J.

This appeal by certificate is directed against the order of the High Court of Assam declaring that the Assam Motor Vehicles Taxation (Amendment) Acts of 1963 and 1966 were repugnant to the Assam Motor Vehicles Taxation Act, 1936 (Assam Act9 of 1936), hereinafter called the Principal Act, and, therefore, void as they were made in contravention of the provisions of Art. 254(2) of the Constitution.

The facts are in a small compass and they are as follows The Principal Act came into force on March l', 1937. The assent of the Governor-General in Council was given under section 35 of the Government of India Act, 1935. This Act imposes tax on motor vehicles in the Province of Assam. In 1955 the Principal Act was amended by Assam Act IV of 1956 and it had received the assent of the President.

Subsequently the Principal Act was amended by Act 15 of 1963, but the Bill was introduced in the Assam State Assembly with the previous sanction of the President and it came into force on April 1, 1963. Subsequent to the filirig of the petition, out of which the present appeal has arisen, the Principal Act was again amended in the year 1966 and it came into force on April 1, 1966. The tax on the stage carriage motor vehicles was gradually raised under each amendment and under the last of the amendments a sum of Rs. 56/- was imposed per seat.

Under the last amendment Act the petitionerrespondent had to pay a sum of Rs. 1680/- as tax for the stage carriage she was plying.

The respondent filed a petition under Art. 226 of the Constitution in the High Court for declaring the amending Acts void and for other reliefs.

The petition was heard by a Division Bench-of the High Court and the learned Judges delivered two separate but concurrent judgments.

They held that the Amending Acts of 1963 and 1966 were void and gave the petitioner-respondent the reliefs asked for. Hence the present appeal.

The main question in the appeal is whether the said Amending Acts increasing the rate of tax are void for constitution incompetence. The High Court in effect held that the provisions of the said Amending Acts were inconsistent with those of the existing law, namely, the Principal Act and, therefore, as they had not received t)!e assent of the President, were void under Art. 254 of the Cci'nstitution. This conclusion was arrived at on the ground that the Amending Acts were made -i~ respect of the matter contained in entry 35 of the Concurrent List.

To appreciate the contentions it will be convenient to read at the outset the relevan: Articles of the Constitution.

Entry 57 of List II of the Seventh Schedule to the Constitution: Taxes on vehicies, whether mechanically propelled or not, suitable for use on roads, including tramcars subject to the provisions of entry 35 of List III.

Entry 35 of List Ill Mechanically propelled vehicles including the principle; on which taxes on such vehicles are to be levied.

Art. 254 ( 1) If any provision of law made by the Legislature of a State is repugnant . . . . . to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause (2) ........ the existing law, shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void. ( 2) Where a law made by the Legislature of a State .vith respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an. earlier law made by Parliament or an existing law with respect to that matter, then the law so made by the Legislature of such State shaU, if it has

be<in reserved for the consideration of the President and has received his assent, prevail in that State.

Art. 366(10) Existing law means any law, ordi- nance or bye-law, rule or regulation passed or made before the commencement of the Constitution by any Legislature, authority or person having power to make such a law, ordinance or bye-law, rule or regulation.

The application of the said provisions to the subject-matter OI

the present appeal leads to the following result.

Tho Principat Act was an existing Jaw. If the Amending Acts were mad• under entry 35 of the Concurrent List and if they were in conflict with any of the provisions of the existing law, to the extent of the inconsistency the said amendments would be void. But, on the other hand, if the Amending Acts were passed under entry 57 of List II of the Seventh Schedule, they would fall outside the scope of Art. 254 of the Constitution, as Art. 254 would apply only to

a conflict between the provisions of an "existing law" and those of tho post-constitution law in respect of matters enumerated in any of the entries of the Concurrent List.

The learned Solicitor General raised before us two points. namely. (i) Art. 254 of the Constitution posits the existence of

SUPREME COURT REPORTS [!967] 3 S.C.ll.

two parallel laws----one an "existing law" and the other a post- Constitutional law-in respect of any one of the entries in the Concurrent List and the provisions thereof are in conflict with each other; but it has no application to a case where the State Legislature, within the scope of its legislative competency, amends an existing law so as to extinguish a parfof it.

(2) The amending Acts were only made under entry 57 of List II and, therefore, there is no scope for invoking the provisions of Art. 254 of the Constitution.

Learned counsel for the respondent, on the other hand, contended that there was no distinction between an amending Act and a new Act in the matter of application of Art. 254 of the Constitution, as in either case the provisions of the said Acts would be inconsistent with the existing law.

He further argued that the Amending Ac.ts introduced new principles of taxation and, therefore, fell squarely within the scope of entry 35 of the Concurrsat List.

As we are holding in favour of the appellant on the secont!l point, it is not necessary to express our view on the first.

The short question, therefore, is whether any of the provisi<il11s of the Amending Acts is repugnant to any of the provisions of lie

existing law with respect to any of the matters enumerated in the Concurrent List. Under the existing law, i.e., Act 9 of 1936, no motor vehicle could be used in the Assam Province unless tlte owner thereof had paid in respect of it a tax at the appropriate rate specified in the Schedule to the Act and, save as therein specified, such tax should thereafter be payable annually notwithstanding that the motor vehicle might from time to time cease to be used (see s. 4). As aforesaid, the Schedule annexed to tlie Principal Act was am.nded from time to time by different ameuing Acts and the rate was increased. Under the 1963 amendimg Act, apart from other provisions which do not relate to any principles of taxation, a new Schedule has been substitute<!. Neither the amending Act nor the Schedule laid down any principles of taxation in re$pect of motor vehicles. So too, the amending Act of 1966 substituted the Schedule of the Ac, t by another Schedule.

A persual of the aforesaid Schedule only disclose that. different

rates were fixed; that is to say, the amended Schedul.e does not lay down any principles on which taxes on motor vehicles are. to be levied within the meaning of entry 35 of the Concurrent List; it is solely concerned with taxes on vehicles within the meaning of entry 57 of List II. The two entries deal with two different matters though. allied ones----one deals w1th taxes on vehicles !"Id the other with the principles on which such taxes are to be lev1e_d.

When two entries in the Constitution, whether in the same List or different Lists, deal with two subjects, if possible, an attempt

shall be made to harmonize them rather than to bring them into conflict.

Tax.s on vehicles in their ordinary meaning connote the liability to pay taxes at the rates at which the taxes are to be levied.

On the other hand, the expression "principles of taxation" denotes rules of guidance in the matter of taxation.

We, therefore, hold that the Amending Acts do not come into conflict with the existing law in respect of any principles of taxation, but only deal with a subject-matter which is exclusively within the legislative competence of the State Legislature. In this view, there is no scope for the application of Art. 254 of the Constitution.

Even so, learned counsel for the respondent contended that the amending Acts offend the provisions of Art. 301 of the Constitution. Article 30 I reads :

"Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free." The scope of this Article has been authoritatively defined by this

Court in The Automobile Tr11msport (Rajasthan) Ltd. v. The Stare of Rajasthan (1).

