Himachal Pradesh High Court Issues Notice On Plea To Restrain State Govt From Paying Income Tax Of MLAs, Ministers

The Himachal Pradesh High Court has issued a notice to the state government on a plea challenging the provisions of the Himachal Pradesh Legislative Assembly (Allowances & Pension of Members) Act, 1971 and Salaries & Allowances of Ministers (Himachal Pradesh) Act, 2000, which exempt legislators and ministers from income tax on their salaries and allowances. 

The bench of Chief Justice Mohammad Rafiq and Justice Jyotsna Rewal Dua issued the notice on a civil writ petition filed by practicing Advocates Yash Pal Rana and others praying that the State Government may be restrained from paying the income tax of Ministers and Members of the State Legislative Assembly.

The court has sought the reply of the state government, Himachal Pradesh Vidhan Sabha, Mahender Singh (MLA, BJP), Mukesh Agnihotri (MLA, Congress; Leader of opposition-Himachal Pardesh), CPIM's Rakesh Singha, and Independent legislator Hoshiar Singh in 6 WEEKS.

The plea before the Court

Essentially, the petitioners moved to the High Court being aggrieved by different provisions of the HP Legislative Assembly (Allowances and Pensions of Members) Act, 1971, which provides for exemptions to the Members of the Legislative Assembly and the Ministers from paying the income tax on the income earned by them along with various allowances and perquisites.

Further, the petitioners have also challenged the similar provisions of the Salaries and Allowances of Ministers (Himachal Pradesh) Act, 2000, which also provides that the Ministers would be exempted from paying the income tax on the income so earned by them in the form of salaries, allowances and other perquisites granted to them under these Acts.

The petitioners have averred in the plea that the State Legislature has no powers to legislate in any manner whatsoever with respect to the payment of income tax or charging of income tax or assessment of income, etc.

In view of this, the plea further stresses that the State also lacks the power to legislate with respect to the fact that the income tax of the MLAs or Ministers shall be borne by the State of Himachal Pradesh.

"As per the provisions of the Income Tax Act, the income of every individual is required to be assessed and taxed in accordance with the provisions of the said Act. The exemptions from the income or non-taxable items are exclusively dealt with under the provisions of the Income Tax Act. Income Tax Act mandates, the payment of income tax by every individual, who is earning income, which is assessed to income tax in accordance with the provisions of the income tax. The State Government has no legislative competence to enact any provision mandating the provisions of income tax contrary to the terms contained in the Income Tax Act, which has been enacted while exercising the powers under Entry 82 of List–1 of 7th Schedule of the Constitution of India. At the same time, no power whatsoever of any sort has been conferred upon the State Legislative Assembly to legislate that the income tax of Members of the Assembly or Ministers thereof will not be paid by the Members or as the case may be and that it shall be borne by the State. Consequently, Section 6AA of Himachal Pradesh Legislative Assembly (Allowance & Pensions of the Members) Act, 1971 and Section 12 of the Salaries & Allowances of Ministers (Himachal Pradesh) Act, 2000 is without any legislative sanction, beyond the competence of the State Legislature and the same cannot stand on Statute Book and may be set aside and be declared invalid and unconstitutional."

Against this backdrop, the plea contends that by virtue of these legislations, a special class has been created for the Members of Legislative Assembly and Ministers thereof, whose income tax liability is being borne by the State.

"At the same time, there is another class of general income tax payers, who bear and pay the income tax in accordance with the provisions of the Income Tax Act. There is no intelligible differentia for carving out these two classes with respect to the payment of income tax and such a differentia has no nexus with the object sought to be achieved by the said classification," the plea further submits.

Senior Advocate Rajnish Maniktala along with Advocate Naresh Verma appeared for the petitioner.

Case title - Yash pal Rana and others v. State of HP and others

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