# N. WANCHOO, C.J., R. S. BACHAWAT v. RAMASWAMI

- **Citation:** [1968] 2 S.C.R. 165
- **Court:** Supreme Court of India
- **Decided:** 1967-11-01
- **Case number:** Civil Appeal No. 809 of 1966
- **Bench:** K. N. Wanchoo, R. S. Bachawat, V. Ramaswami, G. K. Mitter, K. S. Hegde
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/n-wanchoo-c-j-r-s-bachawat-v-ramaswami-4303
- **Pages:** 8

## Headnote

{ncome,-..x Act (11 of 1922), s. 4\3)(xxi) and
Income-tax
Act
(43 of 1961), s. 10(26)-Exemption from. tax-Denied to government
servantS-C-lf violative of Art. 14 oj Constitution.
BOtb under s. 4(3).(xxi) of the Income-tax Act, 1922 and s. 10(26)
of 11\t Income-tax Act, 1961. income of the members of a scheduled
tribe ihcluded in Art. 366(25) of the Constitution and residing in· any
area specified in Part A or Part B of the Table appended to Paragraph
20 of the Sixth Schedule of the Constitution. excepting that of government servants, •is exempt from income-b\X. The respondent was. a mem·
ber of such a scheduled tribe ;esiding in such an area, but, as he was a
government servant, he was assessed to income-tax. · He challenged the
validity of the assessments and the High Court quashed the as'"'"Smcnts
holding that the two sections. to . the extent they excluded government
setvants from the benefit of th!' ex~ption given thereunder, were discriminatorv and therefore void.
'
In appeal to this Court.
HEID : The State has a wide discretion in selecting persons or
objects it will tax, but within the range of selection made by it for the
purpose of exemption, namely, among :members of cer:tain scheduled
tribes ·residing in specified areas, the law as stated in the two oections.
operates unequally and the inequality cannot be justified on the basis of
any valid classification. [168H; 1698-C)
·
(I") The classification of tribals into government servants and others
cannot be jiistified on the basis of administrative convenience viz.. that
it was easy to collect taxes from government servants, because. · · their
case does ·not stand on a different footing from that of the employees. in
statutory corporations or well-<:stablished tinm. U69F-OJ
(2) 1bcrc is no legislative practice or history treating government ·
servants as a separate class for purposes of income tax. Tiie reason for
making, in the past, persons in the service of the government of British
India serving outside British India subject to Indi.an income.tax. is not
I.bat 'their income was· treated in a manner different from that of· other
salaried. ofticers in those areas, but that the Indian Legislature .haif no
legislative competence to tax residents of those areas but had compe,
tence to tax the iiicome of person• in British Indian g0vernment service,
serving in those areas.
Further, the notificatiQn of 6th June 1890 under
which the inoome' earned by members of eertain scheduled tribes, other
than those Jn .. government setvice,. was exempt from income tax, and the
notification .of 21.st March 1922. under which income of certain indig:Q.OUS bill men, other than those in government service, was exempt
from tai. arc not sufficient to prove a .well-established' legislative practico.
Those notifications were issued at a time when the power of ·the legislature to grant or withhold any exemption from tax was not subject to
~y constitutional limitation.
aassificatio'n based on past
legislative
166
St;PREMll COURT REPORTS
[1968] 2 S.C.R.
practice a.nd his'?ry does not mean that because in the past the legislalurc
A
was enaclmg arb11rary laws 11 could do so now. ( l 70A; 17 lD-F]
(J) The s~ial status and economic resources of a government servant are ~ot different from that of anothe_r holding a similar position in
a corporat.Jon or that of a succe~ful medical praccitioner, lawyer, architect etc .. Thcref.orc, merely ~allc;e a tribal becomes a government servant .h~ 1s not lifted out of his social cnvironntent and assimilated into
the forward scclions of society. [I 72A-BJ
B
I -t) The portions of the two sc."C"tioas struck doY.n are ~verable from
the rest of the provision• in which I hey appear. f I 72E·F]

## Text

A.
S. K. DUITA, INCOME-TAX OFFICER & ORS.
B.
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v.
LAWRENCE SINGH INGTY
November 1, 1967
(K. N. WANCHOO, C.J., R. S. BACHAWAT, V. RAMASWAMI,
. G. K. MITTER AND K. S. HEGDE, JJ.]
{ncome,-..x Act (11 of 1922), s. 4\3)(xxi) and
Income-tax
Act
(43 of 1961), s. 10(26)-Exemption from. tax-Denied to government
servantS-C-lf violative of Art. 14 oj Constitution.
