ASSOCIATION OF OLD SETTLERS OF SIKKIM AND ORS. versus UNION OF INDIA AND ANR.

[2023] 10 S.C.R. 289 : 2023 INSC 29

ASSOCIATION OF OLD SETTLERS OF SIKKIM AND ORS.

UNION OF INDIA AND ANR.

(Writ Petition (C) No. 59 of 2013)

JANUARY 13, 2023*

[M. R. SHAH AND B. V. NAGARATHNA, JJ.]

Income Tax Act, 1961 – s.10(26AAA) – Sikkim SubjectsRegulations, 1961 – rr.3 and 4 – Right to Equality – Prohibition ofdiscrimination – Clause 26AAA to s.10 of the Income Tax Act, 1961granted exemption to “Sikkimese” people – Explanation to Clause26AAA defined the term “Sikkimese” – Definition of “Sikkimese”in Explanation to s.10(26AAA) to the extent it excludes the Indians,who have settled in Sikkim prior to the merger of Sikkim with Indiaon 26.04.1975; and proviso to s.10(26AAA) insofar as it excludesfrom the exempted category “a Sikkimese woman, who marries anon-Sikkimese after 01.04.2008” – Challenge to – Held (per M.R.Shah, J.): Total 95% of the population of Sikkim are getting thebenefit of s. 10(26AAA) of the Income Tax Act and only 5% are leftout and out of which only 1% are the persons like the Old IndianSettlers, but their names could not be registered as “Sikkim Subjects”like the petitioner – Purpose of s.10(26AAA) is to grant exemptionto the residents of Sikkim from payment of income tax – All suchIndians/citizens, who have settled in Sikkim prior to the merger ofSikkim with India on 26.04.1975 are to be treated at par – Theyform the same group/class and are entitled to the exemption u/s.10(26AAA) – There is no difference and/or distinction betweenthose “Sikkim Subjects”, whose names are recorded in the registermaintained under the Regulations, 1961 and those Indians, whohave settled in Sikkim prior to the merger of Sikkim, but whosenames were not recorded as “Sikkim Subjects” in the register –Merely because at the relevant time and when the Regulations, 1961was enacted, the Indians settled in Sikkim did not surrender theirIndian citizenship or their fathers/forefathers’ names were not enteredinto the register maintained under the Regulations, 1961, by itself,it cannot be said that they cease to be the “Sikkimese” – Exclusion

*Ed. Note: Subsequent order dated February 8, 2023 reported in [2023] 10 S.C.R. 368 to beread as part and parcel of the present judgements dated January 13,2023.

CDEFG

Aof old Indian settlers, who have settled in Sikkim prior to the mergerof Sikkim with India on 26.04.1975 from the definition of“Sikkimese” in s.10(26AAA) is arbitrary, discriminatory andviolative of Art. 14 – The exclusion has no nexus with the objectand purpose of enacting s. 10(26AAA) of to be achieved – Noreasonable intelligible differentia has been shown and therefore,Bthe same can be termed as arbitrary – Hence, petitioners andsimilarly situated persons who are old Indian settlers who have settledin Sikkim prior to the merger of Sikkim with India on 26th April,1975 shall also be entitled to the exemption under s.10 (26AAA) ofthe I.T. Act, 1961 – Further, there is no justification shown and/orCdemonstrated to exclude “a Sikkimese woman, who marries non-Sikkimese after 01.04.2008” from the exempted category – Thediscrimination is based on gender which is wholly violative of Arts.14, 15 and 21 of the Constitution – To deny the benefit of exemptionu/s. 10(26AAA) of the Income Tax Act to “a Sikkimese woman, whomarries non-Sikkimese after 01.04.2008” is arbitrary,Ddiscriminatory and violative of Art. 14 – Therefore the Proviso tos.10(26AAA) insofar as it excludes from the exempted category “aSikkimese woman, who marries non-Sikkimese after 01.04.2008”has to be struck down – Held (per B.V. Nagarathna, J.): Under the1961 Regulation, for women marriage has been the basis ofEacquiring the status of having domicile in Sikkim and being aSikkim Subject or losing domicile or status as Sikkim Subject –Marriage of Sikkimese woman is also the basis for discriminationagainst her whereas there is no such discrimination vis-à-vis aSikkimese man marrying Sikkimese or non-Sikkimese womanon or after 1st April, 2008 – When the Explanation to s.10(26AAA)Frefers to an “individual”, it includes both Sikkimese men and women,in fact, all genders – Therefore, it cannot have restrictive or myopicreference to only Sikkimese men and exclude those Sikkimese women– In the instant case, the proviso is overriding the provision as wellas the Explanation in respect of those categories of marriedGSikkimese women – The proviso is inherently arbitrary anddiscriminatory against particular category of Sikkimese women –Hence, all Sikkimese women are entitled to the benefit ofs.10(26AAA) as per the Explanation thereto irrespective of whetherthey marry Sikkimese or non-Sikkimese – The proviso toClause(26AAA) of s. 10 of the I.T. Act, 1961 is struck down as beingH

in violation of Arts. 14 and 15 – The object and purpose of theexemption is only to exempt the settlers in Sikkim or personsdomiciled in Sikkim in terms of the 1961 Regulation or theGovernment Orders – All individuals domiciled in Sikkim till 26thApril, 1975 and who have since become citizens of India are entitledto exemption from payment of income tax – Only such individualsare entitled to the exemption who fall within the three clauses of theExplanation – All other citizens of India who do not fall within theambit of the Explanation and who have been domiciled in SikkimState subsequent to 26th April, 1975 would not have the benefit ofexemption – This would be discriminatory insofar as those settlersin Sikkim are concerned who have been domiciled in Sikkimsubsequent to promulgation of 1961 Regulation and till 26th April,1975 – Such individuals are old settlers who have become citizensof India from 26th April, 1975 but who were domiciled in Sikkimprior to the said date – These old settlers are also entitled to theexemption under s.10 (26AAA) – Hence, directions in that regardhave to be issued to fill the Legislative vacuum and amendment tothe Explanation is necessary – Directions issued to eliminate thediscrimination and to save the Explanation from being renderedunconstitutional – Constitution of India – Arts. 14, 15, 21 and 142.Interpretation of Statutes – Internal Aid – Proviso – Functionof – Held: The normal function of proviso is to except somethingout of the provision or to qualify something enacted therein which,but for the proviso, would be within the purview of the provision –A proviso is added to an enactment to qualify or create an exceptionto what is in the enactment – proviso cannot be construed asnullifying the provision or as taking away completely rightconferred by the enactment – If it does so and is discriminatorythen it falls foul of the equality clauses of the Constitution of India.

Disposing of the writ petitions, the Court

HELD:

per M.R. Shah, J.

1. The purpose of Section 10(26AAA) of the Income TaxAct, 1961 is to grant exemption to the residents of Sikkim frompayment of income tax under the Income Tax Act. Therefore, allsuch Indians/citizens, who have settled in Sikkim prior to the

ABC

Amerger of Sikkim with India on 26.04.1975 are to be treated atpar and they form the same group/class and are entitled to theexemption under Section 10(26AAA) of the Income Tax Act. Assuch, there is no difference and/or distinction between those“Sikkim Subjects”, whose names are recorded in the registermaintained under the Sikkim Subjects Regulations, 1961 andBthose Indians, who have settled in Sikkim prior to the merger ofSikkim, but whose names were not recorded as “SikkimSubjects” in the register maintained under the Sikkim SubjectsRegulations, 1961. All are “Sikkimese”. Merely because at therelevant time and when the Sikkim Subjects Regulations, 1961Cwas enacted, the Indians settled in Sikkim did not surrender theirIndian citizenship or their fathers/forefathers’ names were notentered into the register maintained under the Sikkim SubjectsRegulations, 1961, by itself, it cannot be said that they cease tobe the “Sikkimese”. All of them are similarly situated with those“Sikkimese” / “Sikkim Subjects”, who all have settled in SikkimDprior to the merger of Sikkim with India on 26.04.1975. The objectand purpose of Section 10(26AAA) is to grant benefit ofexemption from payment of income tax under the Income TaxAct to the residents of Sikkim. Therefore, there is no nexussought to be achieved in excluding the Indians, who have settledEin Sikkim prior to the merger of Sikkim with India on 26.04.1975but their names are not recorded as “Sikkim Subjects”. The Unionof India has failed to satisfy any reasonable classification and/ornexus to exclude such class of Indians, who, in fact, have settledin Sikkim prior to 26.04.1975. Therefore, exclusion of old Indiansettlers, who have settled in Sikkim prior to the merger of SikkimFwith India on 26.04.1975 from the definition of “Sikkimese” inSection 10(26AAA) is arbitrary, discriminatory and violative ofArticle 14 of the Constitution of India.[Para 13.1][312-D-H; 313-A-B]

2. In the present case, the exclusion has no nexus with theGobject and purpose of enacting Section 10(26AAA) of the IncomeTax Act to be achieved. No reasonable intelligible differentia hasbeen shown and therefore, the same can be termed as arbitrary.This Court is of the firm opinion that Section 10(26AAA) to theextent it excludes the Old Indian settlers, who have settled inHSikkim prior to the merger of Sikkim with India on 26.04.1975,

but whose names are not recorded as “Sikkim Subjects”, fromthe definition of “Sikkimese” is ultra vires, being arbitrary,discriminatory and violative of Article 14 of the Constitution ofIndia. The definition of “Sikkimese” in Section 10(26AAA) ofthe Income Tax Act shall also include all Indians, who havepermanently settled in Sikkim prior to the merger of Sikkim withIndia on 26.04.1975 irrespective of the fact that whether theirnames have been recorded in the register maintained under theSikkim Subjects Regulations, 1961 or not. Therefore, the“Sikkimese” like the petitioners, who are old Indian settlers andwho have settled in Sikkim prior to the merger of Sikkim withIndia on 26.04.1975 shall also be entitled to the exemption underSection 10(26AAA) of the Income Tax Act, 1961. [Paras 13.4and 14][313-G; 314-B-D]

3. So far as the challenge to the Proviso to Section10(26AAA) insofar as it excludes from the exempted category,“a Sikkimese woman, who marries non-Sikkimese after01.04.2008” is concerned, there is no justification shown and/ordemonstrated to exclude “a Sikkimese woman, who marries anon-Sikkimese after 01.04.2008” from the exempted category.Apart from the above, the same is clearly hit by Articles 14, 15and 21 of the Constitution of India. The discrimination is basedon gender, which is wholly violative of Articles 14, 15 and 21 ofthe Constitution of India. There is no disqualification for Sikkimman, who marries non-Sikkimese after 01.04.2008. woman isnot chattel and has an identity of her own, and the mere factumof being married ought not to take away that identity. [Para15][314-D-G]

4. There is no justification shown to exclude “a Sikkimesewoman, who marries non-Sikkimese after 01.04.2008”. ASikkimese woman, who has married non-Sikkimese prior to01.04.2008 is entitled to the benefit of exemption provided underSection 10(26AAA). There is no justification shown to fix the cutoff date of 01.04.2008. There is no rational nexus to the objectsought to be achieved by excluding “a Sikkimese woman, whomarries non-Sikkimese after 01.04.2008” and to include “aSikkimese woman, who has married non-Sikkimese before01.04.2008”. Therefore, to deny the benefit of exemption underSection 10(26AAA) of the Income Tax Act to “a Sikkimese

ABC

Awoman, who marries non-Sikkimese after 01.04.2008” isarbitrary, discriminatory and violative of Article 14 of theConstitution of India. Therefore, also, the Proviso to Section10(26AAA) insofar as it excludes from the exempted category“a Sikkimese woman, who marries non-Sikkimese after01.04.2008” has to be struck down. Therefore, Proviso to SectionB10(26AAA) inasmuch as it excludes from the provision ofexemption Sikkimese woman merely because she marries anon-Sikkimese after 01.04.2008 is totally discriminatory andviolative of Articles 14, 15 and 21 of the Constitution of India,which requires to be struck down. [Paras 15.1 and 16][315-A-D]CD. S. Nakara v. Union of India (1983) 1 SCC 305 :[1983] 2 SCR 165 ; State of Rajasthan v. ManoharSinghji II [1954] SCR 996 and Shayara Bano v.Unionof India (2017) 9 SCC 1 : [2017] 9 SCR 797 - followed.

G. Sekar v. Geetha & Ors. (2009) 6 SCC 99 : [2009] 5DSCR 1005- relied on.Vishundas Hundumal v. State of M.P. (1981) 2 SCC 410:[1981] 3 SCR 234 and Anuj Garg & Ors. v. HotelAssociation of India & Ors. (2008) 3 SCC 1: [2007] 12SCR 991- referred to.

Eper B. V. Nagarathna, J.1. Under the Sikkim Subjects Regulations, 1961, as far aswomen are concerned, marriage has been the basis of acquiringthe status of having domicile in Sikkim and being SikkimSubject or losing domicile or status as Sikkim Subject. Marriageof Sikkimese woman is also the basis for discrimination againstFher whereas there is no such discrimination vis-à-vis Sikkimeseman marrying Sikkimese or non-Sikkimese woman on or after1st April, 2008. When the Explanation to Clause 26AAA to Section10 of the Income Tax Act, 1961 refers to an “individual”, itincludes both Sikkimese men and women, in fact, all genders; itGcannot have restrictive or myopic reference to only Sikkimesemen and exclude those Sikkimese women covered under theproviso. proviso cannot over arch provision. But in the instantcase, the proviso to Section 10(26AAA) of the Act, 1961 isoverriding the provision as well as the Explanation in respect ofthose categories of married Sikkimese women referred to in theHproviso which is impermissible. Thus, the proviso is inherently

arbitrary and discriminatory against particular category ofSikkimese women. In other words, the Explanation to Section10(26AAA) of the I.T. Act, 1961 includes both Sikkimese menas well as women. Such being the interpretation, the proviso isantithetical to the Explanation and the Section as well. Theexpression “an individual” in the Explanation to Section 10(26AAA) of the I.T. Act, 1961, must include all genders includingSikkimese women. There cannot be discrimination only on theground of sex and race. Hence, all Sikkimese women are entitledto the benefit of Section 10 (26AAA) of the I.T. Act, 1961, as perthe Explanation thereto irrespective of whether they marry aSikkimese or non-Sikkimese. [Paras 50,51, 53 and 55][340-C,D; 341-E-G; 342-C-D]

2. Pursuant to the merger of Sikkim with India by virtue ofwhich, Sikkim has become one of the States of India and all SikkimSubjects and all Sikkimese domiciled in the territory of Sikkimhave become Indian citizens, there cannot be discriminationvis-à-vis Sikkimese women marrying non-Sikkimese individual,whether an Indian citizen or foreigner, that too, on or after 1stApril, 2008. Such discrimination, is therefore, in violation of theguarantee of equality provided under Articles 14 and 15 of theConstitution 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 stark example of an unconstitutional sex-based discriminationand is liable to be struck down. [Para 56][342-D-F]

3. The proviso runs counter to the Explanation and is thusmanifestly arbitrary. This is because the Explanation intends togive the benefit of Section 10 (26AAA) of the I.T. Act, 1961 to allSikkimese who are defined under the said Explanation as those‘individuals’ whose names have been recorded and registered inthe Register of Sikkim Subjects immediately before 26th April,1975 or included pursuant to the Government of India Order No.26030/36/90/I.C.I. dated 7th August, 1990 and Order of evennumber dated 8th April, 1991, or those persons whose names donot appear in the Register of Sikkim Subjects but it has beenestablished that the name of such individual’s father or husbandor paternal grandfather or brother from the same father had beenrecorded in that Register. Hence, the benefit of the Explanationmust be extended to all Sikkimese women, irrespective of whether

Athey have married Sikkimese or non-Sikkimese after the 1stApril, 2008. Thus the proviso to Clause (26AAA) of Section 10of the I.T. Act, 1961 is struck down as being in violation of Articles14 and 15 of the Constitution of India. [Paras 64 and 65][352-H;353-A-C]

B4. The Explanation restricts the exemption only to thoseSikkimese individuals who fall within the three clauses of theExplanation, as the object and purpose of the exemption is onlyto exempt the settlers in Sikkim or persons domiciled in Sikkimin terms of the 1961 Regulation or the Government Ordersreferred to above. Even though the 1961 Regulation has beenCrepealed, nevertheless, the Register of Sikkim Subjects whichis maintained under the said Regulation, which had acquired asanctity, has been the basis for grant of an exemption andparticularly in the form of clause (iii) of the Explanation to Section10(26AAA) of the I.T. Act, 1961. This would imply that all those

Dindividuals who fall outside the scope and ambit of the Explanationwould not be granted the exemption. Then, the questions ofdiscrimination against persons such as the petitioners and otherssimilarly situated would arise. Individuals having become citizensof India and were domiciled in Sikkim as on 26th April, 1975 are

also entitled to the benefit of registration and exemption. ThusEall individuals domiciled in Sikkim till 26th April, 1975 and whohave since become citizens of India are entitled to exemptionfrom payment of income tax as per Section 10 (26AAA) of theI.T. Act, 1961. [Paras 73 and 74][364-D-G]

5. Only such individuals are entitled to the exemption whoFfall within the three clauses of the Explanation. Hence, theExplanation must be construed strictly as it is in the nature of adefinition of the expression “Sikkimese” for the purpose ofgranting an exemption from payment of income tax under theI.T. Act, 1961. However, the exemption must be extended to

incorporate all such individuals who have been domiciled inGSikkim as on 26th April, 1975 and who have since then becomecitizens of India. This would mean that all other citizens of Indiawho do not fall within the ambit of the Explanation as interpretedabove and who have been domiciled in Sikkim State subsequentto 26th April, 1975 would not have the benefit of exemption underHSection 10 (26AAA) of the I.T. Act, 1961. Thus, any individual

not falling within the said clause would not be entitled to the saidexemption. This would however be discriminatory insofar as thosesettlers in Sikkim are concerned who have been domiciled inSikkim subsequent to promulgation of 1961 Regulation and till26th April, 1975 when Sikkim merged with India. Such individualsare old settlers who have become citizens of India from 26th April,1975 but who were domiciled in Sikkim prior to the said date.They are also entitled to the exemption under Section 10(26AAA). Hence, directions in that regard have to be issued tofill the Legislative vacuum and amendment to the Explanation isnecessary. However, those individuals who have been domiciledin Sikkim subsequent to 26th April, 1975 shall not be entitled tothe benefit of exemption from payment of income tax. [Paras 75and 76][364-H; 365-A-B; D-F]

6. This Court has on previous occasions, sought to enforcerights of citizens even in areas of legislative vacuum. To this end,Article 142 of the Constitution of India has been invoked and thelaw so declared in order to fill the vacuum has been treated aslaw declared by this Court under Article 141 until properlegislation is made. [Para 77; 365-G]

7.1 The Union of India shall make an amendment toExplanation to Section 10 (26AAA) of I.T. Act, 1961, so as tosuitably include clause to extend the exemption from paymentof income tax to all Indian citizens domiciled in Sikkim on orbefore 26[th] April, 1975. The reason for such direction is to savethe explanation from unconstitutionality and to ensure parity inthe facts and circumstances of the case.[Para 79; 367-B]

7.2 Till such amendment is made by the Parliament to theExplanation to Section 10 (26AAA) of I.T. Act, 1961, anyindividual whose name does not appear in the Register of SikkimSubjects but it is established that such individual was domiciledin Sikkim on or before 26[th] April, 1975, shall be entitled to thebenefit of exemption. This direction is being issued in exerciseof powers under Article 142 of the Constitution so as to eliminatediscrimination and disparity in respect of the aforesaid categoryof Sikkimese, who subsequently have become citizens of Indiaw.e.f. 26[th] April, 1975 and to save the Explanation from beingrendered unconstitutional vis-à-vis such individuals who form asmall percentage of Sikkimese. [Para 79; 367-C-E]

ABC

7.3 Proviso to Section 10 (26AAA), insofar as it excludesfrom the exempted category, “a Sikkimese woman who marries anon-Sikkimese man after 1[st] April, 2008” is hereby struck down asbeing ultra vires Articles 14, 15 and 21 of the Constitution of India.”[Para 79; 367-E-F]

Vishaka and Ors. v. State of Rajasthan, A.I.R. 1997SC 3011 : [1997] 3 Suppl. SCR 404 - followed.