There the majority held that regulatory 1111easures or measures imposing compensatory taxes for the use

of trading facilities did not hamper trade, commerce or inter-

€Ourse but rather facilitate them, and, therefore, were not hit by the freedom declared by Art. 30 I. There, by virtue of section 4 of the Rajasthan Motor Vehicles Taxation Act, 1951, read with the Schedules, no one could use or keep a motor vehicle in Rajasthan without paying an appropriate tax for t and, if he did so, he was made liable to the penalties imposed under s. 11 of that Act. This Court by majority held that such taxes were compensatory and regulatory taxes which did not hinder the freedom of trade. In the present case the respondent in her petition questioned the validity of the provisions of the amending Acts on the following grounds :-(i) The Act abolished the permi• fee previously payable on such motor vehicles. She alleges that as a result of the rationalisation of tax and the introduction of a single point levy, the tax fixed irrespective of road condition. distance travelled, region catered for imposes crushing burden on the petitioner and the other stage carriage pennit-holders plying their vehicles in the short distance route and gives discriminatory weightage in favour o~ the State Carriage; Inter-State public carriers and other vehicles plying in longer distance routes. It will be seen tha, t the averments are general and vague. On the other hand, the State has filCll a detailed affidavit.

The following figures show the expenditure incurred on new roads and maintenance of old roads and the income from motor vehicles for

(I) [1963) t S.C.R. 491.

- some years.

In 1962-63 the expenditure was Rs. 671.60 lakhs and the income was Rs. 75.58 lakhs.

In 1965-66 the expendture was Rs. 1499.77 lakhs and the income was Rs. 137.96 lakhs.

From the said figures it is clear that the State is charging from the users of motor vehicles some thin$ in the neighbourhood of 11 % and 10% respectively for the said two years of the cos.t it has to incur in maintaining and making roads. From Annexure D to the said affidavit it appears that in some cases tax under the 1963 Act had been increased by 50% under the 1966 Act and in some cases the tax under 1963 Act bas been increased by 40% under 1966 Act. It is obvious that comparatively small proportion of the general expenditure is realised through the im.imgned taxation. In the circumstances, we must hold that the said Acts were only_ regulatory measures in1posing compensatory taxes for facilitating trade, commerce and intercourse.

The Acts are, therefore, not hit by Art. 301 of the Constitution.

In the result the order of the High Court is set aside and the appeal is allowed.

The petition filed by the respondent in the

High Court is dismissed with costs here and iii the court below.

V.P.S.

Appeal allowed.

STATE OF ASSAM & ORS

LABANYA PROBHA DEBI

April 11, 1967

K. SUBBA RAO, C.J.

M. HIDAYATULLAH

R. S. BACHAWAT,

J.

M. SHELAT

Art. 301

Assam Motor Vehicles Taxation Act, 1936

Art. 254

Art. 254

Art. 301

[1963] 1 S.C.R. 491

S. V. Gupte

Naunit Lal

Ram Labhaya Obhrai

I. M. Obhrai

S.K. Mehta

K. L.

Mehta

Subbarao

High Court of Assam

Assam Motor Vehicles Taxation Act, 1936

Art. 254(2)

March l', 1937

section 35

Government of India Act, 1935

Assam

Assam Act IV of 1956

April 1, 1963

April 1, 1966

Art. 226

They held that the Amending Act

Art. 254

Seventh Schedule

Art. 254

Parliament

Art. 366(10)

Tho Principat Act

Seventh Schedule

Art. 254

Art. 254

Art. 254

Art. 254

Art. 254

Assam Province

s. 4

Art. 254

Art. 301

Article 30

India

Art. 30

section 4

Rajasthan

s. 11

Art. 301


STATE OF MADRAS

P. M. BATCHA & COMPANY

April 12, 1967

{J. C. SHAH, S. M. SIKRI AND V. RAMASWAMI, JJ.]

Madras General Sales Tax Act, 1939, ss. S a11d 11; Madras General Sales fox Act, 1959, s. 32-'Nil' assessment made b, v Commercial Tax Officer 11nder s. 5 of 1939 Act-Order no1 communicated to 1Msessee- Change of judicai view reRardin11 MXinR provi'iions-Power of Depury Commissioner of Commercial Taxes under s. 32 of 1959 Act to revise order of 'Nir asseisment-Assessee's whtther had right to fil1 apptMI against 'Nil' assessment under s. 11 of 1939 Act-Effect of such right on powers of Dtputy Commissioner 11nder s. 32.

The respondent firm carried on business in hides and skins in Madras.

For the assessment year 1953·54 they applied for a licence under s. S of the Madras General Sales Tax Act, 1939. The Commercial Tax Offi cer relying on a judgment of the Madras High Court held that the res pondent was not liable to tax and made a 'Nil' assessment. The order was however not commu11icated to the respondent. . The afores<1.id jud2ment of the Madras High Court was later reversed by this Court. The Deputy Commissioner of Commercial Taxes Madras, being of the view t1tat thenrder of 'nil' a!sessment relating to 1953-54 was illegal com .. menced proceedings under s. 32 of the Madras General Sales Tax Act, 1959 and thereafter assessed the re•pondent. The Sales Tax Tribunal confirmed the order of Commercial Tax Officer. The High Court in revision held that since the Commercial Tax Officer had not communicated his order to the assessee the time for appeal had not expired and therefore the Deputy Commissioner had no power. to revise the order under s. 32 of the Act of 1939. The State appealed.

HELD : In the present case no tax was assessed, not even the taxable turnover was determined. No aooeal conld h('!··fore lie under s. 11 of the Act of 1939 against the order of 'Nil' assessment. There was thus no bar against the exercise of jurisdiction of the Deputy Commissioner under s. 32(1) to commence proceedings of reassessment. [6210]

Ml s. M.A. Noor Mohamed & Company v. State of Madras & Anr., A.I.R. 1957 Mad. 33 and State of Madras & Anr. v. Mis. M. A. Noor Mohamtd & Company, A.I.R. 1960 S.C. 1254, referred to.

S. B .. Periasanii Nadar and Company v. State of Madras, 13 S.T.C. 328, approved.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 578 of 1966.

Appeal by special leave from the judgment and order dated August 31, 1964 of the Madras High Court in Tax Case No. 127 of 1963 (Revision No. 83).

P. Ram Reddy and A. V. Rangam, for the appellant.

R. Ganapathy Iyer, for the respondent.

The Judgment of the Court was deliver-ed by Shah, J.

The respondents are a firm carrying on business in hides and skins in me State of Madras and is registered as a

"dealer" under the Madras General Sales Tax Act 9 of 1939.

For the assessment year 1953-54 the respondents applied for a licence under s. 5 of the Madras General Sales Tax Act and provisionally paid a sum of Rs. 450 towards licence fee. The respondents were directed to pay an additional amount of Rs. 400.

The respondents declined to pay the additional amount and informed the asessing authority that the transactions crried on by them were of the nature of export of hides and skins and no :sales-tax was payable on goods exported to places outside India.

The Commercial Tax Officer scrutinised the accounts of the respondent for the year 1953-54 and by order dated March 29, 1957 determined their turnover from purchases of hides and skins from dealers outside the State and from dealers within the State both tanned and untanned and of sales of tanned hides and skins -0n behalf of resident and non-resident principals.

B1!ti following the j11dgment of the Madras High Court in Messrs. M. A. Noor Mohamed & Company v. The State of Madras and Another(1). the Commercial Tax Offiper held that the respondents were exempt from tax and no licence fee for the year 1953-54 was payable.

