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Citation Codes
Equivalent Citations
citation codes
Case Number
Advocates
  • I.T. Application No. 9 of 1960.Girish H. Shah with Amarchand and Mangaldas
  • Commr. of Income-tax served; J.M. Thakore
  • Advocate-General with B.R. Sompura
  • Asstt. Govt. Pleader by notice
Judges
  • Hon'ble Mr. Justice Prafullachandra Natverlal Bhagwati
  • Hon'ble Mr. Justice Vadrevu Bhadir Raju
Acts
  • Article 226 of the Constitution or Section 45 of the Specific Relief Act,
  • Article 226 or Section 45 of the Specific Relief Act
  • Act of 1959 violates Article 14 of the Constitution.
  • Article l(f) (i) of the new; Court-fees Act, 1959,
  • Section 5 of the new Court-tees Act oi 1959
  • provisions of the new Court-fees Act, 1959,
  • provisions of the Court-fees Act, 1959,
  • provisions of the new Court-fees Act
  • Section 49(1) as detached provisions
  • Section 66 (2) not the Income-tax Act,
  • Section 66(2) of the Income-tax Act,
  • Section 23(1) of the Income Tax Act
  • COURT FEES ACT
  • SECTION 66 INCOME TAX ACT
  • INCOME TAX ACT
  • Sub-section (1) of Section 49,
  • Section 5 of the new Act
  • Court Fees Act of 1959,
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Advocates
  • I.T. Application No. 9 of 1960.Girish H. Shah with Amarchand and Mangaldas
  • Commr. of Income-tax served; J.M. Thakore
  • Advocate-General with B.R. Sompura
  • Asstt. Govt. Pleader by notice
Judges
  • Hon'ble Mr. Justice Prafullachandra Natverlal Bhagwati
  • Hon'ble Mr. Justice Vadrevu Bhadir Raju
Acts
  • Article 226 of the Constitution or Section 45 of the Specific Relief Act,
  • Article 226 or Section 45 of the Specific Relief Act
  • Act of 1959 violates Article 14 of the Constitution.
  • Article l(f) (i) of the new; Court-fees Act, 1959,
  • Section 5 of the new Court-tees Act oi 1959
  • provisions of the new Court-fees Act, 1959,
  • provisions of the Court-fees Act, 1959,
  • provisions of the new Court-fees Act
  • Section 49(1) as detached provisions
  • Section 66 (2) not the Income-tax Act,
  • Section 66(2) of the Income-tax Act,
  • Section 23(1) of the Income Tax Act
  • COURT FEES ACT
  • SECTION 66 INCOME TAX ACT
  • INCOME TAX ACT
  • Sub-section (1) of Section 49,
  • Section 5 of the new Act
  • Court Fees Act of 1959,
See more information ...
Smart Summary

Summary of Opinion — Court on Court-fees Act, 1959 and Section 66(2) of the Income-tax Act

Factual and Procedural Background

The petitioner is a retail dealer in medicines who was assessed to income-tax for the assessment year 1956-57 (accounting period Samvat Year 2011). In assessment proceedings the Income-tax Officer rejected the petitioner's books, treated sales at Rs. 4,91,326 and enhanced the gross profit rate from 5.9% to 10%, increasing the petitioner's total income from Rs. 19,895 to Rs. 41,049. The petitioner appealed to the Appellate Assistant Commissioner (appeal dismissed) and then to the Income-tax Tribunal (Tribunal made modifications but in effect upheld the lower authorities).

The petitioner applied to the Tribunal under Section 66(2) of the Income-tax Act requesting that the Tribunal draw up a Statement of Case and raise certain questions of law for reference to the High Court. The Tribunal dismissed that application. The petitioner then filed the present petition to this Court under Section 66(2) and, alternatively, under Article 226 of the Constitution, seeking a direction to the Tribunal to draw up and refer the Statement of Case.

At presentation the petitioner paid Rs. 50 by way of court-fees and undertook to pay ad valorem fees eventually assessed at Rs. 770. A notice was issued to the Advocate-General because the matter affected revenue and raised constitutional contentions; a special Bench was constituted to decide principally the construction of provisions of the new Court-fees Act, 1959. At this stage the Court limited its consideration to the contentions relating to payment of court-fees and not the merits of the underlying tax assessment.

Legal Issues Presented

  1. Whether an application under Section 66(2) of the Income-tax Act is chargeable to court-fee under the Court-fees Act, 1959, and if so, the correct mode of computation of that fee.
  2. Whether the Court-fees Act, 1959 (in particular Sections 5, 36 and 49 and entry 16 of Schedule I), applies retrospectively to proceedings which commenced before the Act commenced (i.e., whether the levy of court-fees under the Act can be imposed on matters arising from assessment years prior to 1-8-1959).
  3. Whether entry 16 of Schedule I of the Court-fees Act, 1959 discriminates in violation of Article 14 of the Constitution by distinguishing between private litigant taxpayers and the Commissioner of Income-tax (or other government revenue authorities) in respect of court-fee liability for applications under Section 66(2).
  4. The correct meaning of "amount in dispute" (and the related meaning of "assessed") in entry 16 of Schedule I — specifically, whether ad valorem court-fee is leviable on the amount of tax in dispute or on the amount of income on which tax is assessed.

