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Patna High Court

Purnendu Shekhar Sinha vs The Union Of India And Ors on 26 February, 2024

Bench: Chief Justice, Rajiv Roy

          IN THE HIGH COURT OF JUDICATURE AT PATNA
                  Civil Writ Jurisdiction Case No.12326 of 2017
     ======================================================
     Purnendu Shekhar Sinha son of Late Ram Swaroop Singh, Resident of
     Burmah Shell Lane, Mithapur, P.S.- Jakkanpur, District- Patna.

                                                                   ... ... Petitioner/s
                                          Versus

1.   The Union Of India through the Secretary, Department of Economic Affairs,
     Ministry of Finance, Government of India, North Block, New Delhi.
2.   The Secretary, Department of Revenue, Ministry of Finance, Government of
     India, North Block, New Delhi
3.   The Chairman, Central Board of Direct Taxes, North Block, New Delhi
     (under Ministry of Finance, Government of India).
4.   The Chief General Manager, State Bank of India, Local Head Office, West
     Gandhi Maidan, Patna.

                                               ... ... Respondent/s
     ======================================================
     Appearance :
     For the Petitioner/s    :        Mr. Kundan Kumar Sinha, Advocate
                                      Mr. Bipin Krishna Singh, Advocate
     For the Respondent/s    :        Dr. K.N. Singh, Senior Advocate & ASG
                                      Ms. Archana Sinha, Advocate
     For SBI                 :        Mr. Rakesh Kumar Singh, Advocate

     ======================================================
     CORAM: HONOURABLE THE CHIEF JUSTICE
              and
              HONOURABLE MR. JUSTICE RAJIV ROY
     C.A.V. JUDGMENT
     (Per: HONOURABLE MR. JUSTICE RAJIV ROY)

                    Date :       26-02-2024

                    The writ petition has been preferred:

                                 for issuance of writ of mandamus and other
                                 appropriate writ(s), order(s) or direction(s)
                                 declaring that part of the Section 10(10AA) of
                                 the Income Tax Act, 1961 (henceforth for short
                                 'the Act') by operation of which a cap has been
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                                  placed on exemption from income tax from the
                                  leave encashment amount at the time of
                                  retirement      of    the   employees   other   than
                                  government employees, particularly as such
                                  cap has not been placed on the amount
                                  receivable as leave encashment at the time
                                  of retirement in respect of government
                                  employees, as ultra vires to the Constitution
                                  of India and remove the unconstitutional
                                  part     by     applying      the   Doctrine     of
                                  Severability so that the beneficial portion of
                                  the enactment is saved, the intent of the
                                  Legislature to provide relief to the retirees
                                  in their twilight days is not frustrated and
                                  the enactment after severance does not
                                  suffer from unconstitutionality as prayed
                                  for by the petitioner.
                      2. The facts leading to the writ petition are as follows:

                      3. The petitioner joined the State Bank of India

         (henceforth for short 'the S.B.I.') in the year 1981 and after

         putting in more than 36 years of service retired on 31.08.2017.

                      4. According to the writ petition filed prior to his

         retirement, he made a case that once retired, he was entitled to

         Rs. 6,70,000/- but after deduction of income tax he will be

         getting only a sum of Rs. 4,70,000/- approximately as rest of the

         amount will be liable to tax. However, had he been in the State

         or Central Government Services, no deduction on account of
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         income tax would have been made from the leave salary payable

         to the petitioner at the time of his retirement and he would have

         been entitled to receive the entire sum.

