CONSTITUTION OF INDIA Vs. SEA CUSTOM ACT 1878

JUDGEMENT

(1.) THE following opinions of the court were delivered by <PG>1766</PG>

(2.) .The main question, on this reference by the President of India under Art. 143 (1) of the Constitution, depends upon the true scope and interpretation of Art. 289 of the Constitution relating to the immunity of States from Union taxation. On receipt of the reference notices were issued to the Attorney General 'of India and to the Advocates General of the States. In pursuance of that the case of the Union government has been placed before us by the learned Solicitor-General and that of the States of Andhra Pradesh, Assam, Bihar, Gujarat, Kerala, Madhya Pradesh, Madras, Maharashtra, Mysore, orissa, Punjab and West Bengal was presented to us by their respective counsel. On the date the hearing of this case started, an application was made on behalf of the State of Uttar Pradesh also to be heard, but no statement of case had been put in on behalf of that State, and as no grounds were made out for condoning the delay, we refused the application.

(3.) IT will thus be seen that whereas the Union is for interpreting cl. (1) of Art. 289 in the restricted sense of the immunity being limited to a direct tax on property and on the income of a State, the States contend for an all embracing exemption from Union taxes which have any relation to or impact on State property and income. In spite of this wide gulf between the two view points, both are agreed that the terms 'property', 'income' and 'tax' have been used in their widest sense. 'They are also agreed that the immunity granted to the Union in respect of its property by Art. 285 corresponds to the immunity granted to the States by Art. 289, and that, therefore, the term 'property' 'taxation' and 'tax' have to be interpreted in the same comprehensive sense in both the Articles. IT will be noticed that whereas not only the term ('property' but also 'income' occurs in Art. 289, in Art. 285 the term 'income' is not used apparently because the Constitution makers were aware of the legal position that tax on 'income' (as distinct from agricultural income) is exclusively in the Union List and was so even before the advent of the Constitution. IT was agreed, and it is manifest that the terms of Art. 285 and 289 are very closely parallel to those of ss. 154 and 155, respectively, of the government of India Act, 1935 (25 and 26 Geo. VC. 42), except for the differences in expression occasioned by the change in the constitutional position and the integration of the Indian States after- 1947. The language of the two parellel provisions may be set out below in order to bring out the points of similarity and contrast: <FRM>JUDGEMENT_1760_AIR(SC)_1963Html1.htm</FRM>