Arguments of the Parties

Appellant's (Petitioner's) Arguments (as presented by Mr. S. P. Mehta)

  • No court-fee is payable under the Court-fees Act, 1959 on an application under Section 66(2) of the Income-tax Act (primary contention).
  • If any fee is payable, the computation proposed by the respondent/state is incorrect and the proper mode of computation differs.
  • The Act of 1959 is prospective, not retrospective; a litigant's vested right of appeal is governed by the law in force at the commencement of proceedings, and retrospective imposition of the new court-fees cannot be effected except by express words or necessary intendment.
  • The second proviso to Section 49(1) (which mandates that fees be charged at the rate in force on the date of presentation) cannot be read to impose retrospective charges where proceedings began before 1-8-1959; it was argued to be unnecessary or ex abundanti cautela.
  • Entry 16 of Schedule I violates Article 14 by discriminating between similarly situated litigants (private taxpayers vs. Commissioner of Income-tax), and the classification is arbitrary.
  • The phrase "amount in dispute" (and the word "assessed") in entry 16 should not be read as referring to the amount of tax in dispute; fee should not be computed on the amount of tax assessed but, if relevant, on the amount of tax in dispute or in some interpretations, on taxable income.
  • It was argued (including by Mr. K. H. Kaji) that where a penalty is involved the amount in dispute would be the penalty demanded, supporting the petitioner's contention on the correct measure of "amount in dispute".

Respondent/State's Arguments (as presented by the Advocate-General)

  • Entry 16 of Schedule I and Section 5 of the Court-fees Act bring applications under Section 66(2) within the ambit of the new Act; Section 49(1) (the repeal and saving provisions) operates from 1-8-1959 and Section 5 applies except insofar as saved by the first proviso.
  • The second proviso to Section 49(1) (that all fees shall be charged and collected under the Act at the rate in force on the date of presentation) must be given effect; it is not mere surplusage and mandates charging under the 1959 Act at the prevailing rate on presentation.
  • The State/Government (and its revenue authorities) constitute a distinct class; exemption of the Commissioner of Income-tax from paying court-fee when the Commissioner applies under Section 66(2) is justified because the State is a taxing authority and has a distinct interest (references made to Articles 270 and 285 to demonstrate the State's vital interest in income tax matters and recognised exemptions).
  • Applicants under Section 66(2) are not similarly situated to applicants under Article 226 or Section 45 of the Specific Relief Act because the jurisdictions and nature of relief differ (Section 66(2) is advisory jurisdiction of the High Court whereas Article 226/Section 45 relief is discretionary). Hence different treatment for court-fee purposes is permissible.
  • The wording "assessed" in entry 16 can be read to refer to the taxable income stage; the computation of the amount in dispute must be consistent with income-tax assessment practice (the State urged that the assessable amount relates to taxable income/amount after assessment procedures).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
N. Ramanlal and Company v. Kirchand Sunderji, (1960) L Guj LK 208 (decision of Mr. Justice Shelat) Earlier decision construing the second proviso to Section 49 as being inserted ex abundanti cautela and warning against reading a proviso as an exception to an exception. The Court considered the decision but expressly disagreed with the conclusion that the second proviso is merely ex abundanti cautela, finding the second proviso to be vital and to have operative effect.
Ram Krishna Dalmia v. Justice Tendolkar, 59 Bom LR 769 Principles governing classification under Article 14 — that permissible classification requires an intelligible differentia and a rational nexus to the object of the statute; inequality must be palpably unreasonable to be struck down. The Court applied these principles to reject the petitioner's Article 14 challenge, holding there is an intelligible differentia and nexus between the classification (state/government vs private litigant) and the object of the Act.
Commissioner of Income Tax, Bombay v. Khemchand Ramdas, (1938) 6 ITR 414; AIR 1938 PC 175 Authority for the proposition that the words "assessment" and "assessed" in income-tax law have different senses depending on context — sometimes meaning computation of income, sometimes determination of tax payable, sometimes procedural stages. The Court relied on this principle to analyse the meaning of "assessed" in entry 16: concluding that in the context of court-fee entry 16 it refers to the stage of assessment where the precise amount of tax is particularised (i.e., amount of tax in dispute), and not to the amount of income on which tax is chargeable.

Court's Reasoning and Analysis

The Court structured its analysis around the relevant provisions of the Court-fees Act, 1959 (notably Sections 5, 36 and 49) and the entries in Schedule I (entry 16) that bear on applications under Section 66(2) of the Income-tax Act. The analysis proceeded in the following sequential manner:

  1. Statutory reading and characterisation:
    • Section 5(1) was read as a charging provision: documents specified as chargeable in the Schedules must not be received unless the fee indicated for such document has been paid.
    • Section 36 was interpreted to mean that fees shall be charged and collected at the rate in force on the date the chargeable document is presented.
    • Section 49(1) was examined: it contains a repeal clause (repealing parts of the Court-fees Act, 1870), a first proviso (a saving clause preserving previous operation and actions under the repealed law insofar as not inconsistent with the new Act) and a second proviso that all fees shall be charged and collected under the Act at the rate in force on the date on which the document chargeable to court-fee is presented.
  2. Interpretation of the second proviso to Section 49(1):
    • The Court emphasised established rules of statutory construction — give plain and unambiguous language its effect, consider the whole enactment so that no part becomes redundant, and read provisions contextually and harmoniously.
    • The Court rejected the petitioner's contention that the second proviso is merely ex abundanti cautela or creates an impermissible exception to the saving clause. Instead, the Court held that the repeal clause, the saving proviso and the second proviso must be read together.
    • When so read, the second proviso operates to require that, notwithstanding the saving of previous operation, where question of charging fees arises after the Act came into force, the fee shall be charged under the new Act at the rate in force on the date of presentation. Thus the second proviso has operative effect, and the Court found nothing in the statutory language to restrict its application only to documents first chargeable under the new Act.
  3. Conclusion on retrospectivity:
    • Applying the textual and contextual reading, the Court concluded that the Court-fees Act, 1959 does apply to the charging of fees where the document is presented after the Act commenced, even though the underlying proceedings (such as the assessment and appeals) may have commenced earlier. In short, the fee is to be charged under the 1959 Act at the rate in force on presentation.
  4. Article 14 (classification) challenge:
    • The Court set out the two-limb test for permissible classification (intelligible differentia and rational nexus to statute's objective) and relied on prior authority (including Ram Krishna Dalmia) to apply this test.
    • The Court found that Government (or its revenue authorities) constitutes a distinct class with a vital interest in taxation (noting Articles 270 and 285 as contextual support) and that there is a rational connection between this classification and the object of the statute. Consequently, the Article 14 challenge failed.
    • The Court also addressed the narrower discrimination point (mandamus applicants under Schedule II(1)(f) versus applicants under Section 66(2)), concluding that differing jurisdictions and the nature of reliefs (discretionary relief under Article 226/Specific Relief v. advisory jurisdiction under Section 66(2)) justify distinct treatment for court-fee purposes.
  5. Meaning of "amount in dispute" and "assessed" in entry 16:
    • The Court analysed the stages of imposition of tax (declaration of liability; assessment specifying amount; method of collection) and concluded that in the context of entry 16 the word "assessed" relates to the second stage — the particularisation of the precise amount of tax in a given case.
    • Consequently, the ad valorem court fee in entry 16 must be levied on the amount of tax in dispute (the difference between the amount actually assessed and the amount admitted by the assessee), not on the amount of income on which tax is chargeable.
    • The Court found merit in the petitioner's submission on this point and accepted that the fee should be computed on the amount of tax in dispute.
  6. Disposition and procedural consequence:
    • On the combined statutory interpretation and the proper reading of entry 16, the Court ordered that the petitioner must pay court-fees in accordance with entry 16 of the First Schedule: one half of the ad valorem fee leviable on the amount of tax in dispute (difference between tax actually assessed and tax admitted by the assessee), subject to the minimum fee of fifty rupees.
    • The petition would be placed for admission after the proper court-fee was paid. Similar orders were to be made in other petitions raising the same questions.
  7. Costs:
    • The Court ordered that each party should bear its own costs for this hearing.

Holding and Implications

Holding: The Court held that the petitioner's application is chargeable to court-fee under entry 16 of Schedule I to the Court-fees Act, 1959, and the proper fee is "one half of the ad valorem fee leviable on the amount of tax in dispute" (i.e., the difference between the amount of tax actually assessed and the amount the assessee admits as payable), subject to the minimum fee of Rs. 50. The petition must be placed for admission only after payment of the proper court-fee. Each party will bear its own costs of the hearing.

Implications:

  • Direct effect on the parties: The petitioner is required to pay the calculated court-fee (half ad valorem on the tax in dispute) before the petition can proceed to admission. Similar petitions raising the same questions on the Bench were to receive the same orders.
  • Scope of retrospective application: The Court gave operative effect to the second proviso of Section 49(1), meaning that fees for documents presented after the commencement of the 1959 Act are to be charged under that Act at the rate in force on the date of presentation, even where the underlying proceedings began before the Act; this follows from the Court's statutory construction in this opinion.
  • Constitutional challenge: The Court rejected the Article 14 challenge, finding permissible classification and sufficient nexus between classification and statute's object, and distinguished relief under Section 66(2) from discretionary remedies under Article 226/Specific Relief Act for the purpose of court-fee treatment.
  • No broader pronouncement on precedent-setting was made in the opinion; the decision states the direct legal consequences for the petitions before the Court and applies the Court-fees Act, 1959 to those procedural filings as described above.

End of summary based exclusively on the text of the provided opinion.

Show full summary ...

    C.N Bros. And Others v. Commissioner Of Income-Tax, Ahmedabad Opposite Party.

    1. In this petition entitled as one under Section 66(2) of the Income Tax Act and also tinder Article 226 of the Constitution, the petitioner has sought a direction from this Court under Section 66 (2) of the Income Tax Act to the Income Tax Appellate Tribunal to draw up a Statement of the case and to raise and refer to this Court certain specified questions, of law. In the alternative, he has sought the issuance of a writ of mandamus or any other appropriate writ or direction under Article 226 of the Constitution directing the Income Tax Appellate Tribunal to draw up a Statement of the Case and to raise and refer to this Court certain specified questions of law.

