SC asks for list of persons claiming IT exemption to be submitted within 4 weeks

Gangtok, 04 Apr:

The Supreme Court, while hearing the petition filed by the Association of Old Settlers of Sikkim, today asked for the names and number of persons from the State claiming Income Tax exemption along with reason for such claim within four weeks. The Court has fixed the date for final hearing in July, later this year.

Association of Old Settlers of Sikkim comprising of around 400 families, mostly belonging to the business community, are seeking Income Tax exemption at par with Sikkimese people under a provision of section 10 (26AAA) introduced in the Income Tax Act 1961 in the year 2008.

After hearing the counsels of the parties, the division bench of Supreme Court headed by Justice Adarsh Kumar Goel and Justice Rohinton Fali Nariman directed the State of Sikkim to verify and cooperate with the Central Government so that the claim of the Association of Old Settlers of Sikkim can be considered by the Central Government in accordance with law.

The Apex Court has made it clear that all the contentions of the parties are left open to be considered on the next date of hearing adding that the State respondent may furnish such other information as may be sought by the Central Government while considering the claim of the petitioners in accordance with law.

Meanwhile, counsel for the petitioner, Sudesh Joshi, was quoted in media reports as stating that the Apex Court has observed that gross injustice has been done to the business community of Sikkim who have been residing in the state before it joined the Union of India. Women married to Non-Sikkimese after 2007 may also submit their names, he added.

The Association of Old Settlers of Sikkim have challenged Clause 26 AAA of Section 10 of the Income Tax Act, 1961, saying that the clause was discriminatory and violated Articles 14 and 15. They have alleged that 95 per cent of the state’s population is exempted from paying Income Tax, out of which about 70 per cent are of Nepalese origin, therefore, "the entire exemption has come about to appease the electorate.”

The Centre had exempted Sikkim Subject Certificate holders from paying Income Tax in 2008 after an amendment in the Finance Act by the Parliament based on the State’s request.

In the petition, the seven petitioners have said that discussions between Sikkim and the Union of India disclosed that SSC holders and those who became citizens in 1990-91 after the Sikkim Citizenship Amendment Order 1989 have also been exempted for political reasons and to maintain ethnic peace in the state and to reward SSC holders who had voted for the merger of Sikkim with India.

It may be mentioned that acting on a petition filed by "Old Settlers of Indian Origin" in Sikkim, the Apex Court had also passed a stay order way back in February 2013 restraining the Income Tax authorities from recovering income tax dues from the petitioners stating that “….no coercive steps shall be taken for recovery of amount pursuant to demand notices…” till the matter is decided upon.