MADHAVAN NAIR J. - Motion for a writ of habeas corpus under article 226 of the Constitution of India.
Assessment of income-tax has been made on the petitioners husband - hereinafter called the assessee - for the years 1121, 1122, 1123 and 1124 M. E. under the Travancore Income-tax Act, XXIII of 1121, and for the subsequent years 1950-51 onwards, under the Indian income-tax Act (XI of 1922). For recovery of taxes thus assessed under the Travancore Act and the Indian act, the assessee has been arrested on December 17, 1965, and detained in the civil prison, Central Jail, Trivandrum, under section 222 read with ruled 73 of Schedule II of the Income-tax Act (XLIII of 1961). Shri Suryanarayana Iyer, appearing for the petitioner, asserts that the process of arrest and detention is not available for taxes assessed under the Travancore Act and that therefore the detention is illegal, and prays for a writ of habeas corpus to set the assessee at liberty.
That the assessee is a defaulter is not in dispute here; his liability to be arrested and detained in civil prison for non-payment of tax assessed under the Indian Income-tax Act, 1922, is also not disputed. The controversy is only of the authority to arrest and detain the assessee for taxes assessed under the Travancore Income-tax Act, 1121. We are not shown any provision in the Travancore law for the arrest and detention of an assessee in prison for recovery of income-tax. Contention of counsel for the revenue is that with the repeal of the Travancore Act on the extension of the Indian Act to the area by the Finance Act, 1950, the tax that remained due under the Travancore Act became tax due under the Indian Act realisable under all or any of the modes prescribed by the latter Act. That has to be investigated here.
Section 13(1) of the Finance Act, 1950, so far as it is relevant here, reads :
'If immediately before the 1st day of April, 1950, there is in force in any Part B State.... any law relating to income-tax or super-tax..... that law shall cease to have effect except for the purposes of the levy, assessment and collection of income-tax and super-tax in respect of any period not included in the previous year for the purposes of assessment under the Indian Income-tax Act, 1922 (XI of 1922), for the year ending on the 31st day of March, 1951, or for any subsequent year...'
Apparently it has saved the Travancore Act from 'the levy, assessment and collection' of taxes for the years 1124 and prior. According to the revenue, the above saving does not exclude the application of the Indian Act to taxes for those years, but only keeps alive the Travancore Act as a supplement thereto. The argument is ingenious, but appears to contradict the observations of the Supreme Court in Union of India v. Madan Gopal Kabra Commissioner of Income-tax v. Patiala Cement Co. Ltd. and A. N. Lakshman Shenoy v. Income-tax Officer, Ernakulam.
In Union of India v. Madan Gopal Kabra, the Supreme Court has held that the Finance Act, 1950, is not a 'retroactive legislation' as it concerns taxation 'for the year beginning on the 1st day of April, 1950' and that the contention that 'the State law of income-tax in Part B States for the levy, assessment and collection would be in operation side by side with the Indian Act even after the financial integration of those States with the Indian Union... (is) manifestly repugnant to the policy underlying the Finance Act, 1950.' Those observations indicate that the legislative intent in the Act is to have in operation one Act only for taxation in any year-the State Act for (assessment) years prior to that beginning with the 1st of April, 1950, and the Indian Act for the subsequent years. In other words, to the extent the State Act is expressly saved in operation by the Finance Act, 1950, the Indian Income-tax Act has no application in the State, and to the extent the Indian Act has been extended, the State Act stands repealed.
In Commissioner of Income-tax v. Patiala Cement Co., Ltd., the question before the Supreme Court was whether in regard to an assessment in the Patiala State for the year 1949-50, an appeal could be preferred to the Appellate Tribunal under the Indian Income-tax Act. The Pepsu High Court held such appeal to be maintainable. The Supreme Court reversed it and held :
'Therefore, both for the assessment years 1948-49 and 1949-50 the law applicable would be the Patiala Income-tax Act, and not the Indian Income-tax Act and, consequently, no appeal against the order of the Income-tax Officer was competent.'
It follows that in regard to matters relating to income-tax for periods anterior to the assessment year 1950-51, the law in an erstwhile Part B State is as provided in the relevant State Act; and the Indian Income-tax Act, 1922, has no relevance.
In A. N. Lakshman Shenoy v. Income-tax Officer, Ernakulam, the Supreme Court has held :
'Moreover, the collocation of the words, levy, assessment and collection (in section 13 (I) of the Finance Act, 1950) indicates that what is meant is the entire process by which the tax is ascertained, demanded and realised... We approve of the decision in Hazari Mal Kuthiala v. Income-tax Officer, Ambala, where Bhandari C.J. said :
These three expressions, levy, assessment and collection are of the widest significance and embrace in their broad sweep all the proceeding... for raising money by the exercise of the power of taxation...