                      5. According to him, it is only because of the

         operation of Section 10(10AA) of the Income Tax Act, 1961

         (henceforth for short 'the Act') which discriminates between the

         similarly placed group of employees that he would lose so much

         money. Section 10 (10AA) of 'the Act' read as follows:

                                       CHAPTER III

                      INCOMES WHICH DO NOT FORM PART OF

         TOTAL INCOME:

                                         Incomes not included in total income
                                         10. In computing the total income of a
                                         previous year of any person, any
                                         income falling within any of the
                                         following clauses shall not be included
                                         (10AA) (i) any payment received by an
                                         employee of the Central Government
                                         or a State Government as the cash
                                         equivalent of the leave salary in
                                         respect of the period of earned leave at
                                         his credit at the time of his retirement
                                         whether        on   superannuation   or
                                         otherwise;
                                         (ii) any payment of the nature referred
                                         to in sub-clause (i) received by an
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                                         employee, other than an employee of
                                         the Central Government or a State
                                         Government, in respect of so much of
                                         the period of earned leave at his credit
                                         at the time of his retirement whether
                                         on superannuation or otherwise as
                                         does not exceed ten months, calculated
                                         on the basis of the average salary
                                         drawn by the employee during the
                                         period of ten months immediately
                                         preceding his retirement whether on
                                         superannuation or otherwise, subject
                                         to    such     limit   as      the   Central
                                         Government may, by notification in the
                                         Official Gazette, specify in this behalf
                                         having regard to the limit applicable
                                         in this behalf to the employees of that
                                         Government:
                                         Provided       that    where     any   such
                                         payments are received by an employee
                                         from more than one employer in the
                                         same previous year. the aggregate
                                         amount exempt from income-tax under
                                         this sub- clause shall not exceed the
                                         limit so specified:
                                         Provided further that where any such
                                         payment or payments was or were
                                         received in any one or more earlier
                                         previous years also and the whole or
                                         any part of the amount of such
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                                         payment or payments was or were not
                                         included in the total income of the
                                         assessee of such previous year or
                                         years,      the   amount     exempt    from
                                         income-tax under this sub-clause shall
                                         not exceed the limit so specified, as
                                         reduced by the amount or, as the case
                                         may be, the aggregate amount not
                                         included in the total income of any
                                         such      previous    year     or     years.
                                         Explanation for the purposes of sub-
                                         clause (ii),-
                                         the entitlement to earned leave of an
                                         employee shall not exceed thirty days
                                         for every year of actual service
                                         rendered by him as an employee of the
                                         employer from whose service he has
                                         retired;"
                      6. The contention of the petitioner is that the

         impugned section 10(10AA) of 'the Act' does not place any cap

         on the period of leave and amount of leave salary which will be

         out of income tax net at the time of retirement in the case of

         government employees whether they are in Central or State

         Services, whereas in the case of employees of other

         establishments, the period of leave is capped at 10 months and

         the maximum amount exempted from income tax is subject to

         such limit as the Central Government may notify in the Official
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         Gazette the same being in the year 2017 to be Rs.3.00 lakh

         which means that any amount which is in excess of Rs.3.00 lakh

         will be liable to tax.

                      7. The further contention is that the leave salary rules

         are framed as per different service rules applicable to employees

         of different organizations whereas as per the Central Civil

         Services (Leave) Rules, 1972 (henceforth for short 'the Rules')

         encashment of Earned Leave standing at the credit of a retiring

         government employee is admissible on the date of retirement

         subject to a maximum of 300 days, i.e. ten months whereas in

         the case of personnel retiring from bank services, the leave

         encashment is admissible subject to a maximum of 240 days

         only. Learned counsel submits that the petitioner is not

         concerned with the period specified in 'the Act' but the cap on

         maximum amount exempted from tax which adversely affects

         his interests which led him to file the present writ application.

                      8. Learned counsel submits that in the Income Tax

         which is a personal tax, the distinction made between

         government employees and non-government employees is not a

         valid classification to bestow certain benefits to one class while

         depriving the others of it.

                      9. Learned counsel relied on in the case of Union of
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         India and Others vs N S Rathnam & Sons reported in (2015)

         10 SCC 681. The relevant portion of the order of the Hon'ble

         Apex Court held in para 12 read as follows:

                                  When the exemption is granted to a
                                  particular class of persons, then the benefit
                                  thereof is to be extended to all similarly
                                  situated person. The Notification has to
                                  apply      to   the     entire   class   and    the
                                  Government             cannot     create       sub-
                                  classification thereby excluding one sub-
                                  category,       even    when     both    the   sub-
                                  categories are of same genus. If that is
                                  done, it would be considered as violating
                                  the equality clause enshrined in Article 14
                                  of the Constitution. Therefore, judicial
                                  review of such Notifications is permissible
                                  in order to undertake the scrutiny as to
                                  whether the Notification results in invidious
                                  discrimination between two persons though
                                  they belong to the same class."



