DATE OF JUDGMENT:  28/07/1969





 1970 AIR  385  1970 SCR  (1) 678

 1969 SCC  (2) 351


 R             1972 SC2427      (9)

 RF          1980 SC2181      (104)

 C             1984 SC  87         (21)

 R             1987 SC1399      (18)

 R             1987 SC2239      (8)

 R             1988 SC1263      (10)

ACT:      Income-tax Act,  1961, s. 2(44)---Definition  of   Tax Recovery  Officer in section amended by s. 1 of Finance   Act 1963-- Notification            under   section   extending definition--Certain   revenue  officials  including   Taluka Tehsildar brought within definition--Such Notification being executive     act    cannot    be    given     retrospective effect---Subordinate  legislation  cannot   ordinarily  be retrospective.


      By a notification dated August 14, 1963, issued by the  State  of  Kerala  the Taluka Tehsildar was  authorised  to exercise  the  powers of a Tax Recovery        Officer  under  the Income-tax  Act, 1961. The notification was  made  effective from  April  1962.  The shares of the assessee, who  was  in arrears  of  his income-tax, were. attached  by the  Taluka Tehsildar after April 1, 1962 but prior to August 14,  1963.

A  petition  under Art. 226 of the  Constitution  was  filed challenging  the,  action of the Tehsildar. The  High  Court  held  that  the notification empowering  the  Tehsildar  to exercise   the powers of  a  Tax  Recovery  Officer  with retrospective  effect was invalid and  consequently  quashed the  attachments.   This view was affirmed by  the  Division Bench in appeal.  Dismissing the appeal by the Revenue, this Court,

    HELD: The courts will not ascribe retrospectivity to new laws  affecting rights 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  in  express  terms  or  by necessary  implication empower the authority  concerned  to make  a rule or 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  rule,  regulation   or bye-law   which can operate with  retrospective  effect.

[681 F--H]

      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-cl. (ii) of cl. (44) of s. 2 of  the  Income-tax Act,  1961 is more of an executive than a  legislative act. [682 B]

      Dr.  Indramani  Pyarelal Gupta v.W.R.  Nathu  &            Ors. [1963]  1 S.C.R. 721, Strawboard Manufacturing Co.  Ltd.  v. Gutta Mill Workers [1953] S.C.R. 439, followed.   Phillips v. Eyre, 40 Law L Rep. (N.S.) Q.B. 28 at  p. 37, referred to.

      Modi  Food Products Ltd. v. Commissioner of  Sales-tax U.P.A.I.R. [1956] All. 35, India Refineries Ltd. v. State of Mysore, A.I.R. 1960 Mys. 326 and General 8. Shivdev Singh  &  Anr.  v,  The  State of Punjab &  Ors.[1959] P.L.R. 514, approved.

      By  saying  that  new  definition  of  "Tax   Recovery Officer"  substituted  by  s. 1 of the Finance  Act,  1963, "shall  be  and  shall  be  deemed  always  to  have been substituted"  was to make the new definition a part  of  the income   Tax  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 retrospective authorisation by the  State  re. the absence of any express provision in s. 2(44) of the  Income-Tax Act itself. [682 G]

    B.S.  Vadera  etc. v. Union of India & Ors.    [1968]   3 S.C.R.    575, distinguished. 


    CIVIL  APPELLATE JURISDICTION:  Civil Appeals  Nos. 942 and 943 of 1966.     Appeals  by   special leave from the judgment  and  order dated june 18, 1965 of the Kerala High Court in Writ Appeals Nos. 139 and 140 of 1964.     Jagdish Swarup, Solicitor-General, T.A. Ramachandran and D. Sharma, for the appellant (in both the appeals).  S.T.  Desai, M.C. Chacko, A.K. Verma,  J.B. Dadachanji, and O.C. Mathur, for respondent No. 1 (in C.A. No.  942 of 1966).

    A.G.  Pudissery, for respondents Nos. 2 and 3  (in C.A. No. 942 of 1966).

    J.B.  Dadachanji, for respondents Nos. 1 and 2 (in C.A. NO. 943 of 1966).    A.G.  Pudissery, for respondents Nos. 7 and 8  (in C.A. No. 943 of 1966).     The Judgment of the Court was delivered by

    Grover, J. 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 Taluka 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.

    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  had been attached, sold for satisfaction of the income tax      dues of the assessee.

    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.   Section 2(44)  defined the expression "Tax Recovery Officer" in the following. terms:--

                  "Tax Recovery Officer' means--

                  (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 gazetted 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  aTax Recovery Officer".

                Section  4  of  the  Finance Act,  1963  substituted  a  new definition  for        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                   definition was as follows:

                  "Tax Recovery Officer" means--

                  (i) a Collector or an additional Collector;

                  (ii)  any    such officer empowered to.  Effect  recovery of arrears of land

revenue or  other 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, by general or   special  notification  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  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 bysub-clause  (ii)  of  clause  (44)  of s. 2 of the Act read with sub-rule  (2)  of rule  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.

    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(1) --"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 rights  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  recognized 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 in  express  terms or by necessary implication empower     the authority  concerned  to  make a  rule     or  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. lndramani Pyarelal Gupta  v.  W. R. Nathu & (1) 40 Law  J.Rep.(N.S.) Q.B. 28 at p. 37.

Others(1)—the majority not having expressed any  different opinion    on   the  point;  Modi  Food   Products   Ltd.   v. Commissioner   of Sales Tax U.P.(2); India Sugar  Refineries Ltd.  v. State of Mysore(3) and General S. Shivdev  Singh  & Another v. The State of Punjab & Others(4).

    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(5)  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 Taluka   Tehsildar  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.

    It may next 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  or intendment the State  Government  had    been authorised   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. 8. vadera etc., v. Union of India & Others(1) 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 whereas 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  welt  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.

Y.P.                      Appeals dismissed.

(1) [1968] 3 S.C.R. 575.