PRANLAL CHIMANLAL THAKORE v. UNION OF INDIA — 1994 DIGILAW 204 (GUJ)

M. B. SHAH, M. R. CALLA, J. ( 1 ) ). It is the contention of the petitioner that by a registered sale deed dated 23rd June 1961 the petitioner sold land bearing 3 Survey No 80 admeasuring 11977 sq. yds. for a consideration of Rs. 1 11 505 the petitioner received a notice dated 21st July 1962 issued by respondent No. ( 2 ) ). under Section 139 (9) of the Income-tax Act 1961 for filing of the return of the income for the Assessment Year 1962-63. In response to the said notice the petitioner filed a return of income dated November 20 1962 in the status of Association of person showing income as Nil. It is contended by the petitioner that the said return of income filed was treated as invalid and was ordered to be filed on 12th February 1964. Prior to that the petitioner received a second notice dated August 27 1963 under Section 148 of the Income-tax Act in his capacity as the Karta and Manager of the alleged Hindu Undivided Family of Chimanlal Narbheram Thakore. Again the petitioner submitted a return showing income as Nil. Thereafter the said proceedings were dropped for which the petitioner received a letter dated 10th March 1967. Subsequently a third notice under Section 148 was received by the petitioner on March 28 1967 Despite the objections raised by the petitioner the assessment order dated March 18 1968 was passed by the second respondent assessing the petitioner as liable for capital gains tax for the sum of Rs. 82 46 2 That order was challenged by the petitioner before the Appellate Assistant Commissioner of Income-tax Ahmedabad. The Appellate Assistant Commissioner remanded the matter with a specific direction to give remand report. That remand report was received by the Appellate Assistant Commissioner on September 29 1973 The Appellate Assistant Commissioner finally allowed the appeal by his order dated August 5 1976 Against that order the Department preferred an appeal before the Income-tax Appellate Tribunal. The petitioner filed cross appeal. The appeal filed by the Department was dismissed. ( 3 ) ). It is contended by the petitioner that because of the illegal assessment order the petitioner was required to pay various amounts. In all Rs. 26 598. The petitioner filed cross appeal. The appeal filed by the Department was dismissed. ( 3 ) ). It is contended by the petitioner that because of the illegal assessment order the petitioner was required to pay various amounts. In all Rs. 26 598. 5 from May 25 1967 to August 8 1968 It is his contention that by the order dated February 23 1970 respondent No. 2 had imposed penalty of Rs. 10 984 under Section 271 (1) (a) of the Income-tax Act. The petitioner had paid the said amount. Thereafter the petitioner had also paid by way of penalty the sum of Rs. 4102. 00 pursuant to the order dated February 11 1970 passed by the Inspecting Assistant Commissioner under Section 271 read with Section 274 (2) of the Income-tax Act. It is contended that because the order passed by the Income-tax Officer is set aside by the Appellate Assistant Commissioner the petitiones was entitled to recover Rs. 26 598. 5 ps. along with the penalty of Rs. 15 86 (Rs. 10 984 + Rs. 4102) paid by him with interest. The petitioner has admitted that the respondents had refunded the amount income-tax and penalty amount of Rs. 10 984 by two instalments being the aggregate amount of Rs. 41 685 However no interest is paid on the said amount. Hence it is prayed that- (a) the respondents may be directed to 20 refund to the petitioner the sum of Rs. 4 102 paid by the petitioner by way of penalty under Section 271 (1) (c) read with Section 274 (2) of the Income-tax Act; (b) the words and figures after 31st day of March 1975 occurring in sub-Section (1a) of Section 244 of the Income-tax Act be declared as violative of Article 14 of the Constitution of India; (c) the respondents be directed to pay interest on refund. It is to be noted that in spite of service of notice no affidavit-in-reply is filed on behalf of the respondents. ( 4 ) ). At the time of hearing of the petition it is contended that the petitioner is entitled to get refund of the amount paid by him with interest from the date of payment as provided under Section 244 of the Income-tax Act for which the necessary calculations are produced at Annexure E to the petition. ( 4 ) ). At the time of hearing of the petition it is contended that the petitioner is entitled to get refund of the amount paid by him with interest from the date of payment as provided under Section 244 of the Income-tax Act for which the necessary calculations are produced at Annexure E to the petition. In the alternative it is contended that part of the Section 244 (1a) which fixes the cut-off date 31st day of March 1975 is violative of Article 14 of the Constitution of India as it is fixed arbitrarily. The learned Advocate General submitted that the prescription that only in case if any amount having been paid by an assessee after the 31st day of March 1975 in pursuance of any order