S.K. Dutta v. Lawrence Singh Ingty, A.I.R. 1968 SC658 : [1968] 2 SCR 165; Southern Electricity SupplyCo. of Orissa Ltd. v. Sri Seetaram Rice Mill (2012) 2SCC 108 : [2011] 15 SCR 211; Aphali PharmaceuticalsLtd. v. State of Maharashtra (1989) 4 SCC 378 : [1989]1 Suppl. SCR 129; Anuj Garg and Ors. v. HotelAssociation of India and Ors. (2008) 3 SCC 1 : [2007]12 SCR 991; G. Sekar v. Geetha (2009) 6 SCC 99 :[2009] 5 SCR 1005; Air India v. Nergesh Meerza AIR1981 SC 1829 : [1982] 1 SCR 438; Air India CabinCrew Assn. v. Yeshaswinee Merchant and others AIR2004 SC 187 : [2003] 1 Suppl. SCR 455; C.B.Muthamma v. Union of India AIR 1979 SC 1868 : [1980]1 SCR 668; Mackinnon Mackenzie and Co. Ltd. v.Audrey D’costa and Another AIR 1987 SC 1281 : [1987]2 SCR 659; Githa Hariharan v. Reserve Bank of India(1999) 2 SCC 228 : [1999] 1 SCR 669; Anuj Garg &Ors. v. Hotel Association of India & Ors. (2008) 3 SCC1 : [2007] 12 SCR 991; G. Sekar v. Geetha & Ors. (2009)6 SCC 99 : [2009] 5 SCR 1005; State of Maharashtrav. Indian Hotel and Restaurants Association (2013) 8SCC 519 : [2013] 7 SCR 654 and Secretary, Ministryof Defence v. Babita Puniya and others (2020) 7 SCC469 : [2020] 3 SCR 833- referred to.

Bhe and Ors. v. The Magistrate, Khayelisha and Ors.(2004) 18 BHRC 52 : (2005) 1 BCLR 1 (CC); Reed v.Reed 404 U.S. 71, 92 S. Ct. 251 (1971); Weinbergervs. Wiesenfeld 420 U.S. 636, 95 S. Ct. 1225 (1975);Duren vs. Missouri 439 U.S. 357, 99 S. Ct. 664 (1979);Hishon vs. King & Spalding 467 U.S. 69, 104 S. Ct.2229 (1984); United States v. Virginia 518 U.S. 515(1996)– referred to.

ASSOCIATION OF OLD SETTLERS OF SIKKIM AND ORS. v.UNION OF INDIA AND ANR.

Case Law Reference

In the judgment of M. R. Shah, J.

CIVIL ORIGINAL JURISDICTION : Writ Petition (C) No.59of 2013.

(Under Article 32 of The Constitution of India)With

Writ Petition (C) No.1283 of 2021.

K. V. Viswanathan, Arvind P. Datar, G. Umapathy, Sr. Advs., Ms.Haripriya Padmanabhan, Senthil Jagadeesan, Ms. Shivani Vij, R.Venkataraman, Chanakya Dwivedi, Ms. Pooja Dhar, VenkatSubramanian, Rohit K. Singh, Pritam Bishwas, Ankit Pandey, AdityaSingh, Suvin Kumaran, Advs. for the Petitioners.

BN. Venkataraman, ASG, Vivek Kohli, Adv. Gen., H. R. Rao,Devashish Bharukha, Sughosh Subramanyam, Rajat Nair, BhuvanKapoor, Pranay Ranjan, Vikrant Yadav, Ms. Gargi Khanna, Raj BahadurYadav, Mrs. Anil Katiyar, Sameer Abhyankar, Abhinav Mishra, Ms. NishiSangtani, Ms. Vani Vandana Chhetri, Ms. Yeshi Ranchhen, PranavSachdeva, Ms. Neha Rathi, M/s. Arputham Aruna and Co., NarendraCKumar, Advs. for the Respondents.

The Judgments* of the Court were delivered by

M. R. SHAH, J.

1. By way of this writ petition under Article 32 of the ConstitutionDof India, the respective writ petitioners – Association of Old Settlers ofSikkim and Others have prayed for an appropriate writ, direction ororder striking down Section 10(26AAA) of the Income Tax Act, 1961(hereinafter referred to as the “Act, 1961”), more particularly, thedefinition of “Sikkimese” in Section 10 (26AAA) to the extent it excludesEIndians who have settled in Sikkim prior to the merger of Sikkim withIndia on 26.04.1975. The petitioners have also prayed for an appropriatewrit, 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 non-Sikkimese after 01.04.2008.

F2. Section 10(26AAA), the vires of which is under challenge readsas under:-

“[(26AAA) in case of an individual, being Sikkimese, any incomewhich 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 toa Sikkimese woman who, on or after the 1st day of April, 2008,marries an individual who is not Sikkimese.

*Ed. Note : These were two judgments in the matter-one by Hon’ble Mr. Justice M.R.HShah and the other by Hon’ble Mrs. Justice B.V. Nagarathna.

Explanation.- For the purposes of this clause, “Sikkimese” shallmean-

(i)an individual, whose name is recorded in the registermaintained under the Sikkim Subjects Regulation, 1961 readwith the Sikkim Subject Rules, 1961 (hereinafter referredto as the “Register of Sikkim Subjects”), immediately beforeBthe 26th day of April, 1975; or

(ii)an individual, whose name is included in the Register ofSikkim Subjects by virtue of the Government of India OrderNo.26030/36/90-I.C.I., dated the 7th August, 1990 andOrder of even number dated the 8th April, 1991; or

(iii)any other individual, whose name does not appear in theRegister of Sikkim Subjects, but it is established beyonddoubt that the name of such individual’s father or husbandor paternal grand-father or brother from the same fatherhas been recorded in that register;”

3. It is the case on behalf of the respective writ petitioners that byexcluding the Indians from the definition of Sikkimese, the exemptiongranted under Section 10(26AAA) of the Act 1961, is not available tothe Indian Settlers resulting in discrimination. There is no valid groundfor discriminating against this section of the residents of Sikkim alone.Therefore, it is the case on behalf of the writ petitioners that exclusionof Indians who have settled in Sikkim prior to the merger of Sikkim withIndia on 26.04.1975 and consequently not granting the exemption grantedunder Section 10(26AAA) of the Act, 1961 to the class of Indians, whohave settled in Sikkim prior to the merger of Sikkim with India on26.04.1975 is arbitrary, discriminatory and the differentia do not have arational 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. 59of 2013 that Proviso to Section 10(26AAA), insofar as it excludes fromthe exempted category, “Sikkimese women” who marries non-Sikkimese after 01.04.2008, is discriminatory and violative of Articles14, 15 and 21 of the Constitution of India as the exclusion is based ongender.

4. Before dealing with and/or considering the rival submissions,history of Kingdom of Sikkim and the chronology of dates and events,

Awhich led to enactment of Section 10(26AAA) of the Act, 1961, isrequired to be referred to and considered, which are as under:-

4.1 The Kingdom of Sikkim came into existence in 1642. It wasruled as an independent Kingdom for 333 years till its merger with theUnion of India in 1975. Originally the Kingdom of Sikkim held largeBterritory ranging from parts of present-day Bhutan, Bihar, West Bengal,Nepal and Bangladesh. In the 18[th] and 19[th] Century, lot of territorywas ceded to the British Empire in various conflicts. The Imperial BritishGovernment took over the control of the erstwhile Kingdom of Sikkim inthe year 1888. However, there were conflicts with China.

C4.2 In 1890, Convention was signed between Great Britain andChina to settle the boundaries of Sikkim and Tibet. The British controlover Sikkim was recognized by China in the year 1890. Following Britishtaking control of Sikkim, British Indian Subjects were allowed to holdGovernment employment in Sikkim.

D4.3 In supersession of all earlier treaties, fresh treaty was enteredinto between the British Government and the King of Sikkim in the year1861. Under this treaty, the territory of Sikkim was restored to the Kingof Sikkim under certain conditions. These conditions included Article 8under which the Government of Sikkim was to abolish all restrictions ontravelers and monopolies in trade between the British territories andESikkim. Under the said treaty, British subjects were permitted to trade,reside and travel through Sikkim. Many Indians came to reside in Sikkimover the years. Except for the fact that they could not hold lands in ruralareas, the Indians and other foreigners who settled in Sikkim were treatedequally with the original inhabitants of Sikkim.F4.44.4 The Sikkim Income Tax Manual, 1948 was promulgated bythe Ruler of Sikkim (the Chogyal) in the year 1948. Under the saidManual, all persons engaged in business were subjected to taxirrespective of their origin. The India-Sikkim Peace Treaty was enteredinto on 05.12.1950 and under this Treaty Sikkim was to be the protectorateGof India as per Article VII of the said treaty. It appears that in order tocheck the influx of foreigners into Sikkim, the Ruler of Sikkim (theChogyal) promulgated the Sikkim Subject Regulations, 1961 on03.07.1961. Under the said Regulations: (a) the persons falling underClause 3 of the Regulations were to be entered as “Sikkim Subject” inthe Register; and (b) Persons who were citizens of another countryHwere not to be registered as “Sikkim Subject” unless he relinquishes

the citizenship of the other country. The term ‘Sikkim Subject’ was definedas person who was born in the territory of Sikkim and was residenttherein and similarly situated persons, but however with caveat that “aperson shall not be “Sikkim Subject” under this section, unless he makesa declaration that he is not citizen of any other country at the time ofinclusion of his name in the register of “Sikkim Subjects”. Because ofthis caveat, an Indian citizen whose ancestors had settled down in Sikkimfor generations, had to give up his citizenship of India, for the purpose ofconverting himself into “Sikkim Subject”.

4.5 It appears that some of the families/persons like the membersof the petitioners’ Association, even though their forefather and theywere residents of Sikkim for years together, did not surrender theircitizenship of India and, therefore, their names were not registered as“Sikkim Subject” in the register maintained under the Sikkim SubjectsRegulations, 1961.

4.6 By way of the Constitution 36[th] Amendment Act 1975, Sikkimwas made full-fledged State of India and was included in Entry 22 ofSchedule I to the Constitution of India. Article 371-F was also insertedin the Constitution under which it was, inter alia, open to the President orthe Parliament to extend any law to the State of Sikkim, or repeal anyexisting law of Sikkim.

4.7 On 21.06.1975, the Home Department issued notificationstating 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 residingin Sikkim (without giving up Indian Citizenship) and others who had takenup Sikkimese Citizenship.

4.8 Since large number of eligible persons had been left out ofthe Sikkim Subject Register and were consequently denied Indiancitizenship, Government of Sikkim issued Memorandum that for thepurposes of seeking employment, those claiming to be “Locals” shouldbe able to show whether their parents’ names are maintained on orbefore 15.05.1975 in the relevant Government Register. In the year 1980,notification was issued that domicile/ residential certificate issued bysources, other than District Collector, shall not be accepted as valid.

4.9 In the year 1988, petition was moved in the Lok Sabha by afew MLAs of Sikkim stating that at the time of merger of Sikkim with

AIndia, only those people whose names were registered in the SikkimSubject Register in 1961 were made Indian Citizens, but there weremany other stateless persons who were present in Sikkim between theperiod 1946 and 1975 who were otherwise by the reason of theirresidence, domicile and allegiance, “Sikkimese”, and they should also bemade Indians. The Government of India conceded to this demand andBan exercise was carried out to grant Indian Citizenship to those so-calledstateless people who were deemed to have been genuinely omitted.4.10 In the year 1989, the Sikkim Citizenship (Amendment) Order1989 was notified wherein proviso was created to deem such cases ofgenuine omission as citizens of India. It appears that the principalCbeneficiaries of the said Amendment were those who had migrated toSikkim post 1946 and were therefore not even eligible for being on theSikkim Subject Register.

4.11 That thereafter the Government of India formed Committeeconsisting of its officers and officers of the Sikkim Government andDcertain guidelines were made to decide who the persons were, whowere omitted by mistake from being entered into the “Sikkim SubjectsRegister”. However, these guidelines, did not apply to persons of Indianorigin as they were already Indian citizens, but only to those “non-Sikkimese Subjects” who were to be made Indian citizens.E4.12 Subsequently, vide Government of India’s Order dated07.08.1990 and 08.04.1991, total of 73,431 were granted IndianCitizenship on the basis that it was found that these persons were eligibleto have been included in the “Sikkim Subjects Register”.

4.13 That in the year 1989 and w.e.f. 26.07.1989, the IndianFIncome Tax Act, 1961 was extended to Sikkim by the Finance Act,1989. Under the said amendment, any law corresponding to the IncomeTax Act, 1961, which was in force in the State of Sikkim stood repealed.

4.14 That the State of Sikkim filed Suit before this Courtchallenging the extension of the Income Tax Act, 1961 to the State ofGSikkim, however, the same came to be withdrawn subsequently.

4.15 In the year 1985, the Government of India, vide anamendment to the Income Tax Act, 1961 in the Finance Act, 1994,proposed an exemption from Income Tax to the Schedule Tribes in Sikkimas was being done in regard to other states. The same was opposed byHthe lone M.P. of Sikkim.

4.16 Thereafter, the Government of India and the Government ofSikkim formed joint committee consisting of the members from theCentral Government and Government of Sikkim to resolve the differencesfor implementation of the Income Tax Act, 1961 in Sikkim. It appearsthat while discussing the matters relating to implementation of the IncomeTax Act, 1961 to the State of Sikkim, the committee representing theState Government of Sikkim insisted on exemption for persons holdingthe Sikkim Subjects Certificate and their descendants and were madeIndian Citizens vide the Sikkim Citizenship Amendment Order, 1989. Itappears that these two categories essentially consisted of the BhutiaLepchas, Sherpas and the Nepalis who constituted together about 94.6%of the total population. Discussions were held for four long years tosecure exemptions to Sikkim Subjects Certificate holders and the peoplemade citizens of India vide the Government of India orders dated07.08.1990 and 08.04.1991 and their descendants.

4.17 That in the year 2008, the Government of India, gave in tothe demands of the State of Sikkim, and passed an amendment to theIncome Tax Act, by the Finance Act, 2008, wherein Clause 26AAAwas introduced in Section 10 of the Income Tax Act, and the persons ofIndian origin in Sikkim were treated differently from the Sikkim subjectsand persons who had become citizens of India by the Sikkim CitizenshipAmendment Order 1989. Clause 26AAA to Section 10 of the IncomeTax 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 registermaintained under the Sikkim Subjects Regulations, 1961 readwith the Sikkim Subject Rules, 1961 (hereinafter referredto as the “Register of Sikkim Subjects”, immediately beforethe 26[th] day of April, 1975; or

(ii)an individual, whose name is included in the Register ofSikkim Subjects by virtue of the Government of India OrderGNo. 26030/36/90 - I.C.I. dated the 7[th] August, 1990 andOrder of even number dated the 8[th] April, 1991; or

(iii)any other individual, whose name does not appear in theRegister of Sikkim Subjects, but it is established beyonddoubt that the name of such individual’s father or husband

Aor paternal grandfather or brother from the same fatherhas been recorded in that register;”

4.18 It appears that in view of Section 10(26AAA) of the IncomeTax Act, 1961, effectively 94% of the residents of Sikkim are exemptedfrom payment of Income Tax under the Income Tax Act, 1961. However,B5% of the residents of Sikkim of which about 1% are the people like thepetitioners, who, as such are also the bona fide settlers of Sikkim, are

being singled out from exemption from payment of income tax on thesole ground that they are not recorded in the register under the SikkimSubjects Regulation 1961. It appears that approximately 500 such familiesare affected by the definition of the “Sikkimese”.

4.19 It appears that various representations were made againstsuch discriminatory treatment by the Petitioners to the Government ofSikkim as well as the Union Finance Minister time and again. In the year2009, the Government of Sikkim appointed Committee to look into thegrievances of the petitioners’ Association. The Committee made certainDrecommendations, which shall be dealt with hereinbelow.

4.20 As observed hereinabove, as per Proviso to Section10(26AAA) “a Sikkimese women who marries non-Sikkimese after01.04.2008” is excluded for getting the benefit of exemption under Section10(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 mergerof Sikkim with India on 26.04.1975 and thereby not granting the benefitof exemption under Section 10(26AAA) of the Income Tax Act to suchFIndians and being aggrieved by the Proviso to Section 10(26AAA),insofar as, it excludes from the exempted category “a Sikkimese woman,who marries non-Sikkimese after 01.04.2008”, the present writpetitioners have prayed to strike down Section 10(26AAA) to the extentit excludes Indians, who have settled in Sikkim prior to the merger ofSikkim with India on 26.04.1975 and insofar as it excludes from theGexempted category “a Sikkimese woman, who marries non-Sikkimeseafter 01.4.2008, being arbitrary, discriminatory and violative of Article14 of the Constitution of India.

6. Shri K.V. Viswanathan, learned Senior Advocate has appearedon 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 petitionersin Writ Petition (C) No.1283 of 2021. We have heard the learned counselappearing on behalf of the intervenors in I.A. No. 153446 of 2018 filedin Writ Petition (C) No. 59 of 2013. Shri N. Venkataraman, learned ASGhas appeared on behalf of the Revenue – Union of India and Shri VivekKohli, learned Advocate General has appeared on behalf of the State ofSikkim.