BOtb under s. 4(3).(xxi) of the Income-tax Act, 1922 and s. 10(26)
of 11\t Income-tax Act, 1961. income of the members of a scheduled
tribe ihcluded in Art. 366(25) of the Constitution and residing in· any
area specified in Part A or Part B of the Table appended to Paragraph
20 of the Sixth Schedule of the Constitution. excepting that of government servants, •is exempt from income-b\X. The respondent was. a mem·
ber of such a scheduled tribe ;esiding in such an area, but, as he was a
government servant, he was assessed to income-tax. · He challenged the
validity of the assessments and the High Court quashed the as'"'"Smcnts
holding that the two sections. to . the extent they excluded government
setvants from the benefit of th!' ex~ption given thereunder, were discriminatorv and therefore void.
'
In appeal to this Court.
HEID : The State has a wide discretion in selecting persons or
objects it will tax, but within the range of selection made by it for the
purpose of exemption, namely, among :members of cer:tain scheduled
tribes ·residing in specified areas, the law as stated in the two oections.
operates unequally and the inequality cannot be justified on the basis of
any valid classification. [168H; 1698-C)
·
(I") The classification of tribals into government servants and others
cannot be jiistified on the basis of administrative convenience viz.. that
it was easy to collect taxes from government servants, because. · · their
case does ·not stand on a different footing from that of the employees. in
statutory corporations or well-<:stablished tinm. U69F-OJ
(2) 1bcrc is no legislative practice or history treating government ·
servants as a separate class for purposes of income tax. Tiie reason for
making, in the past, persons in the service of the government of British
India serving outside British India subject to Indi.an income.tax. is not
I.bat 'their income was· treated in a manner different from that of· other
salaried. ofticers in those areas, but that the Indian Legislature .haif no
legislative competence to tax residents of those areas but had compe,
tence to tax the iiicome of person• in British Indian g0vernment service,
serving in those areas.
Further, the notificatiQn of 6th June 1890 under
which the inoome' earned by members of eertain scheduled tribes, other
than those Jn .. government setvice,. was exempt from income tax, and the
notification .of 21.st March 1922. under which income of certain indig:Q.OUS bill men, other than those in government service, was exempt
from tai. arc not sufficient to prove a .well-established' legislative practico.
Those notifications were issued at a time when the power of ·the legislature to grant or withhold any exemption from tax was not subject to
~y constitutional limitation.
aassificatio'n based on past
legislative
166
St;PREMll COURT REPORTS
[1968] 2 S.C.R.
practice a.nd his'?ry does not mean that because in the past the legislalurc
A
was enaclmg arb11rary laws 11 could do so now. ( l 70A; 17 lD-F]
(J) The s~ial status and economic resources of a government servant are ~ot different from that of anothe_r holding a similar position in
a corporat.Jon or that of a succe~ful medical praccitioner, lawyer, architect etc .. Thcref.orc, merely ~allc;e a tribal becomes a government servant .h~ 1s not lifted out of his social cnvironntent and assimilated into
the forward scclions of society. [I 72A-BJ
B
I -t) The portions of the two sc."C"tioas struck doY.n are ~verable from
the rest of the provision• in which I hey appear. f I 72E·F]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 809 of
1966.
Appea! by special leave from the judgment and order dall!d
c
February 13, 1965 of the Assam and Nagaland High Court in
Civil Rule No. 127 of 1963.
Niren De, Solicitor-General, A. N. Kirpa/, S. P. Nayar for
R. N. Sachthey for the appcl!ants.
M. C. Setalvad and D. N. Mukherjee, for the respondent.
D. M. Sell, Advocate-General for the State of Nagaland, A. R.
Barthakur and R. Gopa/akrishnan, for the intervener.
The Judgment of the Court was delivered by
Hegde, J.. The only question that arises for decision in this
appeal is whether the eiu:lusion of the government servants from
the exemption given under s. 4(3)(;u:i) of the Indian Income
Tax Act, 1922 and later on under s. 10(26) of the Income Tax .
Act, 1961 is violative of Art. 14 of the Constitution.
For our
present purpose it may be taken that the said two provisioll~ arc
similar.
The respondent who is a government servant serving in the
State of Assam has been assessed to income tax for the assessment
years 1959-60, 1960-61, 1961-62 and 1962-63. He challenged
the legality of his assessments in civil rule No. 127 of 1963 on
the file of the High Court of Judicature of Assam. The Assam
High Court accepted his petition and quashed the as=ents in
question holding that s. 4 ( 3 )( xxi) of the Indian Income tax Act,
1922 as well ass. 10(26) of the Income Tax Act, 1961 to the
extent they excluded gov~mment servants from the benefit of the
exemption given thereunder are void. The income-tax authorities
as well a~ the Union of India have come up to this Court in appeal
by special leave.