of assessment or penalty which is in excess of the amount which such assessee is liable to pay as tax or penalty the assessee would be entitled to get refund of the excess amount with interest as specified therein is illegal because- (i) by prescribing a date artificially two classes of persons who have paid tax or penalty in excess are created one class of person is the persons who have paid tax in excess prior to March 31 1975 and the other class of those persons who have paid tax after March 31 1975 He further submitted that those persons who have paid tax in excess in pursuance of the order of assessment prior to March 31 1975 cannot be discriminated by not paying interest on the refund amount from the date of payment; and (ii) that there is no reason or nexus sought to be achieved for giving preferential treatment to those persons who have paid tax or penalty in excess after March 31 1975 He further submitted that when tax in excess is paid as the date of payment is not at all relevant for grant of refund with interest. ( 5 ) ). With regard to the refund of the amount of Rs. 4 102 Mr. Shelat learned Counsel appearing on behalf of the respondents vehemently submitted that the present petition for refund of the amount is not maintainable because the petitioner ought to have approached the appropriate authority by filing a proper application. ( 5 ) ). With regard to the refund of the amount of Rs. 4 102 Mr. Shelat learned Counsel appearing on behalf of the respondents vehemently submitted that the present petition for refund of the amount is not maintainable because the petitioner ought to have approached the appropriate authority by filing a proper application. In the alternative he submitted that as the matter was admitted by this Court this Court may direct the petitioner to approach the appropriate authority for refund of the said amount and also to direct the respondents to consider the said application on merits. ( 6 ) ). With regard to the constitutional validity of the provisions he submitted that Section 244 (1a) of the Income-tax Act is not violative of Article 14 of the Constitution because the said sub-section was inserted by the Taxation Laws (Amendment) Act 1975 with effect from 1st October 1975 Therefore the Legislature has given the benefit to those assessees who had paid the tax in excess after March 31 1975 He submitted that for grant of the some benefit that is to say for refunding the amount with interest it is not necessary that the Legislature should grant interest on refund to those assessees who have paid tax in excess even prior to insertion of the said sub-section. ( 7 ) ). He also relied upon the circular dated January 11 1977 issued by the Board which inter alia provides that Section 244 (1a) will be applicable only if the refund is arisen out of orders in appeal or other proceedings passed on or after October 1 1975 and payment has been made after March 31 1975 He submitted that in those cases where the assessment orders are passed after insertion of Section 244 (1a) and payment is made after March 31 1975 the amount is to be refunded with interest from the date of payment till the date of grant of refund He submitted that Section 244 specifically provides to the aforesaid effect. He further submitted that in any case it was open to the Parliament to prescribe a cut-off date to the effect that if the tax is paid in excess after 31st March 1975 in pursuance of the order of assessment then on such refund of excess amount the Central Government shall pay interest from the date of payment and it cannot be said that prescription of such date is arbitrary or violative of Article 14 of the Constitution of India. ( 8 ) ). For appreciating the rival contentions raised by the learned Counsel for the parties it would be necessary to refer to the relevant provisions under Chapter XIX pertaining to refunds of excess tax or penalty paid by the assessee under the Income-tax Act. This provision can broadly be divided into two groups (i) where the claim or refund is to be made Sections 235 239 and 243 provide procedure for it and (ii) other Sections provide for the cases where no claim is required to be made and the concerned officer is required to refund the amount in pursuance of the order passed in appeal or in any other proceedings. The said Sections are Sections 240 241 and 244. Section 237 inter alia provides that if any person satisfies the Income-tax Officer that the amount of tax paid by him for any assessment year exceeds the amount with which he is properly chargeable for that year he shall be entitled to a refund of the excess. Section 238 provides as to who would be entitled to file an application for refund. Section 239 (1) inter alia provides that every claim for refund shall be made in the prescribed form and verified in the prescribed manner. Sub-Section (2) provides limitation within which an application for refund can be filed. Section 243 provides that in the cases where the Income-tax Officer does not grant refund as provided therein the Central Government