7. Learned counsel appearing for the respective writ petitioners/intervenors have challenged the vires of Section 10(26AAA) of theIncome Tax Act to the extent it excludes Indians, who have settled inSikkim prior to the merger of Sikkim with India on 26.04.1975 and moreparticularly, the definition of “Sikkimese” in Section 10(26AAA) of theIncome Tax Act and Proviso to Section 10(26AAA) of the Income TaxAct, insofar as, it excludes from the exempted category “a Sikkimesewoman, who marries non-Sikkimese after 01.04.2008”, mainly on thefollowing 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 Sikkimwith India on 26.04.1975 is discriminatory, arbitrary andunfair and it violates the fundamental rights of those Indians,who have settled in Sikkim prior to 26.04.1975 under Articles14 and 15 of the Constitution of India;

(ii)In the definition of “Sikkimese”, the old Indian settlers ofSikkim have been excluded from the purview of thedefinition of “Sikkimese” and therefore are not entitled toexemption from Income Tax. It is submitted that theexemption which has been granted to ‘Sikkimese” peopleresiding in Sikkim essentially exempts 95% of the residentsof Sikkim while taxing only handful of persons includingthe 1% / 2% old Indian settlers;

(iii)The exclusion of the old Indian settlers from the definitionof ‘Sikkimese’ in Clause 10(26AAA) of the Income TaxAct is clearly violative of Article 14 of the Constitution ofIndia and does not satisfy any of the tests laid down by thisHon’ble Court under Article 14;

(iv)It is submitted that as consistently held by this Hon’ble Courtthat in order to be held valid any legislation under Article

14, the classification should be reasonable and must have anexus with the object sought to be achieved;

(v)It is contended that by way of the amendment, one singleclass of persons, namely, the citizens of India, are sought tobe treated differently for the purpose of taxation;

(vi)It is urged that to exclude the old Indian settlers from theexemption under Section 10(26AAA) has no nexus withthe object sought to be achieved to grant the exemption tothe residents of Sikkim;

(vii) It is submitted that there is no reasonable classificationCbetween the residents/origins of Sikkim whose names wereregistered as “Sikkim Subjects” under the Sikkim SubjectsRegulations, 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 ofthe Union of India, all the residents of Sikkim have becomethe citizens of India. Therefore, being citizen of India, settledin Sikkim, all are to be treated at par. It is contended thattherefore, there is no reasonable justification and/orclassification to exclude those Indians, who have settled inSikkim prior to the merger of Sikkim with India on26.04.1975 solely on the ground that their names were notregistered as “Sikkim Subjects” due to non-surrender ofIndian citizenship at the relevant time;

F(ix)It is submitted that as such, the object and purpose of Section10(26AAA) is to grant exemption from payment of taxunder the Income Tax Act to the locals/residents of Sikkimand that is the object sought to be achieved by providingexemption under Section 10(26AAA) of the Income TaxAct. It is submitted that therefore, there shall not be anyGfurther classification between the locals/residents of Sikkim,whose names have been registered as “Sikkim Subjects” inthe Register maintained under the Sikkim SubjectsRegulations, 1961 and those whose names could not be and/or were not registered as “Sikkim Subjects” due to non-surrender of their Indian citizenship;H(x)It is submitted that as such all the residents of Sikkim, whohave settled in Sikkim prior to the merger of Sikkim withIndia are all to be treated at par as they are all similarlysituated and therefore the classification into different groupsthough similarly situated is discriminatory and violative ofArticle 14 of the Constitution of India. It is submitted thatthe classification into groups should be based on identifiablecriteria, which sets apart one group from the other. It issubmitted that the second condition which has to be satisfiedis that such classification of separate and identifiablegroup should bear reasonable nexus with the object andpurpose sought to be achieved by that law. That in thepresent case, none of the above two conditions are satisfiedand therefore, the classification between the two groupssimilarly situated would be arbitrary and hit by Article 14 ofthe Constitution. In support of above submission thatclassification between the two groups similarly situatedwould be arbitrary and hit by Article 14 of the Constitution,Shri Vishwanathan, learned Senior Advocate, has heavilyrelied upon the decisions of this Court in the case of D.S.Nakara Vs. Union of India, (1983) 1 SCC 305 (paras 9to 15). He has also relied upon the observations made bythis Court in paragraph 4 of the decision of this Court in thecase of State of Rajasthan Vs. Manohar Singhji, 1954SCR 996 : AIR 1954 SC 297.

7.1 Shri Vishwanathan, learned Senior Advocate appearing onbehalf of the petitioner has further submitted that Court can removediscrimination and put the petitioners in the same class so as to do awaywith discrimination. It is submitted that in the present case, in order toremove the arbitrary discrimination against Indian settlers in Sikkim, thedefinition of “Sikkimese” in Section 10(26AAA) ought to be read toinclude Indians, who had settled there as on 26.04.1975. Therefore, it isprayed to treat the word “means” in the definition of “Sikkimese” as aninclusive one and include Indian settlers within this fold. Reliance is placedon the decision of this Court in the case of Vishundas Hundumal Vs.State of M.P., (1981) 2 SCC 410.

7.2 Learned counsel appearing on behalf of the intervenors has,in addition, also relied upon the Parliamentary Report of the Parliament

ABC

Aof India (Rajya Sabha Committee) in the 145[th] Report dated 06.08.2013recommending that the ambit of Section 10 (26AAA) of the IncomeTax Act, 1961, which exempted “Sikkimese Subjects” from payment ofIncome Tax should also be extended to all the Indian citizens and theirdescendants, who have been residing in Sikkim prior to 26.04.1975.

B8. 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 non-Sikkimese after 01.04.2008” is concerned, it isvehemently submitted by Shri K.V. Vishwanathan, learned SeniorAdvocate that the same is discriminatory and based on gender inequality,which is wholly violative of Articles 14, 15 and 21 of the Constitution ofCIndia. It is submitted that there is no exclusion of male Sikkim, whomarries non-Sikkimese person from the exemption granted under clause(26AAA) of Section 10 of the Income Tax Act.

8.1 It is submitted that woman is not chattel and has an identityof her own, and the mere factum of being married ought not to takeDaway that identity. Reliance is placed upon the decisions of this Court inthe 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 tostrike down and/or hold the Proviso to Section 10(26AAA) of the IncomeETax Act is discriminatory and violative of Articles 14 and 21 of theConstitution of India.9. Shri N. Venkataraman, learned ASG has tried to justify theclassification by submitting that conscious decision has been taken bythe legislature/Parliament to grant the benefit of exemption to only thoseF“Sikkim Subjects”, whose names have been registered in the Registermaintained under the Sikkim Subjects Regulations, 1961. It is submittedthat therefore the same may not be interfered with. However, he is notin position to justify the classification and satisfy the Court how such aclassification will achieve the object and purpose of granting exemptionunder Section 10(26AAA) of the Income Tax Act. He is not in positionGto explain and/or satisfy the Court any reasonable differentia and/orjustification to exclude the Indians, who have settled in Sikkim prior tothe merger of Sikkim with India on 26.04.1975 from the purview ofSection 10(26AAA) of the Income Tax Act. He is also not in positionto satisfy the distinguishing features and/or the intelligible differentia,which distinguishes the persons, who are left out of the group namely,H

the Old Indian Settlers, who have settled in Sikkim prior to the merger ofSikkim with India and with that of the “Sikkim Subjects” registered underthe Sikkim Subjects Regulations, 1961.

9.1 Shri Venkataraman, learned ASG is also not in position tojustify the Proviso to Section 10(26AAA) insofar as it excludes from theexempted category, “a Sikkimese woman, who marries non-Sikkimeseafter 01.04.2008”.

10. Shri Vivek Kohli, learned Advocate General appearing on behalfof the State of Sikkim has as such supported the objections.

10.1 It is submitted on behalf of the State that the State has noobjection if the Proviso to Section 10(26AAA) depriving the right of a“Sikkimese woman” to exemption from payment of Income Tax underSection 10(26AAA) upon her marriage to non-Sikkimese after01.04.2008 is struck down and/or is done away with so as to treat themequally in the matter of income tax exemption.

10.2 Now, so far as, the right of the old Indian settlers to pray forthe exemption under Section 10(26AAA) of the Income Tax Act isconcerned, it is submitted on behalf of the State that the benefit of Section10(26AAA) has to be extended to all Indian citizens domiciled in theState of Sikkim irrespective of the fact whether their names have beenregistered 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 theConstitution of India is :-

(i)The definition of “Sikkimese” in Section 10(26AAA) to theextent it excludes the Indians, who have settled in Sikkimprior to the merger of Sikkim with India on 26.04.1975; and

(ii)Proviso to Section 10(26AAA) insofar as it excludes fromthe exempted category “a Sikkimese woman, who marriesa non-Sikkimese after 01.04.2008”

13. Now, so far as the first issue is concerned, as per the definitionof “Sikkimese” only those individuals, whose names are recorded in theregister maintained under the Sikkim Subjects Regulation, 1961immediately before 26.04.1975 or whose names are recorded in theRegister of “Sikkim Subjects” by virtue of Government of India’s Ordersdated 07.08.1990 and 08.04.1991 or any other individual whose name

Adoes not appear in the Register of “Sikkim Subjects”, but it is establishedbeyond doubt that the name of such individual’s father or husband orpaternal grandfather or brother from the same father has been recordedin that register, are considered to be eligible as “Sikkimese” for thepurpose of exemption under Section 10(26AAA) of the Income TaxAct. Meaning thereby, all those Sikkimese/Old Indian Settlers in Sikkim,Bwho might have settled in Sikkim prior to 26.04.1975 but whose namesare not registered as “Sikkim Subjects” in the register maintained underthe Sikkim Subjects Regulations, 1961 are not entitled to the exemptionavailable under Section 10(26AAA) of the Income Tax Act. At thisstage, it is required to be noted that total 95% of the population of SikkimCare getting the benefit of Section 10(26AAA) of the Income Tax Actand only 5% are left out and out of which only 1% are the persons likethe Old Indian Settlers, who have settled in Sikkim prior to the mergerwith India on 26.04.1975, but their names could not be registered as“Sikkim Subjects” like the petitioners.

D13.1 It is to be noted that as such the purpose of Section10(26AAA) is to grant exemption to the residents of Sikkim from paymentof income tax under the Income Tax Act. Therefore, all such Indians/citizens, who have settled in Sikkim prior to the merger of Sikkim withIndia 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)Eof the Income Tax Act. As such, there is no difference and/or distinctionbetween those “Sikkim Subjects”, whose names are recorded in theregister maintained under the Sikkim Subjects Regulations, 1961 andthose Indians, who have settled in Sikkim prior to the merger of Sikkim,but whose names were not recorded as “Sikkim Subjects” in the registerFmaintained under the Sikkim Subjects Regulations, 1961. All are“Sikkimese”. Merely because at the relevant time and when the SikkimSubjects Regulations, 1961 was enacted, the Indians settled in Sikkimdid not surrender their Indian citizenship or their fathers/forefathers’names were not entered into the register maintained under the SikkimSubjects Regulations, 1961, by itself, it cannot be said that they cease toGbe the “Sikkimese”. All of them are similarly situated with those“Sikkimese” / “Sikkim Subjects”, who all have settled in Sikkim prior tothe merger of Sikkim with India on 26.04.1975. As observed above, theobject and purpose of Section 10(26AAA) is to grant benefit of exemptionfrom payment of income tax under the Income Tax Act to the residentsof Sikkim. Therefore, there is no nexus sought to be achieved in excludingH

the Indians, who have settled in Sikkim prior to the merger of Sikkimwith India on 26.04.1975 but their names are not recorded as “SikkimSubjects”. The Union of India has failed to satisfy any reasonableclassification and/or nexus to exclude such class of Indians, who, in fact,have settled in Sikkim prior to 26.04.1975. Therefore, exclusion of oldIndian settlers, who have settled in Sikkim prior to the merger of Sikkimwith India on 26.04.1975 from the definition of “Sikkimese” in Section10(26AAA) is arbitrary, discriminatory and violative of Article 14 of theConstitution of India.13.2 As observed and held by this Court in the case of D.S.Nakara (supra) Article 14 forbids class legislation but permits reasonableclassification for the purpose of legislation, which classification mustsatisfy the twin tests of classification being founded on an intelligibledifferentia which distinguishes persons or things that are grouped togetherfrom those that are left out of the group and that differentia must have arational 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 settledin Sikkim prior to the merger of Sikkim with India on 26.04.1975 fromthe definition of “Sikkimese” in Section 10(26AAA) does not fulfill theaforesaid two conditions.

13.3 As observed and held by this Court in the case of ManoharSinghji (supra), Article 14 declares that “the State shall not deny toany person equality before the law or the equal protection of the lawswithin the territory of India”. It is observed that such an obviousdiscrimination can be supported only on the ground that it was basedupon reasonable classification. proper classification must alwaysbear reasonable and just relation to the things in respect of which it isproposed. Judged by those criteria, it seems to us that the discriminationis based on no classification at all and is manifestly baseless, unreasonableand arbitrary.

13.4 In the present case, as observed hereinabove, the exclusionhas no nexus with the object and purpose of enacting Section 10(26AAA)of the Income Tax Act to be achieved. No reasonable intelligibledifferentia has been shown and therefore, the same can be termed asarbitrary. As observed and held by this Court in the case of ShayaraBano Vs. Union of India, (2017) 9 SCC 1, in India, arbitrariness isnot separate ground since it will come within the embargo of Article 14of the Constitution. Therefore, any provision, which is arbitrary,

Adiscriminatory and violative of Article 14 of the Constitution of India andany classification which is violative of Article 14 of the Constitution ofIndia can be struck down.

14. In view of the above and for the reasons stated above, we areof the firm opinion that Section 10(26AAA) to the extent it excludes theBOld Indian settlers, who have settled in Sikkim prior to the merger ofSikkim with India on 26.04.1975, but whose names are not recorded as“Sikkim Subjects”, from the definition of “Sikkimese” is ultra vires, beingarbitrary, discriminatory and violative of Article 14 of the Constitution ofIndia. The definition of “Sikkimese” in Section 10(26AAA) of the IncomeTax Act shall also include all Indians, who have permanently settled inCSikkim prior to the merger of Sikkim with India on 26.04.1975 irrespectiveof the fact that whether their names have been recorded in the registermaintained under the Sikkim Subjects Regulations, 1961 or not. Therefore,it is held that the “Sikkimese” like the petitioners, who are old Indiansettlers and who have settled in Sikkim prior to the merger of Sikkim

Dwith India on 26.04.1975 shall also be entitled to the exemption underSection 10(26AAA) of the Income Tax Act, 1961.

15. Now, so far as the challenge to the Proviso to Section10(26AAA) insofar as it excludes from the exempted category, “aSikkimese woman, who marries non-Sikkimese after 01.04.2008” isconcerned, there is no justification shown and/or demonstrated to excludeE“a Sikkimese woman, who marries non-Sikkimese after 01.04.2008”from the exempted category. Apart from the above, the same is clearlyhit by Articles 14, 15 and 21 of the Constitution of India. The discriminationis based on gender, which is wholly violative of Articles 14, 15 and 21 ofthe Constitution of India. It is to be noted that there is no disqualificationFfor Sikkim man, who marries non-Sikkimese after 01.04.2008. Asrightly submitted, woman is not chattel and has an identity of herown, and the mere factum of being married ought not to take away thatidentity. In the case of G. Sekar (supra), it is observed and held that theexclusion of women from inheritance on the ground of gender was

clear violation of the constitutional prohibition against unfairGdiscrimination. It is observed and held that in terms of Articles 14 and 15of the Constitution of India, the female heirs, subject to the statutory ruleoperating in that field, are required to be treated equally to the maleheirs. Gender equality is recognised by the world community in generalin the human rights regime.H

15.1 Even otherwise, there is no justification shown to exclude “aSikkimese woman, who marries non-Sikkimese after 01.04.2008”. ASikkimese woman, who has married non-Sikkimese prior to 01.04.2008is 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 non-Sikkimese after 01.04.2008”and to include “a Sikkimese woman, who has married non-Sikkimesebefore 01.04.2008”. Therefore, to deny the benefit of exemption underSection 10(26AAA) of the Income Tax Act to “a Sikkimese woman,who marries non-Sikkimese after 01.04.2008” is arbitrary, discriminatoryand violative of Article 14 of the Constitution of India. Therefore, also,the Proviso to Section 10(26AAA) insofar as it excludes from theexempted category “a Sikkimese woman, who marries non-Sikkimeseafter 01.04.2008” has to be struck down.

16. Therefore, Proviso to Section 10(26AAA) inasmuch as itexcludes from the provision of exemption Sikkimese woman merelybecause she marries non-Sikkimese after 01.04.2008 is totallydiscriminatory and violative of Articles 14, 15 and 21 of the Constitutionof India, which requires to be struck down.

17. In view of the above and for the reasons stated above, boththese petitions succeed. The exclusion of Old Indian settlers, who havepermanently settled in Sikkim prior to merger of Sikkim with India on26.04.1975 from the definition of “Sikkimese” in Section 10(26AAA) ishereby held to be ultra vires to Article 14 of the Constitution of India andis hereby struck down. It is held that all Indians/old Indian settlers, whohave permanently settled in Sikkim prior to the merger of Sikkim withIndia on 26.04.1975, irrespective of whether his/her name is recorded inthe register maintained under the Sikkim Subjects Regulations, 1961 readwith Sikkim Subject Rules, 1961 or not, are entitled to the exemptionunder Section 10(26AAA) of the Income Tax Act.

17.1 Proviso to Section 10(26AAA) insofar as it excludes fromthe exempted category, “a Sikkimese woman, who marries non-Sikkimese after 01.04.2008” is hereby struck down being ultra vires toArticles 14, 15 and 21 of the Constitution of India.

Both these writ petitions are accordingly allowed. However, inthe facts and circumstances of the case, there shall be no order as tocosts.

ANAGARATHNA, J.

I have perused the judgment and order proposed by His LordshipM.R. Shah J. as well as the conclusions reached by him. However, Iwould like to render my separate opinion on the issues raised in thesewrit petitions revolving around the definition of “Sikkimese” appendedBas 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 theproviso 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 oldIndian settlers from the benefit of exemption from payment ofincome tax i.e. those who have settled in Sikkim prior to mergerof Sikkim with India on 26[th] April, 1975 but whose names arenot recorded as “Sikkim Subjects” from the definition ofSikkimese is ultra vires as, being arbitrary, discriminatory andviolative of Article 14 of the Constitution of India. Hence,petitioners herein and similarly situated persons who are oldIndian settlers who have settled in Sikkim prior to the mergerof Sikkim with India on 26[th] April, 1975 shall also be entitled tothe exemption under Section 10 (26AAA) of the I.T. Act, 1961.