    2. The facts are these: The petitioner, who carries on business of purchasing and selling medicines as a retailer was assessed to income-tax for the assessment year 1956-57, accounting period being Samvat Year 2011'. In the course of the assessment proceedings, the Income-tax Officer rejected the books of account of the petitioner and' treated the amount of sales effected by the petitioner at Rs. 4,91,326/- and also enhanced the gross profits of 5.9 per cent disclosed by the petitioner to ten per cent. The result was in increase in the total income of the petitioner from Rs. 19.895/- to Rs. 41,049/-. The petitioner appealed against that order to the Appellate Assistant Commissioner. That appeal was dismissed. The petitioner carried the matter in further appeal to the-Income-tax Tribunal. The Tribunal made some modification in the order but in effect upheld the decision taken by the authorities below,. The petitioner thereafter required the Tribunal under Section 66(2) of the Income-tax Act to draw up a Statement of the Case and raise and refer certain-questions to this Court. The Tribunal dismissed-that application and it is against that order of the Tribunal that the petitioner has come to this Court on this petition. The nature of the petition and' the reliefs sought by the petitioner have already been indicated by us.

    3. At the time of the presentation of the petition, the petitioner paid an amount of Rs. 50/- by way of court-fees under Article l(f) (i) of the new; Court-fees Act, 1959, and undertook if necessary to pay ad valorem court-fees which would come to Rs. 770/- after the question of court-fees payable on this petition was determined by the Court. A notice was directed to be issued to die Advocate-General of the High Court of Gujarat as the matter affected revenue and also as contentions founded on certain provisions of the Constitution were rais ed in the petition, The principal contention raised on the petition touches the construction of certain provisions of the new Court-fees Act, 1959, and being one of considerable importance, this special Bench was constituted for deciding the same.

    4. The petitioner in his petition has contended that while the assessee is liable to pay court-fees while making an application under Section 66 (2) not the Income-tax Act, no such liability is imposed on the Commissioner of Income-tax while making a similar application under that section of the Income-tax Act. The submission is that there should be no discrimination between the petitioner and the In come-tax authorities because as regards the subject-matter of the litigation, their position is the same. He has relied on certain entries in the relevant Schedules to the Court-fees Act in support of this contention.

    5. The petitioner in his petition has also rais ed the contention that in any event, the levy of court-fees under the Act of 1959 can be prospective and not in any manner retrospective. This contention is founded on the fact that the petition arises out of matters relating to years prior to the coming into force of the Act of 1959. The petition relates to an order in respect of assessment year 1956-57 and appeals against the same and the right of the petitioner to file a petition under Section 66(2) of the Income-tax Act, according to the petitioner, can be governed only by the law in force at the time when the- assessment year began or the order was made and inasmuch as the Court-fees Act is not retrospective in its operation it would apply or govern matters and appeals which relate to periods of assessment prior to the date of the coming into force of the new Act. As we have already mentioned, the last of these contentions raises a question of considerable importance relating to the construction of Certain provisions in the new Court fees Act of 1959 and this Bench has been constituted to decide the same. We may mention that we are at this stage not concerned with the merits of the petition. We arc only concerned with the contentions relating to payment of court-fees in respect of this petition.

    6. It will be convenient at this stage to indi cate the contentions urged before us by Mr. S. P. Mehta, learned counsel for the petitioner, It is contended that on a consideration of the relevant provisions of the Court-fees Act, no court-fee whatever can be said to be payable on an application under Section 66 (2) of the Income-tax Act. The other contention is that even if any court-fee is payable, the correct mode of computation is different from that contended for on behalf of the respondent and the State. The first contention lias been presented in a three-fold manner. The primary and principal argument urged on behalf of the petitioner is that the Act of 1959 is prospective and not retrospective in its operation and Cannot govern applications relating to periods of assessment prior to the coming into force of the Act which happened on 1-8-1959. It is the first head of the argument. We shall refer to the other arguments of Mr. Mehta in the order in which they were presented.

    7. The first part of Mr. Mehta's argument under the present head rests on propositions of law which are not disputable and not in dispute. It is well established that a litigant has a vested right of appeal and that such right becomes vested in him from the date when the proceedings are initiated. It is also well established that such vested right of appeal is governed by the law as it stood at the commencement of the proceedings. It is equally well established that though the legislature is competent to lay down restrictive conditions upon any such right, the right being substantive in nature, the legislature can do so only by express words or by necessary intendment.

    8. The argument has proceeded that there is nothing in the language of the relevant provisions of the new Court-fees Act which lays down that court-fees should be payable in accordance with the provisions of the new enactment even in respect of matters in which proceedings actually commenced prior to the date of the coming into operation of the Act Nor is there any necessary implication to be gathered from the provisions of the new Court-fees Act which would go to establish that retrospective operation was sought to be given, by the law-maker to the provisions of the new Court-fees Act.