shall pay the assessee the said amount with interest. In the present case we are not required to deal with these Sections. As against this Section 240 provides that where as a result of any order passed in appeal or other proceeding under the Act refund of any amount becomes due to the assessee the Income-tax Officer shall refund the amount to the assessee without his having to make any claim in that behalf. As against this Section 240 provides that where as a result of any order passed in appeal or other proceeding under the Act refund of any amount becomes due to the assessee the Income-tax Officer shall refund the amount to the assessee without his having to make any claim in that behalf. However Section 241 empowers the Income-tax Officer to withhold the refund in such case where an order giving rise to a refund is the subject-matter of an appeal or further proceedings. Section 244 provides for payment of interest on such refund. Section 240 and relevant part of Section 244 with which we are concerned are as under: 240 Where as a result of any order passed in appeal or other proceeding under this Act refund of any amount becomes due to the assessee the Income-tax Officer shall except as otherwise provided in this Act refund the amount to the assessee without his having to make any claim in that behalf. 244 Where a refund is due to the assessee in pursuance of an order referred to in Section 240 and the Income-tax Officer does not grant the refund within a period of three months from the end of the month in which such order is passed the Central Government shall pay to the assessee simple interest at twelve per cent per annum on the amount of refund due from the date immediately following the expiry of the period of three months aforesaid to the date on which the refund is granted. (1a) Where the whole or any part of the refund referred to in sub-Section (1) is due to the assessee as a result of any amount having been paid by him after the 31st day of March 1975 in pursuance of any order of assessment or penalty and such amount or any part thereof having been found in appeal or other proceeding under this Act to be in excess of the amount which such assessee is liable to pay as tax or penalty as the case may be under this Act the Central Government shall pay to such assessee simple interest at the rate specified in sub-Section (1) on the amount so found to be in excess from the date on which such amount was paid to the date on which the refund is granted: provided that xxx. Admittedly sub-Section (1a) is inserted with effect from 1st October 1975. Prior to addition of sub-Section (1a) where refund was payable to the assessee in pursuance of an order passed in an appeal or other proceedings under the Act the Income-tax Officer was required to refund the said amount within a period of three months from the end of the month in which such order is passed with simple interest at the rate of 1250 per annum on the amount of refund from the date immediately following the expiry of the period of three months aforesaid to the date on which the refund is granted Because of sub-Section (1 ). the Income-tax Officer was duty bound to refund the excess amount within a period of three months from the end of the month in which such order was passed. If such amount is not paid within the said period. then the assessee was entitled to recover the said amount with simple interest at the rate of 12% per annum after expiry of three months from the dale of the order by which he is entitled to get a refund. By inserting sub-Section (1a) the law with regard to payment of interest is changed and it is provided that on such amount. the assessee shall be entitled to get interest from the date of payment and not from the date of the order. While inserting the enactment. the Legislature has taken care to see that this benefit is given only to those persons who have paid tax in excess after 31 March 1975. ( 9 ) ). The question therefore arises as to whether such fixation of date is arbitrary. ( 10 ) ). The learned Advocate General submitted that sub-Section (1a) is inserted in Section 244 with the specific object that interest is paid on refund of excess tax or penalty from the date of the payment of such amount to the date of grant of refund but after excluding a period of one month from the date of the order in appeal. For this purpose he referred to Clause 57 of Notes of Clauses for Taxation (Amendment) Bill 1973 [1973 (89) I. T. R. p. 116]. He further submitted that as per the Bill Clause 57 is as under: (1a ). For this purpose he referred to Clause 57 of Notes of Clauses for Taxation (Amendment) Bill 1973 [1973 (89) I. T. R. p. 116]. He further submitted that as per the Bill Clause 57 is as under: (1a ). Where the whole or any part of the refund referred to in sub-Section (1) is due to the assessee as a result of any amount having been paid by him in pursuance of any order of assessment of penalty and such amount or any part thereof having been found in appeal or other proceeding under this Act to be in excess