Association of Old Settlers of Sikkim and Ors. Vs. Union of India and Anr. Case Summary You Can Listen To

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0 13 Jan, 2023
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Association of Old Settlers of Sikkim and Ors. Vs. Union of India and Anr.

Supreme Court Of India Writ Petition Civil /59/2013

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As per the case facts, writ petitions were filed challenging the constitutionality of Section 10(26AAA) of the Income Tax Act, specifically its definition of "Sikkimese" which excluded Indians settled in ...

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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

WRIT PETITION (C) NO. 59 OF 2013

Association of Old Settlers

of Sikkim and Ors. …Appellant(s)

Versus

Union of India and Anr. …Respondent(s)

WITH

WRIT PETITION (C) NO. 1283 OF 2021

Rapden Lepchaand Ors. …Appellant(s)

Versus

Union of India and Anr. …Respondent(s)

J U D G M E N T

M.R. SHAH, J.

1.By way of this writ petition under Article 32 of the Constitution of

India, the respective writ petitioners – Association of Old Settlers of

Sikkim and Others have prayed for an appropriate writ, direction or order

striking down Section 10(26AAA) of the Income Tax Act, 1961

(hereinafter referred to as the “Act, 1961”), more particularly, the

definition of “Sikkimese” in Section 10 (26AAA) to the extent it excludes

Indians who have settled in Sikkim prior to the merger of Sikkim with

India on 26.04.1975. The petitioners have also prayed for an

appropriate writ, order or direction striking down the Proviso to Section

10(26AAA) of the Act, 1961, insofar as it excludes from the exempted

category, “Sikkimese women” who marries a non-Sikkimese after

01.04.2008.

2.Section 10(26AAA), the vires of which is under challenge reads as

under:-

"[(26AAA) in case of an individual, being a Sikkimese, any

income which accrues or arises to him-

(a) from any source in the State of Sikkim; or

(b) by way of dividend or interest on securities:

Provided that nothing contained in this clause shall

apply to a Sikkimese woman who, on or after the 1st day

of April, 2008, marries an individual who is not a

Sikkimese.

Explanation.- For the purposes of this clause, "Sikkimese"

shall mean-

(i)an individual, whose name is recorded in the

Regulation, 1961 read with the Sikkim Subject

Rules, 1961 (hereinafter referred to as the "Register

of Sikkim Subjects”), immediately before the 26th

day of April, 1975; or

(ii)an individual, whose name is included in the

Government of India Order No.26030/36/90-I.C.I.,

dated the 7th August, 1990 and Order of even

number dated the 8th April, 1991; or

(iii)any other individual, whose name does not appear

in the Register of Sikkim Subjects, but it is

established beyond doubt that the name of such

individual's father or husband or paternal grand-

father or brother from the same father has been

recorded in that register;”

3.It is the case on behalf of the respective writ petitioners that by

excluding the Indians from the definition of Sikkimese, the exemption

granted under Section 10(26AAA) of the Act 1961, is not available to the

Indian Settlers resulting in discrimination. There is no valid ground for

discriminating against this section of the residents of Sikkim alone.

Therefore, it is the case on behalf of the writ petitioners that exclusion of

Indians who have settled in Sikkim prior to the merger of Sikkim with

India on 26.04.1975 and consequently not granting the exemption

granted under Section 10(26AAA) of the Act, 1961 to the class of

Indians, who have settled in Sikkim prior to the merger of Sikkim with

India on 26.04.1975 is arbitrary, discriminatory and the differentia do not

have a rational nexus to the object sought to be achieved by the Statute

in question. It is also the case on behalf of the writ petitioners in Writ

Petition No. 59 of 2013 that Proviso to Section 10(26AAA), insofar as it

excludes from the exempted category, “Sikkimese women” who marries

a non-Sikkimese after 01.04.2008, is discriminatory and violative of

Articles 14, 15 and 21 of the Constitution of India as the exclusion is

based on gender.

4.Before dealing with and/or considering the rival submissions,

history of Kingdom of Sikkim and the chronology of dates and events,

which led to enactment of Section 10(26AAA) of the Act, 1961, is

required to be referred to and considered, which are as under:-

4.1The Kingdom of Sikkim came into existence in 1642. It was ruled

as an independent Kingdom for 333 years till its merger with the Union of

India in 1975. Originally the Kingdom of Sikkim held a large territory

ranging from parts of present-day Bhutan, Bihar, West Bengal, Nepal

and Bangladesh. In the 18

and 19

Century, a lot of territory was ceded

to the British Empire in various conflicts. The Imperial British

Government took over the control of the erstwhile Kingdom of Sikkim in

the year 1888. However, there were conflicts with China.

4.2In 1890, a Convention was signed between Great Britain and

China to settle the boundaries of Sikkim and Tibet. The British control

over Sikkim was recognized by China in the year 1890. Following British

taking control of Sikkim, British Indian Subjects were allowed to hold

Government employment in Sikkim.

4.3In supersession of all earlier treaties, a fresh treaty was entered

into between the British Government and the King of Sikkim in the year

1861. Under this treaty, the territory of Sikkim was restored to the King of

Sikkim under certain conditions. These conditions included Article 8

under which the Government of Sikkim was to abolish all restrictions on

travelers and monopolies in trade between the British territories and

Sikkim. Under the said treaty, British subjects were permitted to trade,

reside and travel through Sikkim. Many Indians came to reside in Sikkim

over the years. Except for the fact that they could not hold lands in rural

areas, the Indians and other foreigners who settled in Sikkim were

treated equally with the original inhabitants of Sikkim.

4.4The Sikkim Income Tax Manual, 1948 was promulgated by the

Ruler of Sikkim (the Chogyal) in the year 1948. Under the said Manual,

all persons engaged in business were subjected to tax irrespective of

their origin. The India-Sikkim Peace Treaty was entered into on

05.12.1950 and under this Treaty Sikkim was to be the protectorate of

India as per Article VII of the said treaty. It appears that in order to

check the influx of foreigners into Sikkim, the Ruler of Sikkim (the

Chogyal) promulgated the Sikkim Subject Regulations, 1961 on

03.07.1961. Under the said Regulations: (a) the persons falling under

Clause 3 of the Regulations were to be entered as a “Sikkim Subject” in

the Register; and (b) Persons who were citizens of another country were

not to be registered as a “Sikkim Subject” unless he relinquishes the

citizenship of the other country. The term 'Sikkim Subject' was defined

as a person who was born in the territory of Sikkim and was resident

therein and similarly situated persons, but however with a caveat that "a

person shall not be a “Sikkim Subject” under this section, unless he

makes a declaration that he is not a citizen of any other country at the

time of inclusion of his name in the register of “Sikkim Subjects".

Because of this caveat, an Indian citizen whose ancestors had settled

down in Sikkim for generations, had to give up his citizenship of India, for

the purpose of converting himself into a “Sikkim Subject”.

4.5It appears that some of the families/persons like the members of

the petitioners’ Association, even though their forefather and they were

residents of Sikkim for years together, did not surrender their citizenship

of India and, therefore, their names were not registered as “Sikkim

Subject” in the register maintained under the Sikkim Subjects

Regulations, 1961.

4.6By way of the Constitution 36

Amendment Act 1975, Sikkim was

made a full-fledged State of India and was included in Entry 22 of

Schedule I to the Constitution of India. Article 371-F was also inserted in

the Constitution under which it was, inter alia, open to the President or

the Parliament to extend any law to the State of Sikkim, or repeal any

existing law of Sikkim.

4.7On 21.06.1975, the Home Department issued a notification stating

that “all Sikkim Subjects (under the Sikkim Subjects Regulations, 1961)

before 26.04.1975 were to be deemed Indian citizens”. Therefore, this

effaced the distinction between the persons of Indian origin residing in

Sikkim (without giving up Indian Citizenship) and others who had taken

up Sikkimese Citizenship.

4.8Since a large number of eligible persons had been left out of the

Sikkim Subject Register and were consequently denied Indian

citizenship, Government of Sikkim issued a Memorandum that for the

purposes of seeking employment, those claiming to be “Locals” should

be able to show whether their parents’ names are maintained on or

before 15.05.1975 in the relevant Government Register. In the year

1980, notification was issued that domicile/ residential certificate issued

by sources, other than District Collector, shall not be accepted as valid.

4.9In the year 1988, a petition was moved in the Lok Sabha by a few

MLAs of Sikkim stating that at the time of merger of Sikkim with India,

only those people whose names were registered in the Sikkim Subject

stateless persons who were present in Sikkim between the period 1946

and 1975 who were otherwise by the reason of their residence, domicile

and allegiance, "Sikkimese", and they should also be made Indians. The

Government of India conceded to this demand and an exercise was

carried out to grant Indian Citizenship to those so-called stateless people

who were deemed to have been genuinely omitted.

4.10In the year 1989, the Sikkim Citizenship (Amendment) Order 1989

was notified wherein a proviso was created to deem such cases of

genuine omission as citizens of India. It appears that the principal

beneficiaries of the said Amendment were those who had migrated to

Sikkim post 1946 and were therefore not even eligible for being on the

Sikkim Subject Register.

4.11That thereafter the Government of India formed a Committee

consisting of its officers and officers of the Sikkim Government and

certain guidelines were made to decide who the persons were, who were

omitted by mistake from being entered into the “Sikkim Subjects

origin as they were already Indian citizens, but only to those "non-

Sikkimese Subjects" who were to be made Indian citizens.

4.12Subsequently, vide Government of India’s Order dated 07.08.1990

and 08.04.1991, a total of 73,431 were granted Indian Citizenship on the

basis that it was found that these persons were eligible to have been

included in the “Sikkim Subjects Register”.

4.13That in the year 1989 and w.e.f. 26.07.1989, the Indian Income

Tax Act, 1961 was extended to Sikkim by the Finance Act, 1989. Under

the said amendment, any law corresponding to the Income Tax Act,

1961, which was in force in the State of Sikkim stood repealed.

4.14That the State of Sikkim filed a Suit before this Court challenging

the extension of the Income Tax Act, 1961 to the State of Sikkim,

however, the same came to be withdrawn subsequently.

4.15 In the year 1985, the Government of India, vide an amendment to

the Income Tax Act, 1961 in the Finance Act, 1994, proposed an

exemption from Income Tax to the Schedule Tribes in Sikkim as was

being done in regard to other states. The same was opposed by the lone

M.P. of Sikkim.

4.16Thereafter, the Government of India and the Government of Sikkim

formed a joint committee consisting of the members from the Central

Government and Government of Sikkim to resolve the differences for

implementation of the Income Tax Act, 1961 in Sikkim. It appears that

while discussing the matters relating to implementation of the Income

Tax Act, 1961 to the State of Sikkim, the committee representing the

State Government of Sikkim insisted on exemption for persons holding

the Sikkim Subjects Certificate and their descendants and were made

Indian Citizens vide the Sikkim Citizenship Amendment Order, 1989. It

appears that these two categories essentially consisted of the Bhutia

Lepchas, Sherpas and the Nepalis who constituted together about

94.6% of the total population. Discussions were held for four long years

to secure exemptions to Sikkim Subjects Certificate holders and the

people made citizens of India vide the Government of India orders dated

07.08.1990 and 08.04.1991 and their descendants.

4.17That in the year 2008, the Government of India, gave in to the

demands of the State of Sikkim, and passed an amendment to the

Income Tax Act, by the Finance Act, 2008, wherein Clause 26AAA was

introduced in Section 10 of the Income Tax Act, and the persons of

Indian origin in Sikkim were treated differently from the Sikkim subjects

and persons who had become citizens of India by the Sikkim Citizenship

Amendment Order 1989. Clause 26AAA to Section 10 of the Income Tax

Act, 1961 granted an exemption to "Sikkimese" people. However, the

Explanation to Clause 26AAA defined the term "Sikkimese" as follows:

"For the purposes of this Clause, "Sikkimese" shall

mean:-

(i)an individual, whose name is recorded in the

Regulations, 1961 read with the Sikkim Subject

Rules, 1961 (hereinafter referred to as the "Register

of Sikkim Subjects”, immediately before the 26

day

of April, 1975; or

(ii)an individual, whose name is included in the

Government of India Order No. 26030/36/90 - I.C.I.

dated the 7

August, 1990 and Order of even

number dated the 8

April, 1991; or

(iii)any other individual, whose name does not appear

in the Register of Sikkim Subjects, but it is

established beyond doubt that the name of such

individual's father or husband or paternal

grandfather or brother from the same father has

been recorded in that register;"

4.18It appears that in view of Section 10(26AAA) of the Income Tax

Act, 1961, effectively 94% of the residents of Sikkim are exempted from

payment of Income Tax under the Income Tax Act, 1961. However, 5%

of the residents of Sikkim of which about 1% are the people like the

petitioners, who, as such are also the bona fide settlers of Sikkim, are

being singled out from exemption from payment of income tax on the

sole ground that they are not recorded in the register under the Sikkim

Subjects Regulation 1961. It appears that approximately 500 such

families are affected by the definition of the “Sikkimese”.

4.19It appears that various representations were made against such a

discriminatory treatment by the Petitioners to the Government of Sikkim

as well as the Union Finance Minister time and again. In the year 2009,

the Government of Sikkim appointed a Committee to look into the

grievances of the petitioners’ Association. The Committee made certain

recommendations, which shall be dealt with hereinbelow.

4.20As observed hereinabove, as per Proviso to Section 10(26AAA) “a

Sikkimese women who marries a non-Sikkimese after 01.04.2008” is

excluded for getting the benefit of exemption under Section 10(26AAA).

5.Feeling aggrieved and dissatisfied with the definition of

“Sikkimese” in Section 10(26AAA) to the extent it excludes Indians

(having Indian citizenship), who have settled in Sikkim prior to the

merger of Sikkim with India on 26.04.1975 and thereby not granting the

benefit of exemption under Section 10(26AAA) of the Income Tax Act to

such Indians and being aggrieved by the Proviso to Section 10(26AAA),

insofar as, it excludes from the exempted category “a Sikkimese woman,

who marries a non-Sikkimese after 01.04.2008”, the present writ

petitioners have prayed to strike down Section 10(26AAA) to the extent it

excludes Indians, who have settled in Sikkim prior to the merger of

Sikkim with India on 26.04.1975 and insofar as it excludes from the

exempted category “a Sikkimese woman, who marries a non-Sikkimese

after 01.4.2008, being arbitrary, discriminatory and violative of Article 14

of the Constitution of India.

6.Shri K.V. Viswanathan, learned Senior Advocate has appeared on

behalf of the writ petitioners in Writ Petition (C) No. 59 of 2013.

Ms. Pooja Dhar, learned counsel has appeared on behalf of the writ

petitioners in Writ Petition (C) No.1283 of 2021. We have heard the

learned counsel appearing on behalf of the intervenors in I.A.

No. 153446 of 2018 filed in Writ Petition (C) No. 59 of 2013.

Shri N. Venkataraman, learned ASG has appeared on behalf of the

Revenue – Union of India and Shri Vivek Kohli, learned Advocate

General has appeared on behalf of the State of Sikkim.