He, therefore, declared that there was no demand under s. 8(B) (2) of the Act, that the tax due for the year was nil and that a notice in Form 'C' be issued for refund of Rs. 450 paid by the respondents.

No intimation of this order was given to the respondents.

The judgment of the Madras High Court in M. A. Noor Mohamed's case(') was carried in appeal to this Court and this Court reversed the judgment : see State of Madras & Another v.

M/s. M.A. Noor Mohammed & Company('). In the meantime the Madras General Sales Tax Act 9 of 1939 was repealed and was replaced by the Madras General Sales Tax Act .1 of 1959.

The Deputy Commissioner of Commercial Taxes, Madras, being of th1' view that the "order of nil assessment" dated March 29, 1957 was illegal and that the respondents were liable to pay sales tax on their turnover of hides and skins for the year 1953-5-4, commenced proceeding under s. 32 of the Madras General Sale~ Tax Act 1 of 1959 and issued a notice to the respondents calling upon them to file their objections, if. any, to the proposal to revise the "order of nil assessment".

The Deputy Commissioner rejected the contention of the respondents that he had no juris- -diction to revise the assessment and determined the turnover of the respondents at Rs. 11,25,000 odd.

The Sales Tax Appellate --· -

(1) A.l.R. !957 Mad. 33.

(2) A.T.R. 1960 S.C. 1254.

• •

A Tribunal substantially confirmed the order of the Deputy Com missioner.

The High Court in exercise of their revisionaJ jurisdiction under s. 38 of Act 1 of 1959 set aside the order of the Tribunal holdmg that it was obligatory upon the Commercial Tax Officer to communicate the order dated March 29, 1957 : if it was not so communicated the time to appeal against the order cannot be deemed to have expired and the Deputy Commissioner had no jurisdiction under s. 32 of the Madras General Sales Tax Act l of 1959 to revise the order.

In recording their conclusions the learned Judges followed the judgment in The State of Madras v.

M/s A. M. Safi1tlla & Company(') in which the rule was stated as follows :

"To sum up in the case of an assessment completed and signed by the Officer, but not communicated to the assessee, our conclusions are as follows :

" (a) The order of assessment can be communicated to the assessee without any time limit, but no liability would arise till communication;

(b) The limitation for the assessee to prefer either an appeal. or a revision would commence to run only after the order is communicated to him; ( c) The time for exercising powers of revision would commence to run from the date of the order itself and there cannot be an enlarged period of limitation merely because the Department takes its own time to communicate the order."

In our judgment, the order of the High Court cannot be sm

tained.

The Commercial Tax Officer commenced proceeding in the manner provided by s. 9 of Act 9 of 1939 for assessment of sales-tax due by the respondents, but ultimately held that no tax was due by the respondents.

Section l l of the Act provided that an assessee objecting to an assessment made on him under s. 9 sub-s. (2) may within thirty days from the date on which he was served with otice of the assessment, appeal to such authority as may be prescnbed.

Rule 15 of the rules framed by the Governor of Madras under the Mdras General Sales Tax Act required the dealers in hides a.nd skins to ; ubmit a return in Form A-4 to the assessing authority on or be, ore the 25th day of every month.

The Commercial Tax Officer had to process the return submitted by the dealer.

If no return was submitted in respect of any month or if the retwm was submitted without payment of the full amount of tax, or the return was otherwise defective the Commercial Tax Officer could determine the turnover to the' best of his judgment. Rule

16 dealt with the levy of tax on hides and skins.

There was no provision in the Act or the Rules framed by the State Government which required that an order made under s. 9 shall, before it may be regarded as validity made, be communicated to the dealer.

An appeal lay under s. 11 by an assessee objecting to an assessment made on him under s. 9(2). Sin9e the assessment was "nil", no question of the respondents objecting to the ai; sessment arose, and no appeal could be contemplated to be filed by them.

We agree with the view of the Madras High Court in S. B.

Periasami Nadar and Company v.

The State of Madras(') at p. 333 that:

"In a case where the assessee is not levied with tax, there is no rule which compels the assessing authority to inform the assessee that the tax levied against him is nil.

The word "assessment" may have a wide connotation including several aspects of the assessment proceedings.

But however wide the significance of the expression "assessment" -may be, it is impossible to hold that an assessment is. incomplete or invalid in the absence of the order of assessment being served upon the assessee.

Once the competent authority makes an asssment under the Madras General Sales Tax Act after scrutinising the return submitted by the assessee, and after giving the assessee a reasonable opportunity of proving the correctness and completeness of any return submitted by him it is complete and valid." It is true that when proceedings for re-assessment .were commenced, Act 9 of 1939 stood repealed and was .replaced by Madras Act 1 of 1959, and the authority which the Deputy Commissioner could exercise was under s. 32 ( 1) which read as follows :

"The Deputy Commissioner may, of his own motion, call for and examine an order passed or proceeding recorded by' the appropriate authority under section 4-A, section 12, section 14, section 15, or sub-sections (1) and (2) of section 16 and may make such inquiry or cause such inquiry to be made and, subject to the provisions of this Act, may pass such order thereon as he thinks fit." Sub-section ( 2) provided, insofar as it is material :

"The Deputy Commissioner shall not pass any order under sub-section ( 1) if-

( I) 13 S.T.C. 328.

(a) the time for appeal against the order has not expired;"

There was, however, no assessment of tax against the respondents.

There could be no appeal against the order of "nil assessment" under s. 11 of Act 1 of 1959, and no bar tothe jurisdiction of the Deputy Commissioner under sub-s. ( 1) of s,, 32 of the Act could arise. The High Court was, in our judgment, in error in llolding that .because "the order of nil assessment" was not communicated, the respondent could not appeal against that order,

and the time for appealing against that order had not expired within the meaning of sub-s. (2) of s. 32 of Act 1 of 1959. We arc unable also to agree with the High Court that in an appeal under s. 11 of Act 9 of 1939 an assessec may object to a mere

statement setting out the sales and purchases during the coune of his business, or even his turnover. An appeal lies against the

wcssmcnt of tax.

In the present case, no tax was assessed : not even the taxable turnover was determined. No appeal, in our judgment, could lie under s. 11 of Act 9 of 1939 against the order of "nil assessment''.

There was therefore no bar against the exercise of jurisdiction of the Deputy Commissioner under a. 32( 1) to commence proceedings for re-assessment.

01:11'. attention was invited to s. 31 ( 1) of Act 1 of 1959, which confers a right of appeal upon any person who objects to an order. passed by the appropriate authority under various sections

includ, ing s. 4A, s. 12, s. 14 and others.

But if no appeal lay against the-0rder of "nil assessment" under's. 11 of Act 9 of 1939, it is difficult to appreciate how an appeal could still be filed by the respondents against that order under Act 1 of 1959 which came into force two years after the order. '

It is unneceHary in that view to consider the alternative argument .advanced by counsel for the State that it was open to the uty Commissioner to revise the order of "nil assessment" Ulidbr the power reserved to him to revise a "proceeding recorded".

The order passed by the High Court is set aside, and the order passed bv the Sales Tax Tribunal restored, with costs in this Court and the High Court.

G.C.

Appeal allowed.