In my view, persons such as the petitioners and similarlyEsituated persons are not entitled to the exemption under theExplanation as it now stands. In the circumstances, in order toremove the discrimination, certain observations have beenmade and directions have been issued by me to the Union ofIndia on the basis of reasons assigned during the course of myjudgment. If those directions are complied with, theFdiscrimination would be removed.

(ii) I agree with the conclusion reached by M.R. Shah, J. tothe effect that the proviso in Section 10 (26AAA) of the I.T.Act, 1961 is arbitrary, discriminatory and violative of Articles14 and 15 of the Constitution of India. I have assigned additionalreasons and dealt with the said aspect of the matter in greaterdetail through the course of my judgment and order.

Background facts:

3. Writ Petition (C) No.1283 of 2021 has been filed by thepetitioners under Article 32 of the Constitution of India, assailing theHvalidity of the proviso to Section 10 (26AAA) and Explanation thereto

introduced to the I.T. Act, 1961 through the Finance Act, 2008 by whichSikkimese (people from Sikkim State) are purportedly exempted frompayment of income tax. They have further sought direction to therespondents to extend the exemption granted under Section 10 (26AAA)of I.T. Act, 1961 to persons such as the petitioners herein. The petitionershave sought declaration that they are also entitled to exemption frompayment of income tax under Section 10 (26AAA) of the I.T. Act, 1961.In other words, they have sought direction to extend the benefit of thesaid provision to the petitioners herein. Another direction that is soughtagainst respondent No. 2 is to furnish list of applicants who havesubmitted applications seeking income tax exemption pursuant to thePublic Notice dated 22[nd] 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 residentin the former Kingdom of Sikkim prior to its merger with India and theyhave an ethnic identity in Sikkim. Now, they are citizens of India. Thepersons ordinarily resident in the former Kingdom of Sikkim comprisedof:

(a)a major population of ‘Sikkimese Nationals’/’SikkimSubjects’ recognized as ‘Persons of Sikkimese origin’; and

(b)a minor population of ‘British Indian Subjects’ of UndividedEIndia/’Indian Nationals’ of Independent India recognizedas ‘Persons of Indian origin’ ordinarily residing in the formerKingdom of Sikkim for the purpose of trade, commerceand 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 comprisedof persons recognized as having the following ethnicity:

(i) ‘Sikkimese Bhutia’ - meaning persons who could be fromamong the native ‘Bhutia’ and the ‘Chumbipa’, ‘Dopthapa’,‘Dukpa’, ‘Kagatey’, ‘Sherpa’, ‘Tibetan’, ‘Tromopa’, ‘Yolmo’Communities which got recognised and notified as the ScheduledTribes by ‘The Constitution (Sikkim) Scheduled Tribes Order 1978’

(ii) ‘Sikkimese Lepcha’ - meaning persons who could be fromthe aboriginal Lepcha Community which got recognised and

Anotified as the Scheduled Tribes by ‘The Constitution (Sikkim)Scheduled Tribes Order, 1978’.

(iii) ‘Sikkimese Nepali’ - meaning persons who could be fromamong the Castes or Classes that included the following:

(a) the ‘Damai’, ‘Kami’/’Lahar’, ‘Majhi’, and ‘Sarki’ CommunitiesBwhich 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) whichgot recognised and notified as the Scheduled Tribes in the yearC2003 by the Scheduled Castes and Scheduled Tribes Orders(Amendment) Act 2002;

(c) the Communities which got recognised and notified for inclusionin the ‘Central List of Other Backwards Classes’ in the year 1995,namely, ‘Bhujel’, ‘Gurung’, ‘Manger’, ‘Kirat Rai’, ‘Sunuwar’,Dand in the year 1999 namely ‘Sanyasi’, and in the year 2000 namely‘Jogi’; and

(d) the ‘Bahun’, ‘Chettri’ and ‘Newar’ Communities which gotrecognized and notified in the ‘State List of Other BackwardClasses of Sikkim in the year 2014.E

6. According to the petitioners, the history regarding ordinarilyresident ‘British Indian Subjects’ and the ‘Indian Nationals’ engaged intrade, commerce and Government employment in the former Kingdomof Sikkim is pluralistic. They comprised of diverse ethnic, religious andsocio-cultural backgrounds from across the territories of Undivided BritishFIndia and later Independent India. The residents of Sikkim are theinhabitants of Sikkim who were permanent residents prior to the year1975.

7. In the year 1975, the former Kingdom of Sikkim became partof India and became known as the State of Sikkim. Till then i.e., 26[th]GApril, 1975 (which is the ‘appointed day’ of its merger and incorporationwith India), the Kingdom of Sikkim was ruled through lineage ofhereditary rulers of Namgyal Dynasty known as the ‘Chogyal’.

8. The history of the period prior to the merger of Sikkim withIndia as averred in the writ petitions could be encapsulated as under:

(a)During the period from 1890 till 1950, the Government ofAthe erstwhile Kingdom of Sikkim and its posts and serviceswere subjected to various situations and conditions whichhave been described by the petitioners and is referred tohereunder:

“(i)During the period from 1890 to 1918, the ImperialBBritish Government exercised direct and exclusivecontrol over the external affairs as well as the internalaffairs of the Kingdom of Sikkim. At that time theBritish Indian Subjects were allowed to hold Officeand Employment to the posts and services of theCGovernment Establishment of the erstwhile Kingdomof Sikkim.

(ii)In 1918, the then King of Sikkim Chogyal TashiNamgyal was given back his authority over theinternal affairs of Kingdom of Sikkim; where-afterDhe got empowered with absolute powers over alllegislative, judicial and executive functions of hisKingdom; while the external affairs continued toremain under the Government of Imperial BritishIndia. From 1918 onwards, the Kingdom of Sikkimhad continued to allow the British Indian Subjects toEhold Office and Employment in the posts and servicesof the Government Establishment of the Kingdom ofSikkim i.e. ‘Sikkim Darbar’. Such governmentemployees were referred to as ‘Darbar’ Employeesof British Indian origin.

(iii)At the time immediately before India’s Independencefrom British Paramountcy, there was populardemand from the people of Kingdom of Sikkim for ademocratic setup and its accession to the IndianUnion. During that time, popular vote for Sikkim tojoin India had failed; hence the Kingdom of SikkimGdid not accede to the Indian Union then.

(iv) When India became independent in 1947, on thecessation of British Paramountcy from India, theDominion of India inherited the rights and liabilities

of the British Crown vis-à-vis the Indian States ason that date. The Kingdom of Sikkim not being exactlylike other Indian States did not accede to the Unionof India but had signed standstill agreement forcontinuation of its previous relationship pending afresh agreement with India. In the years precedingthe proclamation of Republic of India (i.e. before 26thJanuary 1950), it was agreed that the Kingdom ofSikkim was Special Protectorate State of IndianUnion, having its own separate territory.

(v)From 1947 onwards, the Kingdom of Sikkim hadcontinued to allow the British Indian Subjects as wellas Indian Nationals to hold Office and employmentin the posts and services of the GovernmentEstablishment of the Kingdom of Sikkim, i.e. ‘SikkimDarbar’. Such persons of Indian origin serving/appointed in the posts and services of GovernmentEstablishment of the Kingdom of Sikkim were referredto as ‘Darbar’ Employees of British Indian originsand ‘Darbar’ Employees of Indian Nationality.”

In view of the above historical developments, persons ofIndian origin belonging to diverse ethnic, religious and socio-cultural backgrounds from across the territories of UndividedBritish India and later Independent India, resided in Sikkimfor the purpose of their employment in various posts andservices or for trade and business.

F(b)On 5[th] December, 1950, the Indo-Sikkim Peace Treaty wasentered into and under this Treaty, Sikkim was to be aprotectorate of India. However, Sikkim still enjoyedautonomy in its internal administration. It is pertinent to notethat Article VII of this Treaty allowed the subjects of Sikkimas well as Indian citizens, free movement in each other’sGterritories. Under the said Treaty, Indians in Sikkim weresubject to Sikkimese law and the Sikkimese in India weresubject to Indian Laws. Indian citizens in Sikkim hadreciprocal rights to hold government employment and buyimmovable properties once settled in Sikkim and were tobe treated equally with Sikkimese in all matters.

(c)The Chogyal promulgated the Sikkim Subjects RegulationAin 1961 (hereinafter called “1961 Regulation” for the sakeof convenience). This Regulation had extraordinaryprovisions by which ‘National of another State’ ordinarilyresiding in the erstwhile Kingdom of Sikkim then, couldacquire Naturalised Sikkim Subject/Citizenship status.BRegulations 8(3), 8(4) of the 1961 Regulation provide forthe power of the government of the erstwhile Chogyal ofthe Kingdom of Sikkim to naturalise person upon anapplication being made in this regard. However, in order tobe qualified for naturalization, the applicant/person must beemployed in the Posts or Services of the GovernmentCEstablishment of the Kingdom of Sikkim and must fulfil thefollowing parameters:

(i)must have been in the service of the Government ofthe erstwhile Kingdom of Sikkim for period notless than ten years immediately preceding the dateDof his application, or

(ii)must have rendered meritorious service to theerstwhile Kingdom of Sikkim. The Government ofthe Chogyal may as provided for under Regulation8(4) also naturalise the wife and minor children of aEperson who is granted Certificate of Naturalisation,if an application is made in this regard. It is however,to be noted that, in order for Certificate ofNaturalisation to be granted under the aforesaidclauses, the following conditions must be fulfilled: (i)Frenouncing their Nationality and (ii) changing theirallegiance to the erstwhile Kingdom of Sikkim. Theresult of this pre-condition was that an eligible maleBritish Indian Subject or male Indian National andhis wife and minor children had to give up their IndianNationality (of which country Sikkim was aGprotectorate since 1950), for the purpose of convertingthemselves into Naturalized Sikkim Subjects.Although, these Regulations were promulgated,according to the petitioners no differential treatmentwas meted out to the Indians as their rights wereprotected under the Indo-Sikkim Treaty of 1950.H

322SUPREME COURT REPORTS

A(d)In 1965, the Chogyal of Sikkim notified the Sikkim WorkPermit Rules, 1965, by which all foreigners required WorkPermit to enter, work and stay in Sikkim. Significantly, theterm “Foreigner” under the Sikkim Work Permit Rules, 1965,was defined as meaning “foreigner not being Indiannational”. Persons of Indian origin were therefore notBconsidered as foreigners in Sikkim and were not requiredto obtain work permit irrespective of the fact that theywere not Sikkim Subjects. Many of the Indians were alsoon the voters list of Sikkim.

(e)In 1973, an agreement was entered into between India, theCChogyal and the political parties of Sikkim for theestablishment of democratic Government in Sikkim. Inpursuance of the same, India was to assist in the conductof free and fair elections in Sikkim.

(f)Thereafter, on 26[th] April, 1975, by way of the ConstitutionDThirty-sixth Amendment Act, 1975, Sikkim became Statein India and was included in Entry 22 of Schedule I to theConstitution of India.

(g)Article 371-F was also inserted into the Constitution of Indiaunder which it was, inter alia, open to the President ofEIndia (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 State of the India, thefollowing developments relevant to these cases could be traced as under:

(a) By way of statutory order, the Citizenship Act, 1955 wasextended to the State of Sikkim. On 21[st] June, 1975, the HomeDepartment of Government of India issued notification titled“Sikkim (Citizenship) Order 1975” stating that ‘all SikkimSubjects under the 1961 Regulation before 26[th] April, 1975 wereto be deemed Indian citizens’. Therefore, this effaced thedistinction between persons of Indian origin residing in Sikkim(without giving up Indian Citizenship) and others who had earliertaken up Sikkimese Citizenship by entry of their names in theSikkim Subjects Register. According to the petitioners, as on26[th] 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, thosewhose names did not figure in the Sikkim Subjects Registerwere left out of consideration.

(b) In view of the fact that large number of eligible personshad been left out of the Sikkim Subjects Register and wereconsequently denied Indian citizenship, on 25[th] September, 1976the Government of Sikkim issued Memorandum that for thepurposes of seeking employment, those claiming to be localsshould be able to show whether their parents’ names weremaintained on or before 15[th] May, 1975 in the relevantGovernment Register.

(c) Further, under Article 371-F, an Adaptation of Sikkim LawsOrder was promulgated wherein, the 1961 Regulation, wasrepealed w.e.f. 26[th] April, 1975 by the Order issued on 13[th]September, 1975.

(d) On 9[th] April, 1981, the Government of Sikkim issued aMemorandum to the effect that:

“ ... the Governor has been pleased to authorize District Collectorswithin respective district to issue Certificate to person identifyingthem in the following groups to enable them to apply foremployment in the State-

1. person whose name is found in the Old Sikkim SubjectRegister prior to 1975.

2. person whose name is not found registered in the OldSikkim Subject Register but he/she has established beyond doubtthat the name of his/her father/husband/paternal grandfather /brother from the same father has been recorded in the OldSikkim Subject Register, or

3, person who has or had agricultural land in rural areas andhas been ordinarily residing in the State of Sikkim or

4. person whose father/husband has/had been in SikkimGovernment service on or before 31.12.1969.”

(e) In the year 1988, petition was moved in the Lok Sabha bya few Members of Legislative Assembly of Sikkim stating that

at the time of merger of Sikkim with India, only those peoplewhose names were registered in the Sikkim Subjects Registerwere made Indian Citizens in terms of Sikkim (Citizenship)Order 1975, but there were many other persons who werepresent in Sikkim between the period 1946 and 1975 who wereotherwise by reason of their residence, domiciled in Sikkimand by allegiance “Sikkimese” and they should also be madeIndian citizens. The Government of India conceded to thisdemand and an exercise was carried out to grant IndianCitizenship to the so-called ‘stateless’ people whose nameswere deemed to have been genuinely omitted. For this purpose,the Sikkim Citizenship (Amendment) Order, 1989, was notifiedon 3[rd] April, 1989, wherein proviso was inserted to deemsuch cases of genuine omission as citizens of India. The relevantclause in the amendment order reads as follows:

“Provided that any person whose name was eligible to be enteredin the register maintained under the said regulation but was notentered because of any genuine omission shall also be deemed tohave become citizen of India on that day if so determined by theCentral Government.”

(f) On the same date i.e., 3[rd] April, 1989, the Ministry of HomeAffairs, Government of India, constituted committeecomprising of officials of the Government of India andGovernment of Sikkim, to look into cases of genuine omissionin terms of the Sikkim Citizenship (Amendment) Order, 1989.Certain Guidelines were prescribed to decide the persons whowere left out due to genuine omission from being entered intothe Sikkim Subjects Register. It is averred that in terms of“clauses d, f, and h’’ of the prescribed Guidelines, personssuch as the petitioners were entitled to acquire Indian Citizenshipin terms of Sikkim Citizenship (Amendment) Order, 1989, byvirtue of their fathers’ Government employment in ‘SikkimDarbar’ prior to the commencement of the ‘exception’ clauseintroduced w.e.f., 1[st] April, 1974, by the Sikkim GovernmentEstablishment Rules, 1974.

(g) Subsequently, vide Government of India orders dated 7[th]August, 1990 and 08[th] April, 1991, total of 73,431 personswere granted Indian Citizenship on the basis that it was found

that these persons were eligible to have been included in theSikkim Subjects Register. Most of these 73,431 persons includedcitizens of India and were persons who had permanently settledin Sikkim between 1946 and 1975.

It is averred that applications in the prescribed format for inclusionin the Citizenship list in terms of the Sikkim Citizenship (Amendment)Order, 1989, were submitted by the family members of petitioners inW.P. (C) No.1283 of 2021, which was duly acknowledged by theconcerned District Collector. However, their names neither appeared inthe approved list forwarded by the Ministry of Home Affairs, Governmentof India nor in the rejected list.

10. The legal and factual developments prior to the introductionof the I.T. Act, 1961, in Sikkim could be encapsulated as under as thecontroversy in these cases arises under the said Act:

(a) In 1948, the Sikkim Income Tax Manual, 1948 (SITM) waspromulgated by the Ruler of Sikkim (the Chogyal). Under theSITM, all persons engaged in business were subjected to taxirrespective of their origin. Therefore, there was no differencemade out between the original inhabitants of Sikkim, namely, theBhutia-Lepchas and the persons of foreign origin settled in Sikkimlike the Nepalis or persons of Indian origin who had settled downin Sikkim generations back. It is averred that under the SITM,Income Tax was paid by all without any discrimination on theground of place of birth, race or ethnicity.

(b) In the year 1989, the I.T. Act, 1961 was extended to Sikkimby the Finance Act, 1989. Under the said Amendment, any lawcorresponding to the I.T. Act, 1961 which was in force in theState of Sikkim stood repealed. Of course, since Parliament hadno competence to levy tax on agricultural income, the repeal ofthe SITM, 1948, would affect only the law insofar as it applied totaxes on income and would not affect its operation with respectto agricultural income.

(c) However, in spite of the fact that the I.T. Act, 1961, stoodextended to Sikkim and the corresponding law stood repealed,pro tanto, all residents, including the petitioners, continued to payincome tax under the SITM, along with the other Indian citizensin Sikkim irrespective of whether their names had been registeredin the Sikkim State Subjects Register or not.

