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PETITIONER: INCOME-TAX OFFICER, ALLEPPEY

       Vs.

RESPONDENT: M.C. PONNOOSE & ORS.

DATE OF JUDGMENT: 28/07/1969

BENCH: GROVER, A.N. BENCH: GROVER, A.N. SHAH, J.C. (CJ) RAMASWAMI, V.

CITATION:  1970 AIR  385            1970 SCR  (1) 678  1969 SCC  (2) 351  CITATOR INFO :  R          1972 SC2427  (9)  RF         1980 SC2181  (104)  C          1984 SC  87  (21)  R          1987 SC1399  (18)  R          1987 SC2239  (8)  R          1988 SC1263  (10)

ACT:      Income-tax  Act,  1961, s.  2(44)---Definition  of  Tax Recovery  Officer in section amended by s. 1 of Finance  Act 1963--Notification       under       section       extending definition--Certain   revenue  officials  including   Taluka Tehsildar brought within definition--Such Notification being executive     act    cannot    be    given     retrospective effect---Subordinate  legislation  cannot   ordinarily    be retrospective.

HEADNOTE:       By a notification dated August 14, 1963, issued by the State  of  Kerala  the Taluka Tehsildar  was  authorised  to exercise  the  powers of a Tax Recovery  Officer  under  the Income-tax  Act, 1961. The notification was  made  effective from  April  1962.  The shares of the assessee, who  was  in arrears  of  his income-tax, were. attached  by  the  Taluka Tehsildar after April 1, 1962 but prior to August 14,  1963. A  petition  under Art. 226 of the  Constitution  was  filed challenging  the,  action of the Tehsildar. The  High  Court held  that  the  notification empowering  the  Tehsildar  to exercise   the  powers  of  a  Tax  Recovery  Officer   with retrospective  effect was invalid and  consequently  quashed the  attachments.   This view was affirmed by  the  Division Bench in appeal.  Dismissing the appeal by the Revenue, this Court,     HELD: The courts will not ascribe retrospectivity to new laws  affecting rights unless by express words or  necessary implication  it appears that such was the intention  of  the legislature.   The Parliament can delegate  its  legislative power  within  the  recognised limits.  Where  any  rule  or regulation  is made by any person or authority to whom  such powers have been delegated by the legislature it may or  may

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not be possible to make the same so as to give retrospective operation.   It will depend on the language employed in  the statutory  provision  which  may  in  express  terms  or  by necessary  implication  empower the authority  concerned  to make  a rule or regulation with retrospective  effect.   But where  no such language is to be found it has been  held  by the   courts  that  the  person  or   authority   exercising subordinate  legislative   functions  rule,  regulation   or bye-law  .    which can operate with  retrospective  effect. [681 F--H]       It  can hardly be said that the impugned  notification promulgates  any rule, regulation or bye-law ’all  of  which have  a definite signification.  The exercise of  the  power under  sub-cl.  (ii) of cl. (44) of s. 2 of  the  Income-tax Act,  1961 is more of an executive than a  legislative  act. [682 B]       Dr.  Indramani  Pyarelal  Gupta v.W.R.  Nathu  &  Ors. [1963]  1 S.C.R. 721, Strawboard Manufacturing Co.  Ltd.  v. Gutta Mill Workers [1953] S.C.R. 439, followed.       Phillips  v. Eyre, 40 Law L Rep. (N.S.) Q.B. 28 at  p. 37, referred to.       Modi  Food Products Ltd. v. Commissioner of  Sales-tax U.P.A.I.R. [1956] All. 35, India Refineries Ltd. v. State of Mysore, A.I.R. 1960 Mys. 326 and General 8. Shivdev Singh  & Anr.  v,  The  State of Punjab &  Ors.  [1959]  P.L.R.  514, approved. 679       By  saying  that  new  definition  of  "Tax   Recovery Officer"  substituted  by  s. 1 of the  Finance  Act,  1963, "shall   be  and  shall  be  deemed  always  to  have   been substituted"  was to make the new definition a part  of  the income  Tax  Act from the date it was  enacted.   The  legal fiction  could not be extended beyond its legiitimate  field and  the  aforesaid words occurring in  s.4 of  the  Finance Act, 1963 could not be construed to embody conferment of  ’a power  for retrospective authorisation by the  State  re.the absence of any express provision in s. 2(44) of the  Income- Tax Act itself. [682 G]     B.S.  Vadera  etc. v. Union of India & Ors.   [1968]   3 S.C.R.  575, distinguished.