STATE OF MADRAS

P. M. BATCHA & COMPANY

April 12, 1967

C. SHAH

S. M. SIKRI

V. RAMASWAMI, JJ.

Madras General Sales Tax Act, 1939

Madras General Sales fox Act, 1959

s. 32

s. 5

s. 32

s. 11

s. 32

Madras

Madras General Sales Tax Act, 1939

Madras High Court

s. 32

Madras General Sales Tax Act, 1959

s. 32

s. 11

s. 32(1)

P. Ram Reddy

A. V. Rangam

R. Ganapathy Iyer

Shah

s. 5

India

March 29, 1957

s. 8(B)

M. A. Noor Mohamed

s. 32

s. 38

s. 32

s. 9

s. 9

s. 9

s. 11

s. 9(2)

s. 32

section 4

section 12

section 14

section 15

section 16

s. 11

s. 32

s. 11

s. 11

s. 31

s. 4A

s. 12

s. 14

s. 11


STATE OF MADRAS

T. NARAYANASWAMI' NAIDU AND ANR.

April 12, 1967

[J. C. SHAH, S. M. SIKRI AND V. RAMASWAMI, JJ, J 8

Madras General Sf.'/e.r Tax Act, (9 of 1939) S.r. 3 and 4-Goodr in stock-Liabi/l'tv tn tax as lasl purchase-

The assessee, a dealer in cotton, claimed deduction of Salestax an the ground that cotton worth that value were in stock on the last day of the assessing year. The Commercial Tax Officer disallowed the claim holding that as subsequent disposal had not been proved, it was liable to be taxed as a last purchase. The Assistant Commissioner upheld the order, but the Sales Tax Appellate Tribunal accepted the assessee's claim. The Department's revision to the High Court was dismissed. Io ;; ppeal. to this Court, HELD : The assessee was not liable till the purchase of declared good• acquired the character of a last purchase within the Second Sched11l .. " nf the Ace It i:; truP that S •. 3 and 4 of the Madras General Sales Tax Act, speak of "a year", i.e., the financial year, and it is only the turnover during that year that is liable to taxation in the hands of the assessee. but s. 4 has to b' read w; th the Second Schedule, and reading s. 4. with the Second Schedule, it is clear that a dealer is not liable to pay a t:.x on the purchases unti] the purchases acquire :the quality of being last purchases inside the State.

Jn, other words. when he files a return and declares the. stock in hand, the; stock in hand cannot be said to have been acquired by last purchas~ because he may still during the next assessment year, sel1 it or he may conSume it himself or the goods may be destroyed, etc.

He would be entitled to claim before the assessing authorities that the character of acquisition of the stock in hand was un dctcrmiried; in the light of subsequent events it may or may not become the last purchase inside the State.

This construction is in consoninc.: l'ilh s. 15 of the Central Sales Tax Act, 1956.

[625E-G]

Abdu/sa/a11 Rowtlzer v. State of Kera/a, 12 S.T.C. 98, and Harnu.rji Hirj; blioy v. Con1111ercfal Tax Officer, 13 S.T.C. 773, referred to.

CIVIL APPELLATE JuRrsmcTION: Civil Appeals Nos. 633 & 634 of 1966.

Appeals by special leave from the judgment and order dated August 11. 1964 of the Madras High Court in Tax Cases Nos. 105 and 125 of 1963 (Revision Nos. 64 and 81).

G. Ramanujam and A. V. Rangam, for the appellant (in both the appeals.

S. T. Desai and G. L. Sanghi, for the respondents (in both the appeals).

The Judgment of the Court was delivered by Sikri, J. These appeals by special leave are directed against the judgment of the Madras High Court in Tax Cases Nos. 105

and 125 of 1963. The High Court by its common judgment dated August 11, 1964, confirmed the orders of the Sales Tax Appellate Tribunal.

A common point of law is involved in both the cases and it will suffice if we give facts in Tax Case No. 105 of 1963 (Civil Appeal Nos. 633 of 1966) in which the respondent was one T. Narayanaswami Naidu, hereinafter referred to as the assCSiee.

The assessee is a dealer in cotton and cotton seeds.

Before the Additional Commercial Tax Officer, Coimbatore, he claimed to deduct the sum of Rs. 12,32,756.45 as the value of purchase> other than the last purchases of cotton.

The Commercial Tax Officer exempted Rs. 10,11,534.40 but disallowed the remaininr; amount on the ground that cotton worth Rs. 2,27,250.00 was in stock on March 31, 1961. He found that subsequent disposal in the next year had not been proved and, therefore, it was liable to be taxed as a )ast purchase.

In holding this he followed the decision of the Kerala High Court in Abdulsalam Rowther v.

State of Kera/a(').

The Appellate Assistant Commissioner (Commercial Taxes) upheld the order, but the Sales Tax Appellate Tribunal, dissenting from the decision of the Kerala High Court in A bdulsalam Rowther v. State of Kera/a('), accepted the appeal of the assessee and demanded the case to the Appellate Assistant Commissioner for disposal afresh in the light of observations made by it.

The Department filed a revision under s. 38 of the Madras General Sales Tax Act, hereinafter referred to as the Madras Act, and the High Court dismissed the revision.

The State of Madras having obtained special leave, the appeal is now

before us.

The learned counsel for the appellant, Mr. Ramanujam, urges that the decision of the Kerala High Court in Abdulsalam Rowther

v. Stute of Kera/a(') and of the Mysore High Court in Hornusji Hirjiblwy v. Commercial Tax Officer(') laid down the law correctly, and the Madras High Court erred in dissenting from t!tese decisions in the present case (now reported as State of Madras

v. T. Naravanaswami Naidu(').

Section 4 of the Madras Act provides :

"4. Notwithstanding anything contained in section 3 the tax under this Act shall be payable by a dealer o~ the sale or purchase inside the State of declared goods

t the rate and only at the point specified against each

n the Second Schedule on the turnover in such goods m each year, whatever be the quantum of turnover in that year." In other words, this section lays down that in respect of declared goods we have to look at the Second Schedule in order to find

(!) 12 S.T.C. 98,

(2) 13 S.T.C. 771.

(3) !6 S.T.C. 29,

-~24 SUPRBMB COURT RllPORTS

[1967] 3 S.C.R.

out the point at which the tax would be payable by the dealer.

The Second Schedule describes the declared goods in respect of which a single point tax only is leviable under s. 4.

Item 2 of the Second Schedule is "Cotton, that is to say, all kinds of cotton (indigenous or imported) in its unmanufactured state, whether ginned or unginned, baled, pressed or otherwise, but excluding cotton waste".

The point of levy is stated as "at the point of last purchase in the State". ·

The question that arises is : what is the exact meaning of the expression "at the point of last purchase in the State" ? In this connection it may be mentioned that s. 14 of the Central Sales Tall. Act, 1956, hereinafter referred to as the Central Act, declares certain goods as of special importance in inter-State trade and commerce, and cotton is one of the goods included in s. 14.

Section 15 provides :

"15. Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely :-

(a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed two per cent. of the sale or purchase price thereof, and such tax shall not be levied at more than one stage;"

Section 4 of the Madras Act was intended to comply with s. 15 of the Central Act.