                      10. Learned counsel submits that the Hon'ble Apex

         Court further held that:

                                  "In Aashirwad Films v. Union of India and
                                  Others [(2007) 6 SCC 624] this aspect has
                                  been articulated in the following manner.
                                  (SCC PP. 628-29 paras 9-12)
                                  '9. The State undoubtedly enjoys greater
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                                  latitude in the matter of a taxing statute. It
                                  may impose a tax on a class of people,
                                  whereas it may not do so in respect of the
                                  other class.
                                  10. A taxing statute, however, as is well
                                  known, is not beyond the pale of challenge
                                  under Article 14 of the Constitution of India.
                                  11. In Chhotabhai Jethabhai Patel & Co. v.
                                  Union of India, AIR 1962 SC 1006 it was
                                  stated: (AIR p. 1021, para 37)
                                  "37. But it does not follow that every other
                                  article of Part III is inapplicable to tax laws.
                                  Leaving aside Article 31(2) that the
                                  provisions of a tax law within legislative
                                  competence could be impugned as offending
                                  Article 14 is exemplified by such decisions
                                  of this Court as Suraj Mall Mohta & Co. v.
                                  A.V. Vishvanatha Sastri (AIR 1954 SC 545:
                                  (1955) 1 SCR 448) and Meenakshi Mills
                                  Ltd. v. A.V. Visvanatha Sastri (AIR 1955 SC
                                  13: (1955) 1 SCR 787). In K.T. Moopil Nair
                                  v. State of Kerala (AIR 1961 SC 552) the
                                  Kerala Land Tax Act was struck down as
                                  unconstitutional as violating the freedom
                                  guaranteed by Article 14. It also goes
                                  without saying that if the imposition of the
                                  tax was discriminatory as contrary to
                                  Article 15, the levy would be invalid."
                                  12. A taxing statute, however, enjoys a
                                  greater latitude. An inference in regard to
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                                  contravention of Article 14 would. however,
                                  ordinarily be drawn if it seeks to impose on
                                  the same class of persons or occupations
                                  similarly situated or an instance of taxation
                                  which leads to inequality. The taxing event
                                  under       the       Andhra       Pradesh       State
                                  Entertainment          Tax       Act   is   on     the
                                  entertainment         of     a   person.    Rate    of
                                  entertainment tax is determined on the basis
                                  of the amount collected from the visitor of a
                                  cinema theatre in terms of the entry fee
                                  charged from a viewer by the owner thereof.


                      11. Learned counsel concludes by submitting that in

         the given facts and circumstances, the clause of Section 10

         (10AA) of 'the Act' that differentiates the tax on the leave

         encashment between State and Central Government employees

         vis-a-vis others be declared ultra vires.

                      12. The respondents filed counter-affidavit and

         according to them, Section 10(10AA) of 'the Act' governs

         exemption from payment of Income tax with respect to the

         amounts received towards Leave Salary Encashment at the time

         of retirement. There are two sub clauses in clause (10AA) of the

         section of 'the Act' which read as follows:-

                                  (a) sub-clause (i) relates to an employee of
                                  the     Central       Government       or   a    State
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                                  government. It provides complete tax
                                  exemption for any payment received as
                                  leave encashment by such an employee;
                                  (b) sub-clause (ii) relates to an employce
                                  other than the employee of the Central
                                  Government or a State Government. The
                                  persons      covered   under    this   category
                                  includes not only the persons employed in
                                  private sector but also employees of PSUs,
                                  Public Universities, Statutory bodies, etc.
                                  which are not part of the Government. For
                                  this category of employees, the tax benefit
                                  on leave encashment that can be availed is
                                  restricted to the limit notified by the Central
                                  Government, irrespective of the quantum of
                                  leave encashment actually received by such
                                  employee. At present the amount specified
                                  as limit is Rs. 25,00,000/ -.
                      13. The further contention is that by notification no.