JUDGMENT:     CIVIL  APPELLATE JURISDICTION:  Civil Appeals  Nos.  942 and 943 of 1966.     Appeals  by  special leave from the judgment  and  order dated june 18, 1965 of the Kerala High Court in Writ Appeals Nos. 139 and 140 of 1964.     Jagdish Swarup, Solicitor-General, T.A. Ramachandran and D. Sharma, for the appellant (in both the appeals).     S.T.  Desai, M.C. Chacko, A.K. Verma,  J.B.  Dadachanji, and O.C. Mathur, for respondent No. 1 (in C.A. No.  942  of 1966).     A.G.  Pudissery, for respondents Nos. 2 and 3  (in  C.A. No. 942 of 1966).     J.B.  Dadachanji, for respondents Nos. 1 and 2 (in  C.A. NO. 943 of 1966).     A.G.  Pudissery, for respondents Nos. 7 and 8  (in  C.A. No. 943 of 1966).     The Judgment of the Court was delivered by     Grover, J.  These two appeals by special leave involve a common  question relating to the validity of a  notification issued by the Government of Kerala in August 1963 empowering certain revenue officials including the Taluka Tahsildar  to

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exercise  the  powers of a Tax Recovery  Officer  under  the Income  Tax  Act  1961, hereinafter  called  the  Act.   The notification  was expressly stated to be effective from  1st April 1962--a date prior to the date of the notification.     The  facts  in one of the appeals (C.A. 942/66)  may  be stated:  One  Kunchacko of Alleppey allowed the  income  tax dues from him to fall into arrears.  The Income Tax  Officer took  steps  to recover the arrears through  the  Tahsildar. Certain  shares  standing in the name of the  assessee  were attached  by  the Tahsildar. The first  respondent  Ponnoose claimed to have obtained a decree for a certain sum  against the assessee.  He also got the shares 680 standing  in the name of the assessee attached in  execution proceedings,   Ponnoose filed a petition under Art.  226  of the  Constitution  in the High Court of Kerala in  which  he challenged  the  action  taken  by  the  revenue   officials including  the Tahsildar for getting the shares,  which  had been attached, sold for satisfaction of the income tax  dues of the assessee.     The  learned  Single Judge held  that  the  notification empowering  the  Tahsildar to exercise the powers of  a  Tax Recovery Officer under the Act with retrospective effect was invalid.    Consequently’  the  attachments  made   by   the Tahsildar were quashed. This view was affirmed by a division bench in appeal.     The  Act came into force on first April  1962.   Section 2(44)  defined the expression "Tax Recovery Officer" in  the following. terms:--               "Tax Recovery Officer’ means--               (i) a Collector;               (ii)  an  additional Collector  or  any  other               officer authorised to exercise the powers of a               Collector  under  any  law  relating  to  Land               revenue  for  the  time being in  force  in  a               State; or               (iii) any gazetted officer of the Central or a               State Government who may be authorised by  the               Central  Government  by  notification  in  the               Official Gazette, to exercise the powers of  a               Tax Recovery Officer". Section  4  of  the  Finance Act,  1963  substituted  a  new definition  for  the  original definition  of  Tax  Recovery Officer.  It was provided that the new definition "shall  be and shall be deemed always to have  been substituted".   The new definition was as follows:               "Tax Recovery Officer" means--               (i) a Collector or an additional Collector;               (ii)  any  such officer empowered  to.  effect               recovery  of arrears of land revenue or  other               public  demand under any law relating to  land               revenue  or other public demand for  the  time               being  in  force  in  the  State  as  may   be               authorised by the State Government, by general               or   special  notification  in  the   Official               Gazette,  to  exercise  the powers  of  a  Tax               Recovery Officer;               (iii) any Gazetted Officer of the Central or a               State Government who may be authorised by  the               Central  Government,  by  general  or  special               noti- 681               fication in the Official Gazette, to  exercise               the powers of a Tax Recovery Officer." The  impugned notification dated August 14, 1963  which  was