of the amount which such assessee is liable to pay as tax or penalty or both as the case may be under this Act the Central Government shall pay to such assessee simple interest at the rate specified in sub Section (1) on the amount so found to be in excess- (i) from the date such amount was paid; or (ii) where such amount was paid in instalments from the date or dates on which any payment made came to be in excess of the amount due from such assessee as a result of the appeal or other proceeding to the date on which the refund granted: Provided that no interest under this sub-section shall be payable for a period of one month from the date of the passing of the order in appeal or other proceeding: Provided further that where any interest is payable to an assessee under this sub-section no interest under sub-Section (1) shall be payable to him in respect of the amount so found to be in excess. ( 11 ) ). Considering the aforesaid provision in the Bill he submitted that the main purpose of addition of Section 244 (1a) was to refund the amount paid in excess to all the assessees with simple interest from the date of payment till the date on which the refund is granted. ( 12 ) ). In our view this submission is without any substance. Admittedly the aforesaid Bill was referred to the Select Committee and the Select Committee had presented its report on March 20 1975 [1975 (99) ITR p. 19 relevant at p. 27]. ( 12 ) ). In our view this submission is without any substance. Admittedly the aforesaid Bill was referred to the Select Committee and the Select Committee had presented its report on March 20 1975 [1975 (99) ITR p. 19 relevant at p. 27]. The Select Committee had suggested insertion of sub-Section (1a) in Section 244 with modification and it was suggested that only payments of disputed taxes made after the 31st March 1975 will be entitled to interest. ( 13 ) ). Further considering Section 244 (1) of the Act it is clear that where as a result of any order passed in appeal or other proceeding under the Income-tax Act refund of any amount becomes due to the assessee and the Income-tax Officer does not grant refund within a period of three months from the end of the month in which such an order is passed the Central Government is required to pay to the assessee simple interest at the rate of 12% per annum on the amount of refund due from the date immediately following the expiry of the period of three months till the date on which the refund is granted. With effect from 1st October 1975 sub-sec. (1a) is added with the specific purpose of granting interest from the date of payment in certain cases. It provides that if such refund is due to the assessee in cases where (i) the assessee had paid amount after 31st March 1975 in pursuance of any order of assessment or penalty; and (ii) such amount or part thereof having been found in appeal or other proceedings under the Act to be in excess of the amount which such assessee is liable to pay as tax or penalty under the Act then the Central Government shall pay to such assessee simple interest at the rate of 12% per annum on the amount so found to be in excess from the date on which such amount was paid to the date on which the refund is granted. The first proviso provides that where the amount so found to be in excess was paid in instalments such interest shall be payable on the amount of each such instalment or any part of such instalment which was in excess from the date on which such instalment was paid to the date on which the refund is granted. The first proviso provides that where the amount so found to be in excess was paid in instalments such interest shall be payable on the amount of each such instalment or any part of such instalment which was in excess from the date on which such instalment was paid to the date on which the refund is granted. The second proviso provides that no interest shall be payable for a period of one month from the date of the passing of the order in appeal or other proceeding. The third proviso specifically provides that where any interest is payable to an assessee under this sub-section no interest under sub-Section (1) shall be payable to him in respect of the amount so found to be in excess. Considering the aforesaid scheme of Sections 240 244 and 244 it is apparent that with effect from 1st October 1975 sub-section (1a) is added to pay interest on refund from the date of payment and not from the date when the assessment order for tax or penalty is set aside. Therefore an additional right is conferred in favour of those assessees who have paid tax or penalty after 31st March 1975. The purpose may be to induce the assessees to pay tax or penalty even though the appeal or other proceedings for setting aside the levy of tax or penalty are pending. But this would not mean that if the benefit is conferred to the assessees who paid tax or penalty after 31st March 1975 such benefit should always be conferred to other assessees who have paid tax or penalty prior to 31st March 1975. In such a situation it is for the Legislature