The facts of this case lie within a narrow compass. The respondent \:lclongs .to Mikir Scheduled Tribe and is a permanent
inhabitant of United Khasi-Jainti:t Hills District, an autonomous
District included in Part 'A' of the Table appended to Paragraph
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I.T.O. l', LAwRENCE SINGH (Hegde, l.)
. 16';;
A · 20 of the. Sixth Schedule of the Constitution of India. He -is a
government servant.
All ihese are admitti:d facts.
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The respondent in his petition before the High Court averred
(in para. 7 ()f the petition) that "in all the autonomous disrricb
under Table, Part_ A of paragraph 26 of the 'Sixth Schedule of
the· Constitution of India, there are a large number of persons
belonging to Scheduled Tribe who derive considerable income
from trade, commerce and business and other sources and employments and immovable properties . . . ". In the return filed
by the_ appellants those allegations were not denied.
Adverting
to those allegations this is what was stated in the. affidavit ..filed
by. Shri S. K. Dutta,, Income-tax Officer (the first appellant in the
appeal):
"With reference to the statements made in paragraph 7 of the petition I say that the petitioner being a
~overnment servant his case stands on a different footmg other than the general public of the Scll.eduled
Tribe.-"
It ,may be remembered till 15-8-47, Khasi anti J-aintia-iHll!s.
were not parts of British. India. They were under native $$ates.
They merged with British India only after this country got inde--
pendence. Till their metger, none of the Indian laws applied to
those areas. .The Finance Act of 1955 incorporated into the
Indian Income Tax Act, 1922, s. 4(3) (xxi). The relevant portion
of s. 4(3) reads thus :
4{3). "Any income profits, or gains falling within
the following classes shall not be included in the total
income of the person receiving them . . . "
(xxi). "Apy income of a.member of a Scheduled
Tribe, as defined in clause (25) of Article 366 of the
Constitution, residing in any area specified in Part A
or Part B of the table appended to paragraph 20 of the
Sixth Schedule to ihe Constitution, provided that such
member is not in the service of Government."
Sec. 10(26) of the Income tax Act of 1961 which corresponds to
s. 4(3)(xxi) of the Indian Income Tax Act, 1922, J·eads thus :-
"In the case of a member of a Scheduled Tribe as
defined in clause (25) of Article 366 of the Constitution,
residing in any area specified in Part A or Part B of the
Table appended to paragraph 20 of the Sixth Schedule to
the Constitution or in the Union Territories of Manipur
and Tripura, who is not in the service of Government.
any income which accrues or arises to him, (a) from any
1
source in the area or Union Territories aforesaid or
(b) by way of dividend or interest on securities~"
SUPREME COURT REPORTS
(1968) 2 S.C.R.
Part of the impugned ~essments were made under the Indian
.Income Tax Act, 1922 and the rest, under the Income Tax Act,
1961. If the aforementioned provisions are valid, then the assessments in question arc beyond challenge.
Therefore the only question for decision is whether the legislature had.no power to exclude
·the government servants from the benefit of the exemptions given
under the aforementioned ss.4(3) (xxi) and 10(26).
It is seen that the income of the members of a scheduled tribe
included in cl. 25 of Art. 366 of the Constitution and residing in
any area specified in Part A or Part B of the Table appended to
.Paragraph 20 of the Sixth Schedule of the Constitution, excepting
that of government servants is exempt from income tax.
In
·Other words, the government servant alone is excluded from the
benefit of the exemption given under the provisions quoted above.
It is agreed that the respondent is a member of the scheduled tribe
included in cl. 25 of Art. 366 of the Constitution, residing in an
,area specified in Part A of the Table appended to para. 20 of the
Si:tth Schedule to the Constitution, but yet he bad been denied
the benefit of the e:temption in question on the sole ground that
he is in the service of the government.
It may be noted that
.exemption both under s. 4(3)(xxi) of the Indian Income Tax Act,
1922 and under s. I 0(26) of the Income Tax Act, 1961 was given
to the members of certain scheduled tribes.
For the purpose of
.of the exemption in question the classification wa~ made on the
basis of persons being members of a particular tribe. That being
so, some of the members of that tribe cannot be excluded from the
benefit of those provisions unless they can be considered as belonging to a well defined class for the purpose of income. 1ax. The
respondent's con1ention which has be.en accepted by the High
Court is that the government servants cannot be considered as a
-separate class for the purpose of income tax. On the other hand
it is contended on behalf of the Department that the classification
made is a reasonable one, taking into consideration administrative
convenience as well a~ the past legislative practice and history.