7.Learned counsel appearing for the respective writ

petitioners/intervenors have challenged the vires of Section 10(26AAA)

of the Income Tax Act to the extent it excludes Indians, who have settled

in Sikkim prior to the merger of Sikkim with India on 26.04.1975 and

more particularly, the definition of “Sikkimese” in Section 10(26AAA) of

the Income Tax Act and Proviso to Section 10(26AAA) of the Income

Tax Act, insofar as, it excludes from the exempted category “a

Sikkimese woman, who marries a non-Sikkimese after 01.04.2008”,

mainly on the following grounds and making the following submissions:-

(i)That the definition of “Sikkimese” in Section 10(26AAA) of

the Income Tax Act to the extent it excludes Indians, who

have settled in Sikkim prior to the merger of Sikkim with India

on 26.04.1975 is discriminatory, arbitrary and unfair and it

violates the fundamental rights of those Indians, who have

settled in Sikkim prior to 26.04.1975 under Articles 14 and 15

of the Constitution of India;

(ii)In the definition of “Sikkimese”, the old Indian settlers of

Sikkim have been excluded from the purview of the definition

of "Sikkimese" and therefore are not entitled to exemption

from Income Tax. It is submitted that the exemption which

has been granted to 'Sikkimese" people residing in Sikkim

essentially exempts 95% of the residents of Sikkim while

taxing only a handful of persons including the 1% / 2% old

Indian settlers;

(iii)The exclusion of the old Indian settlers from the definition of

'Sikkimese' in Clause 10(26AAA) of the Income Tax Act is

clearly violative of Article 14 of the Constitution of India and

does not satisfy any of the tests laid down by this Hon'ble

Court under Article 14;

(iv)It is submitted that as consistently held by this Hon'ble Court

that in order to be held valid any legislation under Article 14,

the classification should be reasonable and must have a

nexus with the object sought to be achieved;

(v)It is contended that by way of the amendment, one single

class of persons, namely, the citizens of India, are sought to

be treated differently for the purpose of taxation;

(vi)It is urged that to exclude the old Indian settlers from the

exemption under Section 10(26AAA) has no nexus with the

object sought to be achieved to grant the exemption to the

residents of Sikkim;

(vii)It is submitted that there is no reasonable classification

between the residents/origins of Sikkim whose names were

registered as “Sikkim Subjects” under the Sikkim Subjects

Regulations, 1961 and those Indian old Sikkim settlers,

whose names could not be registered as “Sikkim Subjects”

as their forefathers did not surrender the Indian citizenship;

(viii)It is further submitted that after the Sikkim became part of the

Union of India, all the residents of Sikkim have become the

citizens of India. Therefore, being citizen of India, settled in

Sikkim, all are to be treated at par. It is contended that

therefore, there is no reasonable justification and/or

classification to exclude those Indians, who have settled in

Sikkim prior to the merger of Sikkim with India on 26.04.1975

solely on the ground that their names were not registered as

“Sikkim Subjects” due to non-surrender of Indian citizenship

at the relevant time;

(ix)It is submitted that as such, the object and purpose of

Section 10(26AAA) is to grant exemption from payment of

tax under the Income Tax Act to the locals/residents of

Sikkim and that is the object sought to be achieved by

providing exemption under Section 10(26AAA) of the Income

Tax Act. It is submitted that therefore, there shall not be any

further classification between the locals/residents of Sikkim,

whose names have been registered as “Sikkim Subjects” in

the Register maintained under the Sikkim Subjects

Regulations, 1961 and those whose names could not be

and/or were not registered as “Sikkim Subjects” due to non-

surrender of their Indian citizenship;

(x)It is submitted that as such all the residents of Sikkim, who

have settled in Sikkim prior to the merger of Sikkim with India

are all to be treated at par as they are all similarly situated

and therefore the classification into different groups though

similarly situated is discriminatory and violative of Article 14

of the Constitution of India. It is submitted that the

classification into groups should be based on identifiable

criteria, which sets apart one group from the other. It is

submitted that the second condition which has to be satisfied

is that such a classification of a separate and identifiable

group should bear a reasonable nexus with the object and

purpose sought to be achieved by that law. That in the

present case, none of the above two conditions are satisfied

and therefore, the classification between the two groups

similarly situated would be arbitrary and hit by Article 14 of

the Constitution. In support of above submission that

classification between the two groups similarly situated

would be arbitrary and hit by Article 14 of the Constitution,

Shri Vishwanathan, learned Senior Advocate, has heavily

relied upon the decisions of this Court in the case of D.S.

Nakara Vs. Union of India, (1983) 1 SCC 305 (paras 9 to

15). He has also relied upon the observations made by this

Court in paragraph 4 of the decision of this Court in the case

of State of Rajasthan Vs. Manohar Singhji, 1954 SCR

996 : AIR 1954 SC 297.

7.1Shri Vishwanathan, learned Senior Advocate appearing on behalf

of the petitioner has further submitted that Court can remove

discrimination and put the petitioners in the same class so as to do away

with discrimination. It is submitted that in the present case, in order to

remove the arbitrary discrimination against Indian settlers in Sikkim, the

definition of “Sikkimese” in Section 10(26AAA) ought to be read to

include Indians, who had settled there as on 26.04.1975. Therefore, it is

prayed to treat the word “means” in the definition of “Sikkimese” as an

inclusive one and include Indian settlers within this fold. Reliance is

placed on the decision of this Court in the case of Vishundas

Hundumal Vs. State of M.P., (1981) 2 SCC 410.

7.2Learned counsel appearing on behalf of the intervenors has, in

addition, also relied upon the Parliamentary Report of the Parliament of

India (Rajya Sabha Committee) in the 145

Report dated 06.08.2013

recommending that the ambit of Section 10 (26AAA) of the Income Tax

Act, 1961, which exempted “Sikkimese Subjects” from payment of

Income Tax should also be extended to all the Indian citizens and their

descendants, who have been residing in Sikkim prior to 26.04.1975.

8.Now, so far as challenge to the Proviso to Section 10(26AAA),

insofar as it excludes from the exempted category “a Sikkimese woman,

who marries a non-Sikkimese after 01.04.2008” is concerned, it is

vehemently submitted by Shri K.V. Vishwanathan, learned Senior

Advocate that the same is discriminatory and based on gender

inequality, which is wholly violative of Articles 14, 15 and 21 of the

Constitution of India. It is submitted that there is no exclusion of a male

Sikkim, who marries a non-Sikkimese person from the exemption

granted under clause (26AAA) of Section 10 of the Income Tax Act.

8.1It is submitted that a woman is not a chattel and has an identity of

her own, and the mere factum of being married ought not to take away

that identity. Reliance is placed upon the decisions of this Court in the

case of Anuj Garg & Ors. Vs. Hotel Association of India & Ors.

(2008) 3 SCC 1 (paras 21, 22, 25, 26) and G. Sekar Vs. Geetha & Ors.

(2009) 6 SCC 99 (paras 52, 54), in support to the prayer to strike down

and/or hold the Proviso to Section 10(26AAA) of the Income Tax Act is

discriminatory and violative of Articles 14 and 21 of the Constitution of

India.

9.Shri N. Venkataraman, learned ASG has tried to justify the

classification by submitting that a conscious decision has been taken by

the legislature/Parliament to grant the benefit of exemption to only those

“Sikkim Subjects”, whose names have been registered in the Register

maintained under the Sikkim Subjects Regulations, 1961. It is submitted

that therefore the same may not be interfered with. However, he is not

in a position to justify the classification and satisfy the Court how such a

classification will achieve the object and purpose of granting exemption

under Section 10(26AAA) of the Income Tax Act. He is not in a position

to explain and/or satisfy the Court any reasonable differentia and/or

justification to exclude the Indians, who have settled in Sikkim prior to

the merger of Sikkim with India on 26.04.1975 from the purview of

Section 10(26AAA) of the Income Tax Act. He is also not in a position to

satisfy the distinguishing features and/or the intelligible differentia, which

distinguishes the persons, who are left out of the group namely, the Old

Indian Settlers, who have settled in Sikkim prior to the merger of Sikkim

with India and with that of the “Sikkim Subjects” registered under the

Sikkim Subjects Regulations, 1961.

9.1Shri Venkataraman, learned ASG is also not in a position to justify

the Proviso to Section 10(26AAA) insofar as it excludes from the

exempted category, “a Sikkimese woman, who marries a non-Sikkimese

after 01.04.2008”.

10.Shri Vivek Kohli, learned Advocate General appearing on behalf of

the State of Sikkim has as such supported the objections.

10.1It is submitted on behalf of the State that the State has no

objection if the Proviso to Section 10(26AAA) depriving the right of a

“Sikkimese woman” to exemption from payment of Income Tax under

Section 10(26AAA) upon her marriage to a non-Sikkimese after

01.04.2008 is struck down and/or is done away with so as to treat them

equally in the matter of income tax exemption.

10.2Now, so far as, the right of the old Indian settlers to pray for the

exemption under Section 10(26AAA) of the Income Tax Act is

concerned, it is submitted on behalf of the State that the benefit of

Section 10(26AAA) has to be extended to all Indian citizens domiciled in

the State of Sikkim irrespective of the fact whether their names have

been registered as “Sikkim Subjects” in the “Sikkim Subjects Register”

maintained under the Sikkim Subjects Regulations, 1961 or not.

11.Heard the learned counsel for the respective parties at length.

12.The challenge in the present petitions under Article 32 of the

Constitution of India is :-

(i)The definition of “Sikkimese” in Section 10(26AAA) to the

extent it excludes the Indians, who have settled in Sikkim

prior to the merger of Sikkim with India on 26.04.1975; and

(ii)Proviso to Section 10(26AAA) insofar as it excludes from the

exempted category “a Sikkimese woman, who marries a

non-Sikkimese after 01.04.2008”

13. Now, so far as the first issue is concerned, as per the definition of

“Sikkimese” only those individuals, whose names are recorded in the

immediately before 26.04.1975 or whose names are recorded in the

dated 07.08.1990 and 08.04.1991 or any other individual whose name

does not appear in the Register of “Sikkim Subjects”, but it is established

beyond doubt that the name of such individual’s father or husband or

paternal grandfather or brother from the same father has been recorded

in that register, are considered to be eligible as “Sikkimese” for the

purpose of exemption under Section 10(26AAA) of the Income Tax Act.

Meaning thereby, all those Sikkimese/Old Indian Settlers in Sikkim, who

might have settled in Sikkim prior to 26.04.1975 but whose names are

not registered as “Sikkim Subjects” in the register maintained under the

Sikkim Subjects Regulations, 1961 are not entitled to the exemption

available under Section 10(26AAA) of the Income Tax Act. At this stage,

it is required to be noted that total 95% of the population of Sikkim are

getting the benefit of Section 10(26AAA) of the Income Tax Act and only

5% are left out and out of which only 1% are the persons like the Old

Indian Settlers, who have settled in Sikkim prior to the merger with India

on 26.04.1975, but their names could not be registered as “Sikkim

Subjects” like the petitioners.

13.1It is to be noted that as such the purpose of Section 10(26AAA) is

to grant exemption to the residents of Sikkim from payment of income

tax under the Income Tax Act. Therefore, all such Indians/citizens, who

have settled in Sikkim prior to the merger of Sikkim with India on

26.04.1975 are to be treated at par and they form the same group/class

and are entitled to the exemption under Section 10(26AAA) of the

Income Tax Act. As such, there is no difference and/or distinction

between those “Sikkim Subjects”, whose names are recorded in the

those Indians, who have settled in Sikkim prior to the merger of Sikkim,

but whose names were not recorded as “Sikkim Subjects” in the register

maintained under the Sikkim Subjects Regulations, 1961. All are

“Sikkimese”. Merely because at the relevant time and when the Sikkim

Subjects Regulations, 1961 was enacted, the Indians settled in Sikkim

did not surrender their Indian citizenship or their fathers/forefathers’

names were not entered into the register maintained under the Sikkim

Subjects Regulations, 1961, by itself, it cannot be said that they cease to

be the “Sikkimese”. All of them are similarly situated with those

“Sikkimese” / “Sikkim Subjects”, who all have settled in Sikkim prior to

the merger of Sikkim with India on 26.04.1975. As observed above, the

object and purpose of Section 10(26AAA) is to grant benefit of

exemption from payment of income tax under the Income Tax Act to the

residents of Sikkim. Therefore, there is no nexus sought to be

achieved in excluding the Indians, who have settled in Sikkim prior to the

merger of Sikkim with India on 26.04.1975 but their names are not

recorded as “Sikkim Subjects”. The Union of India has failed to satisfy

any reasonable classification and/or nexus to exclude such class of

Indians, who, in fact, have settled in Sikkim prior to 26.04.1975.

Therefore, exclusion of old Indian settlers, who have settled in Sikkim

prior to the merger of Sikkim with India on 26.04.1975 from the definition

of “Sikkimese” in Section 10(26AAA) is arbitrary, discriminatory and

violative of Article 14 of the Constitution of India.

13.2As observed and held by this Court in the case of D.S. Nakara

(supra) Article 14 forbids class legislation but permits reasonable

classification for the purpose of legislation, which classification must

satisfy the twin tests of classification being founded on an intelligible

differentia which distinguishes persons or things that are grouped

together from those that are left out of the group and that differentia

must have a rational nexus to the object sought to be achieved by the

statute in question. In the present case, the exclusion of old Indian

settlers, who have settled in Sikkim prior to the merger of Sikkim with

India on 26.04.1975 from the definition of “Sikkimese” in Section

10(26AAA) does not fulfill the aforesaid two conditions.

13.3As observed and held by this Court in the case of Manohar

Singhji (supra), Article 14 declares that “the State shall not deny to any

person equality before the law or the equal protection of the laws within

the territory of India”. It is observed that such an obvious discrimination

can be supported only on the ground that it was based upon a

reasonable classification. A proper classification must always bear a

reasonable and just relation to the things in respect of which it is

proposed. Judged by those criteria, it seems to us that the discrimination

is based on no classification at all and is manifestly baseless,

unreasonable and arbitrary.

13.4In the present case, as observed hereinabove, the exclusion has

no nexus with the object and purpose of enacting Section 10(26AAA) of

the Income Tax Act to be achieved. No reasonable intelligible differentia

has been shown and therefore, the same can be termed as arbitrary. As

observed and held by this Court in the case of Shayara Bano Vs. Union

of India, (2017) 9 SCC 1, in India, arbitrariness is not a separate ground

since it will come within the embargo of Article 14 of the Constitution.

Therefore, any provision, which is arbitrary, discriminatory and violative

of Article 14 of the Constitution of India and any classification which is

violative of Article 14 of the Constitution of India can be struck down.

14.In view of the above and for the reasons stated above, we are of

the firm opinion that Section 10(26AAA) to the extent it excludes the Old

Indian settlers, who have settled in Sikkim prior to the merger of Sikkim

with India on 26.04.1975, but whose names are not recorded as “Sikkim

Subjects”, from the definition of “Sikkimese” is ultra vires, being arbitrary,

discriminatory and violative of Article 14 of the Constitution of India. The

definition of “Sikkimese” in Section 10(26AAA) of the Income Tax Act

shall also include all Indians, who have permanently settled in Sikkim

prior to the merger of Sikkim with India on 26.04.1975 irrespective of the

fact that whether their names have been recorded in the register

maintained under the Sikkim Subjects Regulations, 1961 or not.

Therefore, it is held that the “Sikkimese” like the petitioners, who are old

Indian settlers and who have settled in Sikkim prior to the merger of

Sikkim with India on 26.04.1975 shall also be entitled to the exemption

under Section 10(26AAA) of the Income Tax Act, 1961.

15.Now, so far as the challenge to the Proviso to Section 10(26AAA)

insofar as it excludes from the exempted category, “a Sikkimese woman,

who marries a non-Sikkimese after 01.04.2008” is concerned, there is no

justification shown and/or demonstrated to exclude “a Sikkimese woman,

who marries a non-Sikkimese after 01.04.2008” from the exempted

category. Apart from the above, the same is clearly hit by Articles 14, 15

and 21 of the Constitution of India. The discrimination is based on

gender, which is wholly violative of Articles 14, 15 and 21 of the

Constitution of India. It is to be noted that there is no disqualification for

a Sikkim man, who marries a non-Sikkimese after 01.04.2008. As rightly

submitted, a woman is not a chattel and has an identity of her own, and

the mere factum of being married ought not to take away that identity. In

the case of G. Sekar (supra), it is observed and held that the exclusion

of women from inheritance on the ground of gender was a clear violation

of the constitutional prohibition against unfair discrimination. It is

observed and held that in terms of Articles 14 and 15 of the Constitution

of India, the female heirs, subject to the statutory rule operating in that

field, are required to be treated equally to the male heirs. Gender

equality is recognised by the world community in general in the human

rights regime.

15.1Even otherwise, there is no justification shown to exclude “a

Sikkimese woman, who marries a non-Sikkimese after 01.04.2008”. A

Sikkimese woman, who has married a non-Sikkimese prior to

01.04.2008 is entitled to the benefit of exemption provided under Section

10(26AAA). There is no justification shown to fix the cut off date of

01.04.2008. There is no rational nexus to the object sought to be

achieved by excluding “a Sikkimese woman, who marries a non-

Sikkimese after 01.04.2008” and to include “a Sikkimese woman, who

has married a non-Sikkimese before 01.04.2008”. Therefore, to deny

the benefit of exemption under Section 10(26AAA) of the Income Tax

Act to “a Sikkimese woman, who marries a non-Sikkimese after

01.04.2008” is arbitrary, discriminatory and violative of Article 14 of the

Constitution of India. Therefore, also, the Proviso to Section 10(26AAA)

insofar as it excludes from the exempted category “a Sikkimese woman,

who marries a non-Sikkimese after 01.04.2008” has to be struck down.

16.Therefore, Proviso to Section 10(26AAA) inasmuch as it excludes

from the provision of exemption a Sikkimese woman merely because

she marries a non-Sikkimese after 01.04.2008 is totally discriminatory

and violative of Articles 14, 15 and 21 of the Constitution of India, which

requires to be struck down.

17.In view of the above and for the reasons stated above, both these

petitions succeed. The exclusion of Old Indian settlers, who have

permanently settled in Sikkim prior to merger of Sikkim with India on

26.04.1975 from the definition of “Sikkimese” in Section 10(26AAA) is

hereby held to be ultra vires to Article 14 of the Constitution of India and

is hereby struck down. It is held that all Indians/old Indian settlers, who

have permanently settled in Sikkim prior to the merger of Sikkim with

India on 26.04.1975, irrespective of whether his/her name is recorded in

the register maintained under the Sikkim Subjects Regulations, 1961

read with Sikkim Subject Rules, 1961 or not, are entitled to the

exemption under Section 10(26AAA) of the Income Tax Act.

17.1Proviso to Section 10(26AAA) insofar as it excludes from the

exempted category, “a Sikkimese woman, who marries a non-Sikkimese

after 01.04.2008” is hereby struck down being ultra vires to Articles 14,

15 and 21 of the Constitution of India.

