SINGHAI NATHURAM Vs. COMMISSIONER OF WEALTH TAX M P

JUDGEMENT

(1.) UNDER section 27 (1) of the Wealth-tax Act, 1957 (XXVII of 1957) the Income-tax Appellate Tribunal, Bombay, has, at the instance of the the assessee, referred to this Court for its opinion, the following question of law:-

(2.) WHEN the case was stated, the Tribunal presumably acted on the dictum laid down by the Judicial Committee of the Privy Council in Raleigh Investment Co. Ltd. v. Governor-General in Council, AIR 1947 PC 78=(1947) LR 74 IA 50, namely, the Act contained effective machinery for the review of the assessment on grounds of law, including the question whether a provision of the Act was ultra vires. Their Lordships of the Supreme Court have, however, departed from that view in R. S. Venkataraman v. State of Madras, (1966) 60 ITR 112. The law now is that a tribunal, which is a creature of a statute, cannot question the vires of the provisions under which it functions. We, therefore, hold the reference to be incompetent. Nevertheless, we would like to state our answer to the questions referred as the parties may like to pursue the matter further.

(3.) IT is now well settled that although a taxation law cannot claim immunity from the equality clause of the Constitution, nevertheless, the Legislature is competent to "classify" persons or properties into different categories and tax them differently. [See, Raja Jagannath Baksh Singh v. State of Uttar Pradesh, (1962) 46 ITR 169]. IT follows, as a necessary corollary, that if the classification thus made is rational the taxing statute cannot be challenged merely because different rates are prescribed for different categories of persons or subjects.