A(d) It is noted that the extension of the I.T. Act, 1961, to Sikkimwas not implemented in reality due to severe opposition from theState of Sikkim. Thereafter, the Government of India, vide anamendment to I.T. Act, 1961 by the Finance Act, 1994, proposedan exemption from income tax to the Scheduled Tribes in Sikkimas was being done in regard to other states. However, this wasBalso opposed by the lone member of Sikkim in the Lok Sabha,since granting exemption only to the tribals would meanantagonizing large extent of non-tribal population who form thebulk of the voters, due to which the said amendment waswithdrawn.C[[th]](e) On 19[[th]] July, 2004, the Government of India and Governmentof State of Sikkim, in an attempt to resolve the differences vis-à-vis implementation of I.T. Act, 1961 in Sikkim, formed JointCommittee consisting of the members from the CentralGovernment and Government of Sikkim. The State of SikkimDrepresenting to the Committee repeatedly insisted on an exemptionfor persons holding the Sikkim Subjects Certificate (SSC) andtheir descendants who were made Indian Citizens vide the 1989Sikkim Citizenship (Amendment) Order, from payment of incometax. This category essentially consisted of about 94.6% of thetotal population. Discussions were held for four years to secureEexemptions to SSC holders and the people who were made citizensof India and their descendants vide the Government of India ordersdated 07[th] August, 1990 and 08[th] April, 1991. The contention ofthe Government of Sikkim was that SSC holders and those whobecame Indian citizens in 1990-1991 vide the Sikkim Citizenship(Amendment) Order, 1989, should be exempted. The Voters’ ListFof 2004 for the State of Sikkim had the following demographiccomposition:

(f) In the year 2008, Government of India passed an amendmentto the I.T. Act, 1961 by virtue of the Finance Act, 2008, whereinclause (26AAA) was introduced under Section 10 of the I.T. Act,1961. Clause (26AAA) to Section 10 of the I.T. Act 1961 grantedan exemption to Sikkimese people. Thereafter, on 16[th] June, 2008,the Government of Sikkim issued Circular stating that the SITMshould 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 serviceon and prior to 31[st] December, 1969. Therefore, they have come underthe fourth category of the Memorandum issued by Government of Sikkimon 09[th] April, 1981. The petitioners have been issued the Certificate ofIdentification (akin to domicile or residential certificate) by the SikkimGovernment. On account of Certificate of Identification being issued tothem, the petitioners are part of the local population of Sikkim and are atpar with those persons whose names are found in the old Sikkim SubjectsRegister. Thus, they have all along been treated as part of the localpopulation of Sikkim but the petitioners, who are also settled in Sikkimand who have been issued Certificates of Identification are excludedfrom the benefit of Section 10 (26AAA) of the I.T. Act, 1961, and arebeing assessed to income tax whereas the object of the aforesaid provisionis to exempt the category of persons mentioned therein from the paymentof income tax. According to these petitioners, the said provision in effectexempts 94% of the residents of Sikkim while taxing the remaining 5%of which about 1% are the people such as petitioners who are bonafide settlers in Sikkim and are entitled to be treated at par with othercategories. It is the grievance of the petitioners that they have beensingled out for the purpose of imposition of income tax on the sole groundthat their names are not recorded in the Register under the 1961Regulation. According to these petitioners, they have Certificates ofIdentification and they are as much Sikkimese as those categories ofpersons mentioned in Section 10 (26AAA) of I.T. Act, 1961 who havebeen given the benefit of non-payment of income tax under the said Act.

12. It is also averred that the persons who were granted Indiancitizenship by way of the Sikkim Citizenship (Amendment) Order of1989, were those persons whose names in point of fact were never

Aincluded in the Sikkim Subjects Register but were given the benefit ofIndian citizenship.

13. In the context of the above grievance, various representationswere made by various persons for being granted exemption from paymentof income tax. Taking note of these representations, the UnionBGovernment appointed committee. On 16[th] October, 2009, theCommittee communicated decision that it had come to the conclusionthat there was no provision in the I.T. Act, 1961, for grant of exemptionsto the individuals not included in the Register of Sikkim Subjects. TheCommittee therefore recommended that the said individuals shouldapproach legal experts/Chartered Accountants to look into the lacunaeCin the I.T. Act, 1961, for the possible inclusion of their names so that theGovernment of Sikkim could take up the issue with the Government ofIndia.

14. According to the petitioners, on 21[st] September, 2010,Government of Sikkim issued Cabinet Memorandum wherein it wasDadmitted that Certificate of Identification (COI) was issued in view ofthe still valid pre-merger laws on the subject, as it enjoyed constitutionalprotection under Article 371-F. The persons such as the petitioners hereinby virtue of being COI holders are covered under Rule 4(4) of SikkimGovernment Establishment Rules, 1974, for employment under the StateEGovernment and its Public Sector Units (PSUs) which has provisions ofemployment for locals only.

15. According to the petitioners, due to the injustice being metedout to the persons excluded from exemption from payment of incometax, even though they were clearly permanent residents of Sikkim, theFmatter was debated in the Sikkim State Assembly. On 24[th] March, 2011,a Cabinet Memorandum was issued stating that the Government of Sikkimfelt that it was appropriate to pass Resolution in the ensuing session ofthe Assembly in favour of the left-out categories of persons (includingpersons such as the petitioners in W.P. (C) No. 1283 of 2021, whosefathers were in Sikkim Government Service before 31[st] December, 1969Gand who are continuously residing in the State of Sikkim) for income taxexemption by Government of India. The Resolution was accordinglypassed on 26[th] March, 2011.

16. Thereafter, Writ Petition (Civil) No 59 of 2013 was filed beforethis Court and this Court was pleased to issue notice on 11[th] February,

2013, and granted interim relief to persons such as the petitioners hereinin respect of recovery proceedings at the instance of the Income TaxDepartment as also qua deposit of TDS.

17. In August 2013, the Rajya Sabha published its 145th Report ofthe Committee on the Petition, praying for protection of interest of bonafide Indian nationals living in Sikkim prior to its merger with India in theyear 1975. In its deliberations, the Committee clearly found that old Indiansettlers of Sikkim are to be treated at par with Sikkimese and shouldhave been included in the said definition. It was recommended thatexemption be granted to such persons as well.

18. On 4[th] April, 2018, an order was passed by this Court directingthe petitioners in Writ Petition No. 59 of 2013 to place on record list ofpersons who were claiming benefit of Section 10 (26AAA) of I.T. Act,1961, and the State of Sikkim was further directed to verify the claimsand cooperate with the Central Government so that such claims couldbe considered by the Central Government in accordance with law.

19. Following this order, the State Government approved two othercategories of persons to be included for exemption from payment ofincome tax, including the petitioners’ category i.e., those having COI onthe basis of their fathers’ being in Government of Sikkim service on orbefore 31[st] December, 1969 and who are permanently settled and residingin Sikkim along with persons who had been issued COI on the basis oflanded property in rural areas of Sikkim. Public Notice bearing No.Home/Confdl/111/2013/09part/5992 dated 22[nd] September, 2018 wasissued by the State Government with directive to the above twocategories to furnish details in the prescribed format to the competentauthority. 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[nd]September, 2018, have submitted all relevant documents before thecompetent authority.

20. It is contended that the petitioners are being subjected tocontinued discrimination and are being assessed to income tax, eventhough they are also eligible for the exemption under Section 10 (26AAA)of the I.T. Act, 1961. That, in spite of various representations whichhave been made, the completely discriminatory and arbitrary amendmentsmade 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

Athe persons who are members of petitioner No.1 Association in W.P.(C) No. 59 of 2013. Therefore, in the above circumstances, beingaggrieved by the amendment by which clause (26AAA) to Section 10of the I.T. Act, 1961 was introduced, the petitioner has invoked Article32 of the Constitution of India by averring that the provision is violativeof their fundamental rights.B

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

21. Section 10 of the I.T. Act, 1961, speaks about incomes notincluded in total income i.e., the incomes mentioned under the clauses ofSection 10 of the said Act shall not be included in computing the totalCincome of any person. Clause (26AAA) of Section 10 states that incase of an individual, being Sikkimese, any income, which accrues orarises to him (a) from any source in the State of Sikkim; or (b) by way ofdividend or interest on securities, shall not be income falling within totalincome of any person. The proviso, however, states that nothing containedin this clause shall apply to Sikkimese woman who, on or after 1[st]DApril, 2008, marries an individual who is not Sikkimese. The Explanationdefines Sikkimese as under:

1.An individual, whose name is recorded in the registermaintained under the Sikkim Subjects Regulation, 1961 readwith Sikkim Subject Rules, 1961 (hereinafter referred to asEthe “Register of Sikkim Subjects”), immediately before the26[th] April, 1975; or

2.An individual, whose name is included in the Register ofSikkim Subjects by virtue of the Government of India OrderNo. 26030/36/90 – I.C.I., dated the 7[th] August, 1990 andFOrder of even number dated the 8[th] April, 1991; or

3.Any other individual, whose name does not appear in theRegister of Sikkim Subjects, but it is established beyonddoubt that the name of such individual’s father or husbandor paternal grandfather or brother from the same fatherGhas 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 Sikkimese, any incomewhich accrues or arises to him—H

(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 aSikkimese woman who, on or after the 1st day of April, 2008,marries an individual who is not Sikkimese.

Explanation. —For the purposes of this clause, “Sikkimese” shallmean—

(i)an individual, whose name is recorded in the registermaintained under the Sikkim Subjects Regulation, 1961 readwith the Sikkim Subject Rules, 1961 (hereinafter referredto as the “Register of Sikkim Subjects”), immediately beforethe 26th day of April, 1975; or

(ii)an individual, whose name is included in the Register ofSikkim Subjects by virtue of the Government of India OrderNo. 26030/36/90-I.C.I., dated the 7th August, 1990 andOrder of even number dated the 8th April, 1991; or

(iii)any other individual, whose name does not appear in theRegister of Sikkim Subjects, but it is established beyonddoubt that the name of such individual’s father or husbandor paternal grandfather or brother from the same fatherEhas been recorded in that register;”

Submissions:

22. We have heard Sri K.V. Viswanathan, learned senior counselappearing on behalf of the writ petitioners in Writ Petition (C) No. 59 of2013, Ms. Pooja Dhar, learned counsel appearing for the writ petitionersin Writ Petition (C) 1283 of 2021, Sri N. Venkataraman, learned AdditionalSolicitor General appearing for the Department of Revenue, Union ofIndia, 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 behalfof 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 itexcludes from the definition of ‘Sikkimese,’ migrants/settlers of Indianorigin who had settled in Sikkim much prior to the coming into effect the

A1961 Regulation, on the sole ground that such migrants/settlers had notbeen registered as ‘Sikkim Subjects’ under the 1961 Regulation. Further,the proviso to Section 10(26AAA) of the I.T. Act, 1961 is unconstitutionaland violative of Articles 14 and 15 of the Constitution of India because itexcludes from the exempted category, Sikkimese woman who marrieda non-Sikkimese after 1[st ]April, 2008.B

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 Section10(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 effectof the 1961 Regulation had been excluded from the definition ofC‘Sikkimese’ and consequently rendered ineligible to claim the benefit ofSection 10(26AAA) of the I.T. Act, 1961, on the sole ground that theirnames could not be registered as Sikkim Subjects as their forefathersdid not surrender their Indian citizenship.25. It was further contended that migrants from other Countries/Derstwhile Kingdoms such as Nepalese migrants, who had migrated toand settled in Sikkim at the same time or even after migrants/settlers ofIndian origin, had been admitted to the benefits of Section 10(26AAA)of the I.T. Act, 1961, while arbitrarily excluding settlers of Indian originsuch as the petitioners herein. That the object sought to be achieved byEthe exemption provision contained in Section 10(26AAA) of the I.T.Act, 1961 was to grant exemption to the residents of Sikkim as per thedefinition of Sikkimese which is in the form of an Explanation to theprovision. Therefore, the discriminatory classification of Sikkim Subjectsvis-à-vis old Sikkim settlers, who had not been registered as SikkimSubjects, whereby the former category of persons was admitted to theFbenefits of the exemption while excluding the latter, had no nexus withthe object of the exemption provision.

26. It was next submitted that classification into groups orcategories ought to be based on an intelligible differentia which set onegroup apart from the other. In this regard, it was stated that Sikkim,Ghaving merged with India on 26[th] April, 1975, all residents and subjectsof Sikkim, had thereafter become Indian citizens. Therefore, there wasno justifiable reason to treat Indian settlers of Sikkim differently fromSikkim Subjects who had all subsequently become Indian citizens. Thatfollowing the merger of Sikkim with India, and Indian citizenship havingHbeen conferred on Sikkim Subjects, the basis for classification had been

eroded. That migrants/settlers who had earlier not been registered asSikkim Subjects, as well as Sikkim Subjects were uniformly consideredas Indian residents of Sikkim, after 26[th] April, 1975, and therefore, bothsuch categories were to be admitted to the benefits of income taxexemption under Section 10(26AAA) of the I.T. Act, 1961. The factthat migrants/settlers had earlier not been registered as Sikkim Subjectson the ground that they failed to surrender their Indian citizenship at therelevant time, would have no relevance after the merger of Sikkim withthe India, since such migrants as well as Sikkim Subjects had been placedin the same class of Indian residents of Sikkim, after the merger.

27. It was urged that the rules to the effect that provisions oflegislation ought to reflect the object sought to be achieved and that anyclassification into groups or categories ought to be based on an intelligibledifferentia, would apply equally to tax legislations, as they apply in anyother 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, furthersubmitted that the Explanation to Section 10(26AAA) of the I.T. Act,1961 begins with the phrase, “‘Sikkimese’ shall mean,” and thereafterlists 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 OrissaLtd. vs. Sri Seetaram Rice Mill, (2012) 2 SCC 108.

29. It was averred that an Explanation to provision should notbe such as would operate as an exception or proviso vide AphaliPharmaceuticals Ltd. vs. State of Maharashtra, (1989) 4 SCC 378.That the Explanation to Section 10(26AAA) of the I.T. Act, 1961, ineffect, acts as an exception to Section 10(26AAA) of the I.T. Act, 1961by excluding from the scope of the provision migrants/settlers of Indianorigin who had settled in Sikkim much prior to the coming into effect ofthe 1961 Regulation.

30. It was submitted that in the present case, in order to removethe arbitrary discrimination against Indian settlers in Sikkim, the definitionof the term ‘Sikkimese’ should be read to include Indians who had settledthere as on 26[th] April, 1975. That this Court, in order to remedy the

Adiscrimination against the writ petitioners, ought to put the Indian settlersin Sikkim in the same class as Sikkim Subjects, for the purposes of allmatters which would affect the rights, benefits and privileges of suchclass of persons.

31. As regards the second prong of the challenge, which is to theBvires of the proviso to Section 10(26AAA) of the I.T. Act, 1961, whichexcludes from the exempted category, Sikkimese woman who marriesa non-Sikkimese after 1[st ]April, 2008, it was contended by learned seniorcounsel and learned counsel appearing for the writ petitioners that theproviso is violative of Articles 14 and 15 of the Constitution of India. Inthis regard, it was further contended that woman, on the mere factumCof being married would not lose her identity as ‘Sikkimese.’ Thatgender-based discrimination is ex-facie evident in the proviso, more so,because there is no provision for disqualification of Sikkimese manfrom claiming exemption under the Act, on marrying non-Sikkimesewoman after 1[st ]April, 2008.D

32. It was submitted that the said proviso could not be traced toany consideration other than that of gender alone and therefore, thesame ought to be declared as discriminatory against women. Reliancewas placed on Anuj Garg and Ors. vs. Hotel Association of Indiaand Ors., (2008) 3 SCC 1and G. Sekar vs. Geetha, (2009) 6 SCC 99Eto contend that exclusion from the benefits of provision, on the groundof gender alone, would be liable to be struck down as being violative ofArticle 14 of the Constitution of India.

33. With the aforesaid averments, it was prayed that the definitionof the term ‘Sikkimese’ as provided for in the Explanation to SectionF10(26AAA) of the I.T. Act, 1961, should be read to include Indians whohad settled there as on 26[th] April, 1975 and that the proviso to Section10(26AAA) of the I.T. Act, 1961 which excludes from the exemptedcategory, Sikkimese woman who marries non-Sikkimese after 1[st]April, 2008, should be struck down as being unconstitutional.

GSubmissions of the Respondents:

34. Per contra, Sri N. Venkataraman, learned Additional SolicitorGeneral appearing for the Department of Revenue contended that theimpugned provision is based on reasonable classification of SikkimSubjects, as group, different from migrants/settlers of Indian origin.That such classification was founded on considerations which wereH

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[nd]State of the Union on 26[th] April, 1965 and consequently, Article 371-Fwas introduced in the Constitution of India by way of the Constitution(Thirty-sixth Amendment Act) 1975. That subsequently, by virtue of aNotification dated 23[rd] February, 1989 issued by the Department ofRevenue, Ministry of Finance, the I.T. Act, 1961 was extended to theState of Sikkim with effect from assessment year 1989-1990. That afterthe extension of the Act to the state of Sikkim, the Government of Sikkimcontinued to vacillate on extending co-operation for smoothimplementation of the central direct tax laws in the state and constantlysought extensions for the implementation, on various grounds. In orderto resolve the continuing impasse, the then Union Minister for Finance,in June 2004 constituted committee having representation from theGovernment of Sikkim as well as the Central Government. During thecourse of deliberations of the said Committee, the then Chief Secretary,Government of Sikkim identified that Sikkimese society was based on aclassification of those Indians of Sikkimese origin who voted in thereferendum of 1975, and others who were residents of the erstwhileKingdom of Sikkim, but had not voted in the referendum as they werenot registered ‘Sikkim Subjects.’ Accordingly, it was resolved that suchclassification would be maintained for the purposes of determining incometax liability as any other classification would fracture Sikkimese societyand lead to unrest and agitations within the society. With the aforesaidbackground, it was urged that the distinction between Sikkim Subjectsand other residents of Sikkim, including migrants/settlers of Indian origin,was based on reasonable classification.

36. It was emphasized that this Court had recognized on previousoccasions that Sikkim Subjects formed group which was distinct fromother residents of Sikkim.

37. It was next contended that exemption from payment of incometax could not be granted to the entire population of Sikkim simply becausethey are domiciled in the State. Therefore, exemption was granted infavour of Sikkim Subjects and such other persons as specified under theExplanation to Section 10(26AAA) of the I.T. Act, 1961, having dueregard to tangible social and historical differences between variouscategories of residents of Sikkim.

A38. Those migrants/settlers of Indian origin, who may have beenresiding in Sikkim prior to the coming into effect of the 1961 Regulation,chose not to get themselves registered as Sikkim Subjects by relinquishingtheir Indian citizenship. This was considered choice made by the saidclass of persons. Having waived their privileges on account of non-registration as Sikkim Subjects, migrants/settlers of Indian origin cannotBat this juncture claim to be treated at par with Sikkim Subjects.

39. Insofar as the validity of the proviso to Section 10(26AAA) ofthe I.T. Act, 1961 is concerned, it was submitted that the same is notdiscriminatory against women or violative of Articles 14 and 15 of theConstitution. That the disqualification placed on Sikkimese womenCmarrying non-Sikkimese men after 1[st] April, 2008, was based on thecustomary laws of Sikkim which provide that descent shall be through awoman’s father and any privileges vested by virtue of such descentwould continue until such woman is married. That the peculiar customarylaws of society could not be ignored while framing laws to bind suchDsociety.40. With the aforesaid averments, it was prayed that the instantwrit petitions be dismissed as being devoid of merit.

41. On behalf of the State of Sikkim, learned counsel, Sri VivekKohli has fairly submitted that the State Government does not have anyEobjection to the prayer of the writ petitioners herein to extend the incometax exemption to married women of Sikkimese origin, who, after 1[st]April, 2008 married non-Sikkimese man. It was also submitted that thebenefit of the tax exemption may be extended to all Indian citizensdomiciled in Sikkim irrespective of the fact as to whether their namesFare registered as ‘Sikkim Subjects’ in the ‘Sikkim Subjects Register’maintained under the 1961 Regulation.