to prescribe the eligibility criteria and/or the cut-off date. It is apparent that the law was enacted from 1st October 1975 and therefore normally it would come into force from that date and the benefit conferred by the said provisions would be available from that date only. But here it seems that the Legislature has conferred the benefit from a specific date i. e. 31st March 1975 because of accounting year which begins from 1st April 1975 ( 14 ) ). But here it seems that the Legislature has conferred the benefit from a specific date i. e. 31st March 1975 because of accounting year which begins from 1st April 1975 ( 14 ) ). However the learned Advocate General relied upon the decision of the Supreme Court in the case of B. Prabhakar Rao v. State of A. P. 1985 Supp SCC 432 to substantiate his contention that fixation of cut-off date in the present case is arbitrary. In our view the said decision would not in any way be helpful in deciding the question involved in the present case because in that very case the Court has observed that a situation such as the one before them had never presented itself to the Court previously. The Court further observed as under: make this case a precedent for justice say one side; let this not be the first say the other. We have had cases where the age of superannuation had been raised from 55 to 58 years; we have had cases where having earlier raised the age of superannuation from 55 to 58 years there was later a change of policy and the age of superannuation was once again reduced to 55 years. But this is the first occasion - neither our researches nor those of the learned Counsel have been able to trace another case of this kind where the age of superannuation was first raised from 55 to 58 years there was then a change of policy a few years later reducing the age of superannuation from 58 to 55 years and finally there was again within a few months a reversion to the higher age of superannuation of 58 years. The cases of Bishun Narain Mishra v. State of UP. and K. Nagaraj v. State of AP. belong to the second category of cases. In Bishun Narain Mishra case by a notification dated November 27 1957 the Government of Uttar Pradesh raised the age of superannuation from 55 to 58 years. ( 15 ) ). It should be noted that in the aforesaid case the judgment was rendered because of peculiar facts and circumstances emerged from the Ordinance issued by the Andhra Pradesh Government. In Bishun Narain Mishra case by a notification dated November 27 1957 the Government of Uttar Pradesh raised the age of superannuation from 55 to 58 years. ( 15 ) ). It should be noted that in the aforesaid case the judgment was rendered because of peculiar facts and circumstances emerged from the Ordinance issued by the Andhra Pradesh Government. In the supplementing judgment delivered by Balkrishna Eradi J. it is clarified as under: we are not to be understood as laying down that whenever the age of superannuation of Government employees or of employees of local authorities etc. is enhanced the benefit of such enhancement should be extended not merely to persons in service on the date on which the change is effected but also to persons who have already retired from service prior to that date. It is now well established by decisions of this Court that the Government has full power to effect a change in the age of superannuation of its employees on relevant consideration. If in the exercise of such power of age of superannuation is enhanced purely by way of implementation of policy decision taken by the Government such alteration can legally be brought about with prospective effect from the date of the commencement of the operation of the Ordinance Act or Rule and no question of violation of Article 14 or 16 of the Constitution will arise merely because the benefit of the change is not extended to employees who have already retired from service. The court again and again emphasized that in the context of telling facts and circumstances which conclusively show that the object and purpose of the legislation was to set right the injustice that had been done there was no rational or reasonable nexus or basis for separately classifying the employees who had retired from service prior to the date of commencement of Ordinance 23 of 1984 who are the persons most affected by the wrong by denying to them the benefit of the rectification of the injustice. The Court has stated that solely on this ground those petitions were allowed and the reliefs were granted. The Court has stated that solely on this ground those petitions were allowed and the reliefs were granted. Even in the last paragraph of the supplementing judgment rendered by Khalid J. it is observed I respectfully agree with the judgment prepared by my learned brother Reddy J. I am also in entire agreement with my learned brother Eradi J. about the limited scope of the principles laid down in these cases on their peculiar facts. ( 16 ) ). From the aforesaid discussion by the Supreme Court it is apparent that case was decided because of the peculiar