The relevant portion of s. 3 of the Madras Act, on which the learned counsel for the appellant relies, provides:

"3 ( 1) Every dealer (other than a casual trader or ugent of a non-resident dealer) whose total turnover for a year is not less than ten thousand rupees and every casual trader or agent of a non-resident dealer, whatever be his turnover for . the year, shall pay a tax for each )'ear at the rate of two per cent of his taxable turnover:"

Section 2 ( p) defines "taxat>le turnover" to mean "the turnover on which a dealer shall be liable to pay tax as determined after making such deductions from his total turnover and in such manner as may be prescribed", and "year" is defined to mean "financial year''. "Turnover" is defined in s. 2(r) as follows:

" 'turnover' means the aggregate amount for which goods are bought or sold, or supplied or distributed, by a dealer, either directly or through another, on his

own account or on account of others whether for cash or for deferred payment or other valuable consideration, provided that the proceeds of the sale by a person of agricultural or horticultural produce, other than te~, grown within the State by himself or on any land m which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover; .... " The learned counsel for the appellant says that it is clear from ss. 3 and 4 that a tax under the Madras Act is a yearly tax. In other words, he says, that just as under the Indian Income Tax Act each assessment year is a self-contained unit, so is the assessment year a self-contained unit under the Madras Act. If that is so, he argues, then what happens in subsequent yea1> cannot be taken into consideration for determining the taxability of any purchase inside the State of declared goods. He says that the taxable event is the last purchase in the State during the assessment year and if stocks are held at the end of the assessment year it follows that the assessee holding the stocks is the last purchaser in the State. ln our opinion, this reasoning is fallacious.

It is true that ss, 3 and 4 speak of "a year", i.e., the financial year, and it is only the turnover during that year that is liable to taxation in the hands of the assessee, but s. 4 has to be read with the Second Schedule, and reading s. 4 with the Second Schedule, it seems to us clear that a dealer is not liable to pay a tax on the , purchases until the. purchases acquire the quality of being the last purchases inside the State. In other words, when he files a return and declares the stock in hand, the stock in hand cannot be said to have been acquired by last purchase because he may still dur ing the next assessment year, sell it or he may consume it himself or the goods may be destroyed, etc.

He would be entitled to claim before the assessing authorities that the character of acquisition of the stock in hand was undetermined; in the light of subsequent events it may or may not become the last purchase inside the State.

In our view this construction is in consonance with s. 15 l.lf the Central Act. If the argument of the learned counsel for th~ State were to be accepted it would mean that the States could with impunity levy purchase tax on declared goods at more than one stage, i.e. on purchases in the hands of one dealer during one a'sessment year and purchases of the same goods in the hands of another dealer in a subsequent assessment year, and so on. Therefore, we agree with the Madras High Court that the assessee is right in contending that he was entitled to claim deduction in respect of the value of the stock of Rs. 2,27 ,250 as being the

purchass other than last purchases of cotton.

L7 Sup. Cl/67-1 O

626 SUP&l!MI! COUR.T &l!PO&TS

The Kerala High Court in Abdulsa/am Rowther v. Stale of Kera/a('), following certain cases decided under the Income Tax Act, was influenced by the consideration that an assessee could not rely on subsequent events in order to escape taxation. That may be so even under the Sales Tax Act, but, according to our view, the assessee is not liable till the purchase of declared goods acquires the character of a last purchase within the Second Schedule referred to above.

In Hornusji Hirjibhoy v. Commercial Tax Officer(') the Mysore High Court also seems to have been impressed by similar considerations.

The judgment under appeal draws a distinction between tax able event and a stage at which the levy of tax in the case of declared goods is subject to sinlge point levy.

This may cause confusion, and indeed, the High Court gives one illustration, which it found unnecessary to deal with.

The illustration given is :

"One can visualise a case for example, where goods mentioned above purchased on the 30th of March, 1960. may be exported by the purchaser himself, outside the State, on the 2nd of April, 1960. In that case the goods could not be assessed in 1960-61 in the hands of the exporting purchaser, because the taxable event did not occur in that year; it could not be assessed in the hands of the seller in 1959-60 because though the taxable event occurred that year, the single point stage was not reached in that year. One possible way of dealing with such a case is to assess it subsequently as escaped turnover."

In our opinion, in this illustration, the assessee would be liable in the financial year 1960-61 as the purchases became the last

purchases in that year.

In the result the appeal fails and is dismissed with costs.

The facts in Tax Case No. 125 of 1963 (Civil Appeal No. 634 of 1966) are similar.

That appeal is also dismissed with costs.

The Appellate Assistant Commissioner (Commercial Taxes) will now dispose of the cases remanded to him by the G Sales Tax Appellate Tribunal in the light of the judgment.

Y.P.

(I) 12 S.T.C. 98.

(2) 13 S.T.C. 773.

Appeal dismissed.

STATE OF MADRAS

T. NARAYANASWAMI' NAIDU AND ANR

April 12, 1967

C. SHAH

S. M. SIKRI

V. RAMASWAMI, JJ

Sales Tax Appellate Tribunal

s. 4

Second Schedule

s. 4

Second Schedule

s. 15

Central Sales Tax Act, 1956

Abdu

G. Ramanujam

A. V. Rangam

S. T. Desai

G. L. Sanghi

Sikri

August 11, 1964

T. Narayanaswami Naidu

March 31, 1961

Kerala High Court

s. 38

State of Madras

Ramanujam

Mysore High Court

Section 4

section 3

Second Schedule

Second Schedule

Second Schedule

s. 4

Second Schedule

s. 14

s. 14

Section 15

Section 4

s. 15

s. 3

Section 2

s. 2(r)

ss. 3 and 4

s. 4

Second Schedule

s. 4

Second Schedule

s. 15

Madras High Court

Second Schedule

30th of March, 1960

2nd of April, 1960

G Sales Tax Appellate Tribunal


K.GOPAUL v.

UNION OF INDIA AND OTHERS Avril 12, 1967

[K. N. WANCHOO, C.J., V. BHARGAVA AND G. K. MITTER, JJ.]

Constitution of India-Articles 14, 311-Appe/lant occupying post of Inspector General of Registration, Madras-Post included In I.A.S.

ladre--Appellant transferred to another post no.~ as head of 4eparr~ ment-Whether reduction in rank-Central Govt. including a post in one State in l.A.S. Cadre and not tn another-Whether discrimination.

The appellant was holding and had been confirmed in the post of Inspector General of Registration (I.G.R.), Madras, when, on November 11 1963, the post of I.G.R. was included in the cadre of the Indian Adminlstrative Service (I.A.S.). On January 25, 1964, a Government order was issued posting a member of the I.A.S. who was holding the po; t of a Deputy Secretary, as l.G.R., Madras, vice the appellant.

On January 30, 1964 by anther order, the appellant was posted to act temporarily as Accommodation Controller. Madras and the person whom be replaced was posted as Director of Fisheries, Madras, The appellant's. appointment was made on the same grade pay which he was then drawing plus certain special allowances. The appellant moved a petition under Art. 226 of the Constitution challenging the two orders of January 25 and January 30, 1964.