42. There is two-pronged challenge to clause (26AAA) ofSection 10 of the I.T. Act, 1961. Firstly, the proviso restricting Sikkimesewoman who marries after the 1[st] April, 2008, non-Sikkimese, is excludedGfrom the benefit under that provision. Secondly, the definition of‘Sikkimese’ is also assailed in these writ petitions. The same shall bediscussed 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 hasbeen assailed. The proviso reads as under:

“Provided that nothing contained in this clause shall apply to aSikkimese woman who, on or after 1[st] day of April, 2008, marriesan individual who is not Sikkimese”

44. The proviso is challenged on the ground that it excludesSikkimese women on the basis that they have married an individual whois not Sikkimese after 1[st] April, 2008. In this context, the followingaspects can be discerned:

i) Firstly, it is the contention of the petitioners that Sikkimesewomen have been subjected to discrimination which is not valid in law,particularly, having regard to Articles 14 and 15 of the Constitution ofIndia. The contention is that there is discrimination against Sikkimesewomen while there is no such discrimination as far as Sikkimese menare concerned, in the sense that if Sikkimese woman marries anindividual who is not Sikkimese, she is excluded from the benefit of theclause but if Sikkimese man marries an individual who is not Sikkimese,such an exclusion does not apply.

ii) Secondly, it is only Sikkimese women who have married on orafter 1[st] April, 2008 who are excluded from the benefit of the said provisionbut if any Sikkimese woman was married to non-Sikkimese prior to 1[st]April, 2008, there is no such exclusion from the benefit granted underthe provision.

iii) Thirdly, it is contended that marriage cannot be basis for aclassification between man and woman so as to make it discriminatoryagainst woman. Sikkimese woman cannot be discriminated againstvis-à-vis Sikkimese man who marries non-Sikkimese.

iv) Fourthly, it is the case of the petitioners that an arbitrary cut-off date of 1[st] April, 2008 has been inserted in the provision thereby,resulting in discrimination between those Sikkimese women who marrieda non-Sikkimese prior to the said date and those Sikkimese women whoare married after the said date. That those Sikkimese women who marrieda non-Sikkimese prior to the said date are included in the beneficialclause of Section 10 (26AAA), but those who married subsequent tothat 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

Amarries 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 anydiscrimination on the basis of marriage against Sikkimese women withreference to an arbitrary date i.e., 1[st] April, 2008. According to theBpetitioners, the proviso creates an artificial classification and adiscrimination between married women and unmarried women and thatmarriage cannot be basis of classification between Sikkimese womenthemselves. Further, the said classification has no nexus to the objectsought to be achieved inasmuch as when all persons who are comingwithin the scope and ambit of the expression “Sikkimese” as given in theCExplanation to the said provision, are given the benefit of exemptionfrom payment of income tax under the I.T. Act, 1961, there cannot bean exclusion of only Sikkimese women, who are married subsequent to1[st] April, 2008, to non-Sikkimese.

46. The thrust of the submissions of the learned Senior CounselDfor the petitioners is that there is discrimination against Sikkimese womenwho have got married to non-Sikkimese, that too, only those womenwho have married on or after 1[st] April, 2008. It is contended that provisois arbitrary for two reasons: firstly, because it is discriminatory againstSikkimese women who have married non-Sikkimese men and secondly,Eonly those Sikkimese women who were married on or after 1[st] April,2008, do not have the benefit of the provision.

47. On analysing the impugned proviso, it is noted that the benefitof the provision does not apply (i) to Sikkimese woman, (ii) who ismarried to an individual who is not Sikkimese, and (iii) the marriageFhaving taken place on or after 1[st] April, 2008. Thus, what emerges isthat marriage of 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 Sikkimesemen.

Gii)between Sikkimese women who are married as opposed tothose who are not married, and

iii)between Sikkimese women who are married to Sikkimeseas opposed to those who are married to non-Sikkimese,and

iv)between Sikkimese women who have married non-ASikkimese on or after 1[st] April, 2008, who are not entitled tothe benefit of the provision as opposed to those Sikkimesewomen who are married to non-Sikkimese prior to theaforesaid date, who are entitled to the said provision.

48. It is further observed that Section 10 (26AAA) was insertedto the I.T. Act, 1961 by the Finance Act, 2008 w.e.f. 1[st] April, 1990. Theproviso although inserted in the year 2008 has retrospective effectfrom 1[st] April, 1990 i.e., the date on which I.T. Act, 1961 was introducedin Sikkim. Prior to 1990, SITM, 1948, was applicable to Sikkim. Thiswould imply that there was no such discrimination between 1[st] April,1990 and 1[st] April, 2008 for period of eighteen years. Thus, thoseSikkimese women who had the benefit of the exemption have beendeprived by the same w.e.f., 1[st] April, 2008. The retrospectivity of theproviso takes away vested benefit extended to such category of womencovered under the proviso w.e.f., 1[st] April, 1990 without there being arationale for the same.

49. Further, it is necessary to analyse the basis of classification interms of the categories of persons enunciated under Regulation (3) ofthe 1961 Regulation as under:

(i)If woman is the wife of person who has his domicile inthe territory of Sikkim immediately before theEcommencement of the 1961 Regulation, such person shallbe 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 aperiod of not less than fifteen years immediately precedingthe commencement of the Regulation.

(ii)The wife of the person having domiciled in Sikkim shall bedeemed to have domiciled in Sikkim for the purpose ofGRegulation (3) [vide clause (2) of Explanation to Regulation(3)].

(iii)Under Regulation (6), woman of foreign nationality whois married to Sikkim Subject after the commencement of1961 Regulation shall ordinarily be eligible to be registered

as Sikkim Subject, on making an application to theGovernment of the Chogyal in the manner provided by theRules under the 1961 Regulation, and after renouncing herformer nationality and on taking an oath of allegiance.

(iv) Clause (b) of Regulation (7) states that any Sikkimese womanBwho marries person who is not Sikkim Subject shallcease to be Sikkim Subject.

50. Thus, under the 1961 Regulation, as far as women areconcerned, marriage has been the basis of acquiring the status of havinga domicile in Sikkim and being Sikkim Subject or losing domicile orCstatus as Sikkim Subject which aspect shall be discussed whileconsidering the challenge to the proviso to Section 10 (26AAA) of theI.T. Act, 1961.

51. In my view, marriage of Sikkimese woman is also the basisfor discrimination against her whereas there is no such discriminationDvis-à-vis Sikkimese man marrying Sikkimese or non-Sikkimesewoman on or after 1[st] April, 2008. Article 14 of the Constitution statesthat, State shall not deny to any person equality before the law or theequal protection of the laws within the territory of India. Article 15 (1) ofthe Constitution states that the State shall not discriminate against anycitizen on grounds only of religion, race, caste, sex, place of birth or anyEof them. In fact, Article 15(3) empathetically states that nothing in Article15 shall prevent the State from making any special provision for womenand children but in the instant case, according to petitioners, instead ofthe proviso being in favour of Sikkimese women, it is antithetical to Articles14 and 15 (1) and (2) of the Constitution of India as it is discriminatoryFagainst Sikkimese women who have married non-Sikkimese, that too,after 1[st] April, 2008.52. This discussion has also to be viewed in light of the Explanationto Section 10 (26AAA) of the I.T. Act, 1961. The Explanation statesthat, the term ‘Sikkimese’ shall mean, an individual whose name isGrecorded in the Register of Sikkim Subjects immediately before 26[th]April, 1975, or an individual whose name is included in the said Registerby virtue of the Government of India Orders dated 07[th] August, 1990and 08[th] April, 1991, or also an individual whose name does not appear inthe said Register but, it is established beyond doubt that name of suchindividual’s father or husband or paternal grandfather or brother fromHthe same father has been recorded in that Register. The expression “an

individual” in clauses (1) to (3) of the Explanation cannot refer to only aSikkimese man and exclude Sikkimese woman. Any other interpretationwould mean that Sikkimese woman has no identity of her own even ifshe is covered under the Explanation to be Sikkimese and therefore isentitled to the benefit of the provision. It would also mean that Sikkimesewoman covered under the Explanation would be excluded from the benefitof the provision if she is covered under the proviso. In other words, theExplanation which is in the nature of definition so as to give benefit toall Sikkimese individuals cannot be restricted in its applicability only toSikkimese men (who are individuals covered under the Explanation), butexclude female Sikkimese individuals of particular category on accountof the proviso, which is inherently discriminatory. This would also implythat the expression “individual” in the Explanation would excludeSikkimese women. In my view, the proviso cannot be construed to be anexception to the Explanation which is in the nature of definition clauseas it would be inherently discriminatory to do so.

53. Thus, when benefit is being given to Sikkimese individualwhich would include all genders under the provision, by way of theExplanation being added, which is in the nature of definition, the provisocannot exclude certain category of married Sikkimese women fromthe said Explanation and thereby, deprive them of the said benefit ofexemption from payment of income tax on the basis of to whom theyare married to. When the Explanation refers to an “individual”, it includesboth Sikkimese men and women, in fact, all genders; it cannot have arestrictive or myopic reference to only Sikkimese men and exclude thoseSikkimese women covered under the proviso. proviso cannot overarch provision. But in the instant case, the proviso is overriding theprovision as well as the Explanation in respect of those categories ofmarried Sikkimese women referred to in the proviso which isimpermissible. Thus, the proviso is inherently arbitrary and discriminatoryagainst particular category of Sikkimese women. In other words, theExplanation to Section 10 (26AAA) of the I.T. Act, 1961 includes bothSikkimese men as well as women. Such being the interpretation, in myview, the proviso is antithetical to the Explanation and the Section aswell.

54. The normal function of proviso is to except something out ofthe provision or to qualify something enacted therein which, but for theproviso, would be within the purview of the provision. As general rule,

Aa proviso is added to an enactment to qualify or create an exception towhat is in the enactment and ordinarily, proviso is not interpreted asstating general rule. In other words, proviso qualifies the generalityof the main enactment by providing an exception and taking out as itwere, from the main enactment, portion which, but for the provisowould fall within the main provision. Further, proviso cannot be construedBas nullifying the provision or as taking away completely right conferredby the enactment. If it does so and is discriminatory then it falls foul ofthe equality clauses of the Constitution of India.55. It is reiterated that the expression “an individual” in theExplanation to Section 10 (26AAA) of the I.T. Act, 1961, must includeCall genders including Sikkimese women. There cannot be discriminationonly on the ground of sex and race. Hence, all Sikkimese women areentitled to the benefit of Section 10 (26AAA) of the I.T. Act, 1961, asper the Explanation thereto irrespective of whether they marry aSikkimese or non-Sikkimese.D

56. Further, pursuant to the merger of Sikkim with India by virtueof which, Sikkim has become one of the States of India and all SikkimSubjects and all Sikkimese domiciled in the territory of Sikkim have becomeIndian citizens, there cannot be discrimination vis-à-vis Sikkimesewomen marrying non-Sikkimese individual, whether an Indian citizenEor foreigner, that too, on or after 1[st] April, 2008. Such discrimination, istherefore, in violation of the guarantee of equality provided under Articles14 and 15 of the Constitution of India as it is on the basis of sex andrace. Hence, the proviso to clause (26AAA) of Section 10 of the I.T.Act, 1961, is stark example of an unconstitutional sex-baseddiscrimination and is liable to be struck down.F

57. In this context, the judicial dicta and decisions of this Courtcould be noted as under:

a) In Air India vs. Nergesh Meerza, AIR 1981 SC 1829,the question was, whether, four-year bar on marriageGimmediately on obtaining employment in Air India, applicableonly to women employees, could be retained as reasonableprovision. This Court held the same to be sound andsalutary provision on the ground that it would “improve thehealth of the employee” and “she becomes fully matureand there is every chance of such marriage proving aHsuccess, all things being equal…….”. The said judgment

was delivered in the year 1981 but with the passage of timeand owing to the worldwide movement towards genderjustice and elimination of all discrimination against women,acquiring momentum, I am of the considered view that aban on marriage in respect of female employeeimmediately for period of four years on her beingappointed by the employer is also discriminatory. Hence,this aspect of gender discrimination would require areconsideration and course correction. This is becausechoice of marriage as well as exercising an option as towhen to marry is Fundamental Right under Article 21 ofthe Constitution of India.

However, in the very same case, this Court found thetermination of service of woman employee on her firstpregnancy to be shocking as it was an open insult to “Indianwomanhood” and hence, the said action was extremelydetestable and abhorrent to the notions of civilised societyand therefore, violative of Article 14 of the Constitution. Infact, this Court observed that the rule could be amended sothat termination of the services of an employee on her thirdpregnancy could be permitted which aspect also, in my view,calls for reconsideration in the absence of any qualifyingparameters.

b) In Air India Cabin Crew Assn. vs. YeshaswineeMerchant and others, AIR 2004 SC 187, this Court setaside decision of the Bombay High Court and upheld theearly retirement of women employees, namely, AirHostesses in Air India which was then Public SectorUndertaking. Justifying its decision, this Court observed that,“there cannot be any cut and dried formula for fixing theage of retirement” and this “would always depend on aproper assessment of the relevant factors and mayconceivably vary from case to case”.

58. With due respect, I find that the aforesaid two judgments havean underlying emphasis on the physique and physical appearance ofwomen related to their marriage, consequent pregnancy and ageing whichcannot be the rationale or basis for making policy decisions or regulationsas they are discriminatory on the basis of sex and thus, unconstitutional.

A59. As opposed to the aforesaid decisions, it is necessary to alsocite the following decisions of this Court:

i) The decision of this Court in C.B. Muthamma Vs Union ofIndia AIR 1979 SC 1868 is highly instructive in this regard. Thepetitioner therein was an officer in the Indian Foreign Service. She filedBa writ petition before this Court claiming denial of promotion on theground of hostile discrimination, as she was woman. She also broughtto the notice of this court, the following two rules, challenging the sameas being violative of the right to equality:

1.Rule 8(2) of the Indian Foreign Service (Conduct andCDiscipline) Rules, 1961 which required woman memberin foreign service to obtain permission of the Governmentin writing before her marriage and to resign if theGovernment is satisfied that her family and domesticcommitments are likely to come in the way of due andefficient discharge of her duties.

2.Rule 18(4) of the Indian Foreign Service (Recruitment,Cadre, Seniority and Promotion) Rules, 1961, whichprohibited married woman to be appointed in ForeignService as of right.

EAlthough during the pendency of the writ petition, Rule 18(4) wasdeleted, and an affidavit was filed by the Respondent-State that Rule8(2) was also in the process of being repealed, this Court made thefollowing observations as regards disabilities based on marriage:

“5. Discrimination against women, in traumaticFtransparency, is found in this rule. If woman member shallobtain the permission of government before she marries,the same risk is run by government if male membercontracts marriage. If the family and domesticcommitments of woman member of the Service is likelyto come in the way of efficient discharge of duties, similarGsituation may well arise in the case of male member. Inthese days of nuclear families, inter-continental marriages andunconventional behaviour, one fails to understand the naked biasagainst the gentler of the species.

6. At the first blush this rule is in defiance of ArticleH16. If married man has right, married woman, other

things being equal, stands on no worse footing. Thismisogynous posture is hangover of the masculine cultureof manacling the weaker sex forgetting how our strugglefor national freedom was also battle against woman’sthraldom. Freedom is indivisible, so is Justice. That our foundingfaith enshrined in Articles 14 and 16 should have been tragicallyignored vis-a-vis half of India’s humanity viz. our women, is sadreflection on the distance between Constitution in the book andlaw in action. And if the executive as the surrogate of Parliament,makes rules in the teeth of Part III especially when high politicaloffice, even diplomatic assignment has been filled by women, theinference of diehard allergy to gender parity is inevitable.7. We do not mean to universalise or dogmatise that menand women are equal in all occupations and all situations and donot exclude the need to pragmatise where the requirements ofparticular employment, the sensitivities of sex or the peculiaritiesof societal sectors or the handicaps of either sex may compelselectivity. But save where the differentiation is demonstrable,the rule of equality must govern. This creed of our Constitutionhas at last told on our governmental mentation, perhaps partlypressured by the pendency of this very writ petition. In the counter-affidavit, it is stated that Rule 18(4) (referred to earlier) has beendeleted on November 12, 1973. And, likewise, the CentralGovernment’s affidavit avers that Rule 8(2) is on its way to oblivionsince its deletion is being gazetted. Better late than never. At anyrate, we are relieved of the need to scrutinise or strike downthese rules.”

(Emphasis by me)

This Court struck down the afore-mentioned provisions asunconstitutional and also impressed upon the Central Government, theneed to overhaul all Service Rules and remove the stain of sexdiscrimination.

(ii) Mackinnon Mackenzie and Co. Ltd. vs. Audrey D’costaand Another, AIR 1987 SC 1281, is judgment of this Court upholdingthe decision of the Bombay High Court wherein it was ordered that, allwomen stenographers were entitled to equal remuneration for work ofthe same or similar nature as male stenographer.

A(iii) In Githa Hariharan vs. Reserve Bank of India, (1999) 2SCC 228, this Court was faced with the interpretation of Section 6(a)of Hindu Minority and Guardianship Act, 1956 and Section 19(b) ofGuardian and Wards Act, 1890. The validity of the aforesaid Sectionswas assailed as being violative of the equality clause of the Constitution,inasmuch as under the said provisions the mother of minor child isBrelegated to an inferior position on the ground of sex alone since herright as natural guardian of the minor, is made cognizable only ‘after’the death of the father. This Court by relying upon the Convention on theElimination of All Forms of Discrimination against Women, 1979(“CEDAW”) and the Beijing Declaration, 1995, which directs all StateCparties to take appropriate measures to prevent discrimination of all formsagainst women, observed that gender equality is one of the basic principlesof our Constitution and in the event the word ‘after’ is to be read tomean disqualification of mother to act as guardian during the lifetimeof the father, the same would definitely run counter to the basicrequirement of the constitutional mandate and would lead to aDdifferentiation between man and woman.