(One of the recommendations of the Indian States Finances Enquiry Committee 1948-49, was :)
(e) It will be necessary to provide that all matters and proceedings pending under, or arising out of, the pre-existing State Acts shall be disposed of under those Acts by, so far as may be, the corresponding authorities.... under the corresponding Indian Acts.
We see no good grounds why full effect should not be given to it; it is one of the limitations... subject to which the State law is to be repealed.... Having regard to these considerations, we find no difficulty in holding that a reassessment proceeding.... is a proceeding which comes under clause (e) of the recommendations of the Committee, and must be disposed of under the pre-existing State law. Section 13(1) of the Finance Act, 1950, gives effect to that recommendation.'
The provisions of the Finance Act, 1950, in the light of the interpretations thereof by the Supreme Court cited above, put beyond doubt that the Indian Act has not been extended to the erstwhile Part B States (inclusive of Travancore-Cochin) as a supplement to the then current State Acts, but only as a replacement thereof without retrospection and with the express concession that the State Acts will continue to govern the levy, assessment and collection of taxes that became payable during currency of the State Acts. If the expression 'collection' in section 13(1) of the Finance Act, 1950, is given the widest significance - that is what the Supreme Court said should be - it would cover all the processes for recovery of tax; and if full effect is given to the recommendation (quoted above) of the Indian states Finances Enquiry Committee in the application of section 13 (1) of the Finance Act, 1950, the question of arrest and detention for recovery of tax assessed under the pre-existing Travancore Act would come within the ambit of the expression 'matters and proceedings arising out of the pre-existing State Act' and has to be ruled under the Travancore Act only.
The fact that a portion - though it be the major portion -of the amount for which the assessees arrest and detention have been ordered and effected has been assessed under the Indian Income-tax Act which warrants such process, cannot sustain or justify the process when the rest of it is tax assessed under the Travancore Act for which the process is not available.
In Ram Narain Sons Ltd. v. Assistant Commissioner of Sales Tax, a Constitution Bench of the Supreme Court, with Jagannadhadas J. dissenting, observed :
'(After finding that the sales tax assessed in the case for the post-Constitution period was illegal and advertising to the necessity to decide the legality of assessment for the pro-Constitution period). The necessity for doing so is, however, obviated by reason of the fact that the assessment is one composite whole relating to the pre-Constitution as well as the post-constitution period and is invalid in toto.
There is authority for the proposition that when an assessment consists of a single undivided sum in respect of the totality of the property treated as assessable, the wrongful inclusion in it of certain items of property which by virtue of a provision of law were expressly exempted from taxation renders the assessment invalid in toto. The Privy Council have observed in Bennett and White (Calgary) Ltd. v. Municipal District of Sugar City No. 5 :
When an assessment is not for an entire sum, but for separate sums, dissected and earmarked each of them to a separate assessable item, a court can sever the items and cut out one or more along with the sum attributed to it, while affirming the residue. But where the assessment consists of a single undivided sum in respect of the totality of property treated as assessable, and when one component (not dismissible as de minimis) is on any view not assessable and wrongly included, it would seem clear that such a procedure is barred, and the assessment is bad wholly.'
The above dicta have been reiterated and followed again by the Supreme Court in Provincial Government of Madras v. J. S. Basappa where it has been observed further :
'It is necessary to explain the distinction between the two classes of cases and how they are to be distinguished. A difference in approach arises only in those cases where the assessment of many matters results in amounts of tax which, though parts of the whole assessment, stand completely separate. There the court can declare the separate, dissected and earmarked items illegal and excise them from the levy. In doing so, the court does not arrogate to itself the functions of the taxing authorities; but where the tax is a composite one and to separate the good part from the bad, proceedings in the nature of assessment have to be undertaken, the civil court lacks the jurisdiction.'
In the case before us, the arrest and detention of the assessee is for a composite sum in which taxes assessed under the Travancore Income-tax Act are irretrievably combined with taxes assessed under the Indian Income-tax Act. In regard to the process issued and effected, the demand is one and it is evident that, even if the assessee has tendered all the tax assessed under the Indian Income-tax Act, he could not have avoided the arrest or detention. By parity of the reasoning in the Supreme Court decisions cited above, the present detention of the assessee has to be declared unsustainable in toto.