         S.0.2276(E) dated 24.05.2023, the limit of leave encashment

         was raised to Rs. 25,00,000/ w.e.f. 01.04. 2023 in relation to

         'other' employees mentioned in clause 10(10AA)(ii) of 'the Act'.

                      14. Dr. K.N. Singh, learned A.S.G. submits that the

         State as well as the Central Government employees form

         distinct class and the petitioner, a Bank employee cannot equate

         his employment with them. Section 10 (10AA) of 'the Act'

         makes reasonable discrimination and it withstood the test before
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         the Hon'ble Apex Court.

                      15. Learned Senior Counsel took this Court to a

         decision of Shri Kamal Kumar Kalia & Others vs Union of

         India & Others decided by the Delhi High Court in W.P. 11846

         of 2019 which held as follows:

                                         "5. So far as the challenge to
                                         provisions of Section 10 (10AA) of the
                                         Act on the ground of discrimination is
                                         concerned, we are of the view that
                                         there is no merit therein. This is for
                                         the reason that employees of the
                                         Central        Government       and    State
                                         Government form a distinct class and
                                         the classification is reasonable having
                                         nexus with the object sought to be
                                         achieved. The Central Government
                                         and State Government employees
                                         enjoy a status and they are governed
                                         by different terms and conditions of
                                         the employment. Reference here may
                                         be made to the decision in Roshan Lai
                                         Tandon v Union of India AIR 1967
                                         SC 1889, wherein it was held by the
                                         Supreme Court that the legal position
                                         of a Government servant is more one
                                         of status than of Contract. The
                                         relevant       extract   from    the   said
                                         judgment reads as under:
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                                         "6. We pass on to consider the next
                                         contention of the petitioner that there
                                         was a contractual right as regards the
                                         condition of service applicable to the
                                         petitioner at the time he entered
                                         Grade D and the condition of service
                                         could      not     be      altered   to     his
                                         disadvantage           afterwards    by     the
                                         notification issued by the Railway
                                         Board. It was said that the order of the
                                         Railway Board dated January 25,
                                         1958, Annexure 'B', laid down that
                                         promotion to Grade 'C' from Grade
                                         'D' was to be based on seniority-cum-
                                         suitability      and     this   condition    of
                                         service was contractual and could not
                                         be altered thereafter to the prejudice
                                         of the petitioner. In our opinion, there
                                         is no warrant for this argument. It is
                                         true that the origin of Government
                                         service is contractual. There is an
                                         offer and acceptance in every case.
                                         But once appointed to his post or
                                         office     the     Government         servant
                                         acquires a status and his rights and
                                         obligations are no longer determined
                                         by consent of both parties, but by
                                         statute or statutory rules which may
                                         be framed and altered unilaterally by
                                         the Government. In other words, the
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                                         legal     position      of     a     Government
                                         servant is more one of status than of
                                         contract. The hallmark of status is the
                                         attachment to a legal relationship of
                                         rights and duties imposed by the
                                         public law and not by mere agreement
                                         of the parties. The emolument of the
                                         Government servant and his terms of
                                         service are governed by statute or
                                         statutory       rules        which     may    be
                                         unilaterally         altered          by     the
                                         Government without the consent of the
                                         employee. It is true that Article 311
                                         imposes        constitutional        restrictions
                                         upon the power of removal granted to
                                         the President and the Governor under
                                         Article 310. But it is obvious that the
                                         relationship between the Government
                                         and its servant is not like an ordinary
                                         contract of service between a master
                                         and servant. The legal relationship is
                                         something            entirely          different,
                                         something in the nature of status. It is
                                         much more than a purely contractual
                                         relationship voluntarily entered into
                                         between the parties. The duties of
                                         status are fixed by the law and in the
                                         enforcement of these duties society
                                         has an interest. In the language of
                                         jurisprudence status is a condition of
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                                         membership of a group of which
                                         powers and duties are exclusively
                                         determined by law and not by
                                         agreement       between    the    parties
                                         concerned. The matter is clearly
                                         stated by Salmond and Williams on
                                         Contracts as follows:
                                          So we may find both contractual and
                                         status obligations produced by the
                                         same transaction. The one transaction
                                         may result in the creation not only of
                                         obligations defined by the parties and
                                         so pertaining to the sphere of contract
                                         but      also   and   concurrently     of
                                         obligations defined by the law itself,
                                         and so pertaining to the sphere of
                                         status. A contract of service between
                                         employer and employee, while for the
                                         most part pertaining exclusively to the
                                         sphere of contract, pertaining.
                                          also to that of status so far as the law
                                         itself has seen fit to attach to this
                                         relation compulsory incidents, such as
                                         liability to pay compensation for
                                         accidents. The extent to which the law
                                         is content to leave matters within the
                                         domain of contract to be determined
                                         by the exercise of the autonomous
                                         authority of the parties themselves, or
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                                         thinks fit to bring the matter within the
                                         sphere of status by authoritatively
                                         determining for itself the contents of
                                         the relationship, is a matter depending
                                         on considerations of public policy. In
                                         such contracts as those of service the
                                         tendency in modern times is to
                                         withdraw the matter more and more
                                         from the domain of contract into that
                                         of status." (Salmand and Williams on
                                         contracts,     Lord   Edn.   Para    (2).
                                         (emphasis added)
                                               Thus the Government employees
                                 enjoy protection and privileges under the
                                 Constitution and other laws, which are not
                                 available to those who are not the employees
                                 of the Central Government and State
                                 Governments.
                      16. Learned A.S.G. submits that merely because the

