Definition of ‘Sikkimese’ for Sec. 10(26AAA) Is Only for Income Tax; Not for Any Other Purpose | HC

Case Details: Dr. Doma T. Bhutia vs. Union of India - [2025] 172 taxmann.com 293 (SIKKIM)

Judiciary and Counsel Details

• Biswanath Somadder, CJ. & Meenakshi Madan Rai, J.
• Dr. Doma T. Bhutia, for the Petitioner.
• Ms Sangita Pradhan, Dy. Solicitor General of India, Zangpo Sherpa, Additional Adv. General & S.K. Chettri, Government Adv. for the Respondent.

Facts of the Case

The writ petition was filed by a designated Senior Advocate, as a Public Interest Litigation (PIL), challenging the vires to Explanation (v) contained under section 10(26AAA) of the Income Tax Act, 1961, which was introduced by way of amendment in terms of the Finance Act, 2023.

The petitioner contended that the amendment to the definition of the term “Sikkimese” under section 10(26AAA) violated Article 371F (k) of the Constitution of India. According to the writ petitioner, it is the responsibility of the State of Sikkim to ensure protection of the old laws including its preservation/protection as provided under Article 371F (k) of the Constitution of India, in public interest.

High Court Held

The High Court held that the relevant amendment was introduced by the Union of India through the Ministry of Law and Justice (Legislative Department) following a judgment of the Hon’ble Supreme Court of India in the case of Association of Old Settlers of Sikkim [2023] 146 taxmann.com 271 (SC).

The Supreme Court passed the judgment on two writ petitions filed before it under Article 32 of the Constitution of India. The petitioners prayed before the Supreme Court for an appropriate writ, order, or direction, striking down section 10(26AAA), more particularly, the definition of “Sikkimese” as contained in section 10(26AAA) to the extent it excludes Indians who have settled in Sikkim before the merger of Sikkim with India on 26th April 1975.

The Supreme Court disposed of the writ petitions with the direction to the Union of India to amend the Explanation to Section 10(26-AAA), to extend the exemption from payment of income tax to all Indian citizens domiciled in Sikkim on or before 26-4-1975. Consequently, the Finance Act, 2023, was enacted on 31st March 2023.

In the instant case, the learned Additional Advocate General representing the State of Sikkim has drawn the Court’s attention to a Press Release dated 04th April 2023, issued by the Government of India, Ministry of Finance, Central Board of Direct Taxes (Tax Policy & Legislation Division). The said press release clarified that the term “Sikkimese” was defined for the said clause, is only for the Income-tax Act, 1961, and not for any other purpose.

The High Court held that the said clarification makes it abundantly clear that the term “Sikkimese” defined for the Income Tax Act, 1961, by the Finance Act, 2023, is only for the Income Tax Act, 1961, and not for any other purpose.

In that view, the High Court held that the clarification did not touch upon the sanctity of the rights and privileges reserved for genuine indigenous Sikkimese, which are carefully preserved and protected under Article 371F (k) of the Constitution of India. Thus, the writ petition was liable to be dismissed and accordingly dismissed.

List of Cases Referred to

• Association of Old Settlers of Sikkim and Others v. Union of India and Another along with Rapden Lepcha and Others v. Union of India and Another (2023) 5 SCC 717 (para 3).