Both these writ petitions are accordingly allowed. However, in the

facts and circumstances of the case, there shall be no order as to costs.

………………………………….J.

[M.R. SHAH]

NEW DELHI; ………………………………….J.

JANUARY 13, 2023. [B.V. NAGARATHNA]

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

WRIT PETITION (C) NO. 59 OF 2013

ASSOCIATION OF OLD

SETTLERS OF SIKKIM & ORS …..PETITIONER(S)

VERSUS

UNION OF INDIA & ANR. …. RESPONDENT (S)

With

WRIT PETITION (C) NO. 1283 OF 2021

J U D G M E N T

NAGARATHNA J.

I have perused the judgment and order proposed by His Lordship

M.R. Shah J. as well as the conclusions reached by him. However, I

would like to render my separate opinion on the issues raised in these

writ petitions revolving around the definition of “Sikkimese” appended

as an Explanation to Section 10 (26AAA) of the Income Tax Act, 1961

(hereinafter referred to as ‘I.T. Act, 1961’) as well as on the vires of the

proviso concerning Sikkimese women assailed in these writ petitions.

2.His Lordship M.R. Shah, J. has opined as follows:

(i)That Section 10 (26AAA) to the extent that it excludes old

Indian settlers from the benefit of exemption from payment of

income tax i.e. those who have settled in Sikkim prior to merger

of Sikkim with India on 26

April, 1975 but whose names are

not recorded as “Sikkim Subjects” from the definition of

Sikkimese is ultra vires as, being arbitrary, discriminatory and

violative of Article 14 of the Constitution of India. Hence,

petitioners herein and similarly situated persons who are old

Indian settlers who have settled in Sikkim prior to the merger of

Sikkim with India on 26

April, 1975 shall also be entitled to

the exemption under Section 10 (26AAA) of the I.T. Act, 1961.

In my view, persons such as the petitioners and similarly

situated persons are not entitled to the exemption under the

Explanation as it now stands. In the circumstances, in order to

remove the discrimination, certain observations have been made

and directions have been issued by me to the Union of India on

the basis of reasons assigned during the course of my judgment.

If those directions are complied with, the discrimination would

be removed.

(ii)I agree with the conclusion reached by M.R. Shah, J. to

the effect that the proviso in Section 10 (26AAA) of the I.T. Act,

1961 is arbitrary, discriminatory and violative of Articles 14 and

15 of the Constitution of India. I have assigned additional

reasons and dealt with the said aspect of the matter in greater

detail through the course of my judgment and order.

Background facts:

3.Writ Petition (C) No.1283 of 2021 has been filed by the

petitioners under Article 32 of the Constitution of India, assailing the

validity of the proviso to Section 10 (26AAA) and Explanation thereto

introduced to the I.T. Act, 1961 through the Finance Act, 2008 by

which Sikkimese (people from Sikkim State) are purportedly exempted

from payment of income tax. They have further sought a direction to

the respondents to extend the exemption granted under Section 10

(26AAA) of I.T. Act, 1961 to persons such as the petitioners herein.

The petitioners have sought a declaration that they are also entitled to

exemption from payment of income tax under Section 10 (26AAA) of

the I.T. Act, 1961. In other words, they have sought a direction to

extend the benefit of the said provision to the petitioners herein.

Another direction that is sought against respondent No. 2 is to furnish

a list of applicants who have submitted applications seeking income

tax exemption pursuant to the Public Notice dated 22

September,

2018.

Similar prayers have been sought by the petitioners in W.P. (C)

No. 59 of 2013 which is the earlier of the two writ petitions.

4.It is the case of the petitioners that they were ordinarily resident

in the former Kingdom of Sikkim prior to its merger with India and

they have an ethnic identity in Sikkim. Now, they are citizens of India.

The persons ordinarily resident in the former Kingdom of Sikkim

comprised of:

(a) a major population of 'Sikkimese Nationals'/'Sikkim Subjects'

recognized as 'Persons of Sikkimese origin'; and

(b) a minor population of 'British Indian Subjects' of Undivided

India/'Indian Nationals' of Independent India recognized as

'Persons of Indian origin' ordinarily residing in the former

Kingdom of Sikkim for the purpose of trade, commerce and

Government employment/s under the 'Sikkim Darbar '.

5.The ordinarily resident 'Sikkimese Nationals/Subjects' or

'Persons of Sikkimese origin' of the former Kingdom of Sikkim

comprised of persons recognized as having the following ethnicity:

(i)'Sikkimese Bhutia' - meaning persons who could be from

among the native 'Bhutia' and the 'Chumbipa', 'Dopthapa',

'Dukpa', 'Kagatey', 'Sherpa', 'Tibetan', 'Tromopa', 'Yolmo'

Communities which got recognised and notified as the

Scheduled Tribes by 'The Constitution (Sikkim) Scheduled Tribes

Order 1978'

(ii)'Sikkimese Lepcha' - meaning persons who could be from

the aboriginal Lepcha Community which got recognised and

notified as the Scheduled Tribes by 'The Constitution (Sikkim)

Scheduled Tribes Order, 1978'.

(iii)'Sikkimese Nepali' - meaning persons who could be from

among the Castes or Classes that included the following:

(a) the 'Damai', 'Kami'/'Lahar', 'Majhi', and 'Sarki' Communities

which got recognised as the Scheduled Castes by the

Constitution (Sikkim) Scheduled Castes Order, 1978;

(b) the 'Limbu' and 'Tamang' Communities (earlier notified under

'Central List of Other Backward Classes ' in the year 1995)

which got recognised and notified as the Scheduled Tribes in

the year 2003 by the Scheduled Castes and Scheduled Tribes

Orders (Amendment) Act 2002;

inclusion in the 'Central List of Other Backwards Classes' in

the year 1995, namely, 'Bhujel', 'Gurung', 'Manger', 'Kirat

Rai', 'Sunuwar', and in the year 1999 namely 'Sanyasi', and

in the year 2000 namely 'Jogi'; and

(d) the 'Bahun', 'Chettri' and 'Newar' Communities which got

recognized and notified in the 'State List of Other Backward

Classes of Sikkim in the year 2014.

6.According to the petitioners, the history regarding ordinarily

resident 'British Indian Subjects' and the 'Indian Nationals' engaged in

trade, commerce and Government employment in the former Kingdom

of Sikkim is pluralistic. They comprised of diverse ethnic, religious and

socio-cultural backgrounds from across the territories of Undivided

British India and later Independent India. The residents of Sikkim are

the inhabitants of Sikkim who were permanent residents prior to the

year 1975.

7.In the year 1975, the former Kingdom of Sikkim became a part of

India and became known as the State of Sikkim. Till then i.e., 26

April, 1975 (which is the 'appointed day' of its merger and

incorporation with India), the Kingdom of Sikkim was ruled through a

lineage of hereditary rulers of Namgyal Dynasty known as the

‘Chogyal’.

8.The history of the period prior to the merger of Sikkim with India

as averred in the writ petitions could be encapsulated as under:

(a) During the period from 1890 till 1950, the Government of the

erstwhile Kingdom of Sikkim and its posts and services were

subjected to various situations and conditions which have been

described by the petitioners and is referred to hereunder:

“(i) During the period from 1890 to 1918, the

Imperial British Government exercised direct

and exclusive control over the external affairs as

well as the internal affairs of the Kingdom of

Sikkim. At that time the British Indian Subjects

were allowed to hold Office and Employment to

the posts and services of the Government

Establishment of the erstwhile Kingdom of

Sikkim.

(ii) In 1918, the then King of Sikkim Chogyal Tashi

Namgyal was given back his authority over the

internal affairs of Kingdom of Sikkim; where-

after he got empowered with absolute powers

over all legislative, judicial and executive

functions of his Kingdom; while the external

affairs continued to remain under the

Government of Imperial British India. From

1918 onwards, the Kingdom of Sikkim had

continued to allow the British Indian Subjects

to hold Office and Employment in the posts and

services of the Government Establishment of the

Kingdom of Sikkim i.e. 'Sikkim Darbar'. Such

government employees were referred to as

'Darbar' Employees of British Indian origin.

(iii) At the time immediately before India's

Independence from British Paramountcy, there

was a popular demand from the people of

Kingdom of Sikkim for a democratic setup and

its accession to the Indian Union. During that

time, a popular vote for Sikkim to join India had

failed; hence the Kingdom of Sikkim did not

accede to the Indian Union then.

(iv) When India became independent in 1947, on

the cessation of British Paramountcy from

India, the Dominion of India inherited the rights

and liabilities of the British Crown vis-à-vis the

Indian States as on that date. The Kingdom of

Sikkim not being exactly like other Indian

States did not accede to the Union of India but

had signed a standstill agreement for

continuation of its previous relationship

pending a fresh agreement with India. In the

years preceding the proclamation of Republic of

India (i.e. before 26th January 1950), it was

agreed that the Kingdom of Sikkim was a

Special Protectorate State of Indian Union,

having its own separate territory.

(v) From 1947 onwards, the Kingdom of Sikkim

had continued to allow the British Indian

Subjects as well as Indian Nationals to hold

Office and employment in the posts and services

of the Government Establishment of the

Kingdom of Sikkim, i.e. 'Sikkim Darbar'. Such

persons of Indian origin serving/appointed in

the posts and services of Government

Establishment of the Kingdom of Sikkim were

referred to as 'Darbar' Employees of British

Indian origins and 'Darbar' Employees of Indian

Nationality.”

In view of the above historical developments, persons of

Indian origin belonging to diverse ethnic, religious and socio-

cultural backgrounds from across the territories of Undivided

British India and later Independent India, resided in Sikkim for

the purpose of their employment in various posts and services or

for trade and business.

(b) On 5

December, 1950, the Indo-Sikkim Peace Treaty was entered

into and under this Treaty, Sikkim was to be a protectorate of

India. However, Sikkim still enjoyed autonomy in its internal

administration. It is pertinent to note that Article VII of this Treaty

allowed the subjects of Sikkim as well as Indian citizens, free

movement in each other's territories. Under the said Treaty,

Indians in Sikkim were subject to Sikkimese law and the

Sikkimese in India were subject to Indian Laws. Indian citizens in

Sikkim had reciprocal rights to hold government employment and

buy immovable properties once settled in Sikkim and were to be

treated equally with Sikkimese in all matters.

(hereinafter called “1961 Regulation” for the sake of convenience).

This Regulation had extraordinary provisions by which a 'National

of another State' ordinarily residing in the erstwhile Kingdom of

Sikkim then, could acquire a Naturalised Sikkim

Subject/Citizenship status. Regulations 8(3), 8(4) of the 1961

Regulation provide for the power of the government of the

erstwhile Chogyal of the Kingdom of Sikkim to naturalise a person

upon an application being made in this regard. However, in order

to be qualified for naturalization, the applicant/person must be

employed in the Posts or Services of the Government

Establishment of the Kingdom of Sikkim and must fulfil the

following parameters:

(i) must have been in the service of the Government of the

erstwhile Kingdom of Sikkim for a period not less than ten

years immediately preceding the date of his application, or

(ii) must have rendered meritorious service to the erstwhile

Kingdom of Sikkim. The Government of the Chogyal may as

provided for under Regulation 8(4) also naturalise the wife

and minor children of a person who is granted a Certificate of

Naturalisation, if an application is made in this regard. It is

however, to be noted that, in order for a Certificate of

Naturalisation to be granted under the aforesaid clauses, the

following conditions must be fulfilled: (i) renouncing their

Nationality and (ii) changing their allegiance to the erstwhile

Kingdom of Sikkim. The result of this pre-condition was that

an eligible male British Indian Subject or male Indian

National and his wife and minor children had to give up their

Indian Nationality (of which country Sikkim was a

protectorate since 1950), for the purpose of converting

themselves into Naturalized Sikkim Subjects. Although, these

Regulations were promulgated, according to the petitioners

no differential treatment was meted out to the Indians as

their rights were protected under the Indo-Sikkim Treaty of

1950.

(d) In 1965, the Chogyal of Sikkim notified the Sikkim Work Permit

Rules, 1965, by which all foreigners required a Work Permit to

enter, work and stay in Sikkim. Significantly, the term "Foreigner"

under the Sikkim Work Permit Rules, 1965, was defined as

meaning a “foreigner not being Indian national". Persons of Indian

origin were therefore not considered as foreigners in Sikkim and

were not required to obtain a work permit irrespective of the fact

that they were not Sikkim Subjects. Many of the Indians were also

on the voters list of Sikkim.

(e)In 1973, an agreement was entered into between India, the

Chogyal and the political parties of Sikkim for the establishment

of a democratic Government in Sikkim. In pursuance of the same,

India was to assist in the conduct of free and fair elections in

Sikkim.

(f) Thereafter, on 26

April, 1975, by way of the Constitution Thirty-

sixth Amendment Act, 1975, Sikkim became a State in India and

was included in Entry 22 of Schedule I to the Constitution of

India.

(g) Article 371-F was also inserted into the Constitution of India

under which it was, inter alia, open to the President of India

(within two years from the date of the Amendment) or the

Parliament to extend any law to the State of Sikkim, or repeal any

existing law of Sikkim.

9.Subsequent to the merger of Sikkim as a State of the India, the

following developments relevant to these cases could be traced as

under:

(a) By way of a statutory order, the Citizenship Act,

1955 was extended to the State of Sikkim. On 21

June, 1975, the Home Department of Government of

India issued a notification titled "Sikkim (Citizenship)

Order 1975" stating that 'all Sikkim Subjects under

the 1961 Regulation before 26

April, 1975 were to

be deemed Indian citizens'. Therefore, this effaced the

distinction between persons of Indian origin residing

in Sikkim (without giving up Indian Citizenship) and

others who had earlier taken up Sikkimese

Citizenship by entry of their names in the Sikkim

Subjects Register. According to the petitioners, as on

April, 1975, there was no distinction between

Sikkim subjects and persons of Indian origin and

other settlers in Sikkim, all of them being treated as

citizens of India. However, those whose names did

not figure in the Sikkim Subjects Register were left

out of consideration.

(b) In view of the fact that a large number of

eligible persons had been left out of the Sikkim

Subjects Register and were consequently denied

Indian citizenship, on 25

September, 1976 the

Government of Sikkim issued a Memorandum that

for the purposes of seeking employment, those

claiming to be locals should be able to show whether

their parents’ names were maintained on or before

May, 1975 in the relevant Government Register.

Sikkim Laws Order was promulgated wherein, the

1961 Regulation, was repealed w.e.f. 26

April, 1975

by the Order issued on 13

September, 1975.

(d)On 9

April, 1981, the Government of Sikkim

issued a Memorandum to the effect that:

" ... the Governor has been pleased to authorize

District Collectors within respective district to issue

Certificate to person identifying them in the following

groups to enable them to apply for employment in the

State-

1.A person whose name is

found in the Old Sikkim

Subject Register prior to 1975.

2. A person whose name is not found

registered in the Old Sikkim Subject

beyond doubt that the name of his/her

father/husband/paternal grandfather

/brother from the same father has been

recorded in the Old Sikkim Subject

3,A person who has or had

agricultural land in rural areas and has

been ordinarily residing in the State of

Sikkim or

4. A person whose father/husband

has/had been in Sikkim Government

service on or before 31.12.1969."

(e)In the year 1988, a petition was moved in the

Lok Sabha by a few Members of Legislative Assembly

of Sikkim stating that at the time of merger of Sikkim

with India, only those people whose names were

registered in the Sikkim Subjects Register were made

Indian Citizens in terms of Sikkim (Citizenship) Order

1975, but there were many other persons who were

present in Sikkim between the period 1946 and 1975

who were otherwise by reason of their residence,

domiciled in Sikkim and by allegiance "Sikkimese"

and they should also be made Indian citizens. The

Government of India conceded to this demand and an

exercise was carried out to grant Indian Citizenship

to the so-called ‘stateless’ people whose names were

deemed to have been genuinely omitted. For this

purpose, the Sikkim Citizenship (Amendment) Order,

1989, was notified on 3

April, 1989, wherein a

proviso was inserted to deem such cases of genuine

omission as citizens of India. The relevant clause in

the amendment order reads as follows:

“Provided that any person whose name was

eligible to be entered in the register maintained

under the said regulation but was not entered

because of any genuine omission shall also be

deemed to have become a citizen of India on that

day if so determined by the Central Government.”

(f) On the same date i.e., 3

April, 1989, the

Ministry of Home Affairs, Government of India,

constituted a committee comprising of officials of the

Government of India and Government of Sikkim, to

look into cases of genuine omission in terms of the

Sikkim Citizenship (Amendment) Order, 1989.

Certain Guidelines were prescribed to decide the

persons who were left out due to genuine omission

from being entered into the Sikkim Subjects Register.