It is not in dispute that ta:tation laws must also pass the test
of Art. 14. That has been laid down by this Court in Moopil Nair
v. State of Kera/a('). But as observed by this Court in East India
Tobacco Co. v. State of Andhra Pradesh('), in deciding whether
a taxation law is discriminatory or not it is necessary to bear in
mind that the State has a wide discretion in selecting persons or
·objccli it will tax, and that a statute is not open to attack on the
ground tjlat it ta:tes some persons or objects and not others; it is
<>nly when within the range of its selection, the law operates un-
~I) (1961} 3 S.C.R. 77.
(2} [1963} I S.C.R. 404, 409.
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l.T.O. v. LAWRENCE SINGH· (Hegde, !.)
169
equally, and that cannot be just!fied. on, the basis of an~ valid.
classification, that it would be v10lallve of Art. 14. It 1s well
settled that a State does not have to tax everything in order to tax
something.
It is allowed to pick and choose districts, objects,
persons, methods and even rates for taxation if it does so reasonably.
The complaint in this case is that within the range of the selection made by the State for the purpose of exemption, namely,
members of certain scheduled tribes residing in specified areas, the
law operates unequally and the inequality in question cannot be
justified on the basis of any valid classification.
There can be no distinction between the income earned bv
a government servant a.nd that earned by a person serving in a
company or under a private individual.
More or less similar is
the case in respect of the income earned by persons practising one
or more of the professions. Admittedly the income earned by the
members of the scheduled tribes residing in Khasi-Jaintia Hills
excepting in the case of government servants is exempt from income tax be it as. salaried officers, lawyers, doctors or persons in
other walks of life.
Is there any legal basis for this differentiation '?
Prima facie it appears that the government servants have·
been discriminated against and the discrimination in question i•
writ large on the face of the provisions in question.
The learned Solicitor-General contended that the classification in question can be justified on administrative grounds.
He
urged that a classification based on administrative convenience i~
a just classification in the matter of levying taxes.
According to
him it is easy to collect taxes from government servants. Therehre, it was
permissible for the legislature to deny
them the
exempiion extended to the other members of their tribes.
This
contention appears to be without merit.
It may be that for the
purpose of taxation a classification can be made on the basis of
administrative convenience.
But we fail to see how the case "f
the government servants stands on a footing different frolh that
of the employees in statutory corporations or even well recognised
firms.
That apart, administrative convenience which can afford
a just basis for classification must be a real and substantial one.
We see no such administrative convenience.
The learred Solicitor-General, next contended that the classification can be iustified
on the basis of past legislative practice and history. In this connection he invited our attention to the fact that before this country
got independence, the income of the persons in the service of the
government but serving outside British India such as in Baluchistan, or native States was subject to tax under th~ Indian lncomc
Tax laws though other persons residing in those places were not
subject' to the income tax .laws in force
in Briti>h India.
The
LlfJ Slip Cl.167~12
170
SUPREME COURT REPORTS
( 1968] 2 S.C.R.
reason for the same is that the Indian legislature had no legislative
competence to tax the residents of those areas, but it had compdence to tax the income of the persons in government service
dtough they might be serving outside British India.
The learned Solicitor-General next invited our attention to a
notification issued by the Government of India as long back as
6-6-1890, under which the income earned by members of certain
scbcduled tribes other than those ·serving under the government
was exempted from income tax. He also invited our attention to
Finance department Notification No. 788F dated 21-3-1922 under
which the income of indigenous hill men other than persons in
the service of government, residing in certain areas were exempt
from tax.
On the basis of those notifications, he wanted us to
spell out a well recognised legislative practice and history under
which the government servants as a .class were excluded from the
benefit of income tax exemption extended to other persons similarly situated. In this connection, he placed reliance on the decision of this Court in Naro/tam Kishore Dev Varma and Ors. v.
Union of .India and Aoorher('). Therein this Court was called
upon to consider the validity of s. 87B of the Code of Civil
Procedure which prescribed that a Ruler of a former Indian State
cannot be sued in any court otherwise competent to tfy the suit
except with the consent of the Central Government certified in
writing by a Secretary to the Government. The validity of that
provision was challenged on the basis of Art. 14. This Court upheld the validily of that provision having regard to the /egislative
and historical background of that provision, but at the same time
observed that considered in the light of basic principles of equality
before law, it would be odd to allow the section to continue prospectively for all time lo come.
After setting out the legislative
background of that provision, this Court observed :
"The legislative background to which we have referred cannot be divorced
from the historical
background which is to be found for instance, in Art. 362.