    9. It will be convenient here to refer to the provisions of the Court-fees Act, 1959, to which our attention has been drawn by counsel and which have bearing on the contention of the petitioner under consideration:-

    "5 (1) No document of any of the kinds specified as chargeable in the first or second schedule to this Act annexed shall be filed, exhibited or recorded in any Court of Justice, or shall be received or furnished hy any public officer, unless in respect of such document there has been paid a fee of an amount not less than that indicated by either of the said schedules as the proper fee for such document.

    Provided that such repeal shall not affect the previous operation of any of the laws so repealed and anything done or any action taken (including any appointment, notification, order, rule, form, application, reference, notice, report or Certificate made Or issued) under any such law shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provision of this Act and shall continue to be in force accordingly, unless and until suspended by anything done or any action taken under this Act:

    Provided further that all the fees shall be charged and Collected under this Act at the rate in force on the date on which the document chargeable to court-fee is or was presented.

    Succinctly stated, the argument on behalf of the petitioner is that neither Section5 nor Section 36 nor the first proviso to Section 49 can be read to indicate in the least that retrospective operation is to be given to the relevant entries in the Schedules. As to the second proviso to Section 49, the argument is that it was unnecessary and inserted only ex abundanti cautela.

    10. Section 5 of the new Court-tees Act oi 1959 is one of a fasciculus of sections in Chap. III which is headed "Computation of Fees". It relates inter alia to payment of fees on documents filed in Courts. The argument of counsel for the petitioner in so far as it touches Section 5 is that the section affects only the fees chargable under any of the Schedules to the Act. The way we read Sub-section. (1) of this section is that it is a charging provision which lays down that no document of any kind specified as chargable to court-fee under any of the schedules to the Act shall be received unless the fee indicated in the schedule in respect of the same as proper fee for such document has been paid.

    11. Section 36 appears in Chapter VI which relates to the mode of levying fees. The section obviously has reference to the rate of fee in force on the date of presentation of the document. In terms express and explicit this section rules that all fees to be charged and collected under the Act shall be at the rate in force on the date on which the document chargeable to court-fee is presented. Mr. Mehta has stated before us that one crucial question for our consideration is the interpretation of this section. He has added that this section must however be read along with Section 5 and the schedules to the enactment and also with Section. 49. The submission has been that all these provisions should be read together in a harmonious manner. Here we find ourselves in entire agreement with Mr. Mehta.

    12. To turn to Section 49. We are only concerned with sub-section (1) of that section and a good deal of argument has been advanced before us on the meaning and effect of the language in which that sub-section has been enacted. It will be seen that Sub-section (1) contains the repeal clause. Then there are two provisos. The first proviso no doubt spoken of by the Legislature as such, really is the saving clause, and of that there can be no doubt. Nor has any attempt been made before us by Mr. Mehta to ask us to read Sub-section (1) and the first proviso to that sub-section as anything other than a repealing clause and a saving clause. Then comes the second proviso which, in language of abundant clarity, states that all fees shall be charged and collected under the Act at the rate in force on the date on which the document chargeable to court-fees is presented.

    13. To continue with the argument of counsel under the present head. The argument was sought to be stressed in the form of an interrogation: Is there anything in Section 49 which brings the present petition within the operation of the Act? And in support of the argument reliance has been placed on the words "previous operation" in the first proviso and the words "charged and collected under this Act" in the second proviso. It is said that there is no indication whatever in the first proviso either express or implied, to any retrospective operation. As to the second proviso it is said that it merely repeats the provisions contained in section 36 and the proviso should therefore not be road as providing for any retrospective operation. The second proviso, it is further urged, cannot create a new charge. We put it to learned counsel if he could attribute any meaning and any operation to the second proviso to Section 49. A rather feeble attempt was made when it was said that it must be read as something inserted ex abundanti cautela.

    14. We may preface what follows with some brief general observations and do so before we examine the language of the provisions enacted in Section 49. If there is one rule of interpretation which the Court has always to bear in mind and more than any other, it is this that it must first look at the specific language of the enactment and if the language is plain, unambiguous and explicit in terms and susceptible of but one construction, the Court must not go beyond it or ignore it or subtract anything from its meaning and import. Such language must determine the intent and purpose of the section. This is a cardinal rule of construction and it we may say so, an axiom of experience. A statute must be construed ut res magis valeat, quam pereat so that the intention of the law-maker may not bo treated as vague or left to operate in the air. Another principle of no less importance and one of cogency is that the whole of every material and relevant part of an enactment must be considered in 'die determination of the meaning, ambit and operation of a provision or a series of provisions. The whole enactment is to be viewed and compared in ail its parts so that every part of it may be made consistent and effectual and harmonious and sensible. Every part of it should, as far as possible, be read and treated as sound and effective so that no part of it will be inoperative or superfluous or insignificant. Where there is no sound reason for departing from these principles, for instance in case of a section like the one under examination expressed in language precise and unambiguous, they offered a safe approach and a reliable guide to the ascertainment of the intention of the Jaw-giver.