This Court therefore held that the father, by reason of beingconferred dominant personality, cannot be ascribed to have preferentialright over the mother, in the matter of guardianship, since both fall withinthe same category and the word ‘after’ shall have to be interpreted inEterms of the constitutional safeguards and guarantee given to genderequality so as to give 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 haveequal treatment in employment in the hospitality sector. In the said case,Fthe 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 intoxicatingdrug was consumed by the public, was challenged. This Court observedthat, when the original Act was enacted, the concept of equality betweenGtwo sexes was unknown. The makers of the Constitution intended toapply equality amongst men and women in all spheres of life by virtue ofArticles 14 and 15 of the Constitution. The Court was of the view that:

“26. When discrimination is sought to be made on the purportedground of classification, such classification must be founded on arational criterion. The criteria which in absence of any constitutional

provision and, it will bear repetition to state, having regard to thesocietal conditions as they prevailed in early 20th century, maynot be rational criterion in the 21st century. In the early 20thcentury, the hospitality sector was not open to women in general.In the last 60 years, women in India have gained entry in all spheresof public life. They have also been representing people at grassroot democracy. They are now employed as drivers of heavytransport vehicles, conductors of service carriage, pilots et. al.Women can be seen to be occupying Class IV posts to the post ofa Chief Executive Officer of 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 SouthAfrican 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 BlackAdministration Act, 1927 (South Africa) and the Regulations of theAdministration and Distribution of the Estates of Deceased Blacks (SouthAfrica) as ultra vires. It was held by the majority that the rule of maleprimogeniture as it applied in customary law to the inheritance of propertywas inconsistent with its Constitution and invalid to the extent that itexcluded or hindered women and extra-marital children from inheritingproperty. The South African Constitutional Court further observed that,the rules of succession in customary law had not been given the spaceto adapt and to keep pace with changing societal conditions and values,instead, they had over time become increasingly out of step with the realvalues and circumstances of the societies they were meant to serve.Thus, the official rules of customary law of succession were no longeruniversally observed. The South African Constitutional Court, therefore,held that, the exclusion of women from inheritance on the grounds ofgender was clear violation of the constitutional prohibition against unfairdiscrimination.

(v) In G. Sekar vs. Geetha & Ors. (2009) 6 SCC 99 this Courtobserved 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, arerequired to be treated equally to the male heirs. This Court furtherobserved that, gender equality is recognized by the world community ingeneral in the human rights regime.

(vi) In this context, it would be useful to refer to the followingobservations made by Altamas Kabir, C.J. in his supplemental opinion in

AState of Maharashtra vs. Indian Hotel and Restaurants Association,(2013) 8 SCC 519:

“147. Women worldwide are becoming more and more assertiveof their rights and want to be free to make their own choices,which is not an entirely uncommon or unreasonable approach.BBut it is necessary to work towards change in mindset of peoplein general not only by way of laws and other forms of regulations,but also by way of providing suitable amenities for those whowant to get out of this trap and to either improve their existingconditions or to begin new life altogether. Whichever way onelooks at it, the matter requires the serious attention of the StateCand its authorities, if the dignity of women, as whole, and respectfor them, is to be restored.”(vii) Recently in Secretary, Ministry of Defence vs. BabitaPuniya and others, (2020) 7 SCC 469, struggle for equality ofopportunity for women seeking Permanent Commissions (PCs) in theDIndian Army succeeded after decade and more spent in litigation inwhich women engaged in Short Service Commissions (SSCs) in theArmy sought parity with their male counterparts in obtaining PCs. In thesaid case, this Court speaking through Dr. D. Y. Chandrachud, J. (as HisLordship then was) observed as under:

E“85…..An absolute bar on women seeking criteria or commandappointments would not comport with the guarantee of equalityunder Article 14. Implicit in the guarantee of equality is that wherethe action of the State does differentiate between two classes ofpersons, it does not differentiate them in an unreasonable orirrational manner. In this sense, even at its bare minimum, theFright to equality is right to rationality. Where the State, and inthis case the Army as an instrumentality of the State, differentiatesbetween women and men, the burden falls squarely on the Armyto justify such differentiation with reason. An absolute prohibitionof women SSC officers to obtain anything but staff appointmentsGevidently does not fulfil the purpose of granting PCs as meansof career advancement in the Army. Whether particularcandidate should or should not be granted criteria or commandassignment is matter for the competent authority to considerhaving regard to all the exigencies of service, performance andorganisational requirements. In the present case the Army has

provided no justification in discharging its burden as to why womenacross the board should not be considered for any criteria orcommand appointments. Command assignments are not automaticfor men SSC officers who are granted PC and would not beautomatic for women either. The absolute exclusion of womenfrom all others except staff assignments is indefensible. If theArmy has cogent reasons for excluding women from particularcriteria or command appointment, it may provide them to therelevant authorities and if necessary, to future courts. However,such justification must take place on case-to-case basis, inlight of the requirements and exigencies of particular appointment.The blanket non-consideration of women for criteria or commandappointments absent an individuated justification by the Armycannot be sustained in law.”

60. The fight for non-discrimination based on considerations ofgender has assumed centre stage in the United States of America aswell. The Fourteenth Amendment to the U.S. Constitution provides thatno State shall deny to any person within its jurisdiction, equal protectionof the laws. This clause has evolved body of judicial doctrine which iscomprised, inter-alia, in the numerous rulings issued by the United StatesSupreme Court, that have advanced women’s rights. few of suchlandmark decisions may be referred to as under:

(a) In Reed vs. Reed, 404 U.S. 71, 92 S. Ct. 251 (1971), thequestion before the Supreme Court of the United States was,whether, statute, namely, the Idaho Probate Code that includeda gender-based provision, preferring males over females toadminister an estate, violated the Equal Protection clause of theFourteenth Amendment of the Constitution.In unanimousdecision, the Court held that the Idaho Probate Code’s dissimilartreatment of men and women was unconstitutional and wasviolative of the Equal Protection clause of the FourteenthAmendment. The Court observed that, “to give mandatorypreference 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 choiceforbidden by the Equal Protection clause of the FourteenthAmendment…The choice in this context may not lawfully bemandated solely on the basis of sex.”

(b) InWeinberger vs. Wiesenfeld, 420 U.S. 636, 95 S. Ct. 1225(1975), the issue was with regard to the Social Security Act whichprovided survivor’s benefits based on the earnings of deceasedhusband and father both to his widow and the couple’s minorchildren in her care. However, the benefits based on the earningsof covered deceased wife and mother were granted only to theminor children and not to the widower. In the said case, the questionbefore the Supreme Court of the United States was whether thegender-based distinction in Social Security Benefits violated theDue Process Clause of the Fifth Amendment.

In unanimous decision, the Court held that the purpose ofthe social security benefits for the surviving spouse and childrenis 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 illogicaland counter-productive by excluding widower.

It was further observed that the Constitution of United Statesforbade gender-based differentiation that resulted in lessprotection for the families of female workers who were requiredto pay Social Security taxes than was accorded to the families ofmale workers. The statute’s gender-based distinction was basedEon an archaic and overbroad generalization about the contributionsto family support made by male and female workers. The Courttherefore held that such an irrational classification violated theright to equal protection secured by the Fifth Amendment, whichprohibited discrimination that was so unjustifiable as to be violativeof due process. Thus, in the aforesaid case, the right of widowerFwas established while at the same time emphasising thatdiscrimination on the basis of gender violated the equality clausewhich provides 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 ofautomatically exempting women from jury service upon requestviolated the rights as guaranteed by the Sixth and FourteenthAmendments. The Court held that the State statute’s exemptionof women from jury service on request violated the defendant’srights as guaranteed by the Sixth and Fourteenth Amendments infailing to ensure that jurors in criminal cases be drawn from fair

cross section of the community, since it was sufficiently establishedby the defendant that women, as group, were distinct from men.The Court further observed that, there existed no significant stateinterest 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, thelaw firm where Hishon was employed, violated Title VII of theCivil Rights Act of 1964 (for short, “CR Act, 1964”) by unfairlydiscriminating against Hishon on the basis of her sex by denyingher admission to the partnership of the firm. In unanimousdecision, the Court held that Title VII of the CR Act, 1964 madeit illegal for an employer to discriminate against any employee onthe basis of her sex. The Court observed that, the promise ofequal consideration for partnership that went along with Hishon’semployment was contractual in nature and subject to the regulationsof Title VII of the CR Act, 1964. The Court further observed thatby preventing Hishon from obtaining partnership because of hersex, the firm had discriminated against her and had breached the“terms, conditions or privileges of employment”. It was thereforeheld that the firm acted in direct violation of Title VII of the CRAct, 1964.(e) Another question before the Supreme Courtin United Statesvs. Virginia, 518 U.S. 515 (1996)was whether the practiceundertaken by the Virginia Military Institute (VMI) of offeringeducation only to men and not women constituted denial of equalprotection under the Fourteenth Amendment of the United StatesConstitution. In 7:1 decision, the Court held that VMI’s male-only admissions policy was unconstitutional. Justice Ruth BaderGinsburg was of the view that Virginia failed to show “anexceedingly persuasive justification” for VMI’s gender-biasedadmissions policy. The Court observed that the notion that admittingwomen would downgrade VMI’s stature and destroy the school’sadversity system, was hardly proved. The Court thereforeobserved that, it violated the Fourteen Amendment’s equalprotection clause.

61. In the case under consideration as per the Notification dated16[th] May, 1975 on the enforcement of Citizenship Act, 1955, andCitizenship Rules, 1956 to the State of Sikkim on its merger with India

Aand as per the Sikkim (Citizenship) Order, 1975, every person whoimmediately before 26[th] April, 1975, was Sikkim Subject as per the1961 Regulation was deemed to have become citizen of India on thatday. Thus, an individual had domicile in the territory of Sikkimimmediately before the commencement of the 1961 Regulation, if he/she was:B

a)born in the territory of Sikkim and was resident therein; or

b)had been ordinarily residing in the territory of Sikkim for aperiod of not less than fifteen years immediately precedingthe commencement of the 1961 Regulation.C

62. Such an individual automatically became citizen of India andhis/her name may have also been entered in the Register of SikkimSubjects immediately before 26[th] April, 1975. This is also clear from theGovernment Order dated 7[th] August, 1990 which was notified by theGovernment of Sikkim to the effect that every person who immediatelyDbefore 26[th] April, 1975, was Sikkim Subject under 1961 Regulation,shall be deemed to have become citizen of India on that day. In fact,where there were genuine omissions, direction was issued to enter allsuch eligible persons who had been omitted in the said Register. To thesame effect is the Government Order issued by the Government of Indiadated 8[th] April, 1991 which was notified by the Government of SikkimEon the same date.

63. Therefore, on conspectus consideration of the 1961Regulation in light of the Government Orders passed subsequent to themerger of Sikkim with India by which Sikkim became State in Indiaand by which the Sikkim Subjects domiciled in Sikkim had their namesFincluded in the Register of Sikkim Subjects, the proviso should not havediscriminated against Sikkimese women in the manner analysed above,only because Sikkimese woman who, though, may have had her nameregistered in the Register of Sikkim Subjects, married non-Sikkimese,that too, only on or after, 1[st] April, 2008, would be excluded from theGexemption clause. Such category of women cannot be deprived of thebenefit 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 Explanationand is thus manifestly arbitrary. This is because the Explanation intendsto give the benefit of Section 10 (26AAA) of the I.T. Act, 1961 to allSikkimese who are defined under the said Explanation as thoseH

‘individuals’ whose names have been recorded and registered in theRegister of Sikkim Subjects immediately before 26[th] April, 1975 orincluded pursuant to the Government of India Order No. 26030/36/90/I.C.I. dated 7[th] August, 1990 and Order of even number dated 8[th] April,1991, or those persons whose names do not appear in the Register ofSikkim Subjects but it has been established that the name of suchindividual’s father or husband or paternal grandfather or brother fromthe same father had been recorded in that Register. Hence, the benefitof the Explanation must be extended to all Sikkimese women, irrespectiveof whether they have married Sikkimese or non-Sikkimese after the1[st] 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 inviolation 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 sameis under challenge in these petitions. There are three categories of personsincluded within the expression ‘Sikkimese’ given in the Explanation tothe aforesaid provision namely: -

A) an individual, whose name is recorded in the register maintainedunder the Sikkim Subjects Regulation, 1961 read with the SikkimSubject Rules, 1961 (Register of Sikkim Subjects), immediatelybefore 26[th] April, 1975; or

B) an individual, whose name is included in the Register of SikkimSubjects by virtue of the Government of India Order No. 26030/36/90 - I.C.I., dated 7[th] August 1990 and Order of even numberdated 8[th] April, 1991; or

C) any other individual, whose name does not appear in theRegister of Sikkim Subjects, but it is established beyond doubtthat the name of such individual’s father or husband or paternalgrandfather or brother from the same father has been recorded inthat register;

67. Therefore, it is necessary to analyse each of the aforesaidRegulations, Rules, Government of India Orders for the purpose of this

Acase as 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 whosenames are registered in the Register maintained under the Sikkim SubjectsBRegulation, 1961 read with the Sikkim Subject Rules, 1961 (“1961Regulation” and “1961 Rules” respectively):

68.1. An individual whose name is recorded in the Register ofSikkim Subjects immediately before 26[th] April, 1975 is aSikkimese. The same is as per the 1961 Regulation readwith 1961 Rules. On perusal of the 1961 Regulation, whichwas enacted during the period of the Chogyal in Sikkim, itis noted that Regulation (3) is relevant insofar as thesepetitioners are concerned. Regulation (3) reads as under: -

“3. Certain persons domiciled in Sikkim Territory at thecommencement of the Regulation to be Sikkim Subjects:

(1) Every person who has his domicile in the territoryof Sikkim immediately before the commencement of thisRegulation shall be Sikkim Subject if he-

(a) was born in the territory of Sikkim and is residenttherein, or

(b) has been ordinarily resident in the territory of Sikkimfor period of not less than fifteen years immediatelypreceding such commencement:

Provided that in counting the said period of fifteen yearsany absence from the said territory on account of serviceunder the Government of India shall be disregarded; or

(c) is the wife or minor child of person mentioned inclause(a) or clause (b):

Provided that person shall not be Sikkim Subject underthis Section unless he makes declaration to the effectthat he is not citizen of any other country at the time ofinclusion of his name in the register of Sikkim Subjects tobe maintained under this Regulation:

Provided further that in the case of minor or person ofunsound mind, such declaration may be made by hisguardian.

Explanation: No person shall ·be deemed to have hisdomicile in the territory of Sikkim unless ...

(1) he is person who has made Sikkim his permanenthome and has severed his connections with the countryof his origin such as by parting with his property in thatcountry or acquiring immovable property in Sikkim.

Provided that person shall not be deemed to have apermanent home in Sikkim if he indicates an intention ofreturning to his country of origin, by keeping live interesttherein even though he might have parted with his propertyin his country of origin and the mere parting of such propertywill not be regarded as proof of person’s having acquireda permanent home in Sikkim.

(2) The wife and minor children of person having hisdomicile in Sikkim shall be deemed to have domicile inSikkim for the purpose of this Section.

(3) In any case of doubt as to whether person hasdomicile within the territory of Sikkim under this Section,the matter shall be decided by The Chogyal with theassistance of Board consisting of persons to beappointed in accordance with the rules made under thisRegulation.”

68.2. What is pertinent in the said Regulation is that, the followingthree categories of persons are stated to have domicile inthe territory of Sikkim immediately before thecommencement of the 1961 Regulation: -

(a) person born in the territory of Sikkim and is residenttherein, or

(b) has been ordinarily resident in the territory of Sikkimfor period of not less than fifteen years immediatelypreceding such commencement, or

(c) is the wife or the minor child of person mentionedin clause (a) or clause (b) above.

A68.3. The proviso to Regulation (3) states that person shall notbe Sikkim Subject under Regulation (3) “unless he makesa declaration to the effect that he is not citizen of anyother country at the time of inclusion of his name in theRegister of Sikkim Subjects to be maintained under thesaid Regulation.” The said proviso, must now beBinterpreted in light of the fact that the Kingdom of Sikkimhas merged with India with effect from 26[th] April, 1975and is an Indian State. When considered in the context ofthe aforesaid significant fact, the proviso to Regulation (3)would have to be interpreted to mean that an individual whoChad not made declaration to the effect that he was not acitizen of any other country at the time of inclusion of hisname in the Register of Sikkim Subjects, as he was originallya subject of British India or any of the princely states ofIndia or any other A, or state as understood under theConstitution of India, had ordinarily been resident in theDterritory of Sikkim for business, employment or any suchother purposes, is now entitled to be registered in theRegister of Sikkim Subjects. This is because Sikkim hasnow merged with India and has become one of the Statesof India. Also, persons domiciled in the erstwhile KingdomEof Sikkim i.e., prior to 26[th] April, 1975, the day SikkimKingdom merged with India would now become citizens ofIndia. Therefore, the expression “he is not citizen of anyother country” in the proviso to Regulation (3), after theinclusion of the territory of Sikkim as part of the Indianterritory, must now be read, to exclude citizen of IndiaFordinarily resident in Sikkim as on 26[th] April, 1975. Thiswould imply that if an individual from British India or anyother part of India after its Independence was domiciled inSikkim prior to 26[th] April, 1975 and has become citizen ofIndia by virtue of Part II of the Constitution and theGCitizenship Act, 1955, enacted by the Parliament and Ordersmade thereunder, pursuant to the merger of Sikkim Kingdomwith India, such individual ought to now be included in theRegister of Sikkim Subjects if not included till date.

68.4. Similarly, the expression “any other country” in RegulationH(4) of the 1961 Regulation must be read to mean “any other

country other than India”. By such an interpretation, persondomiciled in the territory of Sikkim and who has acquiredthe citizenship of India may, on an application made to theauthority prescribed by the 1961 Rules be registered as aSikkim Subject, if he is person whose ancestors weredeemed 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 1961Regulation were to be entered as ‘Sikkim Subjects’ in theRegister; and

b) Persons who were citizens of another country were notto be registered as ‘Sikkim Subjects’ unless theyrelinquished the citizenship of the other country.

However, after the merger of Sikkim Kingdom with India,the expression “any other country” would not include Indiaas all residents of Sikkim, whether Sikkim Subject or notare now Indian citizens. But the term ‘Sikkim Subject’ wasdefined as person who was born in the territory of Sikkimand was resident therein and all similarly situated persons,but however, with caveat that person shall not be aSikkim Subject under the 1961 Regulation, unless he madea declaration that he was not citizen of any other countryat the time of inclusion of his name in the Register of SikkimSubjects. The result of this caveat was that an Indian citizenwhose ancestors had settled down in Sikkim for generations,had to give up his citizenship of India (of which countrySikkim was protectorate since 1950), for the purpose ofregistering himself as Sikkim Subject. However, thoughthese Regulations were promulgated, no differentialtreatment was meted out to the Indians as their rights wereprotected under the Indo-Sikkim Treaty of 1950.