It is averred that in terms of "clauses d, f, g and h'' of

the prescribed Guidelines, persons such as the

petitioners were entitled to acquire Indian Citizenship

in terms of Sikkim Citizenship (Amendment) Order,

1989, by virtue of their fathers’ Government

employment in 'Sikkim Darbar' prior to the

commencement of the 'exception' clause introduced

w.e.f., 1

April, 1974, by the Sikkim Government

Establishment Rules, 1974.

(g)Subsequently, vide Government of India orders

dated 7

August, 1990 and 08

April, 1991, a total of

73,431 persons were granted Indian Citizenship on

the basis that it was found that these persons were

eligible to have been included in the Sikkim Subjects

citizens of India and were persons who had

permanently settled in Sikkim between 1946 and

1975.

It is averred that applications in the prescribed format for

inclusion in the Citizenship list in terms of the Sikkim Citizenship

(Amendment) Order, 1989, were submitted by the family members

of petitioners in W.P. (C) No.1283 of 2021, which was duly

acknowledged by the concerned District Collector. However, their

names neither appeared in the approved list forwarded by the

Ministry of Home Affairs, Government of India nor in the rejected

list.

10.The legal and factual developments prior to the introduction of

the I.T. Act, 1961, in Sikkim could be encapsulated as under as the

controversy in these cases arises under the said Act:

(a) In 1948, the Sikkim Income Tax Manual, 1948

(SITM) was promulgated by the Ruler of Sikkim (the

Chogyal). Under the SITM, all persons engaged in business

were subjected to tax irrespective of their origin. Therefore,

there was no difference made out between the original

inhabitants of Sikkim, namely, the Bhutia-Lepchas and the

persons of foreign origin settled in Sikkim like the Nepalis

or persons of Indian origin who had settled down in Sikkim

generations back. It is averred that under the SITM,

Income Tax was paid by all without any discrimination on

the ground of place of birth, race or ethnicity.

(b) In the year 1989, the I.T. Act, 1961 was

extended to Sikkim by the Finance Act, 1989. Under the

said Amendment, any law corresponding to the I.T. Act,

1961 which was in force in the State of Sikkim stood

repealed. Of course, since Parliament had no competence

to levy a tax on agricultural income, the repeal of the SITM,

1948, would affect only the law insofar as it applied to

taxes on income and would not affect its operation with

respect to agricultural income.

1961, stood extended to Sikkim and the corresponding law

stood repealed, pro tanto, all residents, including the

petitioners, continued to pay income tax under the SITM,

along with the other Indian citizens in Sikkim irrespective

of whether their names had been registered in the Sikkim

State Subjects Register or not.

(d) It is noted that the extension of the I.T. Act,

1961, to Sikkim was not implemented in reality due to

severe opposition from the State of Sikkim. Thereafter, the

Government of India, vide an amendment to I.T. Act, 1961

by the Finance Act, 1994, proposed an exemption from

income tax to the Scheduled Tribes in Sikkim as was being

done in regard to other states. However, this was also

opposed by the lone member of Sikkim in the Lok Sabha,

since granting exemption only to the tribals would mean

antagonizing a large extent of non-tribal population who

form the bulk of the voters, due to which the said

amendment was withdrawn.

(e) On 19

July, 2004, the Government of India

and Government of State of Sikkim, in an attempt to

resolve the differences vis-à-vis implementation of I.T. Act,

1961 in Sikkim, formed a Joint Committee consisting of

the members from the Central Government and

Government of Sikkim. The State of Sikkim representing to

the Committee repeatedly insisted on an exemption for

persons holding the Sikkim Subjects Certificate (SSC) and

their descendants who were made Indian Citizens vide the

1989 Sikkim Citizenship (Amendment) Order, from

payment of income tax. This category essentially consisted

of about 94.6% of the total population. Discussions were

held for four years to secure exemptions to SSC holders

and the people who were made citizens of India and their

descendants vide the Government of India orders dated

August, 1990 and 08

April, 1991. The contention of

the Government of Sikkim was that SSC holders and those

who became Indian citizens in 1990-1991 vide the Sikkim

Citizenship (Amendment) Order, 1989, should be

exempted. The Voters' List of 2004 for the State of Sikkim

had the following demographic composition:

Bhutia-Lepcha (STs) : 20.64%

Nepalis : 69.71%

(Including the original Sikkim Subjects)

Sherpa : 4.31%

Others : 5.34%

(Old Settlers of Indian Origin: 1.50% and New Settlers

including those of Indian Origin 3.84% = 5.34%)

(f) In the year 2008, Government of India passed

an amendment to the I.T. Act, 1961 by virtue of the

Finance Act, 2008, wherein clause (26AAA) was introduced

under Section 10 of the I.T. Act, 1961. Clause (26AAA) to

Section 10 of the I.T. Act 1961 granted an exemption to

Sikkimese people. Thereafter, on 16

June, 2008, the

Government of Sikkim issued a Circular stating that the

SITM should not be acted upon.

Grievance of the petitioners:

11.According to the petitioners in W.P.(C) No. 1283 of 2021, they

have settled in Sikkim and their fathers were in Government service

on and prior to 31

December, 1969. Therefore, they have come under

the fourth category of the Memorandum issued by Government of

Sikkim on 09

April, 1981. The petitioners have been issued the

Certificate of Identification (akin to domicile or residential certificate)

by the Sikkim Government. On account of Certificate of Identification

being issued to them, the petitioners are part of the local population of

Sikkim and are at par with those persons whose names are found in

the old Sikkim Subjects Register. Thus, they have all along been

treated as part of the local population of Sikkim but the petitioners,

who are also settled in Sikkim and who have been issued Certificates

of Identification are excluded from the benefit of Section 10 (26AAA) of

the I.T. Act, 1961, and are being assessed to income tax whereas the

object of the aforesaid provision is to exempt the category of persons

mentioned therein from the payment of income tax. According to these

petitioners, the said provision in effect exempts 94% of the residents of

Sikkim while taxing the remaining 5% of which about 1% are the

people such as petitioners who are bona fide settlers in Sikkim and

are entitled to be treated at par with other categories. It is the

grievance of the petitioners that they have been singled out for the

purpose of imposition of income tax on the sole ground that their

names are not recorded in the Register under the 1961 Regulation.

According to these petitioners, they have Certificates of Identification

and they are as much Sikkimese as those categories of persons

mentioned in Section 10 (26AAA) of I.T. Act, 1961 who have been given

the benefit of non-payment of income tax under the said Act.

12.It is also averred that the persons who were granted Indian

citizenship by way of the Sikkim Citizenship (Amendment) Order of

1989, were those persons whose names in point of fact were never

included in the Sikkim Subjects Register but were given the benefit of

Indian citizenship.

13.In the context of the above grievance, various representations

were made by various persons for being granted exemption from

payment of income tax. Taking note of these representations, the

Union Government appointed a committee. On 16

October, 2009, the

Committee communicated a decision that it had come to the

conclusion that there was no provision in the I.T. Act, 1961, for grant

of exemptions to the individuals not included in the Register of Sikkim

Subjects. The Committee therefore recommended that the said

individuals should approach legal experts/Chartered Accountants to

look into the lacunae in the I.T. Act, 1961, for the possible inclusion of

their names so that the Government of Sikkim could take up the issue

with the Government of India.

14.According to the petitioners, on 21

September, 2010,

Government of Sikkim issued a Cabinet Memorandum wherein it was

admitted that Certificate of Identification (COI) was issued in view of

the still valid pre-merger laws on the subject, as it enjoyed

constitutional protection under Article 371-F. The persons such as the

petitioners herein by virtue of being COI holders are covered under

Rule 4(4) of Sikkim Government Establishment Rules, 1974, for

employment under the State Government and its Public Sector Units

(PSUs) which has provisions of employment for locals only.

15.According to the petitioners, due to the injustice being meted out

to the persons excluded from exemption from payment of income tax,

even though they were clearly permanent residents of Sikkim, the

matter was debated in the Sikkim State Assembly. On 24

March,

2011, a Cabinet Memorandum was issued stating that the

Government of Sikkim felt that it was appropriate to pass a Resolution

in the ensuing session of the Assembly in favour of the left-out

categories of persons (including persons such as the petitioners in

W.P. (C) No. 1283 of 2021, whose fathers were in Sikkim Government

Service before 31

December, 1969 and who are continuously residing

in the State of Sikkim) for income tax exemption by Government of

India. The Resolution was accordingly passed on 26

March, 2011.

16.Thereafter, Writ Petition (Civil) No 59 of 2013 was filed before

this Court and this Court was pleased to issue notice on 11

February, 2013, and granted interim relief to persons such as the

petitioners herein in respect of recovery proceedings at the instance of

the Income Tax Department as also qua deposit of TDS.

17.In August 2013, the Rajya Sabha published its 145th Report of

the Committee on the Petition, praying for protection of interest of

bona fide Indian nationals living in Sikkim prior to its merger with

India in the year 1975. In its deliberations, the Committee clearly

found that old Indian settlers of Sikkim are to be treated at par with

Sikkimese and should have been included in the said definition. It was

recommended that exemption be granted to such persons as well.

18.On 4

April, 2018, an order was passed by this Court directing

the petitioners in Writ Petition No. 59 of 2013 to place on record a list

of persons who were claiming benefit of Section 10 (26AAA) of I.T. Act,

1961, and the State of Sikkim was further directed to verify the claims

and cooperate with the Central Government so that such claims could

be considered by the Central Government in accordance with law.

19.Following this order, the State Government approved two other

categories of persons to be included for exemption from payment of

income tax, including the petitioners’ category i.e., those having COI

on the basis of their fathers’ being in Government of Sikkim service on

or before 31

December, 1969 and who are permanently settled and

residing in Sikkim along with persons who had been issued COI on

the basis of landed property in rural areas of Sikkim. A Public Notice

bearing No. Home/Confdl/111/2013/09part/5992 dated 22

September, 2018 was issued by the State Government with a directive

to the above two categories to furnish details in the prescribed format

to the competent authority. It is averred that the persons such as the

petitioners in W.P.(C) No. 1283 of 2021 in accordance to the Public

Notice dated 22

September, 2018, have submitted all relevant

documents before the competent authority.

20.It is contended that the petitioners are being subjected to

continued discrimination and are being assessed to income tax, even

though they are also eligible for the exemption under Section 10

(26AAA) of the I.T. Act, 1961. That, in spite of various representations

which have been made, the completely discriminatory and arbitrary

amendments made to the I.T. Act, 1961 have still not been done away

with. In fact, further recovery notices for recovery of tax have been

sent to some of the persons who are members of petitioner No.1

Association in W.P. (C) No. 59 of 2013. Therefore, in the above

circumstances, being aggrieved by the amendment by which clause

(26AAA) to Section 10 of the I.T. Act, 1961 was introduced, the

petitioner has invoked Article 32 of the Constitution of India by

averring that the provision is violative of their fundamental rights.

Section 10 (26AAA) of Income Tax Act, 1961:

21.Section 10 of the I.T. Act, 1961, speaks about incomes not

included in total income i.e., the incomes mentioned under the

clauses of Section 10 of the said Act shall not be included in

computing the total income of any person. Clause (26AAA) of Section

10 states that in case of an individual, being a Sikkimese, any income,

which accrues or arises to him (a) from any source in the State of

Sikkim; or (b) by way of dividend or interest on securities, shall not be

income falling within total income of any person. The proviso,

however, states that nothing contained in this clause shall apply to a

Sikkimese woman who, on or after 1

April, 2008, marries an

individual who is not a Sikkimese. The Explanation defines a

Sikkimese as under:

1.An individual, whose name is recorded in the register maintained

under the Sikkim Subjects Regulation, 1961 read with Sikkim

Subject Rules, 1961 (hereinafter referred to as the “Register of

Sikkim Subjects”), immediately before the 26

April, 1975; or

2.An individual, whose name is included in the Register of Sikkim

Subjects by virtue of the Government of India Order No.

26030/36/90 – I.C.I., dated the 7

August, 1990 and Order of

even number dated the 8

April, 1991; or

3.Any other individual, whose name does not appear in the Register

of Sikkim Subjects, but it is established beyond doubt that the

name of such individual’s father or husband or paternal

grandfather or brother from the same father has been recorded in

that register;

The relevant provision of Section 10 (26AAA) of I.T. Act, 1961, is

extracted as under:

“(26AAA) in case of an individual, being a Sikkimese, any

income which accrues or arises to him—

(a) from any source in the State of Sikkim; or

(b) by way of dividend or interest on securities:

Provided that nothing contained in this clause shall apply

to a Sikkimese woman who, on or after the 1st day of

April, 2008, marries an individual who is not a Sikkimese.

Explanation. —For the purposes of this clause, "Sikkimese"

shall mean—

(i) an individual, whose name is recorded in the

Regulation, 1961 read with the Sikkim Subject

Rules, 1961 (hereinafter referred to as the

"Register of Sikkim Subjects"), immediately before

the 26th day of April, 1975; or

(ii) an individual, whose name is included in the

Government of India Order No. 26030/36/90-

I.C.I., dated the 7th August, 1990 and Order of

even number dated the 8th April, 1991; or

(iii) any other individual, whose name does not appear

in the Register of Sikkim Subjects, but it is

established beyond doubt that the name of such

individual's father or husband or paternal

grandfather or brother from the same father has

been recorded in that register;”

Submissions:

22.We have heard Sri K.V. Viswanathan, learned senior counsel

appearing on behalf of the writ petitioners in Writ Petition (C) No. 59 of

2013, Ms. Pooja Dhar, learned counsel appearing for the writ

petitioners in Writ Petition (C) 1283 of 2021, Sri N. Venkataraman,

learned Additional Solicitor General appearing for the Department of

Revenue, Union of India, Sri Vivek Kohli, learned Advocate General for

the State of Sikkim, and perused the material on record.

Submissions of the Writ Petitioners:

23.Learned senior counsel and learned counsel appearing on behalf

of the writ petitioners at the outset submitted that Section 10(26AAA)

of the I.T. Act, 1961 is ultra vires the Constitution of India, insofar as

it excludes from the definition of ‘Sikkimese,’ migrants/settlers of

Indian origin who had settled in Sikkim much prior to the coming into

effect the 1961 Regulation, on the sole ground that such

migrants/settlers had not been registered as ‘Sikkim Subjects’ under

the 1961 Regulation. Further, the proviso to Section 10(26AAA) of the

I.T. Act, 1961 is unconstitutional and violative of Articles 14 and 15 of

the Constitution of India because it excludes from the exempted

category, a Sikkimese woman who married a non-Sikkimese after 1

April, 2008.

24.As regards the first leg of challenge in the instant Writ Petitions,

i.e., challenge to the vires of the definition of ‘Sikkimese’ under Section

10(26AAA) of the I.T. Act, 1961, it was contended that old

settlers/migrants, who had settled in Sikkim much prior to the

coming into effect of the 1961 Regulation had been excluded from the

definition of ‘Sikkimese’ and consequently rendered ineligible to claim

the benefit of Section 10(26AAA) of the I.T. Act, 1961, on the sole

ground that their names could not be registered as Sikkim Subjects as

their forefathers did not surrender their Indian citizenship.

25.It was further contended that migrants from other

Countries/erstwhile Kingdoms such as Nepalese migrants, who had

migrated to and settled in Sikkim at the same time or even after

migrants/settlers of Indian origin, had been admitted to the benefits of

Section 10(26AAA) of the I.T. Act, 1961, while arbitrarily excluding

settlers of Indian origin such as the petitioners herein. That the object

sought to be achieved by the exemption provision contained in Section

10(26AAA) of the I.T. Act, 1961 was to grant exemption to the

residents of Sikkim as per the definition of Sikkimese which is in the

form of an Explanation to the provision. Therefore, the discriminatory

classification of Sikkim Subjects vis-à-vis old Sikkim settlers, who had

not been registered as Sikkim Subjects, whereby the former category

of persons was admitted to the benefits of the exemption while

excluding the latter, had no nexus with the object of the exemption

provision.

26.It was next submitted that classification into groups or

categories ought to be based on an intelligible differentia which set one

group apart from the other. In this regard, it was stated that Sikkim,

having merged with India on 26

April, 1975, all residents and

subjects of Sikkim, had thereafter become Indian citizens. Therefore,

there was no justifiable reason to treat Indian settlers of Sikkim

differently from Sikkim Subjects who had all subsequently become

Indian citizens. That following the merger of Sikkim with India, and

Indian citizenship having been conferred on Sikkim Subjects, the

basis for classification had been eroded. That migrants/settlers who

had earlier not been registered as Sikkim Subjects, as well as Sikkim

Subjects were uniformly considered as Indian residents of Sikkim,

after 26

April, 1975, and therefore, both such categories were to be

admitted to the benefits of income tax exemption under Section

10(26AAA) of the I.T. Act, 1961. The fact that migrants/settlers had

earlier not been registered as Sikkim Subjects on the ground that they

failed to surrender their Indian citizenship at the relevant time, would

have no relevance after the merger of Sikkim with the India, since

such migrants as well as Sikkim Subjects had been placed in the

same class of Indian residents of Sikkim, after the merger.