While the petition before the High Court was pending, by another order dated June 6, 1964 the temporary post of Accommodation Controller which earlier existed in the cadre of Deputy Secretary (Non- 1.A.S.), was kept in abeyance with effect from February 6, 1964 and a new temporary post of Accommodation Controller, Madra•, was sanctioned in the same grade as that of the appellant and it was directed that the appellant be deemed to have acted in that post from February 6, 1964 to April 14, 1964. The appellant then moved another writ petition challenging this order. A single Bench of the High Court dismissed the

two petitions. While the appeals were pending before a Division Bench. the Court was informed through a letter from the Government to its counsel that when the post of I.G.R. was included in the I.A.S. service cadre, the Government had Alecided that in order to protect the Tights of the appellant, a supernumerary post of I.G.R. should be created with effect from November 11, 1963. Taking notice of this lelter the High n dismissed the appeals holding that all the rights of the appellants in respect of pension and gratuity had been protected and there had been no removal from service or reduction in rank in the case of the appellant. By orders dated October 6, 1966 and February 10, 1967, the supernumerarv post of LG.I. was sanctioned up to such time as the appellant was confirmed Jn another post.

Jn the ppeal before this Court it was contended on behalf of the a.Ppellant (1) that by transferring him and posting him as Accommodation .C:Ontroller he had been reduced in rank without complying with tho provisions of Art. 31,1 of the Constitution; the I.G.R. was declared head of a Department whtle the Accommodation Controller was not head of a department; te post of Accommodation Controller was held by an officer who, on relief by the appellant, was promoted to the post created in the grade of a Deputy Secretary and from this it must be inferred that

628 SUPllEMB COURT llEPOllTS

(1967) 3 S.C.R.

the post of Accommodation Controller was lower in rank than the post of a Deputy Secretary, whereas the post of I.G.R. was a rank higher than that of a Deputy Secretary; (ii) that while the appellant was holding the post of I.G.R. be bad a lien on a permanent post, but, when be was >ent to the post of Accommodation Controller. the appellant was left \vithout a lien on any permanent post and that would necessarily deprive him of his rights to pension and gratuity which would amount to his removal from service as a punishment; and (iii) that the post of I.G.R. had been placed in the cadre of I.A.S. in the State of Madras only and in no other State and, as a consequence, the appellant lost his appointment to that post due to the unequal treatment.

HELD : Dismissing the appeal :

(i) The mere fact that the post of Accommodation Controller to which the appellant had been transferred was not designated the post of a head of department did not necessarily involve any reduction in rank.

It is \\'Cl! kno\'1n that a Government servio~. there may be senior posts, the holders of which are not declaP'..d heads of department while persons holding comparatively junior posts may be declared as such. Furthermore, there was no reduction in rank of the appellant for it was clear, on the fact<. that the post of J.G.R. was not higher in rank but lower than that of a Deputy Secretary. In fact the post was equated with that of an Assistant Secretary. [631H-632B, G]

(ii) The mere transfer of th1' appellant to the post of Accommodation Controller did not have the effect of his removal from his se.rvice; although it was true that when the order of bis transfer was initially passed on January 30, 1964 no provision was made for his retaining a lien on any permanent post, this position was eventually corrected when a super .. numery post of I.G.R. was created from November 11, 1963 and it was laid do\\n that it would exist until such time as the appellant was con .. firmed in another post. It could not be said that this supemumery post was a temporary post within the meaning of Rule 9(30); it was a permanent post within Rule 9(22) of the Fundamental Rules of the Madras Government for it had been created for an indefinite period and was to continue in existence as long as the appellant held it and was not oonlirmed in any other post. [633B-C; 634F-F]

(iii) Under Rule 4(1) of the Indian Administrative Service (Cadre) Rules, 1954, framed under the All India Service Act 61 of 1951, the •trengtb and composition of the cadre of the I.A.S. constituted far a State are to be determined by Regulations made by the Central Government in consultation with the State Governments.

DependinJI on the ·.conditions in each State, the Government may coniider it desirable that a particular post should be placed on the Cadre of the tA.S. in one State but not in another. The order of the Central Government cannot therefore be held to be void on the f.l'OUnd of discrimination. [634G-H;

63SB-C]

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 2426 and 2430 of 1966.

Appeals by special leave from the judgment and order dated October 14, 1965 of the Madras High Court in Writ Appeals Nos. 41 and 42 of I 965.

N. S. Somasundaram. E. C. Agarwal, Champat Rai and P. C.

Agarwala, for the appellant (in both the appeals).

GOPAUL v. UNION tBhargava, J.) 629

A R. H. Dhebar for S. P. Nayyar, for respondent No. 1 (in both

the appeals) .

G. Ramanujam and A. V. Rangam, for respondents Nos. 2 and 3 (in both the appeals).

The Judgment of the Coun was delivered by

Bbargava, J. The appellant, K. Gopaul, was appointed to the '.11adras Registration Service as. a direct recruit and commenced his service on posting as a District Registrar in Jam,1ary, 1939.

Under the latest Rules governing the Madras Registration Service, the Service consists of two Classes.

Class I has only one post in it, viz., Inspector-General of Registration. l!n Class II, there are two categories; category 1 consists of posts of Inspectors of Reg1station Offices, and category 2 of posts of District Regitrars.

Under these Rules, the appellant was promoted as Inspector- General of Registration (hereinafter referred to as "l.G.R.") in the post in Class I on 8th June, 1956, and was confirmed m that p0st by the Government Order dated 9th November, 1957, with effect from 9th June, 1956.

While he was still holding this post, the post of I.G.R. was included in the cadre of the Indian Administrative Service with effect from 11th November, 1963.

On 25th January, 1964, a Government Order was issued posting ou~ 0.JI. Dias of the Indian Administrative Service, who was holding a post of Deputy Secretary to Government, Revenue Department. as I.G.R., Madras, vlce the appellant. That Government Order contained a note that orders regarding the posting of the appellant will be issued separately from the Home Department.

Then, on 30<h January, 1964, a Government Order was issued posting the appellant to act temporarily as Accommodation Controller, Madras, vice one M. Sargunam. That Order further laid down that the appellant, as Accommodation Controller, will continue h> draw his grade pay in the scale of Rs. 1,200-100/2-1,400 and. in addition, he will draw a special pay Rs. 100 pr month and ,, lsu a conveyance allowance of Rs. 75 per month if a car is maintained or Rs. 62/50P per month, if no car is maintained.

On receiving this Order, the appellant moved a petition under Art. 226 o~ the Constitution in the High Court of Madras, seeking the ; iuashmg of the Order of the Government of India placing th" post of l.G.R., Madras, in the Cadre of the Indian Administratiw Service with effect from 11th November, 1963. as well as th~ Order of the Madras Government dated 30th January, 1964. transferring the appellant to the post of Accommodation Controller, Madras.

In pursuance of the Government Order made on ihe 5th January, 1964, a notification was published in the Gazette Jated 5th February, 1964. In this notification, the posting of

0. H. Dias as I.G.R., Madras, in place of the appellant, wa•

uotified. In addition. it was laid down that the cadre post of Direc-

630 SUPREME COURT llBPOllTS

[1967] 3 S.C.R.

tor of Fisheries, Madras, was to be kept temporarily in abeyance until further orders, and, instead, sanction was accorded to the creation of a temporary post of Director of Fisheries, Madras, in the grade of a , Deputy Secretary to Government (non-I.A.S.) for a period of six months from the date of appointment or till the need for it ceased, whichever was earlier. The notification proceeded to Jay down that M. Sargunam is posted to act as Director of Fisheries, Madras, in the newly sanctioned post. Obviously, this posting was ordered, so that the post of Accommodation Controller, to which the appellant was transferred, should fall va(iant and should be available for the appellant to take charge of it.