    15. It is in the light of these observations that we turn to examine the provisions contained in section 49. The Legislature has said in Sub-section (1) of Section 49, which has to be read along with column 4 of Schedule IV, that the whole of the Court-fees Act, 1870, in so far as it inter alia relates to entries 3 and 66/2 and 47 in the 7th Schedule to the Constitution shall stand repealed from 1st August, 1959. Section 5 which comes into operation on the same day rules in express terms that no document specified as chargeable in the first or the second schedule to the Act shall be received in any Court unless the court-fee as indicated in any of the Schedules to the Act has been paid. The first proviso to Section 49 (1.) is in language usually employed in enacting a saving after a repeal. It is, as we have already mentioned, no more and no less than a saving clause. The second proviso, which is a vital clause, lays down a rule of considerable importance and in our opinion, a rule which it is not possible for the Court to ignore. In words of amplitude and clarity it enacts that all fees shall be charged under the Act at the rate in force on the date on which the document subject to court-fee is presented.

    16. In the course of his arguments, Mr. Mehta suggested that the second proviso must be read with Sub-section (1) and cannot be read with the first proviso. The suggestion, in our opinion, is untenable. The repeal clause contained in subsection (1) and the two provisos must be read as a whole enactment. Sub-section (1) gives the repeal clause and the first proviso is the saving clause. The second proviso must be read with all that precedes it and if anything, in particular with the first proviso. But for the saving clause, the whole Court Fees Act of 1870 in so far as it relates to entries 2 and 66/2 in the seventh Schedule to the Constitution would have stood wholly repealed. The effect of the saving clause is to save the previous operation of the repealed law and anything done or any action taken under it, for instance, by a notification, order, rule, form, etc., in so far as it is not inconsistent with the provisions of the new Act. The second proviso, operating On the first proviso, rules jn effect that notwithstanding the saving clause, notwithstanding any previous operation of the repealed law saved by it, when question arises as to charging of fees the fee will be charged under the Act at the rate in force at the date on which the document is presented. And if we may say so, the Legislature has stated in the second proviso that repeal or no repeal partial repeal or total repeal, when it comes to payment of fees after the coming into force of the operation of the Act, the fees to be charged shall be at the rate in force on the date when the document is presented, The only answer which Mr. Mehta has to the difficulty in the way of his client in the matter of the application of; the second proviso to Section, is that we should have regard to the word "document chargeable" in the second proviso. The suggestion is that before inviting the application of the second proviso, it must be established that the document is chargeable to court-fees under the Act. And the further suggestion is that the petition is not a document which is chargeable to court-fees under the Act. This, in our opinion, is arguing in a circle The question here is one simply of retrospective-operation or prospective application and we have to examine the language of the second proviso and see for ourselves whether after enacting the (saving) clause the Legislature has by this proviso ruled that retrospective operation is to be given to the provision relating to the fees chargeable under the AH. Then it is said that there can be no proviso to a proviso and the second proviso must, therefore, be read as applicable only to the provision contained in Sub-section (1) which is the repeal clause. Now if we try to read the second proviso only with the repeal clause in Section 49(1), it will not give any complete meaning. Of course, as we have already said, we have to read the second proviso with all that has gone before-, including Subsection (1 which is the repeal clause. Another argument of Mr. Mehta on this aspect of the matter is that the second proviso, if it is to be read in the manner suggested by the other side, will take away the entire operation of the first proviso. We do not agree. The first proviso does not deal merely with the charging of fees at the rate in force on the date on which the document is presented. It deals with much more than that. Therefore it would Rot be correct to say that a reading of the second proviso in a manner different from that suggested by Mr. Mehta would render the first proviso nugatory.

    17. The argument urged before us by the Ad-vocate-General under the present head may be briefly stated. Referring to Section 5, it is said that it is clear from entry 16 in Schedule I that Section 5 of the new Act would touch an application under Section 66(2) of the Income-tax Act. The effect of the repeal clause is that Section 5 would come into operation immediately from 1st August 1959, except in so far as there is any saving of any provision contained in the repealed Act. Therefore, so the argument has proceeded, the only question is, has anything been saved, and if so, what? Such being the position, Section 49 must come into play. But before advancing the present argument, counsel also urged that the first proviso speaks of the previous operation of any law and the case before us is not a case of previous operation at all and ia a -case of future operation of a previous law. We need not linger on an examination of this aspect of the argument however fascinating it may be since in our opinion, on a plain reading of Section 49, it is not possible to hold that the second proviso is merely a surplusage or is inserted only ex abundant I cautela. It is a vital clause and it is incumbent on us to give full effect and operation to that proviso.

    The other argument of the learned Advocate-Gene-

    ral is that the second proviso is an express provi-

    sion by which saving, if any, in the first proviso is taken away. There is on our opinion, considerable force in this argument. We have already dwelt at some length on the question of interpretation and ambit of Section 49. .

    18. In support of his argument that the second proviso to Section 49 .(1) is unnecessary in that section and must have been inserted only ex abundanti cautela, Mr. Mehta leaned heavily on a decision of Mr. Justice Shelat in N. Ramanlal 'and Company v. Kirchand Sunderji, reported in (1960) L Guj LK 208. In his judgment in that case the learned Judge, while examining the argument urged before him by the learned Advocate-General, discountenanced the contention that there could be an exception to an exception. The learned Judge has also expressed the view that to read the second proviso as anything more than one inserted ex abundant cautela would create inconsistency between the first and the second proviso and would render the first proviso nugatory. With respect, we are unable to agree with him.