27.It was urged that the rules to the effect that provisions of

legislation ought to reflect the object sought to be achieved and that

any classification into groups or categories ought to be based on an

intelligible differentia, would apply equally to tax legislations, as they

apply in any other area of law, vide S.K. Dutta vs. Lawrence Singh

Ingty, A.I.R. 1968 SC 658.

28.Sri K.V. Viswanathan, learned Senior Counsel, further submitted

that the Explanation to Section 10(26AAA) of the I.T. Act, 1961 begins

with the phrase, “‘Sikkimese’ shall mean,” and thereafter lists three

categories of persons who shall be considered to be ‘Sikkimese’ for the

purposes of the Act. That the term used in the Explanation is ‘mean.’

Therefore, the definition would have to be treated as inclusive, but not

exhaustive of the scope of the term ‘Sikkimese.’ In this regard, reliance

was placed on Southern Electricity Supply Co. of Orissa Ltd. vs.

Sri Seetaram Rice Mill, (2012) 2 SCC 108.

29.It was averred that an Explanation to a provision should not be

such as would operate as an exception or a proviso vide Aphali

Pharmaceuticals Ltd. vs. State of Maharashtra , (1989) 4 SCC

378. That the Explanation to Section 10(26AAA) of the I.T. Act, 1961,

in effect, acts as an exception to Section 10(26AAA) of the I.T. Act,

1961 by excluding from the scope of the provision migrants/settlers of

Indian origin who had settled in Sikkim much prior to the coming into

effect of the 1961 Regulation.

30.It was submitted that in the present case, in order to remove the

arbitrary discrimination against Indian settlers in Sikkim, the

definition of the term ‘Sikkimese’ should be read to include Indians

who had settled there as on 26

April, 1975. That this Court, in order

to remedy the discrimination against the writ petitioners, ought to put

the Indian settlers in Sikkim in the same class as Sikkim Subjects, for

the purposes of all matters which would affect the rights, benefits and

privileges of such class of persons.

31.As regards the second prong of the challenge, which is to the

vires of the proviso to Section 10(26AAA) of the I.T. Act, 1961, which

excludes from the exempted category, a Sikkimese woman who

marries a non-Sikkimese after 1

April, 2008, it was contended by

learned senior counsel and learned counsel appearing for the writ

petitioners that the proviso is violative of Articles 14 and 15 of the

Constitution of India. In this regard, it was further contended that a

woman, on the mere factum of being married would not lose her

identity as a ‘Sikkimese.’ That gender-based discrimination is ex-facie

evident in the proviso, more so, because there is no provision for

disqualification of a Sikkimese man from claiming exemption under

the Act, on marrying a non-Sikkimese woman after 1

April, 2008.

32.It was submitted that the said proviso could not be traced to any

consideration other than that of gender alone and therefore, the same

ought to be declared as discriminatory against women. Reliance was

placed on Anuj Garg and Ors. vs. Hotel Association of India and

Ors., (2008) 3 SCC 1 and G. Sekar vs. Geetha, (2009) 6 SCC 99 to

contend that exclusion from the benefits of a provision, on the ground

of gender alone, would be liable to be struck down as being violative of

Article 14 of the Constitution of India.

33.With the aforesaid averments, it was prayed that the definition of

the term ‘Sikkimese’ as provided for in the Explanation to Section

10(26AAA) of the I.T. Act, 1961, should be read to include Indians who

had settled there as on 26

April, 1975 and that the proviso to Section

10(26AAA) of the I.T. Act, 1961 which excludes from the exempted

category, a Sikkimese woman who marries a non-Sikkimese after 1

April, 2008, should be struck down as being unconstitutional.

Submissions of the Respondents:

34.Per contra, Sri N. Venkataraman, learned Additional Solicitor

General appearing for the Department of Revenue contended that the

impugned provision is based on a reasonable classification of Sikkim

Subjects, as a group, different from migrants/settlers of Indian origin.

That such classification was founded on considerations which were

designed to maintain peace and harmony within the Sikkimese

society, and therefore prayed that the same may not be interfered

with.

35.It was submitted that Sikkim merged with India, as the 22

State of the Union on 26

April, 1965 and consequently, Article 371-F

was introduced in the Constitution of India by way of the Constitution

(Thirty-sixth Amendment Act) 1975. That subsequently, by virtue of a

Notification dated 23

February, 1989 issued by the Department of

Revenue, Ministry of Finance, the I.T. Act, 1961 was extended to the

State of Sikkim with effect from assessment year 1989-1990. That

after the extension of the Act to the state of Sikkim, the Government of

Sikkim continued to vacillate on extending co-operation for smooth

implementation of the central direct tax laws in the state and

constantly sought extensions for the implementation, on various

grounds. In order to resolve the continuing impasse, the then Union

Minister for Finance, in June 2004 constituted a committee having

representation from the Government of Sikkim as well as the Central

Government. During the course of deliberations of the said Committee,

the then Chief Secretary, Government of Sikkim identified that

Sikkimese society was based on a classification of those Indians of

Sikkimese origin who voted in the referendum of 1975, and others

who were residents of the erstwhile Kingdom of Sikkim, but had not

voted in the referendum as they were not registered ‘Sikkim Subjects.’

Accordingly, it was resolved that such classification would be

maintained for the purposes of determining income tax liability as any

other classification would fracture Sikkimese society and lead to

unrest and agitations within the society. With the aforesaid

background, it was urged that the distinction between Sikkim

Subjects and other residents of Sikkim, including migrants/settlers of

Indian origin, was based on a reasonable classification.

36.It was emphasized that this Court had recognized on previous

occasions that Sikkim Subjects formed a group which was distinct

from other residents of Sikkim.

37.It was next contended that exemption from payment of income

tax could not be granted to the entire population of Sikkim simply

because they are domiciled in the State. Therefore, exemption was

granted in favour of Sikkim Subjects and such other persons as

specified under the Explanation to Section 10(26AAA) of the I.T. Act,

1961, having due regard to tangible social and historical differences

between various categories of residents of Sikkim.

38.Those migrants/settlers of Indian origin, who may have been

residing in Sikkim prior to the coming into effect of the 1961

Regulation, chose not to get themselves registered as Sikkim Subjects

by relinquishing their Indian citizenship. This was a considered choice

made by the said class of persons. Having waived their privileges on

account of non-registration as Sikkim Subjects, migrants/settlers of

Indian origin cannot at this juncture claim to be treated at par with

Sikkim Subjects.

39.Insofar as the validity of the proviso to Section 10(26AAA) of the

I.T. Act, 1961 is concerned, it was submitted that the same is not

discriminatory against women or violative of Articles 14 and 15 of the

Constitution. That the disqualification placed on Sikkimese women

marrying non-Sikkimese men after 1

April, 2008, was based on the

customary laws of Sikkim which provide that descent shall be through

a woman’s father and any privileges vested by virtue of such descent

would continue until such woman is married. That the peculiar

customary laws of a society could not be ignored while framing laws to

bind such society.

40.With the aforesaid averments, it was prayed that the instant writ

petitions be dismissed as being devoid of merit.

41.On behalf of the State of Sikkim, learned counsel, Sri Vivek Kohli

has fairly submitted that the State Government does not have any

objection to the prayer of the writ petitioners herein to extend the

income tax exemption to married women of Sikkimese origin, who,

after 1

April, 2008 married a non-Sikkimese man. It was also

submitted that the benefit of the tax exemption may be extended to all

Indian citizens domiciled in Sikkim irrespective of the fact as to

whether their names are registered as ‘Sikkim Subjects’ in the ‘Sikkim

Subjects Register’ maintained under the 1961 Regulation.

42.There is a two-pronged challenge to clause (26AAA) of Section 10

of the I.T. Act, 1961. Firstly, the proviso restricting a Sikkimese

woman who marries after the 1

April, 2008, a non-Sikkimese, is

excluded from the benefit under that provision. Secondly, the

definition of ‘Sikkimese’ is also assailed in these writ petitions. The

same shall be discussed in seriatim.

Challenge to the Proviso to Section 10 (26AAA) of I.T. Act, 1961:

43.The proviso to Section 10(26AAA) of the I.T. Act, 1961 has been

assailed. The proviso reads as under:

“Provided that nothing contained in this clause

shall apply to a Sikkimese woman who, on or

after 1

day of April, 2008, marries an individual

who is not a Sikkimese”

44.The proviso is challenged on the ground that it excludes

Sikkimese women on the basis that they have married an individual

who is not a Sikkimese after 1

April, 2008. In this context, the

following aspects can be discerned:

i)Firstly, it is the contention of the petitioners that Sikkimese

women have been subjected to discrimination which is not valid in law,

particularly, having regard to Articles 14 and 15 of the Constitution of

India. The contention is that there is a discrimination against

Sikkimese women while there is no such discrimination as far as

Sikkimese men are concerned, in the sense that if a Sikkimese woman

marries an individual who is not a Sikkimese, she is excluded from the

benefit of the clause but if a Sikkimese man marries an individual who

is not a Sikkimese, such an exclusion does not apply.

ii) Secondly, it is only Sikkimese women who have married on or

after 1

April, 2008 who are excluded from the benefit of the said

provision but if any Sikkimese woman was married to a non-Sikkimese

prior to 1

April, 2008, there is no such exclusion from the benefit

granted under the provision.

iii)Thirdly, it is contended that marriage cannot be a basis for a

classification between a man and a woman so as to make it

discriminatory against a woman. A Sikkimese woman cannot be

discriminated against vis-à-vis a Sikkimese man who marries a non-

Sikkimese.

iv)Fourthly, it is the case of the petitioners that an arbitrary cut-off

date of 1

April, 2008 has been inserted in the provision thereby,

resulting in discrimination between those Sikkimese women who

married a non-Sikkimese prior to the said date and those Sikkimese

women who are married after the said date. That those Sikkimese

women who married a non-Sikkimese prior to the said date are

included in the beneficial clause of Section 10 (26AAA), but those who

married subsequent to that date are denied the benefit.

v)Another contention is that the definition of the expression

“Sikkimese” itself is assailed and therefore, any Sikkimese woman who

marries a person who does not fall within the scope of the definition of

“Sikkimese”, does not have the benefit of the said provision.

45.Primarily, it was contended that there cannot be any

discrimination on the basis of marriage against Sikkimese women with

reference to an arbitrary date i.e., 1

April, 2008. According to the

petitioners, the proviso creates an artificial classification and a

discrimination between married women and unmarried women and

that marriage cannot be a basis of classification between Sikkimese

women themselves. Further, the said classification has no nexus to

the object sought to be achieved inasmuch as when all persons who

are coming within the scope and ambit of the expression “Sikkimese”

as given in the Explanation to the said provision, are given the benefit

of exemption from payment of income tax under the I.T. Act, 1961,

there cannot be an exclusion of only Sikkimese women, who are

married subsequent to 1

April, 2008, to a non-Sikkimese.

46.The thrust of the submissions of the learned Senior Counsel for

the petitioners is that there is a discrimination against Sikkimese

women who have got married to a non-Sikkimese, that too, only those

women who have married on or after 1

April, 2008. It is contended

that proviso is arbitrary for two reasons: firstly, because it is

discriminatory against Sikkimese women who have married non-

Sikkimese men and secondly, only those Sikkimese women who

were married on or after 1

April, 2008, do not have the benefit of the

provision.

47.On analysing the impugned proviso, it is noted that the benefit of

the provision does not apply (i) to a Sikkimese woman, (ii) who is

married to an individual who is not a Sikkimese, and (iii) the marriage

having taken place on or after 1

April, 2008. Thus, what emerges is

that marriage of a Sikkimese woman is made the basis of

classification. Thus, in other words, there is discrimination in the

following ways:

i)between Sikkimese women who as opposed to Sikkimese men.

ii)between Sikkimese women who are married as opposed to those

who are not married, and

iii)between Sikkimese women who are married to a Sikkimese as

opposed to those who are married to a non-Sikkimese, and

iv)between Sikkimese women who have married a non-Sikkimese on

or after 1

April, 2008, who are not entitled to the benefit of the

provision as opposed to those Sikkimese women who are married

to a non-Sikkimese prior to the aforesaid date, who are entitled to

the said provision.

48.It is further observed that Section 10 (26AAA) was inserted to the

I.T. Act, 1961 by the Finance Act, 2008 w.e.f. 1

April, 1990. The

proviso although inserted in the year 2008 has a retrospective effect

from 1

April, 1990 i.e., the date on which I.T. Act, 1961 was

introduced in Sikkim. Prior to 1990, SITM, 1948, was applicable to

Sikkim. This would imply that there was no such discrimination

between 1

April, 1990 and 1

April, 2008 for a period of eighteen

years. Thus, those Sikkimese women who had the benefit of the

exemption have been deprived by the same w.e.f., 1

April, 2008. The

retrospectivity of the proviso takes away a vested benefit extended to

such category of women covered under the proviso w.e.f., 1

April,

1990 without there being a rationale for the same.

49.Further, it is necessary to analyse the basis of classification in

terms of the categories of persons enunciated under Regulation (3) of

the 1961 Regulation as under:

(i)If a woman is the wife of a person who has his domicile in the

territory of Sikkim immediately before the commencement of the

1961 Regulation, such a person shall be a Sikkim Subject if he:

a) was born in the territory of Sikkim and is resident therein, or

b) has been ordinarily resident in the territory of Sikkim for a

period of not less than fifteen years immediately preceding the

commencement of the Regulation.

(ii) The wife of the person having domiciled in Sikkim shall be deemed

to have domiciled in Sikkim for the purpose of Regulation (3) [vide

clause (2) of Explanation to Regulation (3)].

(iii) Under Regulation (6), a woman of a foreign nationality who is

married to a Sikkim Subject after the commencement of 1961

Regulation shall ordinarily be eligible to be registered as a Sikkim

Subject, on making an application to the Government of the

Chogyal in the manner provided by the Rules under the 1961

Regulation, and after renouncing her former nationality and on

taking an oath of allegiance.

(iv) Clause (b) of Regulation (7) states that any Sikkimese woman who

marries a person who is not a Sikkim Subject shall cease to be a

Sikkim Subject.

50.Thus, under the 1961 Regulation, as far as women are

concerned, marriage has been the basis of acquiring the status of

having a domicile in Sikkim and being a Sikkim Subject or losing

domicile or status as a Sikkim Subject which aspect shall be

discussed while considering the challenge to the proviso to Section 10

(26AAA) of the I.T. Act, 1961.

51.In my view, marriage of a Sikkimese woman is also the basis for

discrimination against her whereas there is no such discrimination

vis-à-vis a Sikkimese man marrying a Sikkimese or a non-Sikkimese

woman on or after 1

April, 2008. Article 14 of the Constitution states

that, State shall not deny to any person equality before the law or the

equal protection of the laws within the territory of India. Article 15 (1)

of the Constitution states that the State shall not discriminate against

any citizen on grounds only of religion, race, caste, sex, place of birth

or any of them. In fact, Article 15(3) empathetically states that nothing

in Article 15 shall prevent the State from making any special provision

for women and children but in the instant case, according to

petitioners, instead of the proviso being in favour of Sikkimese women,

it is antithetical to Articles 14 and 15 (1) and (2) of the Constitution of

India as it is discriminatory against Sikkimese women who have

married a non-Sikkimese, that too, after 1

April, 2008.

52.This discussion has also to be viewed in light of the Explanation

to Section 10 (26AAA) of the I.T. Act, 1961. The Explanation states

that, the term ‘Sikkimese’ shall mean, an individual whose name is

recorded in the Register of Sikkim Subjects immediately before 26

April, 1975, or an individual whose name is included in the said

August, 1990 and 08

April, 1991, or also an individual whose name

does not appear in the said Register but, it is established beyond

doubt that name of such individual’s father or husband or paternal

grandfather or brother from the same father has been recorded in that

Explanation cannot refer to only a Sikkimese man and exclude a

Sikkimese woman. Any other interpretation would mean that a

Sikkimese woman has no identity of her own even if she is covered

under the Explanation to be a Sikkimese and therefore is entitled to

the benefit of the provision. It would also mean that a Sikkimese

woman covered under the Explanation would be excluded from the

benefit of the provision if she is covered under the proviso. In other

words, the Explanation which is in the nature of a definition so as to

give benefit to all Sikkimese individuals cannot be restricted in its

applicability only to Sikkimese men (who are individuals covered

under the Explanation), but exclude female Sikkimese individuals of a

particular category on account of the proviso, which is inherently

discriminatory. This would also imply that the expression “individual”

in the Explanation would exclude Sikkimese women. In my view, the

proviso cannot be construed to be an exception to the Explanation

which is in the nature of a definition clause as it would be inherently

discriminatory to do so.