Counsel for the revenue contended that the issue here is res judicata on account of the decision of this court in O. P. No. 819 of 1963. The question in that O. P. was whether a certificate issued under the provisions of the Indian Income-tax Act, 1922, could be executed by arrest and detention under the Income-tax Act, 1961. This court held that it could be so executed as all orders and proceedings issued under the Act of 1922 must, after the commencement of the Income-tax Act of 1961, be deemed to have been issued under the latter Act. The non-availability of the process of arrest and detention for taxes assessed under the Travancore Income-tax Act, before its repeal by the Finance Act, 1950, was neither mooted nor decided in O. P. No. 819 of 1963. The order (exhibit P-1) pursuant to which the present arrest and detention of the assessee has been effected is dated 16th December, 1965, which is after the disposal of O. P. No. 819 of 1963 and is made by a different officer on independent consideration of facts. We are afraid that the decision in O. P. No. 819 of 1963 has little bearing on the question in the present motion and cannot be urged as res judicata here.
It is also contended by the revenue that the assessee has preferred an appeal against the order (exhibit P-1) for his arrest and detention before the Board of Revenue which is still pending disposal and that therefore the present motion under article 226 of the Constitution should not be entertained. Whether the existence or the invocation of an alternative remedy would bar a motion under article 226 of the Constitution depends largely on the facts and circumstances of each case. Article 21 of the Constitution guarantees 'No person shall be deprived of his life or personal liberty except according to procedure established by law.' It is one of the essential functions of this court to watch and guard the fundamental rights guaranteed to citizens by the Constitution. The complaint in this motion is that the assessee is detained in prison without authority of law and such detention is continuing indefinitely in spite of a motion for release made before the Revenue Board. If the matter concerned calls for a quick relief and undisputed grounds are made out therefore - the admitted fact here is that the detention of the assessee in prison is for arrears of income-tax, part whereof was assessed under the Travancore Income-tax Act, 1121 - this court cannot avoid hearing the motion on the ground that a like motion made elsewhere is kept pending without prompt disposal. As has been observed by the Supreme Court in Ranjit Singh v. State of Pepsu, 'the whole object of proceedings for a writ of habeas corpus is to make them expeditious, to keep them as free from technicality as possible and to keep them as simple as possible. The incalculable value of habeas corpus is that it enables the immediate determination of the right to the appellants freedoms. The observation of the Supreme Court in Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District I, Calcutta 'The existence of such alternative remedy is not however always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction from continuing such action' seems to us to apply well to the facts and circumstances of the present motion. As the assessee has been arrested and put in prison by an order beyond authority of law, we think a circumstance arises here for exercise of our jurisdiction to safeguard his personal liberty guaranteed under article 21 of the Constitution. The contention is therefore overruled.
It was also contended that the motion is not in form in that it has been made by the wife of the person aggrieved while he himself was not unable to make it. The petitioners wife has stated in her affidavit : '... my husband.... is now under restraint and detained in the civil prison, Central Jail, Trivandrum. I state that this petition is filed by me at his instance'. Along with her petition she has filed an affidavit of her husband stating : 'The above application for the writ of habeas corpus is filed by my wife, Mrs. Annamma Kunjacko, at my instance... I am now detained in the civil prison in Trivandrum. I state that this court may be pleased to quash the order of the 1st respondent and direct that I be set at liberty forthwith.' Further, the assessee has filed a supplemental affidavit yesterday saying :
'... I crave leave (that this) may be treated as part of the affidavit of mine sworn to on instructions on 20th December, 1965.
Being then under detention in Trivandrum I could not give necessary and sufficient instructions to the counsel at Ernakulam.
I had instructed my wife, Mrs. Annamma Kunjacko, to give the necessary instructions and papers to counsel at Ernakulam and herself to file a petition for the relief among others that I be set at liberty.
I have perused the affidavit filed along with the original petition and the reply affidavits filed by her and I adopt all the allegations and contentions raised therein.
I reiterate that the petition and affidavit were filed by my wife at my instance.'
As has been indicated by the Supreme Court in Ranjit Singh v. State of Pepsu, too technical a view should not be taken in such matters when the complaint is of deprivation of a citizens personal liberty without the authority of law. In the light of the affidavits filed by the assessee himself in the case, we overruled the contention as unsubstantial.
In the light of our decision on the legality of the proceeding, the other contentions raised in this O. P. about non-compliance with the conditions set forth in the Act and the Rules become irrelevant and do not call for a decision one way or the other. We, however, make it clear that the authority of the respondents to take fresh steps according to law for the arrest and detention of the assessee for recovery of taxes assessed under the Indian Income-tax Act, 1922, for the years 1950-51 onwards is not in any way hampered by this judgment, which declares the assessees present detention illegal only because it is for a composite sum, for a part whereof the process is not available in law.
In view of our finding that as regards taxes assessed under the Travancore Income-tax Act, 1121, the assessee is not liable to be arrested or detained in civil prison for non-payment and that his arrest and detention as per the order dated December 16 and executed on December 17, 1965, have not the authority of law, the assessee, who is now before us as per bail granted earlier in this case, has to be released. The bail bonds are cancelled and the assessee is set at liberty forthwith.
In the circumstances of this case, we make no order as to costs.