    19. We need not rehearse what we have already stated. It is to be presumed that the legislature has not 'used any useless clause of words. It is a dangerous practice to base the construction and effect of a section upon only a part of it, since one portion may he qualified by other portions. As a rule the Court has to Consider every provision in the light of the general purpose and object of the enactment. The Legislative intent, as has so often been observed, is apt to be lost where a phrase, sentence or clause in a section is rejected. The omission may easily lead to an idea quite different from the one actually intended and expressed. We must not read the clauses in Section 49(1) as detached provisions but take the entrie subsection by its four corners the better to ascertai11 the intent of the law-maker. Read in its entirety and contextually, the second proviso expresses a meaning which is single (sic) and sensible and we see no reason why it should not be given its due meaning and effect. There is nothing about it which can be said to leave the question of its operation in dubio. There is no ellipsis and no redundance. The second proviso is in a section which deals with repeal and saving and it is germane to the whole question before us that if is in the context of repeal and saving that the proviso should be read. For all these reasons the conclusion seems inescapable that the present contention of the petitioner must fail,

    20. The next contention urged before us by Mr. Mehta is that entry 16 in Schedule 1 of the new Act of 1959 violates Article 14 of the Constitution. It is said that the Legislature has drawn a distinction between the State and the litigant tax-payer. Whereas the litigant tax-payer has to pay court fee when he prefers an application under Section 66(2) of the Income Tax Act to the High Court, the Commissioner of Income Tax is not required to pay court, fee when he goes to the High Court with an application under Section 66(2). It is said that this distinction amounts to discrimination and further that it results in unreasonable classification which is also arbitrary.

    21. It has been argued on the other hand by learned Advocate General that in any view of the matter, Government is a distinct class and also a taxing authority. One aspect of the matter which has been presented before us by Mr. Mehta is that in the present case, the Commissioner of Income Tax acts on behalf of the Union of India and not the State of Gujarat and the legislation is State legislation. The answer to this given by learned Advocate General is that the State is vitally interested in income tax. He has drawn our attention to Article 270 of the Constitution for the purpose of showing that a State is vitally interested in income tax levied and collected by the Union. So founded, the argument is that whether it is the Union or the State Government which is the party, it is a party which is very much interested in collection of income tax. The crux of the argument is, State itself imposes court fees and there can be nothing objectionable in enacting that the Commissioner of Income Tax should not be under an obligation to pay court fees, when he prefers an application under Section 66(2) to the High Court. The object of the levy of court fees, it is urged, is administration of justice and the argument of the other side that there is no nexus is unsound. Counsel also referred us to Article 285 of the Constitution. Reference to that Article was for the purpose of showing that the Constitution itself recognises exemption in favour of the Union of the taxation by the State. In our opinion, there is considerable force in these arguments.

    22. The ambit and operation of Article 14 of tile Constitution has been explained by the Supreme Court in a series of cases and we do not intend to burden this judgment with reference to those decisions. It is now firmly established law that in order to pass the test of permissible classification, two conditions must be fulfilled, viz., one, that the classification must be founded on sea intelligible differentia which distinguishes persons or things that are grouped together from others left out of die group, and two, that that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may Be founded on different basis, geographical, or according to objects Or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. In Dalmia's case (Ram Krishna Dalmia v. Justice Tendolkar, 59 Bom LR 769 at p. 780) decided by a Bench of the Bombay High Court and to which I was a party, we pointed out that the Legislature may not be bound to extend a legislation to all cases which it might possibly reach. It may take into consideration practical exigencies, it may recognise degrees of harm, and confine the legislation where the need is greatest, and that a law which hits evil where it is most felt will not be overthrown because there are other instances to which it might have been applied. We also pointed out in that case that inequality produced in order to encounter the challenge of the Constitution must be actually and palpably unreasonable and arbitrary. Applying the test laid down by their Lordships of the Supreme Court in a series of cases, we must hold that in the case of the provisions under examination, there is no unreasonable classification and there is nothing which can be said to be palpably unreasonable and arbitrary. Moreover the contention of the petitioner must be repelted when we examine the distinction from the point of view of nexus. For all these reasons. We are of the opinion that the present contention raised on behalf of the petitioner must be negatived.

    23. A further argument urged, before us by Mr. Mehta under the same head is that the provisions relating to imposition of court fees under examination discriminate between the same class of litigants, viz., persons who ask for relief only for mandamus and whose case falls under Schedule II (1) (f) and on the other hand those who apply to Court under Section 66(2) of the Income Tax Act. The narrow submission here is that the effect of the remedy in both, cases would be the same on the petitioner. The argument urged by learned Advocate General on the other hand on this aspect of the case is that a person who applies to the Court under Section 66(2) of the Income Tax Act on the one hand and a person who applies to the Court under Article 226 of the Constitution or Section 45 of the Specific Relief Act, cannot be regard-ed as persons similarly situated. The argument on behalf of the State under this head is that the relief in the two cases is not the same. Whereas the granting or not granting of any relief under Article 226 or Section 45 of the Specific Relief Act is discretionary to the Court, the position in the case of an application under Section 66(2) of the Income Tax Act is quite different, though the Court under Section 66(2) acts in an advisory jurisdiction. In our opinion, there is force in this argument. The jurisdictions would be different and the nature of the reliefs claimed in the two cases is also different, The fact that the effect of the remedy may be the same is not a determinative consideration. For these reasons, the present contention urged on behalf of the petitioner must be repelled.