53.Thus, when a benefit is being given to a Sikkimese individual

which would include all genders under the provision, by way of the

Explanation being added, which is in the nature of a definition, the

proviso cannot exclude a certain category of married Sikkimese

women from the said Explanation and thereby, deprive them of the

said benefit of exemption from payment of income tax on the basis of

to whom they are married to. When the Explanation refers to an

“individual”, it includes both Sikkimese men and women, in fact, all

genders; it cannot have a restrictive or myopic reference to only

Sikkimese men and exclude those Sikkimese women covered under

the proviso. A proviso cannot over arch a provision. But in the instant

case, the proviso is overriding the provision as well as the Explanation

in respect of those categories of married Sikkimese women referred to

in the proviso which is impermissible. Thus, the proviso is inherently

arbitrary and discriminatory against a particular category of

Sikkimese women. In other words, the Explanation to Section 10

(26AAA) of the I.T. Act, 1961 includes both Sikkimese men as well as

women. Such being the interpretation, in my view, the proviso is

antithetical to the Explanation and the Section as well.

54.The normal function of a proviso is to except something out of

the provision or to qualify something enacted therein which, but for

the proviso, would be within the purview of the provision. As a general

rule, a proviso is added to an enactment to qualify or create an

exception to what is in the enactment and ordinarily, a proviso is not

interpreted as stating a general rule. In other words, a proviso

qualifies the generality of the main enactment by providing an

exception and taking out as it were, from the main enactment, a

portion which, but for the proviso would fall within the main

provision. Further, a proviso cannot be construed as nullifying the

provision or as taking away completely a right conferred by the

enactment. If it does so and is discriminatory then it falls foul of the

equality clauses of the Constitution of India.

55.It is reiterated that the expression “an individual” in the

Explanation to Section 10 (26AAA) of the I.T. Act, 1961, must include

all genders including Sikkimese women. There cannot be a

discrimination only on the ground of sex and race. Hence, all

Sikkimese women are entitled to the benefit of Section 10 (26AAA) of

the I.T. Act, 1961, as per the Explanation thereto irrespective of

whether they marry a Sikkimese or a non-Sikkimese.

56.Further, pursuant to the merger of Sikkim with India by virtue of

which, Sikkim has become one of the States of India and all Sikkim

Subjects and all Sikkimese domiciled in the territory of Sikkim have

become Indian citizens, there cannot be a discrimination vis-à-vis

Sikkimese women marrying a non-Sikkimese individual, whether an

Indian citizen or a foreigner, that too, on or after 1

April, 2008. Such

discrimination, is therefore, in violation of the guarantee of equality

provided under Articles 14 and 15 of the Constitution of India as it is

on the basis of sex and race. Hence, the proviso to clause (26AAA) of

Section 10 of the I.T. Act, 1961, is a stark example of an

unconstitutional sex-based discrimination and is liable to be struck

down.

57.In this context, the judicial dicta and decisions of this Court

could be noted as under:

a)In Air India vs. Nergesh Meerza, AIR 1981 SC

1829, the question was, whether, a four-year bar on

marriage immediately on obtaining employment in Air

India, applicable only to women employees, could be

retained as a reasonable provision. This Court held the

same to be a sound and salutary provision on the ground

that it would “improve the health of the employee” and “she

becomes fully mature and there is every chance of such a

marriage proving a success, all things being equal…….”.

The said judgment was delivered in the year 1981 but with

the passage of time and owing to the worldwide movement

towards gender justice and elimination of all discrimination

against women, acquiring momentum, I am of the

considered view that a ban on marriage in respect of a

female employee immediately for a period of four years on

her being appointed by the employer is also discriminatory.

Hence, this aspect of gender discrimination would require a

reconsideration and course correction. This is because

choice of marriage as well as exercising an option as to

when to marry is a Fundamental Right under Article 21 of

the Constitution of India.

However, in the very same case, this Court found the

termination of service of a woman employee on her first pregnancy

to be shocking as it was an open insult to “Indian womanhood”

and hence, the said action was extremely detestable and

abhorrent to the notions of a civilised society and therefore,

violative of Article 14 of the Constitution. In fact, this Court

observed that the rule could be amended so that termination of

the services of an employee on her third pregnancy could be

permitted which aspect also, in my view, calls for reconsideration

in the absence of any qualifying parameters.

b) In Air India Cabin Crew Assn. vs. Yeshaswinee

Merchant and others, AIR 2004 SC 187 , this Court set

aside a decision of the Bombay High Court and upheld the

early retirement of women employees, namely, Air

Hostesses in Air India which was then a Public Sector

Undertaking. Justifying its decision, this Court observed

that, “there cannot be any cut and dried formula for fixing

the age of retirement” and this “would always depend on a

proper assessment of the relevant factors and may

conceivably vary from case to case”.

58.With due respect, I find that the aforesaid two judgments have an

underlying emphasis on the physique and physical appearance of

women related to their marriage, consequent pregnancy and ageing

which cannot be the rationale or basis for making policy decisions or

regulations as they are discriminatory on the basis of sex and thus,

unconstitutional.

59.As opposed to the aforesaid decisions, it is necessary to also cite

the following decisions of this Court:

i)The decision of this Court in C.B. Muthamma Vs Union of

India AIR 1979 SC 1868 is highly instructive in this regard. The

petitioner therein was an officer in the Indian Foreign Service. She

filed a writ petition before this Court claiming denial of promotion on

the ground of hostile discrimination, as she was a woman. She also

brought to the notice of this court, the following two rules, challenging

the same as being violative of the right to equality:

1.Rule 8(2) of the Indian Foreign Service (Conduct and Discipline)

Rules, 1961 which required a woman member in foreign service

to obtain permission of the Government in writing before her

marriage and to resign if the Government is satisfied that her

family and domestic commitments are likely to come in the way

of due and efficient discharge of her duties.

2.Rule 18(4) of the Indian Foreign Service (Recruitment, Cadre,

Seniority and Promotion) Rules, 1961, which prohibited a

married woman to be appointed in Foreign Service as of right.

Although during the pendency of the writ petition, Rule 18(4) was

deleted, and an affidavit was filed by the Respondent-State that Rule

8(2) was also in the process of being repealed, this Court made the

following observations as regards disabilities based on marriage:

“5. Discrimination against women, in traumatic

transparency, is found in this rule. If a woman

member shall obtain the permission of

government before she marries, the same risk is

run by government if a male member contracts a

marriage. If the family and domestic

commitments of a woman member of the Service

is likely to come in the way of efficient discharge

of duties, a similar situation may well arise in the

case of a male member. In these days of nuclear

families, inter-continental marriages and

unconventional behaviour, one fails to understand

the naked bias against the gentler of the species.

6. At the first blush this rule is in defiance of

Article 16. If a married man has a right, a married

woman, other things being equal, stands on no

worse footing. This misogynous posture is a

hangover of the masculine culture of manacling

the weaker sex forgetting how our struggle for

national freedom was also a battle against

woman's thraldom. Freedom is indivisible, so is

Justice. That our founding faith enshrined in Articles

14 and 16 should have been tragically ignored vis-a-

vis half of India's humanity viz. our women, is a sad

reflection on the distance between Constitution in

the book and law in action. And if the executive as

the surrogate of Parliament, makes rules in the teeth

of Part III especially when high political office, even

diplomatic assignment has been filled by women, the

inference of diehard allergy to gender parity is

inevitable.

7. We do not mean to universalise or dogmatise

that men and women are equal in all occupations

and all situations and do not exclude the need to

pragmatise where the requirements of particular

employment, the sensitivities of sex or the

peculiarities of societal sectors or the handicaps of

either sex may compel selectivity. But save where the

differentiation is demonstrable, the rule of equality

must govern. This creed of our Constitution has at

last told on our governmental mentation, perhaps

partly pressured by the pendency of this very writ

petition. In the counter-affidavit, it is stated that

Rule 18(4) (referred to earlier) has been deleted on

November 12, 1973. And, likewise, the Central

Government's affidavit avers that Rule 8(2) is on its

way to oblivion since its deletion is being gazetted.

Better late than never. At any rate, we are relieved of

the need to scrutinise or strike down these rules."

(Emphasis by me)

This Court struck down the afore-mentioned provisions as

unconstitutional and also impressed upon the Central Government,

the need to overhaul all Service Rules and remove the stain of sex

discrimination.

(ii)Mackinnon Mackenzie and Co. Ltd. vs. Audrey D’costa and

Another, AIR 1987 SC 1281, is a judgment of this Court upholding

the decision of the Bombay High Court wherein it was ordered that, all

women stenographers were entitled to equal remuneration for work of

the same or similar nature as a male stenographer.

(iii) In Githa Hariharan vs. Reserve Bank of India, (1999) 2 SCC

228, this Court was faced with the interpretation of Section 6(a) of

Hindu Minority and Guardianship Act, 1956 and Section 19(b) of

Guardian and Wards Act, 1890. The validity of the aforesaid Sections

was assailed as being violative of the equality clause of the

Constitution, inasmuch as under the said provisions the mother of a

minor child is relegated to an inferior position on the ground of sex

alone since her right as a natural guardian of the minor, is made

cognizable only 'after' the death of the father. This Court by relying

upon the Convention on the Elimination of All Forms of Discrimination

against Women, 1979 ("CEDAW") and the Beijing Declaration, 1995,

which directs all State parties to take appropriate measures to prevent

discrimination of all forms against women, observed that gender

equality is one of the basic principles of our Constitution and in the

event the word 'after' is to be read to mean a disqualification of a

mother to act as a guardian during the lifetime of the father, the same

would definitely run counter to the basic requirement of the

constitutional mandate and would lead to a differentiation between a

man and a woman.

This Court therefore held that the father, by reason of being

conferred a dominant personality, cannot be ascribed to have a

preferential right over the mother, in the matter of guardianship, since

both fall within the same category and the word 'after' shall have to be

interpreted in terms of the constitutional safeguards and guarantee

given to gender equality so as to give a proper and effective meaning to

the words use.

(iv) In Anuj Garg & Ors. vs. Hotel Association of India & Ors.

(2008) 3 SCC 1, this Court upheld the right of women to have equal

treatment in employment in the hospitality sector. In the said case, the

constitutional validity of Section 30 of the Punjab Excise Act, 1914,

which prohibited employment of "any man under the age of 25 years"

or "any woman" in any part of the premises in which liquor or any

intoxicating drug was consumed by the public, was challenged. This

Court observed that, when the original Act was enacted, the concept of

equality between two sexes was unknown. The makers of the

Constitution intended to apply equality amongst men and women in all

spheres of life by virtue of Articles 14 and 15 of the Constitution. The

Court was of the view that:

“26. When a discrimination is sought to be made on

the purported ground of classification, such

classification must be founded on a rational

criterion. The criteria which in absence of any

constitutional provision and, it will bear repetition to

state, having regard to the societal conditions as they

prevailed in early 20th century, may not be a rational

criterion in the 21st century. In the early 20th

century, the hospitality sector was not open to

women in general. In the last 60 years, women in

India have gained entry in all spheres of public life.

They have also been representing people at grass

root democracy. They are now employed as drivers of

heavy transport vehicles, conductors of service

carriage, pilots et. al. Women can be seen to be

occupying Class IV posts to the post of a Chief

Executive Officer of a Multinational Company. They

are now widely accepted both in police as also army

services.”

In the said case, this court relied upon the judgment of the South

African Constitutional Court in Bhe and Ors. vs. The Magistrate,

Khayelisha and Ors. (2004) 18 BHRC 52 : (2005) 1 BCLR 1 (CC),

wherein the South African Constitutional Court had declared the

Black Administration Act, 1927 (South Africa) and the Regulations of

the Administration and Distribution of the Estates of Deceased Blacks

(South Africa) as ultra vires. It was held by the majority that the rule of

male primogeniture as it applied in customary law to the inheritance

of property was inconsistent with its Constitution and invalid to the

extent that it excluded or hindered women and extra-marital children

from inheriting property. The South African Constitutional Court

further observed that, the rules of succession in customary law had

not been given the space to adapt and to keep pace with changing

societal conditions and values, instead, they had over time become

increasingly out of step with the real values and circumstances of the

societies they were meant to serve. Thus, the official rules of

customary law of succession were no longer universally observed. The

South African Constitutional Court, therefore, held that, the exclusion

of women from inheritance on the grounds of gender was a clear

violation of the constitutional prohibition against unfair

discrimination.

(v)In G. Sekar vs. Geetha & Ors. (2009) 6 SCC 99 this Court

observed that, in terms of Articles 14 and 15 of the Constitution of

India, the female heirs, subject to the statutory rule operating in that

field, are required to be treated equally to the male heirs. This Court

further observed that, gender equality is recognized by the world

community in general in the human rights regime.

(vi)In this context, it would be useful to refer to the following

observations made by Altamas Kabir, C.J. in his supplemental opinion

in State of Maharashtra vs. Indian Hotel and Restaurants

Association, (2013) 8 SCC 519:

“147. Women worldwide are becoming more

and more assertive of their rights and want to

be free to make their own choices, which is not

an entirely uncommon or unreasonable

approach. But it is necessary to work towards a

change in mindset of people in general not only

by way of laws and other forms of regulations,

but also by way of providing suitable amenities

for those who want to get out of this trap and to

either improve their existing conditions or to

begin a new life altogether. Whichever way one

looks at it, the matter requires the serious

attention of the State and its authorities, if the

dignity of women, as a whole, and respect for

them, is to be restored.”

(vii) Recently in Secretary, Ministry of Defence vs. Babita Puniya

and others, (2020) 7 SCC 469, a struggle for equality of opportunity

for women seeking Permanent Commissions (PCs) in the Indian Army

succeeded after a decade and more spent in litigation in which women

engaged in Short Service Commissions (SSCs) in the Army sought

parity with their male counterparts in obtaining PCs. In the said case,

this Court speaking through Dr. D. Y. Chandrachud, J. (as His

Lordship then was) observed as under:

“85…..An absolute bar on women seeking criteria or

command appointments would not comport with the

guarantee of equality under Article 14. Implicit in the

guarantee of equality is that where the action of the

State does differentiate between two classes of

persons, it does not differentiate them in an

unreasonable or irrational manner. In this sense,

even at its bare minimum, the right to equality is a

right to rationality. Where the State, and in this case

the Army as an instrumentality of the State,

differentiates between women and men, the burden

falls squarely on the Army to justify such

differentiation with reason. An absolute prohibition of

women SSC officers to obtain anything but staff

appointments evidently does not fulfil the purpose of

granting PCs as a means of career advancement in

the Army. Whether a particular candidate should or

should not be granted a criteria or command

assignment is a matter for the competent authority to

consider having regard to all the exigencies of service,

performance and organisational requirements. In the

present case the Army has provided no justification

in discharging its burden as to why women across

the board should not be considered for any criteria or

command appointments. Command assignments are

not automatic for men SSC officers who are granted

PC and would not be automatic for women either.

The absolute exclusion of women from all others

except staff assignments is indefensible. If the Army

has cogent reasons for excluding women from a

particular criteria or command appointment, it may

provide them to the relevant authorities and if

necessary, to future courts. However, such a

justification must take place on a case-to-case basis,

in light of the requirements and exigencies of a

particular appointment. The blanket non-

consideration of women for criteria or command

appointments absent an individuated justification by

the Army cannot be sustained in law.”

60.The fight for non-discrimination based on considerations of

gender has assumed centre stage in the United States of America as

well. The Fourteenth Amendment to the U.S. Constitution provides

that no State shall deny to any person within its jurisdiction, equal

protection of the laws. This clause has evolved a body of judicial

doctrine which is comprised, inter-alia, in the numerous rulings issued

by the United States Supreme Court, that have advanced women’s

rights. A few of such landmark decisions may be referred to as under:

(a)In Reed vs. Reed, 404 U.S. 71, 92 S. Ct. 251 (1971), the

question before the Supreme Court of the United States was,

whether, a statute, namely, the Idaho Probate Code that

included a gender-based provision, preferring males over

females to administer an estate, violated the Equal Protection

clause of the Fourteenth Amendment of the Constitution. In a

unanimous decision, the Court held that the Idaho Probate

Code’s dissimilar treatment of men and women was

unconstitutional and was violative of the Equal Protection

clause of the Fourteenth Amendment. The Court observed

that, “to give a mandatory preference to members of either sex

over members of the other, merely to accomplish the elimination

of hearings on the merits, is to make the very kind of arbitrary

legislative choice forbidden by the Equal Protection clause of

the Fourteenth Amendment…The choice in this context may not

lawfully be mandated solely on the basis of sex.”

(b)In Weinberger vs. Wiesenfeld, 420 U.S. 636, 95 S. Ct.

1225 (1975), the issue was with regard to the Social Security

Act which provided survivor’s benefits based on the earnings

of a deceased husband and father both to his widow and the

couple’s minor children in her care. However, the benefits

based on the earnings of a covered deceased wife and mother

were granted only to the minor children and not to the

widower. In the said case, the question before the Supreme

Court of the United States was whether the gender-based

distinction in Social Security Benefits violated the Due

Process Clause of the Fifth Amendment.

In a unanimous decision, the Court held that the purpose of

the social security benefits for the surviving spouse and children

is to enable the surviving spouse to properly care for the children,

regardless of the gender of the parent. The Court observed that,

gender-based discrimination regarding these benefits was illogical

and counter-productive by excluding a widower.