         Public Sector Undertakings and Nationalized Banks are

         considered as State under Article 12 of the Constitution of India

         for the purpose of entertainment of proceedings under Article

         226 of the Constitution and for enforcement of fundamental

         right under the Constitution, it does not follow that the

         employees of such Public Sector Undertaking, Nationalised

         Banks or other institutions which are classified as 'State' assume

         the status of Central Government and State Government
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         employees. He submits that it has been held in multiple

         decisions that employees of Public Sector Undertakings are not

         at par with government servants.

                      17. Learned Senior Counsel has referred to the case of

         Hon'ble Supreme Court in A.K. Bindal & Anr. vs Union of

         India reported in (2003) 5 SCC 163 and the relevant portions

         of para 17 read as follows:-

                                  The legal position is that identity of the
                                  government company remains distinct from
                                  the Government. The government company
                                  is not identified with the Union but has
                                  been placed under a special system of
                                  control and conferred certain privileges by
                                  virtue of the provisions contained in
                                  Sections 619 and 620 of the Companies Act.
                                  Merely because the entire share holding is
                                  owned by the Central Government will not
                                  make the incorporated company as Central
                                  Government. It is also equally well settled
                                  that the employees of the government
                                  company are not civil servants and so are
                                  not entitled to the protection afforded by
                                  Article 311 of the Constitution (Pyare Lai
                                  Sharma v. Managing Director (1989) 3
                                  SCC 448). Since employees of government
                                  companies are not government servants,
                                  they have absolutely no legal right to claim
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                                  that the Government should pay their
                                  salary or that the additional expenditure
                                  incurred on account of revision of their pay
                                  scale should be met by the Government.
                                  Being employees of the companies it is the
                                  responsibility of the companies to pay them
                                  salary and if the company is sustaining
                                  losses continuously over a period and does
                                  not have the financial capacity to revise or
                                  enhance the pay scale, the petitioners
                                  cannot claim any legal right to ask for a
                                  direction to the Central Government to
                                  meet the additional expenditure which may
                                  be incurred on account of revision of pay
                                  scales. It appears that prior to issuance of
                                  the office memorandum dated 12.4.1993 the
                                  Government            had   been   providing   the
                                  necessary funds for the management of
                                  public sector enterprises which had been
                                  incurring losses. After the change in
                                  economic policy introduced in the early
                                  nineties, the Government took a decision
                                  that the public sector undertakings will
                                  have to generate their own resources to
                                  meet the additional expenditure incurred on
                                  account of increase in wages and that the
                                  Government will not provide any funds for
                                  the same. Such of the public sector
                                  enterprises (government companies) which
                                  had become sick and had been referred to
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                                  BIFR, were obviously running on huge
                                  losses and did not have their own resources
                                  to meet the financial liability which would
                                  have been incurred by revision of pay
                                  scales. By the office memorandum dated
                                  19.7.1995