facts and circumstances. The Court has also emphasized that alteration can legally be brought about with prospective effect from the date of commencement of the operation of the Act and no question of violation of Article 14 will arise merely because the benefit of change is not extended to the employees who have already retired from service. ( 17 ) ). Further while dealing with the case of Nakara [ air 1983 SC 130 ] the Supreme Court in the case of Krishena Kumar v. Union of India AIR 1990 Supreme Court 1782 (paragraph 18) has observed the doctrine of precedent that is being bound by a previous decision is limited to the decision itself and as to what is necessarily involved in it; it does not mean that this Court is bound by the various reasons given in support of it especially when they contain propositions wider than the case itself required. The Court has further observed that in Nakaras case it was never required to be decided that all the retirees formed a class and no further classification was permissible. ( 18 ) IN the present case by insertion of sub-Section (1a) in Section 244 law with regard to grant of interest on the refund amount of excess tax or penalty is altered with prospective effect. Therefore there cannot be any question of violation of Article 14. It is not necessary that the Legislature should grant benefit to those persons who have paid tax or penalty as per the order prior to coming into operation of the Act. ( 19 ) FURTHER with regard to cut off date the Supreme Court in the case of Hathising Mfg. Co. It is not necessary that the Legislature should grant benefit to those persons who have paid tax or penalty as per the order prior to coming into operation of the Act. ( 19 ) FURTHER with regard to cut off date the Supreme Court in the case of Hathising Mfg. Co. v. Union of India AIR 1960 Supreme court 923 (paragraph 28) observed as under: article 14 strikes at discrimination in the application of the laws between persons similarly circumstanced; it does not strike at a differentiation which may result by the enactment of a law between transactions governed thereby arid those which are not governed thereby. If the argument that discrimination results when by statute a civil liability is imposed upon transactions which were otherwise subject to such liability be accepted every law which imposed civil liability will be liable to be struck down under Article 14 even if it comes into operation on the date on which it is passed because immediately on its coming into operation discrimination will arise between transactions which will be covered by the law after its coming into force and transactions before the law came into force which will not naturally be hit by it. The court further observed that the power of the Legislature to impose civil liability in respect of transactions completed even before that date on which the Act is enacted does not appear to be restricted If as is conceded and in our judgment rightly by a statute imposing civil liability in respect of post enactment transactions no discrimination is practised by a statute which imposes liability in respect of transaction which have taken place after a date fixed by the statute but before its enactment it cannot be said that discrimination is practised. The court further observed that Article 14 strikes at discrimination in the application of the laws between persons similarly circumstanced; it does not strike at a differentiation which may result by the enactment of a law between transactions governed thereby and those which are not governed thereby ( 20 ) ). The court further observed that Article 14 strikes at discrimination in the application of the laws between persons similarly circumstanced; it does not strike at a differentiation which may result by the enactment of a law between transactions governed thereby and those which are not governed thereby ( 20 ) ). Applying the aforesaid law it cannot be said that the two groups of assessees those who have paid excess tax or penalty prior to 31st March 1975 and after 31 March 1975 are similarly circumstanced and therefore denial of benefit to one group does not infringe rights guaranteed under the Constitution By insertion of sub-Section (1a) benefit of granting interest from the date of payment is given in respect of post enactment payment of excess tax or penalty . ( 21 ) WHILE dealing with such contention the Supreme Court in the case of Union of India v. P. M. Works AIR 1974 Supreme Court 2349 (paragraph 10 has observed that the choice of a date as basis for classification cannot always be dubbed as arbitrary even if no particular reason is forthcoming for the choice unless it is shown to be capricious or whimsical in the circumstances. The Court has also observed that when it is seen that a line or a point there must be and there is no mathematical or logical way of fixing it precisely the decision of the Legislature or its delegate must be accepted unless we can say that it is very wide of any reasonable mark. As stated above in the present case