It was further observed that the Constitution of United States

forbade a gender-based differentiation that resulted in less

protection for the families of female workers who were required to

pay Social Security taxes than was accorded to the families of

male workers. The statute's gender-based distinction was based

on an archaic and overbroad generalization about the

contributions to family support made by male and female

workers. The Court therefore held that such an irrational

classification violated the right to equal protection secured by

the Fifth Amendment, which prohibited discrimination that was

so unjustifiable as to be violative of due process. Thus, in the

aforesaid case, the right of a widower was established while at the

same time emphasising that discrimination on the basis of gender

violated the equality clause which provides a guarantee against

such discrimination.

(c)The question in Duren vs. Missouri, 439 U.S. 357, 99 S.

Ct. 664 (1979) was whether the Jackson County’s practice of

automatically exempting women from jury service upon

request violated the rights as guaranteed by the Sixth and

Fourteenth Amendments. The Court held that the State

statute's exemption of women from jury service on request

violated the defendant's rights as guaranteed by the Sixth and

Fourteenth Amendments in failing to ensure that jurors in

criminal cases be drawn from a fair cross section of the

community, since it was sufficiently established by the

defendant that women, as a group, were distinct from men.

The Court further observed that, there existed no significant

state interest to justify exemption of women from jury service.

(d)In Hishon vs. King & Spalding, 467 U.S. 69, 104 S. Ct.

2229 (1984) the controversy was whether King & Spalding,

the law firm where Hishon was employed, violated Title VII of

the Civil Rights Act of 1964 (for short, “CR Act, 1964”) by

unfairly discriminating against Hishon on the basis of her sex

by denying her admission to the partnership of the firm. In a

unanimous decision, the Court held that Title VII of the CR

Act, 1964 made it illegal for an employer to discriminate

against any employee on the basis of her sex. The Court

observed that, the promise of equal consideration for

partnership that went along with Hishon’s employment was

contractual in nature and subject to the regulations of Title

VII of the CR Act, 1964. The Court further observed that by

preventing Hishon from obtaining partnership because of her

sex, the firm had discriminated against her and had breached

the “terms, conditions or privileges of employment”. It was

therefore held that the firm acted in direct violation of Title VII

of the CR Act, 1964.

(e)Another question before the Supreme Court in United

States vs. Virginia, 518 U.S. 515 (1996) was whether the

practice undertaken by the Virginia Military Institute (VMI) of

offering education only to men and not women constituted a

denial of equal protection under the Fourteenth Amendment

of the United States Constitution. In a 7:1 decision, the Court

held that VMI’s male-only admissions policy was

unconstitutional. Justice Ruth Bader Ginsburg was of the

view that Virginia failed to show “an exceedingly persuasive

justification” for VMI’s gender-biased admissions policy. The

Court observed that the notion that admitting women would

downgrade VMI’s stature and destroy the school’s adversity

system, was hardly proved. The Court therefore observed that,

it violated the Fourteen Amendment’s equal protection clause.

61.In the case under consideration as per the Notification dated 16

May, 1975 on the enforcement of Citizenship Act, 1955, and

Citizenship Rules, 1956 to the State of Sikkim on its merger with India

and as per the Sikkim (Citizenship) Order, 1975, every person who

immediately before 26

April, 1975, was a Sikkim Subject as per the

1961 Regulation was deemed to have become a citizen of India on that

day. Thus, an individual had a domicile in the territory of Sikkim

immediately before the commencement of the 1961 Regulation, if

he/she was:

a) born in the territory of Sikkim and was resident therein; or

b) had been ordinarily residing in the territory of Sikkim for a period

of not less than fifteen years immediately preceding the

commencement of the 1961 Regulation.

62.Such an individual automatically became a citizen of India and

his/her name may have also been entered in the Register of Sikkim

Subjects immediately before 26

April, 1975. This is also clear from

the Government Order dated 7

August, 1990 which was notified by

the Government of Sikkim to the effect that every person who

immediately before 26

April, 1975, was a Sikkim Subject under 1961

Regulation, shall be deemed to have become a citizen of India on that

day. In fact, where there were genuine omissions, a direction was

issued to enter all such eligible persons who had been omitted in the

said Register. To the same effect is the Government Order issued by

the Government of India dated 8

April, 1991 which was notified by

the Government of Sikkim on the same date.

63.Therefore, on a conspectus consideration of the 1961 Regulation

in light of the Government Orders passed subsequent to the merger of

Sikkim with India by which Sikkim became a State in India and by

which the Sikkim Subjects domiciled in Sikkim had their names

included in the Register of Sikkim Subjects, the proviso should not

have discriminated against Sikkimese women in the manner analysed

above, only because a Sikkimese woman who, though, may have had

her name registered in the Register of Sikkim Subjects, married a

non-Sikkimese, that too, only on or after, 1

April, 2008, would be

excluded from the exemption clause. Such a category of women

cannot be deprived of the benefit of the provision under Section 10

(26AAA) of the I.T. Act, 1961.

64.In fact, in my view, the proviso runs counter to the Explanation

and is thus manifestly arbitrary. This is because the Explanation

intends to give the benefit of Section 10 (26AAA) of the I.T. Act, 1961

to all Sikkimese who are defined under the said Explanation as those

‘individuals’ whose names have been recorded and registered in the

April, 1975 or

included pursuant to the Government of India Order No.

26030/36/90/I.C.I. dated 7

August, 1990 and Order of even number

dated 8

April, 1991, or those persons whose names do not appear in

the Register of Sikkim Subjects but it has been established that the

name of such individual’s father or husband or paternal grandfather

or brother from the same father had been recorded in that Register.

Hence, the benefit of the Explanation must be extended to all

Sikkimese women, irrespective of whether they have married a

Sikkimese or a non-Sikkimese after the 1

April, 2008.

65.Thus, in view of the aforesaid discussion, the proviso to Clause

(26AAA) of Section 10 of the I.T. Act, 1961 is struck down as being in

violation of Articles 14 and 15 of the Constitution of India.

Challenge to the Explanation:

66.For the purpose of Section 10 (26AAA) of the I.T. Act, 1961, the

meaning of ‘Sikkimese’ is of significance inasmuch as it is only a

‘Sikkimese’ who is entitled to the benefit under the said Act. The same

is under challenge in these petitions. There are three categories of

persons included within the expression ‘Sikkimese’ given in the

Explanation to the aforesaid provision namely: -

A) an individual, whose name is recorded in the register maintained

under the Sikkim Subjects Regulation, 1961 read with the

Sikkim Subject Rules, 1961 (Register of Sikkim Subjects),

immediately before 26

April, 1975; or

B)an individual, whose name is included in the Register of

Sikkim Subjects by virtue of the Government of India Order

No. 26030/36/90 - I.C.I., dated 7

August 1990 and Order of

even number dated 8

April, 1991; or

C)any other individual, whose name does not appear in the

that the name of such individual's father or husband or

paternal grandfather or brother from the same father has been

recorded in that register;

67.Therefore, it is necessary to analyse each of the aforesaid

Regulations, Rules, Government of India Orders for the purpose of this

case as a challenge is made by the petitioners to the definition of

‘Sikkimese’ in the Explanation to Section 10 (26AAA) of the I.T. Act,

1961 in respect of the three categories of individuals entitled to the

benefit.

68.The first category of individuals are those individuals whose

names are registered in the Register maintained under the Sikkim

Subjects Regulation, 1961 read with the Sikkim Subject Rules, 1961

(“1961 Regulation” and “1961 Rules” respectively):

68.1.An individual whose name is recorded in the Register of Sikkim

Subjects immediately before 26

April, 1975 is a Sikkimese. The

same is as per the 1961 Regulation read with 1961 Rules. On a

perusal of the 1961 Regulation, which was enacted during the

period of the Chogyal in Sikkim, it is noted that Regulation (3) is

relevant insofar as these petitioners are concerned. Regulation

(3) reads as under: -

“3. Certain persons domiciled in Sikkim Territory at

the commencement of the Regulation to be Sikkim

Subjects:

(1)Every person who has his domicile in the

territory of Sikkim immediately before the

commencement of this Regulation shall be a

Sikkim Subject if he-

(a) was born in the territory of Sikkim and is

resident therein, or

(b) has been ordinarily resident in the

territory of Sikkim for a period of not less

than fifteen years immediately preceding

such commencement:

Provided that in counting the said period of fifteen

years any absence from the said territory on account

of service under the Government of India shall be

disregarded; or

mentioned in clause(a) or clause (b):

Provided that a person shall not be a Sikkim Subject

under this Section unless he makes a declaration to

the effect that he is not a citizen of any other country

at the time of inclusion of his name in the register of

Sikkim Subjects to be maintained under this

Regulation:

Provided further that in the case of a minor or a

person of unsound mind, such declaration may be

made by his guardian.

Explanation: No person shall ·be deemed to have his

domicile in the territory of Sikkim unless ...

(1) he is a person who has made Sikkim his

permanent home and has severed his

connections with the country of his origin such

as by parting with his property in that country

or acquiring immovable property in Sikkim.

Provided that a person shall not be deemed to have a

permanent home in Sikkim if he indicates an

intention of returning to his country of origin, by

keeping a live interest therein even though he might

have parted with his property in his country of origin

and the mere parting of such property will not be

regarded as proof of a person's having acquired a

permanent home in Sikkim.

(2) The wife and minor children of a person

having his domicile in Sikkim shall be deemed

to have domicile in Sikkim for the purpose of

this Section.

(3) In any case of doubt as to whether a person

has domicile within the territory of Sikkim

under this Section, the matter shall be decided

by The Chogyal with the assistance of a Board

consisting of persons to be appointed in

accordance with the rules made under this

Regulation.”

68.2.What is pertinent in the said Regulation is that, the following

three categories of persons are stated to have domicile in the

territory of Sikkim immediately before the commencement of

the 1961 Regulation: -

(a)a person born in the territory of Sikkim and is

resident therein, or

(b)has been ordinarily resident in the territory of

Sikkim for a period of not less than fifteen years

immediately preceding such commencement, or

(c)is the wife or the minor child of a person

mentioned in clause (a) or clause (b) above.

68.3.The proviso to Regulation (3) states that a person shall not be a

Sikkim Subject under Regulation (3) “unless he makes a

declaration to the effect that he is not a citizen of any other

country at the time of inclusion of his name in the Register of

Sikkim Subjects to be maintained under the said Regulation.”

The said proviso, must now be interpreted in light of the fact

that the Kingdom of Sikkim has merged with India with effect

from 26

April, 1975 and is an Indian State. When considered

in the context of the aforesaid significant fact, the proviso to

Regulation (3) would have to be interpreted to mean that an

individual who had not made a declaration to the effect that he

was not a citizen of any other country at the time of inclusion of

his name in the Register of Sikkim Subjects, as he was

originally a subject of British India or any of the princely states

of India or any other A, B or C state as understood under the

Constitution of India, had ordinarily been resident in the

territory of Sikkim for business, employment or any such other

purposes, is now entitled to be registered in the Register of

Sikkim Subjects. This is because Sikkim has now merged with

India and has become one of the States of India. Also, persons

domiciled in the erstwhile Kingdom of Sikkim i.e., prior to 26

April, 1975, the day Sikkim Kingdom merged with India would

now become citizens of India. Therefore, the expression “he is

not a citizen of any other country” in the proviso to Regulation

(3), after the inclusion of the territory of Sikkim as a part of the

Indian territory, must now be read, to exclude a citizen of India

ordinarily resident in Sikkim as on 26

April, 1975. This would

imply that if an individual from British India or any other part

of India after its Independence was domiciled in Sikkim prior to

April, 1975 and has become a citizen of India by virtue of

Part II of the Constitution and the Citizenship Act, 1955,

enacted by the Parliament and Orders made thereunder,

pursuant to the merger of Sikkim Kingdom with India, such

individual ought to now be included in the Register of Sikkim

Subjects if not included till date.

68.4.Similarly, the expression “any other country” in Regulation (4)

of the 1961 Regulation must be read to mean “any other

country other than India”. By such an interpretation, a person

domiciled in the territory of Sikkim and who has acquired the

citizenship of India may, on an application made to the

authority prescribed by the 1961 Rules be registered as a

Sikkim Subject, if he is a person whose ancestors were deemed

to be Sikkim Subjects.

68.5.That in order to check the influx of foreigners into Sikkim, the

Chogyal, in 1961, had promulgated the 1961 Regulation. Under

the said Regulation:

a) Persons falling under Regulation (3) of the 1961 Regulation

were to be entered as ‘Sikkim Subjects' in the Register; and

b) Persons who were citizens of another country were not to

be registered as ‘Sikkim Subjects’ unless they relinquished

the citizenship of the other country.

However, after the merger of Sikkim Kingdom with India,

the expression “any other country” would not include India as

all residents of Sikkim, whether a Sikkim Subject or not are

now Indian citizens. But the term 'Sikkim Subject' was defined

as a person who was born in the territory of Sikkim and was

resident therein and all similarly situated persons, but however,

with a caveat that a person shall not be a Sikkim Subject under

the 1961 Regulation, unless he made a declaration that he was

not a citizen of any other country at the time of inclusion of his

name in the Register of Sikkim Subjects. The result of this

caveat was that an Indian citizen whose ancestors had settled

down in Sikkim for generations, had to give up his citizenship

of India (of which country Sikkim was a protectorate since

1950), for the purpose of registering himself as a Sikkim

Subject. However, though these Regulations were promulgated,

no differential treatment was meted out to the Indians as their

rights were protected under the Indo-Sikkim Treaty of 1950.

68.6. Thus, although, as per the 1961 Regulation read with the 1961

Rules, the name of the individual had to be registered before

April, 1975 in the Register of Sikkim Subjects, in view of

the interpretation now given to the proviso to Regulation (3) and

particularly, to the expression ‘in any other country’, as also

100

found in Regulation (4) of the 1961 Regulation, a future cut-off

date may have to be indicated by the Union of India by means

of a circular or in any other manner for the purpose of enabling

the registration of individuals in the Register of Sikkim Subjects

who are Indian citizens, domiciled in the territory of Sikkim on

or before 26

April, 1975. This is permissible because

Government Order dated 7

August, 1990, would indicate that

every person who immediately before 26

April, 1975 was a

Sikkim Subject under the 1961 Regulation shall be deemed to

have become a citizen of India on that day. The object and

purpose of the issuance of the Government Order was to ensure

that those persons who were eligible to be entered in the

a genuine omission were enabled to get themselves registered

and are accordingly deemed to have become citizens of India

with effect from 26

April, 1975 in terms of the Sikkim

(Citizenship) Order, 1975.

68.7.The Sikkim (Citizenship) Order, 1975, as amended by the

Sikkim (Citizenship) Amendment Order, 1989, issued by the

Government of India would clearly indicate that any person who

was a Sikkim Subject under the 1961 Regulation shall be

deemed to have become a citizen of India. Conversely, all

101

citizens of India having a domicile in Sikkim on or before 26

April, 1975 must be enabled to register their names in the

exemption under clause (26AAA) of Section 10 of the I.T. Act,

1961. This would imply that the 1961 Regulation is being

extended up to 26

April, 1975 for the purpose of Explanation

to Section 10 (26AAA) of the I.T. Act, 1961 so as to save it from

being rendered discriminatory insofar as the petitioners herein

and similarly situated individuals are concerned.

68.8.Further, under the Sikkim Work Permit Rules, 1965 every

‘foreigner’ entering Sikkim was required to obtain a work permit

from the Chief Secretary or any other officer authorised by him

before he could take up or continue any employment for gain

within the State of Sikkim. However, under the aforesaid Rules,

the definition of ‘foreigner’ included all foreigners except a

citizen of India. Therefore, Indian citizens or Indian nationals

who became domiciled in Sikkim and were employed in Sikkim

did not require a work permit. In view of the aforesaid Rules, it

can be inferred that any Indian citizen who entered Sikkim for

the purpose of employment prior to 26

April, 1975 was treated

on par with Sikkimese and not as a foreigner. It is plausible

that because of the concession given under Work Permit Rules

102

of 1965, Indian citizens or nationals did not get themselves

registered under the Register of Sikkim Subjects at the relevant

point of time.

68.9.It is contended that only a small percentage of settlers of Indian

origin in Sikkim have not been registered under the Register of

Sikkim Subjects and as a result they are not provided the

benefit of exemption under the Explanation to clause (26AAA) of

Section 10 of the I.T. Act, 1961. In the circumstances, the

respondent-Union of India must consider ways and means in

which such persons could also receive the benefit of exemption

from payment of income tax if they were domiciled in Sikkim on

or before 26

April, 1975 by amending the Explanation to

Section 10 (26AAA) of the I.T. Act, 1961 or by issuing a circular

enabling such individuals being given the opportunity to

68.10.Further, the Government of India has enabled the registration

of all such persons who were omitted from the Register of

Sikkim Subjects under the 1961 Regulation read with the 1961

Rules. The Government of India Order dated 7

August, 1990

also has a deeming fiction inasmuch as all subjects registered

under the Register of Sikkim Subjects have become citizens of

India as on 26

April, 1975.

