# 1 S.C.R. SUPREME COURT REPORTS 77(;1 SRI SUDHANSU SHEKHAR SINGH DEO v. THE STATE OF ORISSA. AND ANOTHER - **Citation:** [1961] 1 S.C.R. 779 - **Court:** Supreme Court of India - **Decided:** 1961 - **Case number:** Civil Appeals Nos. 307 to 309 of 1958 - **Bench:** S. K. Das, M. Hidayatullah, K. c. DAS GUPTA J.C. SHAH a.nd N. RAJAGOPALA AYYANGAR - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1-s-c-r-supreme-court-reports-77-1-sri-sudhansu-shekhar-singh-deo-v-the-state-2226 - **Pages:** 9 ## Headnote Agricultural Income Tax-Ex-Ruler of Indian State-Exemption from taxation-Claim based on agreement. of merger-Whether justiciable-Definition of" person "-Whether excludes "Ruler"- Orissa Agricultural Income-tax Act, I947 (Orissa z4 of r947), ss. z(i), 3-Constitution of India, Arts. z9z, 36z, 363. On December 15, 1947, the Ruler of the erstwhile State of Sonepur, the appellant, executed a merger agreement whereby the Government of India acquired full sovereign rights over the territory of the State, but ownership and full enjoyment of private properties belonging to the appellant and the personal rights, privileges, .dignities etc., enjoyed by him immediately before Au3ust 15, 1947, were guaranteed to him under Arts. 4 and 5. On July 27, 1949, the Gov-ernor-General of India issued an order providing that the 'merged Orissa States including the State of Sonepur shall be administered in all respects as if they formed part of the Province of Orissa. The Orissa Agricultural Income-tax Act, 1947, had in the meantime been enacted by the Legislature of the Province of Orissa and by virtue of an Ordinance promulgated by the Governor of Orissa on Decemoer 30, 1949, the Act became applicable to the merged Orissa States. Section 2(i) of the Act defined a "person " as inclusive of a Ruler of an Indian State, but by the Adaptation of Laws Order, . 1950, reference to Rulers of Indian States was deleted as from January 26, 1950. The appellant contended that he was ·not liable to be assessed to tax on agricultural income under the provisions of the Act because (I) as a Ruler of the State of Sonepur, he was, before merger of his State, immune from liability to taxation in respect of his private property and that his immunity from taxation was guaranteed by Arts. 4 and 5 o[ the agreement of merger; and (2) that by virtue of the amendment of s. 2, cl. (i), of the Act, he was not a "person" within the meaning of the Act and therefore he was not liable to pay agricultural incom~-tax. Held: (1) that the amendment in the definition of "person" · in s. 2, cl. (i), of the Act was made ncn \fith the object of excluding the Rulers of former Indian States from liability to pay tax, but only to delete a clause which in view of political changes' which had taken place since the Act was enacted had no practical significance. The appellant could not claim exemption from taxation on the ground that he was not a "person", in the absence of an. express exemption clause in the Act, r960 September ax. 780 SUPREME COURT REPORTS (1961] 1960 (2) that the privileges guaranteed by Arts. 4 and 5 of the agreement of merger were only personal privileges of the appelSudh~nsu !ant as an ex-Ruler and that these privileges did not extend to )hekhar Singh Deo his private property. v. Stale of Omsa Vishweshwar Rao v. The Stale of Madhya Pradesh, (19.52) S.C.R. 1020, followed. Shah]. (3) that the claim made by the appellant of immunity from taxation relying upon the agreement of merger was not justici- . able. ## Text 1 S.C.R. SUPREME COURT REPORTS 77(;1 SRI SUDHANSU SHEKHAR SINGH DEO v. THE STATE OF ORISSA. AND ANOTHER (S. K. DAS, M. HIDAYATULLAH, K. c. DAS GUPTA J.C. SHAH a.nd N. RAJAGOPALA AYYANGAR, JJ.) Agricultural Income Tax-Ex-Ruler of Indian State-Exemption from taxation-Claim based on agreement. of merger-Whether justiciable-Definition of" person "-Whether excludes "Ruler"- Orissa Agricultural Income-tax Act, I947 (Orissa z4 of r947), ss. z(i), 3-Constitution of India, Arts. z9z, 36z, 363. On December 15, 1947, the Ruler of the erstwhile State of Sonepur, the appellant, executed a merger agreement whereby the Government of India acquired full sovereign rights over the territory of the State, but ownership and full enjoyment of private properties belonging to the appellant and the personal rights, privileges, .dignities etc., enjoyed by him immediately before Au3ust 15, 1947, were guaranteed to him under Arts. 4 and 5. On July 27, 1949, the Gov-ernor-General of India issued an order providing that the 'merged Orissa States including the State of Sonepur shall be administered in all respects as if they formed part of the Province of Orissa. The Orissa Agricultural Income-tax Act, 1947, had in the meantime been enacted by the Legislature of the Province of Orissa and by virtue of an Ordinance promulgated by the Governor of Orissa on Decemoer 30, 1949, the Act became applicable to the merged Orissa States. Section 2(i) of the Act defined a "person " as inclusive of a Ruler of an Indian State, but by the Adaptation of Laws Order, . 