the Government merely reiterated its earlier stand and issued a caution that till a decision was taken to revive the undertakings, no revision in pay scale should be allowed. We, therefore, do not find any infirmity, legal or constitutional in the two office memorandums which have been challenged in the writ petitions.

18. Learned Senior Counsel submits that enhancing the exemption limit for leave encashment for other employees has been considered by the Central Government from time to time and effective 01.04.2023, it has now been raised to Rs. 25.00,000/-.

19. As regards the constitutionality of the provisions under section 10 (10AA) vis-à-vis Article 14 of the Constitution of India as raised by the petitioner, learned Senior Counsel cited the decision of a Constitution Bench of the Supreme Court in S.K. Dutta, ITO vs Lawrence Singh Ingty, (1968) 68 ITR 272, wherein it was held thus:

Patna High Court CWJC No.12326 of 2017 dt. 26-02-2024 19/25 "It is not in dispute that taxation laws must also pass the test of Article 14. That has been laid down by this Court in Moopil Nair v. State of Kerala, [1961] 3 S.C.R. 77. But as observed by this Court in East India Tobacco Co. v. State of Andhra Pradesh, [1963] 1 S.C.R. 404, 409, in deciding whether the taxation law is discriminatory or not, it is necessary to bear in mind that the State has a wide discretion in selecting persons or objects it will tax, and that a statute is not open to attack on the ground that it taxes some person or objects and not others, it only when within the range of its selection, the law operates unequally, and that cannot be justified on the basis of any valid classification, that it would be violative of Article 14. It is well settled that a State does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably."

20. He also took this Court to the case of State of A.P. v. Nallamilli Ramli Reddi, of the Hon'ble Apex Court reported in (2001) 7 SCC 708, in which the Court held in para 8 that:

what Article 14 of the Constitution prohibits is "class legislation" and not "classification for purpose of legislation". If the legislature Patna High Court CWJC No.12326 of 2017 dt. 26-02-2024 20/25 reasonably classifies persons for legislative purposes so as to bring them under a well- defined class, it is not open to challenge on the ground of denial of equal treatment that the law does not apply to other persons. The test of permissible classification is twofold: (i) that the classification must be founded on intelligible differentia which distinguishes persons grouped together from others who are left out of the group, and (ii) that differentia must have a rational connection with the object sought to be achieved. Article 14 does not insist upon classification, which is scientifically perfect or logically complete. A classification would be justified unless it is patently arbitrary. If there is equality and uniformity in each group, the law will not become discriminatory, though due to some fortuitous circumstance arising out of peculiar situation some included in a class get an advantage over others so long as they are not singled out for special treatment. In substantia, the differentia required is that it must be real and substantial, bearing some just and reasonable relation to the object of the legislation.

21. Learned Senior Counsel concluded by submitting Patna High Court CWJC No.12326 of 2017 dt. 26-02-2024 21/25 that the petitioner has failed to show how Section 10 (10AA) of 'the Act' is arbitrary and as such the writ petition deserves dismissal.

22. The counter-affidavit of the State Bank of India states that the Income Tax Act is a Central legislation and Central Government has the power to enact a law within the periphery of the constitution which can be implemented in its letter and spirit, unless it is declared ultra vires by the competent court.