    24. There remains for consideration one more contention urged before us by counsel for the petitioner. In the petition, the petitioner has contended that in any event, on a proper interpretation of entry 16 in the first Schedule the amount of ad valorem court fees leviable can have reference to the amount of tax in dispute and not to the amount of income on which the tax is assessed. We have already set out entry 16 of the first Schedule in the earlier part of our judgment. It will be seen that that entry rules that the proper fee on an application under Section 66 of the Income Tax Act is one half ad valorem, fee leviable on the amount in dispute, subject to the minimum fee of fifty rupees. The expression "amount in dispute" has been explained in brackets by stating that the -amount in dispute would mean the difference between the amount actually assessed and the amount admitted by the assessee as assessable. The argument of Mr. Mehta has proceeded that the expression "assessed" has been used in the Income Tax Act in different contexts and has been given diff-rent meanings having regard to the context in which it appears, He has drawn our attention to a decision of their Lordships of Privy Council in Commr. of Income Tax, Bombay v. Khemchand Ramdas, reported in 1938-6 ITR 414 ; (AIR 1938 PC 175), where their Lordships pointed out "the word 'assessment" is used in the Income, Tax Act as meaning some times computation of income, some times determination of amount of tax payable and come times the procedure laid down in the Act for imposing liability upon the tax payer."

    25. 61 an extended and expansive sense, the expression "assessed" or "assessment" may have different meanings, each depending on the context in which the expression is to be found. The expression "assessment", as I had occasion to point out In a recent case, may include a number of Steps and the whole procedure for imposing, fixing and collecting of a tax. It need not relate to the-whole gamut of it. In a given case it may relate to assessment strictissimi juris. It may relate to the fixing of a prescribed tax or fee which covers the particular case and the computation and determination of the amount of tax or fee to be charged in the particular case. The question does not present any difficulty if it is clearly borne in mind that there are three stages in the imposition of a tax or a fee. There is a declaration of liability i.e., by the charging section which; in the case of the enactment before us, is Section 5. The liability Is fixed ex hypothesi, That would he the first stage. The second stage is assessment. Assessment particularises fixation of precise amount of tax or fee in respect of a case under consideration. That must obviously depend On the subject matter of each case. The third and the last stage is the mode or method of collection and recovery of the amount of tax or fee. If these stages of assessment are borne in mind, it must follow that in the context of entry 16 in the first Schedule to the Court Fees Act of 1959, the word 'assessed must relate to the second stage in an assessment. It is a stage at which the precise amount of the fee is fixed and the amount of assessment is particularised. It cannot have any bearing to the amount of income which is held as chargeable to income tax.

    26. It has however been urged by the learned Advocate General that we must give effect to the words "amount admitted by the assessee as assessable" and the argument is that in the Form-which an assessee has to submit, he does not stater the amount of tax which he admits as payable by him to the revenue. It is stressed that the assessable amount has to be worked out after the assessable income is computed. The word "assessed'" in entry 16, it is urged, must have reference to the-amount of taxable income and not to the amount of tax computed in accordance with the provisions of the income-tax law, He has drawn our attention to Section 23(1) of the Income Tax Act and some other provisions where the words "assessed" and "assessment" are used. Now as we have already observed, the words "assessed" and "assessment" can have different meanings in different contexts and in our view there is little substance in the argument urged on behalf of the respondents, on this aspect of the case.

    27. We may add that some argument urged before us on behalf of the petitioner on this aspect of the matter was presented by Mr. K. H. Kaji, and the argument was that if a penalty was levied by income tax authorities on an assessee and he had to bring an application under Section 66(2) to the High Court, it would be impossible to urge that ad valorem court fees should be paid on the amount of income tax in dispute. The argument has been that the amount in dispute can only be regarded as the amount which the assessee is asked to pay by way of penalty. There is, in our opinion, some force in this submission. For reasons which we have already discussed, we are of the opinion that the proper meaning to be attributed to entry 16 of Schedule I is that ad valorem court fee is leviable on the amount of tax in dispute and not On any other amount. On this aspect of the matter the conclusion that we reach is in favour of the petitioner,

    28. In the result, the petitioner will have to pay court fees in accordance with entry 16 of the First Schedule and the fee will be one half of ad valorem fee leviable on tile amount of tax in dispute. It will be the difference between the amount of tax actually assessed and the amount of tax which, according to the assessee, is payable by him. The; petition will be placed for admission after proper court fee is paid by the petitioner. There will be similar orders in the other petitions which are on our List and raise the same questions.

    29. We have heard counsel on the question of costs. In our opinion, the fair order for costs would be that each party should hear its own costs of this hearing.

    30. Similar orders in the other petitions.

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    Comments

    C.N Bros. And Others v. Commissioner Of Income-Tax, Ahmedabad Opposite Party.
    (Jan 10, 1961)