Background
The Constitution of India, by virtue of its basic structure, does not allow the State or any of its organs to work arbitrarily but still the State, owing to its enormous powers to legislate and formulate laws, tends to transgress the boundaries which are dynamically set in the interest of people as a whole and not just few individuals.
The State of Himachal Pradesh used to pay income tax of its Legislators out of the public exchequer. This practice continued from year 2000. As per the information received through RTI for three years, the State paid income tax on behalf of MLAs as shown below:
Year 2017-18 – Rs. 1,11,87,863/-
Year 2018-19 – Rs. 1,79,30,873/-
Year 2019-20 – Rs. 1,78,12,311/- (estimated)
Upon examination of Act promulgated by Legislative Assembly, it was seen that the provisions of
Section 6AA of Himachal Pradesh Legislative Assembly (Allowance & Pensions of the Members) Act, 1971 and Section 12 of Salaries & Allowances of Ministers (Himachal Pradesh) Act, 2000 were a serious and arbitrary transgression of the boundaries set up by the Constitution of India, due to operation of which the state of Himachal Pradesh was unduly burdened with Income Tax liability of MLAs and
Ministers of Himachal Pradesh.
Challenge to the Law
Accordingly, a petition was filed challenging these provisions in the High Court of Himachal Pradesh on the following two grounds:
⦁ Provisions enacted being ultra vires to the Constitution of India owing to Legislative Incompetence.
⦁ Provisions being manifestly arbitrary and constitutionally invalid/unconstitutional.
Case title:
CWP 1753 of 2022 Yashpal Rana versus State of Himachal Pradesh
Contentions
On the aforesaid Grounds it was contended that the Income Tax Act, 1961 has been legislated by the Parliament while exercising its powers under Entry 82 of List-1 of the 7th Schedule of the Constitution of India. No power, whatsoever of any sort, has been conferred upon the State Legislative Assembly to legislate that the income tax of Members of the Assembly or Ministers thereof will not be paid by the
Members and that it shall be borne by the State. Consequently, Section 6AA of Himachal Pradesh Legislative Assembly (Allowance & Pensions of the Members) Act, 1971 and Section 12 of the Salaries & Allowances of Ministers (Himachal Pradesh) Act, 2000 was without any legislative sanction, beyond the competence of the State Legislature and the same could not stand on Statute Book.
Major emphasis was laid on the principle that the assessee has to pay income tax and government cannot pay income tax on behalf of the assessee and that the provisions under challenge are contradictory to the very basics of the principles of Income Tax Act,1961 and it’s operation . The due attention of the Hon’ble Court was also drawn to the various allowances, facilities and other benefits along with the salary given to the MLAs and Ministers such as Travel Allowance, House Building Advance, Purchase of motor car advance, Office Allowance, Sumptuary Allowance, Conveyance Allowance , etc.
Similar Instances in Other States
Huge Burden on Public Exchequer
The information sought through RTI applications for the purpose of this petition revealed that an enormous amount of Rs1,11,87,863; Rs 1,79,30,873; Rs1,78,12,311 approximately was spent for the purpose of paying Income Tax on behalf of MLAs and Ministers from year 2017 to 2020. This data was only for three years. One could imagine the colossal drain on State exchequer. Therefore, this was prime facie unreasonable in a debt burdened State like Himachal Pradesh to bear the burden of law makers and also arbitrary as it could not pass the test of rationality laid down under Article 14 of the Constitution of India and was fit to be struck down and declared unconstitutional being manifestly arbitrary and ultra vires to the Constitution of India.
Consequences of the Petition
Upon the notices issued to the concerned parties by the High Court of Himachal Pradesh and the awareness it generated among the public at large, the government was forced to bring an Ordinance i.e. The Himachal Pradesh Payment of Income Tax on Salaries and Allowances of Certain Categories Ordinance, 2022 thus omitting the offending provisions, paving the way for payment of income tax by the legislators themselves. This was the victory of People who had the courage to raise their voice against this manifest injustice!