Law:

Section:

Section 230 of the Income-tax Act, 1961 [Corresponding to section 46A of the Indian Income-tax Act, 1922] read with article 19(1)(g) of the Constitution of India, 1950 - Collection and recovery of tax - Tax Clearance Certificate - Whether an insistence by Government on production by a party of proof of solvency or an income tax clearance certificate in any way infringes fundamental right of that party to carry on a business - Held, no FACTS The appellant was a contractor doing the business of laying of roads and making improvements to roads. The highways department of the Government of Madras called for tenders for black topping. Appellant's tender for the road was accepted and he was directed to pay additional security and also to produce the necessary income-tax clearance certificate at the time of filing the agreement. The appellant paid the earnest money but he did not produce the income-tax clearance certificate. By a letter the appellant was informed that the should produce the income-tax clearance certificate and execute the agreement within three days from the date of receipt of the letter and that failure to do so would entail the forfeiture of the earnest money deposit paid by him. On writ, the appellant challenged the action of the highways department in insisting upon the production of an income tax clearance certificate. HELD The appellant undoubtedly had a fundamental right to carry on a trade or business but he had no fundamental right to insist upon the Government or any other individual doing business with him. The Government, as well as any individual, has got a right to enter or not into a contract with a particular person. The Government as well as any individual has the right to decide on the terms of the contract. For instance, a private body can say that it will entrust its work only to a solvent person who should file a statement of his immovable properties and produce a nil encumbrance certificate. It could not be said that an insistence on such a term being fulfilled in any way infringes the fundamental right of the person with whom the contract is being entered into. The appellant was unable to cite any authority in support of his…

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