1950, reference to Rulers of Indian States was deleted as from January 26, 1950. The appellant contended that he was ·not liable to be assessed to tax on agricultural income under the provisions of the Act because (I) as a Ruler of the State of Sonepur, he was, before merger of his State, immune from liability to taxation in respect of his private property and that his immunity from taxation was guaranteed by Arts. 4 and 5 o[ the agreement of merger; and (2) that by virtue of the amendment of s. 2, cl. (i), of the Act, he was not a "person" within the meaning of the Act and therefore he was not liable to pay agricultural incom~-tax. Held: (1) that the amendment in the definition of "person" · in s. 2, cl. (i), of the Act was made ncn \fith the object of excluding the Rulers of former Indian States from liability to pay tax, but only to delete a clause which in view of political changes' which had taken place since the Act was enacted had no practical significance. The appellant could not claim exemption from taxation on the ground that he was not a "person", in the absence of an. express exemption clause in the Act, r960 September ax. 780 SUPREME COURT REPORTS (1961] 1960 (2) that the privileges guaranteed by Arts. 4 and 5 of the agreement of merger were only personal privileges of the appelSudh~nsu !ant as an ex-Ruler and that these privileges did not extend to )hekhar Singh Deo his private property. v. Stale of Omsa Vishweshwar Rao v. The Stale of Madhya Pradesh, (19.52) S.C.R. 1020, followed. Shah]. (3) that the claim made by the appellant of immunity from taxation relying upon the agreement of merger was not justici- . able. CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 307 to 309 of 1958. Appeals from the judgment and order dated August l, 1956, of the Orissa High Court in 0. J. C. Nos. 16, 19, 137 a.nd 61 of 1954. G. B. Aggarwala and P. G. Aggarwala, for the a.ppella.nt (In C. As. Noe. 307 to 309 of 58). . N. G. Chatterjee, J. H. Umrigar a.ad T. M. Sen, for the respondents (In a.II the a.ppea.Ie). 1960. September 21. The Judgment of the Court wa.e delivered by SHAH J.-Thie is a group of three appeals filed with certificate of fitneSB under Art. 132 of the Constitution issued by the High Court of J udioa.ture, Jrissa.. The Legislature of the Province of OriSBa. enacted the Orissa. Agricultural Income-tax .Act XXIV of 1947-hereina.fter referred to a.s the Aot,-provi2 anq 1952-1>3 to pay agricultural income-tax, and they oanoelled the order of a.s86811 ment in reapeot of the year 1949-60 and the orders imposing penalty in respect of years 1949-50 and \: ·,-,I \ . 1 S.C.R. SUPREME COURT REPORTS 783 1950-51. Against the orders. dismissing the applica196• tions for setting aside the assessments in respect of s.tdhansu years 1950-51, 1951-52 and 1900-53, these appeals Sltehh• s;,.1i D••. have been. preferred with certificate granted by the · v. High Court under Art. 132 of thfl Constitution. . Sl•I• •f o,;,.. The appellant was undoubtedly the Ruler of e.n Indian State before August 15, 1947, but by reason of the merger agreement executed by him ·on December 15, UU7, his eovereignty was extinguished. By Art. I of tohe t.erml of the merger. agreement, the appellant ceded to the Dominion of India full and exclusive authority, jurisdiction and power for and in relation to the governance of the State and agreed to transfer the administration of the State on the appointed day and as from the said day, the Dominion Government bees.me competent to exercise the power, authority and jurisdiction in relation to the governance of the State in such matters and through such agency as the Government thought fit. By Art. 3, the appellant remained entitled to full ownership, use and enjoyment of all private properties (but not of the State pro~tf,ie~) belonging to . him on the da.te of the mer~~ 1.By Art. 5, the Dominion Government gua. ranteed the succession according to law and custom-. to the gadi of the State and to the personal rights, privileges, dignities and titles of the appellant. It wu provided by Art. 4 that "the Raja, the Rani, the· Rajmata, the Yuvraj& and the Yuvrani shall be entitled to all personal privileges enjoyed by them whether within or outside the territories of the State, immediately before the 15th day of August, 1947 ". · The appellant contends that as a Ruler of the State of Sonepur, he. was, before merger of his State, immune from liability to taxation in respect of hie private property both within hie territory and out.aide. He claims that he was so immune in respect of hie p~operty within ~is State as a Ruler and'in respect of bJB property outside the State by the. rules of Inter. national Law which, he submits, protect from taxation the properties of a Ruler 6f a State, situate in a foreign State. The appellant says that by Arts. 4 and 5, the Dominion Government guaranteed to him all 784 SUPREME COURT REPORTS [1961] r96o his personal rights, privileges, dignities anq titles 5 dh enjoyed within or without the territory immediately 5;,,0 :, ;;~;,. 