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published  in  the  Kerala Gazette  dated  August  20,  1963 referred  to  the  powers conferred by  sub-clause  (ii)  of clause  (44)  of s. 2 of the Act read with sub-rule  (2)  of rule  7 of the Income tax (Certificate  Proceedings)  Rules, 1962 and authorised the various revenue officials  mentioned therein including the Taluk Tahsildar to exercise the powers of  a Tax Recovery Officer under the Act in respect  of  the arrears etc.  The concluding portion was, "This notification shall be deemed to have come into force on the first day  of April  1962".  The Tahsildar had effected attachment of  the shares  subsequent to first April 1962 but prior  to  August 14,  1963.   In  other words on the date  on  which  he  had effected attachment he was not a Tax Recovery Officer but he got  the powers of a Tax Recovery Officer by virtue  of  the notification dated August 14, 1963.  The short question  for determination,  therefore,  was  and is  whether  the  State Government  could invest the Tahsildar with the powers of  a Tax  Recovery Officer under the aforesaid provisions of  the Act  with  effect  from  a date prior to  the  date  of  the notification, i.e., retroactively or retrospectively.     Now it is open to a sovereign legislature to enact  laws which   have   retrospective  operation.   Even   when   the Parliament  enacts retrospective laws such laws  are-in  the words of Willes J. in Phillips v. Eyre(1) --"no doubt  prima facie  of questionable policy  and contrary to  the  general principle  that legislation by which the conduct of  mankind is  to  be regulated ought, when introduced  for  the  first time, to deal with future acts, and ought not to change  the character of past transactions carried on upon the faith  of the  then  existing law."  The courts will  not,  therefore, ascribe retrospectivity to new laws affecting rights  unless by  express words or necessary implication it  appears  that such  was the intention of the legislature.  The  Parliament can  delegate  its legislative power within  the  recognised limits.  Where any rule or regulation is made by any  person or authority to whom such powers have been delegated by  the legislature  it may or may not be possible to make the  same so  as to give retrospective operation.  It will  depend  on the  language employed in the statutory provision which  may in  express  terms or by necessary implication  empower  the authority  concerned  to  make a  rule  or  regulation  with retrospective  effect.  But where no such language is to  be found  it  has been held by the courts that  the  person  or authority  exercising   subordinate  legislative   functions cannot make a rule, regulation or bye-law which can  operate with  retrospective  effect;  (see  Subba  Rao  J.  in   Dr. lndramani Pyarelal Gupta  v.  W. R. Nathu & (1) 40 Law  J.Rep.(N.S.) Q.B. 28 at p. 37. 682 Others(1)--the  majority not having expressed any  different opinion   on   the  point;  Modi  Food  Products   Ltd.   v. Commissioner   of Sales Tax U.P.(2); India Sugar  Refineries Ltd.  v. State of Mysore(3) and General S. Shivdev  Singh  & Another v. The State of Punjab & Others(4).     it  can  hardly be said that the  impugned  notification promulgates  any  rule, regulation or bye-law all  of  which have  a definite signification.  The exercise of  the  power under sub-clause (ii) of cl. (44) of s. 2 of the Act is more of  an  executive  than  a  legislative  act.   It  becomes, therefore,  all the more necessary to consider how  such  an act  which has retrospective operation can be valid  in  the absence of any power conferred by the aforesaid provision to so  perform  it as to give it retrospective  operation.   In Strawboard  Manufacturing Co., Ltd. v. Gutta  Mill  Workers’ Union(5)  an  industrial dispute had been  referred  by  the

