Appeal No 231 of 1956
Appeal from the judgment and order dated September 11 1953 of the Rajasthan High Court Jaipur Bench at Jaipur in Writ Application No 141 of 1952
M section K Sastri and T M Sen for the appellants
The respondent did not appear
August 18
The Judgment of the Court was delivered by RAJAGOPALA AYYANGAR J
This appeal raises for consideration the constitutional validity of one paragraph of a notification issued by the State of Rajasthan under section 15 of the V of 1861 under which  the Harijan  and  Muslim  inhabitants of the villages in which an additional police force was stationed were exempted from the obligation to bear any portion of the cost of that force
It is stated that the inhabitants of certain villages 223 in the district of Jhunjhunu in the State of Rajasthan harboured dacoits and receivers of stolen property and were besides creating trouble between landlords and tenants as a result of which there were serious riots in the locality in the course of which some persons lost their lives
The State Government therefore took action under section 15 of the 
This Section provides   Quartering of additional police in disturbed or dangerous districts 1 It shall be lawful for the State Government by proclamation to be notified in the official Gazette and in such other manner as the State Government shall direct to declare that any area subject to its authority has been found to be in a disturbed or dangerous state or that from the conduct of the inhabitants of such area or of any class or section of them it is expedient to increase the number of police
2 It shall thereupon be lawful for the Inspector General of Police or other officer authorised by the State Government in this behalf with the sanction of the State Government to employ any police force in addition to the ordinary fixed complement to be quartered in the areas specified in such proclamation as aforesaid
3 Subject to the provisions of sub section 5 of this section the cost of such additional police force shall be borne by the inhabitants of such area described in the proclamation
4 The Magistrate of the district after such enquiry as he may deem necessary shall apportion such cost among the inhabitants who are as aforesaid liable to bear the same and who shall not have been exempted under the next succeeding sub section
Such apportionment shall be made according to the Magistrate s judgment of the respective means within such area of such inhabitants
5 It shall be lawful for the State Government by order to exempt any persons or class or section of such inhabitants from liability to bear any portion of such cost
 Sub section 6 is omitted as not relevant
224 The notification by which these provisions were invoked and which is impugned in these proceedings was in these terms  Whereas the Rajpramukh is satisfied that the area shown in the schedule annexed hereto has been found to be in a disturbed and dangerous state Now therefore in the exercise of the authority vested in him under Section 151 of the V of 1861 the Rajpramukh is pleased to declare that the 24 villages included in the said schedule shall be deemed to be disturbed area for a period of six months from the date of this notification
Under sub section 2 of the said section 15 of the V of 1861 the Rajpramukh is pleased to authorise the Inspector General of Police to employ at the cost of the inhabitants of the said area any Police force in addition to the ordinary fixed complement quartered therein
Under sub section 5 of section 15 of the said Act the Rajpramukh is further pleased to exempt the Harijan and Muslim inhabitants of these villages from liability to bear any portion of the cost on account of the posting of the additional Police force
 Then followed the names of the 24 villages
The respondent Thakur Pratap Singh being an inhabitant of Baragaon one of these 24 villages moved the High Court of Rajasthan for the issue of a writ or direction under Act
226 of the Constitution impugning the validity of section 15 of the and in particular of sub section
5 thereof and of the notification and praying for appropriate reliefs
The High Court repelled the wider contentions urged regarding the invalidity of section 15 of the in general as also of the powers conferred on the State Government to order the exemption of  any person or classes or sections of such inhabitants  from liability to bear the cost of the additional police force
But the learned Judges hold that Para 4 of the notification which exempted  Harijan and Muslim inhabitants of the villages  from the levy was violative of the guarantee in article 151 of the Constitution against discrimination on the ground of caste or religion etc
which reads
225  The State shall not discriminate against any citizen on grounds only of religion race caste sex place of birth or any of them and struck it down as unconstitutional
The State of Rajasthan who felt aggrieved by this order applied to the High Court for a certificate under article 1321 to enable it to file an appeal to this court and this having been granted the appeal is now before us
Learned Counsel for the State made a strenuous effort to show that the exemption of the Harijan  Muslim inhabitants of the villages was in the impugned notification not based  only  on the ground of caste or religion  or the other criteria set out in article 151 but on the ground that persons belonging to these two communities were found by the State not to have been guilty of the conduct which necessitated the stationing of the additional police force
