A CASE ANALYSIS OF
K.C. Gajapati Narayan Deo v. State of Orissa
The appellant firstly contended validity of Orissa Agricultural Income-tax (Amendment) Act, 1950 claiming it to be colourable legislation as its object was to reduce income of intermediaries in order to pay them less compensation and as it was based upon provisions of Bihar Land Reform Act. Secondly that in relation to Madras Estates Land (Amendment) Act, 1947 that improper delegation of legislative power to Provincial Government and provision were against Article 14 of Constitution. Thirdly that building was treated as part of gross assets of estates thereby reducing compensation payable to intermediaries and provisions of Act give no compensation in relation to kudivaram rights.Fourthly that manner of payment of compensation was invalid Supreme Court decided that bill receiving assent of President was protected from ground of non-compliance with provisions of Article 31 (2).Even if deductions stated in Bihar Act were improper it did not make Legislation invalid unless it was unrelated to facts upon which it was based – in relation to Madras Act contention were not relevant as provisions of Orissa Estates Abolition Act, 1952 relating to computation of gross asset on basis of rent payable was not illegal .No objection in relation to inadequacy of compensation on rental basis can be raised in view of provision of Article 31 (4)
In the first place, there were contentions raised, attacking the validity of the Act as a whole. In the second place, the validity of the Act was challenged as far as it related to certain specified items of property included in an estate, e.g. private lands, buildings, waste lands, etc. Thirdly, the challenge was as to the validity of certain provisions in the Act relating to determination of compensation payable to the intermediary, with reference either to the calculation of the gross assets or the deductions to be made therefrom for the purpose of arriving at the net income. .
Under the first head the appellants' main contention relates to the validity of the Orissa Agricultural Income-tax (Amendment) Act of 1950. This Act, it is said, is not a bona fide taxation statute at all, but is a colourable piece of legislation, the real object of which is to reduce, by artificial means, the net income of the intermediaries, so that the compensation payable to them under the Act might be kept down to as low a figure as possible. There was an Agricultural Income-tax Act in force in the State of Orissa from the year 1947 which provided a progressive scale of taxation on agricultural income, the highest rate of tax being 3 annas in the rupee on a slab of over Rs. 30,000 received as agricultural income The object of this amended legislation, according to the appellants, was totally different from what it ostensibly purported to be and the object was nothing else but to use it as a means of effecting a drastic reduction in the income of the intermediaries, so that the compensation payable to them may be reduced almost to nothing It may be made clear at the outset that the doctrine of colourable legislation does not involve any question of bona fides or mala fides on the part of the legislature. The whole doctrine resolves itself into the question of competency of a particular legislature to enact a particular law. If the legislature is competent to pass a particular law, the motives which impelled it to act are really irrelevant. On the other hand, if the legislature lacks competency, the question of motive does not arise at all. Whether a statute is constitutional or not is thus always a question of power Though apparently the Act purported to be a taxation statute coming under entry 46 of List II, really and in substance it was not so. It was introduced under the guise of a taxation statute with a view to accomplish an ulterior purpose, namely, to inflate the deductions for the purpose of...
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