as sub-Section (1a) was incorporated with effect from 1st October 1975 the Legislature has prescribed the date 31st March 1975 so as to give benefit in that accounting year. Hence it would be difficult to hold it in any way capricious or whimsical in the circumstances. ( 22 ) FURTHER it is established law that in the matter of granting concession or exemption from tax the Government has a wide latitude of discretion. It need not give exemption or concession to everyone in order that it may grant the same to someone. ( 23 ) ). ( 22 ) FURTHER it is established law that in the matter of granting concession or exemption from tax the Government has a wide latitude of discretion. It need not give exemption or concession to everyone in order that it may grant the same to someone. ( 23 ) ). While dealing with the contention that the Expenditure Tax Act is violative of Article 14 of the Constitution of India the Supreme Court in the case of Federation of Hotel and Restaurant v. Union of India AIR 1990 Supreme Court 1637 has observed that the Legislature enjoys a wide latitude in the matter of selection of persons subject-matter events etc. for taxation; the tests of the vice of discrimination in a taxing law are accordingly less rigorous; a Legislature does not as an old saying goes have to tax everything in order to be able to tax something; it is also recognized that no precise or set formulate or doctrinaire tests or precise scientific principles of exclusion or inclusion are to be applied; the test could only be one of palpable arbitrariness applied in the context of the felt needs of the times and societal exigencies informed by experience. In that case the Court has also referred to its earlier decision in the case of Jaipur Hosiery Mills Pvt. Ltd. v. State of Rajasthan AIR 1971 SC 1330 wherein the Court has observed as under :. . . . it has to be borne in mind that in matters of taxation the Legislature possesses the large freedom in the matter of classification Thus wide discretion can be exercised in selecting persons or objects which will be taxed and the statute is not open to attack on the mere ground that it taxes some persons or objects and not others. It is only where within the range of its selection the law operates unequally and cannot be justified on the oasis of a valid classification that there would he a violation of Article 14. After considering various decisions the Court has observed the legislative assumption cannot be condemned as irrational. It is equally well recognized that judicial veto is to be exercised only in cases that leave no room for reasonable doubt. Constitutionally is presumed. After considering various decisions the Court has observed the legislative assumption cannot be condemned as irrational. It is equally well recognized that judicial veto is to be exercised only in cases that leave no room for reasonable doubt. Constitutionally is presumed. ( 24 ) THE law on the subject was also considered by the Supreme Court in the case of Spences Hotel Pvt. Ltd. v. State of W. B. (1991) 2 SCC 154 The Court observed that taxation will not be discriminatory if within the sphere of its operation it affects alike all persons similarly situated. It however does not prohibit special legislation or legislation that is limited either in the objects to which it is directed or by the territory within which it is to operate; the rule of equality requires to more than that the same means and methods be applied impartially to all the constituents of each class so that the law shall operate equally and uniformly upon all persons in similar circumstances. The Legislature may exempt certain classes of property from any taxation at all may impose different specific taxes upon different trades and professions. The relevant discussion in paragraph 26 is as under : what then equal protection of laws means as applied to taxation ? Equal protection cannot be said to be denied by a statute which operates alike on all persons and property similarly situated or by proceedings for the assessment and collection of taxes which follows the course usually pursued in the State. It prohibits any persons or class of persons from being singled out as special subject for discrimination and hostile legislation; but it does not require equal rates of taxation on different classes of property nor does it prohibit unequal taxation so long as the inequality is not based upon arbitrary classification. Taxation will not be discriminatory if within the sphere of its operation it affects alike all persons similarly situated. It however does not prohibit special legislation or legislation that is limited either in the objects to which it is directed or by the territory within which it is to operate. In the words of Cooley. It merely requires that all persons subjected to such legislation shall be treated alike under like circumstances and conditions both in the privileges conferred and in the liabilities imposed. In the words of Cooley. It merely requires that all persons subjected to such legislation shall be