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Governor to the Labour Commissioner or a person nominated by him  with the direction that the award should  be  submitted not later than April 5, 1950.  The award, however, was  made on  April 13, 1950. On April 26, 1950 the Governor issued  a notification extending the time up to April 30.  It was held that  in  the absence of a provision authorising  the  State Government  to  extend from time to time the  period  within which  the Tribunal or the adjudicator could  pronounce  the decision the State Government had no authority to extend the time  and  the  award  was,  therefore,  one  made   without jurisdiction and a nullity.  This decision is quite apposite and  it  is difficult to hold in the present case  that  the Taluka  Tehsildar  could  be  authorised  by  the   impugned notification  to exercise powers of a Tax  Recovery  Officer with   effect  from  a  date  prior  to  the  date  of   the notification.     It may next be considered whether by saying that the new definition. of "Tax Recovery Officer" substituted by s. 4 of the  Finance Act, 1963 "shall be and shall be deemed  always to have been substituted" it could be said that by necessary implication  or  intendment the State  Government  had  been authorised   to  invest  the  officers  mentioned   in   the notification with the powers of a Tax Recovery Officer  with retrospective  effect.  The only effect of the  substitution made  by  the Finance Act was to make the new  definition  a part  of  the Act from the date it was enacted.   The  legal fiction  could not be extended beyond its  legitimate  field and the aforesaid words occurring in s. 4 of the Finance Act 1963 could not be construed to embody conferment of a  power for  a  retrospective  authorisation by  the  State  in  the absence of any express (1) [1963] S.C.R. 721.      (2) A.I.R. 1956 All. 35. (2) A.I.R. 1960 Mys, 326    (4) [1959] P.L.R. 514. (5) [1953] S.C.R. 439. 683 provision in s. 2(44) of the Act itself.  It may be  noticed that in a recent decision of the Constitution Bench of  this Court in B. 8. vadera etc., v. Union of India & Others(1) it has  been observed with reference to rules framed under  the proviso to Art. 309 of the Constitution that these rules can be  made  with  retrospective  operation.   This  view  was, however,  expressed  owing to the language employed  in  the proviso  to  Art. 309 that ’’any rules so  made  shall  have effect  subject to the provisions of any such Act".  As  has been  pointed out the  clear  and   unambiguous  expressions used  in the Constitution, must be  given  their   full  and unrestricted  meaning unless hedged in by  any  limitations. Moreover when the language employed in the main part of Art. 309  is compared with that of the proviso it  becomes  clear that the power given to the legislature for laying down  the conditions  is  identical  with  the  power  given  to   the President or the Governor, as the case may be, in the matter of  regulating  the recruitment of Government  servants  and their conditions of  service.  The legislature, however, can regulate  the recruitment and conditions of service for  all times whereas the President and the Governor can do so only. till  a provision in that behalf is made by or under an  Act of  the  appropriate legislature.  As  the  legislature  can legislate prospectively as well as retrospectively there can be  hardly any .justification  for saying that the President or  the   Governor should not be able to make rules  in  the same  manner  so  as to give them  prospective  as  welt  as retrospective  operation.  For these reasons the  ambit  and content of the rule making power under Art. 309 can  furnish no analogy or. parallel to the present case. The High  Court

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was consequently fight in coming to the conclusion that  the action  taken by the Tahsildar in attaching the  shares  was unsustainable.     The appeals therefore fail and are dismissed with costs. One hearing fee. Y.P.                 Appeals dismissed. (1) [1968] 3 S.C.R. 575. 584