While the petltion before the High Court was still pending, another Order was issued by the Madras Government on the 6th June, 1964, keeping the temporary post of Accommodation Controller, Madras, which earlier existed in the cadre of Deputy Secretary (non-1.A.S.), in abeyance with effect froill 6th February, 1964 afternoon; and with effect from the same date, sanction was accorded to the creation of a temporary post of Accommodation Controller, Madras, is the scale of Rs. 1,200-100/2-1,400 for the period from 6-2-1964 to 14-4-1964 afternoon (both days inclusive). This scale of pay, it appears, was t.be scale in which the appellant was drawing his salary in the post of I.G.R.

By this Order dated 6th June, 1964, it was further directed that the appellant, who was appointed as Accommodation Controller by the Order dated 30th January, 1964, should be deemed to have acted in the post sanctioned by this Order durinp; the period from 6-2-1964 afternoon to the afternoon of 14-4-1964 (both day• inclusive).

It may be mentioned that after the Order of 6th June. 1964 had been passed, the appellant moved another petition in the High Court challenging that Order also.

Both the petitions were decided by a common judgment by a single Judge of the High Court on 2nd December, 1964.

The appellant then filed appeals before a Division Bench of the High Court.

While these appeals were pending before the Division Bench, a letter was sent on behalf of the Government of Madras to the Counsel representing the Government in the .appeals on 27th August, 1965. In that letter, it was s'tated that, when the post of I.G.R. was included in the Indian Administrative Service Cadre of the State, the Government had decided that. in order to protect the rights of the appellant, a supernumerary post of I.G.R. in the State Service should be created with effect from 11th November, 1963, the date on which the above post was included in the Indian Administrative Service Cadre. It was added that, in the circumstances, there would not be anv reduction in the pension and p; ratuity of the appellant consequent on the inclusion of the post of I.G.R. in the l'ndian Administrative

Service.

It appears that, by this time, it was realised by the Government that the effect of the earlier Orders made in the case of the appellant was that the appellant was not holding lien on any permanent post and was only working on the temporary post of Accommodation Controller with the resul. that the appellant was likely to suffer in the matter of earning pension and gratuity in his service.

The Bench of the High Ci'lurt hearing the appeals took notice of this letter and dismissed the appeals on the 14th October, 1965, holding that all the rights of the apprlJ.ant in respect of pension and gratuity had been protected and that there had been no removal from service or reduction in rank in the case of the appellant.

Thereupon, the appellant' sought JeaYe to appeal to this Court under Article 136 of the Constitution against the commoµ order of the High Court dismissing !he two appeals arising out of the two writ petitions. Special leljve was granted and that is how these appeals have come up before us.

During the pendency of these appeals, the Madras GoveJlll• rnent, on 6th October, 1966, issued a Government Order sanctioning the creation of a supernumerary post of Additional Inspector-General of Registration in the State Service in the scale of Rs. 1200-100/2-1400 with effect from 11th Nove1J1ber, 1963.

Later still, on 10th February, 1967, another Order was issued, in supersession of the orders issued on 6th October, 1966, conveying the Goverment sanction to .the creation of a supernum7rary P?t of f.G.R. m the State Sernce not borne on the Indran Civil

Administration Cadre in the scale of Rs. 1200-100/2-1400 with effect from 11-11-1963 until such time as the appellant is confirmed in another post. It is on these facts, which have now been placed before us, that we have to decide these appeals in. which the appellant challenges the Orders of the Government posting .him as Accommodation Controller.

On behalf of the appellant, these Orders of the Gowrnment have been challenged on three grounds. The first ground urged is that, by transferring the appellant and posting him as Accommodation. Controller, he has been reduced in rank and this reduction in rank was ordered without complying with the provisions of Art 311 of the Constitution. This submission is based on the

ircumstance that, accordinl( to Entry 13 in Ap11endix II which

is referred to in subsidiary definition (ii) of Rule 9 of Part I of the Fundamental Rules of the Madras Government, the I.G.R. has been declared to be the Head of a Department, while the Accommodation Controller is not the Head of a Department. We cannot accept the submission that the mere fact that the post of Accommodation Controller, to which the appellant has been transferred, has not been designated as the post of .a Head of the Department necessarily involves any reduction in rank. In fact. it

632 SUPRBMB COUR.T llEPOllTS

[1967) 3 S.C.R.

is well-known that in Government service, there may be senior posts, the holders of which are not declared as Heads of Department, while persons holding comparatively junior posts may be declared as such.

The rank in Government service does not depend on the mere circumstance that the government servant, in the discharge of his duties, is given certain powers. In the case of the appellant, it is to be noticed that, from the very initial stage, it was laid down that, on being transferred to the post of the Accommodation Controller, he was still to continue to draw pay in the scale of Rs. 1,200-100/2-1,400 which was the scale m . which he was drawing his pay while working in the post of

I.G.R.

The appellant was, thus, not sent to a , post carrying a lower scale of pay.

This point was further urged on the bash that the post of Accommodation Controller was held by an Officer who, on relief by the appellant, was promoted to the post created in the grade of a Deputy Secretary. to Government (non-I.AS.).

From this fact it was sought to be inferred that the post of Accommodation Controller was lower in rank than the post of a Deputy Secretary to Government, and it was urged that the post of I.G.R. was of a rank higher than that of a Deputy Secretary.

The argument completely fails in view of the appellant's own affidavit showing the method of recruitment to the post of I.G.R.

The appellant stated that the method of recruitment for the post of I.G.R. was from two sources.

One was by promotion of the Inspector of Registration Offices or District Registrars, and the other recruitment by transfer from Deputy Collectors or Assistant Secretaries to Government. The second method of appointment to the post of I.G.R. makes it clear that this post is equated with that of a Deputy Collector or Assistant Secretary to Government because persons holding those posts can be appointed as I.G.R. by mere transfer. If the post of I.G.R. had been senior to that of the Deputy Collector or Assistant Se'cretary to Government, the appointment could not have been made to that post by mere transfer, but would necessarily have involved promotion.

The submission made on behalf of the appellant that the post of I.G.R. is higher in rank than that of a Deputy Secretary is thus clearly wrong;. In fact, the post is lower in rank than that of a Deputy Secretary and. is equated with that of an Assistant Secretary. It has not even been suggested anywhere that the post of Accommodation Controller is lower in rank than that of an Assistant secretary to Government or a Deputy Collector.

On the other hand, the inforn1ation given to us in the course of the arguments 'bowed that, under the Rules, the Accommodation Controller works directly under the control of the Government, while the I.G.R. is subordinate to the Board of Revenue. We, consequently, find no force at all in the plea that ibe posting of the appellant as Accommodation Controller, when he was holding the post of T.G.R. amounted to reduction in rank.

