WALASHAN PRINCE NAWAB MOAZZAM JAH BAHADUR Vs. EXPENDITURE TAX OFFICER B WARD MUKARRAB JUNG LANE HYDERABAD DN

JUDGEMENT

(1.) This is a petition under Article 226 of the Constitution, challenging the validity of a notice dated 23-9-1958 issued by the respondent who is the Expenditure-tax Officer, Income-tax-cum-Wealth-tax Circle No. II, Hyderabad, under Section 13 (2) of the Expenditure-tax Act, 1957 (hereinafter referred to as the Act) and seeking an appropriate writ, more particularly a writ in the nature of prohibition, to forbid the respondent from taking any further steps under the Act. The petitioner denies his liability to be assessed under the Act and questions the jurisdiction of the respondent to proceed against him under the provisions of the Act.

(2.) Expenditure-tax is a novel piece of taxation unknown to the taxing system of any other country and was introduced in our country by Act XXIX of 1957 which was enacted by Parliament on the 17/09/1957 and came into force on the 1/04/1958. The object of the measure is threefold : firstly, to augment public revenues; secondly, to reduce excessive consumer-spending and to divert the surplus funds towards savings; and thirdly, together with the Wealth-lax Act and the Income-tax Act, to provide an effective weapon to counter tax-evasion and tax-avoidance.

(3.) Section 3 of the Act is the charging section and it provides that subject to the other provisions of the Act, for every financial year, a tax called expenditure-tax shall be levied at the rate or rates specified in the Schedule in respect of the expenditure incurred in the previous year by any individual or Hindu undivided family, subject to a proviso, which is in the following terms ;