This Article provides that in the exercise of the power
of Parliament or of any legislature of any 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 clause (I) of Art. 291
with respect to the personal right~. privileges and dignities of a Ruler of an Indian State. This has reference
to the covenants
and agreements
which
had
been
entered into between the Central Government and the
Indian Princes before all the Indian Stales were politi-
(1) [1964) 7 S.C.R. SS.
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I.T.O. V. LAWRENCE SINGH (Hegde, J.)
171
cally completely
assimilated with the rest of India.
The privilege conferred on the Rulers of former Indian
States has its origin in these agreements and covenants.
One of the privileges is that of extra territoriality and
exemption from civil jurisdiction except with the sanction of the Central Government.
It was thought that
the privilege which was claimed by foreign Rulers and
Rulers of Indian States prior to the independence of the
country should be continued even after independence
was attained and the States had become part of India,
and that is how in 1951, the Civil Procedure Code was
amended and present sections 86, 87, 87A and 87B
came to be enacted in the present form."
In the background set out above this Court upheld the validity
of s. 8 7B of the Code of Civil Procedure.
We know of no legislative practice or history treating the government servants as a separate class for the purpose of income
tax. The government servants' income has all along been treated
in the same manner as the income of other salaried officers. We
· do not know under what circumstances the notifications dated
6-6-1890 and 21-3-1922, referred to earlier, came to be issued.
But they are insufficient to prove a well established legislative
practice. At the time those notifications were issued the power
of the legislature to grant or withhold any exemption from tax
was not subject to any constitutional limitation. Hence the validity of the impugned provisions cannot be tested from what our
legislatures or governments did or omitted to do before the Constitution came into force.. If that should be considered· as a true
test then Art. 13(1) would become otiose and most, if not all, of
our constitutional guarantees would lose their content.
Sri
Setalvad learned counsel for the respondent is justified in his comment that classification based on past legislative practice and history does not mean that because. in the past the legislature was
enacting arbitrary laws it- could do so now.
It was the contention of the learned Solicitor-General that exemption from income tax was given to members of certain scheduled tribes due to their economic and social backwardness; it is
not possible to consider a government servant as socially and eco·
nomically backward and hence the exemption was justly denied to
him. According to the Solicitor-General, once a tribal becomes a
government servant he -is lifted out of his social environment and
assimilated into the forward sections of the society and therefore he needs no more any crutch to lean on.
This argument
,appears to us to be wholly irrelevant. The exemption in ques-
' tion was not given to individuals either on the basis of their social
status or economic resources.
It was given to a class.
Hence
172
SUPREME COURT REPORTS
(1968] 2 S.C.R.
individuals as individuals do not come into the picture.
We fail
to see ia what manner the social status and economic resources
of a government servant can be different from that of another
holding a similar position in a corporation or that of a succcssf ul medical practitioner, lawyer, architect, etc. To over-paint the
picture of a government servant as the embodiment of all power
and prestige would sound ironical.
Today his position in
the
society to put it at the highest is no higher than that of others who
in other walks of life h:ive the ~ame income.
For the purpose of
valid classification what is required is not some imaginary difference but a reasonable and substantial distinction having regard
to the purpose of the law.
It was lastly contended by the learned Solicitor-General-a
contention which was not taken either in the return or before the
High Court or in the appeal memo.-that it is not possible to strike
down only a portion of s. 4(3) (xxi) of the Indian Income Tax Act.
1922 and s. I 0(26) of the Income Tax Act, I 961, namely, the
words "provided that such member is not in the service of government"' found ins. 4(3)(xxi) of the Indian Income Tax Act, l 922
ar .. '. the words "who is not in the service of government" in s.
I 0(26) of the Income Tax Act, 1961. as those words arc not severable from the rest of the provisions in which they appear. Further
according to him it cannot be definitely predicated that the legislature would have granted the exemption incorporated in those
provisions without the exception made in the case of government
servants. Therefore if we hold that those provisions as they stand
arc violative of Art.
14 then we must strike down the aforementioned ss. 4(3)(xxi) and 10(26) in their entiretv.
We .1rc unable
to accept the contention that the words mentioned above are not
severable from the rest of the provision in which they appear. They
arc easily severable. Taking into consideration the reasons which
persuaded the legislature to grant the exemption in question we
have no doubt that it would have granted that exemption even if
it was aware of the fact that it was beyond its competence to exclude the government 'ervants from the exemption in question.
For the reasons mentioned above this appeal is dismissed with
cost;.
V.P.S.
Appeal dismi.1sed.
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