B 1

The second point urged on behalf of the appellant was that, while the appellant was holding the post of I.G.R., he had a lien on a permanent post, but, when he was sent to the post of Accommodation Controller and O.H. Dias was appointed as l.G.R. after placing that post in the Cadre of the Indian Administrative Service, the appellant was left without a lien on any permanent post, and that would necessarily deprive the appellant of his rights to pension and gratuity, so that his transfer to the post of Accommodation Controller would amount to his removal from service as a punishment. The mere transfer to the post of Accommodation Controller did not bring into effect removal of the appellant from government service. It is, however, correct that, when the order of his tramfer was initially passed on 30th January, 1964, no provision was made for his retaining lien on any permanent post, and, if that position had been maintained, the appellant would, no doubt. have lost his rights to pension and gratuity. Under Rule 361 of the Madras Pension Code, the service of an officer doe, not qualify for pension unless it confonns to the following threie 2onditions :-

First-The service must be under Government.

Second.-The employment must be substantive and permanent.

Third.-The service must be paid by Government.

On transfer of the appellant to the post of Accommodation Controller, the first and the third conditions continued to be satisfied but the employment of the appellant in a substantive and permanent post ceased. This second condition is further explained in Rule 368 which lays down that service does not qualify unless the officer holds a substantive office on a P.ermanent establishment. It appears that the Madras Government, when transferring the appellant in order to appoint a member of the Indian Administrative Service as I.G.R. consequent on that post being included in the cadre of the Indian Administrative Service, lost sight of the fact that this transfer would involve loss of lien on a permanent post by the appellant.

The subsequent orders have, however, clearly rectified this error. By the Order dated 6th June, 1964, the first step was taken of keeping the earlier existing temporary post of Accommodation Controller, Madras, in abeyance with effect from 6th February, 1964, the date on which the appellant took charge of that post, and, instead, another temporary post of Acconunodation Controller, Madras, was created in the scale of pay which was applicable to the post of I.G.R. . Later on, while the appeals were pending is the High Court, the Govern ment sent a letter conveying their decision to create a superuume rary post of f.G.R. in the State Service with effect from 11th November, 1963 in order to protect the rights of the appellant.

'634 SUPJ.EMI COURT llBPOllTS

(1967] 3 S.C.R.

A supernumerary post of Additional Inspector-G\lncral of Registration was in fact created by the Order dated 6th October, 1966, with effect from 11-11-1963. That Order was iater superseded by the Order dated 10th February, 1967, which conveyed Government's sanction to the creation of a supernumerary post of I.G.R. in the State Service not borne on the Indian Civil Administrati w Cadre in the scale of pay which the appellant was drawing when he was holding the post of I.G.R. which was placed in the cadre of the Indian Administrative Service.

This supernumerary post was created with effect from 11-11-1963 and it was laid down that it would exist until such time as the appellant was confirmed in another post.

The appellant was thus provided a lien on this supernumerary post of J.G.R. in the State Service. On behalf of the appellant, it was urged that the supernumerary post of I.G.R.

is a temporary post, and the fact that the Government has placed his lien on this post does not protect his rights to pension.

On behalf of the Government, the reply is that the supernumerary post of I.G.R. is a permanent post and not a temporary post. In Rule 9(22) of the Fundamental Rules of the Madras Government. a

permanent post is defined to mean a post carrying a definite rate of pay sanctioned wthout limit of time, while, under Rule 9(30),

a temporary post is defined to mean a post carrying a definite rate of pay sanctioned for a limited time. The supernumerary post of I.G.R. created by the Order of the Government dated 10th

February, 1967, is not for a limited time.

The post has been created for an indefinite period and is to continue in existence as Jong as the appellant holds that post and is not confirmed in any other permanent post.

This supernumerary post of I.G.R. is. thus, clearly covered by the definition of permanent post, so that the appellant now holds lien on a permanent post and, consequently, satisfies the second condition for qualifying for pension laid down in Rule 361 of the Madras Pension Code, mentioned above.

There is, therefore, no force in the submission that the Orders made by the Government have resulted in any punishment being inflicted on the appellant by prejudicing his rights to pension and gratuity.

The last point urged by learned counsel was that the post of I.G.R. has been placed in the cadre of the Indian Administrative Service in the State of Madras only and in no other State and, as a consequence, the appellant lost his appointment to that post due to the unequal treatment mete4 out by. te Government of India. Under Rule 4 (1) of the Indian Admmtstrative Service (Cadre) Rules, 1954, framed under t~"'. All India Services Act 61 of 1951, the strength and compos1tton of the Cadre of the Indian Administrative Service constituted for a State are to be detennined by regulations made by the Central Government in consultation with the State Government concern-

A ed.

Rule 4(2) lays down that the Central Government shall, at the interval of every three years, re-examine the strength and composition of each such cadre in consultation with the State 'Government concerned. It was as a result of re-examination in the year 1963 that the Central Government declared the post of I.G.R. as well as a number of other posts as cadre posts

8 of the Indian Administrative Service in consultation with the Madras Govenunent. When such re-examination takes place, the circumstances and conditions existing in a particular State

have to be taken into account. It is not necessary that similar posts in all States in India must all be placed in the same cadre.

Depending on the conditions brought to the notice of the Central Government, the Government may consider it desirable that a C particular post in c:me State should be placed on the Cadre of the Indian Administrative Service, whereas, in another State, it may not be considered advisable to do so. On behalf of the appellant, Volume II of the Hand Book of Rules and Regulations for the All India Services was brought to our notice. The

D edition corrected up to 1st September, 1962 showed the posts fn the various States placed on the Cadre of the Indian Administrative Service.

These Rules certainly do not show that the post of I.G.R. is any State was in the cadre of the Indian Administrative Service in that year; but. a comparison of the various lists shows that there are some posts which, in some of the States, are borne on the Cadre of the Indian Administrative Service, where as they are not included in that Cadre in other

States. Clearly, there can be no uniformity between different States .in the matter of . determining the strength and the . composition of the Cadre of the Indian Administrative Service in all the States.

The submission that we should bold the order of the Union Government as void on the ground of discrimination between different States bas, therefore, no force and must be r rejected.

The appeal, consequently, fails and is dismissed, but, in the circumstances of the case, we direct parties to bear their own costs.

R.K.P.S.

Appeal dismissed.

K.GOPAUL

UNION OF INDIA AND OTHERS

K. N. WANCHOO, C.J.

V. BHARGAVA

G. K. MITTER, JJ.

Constitution of India

Articles 14, 311

Madras

Art. 226

January 25 and January 30, 1964

June 6, 1964

February 6, 1964

Madra•

April 14, 1964

November 11, 1963

October 6, 1966

February 10, 1967

Art. 31

January 30, 1964

Madras Government

I.A.S.

Central Government

N. S. Somasundaram

E. C. Agarwal

Champat Rai

P. C.

Agarwala

A R. H. Dhebar

S. P. Nayyar

G. Ramanujam

A. V. Rangam

Bbargava

K. Gopaul

11th November, 1963

25th January, 1964

30<h January, 1964

M. Sargunam

Art. 226

High Court of Madras

6th June, 1964

30th January, 1964

6th June. 1964

2nd December, 1964

Government of Madras

27th August, 1965

14th October, 1965

Article 136

11th Nove1J1ber, 1963

10th February, 1967

6th October, 1966

Art 311

Part I of the Fundamental Rules

I.G.R.

O.H. Dias

10th

February, 1967

I.G.R.

Government of India

All India Services Act

India

1st September, 1962