23. We have gone through the materials on record as well as the submissions put forward by the respective counsels. The sum and substance of the case of the petitioner is that the employees of the Bank as also the Public Sector Undertakings cannot be treated differently holding the equality clause of Article 14 of the Constitution of India. The said contention is unfounded and fit to be rejected as two different set of employees who are not situated equally and form a class different cannot be equated under Article 14 of the Constitution of India. The distinction made between the Central and State Government employees vis-a-vis others is/are definitely a reasonable classification which having been found to be proper in various cases decided by Hon'ble the Apex Court. Patna High Court CWJC No.12326 of 2017 dt. 26-02-2024 22/25

24. Though we accept that a taxation law cannot claim immunity from the equality clause that finds enshrined in Article 14 of the Constitution of India and it has to pass the test, this Court is also conscious of the fact that considering the intrinsic complexity of fiscal adjustments of diverse elements, the State has wide discretion in the matter of classification for the taxation purposes.

25. The legislature must have the freedom to select and classify persons, properties and income which it would tax and/or not tax. Thus, the differentiation made by the State between the employees of the Central and State Governments on the one hand and the other employees on the other in Section 10 (10 AA) of 'the Act' in our view is neither discriminating nor violative of the Article 14 of the Constitution of India.

26. Even in the case of Union of India and others (supra) cited by the learned counsel for the petitioner do not come to his rescue as in the said case too, Hon'ble Apex Court held that the State undoubtedly enjoys greater latitude in the matter of taxing statute. It may impose a tax on a class of people whereas it may not do so in respect of the other class.

27. On the other hand, in Kamal Kumar Kalia and others (supra) which was specially dealing with Section 10 Patna High Court CWJC No.12326 of 2017 dt. 26-02-2024 23/25 (10AA) of 'the Act' took note of an order of the Hon'ble Apex Court in Roshan Lal Tandon Vs. Union of India reported in AIR 1967 SC 1889 and held that there is no merit in the contention put forward that the employees of Public Sector Undertakings and Nationalized Banks are at par with the Central and State Government employees as they are also rendering services for the Government. The employees of Government Companies cannot claim the same legal rights as Government employees.

28. We are guided by the decision of the Hon'ble Apex Court in A.K. Bindal & Anr. (supra) wherein it was held that identity of government company remains distinct from the government. It is not identified with the Union but has been placed under a special system of Centre and conferred certain privileges. It further held that since the employees of government companies are not government servants, they have absolutely no right to claim parity.

29. This Court also takes note of the case of S.K. Dutta, ITO (supra) in which the Hon'ble Supreme Court held that State has wide discretion in selecting persons or objects it will tax and that a statute is not open to attack on the ground that it taxes some persons or objects and not others. Hon'ble Apex Patna High Court CWJC No.12326 of 2017 dt. 26-02-2024 24/25 Court further held that the State is allowed to prefer and choose districts, objects, persons, methods and even rates of taxation if it does so reasonably.

30. Again in the case of Government of Andhra Pradesh (supra), the Hon'ble Apex Court observed that if there is equality and uniformity in each group, the law will not become discriminatory, though due to some fortuitous circumstance arising out of peculiar situation, some included in a class get an advantage over others so long as they are not singled out for special treatment.

31. We are thus of the view that classification made in the Section 10 (10AA) of 'the Act' has withstood the judicial scrutiny again and again and there is no need to give a re-look to it. The petitioner, a retired employee of the State Bank of India cannot claim parity with the employees of the Central and State Government and in that background, the deductions so made cannot be interfered with.

32. We have taken note of the fact that subsequently the amount/limit of leave encashment has been raised to Rs. 25,00,000/- effective 01.04.2023. We must record that it has been a belated exercise as the last revision took place in the year 2002. However, this does not benefit the petitioner as he has Patna High Court CWJC No.12326 of 2017 dt. 26-02-2024 25/25 already retired in the year 2017.

33. The writ petition is dismissed.

(K. Vinod Chandran, CJ) ( Rajiv Roy, J) Adnan/-

AFR/NAFR                         AFR
CAV DATE                      01.02.2024
Uploading Date                26.02.2024
Transmission Date