0 , 0 before the 15th August, 1947, and that any atfempt v. to tax his private property hy the St&te of Orissa or Sl•I• of Orissa by the Union Government violates that guarantee. Shah ]. The appellant submits that to give effect to this guarantee, all legislation must be interpreted ·in the light of the merger agreement which he claims is incorporated in Art. 362 of the Constitution and he must he held exempt from liability to pay tax even thouga no express provision in that behalf has been made by the Legislature. In our view, there is no force in the contentions raised by the appellant. The privileges guaranteed by Arts. 4 and 5 a.re personal privileges of the appellant as an ex.Ruler and those privileges do not extend to his personal property. In dealing with a similar contention raised on the interpret&tion of Art. 4 of the merger agreement entered into by the Ruler of Khaire.garh (which was in material terms identical with the terms of Art. 4 of the agreement executed by the appellant), S. R. Da.s, J., (as he then was), observed in Visweshwar Rao v. The State of Madhya Pradesh('): "The guarantee or assure.nee to which due regard is to be had is limited to persona.I rights, privileges and dignities of the Ruler qua a Ruler. It does not extend to persona.I property which is different from personal rights". The Act imposes on the agricultural income of "every person " liability to p&y agriculture.I incometax. By the proviso to s. 3, agriculture.I income of the Central Government, State Govf\rnment and of .local authorities is exempt from tax, but this exemp• tion is not extended to any other body or person. It is true that in the definition of the expression " person " as originally enacted in s. 2, ol. (i), e. Ruler of an Indian State was expressly included and by the Adapt&tion of Laws Order, 1950, reference to Rulers of Indian Sta.tee was deleted a.Ii from January 26, 1950. But by that amendment, an intention to exclude the Rulers of Indian States from liability to pay (1) [1952) S.C.R. 1020, 1054. I S.C.R. SUPREME COURT REPORTS 785 agricultural income-tax was, in our judgment, not '960 evinced. Between the da~es on which the Act was Sudhansu enacted and the Adaptat10n of Laws Order, 1950, Shekha. Singh Dn several political events of far reaching effect had v. taken place, in consequence of which· the appellant State of O>issa had ceased to he a Ruler of an Indian State. On January 26, 1950, the date on which the Adaptation of Laws Order, 1950, became operative, there were in existence no Indian States. The sovereign rights of the erstwhile Rulers of the Indian States were extinguished, and their territories were merged in the Indian Union. The amendment in the definition of "person " in s. 2, cl. (i), of the Act was made not with the object of excluding the Rulers of former Indian States from liability to pay tax : it was only made to delete a clause which, in view of political changes, had no practical significance. Liability to pay tax is imposed by the Act and there is in the Act no express· exemption in favour of .. the appellant. The claim of the appellant to exemption on the ground that he is not a "person" cannot therefore be sustained. Article 362 of the Constitution provides : "In the exercise of the power of Parliament or of the Legislature· of a State to make laws or in the exercise of the executive power of the Union or of a State, due regard shall be had to the guarantee or assurance given under any such covenant or agreement as is referred to in Art. 291 w;th respect to the personal rights, privileges and dignities of the Ruler of an Indian State". • Article 291 of the Constitution deals with the privy purse of the Rulers under any covenant or, agreement entered into by the Ruler of any Indian State before the commencement of the Constitution payment whereof is free from tax as has been granted or assured by the Government of the Dominion of India. Article 362 recommends to the Parliament an_£ ln.dian State~ before the co~meneom.rr~t Shtkha' Srngh Dco of the Const1tut10n whereby t hA uer