CARBORANDUM UNIVERSAL LIMITED Vs. UNION SAW MILLS

JUDGEMENT

(1.) THIS petition is for a rule of mandamus directing the respondent, Union of India, represented by the Ministry of Finance, to issue a recognition that the Central Government is satisfied that the petitioners are engaged in the manufacture of one or more of the articles specified in Part A of the Fifth Schedule to the Income-tax Act, 1961" (1) Super-tax shall not be payable by an assessee in respect of the following amounts which are included in his total income(iv) if the assessee is a company, any dividend received by it from an Indian company, subject to the provisions contained in the Fifth ScheduleRule 1, clause (a)(1) in the Fifth Schedule, provides that super-tax shall not be payable in respect of any dividend which is assessable for the assessment year commencing on the 1st day of April, 1962, and for the subsequent assessment years and which is declared by an Indian company formed and registered after March 31, 1952, and before April 1, 1967, where the Central Government is satisfied that the Indian company is wholly or mainly engaged in an industry for the manufacture or production of any one or more of the articles specified in any of the items in Part A of this schedule. In Part A, section 6C, item (iii) relates to grinding wheels and abrasives. It may be clear from these provisions that the satisfaction contemplated by rule 1(a)(1) of this schedule is that of the Central Government. But no application was made to the Central Government for a certificate under that provision. When a power is entrusted by a statute to a named authority and the exercise of it is invoked by a person concerned and there is an improper refusal to exercise the power, then, of course, in such premises, a mandamus may well issue under article 226 of the Constitution directing the authority to exercise the power. But, for doing it, it is a requisite that the applicant must in the first instance approach the authority with a request to invoke the power, and without that there would be no occasion for this court to consider that the authority has refused to exercise or exercised the power improperly, which is vested in it. Admittedly, here, there was no application to the Central Government making such a requestMr. Venkataraman for the petitioners, however, contends that the Central Board of Revenue which was reconstituted as the Central Board of Direct Taxes under the Central Boards of Revenue Act, 1963, is but an arm of the Government and it would be proper to say that it is the Central Government itself. He relies on the fact that the Board is manned by some of the officials who belong to the Ministry of Finance. We have no hesitation in rejecting this contention.

(2.) THE Central Boards of Revenue Act itself makes a distinction between the Central Government and the Central Board of Direct Taxes. For instance, section 3 says that the Board shall, subject to the control of the Central Government, exercise its powers and duties entrusted to it by the Central Government or by or under any law. THE Income-tax Act itself clearly indicates the framework of the hierarchy of officers with the Income-tax Officer at the bottom and the Central Board of Revenue and now the Central Board of Direct Taxes at the top. THE Fifth Schedule which we referred to clearly mentions the Central Government as the authority to be satisfied in the matter of issuing a certificate and not any other authority. In such circumstances, we are unable to accept the petitioners' contention that the Central Board of Direct Taxes should for purposes of the Fifth Schedule be considered as the Central GovernmentIt may be that when an application was made under the schedule to the Central Board of Revenue as it stood then, they could well have transmitted it to the proper authority for disposal, though they might not be obliged to do so. That would have tended to the convenience of everybody and would have saved a lot of time and perhaps needless expenditure and futile effort. But the point remains that, so long as the, application was not made to the Central Government, we would not be justified in issuing a rule to the Central GovernmentFrom what we have said so far, it is obvious that we have not dealt with the merits on which the Central Government would have to be satisfied.