treated alike under like circumstances and conditions both in the privileges conferred and in the liabilities imposed. The rule of equality requires no more than that the same means and methods be applied impartially to all the constituents of each class so that the law shall operate equally and uniformly upon all persons in similar circumstances. Nor does this requirement preclude the classification of property trades profession and events for taxation subjecting one kind to one rate of taxation and another to a different rate. The rule of equally of taxation is not intended to prevent a State from adjusting its system of taxation in all proper and reasonable ways. It may if it chooses exempt certain classes of property from any taxation at all may impose different specific taxes upon different trades and professions. It cannot be said that it is intended to compel the State to adopt an iron rule of equal taxation. In the words of Cooley: Absolute equality is impossible. In equality of taxes means substantial differences Practical equality is constitutional equality. There is no imperative requirement that taxation shall be absolutely equal. If there were the operations of government must come to a stop from the absolute impossibility of fulfilling lt. The most casual attention to the nature and operation of taxes will put this beyond question. No single tax can be apportioned so as to be exactly just and any combination of taxes is likely in individual cases to increase instead of diminish the inequality. ( 25 ) THE aforesaid two judgments were referred to and relied upon by the Supreme Court in the case of Sri Srinivasa Theatre v. Govt. of Tamil Nadu AIR 1992 Supreme Court 999. The Court observed that Parliament and Legislatures are accorded a greater freedom and latitude in choosing the persons upon whom and the situations and stages at which it can levy tax. ( 26 ) CONSIDERING the aforesaid settled law in our view the constitutionality of Section 244 (1a) of the Income-tax Act is required to be presumed. It cannot be said that the Parliament has prescribed cut-off date arbitrarily or capriciously. The cut-off date was prescribed because of the suggestion made by the Select Committee. ( 26 ) CONSIDERING the aforesaid settled law in our view the constitutionality of Section 244 (1a) of the Income-tax Act is required to be presumed. It cannot be said that the Parliament has prescribed cut-off date arbitrarily or capriciously. The cut-off date was prescribed because of the suggestion made by the Select Committee. However the amendment came into force with effect from 1st October 1975 and as the Legislature was required to prescribe a stage from which it would be applicable has prescribed by providing that refund of excess tax or penalty paid after 31st March 1975 shall be given with interest from the date of its payment. Within the sphere of operation of sub-Section (1a) it operates alike on all persons similarly situated that is to say it applies uniformly upon all the assessees in similar circumstances. It was for the Legislature to decide whether payment of excess tax or penalty should be refunded with interest from the date of payment before the amended law came into force and by such prescription it cannot be said that it would be hit by Article 14. Further because the benefit of granting interest from the date of payment is given to the assessees who have paid excess tax on penalty after 31st March 1975 it is not necessary that similar benefit should be given to the assessees who have paid it prior to 31st March 1975 In this view of the matter there is no substance in the contention that Section 244 (1a) more particularly prescription of date as after 31 day of March 1975 occurring in sub-Section (1a) of Section 244 of the Income-tax Act is arbitrary or violative of Article 14 of the Constitution of India. ( 27 ) LASTLY it was contended that the Department has not refunded an amount of Rs. 4 102 and some part of interest over the penalty amount paid by the petitioner in pursuance of the order dated 11 February 1970 passed by the Inspecting Assistant Commissioner under Section 271 (1) (c) lead with Section 274 (2) of the Act. It would be difficult for us to find out as to whether the said amount is refunded with interest or not as provided under. Section 244 (1) of the Act. It would be difficult for us to find out as to whether the said amount is refunded with interest or not as provided under. Section 244 (1) of the Act. Considering the fact that the petition was pending before this court and that it is difficult to find out whether the amount is refunded or not it is directed that it would be open to the petitioner to approach the appropriate authority by filing an application for grant of refund as provided under the Act. If the petitioner files an application for refund of remaining amount on or before 1st October 1994 the appropriate authority would pass an order in accordance with law. ( 28 ) IN the result Rule discharged with no order as to costs with the aforesaid directions. .