It was the same argument as was addressed to the High Court and was rejected by the learned Judges who observed   Now this is a very strange argument that only persons of a certain community or caste were law abiding citizens while the members of other communities were not
Disturbing elements may be found among members of any community or religion just as much as there may be saner elements among members of that community or religion
 The view here expressed by the learned Judges is in our opinion correct
Even if it be that the bulk of the members of the communities exempted or even all of them were law abiding it was not contended on behalf of the State that there were no peaceful and law abiding persons in these 24 villages belonging to the other communities on whom the punitive levy had been directed to be made
In para 5f of the petition filed before the High Court the respondent had averred   That the aforesaid Notification is ultra vires of the Constitution of India as it discriminates amongst the Citizens of a village on the basis of religion race or caste in as much as it makes a distinction between 29 226 persons professing the Mohammadan religion and others and also between persons who are Muslims and Harijans by caste and the rest
It therefore contravenes the provisions of Article 15 of the Constitution of India
 The answer to this by the State was in these terms  The Harijan and Muslim inhabitants of these villages have been exempted from liability to bear any portion of the cost of the additional force not because of their religion race or caste but because they were found to be peace loving and law abiding citizens in the 24 villages additional force has been posted
 It would be seen that it is not the case of the State even at the stage of the petition before the High Court that there were no persons belonging to the other communities who were peace loving and law abiding though it might very well be that according to the State a great majority of these other communities were inclined the other way
If so it follows that the notification has discriminated against the law abiding members of the other communities and in favour of the Muslim and Harijan communities assuming that every one of them was peace loving and law abiding on the basis only of  caste  or religion 
If there were other grounds they ought to have been stated in the notification
It is plain that the notification is directly contrary to the terms of article 151 and that para 4 of the notification has incurred condemnation as violating a specific constitu tional prohibition
In our opinion the learned Judges of the High Court were clearly right in striking down this paragraph of the notification
The appeal fails and is dismissed
As the respondent has not appeared there will be no order as to costs
Appeal dismissed


Summary:
A Swedish company manufacturing ball bearing equipment entered into an agreement with the respondent section K F Ball Bearing Co Ltd registered under the Indian Companies Act 1913 appointing the latter as its sole selling agent in India
The material portion of the Agreement ran thus  Clause 23 The Agent shall pay to section K F net sales value of the said products that are sold each month after deduction of the Commission that has been agreed upon and the import expenses that have been paid
Payment shall be made in Sweden thirty days at the latest following the last day of the month in which the sales have been effected During the second world war a corporation known as the Pan rope Corporation was incorporated in the Republic of Panama to take over the assets and business of the Swedish company and the said Panrope Corporation in its turn conveyed the property and business to the Swedish company
Thereafter the respondent company sold in India as the agent of the foreign Corporations goods manufactured by them and in a majority of the sales the respondent company remitted the  sale value  to the foreign corporations after the goods were sold but before the sale proceeds were recovered from the buyers
In some cases remittances were made even before the goods were sold and in others remittances were made after the sale proceeds were realised from the buyers
The Income tax Officer assessed the foreign corporations under section 41a of the Indian Income tax Act for payment of tax on the profit included in the price realised by the respondent company without making any distinction between remittances made before recovery of the sale proceeds and remittances made after recovery of the sale proceeds
This order was confirmed by the higher income tax authorities
On a reference made at the instance of the respondent company the High Court came to the conclusion that the foreign corporations had a business connection in the taxable territories in the years of account and the respondent company was liable to pay tax on their behalf only with regard to remittances made after the sale proceeds were recovered
On appeal by the Commissioner of Income tax by special leave 142 Held that the liability to pay income tax finder s 41a arose on the receipt of the income and the question whether the income was received in the taxable territory was determined by the place where the price was received
Profits were received by the respondent company on behalf of the foreign corporations in the taxable territory in respect of all sales of consigned goods irrespective of whether the remittances were made either before or after the price was received