I T M KANNIYAN FRENCH INDIA IMPORTING CORPORATION PONDICHERRY BALWANT SINGH HIMAL LAL J TALSANIA Vs. INCOME TAX OFFICER PONDICHERRY

JUDGEMENT

(1.) In all these writ petitions, the petitioners challenge the vires of the Taxation Laws (Extension to Union Territories) Regulation No. 3 of 1963. The contention is that the President had no power to promulgate the Regulation under Article 240 of the Constitution. On August 16, 1982, Pondicherry became a Union Territory. On December 5, 1962, Parliament enacted the Pondicherry Administration Act 1962 (Act No. 49 of 1962) . Section 4 (1) of this Act provided that all laws in force immediately before August 19, 1962 would continue to be in force in Pondicherry until amended or repealed by a competent legislature or other competent authority. Section 4 (2) empowered the Central Government to make necessary adaptations and modifications for the purpose of facilitating the application of any such law in relation to the administration of Pondicherry and bringing the provisions of any such law into accord with the provisions of the Constitution. Section 7 provided that all taxes, duties, cesses and fees which immediately before August 19 1962 were being lawfully levied would continue to be levied In Pondicherry and to be applied for the same purposes, until other provision was made by a competent legislature or other competent authority. After the passing of this Act, the petitioners continued to be subject to the existing French laws relating to income-tax. On March 30, 1963, the President in the exercise of the powers conferred on him by Article 240 of the Constitution promulgated the impugned Regulation No. 3 of 1963. The Regulation extended certain Indian Acts relating to taxation to the Union mentioned therein. Section 3 (2) of the Regulation extended the Income-tax Act, 1961, subject to the modify dons mentioned in Part II of the Schedule, to Pondicherry as from April 1,1963. Section 4 (1) provided that any law in force in Pondicherry corresponding to the Income-tax Act, 1961 would stand repealed on April 1, 1963. The petitioners carry on business at Pondicherry arid are being assessed to income-tax under the Income-tax Act 1961. They have filed the present writ petitions asking for a declaration that the Income-tax Act, 1961, was not legally extended to Pondicherry and a direction prohibiting the respondents from implementing that Act in relation to Pondicherry.

(2.) In the Constitution of India as originally enacted, India was declared to be a Union of States. [Art. 1 (1) ]. The States and their territories were specified in Parts A, B and C of the First Schedule [Art. 1 (2) ]. The territory, of India consisted of the territories of the States the territories specified in Part D of the First Schedule (Andaman and Nicobar Islands) and such other territories as may be acquired, [Art. I (3) ]. As originally enacted, Part VI of the Constitution dealt with Part A States, Part VII dealt with Part B States, Part VIII dealt with Part C States and Part IX-dealt with the territories specified in Part D of the First Schedule. The Constitution (Seventh Amendment) Act passed an October 18, l956 altered the scheme of division of India into A, B and C States and the territories mentioned in Part D of the First Schedule. Article 1 and the First Schedule were amended so that the territory of India would comprise the territories of the States' the Union territories specified in the First Schedule and such other territories as may be acquired, By Clause 30 added to Article 366, "Union territory" was defined to mean any Union territory specified in the First Schedule and to include any other territory comprised within the territory of India but not specified in that Schedule. Consequential amendments were made in Part VI and other Parts of the Constitution. Parts VII and IX were repealed. Part VIII was drastically amended. The title of Part VIII was altered to that of "Union Territories". The amended Article 239 provided for the administration of Union territories by the President acting through an administrator to be appointed by him. The amended Art. 240 was in these terms

(3.) Regulation No. 3 of 1963 was made by the President in the exercise of the power conferred on him to make regulations for the peace, progress and good government of the Union territories. The contention that under Article 240 the President can make regulations limited to the subject of law and order only cannot be accepted. The grant of legislative power to make laws, regulations or ordinances for British dependencies has long been expressed in the common form of that of making laws, regulations or ordinances for "peace and good government" of the territory or similar objects such as "peace, order and good government. "peace, welfare and good government" and "peace, progress and good government" of the territory. Instances of this common form of grant of legislative power to legislatures and authorities in India are Section 42 of the Indian Councils Act, 1861, Sections 71, 72, 80-A of the Government of India Act, 1915, Section 72 of the ninth Schedule and Section 92 (2) of the Government of India Act, 1935. Such a power was held to authorise the utmost discretion of enactment for the attainment of peace, order and good government of the territory and a Court will not enquire whether any particular enactment made in the exercise of this power, in fact, promotes those objects, Riel vs. Queen, (1885) 10 AC 675 at pages 678-679. Chenard and Co. vs. Joachim Arissol, 1949 AC 127 at page No. 132. The words "peace, order and good government" and similar express dons are words of very wide import giving wide discretion to the authority empowered to pass laws for such purposes. Attorney General for Saskatchewan vs. Canadian Pacific Rly. Co., 1953 AC 594 at pages 613-614, Emperor vs. Benoari Lal Sarma, 72 Ind App 57 at page No. 72. In Jogendra Narayan Deb v Debendra Narayan Roy, 69 Ind App 76 at page No. 90; Sir George Rankin said that the words have reference to the scope and not to the merits of the legislation In Girindra Nath Banerjee vs. Birendra Nath Pal, ILR 54 Cal 727 at page No. 738 he said that