LexHUKUMCHAND MILLS LID. versus THE STATE OF MADHYA BHARAT AND ANOTHER
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6 S.C.R. SUPREME COURT REPORTS 857 possession, showing a rational relation between the differ- 1964 1ential treatment and the classification and has also not State of Madlqfi, placed any material before the Court throwing light on the Pradult v. question whether the continuance of the tax was justified : Bhopal s,,,., it merely chose to plead its case as on a demurrer. Both lndunriu the State and the Company have by inadequate appreciation Shah 1. of the true position in law contributed to the manner in which the trial of the petition has proceeded. We would in the circumstances not be justified in dismissing the peti· tion on a technical view of the burden of proof. , We think that this is a case in which the iparties should be given an opportunity to plead their respective cases adequately and to go to trial after the requisite evidence which has a bearing is brought before the Court. We accordingly allow the appeal, set aside the order and remand the case for retrial to the High Court. The High Court, will, if the Company so desires, give oppor· tunity to the Company to amend its petition .so as to adequately iplead its case of infringement of the fundamental right to equal protection of the laws supported by necessary particulars. The High Court will also give opportunity to the State to file its affidavit in reply and to place all such materials as it may rely upon the plea set up by the Com- 1>any. After the pleadings are completed and the evidence is brought on the record, the High Court will proceed to decide the case according to law. Costs in this Court will be the costs in the petition before the High Court. Appeal allowed. HUKUMCHAND MILLS LID. v. 1HE STATE OF MADHYA BHARAT AND ANOTHER (P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, K. c. DAS GUPTA, J.C. SHAH AND N. RAJAGOPALA AYYANGAR JJ.) fudustrial Tax-Assessment under the Tax Rults-A.mendment- Yalidity-AsJtnm•nt under the old law if validated by the Yal1dat- in1 Act-Validating Act if, hit b1 Art. 14-lndore Industrial T~ 1964 February 20'.. 858 SUPREMJ; COURT REPORTS Rules. 1927: rr. 17. 18-Finilnce Act No. 2S of 19SO-Madhy• Bharat Tax~s on Income (Validation) Act No. 38 of 1954- Constitution of India. Art. 14 • .8111# or Madhya The appellant, a Cotton Mill in Indore in Holkar State was taxed Bharat in respect of profits, gains and income under the Indore Industrial Tax Ru!OI, 1927 by the then Ruler of Indore. The Holkar State merged into the State of Madhya Bharat which acceded to India. Tho Rajpramukh of the new State promulgated an Ordinance No. I of 1948 to provide for peace and good Government of the State. This Ordinance was superseded by Act I of 1948. Thereafter on December 28, 1949, me Government issued a Notification under r. 18 of the Tax Rules purporting to make rules under r. 17 thereof. These rules made certain amendments in the Tax Rules. The State of Madhya Bharat became ono of the Part B States on January 26, 19SO. From April I, 19SO, Finance Act No. 25 of 1950 came into force and applied to Madhya Bharat also. According to its provision, the Tax Rules came to be repealed from after the accounting year ending on March 31, 1949 and assessments could only be made under the Tax Rules upto the end of the accounting period ending on or before March 31, 1949. It further provided that even the assessments for the years previous to the accounting year ending on March 31, 1949 could only be made by the corresponding authorities under the Income-tax: Act, and that ·appeals would lie to the corresponding authorities under the Income-tax Act; no levy and ·assessment could be made ·by the authorities under the repealed law and no appeal would lie to the authorities or Court under that law. This provision as to the authorities competent to make assessments was lost sight of with the result that assessments were made for the years in dispute which were all before the accounting year ending on March 31, 1949 by the authorities under the Tax Rules, as they were before their repeal. When this mistake was dis- covered, Parliament passed the Madhya Bharat Taxes on Income (Validation) Act, No. 38 of 1954. The appellant then challenged tho validity of the assessments under the Tax Rules, on the grounds: (I) that the amendments of the Tax Rules on December 28, 1949 were invalid as such amendments could not be made under r. 17 of the Tax Rules, as was purported to be
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