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Ito, Alleppey v. M.C.Ponnoose
Legal Opinion Summary — Notification Empowering Tahsildar as Tax Recovery Officer (Kerala, 1963)
Factual and Procedural Background
These two appeals by special leave concerned the validity of a notification issued by the Government of Kerala (dated 14 August 1963, published 20 August 1963) that authorised certain revenue officials, including the taluk tahsildar, to exercise the powers of a "tax recovery officer" under the Income Tax Act, 1961 ("the Act"). The notification declared that it "shall be deemed to have come into force on the first day of April 1962", i.e., it purported to have retrospective effect.
In one of the appeals (C.A. 942/66), the relevant facts were: Kunchacko of Alleppey allowed income tax dues to fall into arrears; the income tax officer sought recovery through the tahsildar, who attached certain shares standing in the name of the assessee. The first respondent, Ponnoose, who claimed a decree against the assessee and had shares attached in execution proceedings, filed a petition under Article 226 of the Constitution in the Kerala High Court challenging the revenue officials' actions in causing the attached shares to be sold to satisfy the assessee's income tax dues.
The single judge held the retrospective notification invalid and quashed the tahsildar's attachments; a Division Bench affirmed that view. The central legal contest became whether the State Government could validly invest the tahsildar with the powers of a tax recovery officer with effect from a date prior to the date of the notification (i.e., retrospectively to 1 April 1962).
Legal Issues Presented
- Whether the State Government could validly empower the taluk tahsildar (and other named revenue officials) to exercise the powers of a "tax recovery officer" under s. 2(44) of the Income Tax Act, 1961, with effect from a date prior to the date of the notification (i.e., whether the notification could operate retrospectively to 1 April 1962).
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Phillips v. Eyre (reported, Willes J.) | General principle that retrospective legislation is prima facie of questionable policy; courts will not ascribe retrospectivity to laws affecting rights unless express words or necessary implication indicate such intention. | Used to state the background principle that courts require express language to attribute retrospective effect to laws affecting rights. |
| Indramani Pyarelal Gupta v. W. R. Nathu & Others (1963) I S.C.R. 721 | Authority for the proposition that where delegated/subordinate legislative power contains no words permitting retrospectivity, the delegate cannot make rules or regulations with retrospective effect. | Cited among cases showing that persons/authorities exercising subordinate legislative functions cannot make retrospective rules in the absence of empowering language; relied upon in concluding that the State could not retroactively empower officials here. |
| Modi Food Products Ltd. v. Commissioner of Sales Tax, U.P. (AIR (1956) All. 35) | Support for the view that subordinate authorities cannot give retrospective effect unless empowered by statute. | Relied on as precedent reinforcing the limitation on retrospective action by subordinate authorities. |
| India Sugar Refineries Ltd. v. State of Mysore (AIR (1960) Mysore 326) | Another authority cited for the limitation on subordinate rule-making with retrospective operation in the absence of statutory authority. | Applied as part of the line of authority supporting the court's conclusion that retrospective conferment of powers by subordinate executive action was not permissible here. |
| General Shivdev Singh & Another v. The State of Punjab & Others (1969 PLR 514) | Also cited among decisions holding that subordinate legislation or delegated acts cannot operate retrospectively unless authorised. | Used to bolster the proposition that the notification could not validly confer retrospective powers on the tahsildar. |
| Strawboard Manufacturing Co., Ltd. v. Gutta Mill Workers' Union (1953 SCR 43) | Held that where no statutory provision authorised an extension, an executive extension of time was ultra vires and the award made thereafter was nullity; example of invalid executive action in absence of empowering language. | Described as "apposite"; the court applied its logic by analogy to conclude that the State could not by notification retrospectively authorise the tahsildar to exercise tax recovery powers. |
| B. S. Vadera etc. v. Union of India (AIR 1969 S.C. 118) | Holds that rules made under the proviso to Article 309 of the Constitution can be given retrospective operation because of the specific language of that proviso. | Cited and distinguished: the court explained that the special language of Article 309's proviso made retrospective rule-making permissible there, but that the proviso's language furnished no parallel for the present case. |
Court's Reasoning and Analysis
The court's analysis proceeded from general constitutional and statutory principles about retrospectivity and delegated power:
- The court acknowledged that a sovereign legislature can enact retrospective laws, but reiterated the established rule (as explained in Phillips v. Eyre) that courts will not attribute retrospective effect to laws affecting rights unless the legislature's intention to do so is expressed in clear terms or arises by necessary implication.