68.6. Thus, although, as per the 1961 Regulation read with the1961 Rules, the name of the individual had to be registeredbefore 26[th] 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 anyother country’, as also found in Regulation (4) of the 1961Regulation, future cut-off date may have to be indicatedby the Union of India by means of circular or in any othermanner for the purpose of enabling the registration ofindividuals in the Register of Sikkim Subjects who are Indiancitizens, domiciled in the territory of Sikkim on or before26[th] April, 1975. This is permissible because GovernmentOrder dated 7[th] August, 1990, would indicate that everyperson who immediately before 26[th] April, 1975 was aSikkim Subject under the 1961 Regulation shall be deemedto have become citizen of India on that day. The objectand purpose of the issuance of the Government Order wasto ensure that those persons who were eligible to be enteredin the Register of Sikkim Subjects but were not so enteredbecause of genuine omission were enabled to getthemselves registered and are accordingly deemed to havebecome citizens of India with effect from 26[th] April, 1975in terms of the Sikkim (Citizenship) Order, 1975.

68.7. The Sikkim (Citizenship) Order, 1975, as amended by theSikkim (Citizenship) Amendment Order, 1989, issued by theGovernment of India would clearly indicate that any personEwho was Sikkim Subject under the 1961 Regulation shallbe deemed to have become citizen of India. Conversely,all citizens of India having domicile in Sikkim on or before26[th] April, 1975 must be enabled to register their names inthe Register of Sikkim Subjects in order to avail the benefitFof exemption under clause (26AAA) of Section 10 of theI.T. Act, 1961. This would imply that the 1961 Regulation isbeing extended up to 26[th] April, 1975 for the purpose ofExplanation to Section 10 (26AAA) of the I.T. Act, 1961so as to save it from being rendered discriminatory insofaras the petitioners herein and similarly situated individualsGare concerned.

68.8. Further, under the Sikkim Work Permit Rules, 1965 every‘foreigner’ entering Sikkim was required to obtain workpermit from the Chief Secretary or any other officerauthorised 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 citizen of India. Therefore,Indian citizens or Indian nationals who became domiciledin Sikkim and were employed in Sikkim did not require awork permit. In view of the aforesaid Rules, it can beinferred that any Indian citizen who entered Sikkim for thepurpose of employment prior to 26[th] April, 1975 was treatedon par with Sikkimese and not as foreigner. It is plausiblethat because of the concession given under Work PermitRules of 1965, Indian citizens or nationals did not getthemselves registered under the Register of Sikkim Subjectsat the relevant point of time.

68.9. It is contended that only small percentage of settlers ofIndian origin in Sikkim have not been registered under theRegister of Sikkim Subjects and as result they are notprovided the benefit of exemption under the Explanation toclause (26AAA) of Section 10 of the I.T. Act, 1961. In thecircumstances, the respondent-Union of India must considerways and means in which such persons could also receivethe benefit of exemption from payment of income tax ifthey were domiciled in Sikkim on or before 26[th] April, 1975by amending the Explanation to Section 10 (26AAA) of theI.T. Act, 1961 or by issuing circular enabling suchindividuals being given the opportunity to register themselvesin the said Register.

68.10.Further, the Government of India has enabled the registrationof all such persons who were omitted from the Register ofSikkim Subjects under the 1961 Regulation read with the1961 Rules. The Government of India Order dated 7[th]August, 1990 also has deeming fiction inasmuch as allsubjects registered under the Register of Sikkim Subjectshave become citizens of India as on 26[th] April, 1975.

68.11. The rationale for extending the registration of persons whowere omitted from the Register of Sikkim Subjects underthe 1961 Regulation vide Government of India Orders dated07[th] August, 1990 and 08[th] April, 1991 is in recognition ofthe fact that individuals who were domiciled in Sikkim, for

Avarious reasons could not be registered under the Registerof Sikkim Subjects. If the criterion of domicile has been thebasis for registration of persons in the Register under the1961 Regulations, then by the very same basis, individualssuch as the petitioners and all similarly situated personsdomiciled in Sikkim on or before 26[th] April, 1975 which isBthe day on which Sikkim merged with India must be giventhe benefit of the exemption even if their names are presentlynot registered in the Register of Sikkim Subjects in order toremove the vice of discrimination vis-a-vis such individuals.

68.12. Hence, persons such as the petitioners and other similarlyCsituated persons who have not been registered under theRegister of Sikkim Subjects can now seek registration inview of the aforesaid discussion as registration under thesaid Register is the basis for extending the exemption underSection 10 (26AAA) of the I.T. Act, 1961. Hence, directionsDhave been issued so as to include persons such as thepetitioners and other similarly situated persons.

69. The second category of individuals are individuals whosenames have been registered in the Register of Sikkim Subjects by virtueof the Government of India Order No.26030/36/90 – I.C.I. dated 7[th]EAugust, 1990 and Order of even number dated the 8[th] April, 1991 andnotification issued by the Department of Home, Government of Sikkimdated 16[th] August, 1990 publishing the Government of India Order dated7[th] August, 1990:

69.1. As per the Notification dated 21[st] June, 1975, issued by theFHome Department, Government of Sikkim, it was declared that 16[th]May, 1975 was the date on which the Citizenship Act, 1955, shall comeinto force in the State of Sikkim and the Citizenship Rules, 1956, werealso enforced from the aforesaid date. In fact, in exercise of the powersconferred under Section 7 of the Citizenship Act, 1955, the Governmentof India promulgated the Sikkim (Citizenship) Order, 1975. As per clauseG(2) of the aforesaid order:

“Every person who immediately, before the 26[th] day of April,1975, was the Sikkim Subject under the Sikkim SubjectsRegulation, 1961 shall deem to have become citizen of Indiaon that day”.

Further, in exercise of the powers conferred by Section 7 of theCitizenship Act, 1955, the Government of India amended the SikkimCitizenship Order, 1975, by virtue of the Sikkim Citizenship (Amendment)Order, 1989, whereby 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 beentered in the register maintained under the said regulation butwas not so entered because of any genuine omission shall alsobe deemed to have become citizen of India on that day if sodetermined by the Central Government”.

69.2. As per the Notification issued by the Government of IndiaOrder No.26030/69/88-I.C.I. dated 20[th] March, 1989, Committee forthe purpose of consideration of the cases of genuine omissions in termsof the Sikkim Citizenship (Amendment) Order, 1989, was formed on20[th] March, 1989. Further, by this Order, Guidelines were issued as criteriafor considering the names of individuals who had been omitted to beregistered in the Sikkim Subjects. The said criteria read as under: -

“ANNEXURE TO M.H.A. ORDER N0.26030/ 69/88-I.C.IDATED 20.03.1989 GUIDELINES

a. Natural descendants of person whose names is in the SikkimSubject Register.

b. Person having recorded ownership or tenancy rights onagricultural land or of rural property within Sikkim before 26thApril, 1975, and his natural descendants.

c. Persons whose name is included in the earliest available voters-list prior to the 26[th] April, 1975, and his natural descendants.

d. Person holding regular government job before 26[th] April, 1975provided that the appointment has not been made under the‘exception’ clause pertaining to non-subjects; and his naturaldescendants.

e. Holder of trade license outside notified bazaar areas prior to26[th] April, 1975 and his natural descendants.

f. He must not have entered the territory of Sikkim on the basis ofwork-permit.

g. He must not have acquired citizenship of any other country.

Ah. He must not be holding the status of refugee on the basis of aregistration certificate issued by the competent authority.

(The criteria laid down from (a) to (e) singly or collectively are bythemselves not be taken as conclusive evidence for grantingcitizenship, but would have to be scrutinized in the light of those atB(f), (g) & (h).”

69.3. Further, the Government of India issued Notification videOrder No.26030/36/90-I.C.I. dated 8[th] April, 1991 and the said Orderstates that there were large number of persons who were eligible to beentered in the Register as Sikkim Subjects immediately before 26[th] April,C1975, as per the 1961 Regulation, were not so entered because of genuineomissions. The said cases of genuine omissions were reviewed and itwas recommended that the names of 73,431 persons were consideredeligible for being included in the Register of Sikkim Subjects. The Ministryof Home Affairs, Government of India after consideration of the casesfound that 33,348 persons were eligible to be registered under the RegisterDof Sikkim Subjects and were deemed to have become citizens of Indiawith effect from 26[th] April, 1975, in terms of the Sikkim (Citizenship)Order, 1975.

69.4. By virtue of the aforesaid Government Orders dated 7[th]August, 1990 and 8[th] April, 1991 it is clear that persons who were entitledEto be registered in the Register of Sikkim Subjects immediately before26[th] April, 1975 but were not registered because of genuine omissions,are to be registered in the said Register by virtue of the said GovernmentOrders as citizens of India and entitled to the benefit of the exemption.

Thus, all individuals who were registered in the Register of SikkimFSubjects became citizens of India by virtue of the aforesaid Governmentof India’s orders. Therefore, it was necessary concomitant that tobecome citizen of India, an individual must have been/be registered inthe Register of Sikkim Subjects. Further registration under the saidRegister enables such individuals to have the benefit of exemption fromGpayment of income tax. But individuals such as the petitioners and allsimilarly situated individuals as of now are not entitled to the benefit ofexemption as their names are not registered in the said Register.

69.5. Further, even under the Sikkim Work Permit Rules, 1965, anIndian national was not considered to be foreigner in Sikkim. Thus, allIndian nationals who have become domiciled in Sikkim till 26[th] April,H

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 individualswho are all now citizens of India settled/domiciled in Sikkim prior to 26[th]April, 1975. Therefore, directions have been issued in this regard so asto save the Explanation from the vice of being ultra vires under Articles14 and 15 of the Constitution of India.

70. The third category of individuals are those, whose namesdo not appear in the Register of Sikkim Subjects, but it is establishedbeyond doubt that the name of such individuals’ father or husband orpaternal grandfather or brother from the same father has been recordedin that register.

70.1. As far as these categories of individuals are concerned,there is necessity to prove beyond doubt that the name of suchindividual’s father or husband or paternal grandfather or brother fromthe same father has been recorded in the Register. In such case, evenif 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 closerelations of the individual. Therefore, such category of individuals arealso included to avail the benefit of the exemption clause.71. On an analysis of the Explanation, it would emerge that theRegister of Sikkim Subjects is the basis for granting an exemption frompayment of income tax under the I.T. Act, 1961 to Sikkimese.Therefore, the Government of India has extended opportunities for thenames of individuals to be recorded in the Register of Sikkim Subjectseven after the merger of Sikkim as State with India on 26[th] April, 1975,by issuance of Government Orders dated 7[th] August, 1990 and 8[th] April,1991. Further, names of individuals which do not appear in the Registerof Sikkim Subjects but it is established beyond doubt that the names ofsuch individual’s father or husband or paternal grandfather or brotherfrom the same father have been recorded in that Register, could also beincluded in the said Register. Hence, even as of now, if any individual’sname is not entered in the Register, such individual’s name could beentered into the Register by virtue of clause (iii) of the Explanation toSection 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 toextend the benefit of the exemption under Section 10 (26AAA) of the

AI.T. Act, 1961 to all Sikkimese as per the conditions mentioned thereinby providing individuals whose names do not appear in the Register, anopportunity of getting their names registered in the said Register so as toavail the benefit of exemption from payment of income tax as per theaforesaid provision.B72. Thus, the object is to provide the exemption from payment ofincome tax only to those Sikkimese who were domiciled in Sikkim havingregard to the 1961 Regulation or by virtue of the Government Ordersdated 7[th] August, 1990 or 8[th] April, 1991 issued by the Government ofIndia which are again based on the 1961 Regulation. Therefore, underclause (iii) of the Explanation, an opportunity would have to be providedCto individuals who fall within the scope and ambit of the said clause ofthe I.T. Act, 1961, to get their names registered if not yet registered.

73. However, in my view, the Explanation restricts the exemptiononly to those Sikkimese individuals who fall within the three clauses ofthe Explanation, as the object and purpose of the exemption is only toDexempt the settlers in Sikkim or persons domiciled in Sikkim in terms ofthe 1961 Regulation or the Government Orders referred to above. Eventhough the 1961 Regulation has been repealed, nevertheless, the Registerof Sikkim Subjects which is maintained under the said Regulation, whichhad acquired sanctity, has been the basis for grant of an exemptionEand particularly in the form of clause (iii) of the Explanation to Section10(26AAA) of the I.T. Act, 1961. This would imply that all thoseindividuals who fall outside the scope and ambit of the Explanation wouldnot be granted the exemption. Then, the questions of discrimination againstpersons such as the petitioners and others similarly situated would arise.

F74. Individuals having become citizens of India and were domiciledin Sikkim as on 26[th] April, 1975 are also entitled to the benefit ofregistration and exemption. Thus, in my view, all individuals domiciled inSikkim till 26[th] April, 1975 and who have since become citizens of Indiaare entitled to exemption from payment of income tax as per Section 10(26AAA) of the I.T. Act, 1961.G

75. The rationale being, Sikkim merged with India and became aState within India in the year 1975 and special status was given to it byvirtue of Article 371-F of the Constitution of India. This does not meanthat all persons domiciled in Sikkim who have been treated as citizens ofIndia are entitled to the exemption. Only such individuals are entitled toHthe exemption who fall within the three clauses of the Explanation. Hence,

the Explanation must be construed strictly as it is in the nature of adefinition of the expression “Sikkimese” for the purpose of granting anexemption from payment of income tax under the I.T. Act, 1961.However, the exemption must be extended to incorporate all suchindividuals who have been domiciled in Sikkim as on 26[th] April, 1975 andwho have since then become citizens of India. This would mean that allother citizens of India who do not fall within the ambit of the Explanationas interpreted above and who have been domiciled in Sikkim Statesubsequent to 26[th] April, 1975 would not have the benefit of exemptionunder Section 10 (26AAA) of the I.T. Act, 1961.

76. In view of the above interpretation, in my view, the Explanationhas to be saved from being in violation of Articles 14 or 15 of theConstitution of India as there is rationale in the three clauses of theExplanation which is reasonable classification which has nexus tothe object sought to be achieved, which is to grant of exemption frompayment of income tax only to those individuals who would qualify as‘Sikkimese’ in terms of the Explanation to clause (26AAA) of Section10 of the I.T. Act, 1961. Thus, any individual not falling within the saidclause would not be entitled to the said exemption. This would howeverbe discriminatory insofar as those settlers in Sikkim are concerned whohave been domiciled in Sikkim subsequent to promulgation of 1961Regulation and till 26[th] April, 1975 when Sikkim merged with India. Suchindividuals are old settlers who have become citizens of India from 26[th]April, 1975 but who were domiciled in Sikkim prior to the said date. Inmy view, they are also entitled to the exemption under Section 10(26AAA). Hence, directions in that regard have to be issued to fill theLegislative vacuum and amendment to the Explanation is necessary.However, those individuals who have been domiciled in Sikkim subsequentto 26[th] April, 1975 shall not be entitled to the benefit of exemption frompayment of income tax.

77. This Court has on previous occasions, sought to enforce rightsof citizens even in areas of legislative vacuum. [For instance, in Vishakaand 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 sodeclared in order to fill the vacuum has been treated as law declared bythis Court under Article 141 until proper legislation is made.

Hence, it has to be directed that till such amendment is made tothe down the Explanation to Section 10(26AAA) of the I.T. Act, 1961,

Aall individuals domiciled in Sikkim up to 26[th] April, 1975 shall be entitledto the exemption under the said provision from the current financial yeari.e., 1[st] April, 2022 onwards. This direction is being issued in exercise ofpowers under Article 142 of the Constitution so as to eliminatediscrimination and disparity in respect of the aforesaid category ofSikkimese, who subsequently have become citizens of India w.e.f. 26[th]BApril, 1975 and to save the Explanation from being renderedunconstitutional vis-à-vis such individuals who form small percentageof Sikkimese and who are also entitled to such an exemption. Such asapproach is being adopted rather than striking down the Explanation toSection 10(26AAA) of the I.T. Act, 1961 which would have the effectCof withdrawing the benefit of exemption even from those categories ofpersons who are presently eligible for the same.78. Hence, until the amendment is made, the following clauseshall be read as part of the Explanation to Section 10(26AAA) of theI.T. Act, 1961, possibly as sub-clause (iv) thereof:D“(iv) any other individual, whose name does not appear in theRegister of Sikkim Subjects but it is established that such individualwas domiciled in Sikkim on or before 26[th] April, 1975.”

This provision would extend the benefit of exemption to thoseindividuals, domiciled in Sikkim on the day it merged with India, i.e., 26[th]EApril, 1975.

79. In the result, the writ petitions are disposed of in the followingterms:

i)That the benefit of income-tax exemption presently isFrestricted only to those Sikkimese who fall within the threeclauses of the Explanation to Section 10(26AAA) of theI.T. Act, 1961, or those persons domiciled in Sikkim, or areSikkimese as covered under the 1961 Regulation.

ii)In terms of the Sikkim (Citizenship) Order, 1975 as amendedby the Sikkim (Citizenship) Amendment Order, 1989, issuedGby the Government of India any person who was SikkimSubject under the 1961 Regulation was to be deemed to bea citizen of India w.e.f. 26[th] April, 1975. Conversely, it isheld that all citizens of India, having domicile in Sikkim onthe day it merged with India i.e. 26[th] April, 1975 must beHcovered under the Explanation in order to avail the benefit

of the exemption under Section 10(26AAA) of the I.T. Act,A1961.

iii)The Union of India shall make an amendment to Explanationto Section 10 (26AAA) of I.T. Act, 1961, so as to suitablyinclude clause to extend the exemption from payment ofincome tax to all Indian citizens domiciled in Sikkim on orbefore 26[th] April, 1975. The reason for such direction isto save the explanation from unconstitutionality and to ensureparity in the facts and circumstances of the case.

iv)Till such amendment is made by the Parliament to theExplanation to Section 10 (26AAA) of I.T. Act, 1961, anyindividual whose name does not appear in the Register ofSikkim Subjects but it is established that such individual wasdomiciled in Sikkim on or before 26[th] April, 1975, shall beentitled to the benefit of exemption.

This direction is being issued in exercise of powers under Article142 of the Constitution so as to eliminate discrimination and disparity inrespect of the aforesaid category of Sikkimese, who subsequently havebecome citizens of India w.e.f. 26[th] April, 1975 and to save the Explanationfrom being rendered unconstitutional vis-à-vis such individuals who forma small percentage of Sikkimese.

v) Proviso to Section 10 (26AAA), insofar as it excludes from theexempted category, “a Sikkimese woman who marries non-Sikkimese man after 1[st] April, 2008” is hereby struck down as beingultra vires Articles 14, 15 and 21 of the Constitution of India.”

Parties to bear their respective costs.

Bibhuti Bhushan Bose

Writ petitions disposed of

(Assisted by : Abhishek Pratap Singh and Shubhanshu Das, LCRAs)