103

68.11.The rationale for extending the registration of persons who were

omitted from the Register of Sikkim Subjects under the 1961

Regulation vide Government of India Orders dated 07

August,

1990 and 08

April, 1991 is in recognition of the fact that

individuals who were domiciled in Sikkim, for various reasons

could not be registered under the Register of Sikkim Subjects. If

the criterion of domicile has been the basis for registration of

persons in the Register under the 1961 Regulations, then by

the very same basis, individuals such as the petitioners and all

similarly situated persons domiciled in Sikkim on or before 26

April, 1975 which is the day on which Sikkim merged with

India must be given the benefit of the exemption even if their

names are presently not registered in the Register of Sikkim

Subjects in order to remove the vice of discrimination vis-a-vis

such individuals.

68.12.Hence, persons such as the petitioners and other similarly

situated persons who have not been registered under the

the aforesaid discussion as registration under the said Register

is the basis for extending the exemption under Section 10

(26AAA) of the I.T. Act, 1961. Hence, directions have been

104

issued so as to include persons such as the petitioners and

other similarly situated persons.

69. The second category of individuals are individuals whose

names have been registered in the Register of Sikkim Subjects by

virtue of the Government of India Order No.26030/36/90 – I.C.I. dated

August, 1990 and Order of even number dated the 8

April, 1991

and notification issued by the Department of Home, Government of

Sikkim dated 16

August, 1990 publishing the Government of India

Order dated 7

August, 1990:

69.1.As per the Notification dated 21

June, 1975, issued by the

Home Department, Government of Sikkim, it was declared that

May, 1975 was the date on which the Citizenship Act,

1955, shall come into force in the State of Sikkim and the

Citizenship Rules, 1956, were also enforced from the aforesaid

date. In fact, in exercise of the powers conferred under Section

7 of the Citizenship Act, 1955, the Government of India

promulgated the Sikkim (Citizenship) Order, 1975. As per

clause (2) of the aforesaid order:

“Every person who immediately, before the 26

day of April, 1975, was the Sikkim Subject

under the Sikkim Subjects Regulation, 1961

shall deem to have become a citizen of India on

that day”.

105

Further, in exercise of the powers conferred by Section 7 of

the Citizenship Act, 1955, the Government of India amended

the Sikkim Citizenship Order, 1975, by virtue of the Sikkim

Citizenship (Amendment) Order, 1989, whereby a proviso was

added to paragraph 2 of the Sikkim (Citizenship) Order, 1975,

which reads as follows:

“Provided that any person whose name was

eligible to be entered in the register maintained

under the said regulation but was not so

entered because of any genuine omission shall

also be deemed to have become a citizen of India

on that day if so determined by the Central

Government".

69.2.As per the Notification issued by the Government of India Order

No.26030/69/88-I.C.I. dated 20

March, 1989, a Committee for

the purpose of consideration of the cases of genuine omissions

in terms of the Sikkim Citizenship (Amendment) Order, 1989,

was formed on 20

March, 1989. Further, by this Order,

Guidelines were issued as criteria for considering the names of

individuals who had been omitted to be registered in the Sikkim

Subjects. The said criteria read as under: -

“ANNEXURE TO M.H.A. ORDER N0.26030/

69/88-I.C.I DATED 20.03.1989 GUIDELINES

a. Natural descendants of a person whose

names is in the Sikkim Subject Register.

106

b. Person having recorded ownership or tenancy

rights on agricultural land or of rural property

within Sikkim before 26th April, 1975, and his

natural descendants.

c. Persons whose name is included in the

earliest available voters-list prior to the 26

April, 1975, and his natural descendants.

d. Person holding a regular government job

before 26

April, 1975 provided that the

appointment has not been made under the

'exception' clause pertaining to non-subjects;

and his natural descendants.

e. Holder of trade license outside notified bazaar

areas prior to 26

April, 1975 and his natural

descendants.

f. He must not have entered the territory of

Sikkim on the basis of work-permit.

g. He must not have acquired citizenship of any

other country.

h. He must not be holding the status of refugee

on the basis of a registration certificate issued

by the competent authority.

(The criteria laid down from (a) to (e) singly or

collectively are by themselves not be taken as

conclusive evidence for granting citizenship, but

would have to be scrutinized in the light of

those at (f), (g) & (h).”

69.3.Further, the Government of India issued Notification vide Order

No.26030/36/90-I.C.I. dated 8

April, 1991 and the said Order

states that there were a large number of persons who were

107

eligible to be entered in the Register as Sikkim Subjects

immediately before 26

April, 1975, as per the 1961 Regulation,

were not so entered because of genuine omissions. The said

cases of genuine omissions were reviewed and it was

recommended that the names of 73,431 persons were

considered eligible for being included in the Register of Sikkim

Subjects. The Ministry of Home Affairs, Government of India

after consideration of the cases found that 33,348 persons were

eligible to be registered under the Register of Sikkim Subjects

and were deemed to have become citizens of India with effect

from 26

April, 1975, in terms of the Sikkim (Citizenship)

Order, 1975.

69.4.By virtue of the aforesaid Government Orders dated 7

August,

1990 and 8

April, 1991 it is clear that persons who were

entitled to be registered in the Register of Sikkim Subjects

immediately before 26

April, 1975 but were not registered

because of genuine omissions, are to be registered in the said

India and entitled to the benefit of the exemption.

Thus, all individuals who were registered in the Register of

Sikkim Subjects became citizens of India by virtue of the

aforesaid Government of India’s orders. Therefore, it was a

108

necessary concomitant that to become a citizen of India, an

individual must have been/be registered in the Register of

Sikkim Subjects. Further registration under the said Register

enables such individuals to have the benefit of exemption from

payment of income tax. But individuals such as the petitioners

and all similarly situated individuals as of now are not entitled

to the benefit of exemption as their names are not registered in

the said Register.

69.5.Further, even under the Sikkim Work Permit Rules, 1965, an

Indian national was not considered to be a foreigner in Sikkim.

Thus, all Indian nationals who have become domiciled in

Sikkim till 26

April, 1975 must be given the benefit of the

exemption clause under the I.T. Act, 1961. This is in order to

eliminate the disparity amongst the individuals who are all now

citizens of India settled/domiciled in Sikkim prior to 26

April,

1975. Therefore, directions have been issued in this regard so

as to save the Explanation from the vice of being ultra vires

under Articles 14 and 15 of the Constitution of India.

70.The third category of individuals are those, whose names do

not appear in the Register of Sikkim Subjects, but it is established

beyond doubt that the name of such individuals’ father or husband or

109

paternal grandfather or brother from the same father has been

recorded in that register.

70.1.As far as these categories of individuals are concerned, there is

a necessity to prove beyond doubt that the name of such

individual's father or husband or paternal grandfather or

brother from the same father has been recorded in the Register.

In such a case, even if an individual’s name does not appear in

the Register of Sikkim Subjects, for the purpose of clause

(26AAA) of Section 10 of the I.T. Act, 1961, a Sikkimese is

entitled to the benefit of the said provision of the said Act. This

is on the basis of the concept of domicile of the ancestors or

close relations of the individual. Therefore, such category of

individuals are also included to avail the benefit of the

exemption clause.

71.On an analysis of the Explanation, it would emerge that the

from payment of income tax under the I.T. Act, 1961 to a Sikkimese.

Therefore, the Government of India has extended opportunities for the

names of individuals to be recorded in the Register of Sikkim Subjects

even after the merger of Sikkim as a State with India on 26

April,

1975, by issuance of Government Orders dated 7

August, 1990 and

April, 1991. Further, names of individuals which do not appear in

110

the Register of Sikkim Subjects but it is established beyond doubt that

the names of such individual’s father or husband or paternal

grandfather or brother from the same father have been recorded in

that Register, could also be included in the said Register. Hence, even

as of now, if any individual’s name is not entered in the Register, such

individual’s name could be entered into the Register by virtue of clause

(iii) of the Explanation to Section 10 (26AAA) of the I.T. Act, 1961. The

object of providing clause (iii) of the Explanation, which is in the

nature of an omnibus clause, is to extend the benefit of the exemption

under Section 10 (26AAA) of the I.T. Act, 1961 to all Sikkimese as per

the conditions mentioned therein by providing individuals whose

names do not appear in the Register, an opportunity of getting their

names registered in the said Register so as to avail the benefit of

exemption from payment of income tax as per the aforesaid provision.

72.Thus, the object is to provide the exemption from payment of

income tax only to those Sikkimese who were domiciled in Sikkim

having regard to the 1961 Regulation or by virtue of the Government

Orders dated 7

August, 1990 or 8

April, 1991 issued by the

Government of India which are again based on the 1961 Regulation.

Therefore, under clause (iii) of the Explanation, an opportunity would

have to be provided to individuals who fall within the scope and ambit

111

of the said clause of the I.T. Act, 1961, to get their names registered if

not yet registered.

73.However, in my view, the Explanation restricts the exemption

only to those Sikkimese individuals who fall within the three clauses of

the Explanation, as the object and purpose of the exemption is only to

exempt the settlers in Sikkim or persons domiciled in Sikkim in terms

of the 1961 Regulation or the Government Orders referred to above.

Even though the 1961 Regulation has been repealed, nevertheless, the

Regulation, which had acquired a sanctity, has been the basis for

grant of an exemption and particularly in the form of clause (iii) of the

Explanation to Section 10(26AAA) of the I.T. Act, 1961. This would

imply that all those individuals who fall outside the scope and ambit of

the Explanation would not be granted the exemption. Then, the

questions of discrimination against persons such as the petitioners

and others similarly situated would arise.

74.Individuals having become citizens of India and were domiciled in

Sikkim as on 26

April, 1975 are also entitled to the benefit of

registration and exemption. Thus, in my view, all individuals domiciled

in Sikkim till 26

April, 1975 and who have since become citizens of

India are entitled to exemption from payment of income tax as per

Section 10 (26AAA) of the I.T. Act, 1961.

112

75.The rationale being, Sikkim merged with India and became a

State within India in the year 1975 and a special status was given to it

by virtue of Article 371-F of the Constitution of India. This does not

mean that all persons domiciled in Sikkim who have been treated as

citizens of India are entitled to the exemption. Only such individuals

are entitled to the exemption who fall within the three clauses of the

Explanation. Hence, the Explanation must be construed strictly as it is

in the nature of a definition of the expression “Sikkimese” for the

purpose of granting an exemption from payment of income tax under

the I.T. Act, 1961. However, the exemption must be extended to

incorporate all such individuals who have been domiciled in Sikkim as

on 26

April, 1975 and who have since then become citizens of India.

This would mean that all other citizens of India who do not fall within

the ambit of the Explanation as interpreted above and who have been

domiciled in Sikkim State subsequent to 26

April, 1975 would not

have the benefit of exemption under Section 10 (26AAA) of the I.T. Act,

1961.

76.In view of the above interpretation, in my view, the Explanation

has to be saved from being in violation of Articles 14 or 15 of the

Constitution of India as there is rationale in the three clauses of the

Explanation which is a reasonable classification which has a nexus to

the object sought to be achieved, which is to grant of exemption from

113

payment of income tax only to those individuals who would qualify as

‘Sikkimese’ in terms of the Explanation to clause (26AAA) of Section 10

of the I.T. Act, 1961. Thus, any individual not falling within the said

clause would not be entitled to the said exemption. This would

however be discriminatory insofar as those settlers in Sikkim are

concerned who have been domiciled in Sikkim subsequent to

promulgation of 1961 Regulation and till 26

April, 1975 when Sikkim

merged with India. Such individuals are old settlers who have become

citizens of India from 26

April, 1975 but who were domiciled in

Sikkim prior to the said date. In my view, they are also entitled to the

exemption under Section 10 (26AAA). Hence, directions in that regard

have to be issued to fill the Legislative vacuum and amendment to the

Explanation is necessary. However, those individuals who have been

domiciled in Sikkim subsequent to 26

April, 1975 shall not be

entitled to the benefit of exemption from payment of income tax.

77.This Court has on previous occasions, sought to enforce rights of

citizens even in areas of legislative vacuum. [For instance, in Vishaka

and Ors. vs. State of Rajasthan, A.I.R. 1997 SC 3011 ]. To this

end, Article 142 of the Constitution of India has been invoked and the

law so declared in order to fill the vacuum has been treated as law

declared by this Court under Article 141 until a proper legislation is

made.

114

Hence, it has to be directed that till such amendment is made to

the down the Explanation to Section 10(26AAA) of the I.T. Act, 1961,

all individuals domiciled in Sikkim up to 26

April, 1975 shall be

entitled to the exemption under the said provision from the current

financial year i.e., 1

April, 2022 onwards. This direction is being

issued in exercise of powers under Article 142 of the Constitution so

as to eliminate discrimination and disparity in respect of the aforesaid

category of Sikkimese, who subsequently have become citizens of India

w.e.f. 26

April, 1975 and to save the Explanation from being

rendered unconstitutional vis-à-vis such individuals who form a small

percentage of Sikkimese and who are also entitled to such an

exemption. Such as approach is being adopted rather than striking

down the Explanation to Section 10(26AAA) of the I.T. Act, 1961 which

would have the effect of withdrawing the benefit of exemption even

from those categories of persons who are presently eligible for the

same.

78.Hence, until the amendment is made, the following clause shall

be read as a part of the Explanation to Section 10(26AAA) of the I.T.

Act, 1961, possibly as sub-clause (iv) thereof:

“(iv) any other individual, whose name does not

appear in the Register of Sikkim Subjects but it is

established that such individual was domiciled in

Sikkim on or before 26

April, 1975.”

115

This provision would extend the benefit of exemption to those

individuals, domiciled in Sikkim on the day it merged with India, i.e.,

April, 1975.

79.In the result, the writ petitions are disposed of in the following

terms:

i)That the benefit of income-tax exemption presently is restricted

only to those Sikkimese who fall within the three clauses of the

Explanation to Section 10(26AAA) of the I.T. Act, 1961, or those

persons domiciled in Sikkim, or are Sikkimese as covered under

the 1961 Regulation.

ii) In terms of the Sikkim (Citizenship) Order, 1975 as amended by

the Sikkim (Citizenship) Amendment Order, 1989, issued by the

Government of India any person who was a Sikkim Subject under

the 1961 Regulation was to be deemed to be a citizen of India

w.e.f. 26

April, 1975. Conversely, it is held that all citizens of

India, having a domicile in Sikkim on the day it merged with India

i.e. 26

April, 1975 must be covered under the Explanation in

order to avail the benefit of the exemption under Section

10(26AAA) of the I.T. Act, 1961.

iii) The Union of India shall make an amendment to Explanation to

Section 10 (26AAA) of I.T. Act, 1961, so as to suitably include a

116

clause to extend the exemption from payment of income tax to all

Indian citizens domiciled in Sikkim on or before 26

April, 1975.

The reason for such a direction is to save the explanation from

unconstitutionality and to ensure parity in the facts and

circumstances of the case.

iv)Till such amendment is made by the Parliament to the

Explanation to Section 10 (26AAA) of I.T. Act, 1961, any

individual whose name does not appear in the Register of Sikkim

Subjects but it is established that such individual was domiciled

in Sikkim on or before 26

April, 1975, shall be entitled to the

benefit of exemption.

This direction is being issued in exercise of powers under

Article 142 of the Constitution so as to eliminate discrimination

and disparity in respect of the aforesaid category of Sikkimese,

who subsequently have become citizens of India w.e.f. 26

April,

1975 and to save the Explanation from being rendered

unconstitutional vis-à-vis such individuals who form a small

percentage of Sikkimese.

v)Proviso to Section 10 (26AAA), insofar as it excludes from

the exempted category, “a Sikkimese woman who marries a

non-Sikkimese man after 1

April, 2008” is hereby struck

down as being ultra vires Articles 14, 15 and 21 of the

Constitution of India.”

117

Parties to bear their respective costs.

…………..…………….J.

[B.V. Nagarathna]

New Delhi;

13 JANUARY, 2023.

118

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G. Sekar Vs. Geetha & Ors

1:01 mins | 0 | 15 Apr, 2009

Githa Hariharan and Anr .. Vs. Reserve Bank of India...

2:00 mins | 2 | 17 Feb, 1999

Vishaka and Ors. Vs. State of Rajasthan and Ors.

mins | 5 | 13 Aug, 1997

Aphali Pharmaceuticals Ltd. Vs. State of Maharashtra & Ors.

mins | 0 | 19 Sep, 1989

Mackinnon Mackenzie & Co. Ltd. Vs. Audrey Dcosta & Anr.

mins | 0 | 26 Mar, 1987

Air India Etc. Etc. Vs. Nergesh Meerza & Ors. Etc....

mins | 0 | 28 Aug, 1981

Vishundas Hundumal, Etc. Vs. State of Madhya Pradesh & Ors.

mins | 0 | 13 Mar, 1981

Maneka Gandhi Vs. Union of India

2:00 mins | 34 | 25 Jan, 1978

Shayara Bano Vs. Union of India and others

mins | 6 | 22 Aug, 2017

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