- The court distinguished between primary legislative acts (which may expressly be retrospective) and subordinate legislative or executive acts. It held that whether a delegated authority can validly make rules or take measures with retrospective effect depends upon whether the empowering statute contains express words or necessary implication authorising retrospective action.
- The court treated the act of empowering particular officers under sub-clause (ii) of s.2(44) as primarily executive rather than legislative in character, making it more necessary to look for clear statutory authority to support retrospective operation.
- The court relied on a line of earlier decisions (including Indramani Pyarelal Gupta, Modi Food Products, India Sugar Refineries, and General Shivdev Singh) which held that persons or authorities exercising subordinate legislative functions cannot generally make rules or regulations that operate retrospectively in the absence of statutory authority to do so.
- The Strawboard Manufacturing decision was treated as an apt precedent: where an executive extension of time was not authorised by statute, the executive act was held ultra vires and the resulting award null. The court used that decision by analogy to show that the State could not, by notification, validly confer powers retrospectively when no provision authorised such retrospective conferment.
- The court considered whether the deeming provision in s.4 of the Finance Act, 1963 (that the new definition of "tax recovery officer" "shall be and shall be deemed always to have been substituted") could effect retrospective authorisation of state executive action. The court concluded that the deeming fiction only made the new definition a part of the Act from the date of enactment; it could not be extended beyond its legitimate field to imply a power for retrospective authorisation by the State in the absence of express provision in s.2(44) of the Income Tax Act itself.
- The court also addressed and distinguished B. S. Vadera (regarding retrospective operation of rules under Article 309) on the basis that the constitutionally clear language of Article 309's proviso made a different result appropriate there; that peculiarity furnished no parallel to justify retrospective executive authorisation in the present case.
- Applying these principles to the facts — the tahsildar had effected attachments after 1 April 1962 but before the 14 August 1963 notification — the court concluded that, on the date of the attachment, the tahsildar was not a tax recovery officer and could not be retrospectively vested with that status by the later notification.
Holding and Implications
APPEALS DISMISSED.
Direct effect on the parties:
- The court agreed with the Kerala High Court: the notification purporting to vest the tahsildar with tax recovery powers retrospectively to 1 April 1962 was invalid. The attachments effected by the tahsildar (which occurred after 1 April 1962 but before the notification of 14 August 1963) were unsustainable and had been correctly quashed by the High Court.
- The appeals failed and were dismissed with costs (one hearing fee).
Broader implications:
The opinion does not articulate any intention to lay down a new general rule beyond the application of well-established principles; it applies existing authority to the particular question whether a State executive notification can have retrospective effect in the absence of express statutory empowerment.
1. 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 taluk tahsildar to 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.
2. 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 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 bad been attached, Sold for satisfaction of the income tax dues of the assessee.
3. 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. S. 2 (44) defined the expression "tax recovery officer" in the following terms: (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 gazatted 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".
s. 4 of the finance act 1963 substituted a new definition or 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 was as follows:
"tax recovery officer" means (i) a collector or an additional collector;
(ii) any such officer empowered to effect 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 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 notification in the official gazette, To exercise the powers of a tax recovery officer".
the impugned notification dated august 14,1963 which was 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 r. 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.
4. 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 40 l j. P. (n s.) q. B. 28 at p 37
"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 tights 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 is express terms or by necessary implication empower the authority concerned to make a rule nor 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. Indramani pyarelel gupta v. W. R. Nathu & others (1963) i. S. C. R. 721, The majority not having expressed any different opinion on the point; modi food products ltd. V. Commissioner of sales tax, U. P. Air. (1956) all. 35; india sugar refineries ltd. V. State of mysore air. (1960) mysore 326 and general s. Shivdev singh & another v. The state of punjab & others 1969 plr. 514.
5. 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 (1953) scr. 43) an industrial dispute had been referred by the 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 taluk tahsildar 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.
6. It may 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 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 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. S. Vadera etc. V. Union of india air. 1969 s. C. 118 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 where as 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 well 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 was consequently right 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. Dismissed.
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