RAMPRASAD Vs. WAR PROFITS TAX OFFICER

JUDGEMENT

(1.) THIS is a reference under Clause 46(2) of the Gwalior War Profits Tax Ordinance Samvat 2001. The relevant facts of the case are as follows. The War Profits Tax Ordinance, Samvat 2001 was promulgated by His Highness the Maharaja Scindia imposing a tax on excess profits arising out of certain businesses in Gwalior State. The said Ordinance came into force on the 1st of July, 1944. The Assessee Messrs Ramprasad Ramnarayan, who are wholesale dealers and Commission agents for cloth and yarn, were assessed for the chargeable accounting period 1 -7 -45 to 30 -6 -46 by the War Profits Tax Officer. Being aggrieved by the order, the Assessee firm preferred an appeal to the Revenue Commissioner, who was the appellate authority for War Profits Tax. The appellate authority also upheld the order of the War Profits; Tax Officer. Consequently at the instance of the Assessee, the Commissioner for War Profits Tax has made this reference under, Clause 46(2) of the Gwalior War Profits Tax Ordinance.

(2.) NINE questions of law have been referred to us. We propose to deal with them seriatim. As questions Nos. 1, 2 and 3 are inter -allied I propose to deal with them together. The first question raised is whether the War Profits Tax Ordinance, Samvat 2001 is still subsisting. The second question is whether the Madhya Bharat authorities for War Profits Tax can assess and realize the War Profits Tax after 26th January, 1950. The third question is whether the financial agreement referred to by the appellate authority is valid in law. The counsel for the Assessee contends that Entry 82 of the Union List given in the seventh schedule of the Constitution makes it quite clear that taxes on income other than agricultural income fall within the category of Union List. Consequently under Article 246 Parliament has exclusive power to make laws with respect to tax on income other than agricultural income. As War Profits Tax is a tax on income Madhya Bharat Government has no authority either to impose or to realize tax on income after the commencement of the Constitution.

(3.) ARTICLE 278, however, stands on a different footing. It runs as follows: