Safiya Malik

The High Court of Sikkim at GangtokDivision Bench comprising Chief Justice Biswanath Somadder and Justice Meenakshi Madan Rai, delivered a judgment on March 4, 2025, dismissing a Public Interest Litigation. The petition contested the validity of Explanation (v) under clause (26AAA) of section 10 of the Income Tax Act, 1961, as amended by the Finance Act, 2023. The petitioner contended that the amended definition of the term "Sikkimese" contravened Article 371F(k) of the Constitution of India. The Court, however, held that the amendment and the subsequent clarification issued by the Ministry of Finance pertain solely to the applicability of income tax provisions and do not impinge on constitutional protections.

Dr. Doma T. Bhutia, a designated Senior Advocate, filed the writ petition as a Public Interest Litigation, questioning the vires of Explanation (v) under clause (26AAA) of section 10 of the Income Tax Act, 1961. The Finance Act, 2023 introduced the amendment that broadened the definition of "Sikkimese". The petitioner contended that the explanation diluted the protections afforded to genuine indigenous Sikkimese under Article 371F(k) of the Constitution.

Also Read: Supreme Court: It Is Not Sufficient to Lay Down a Precedent, But Equally Important to Follow It ; Arbitrator Can Grant Pendente Lite Interest in Absence of Clear Contractual Prohibition

According to the petition, the original provisions of the Income Tax Act defined "Sikkimese" in narrow terms. However, the Finance Act, 2023, substituted clause (26AAA) with a broader explanation that includes individuals with ancestral or domicile ties to Sikkim as of April 26, 1975. The petitioner argued that such inclusion undermines the sanctity of rights preserved under Article 371F(k), which mandates the protection of old laws of Sikkim.

The amendment under challenge followed the Supreme Court's judgment dated January 13, 2023, in the matters of Association of Old Settlers of Sikkim and Others vs. Union of India and Another and Rapden Lepcha and Others vs. Union of India and Another, reported at (2023) 5 SCC 717. In those cases, the petitioners prayed for the striking down of section 10(26AAA) of the Income Tax Act to the extent that it excluded certain Indian citizens domiciled in Sikkim before its merger with India in 1975. It also contested the exclusion of Sikkimese women who married non-Sikkimese men after April 1, 2008.

The Supreme Court directed:

"The Union of India shall make an amendment to the Explanation to Section 10(26-AAA) of the IT Act, 1961, so as to suitably include a clause to extend the exemption from payment of income tax to all Indian citizens domiciled in Sikkim on or before 26-4-1975."

"Till such amendment is made... any individual whose name does not appear in the Register of Sikkim Subjects but it is established that such individual was domiciled in Sikkim on or before 26-4-1975, shall be entitled to the benefit of exemption."

In compliance with the above, the Finance Act, 2023 amended clause (26AAA) and defined "Sikkimese" as follows:

1. Individuals whose names are recorded in the Register of Sikkim Subjects maintained under the Sikkim Subjects Regulation, 1961.

2. Individuals included in the Register by virtue of Government of India Orders dated August 7, 1990 and April 8, 1991.

3. Individuals whose immediate male ancestors or husband are recorded in the Register.

4. Individuals domiciled in Sikkim on or before April 26, 1975.

5. Individuals not domiciled on or before April 26, 1975 but with immediate male ancestors or husband domiciled in Sikkim on or before that date.

Dr. Bhutia maintained that Explanation (v) allows individuals without genuine indigenous roots in Sikkim to receive tax benefits, thereby diluting the purpose of Article 371F(k). The State of Sikkim, through its Additional Advocate General, presented a Press Release issued by the Ministry of Finance on April 4, 2023, stating:

"The term 'Sikkimese' defined for the purposes of the said clause, is only for the purposes of the Income-tax Act, 1961, and not for any other purpose."

The Division Bench recorded that the genesis of the amendment lies in the judgment of the Supreme Court in (2023) 5 SCC 717, which mandated inclusion of all Indian citizens domiciled in Sikkim as of April 26, 1975, within the scope of tax exemption under Section 10(26AAA).

The Court stated:

"On a careful reading of the clarification provided as per the 'Press Release' dated 04th April, 2023, makes it abundantly clear that the term 'Sikkimese' defined for the purpose of clause (26AAA) of section 10 of the Income Tax Act, 1961, by the Finance Act, 2023, is only for the purpose of Income Tax Act, 1961, and not for any other purpose."

Also Read: Failure to Publish Notice in Regional Language and Gazette Amounts to Breach of Mandatory Provisions, Vitiates Acquisition Proceedings: J&K High Court

It further recorded:

"We do not find that this clarification or explanation touches 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."

Consequently, the Bench held that the writ petition failed to establish any infringement of constitutional rights or legal infirmity in the amendment to clause (26AAA) of section 10.

The Court dismissed the writ petition, recording:

"In such circumstances, we do not find any justifiable reason to entertain the writ petition, which is liable to be dismissed and stands accordingly dismissed."

Advocates Representing the Parties:

For the Petitioner: Dr. Doma T. Bhutia, Senior Advocate – in person

For the Respondents:  Ms. Sangita Pradhan, Deputy Solicitor General of India, Mr. Zangpo Sherpa, Additional Advocate General, with Mr. S. K. Chettri, Government Advocate

Case Title: Dr. Doma T. Bhutia vs. Union of India & Another

Neutral Citation: 2025: SHC:5-DB

Case Number: WP (PIL) No. 01/2025

Bench: Chief Justice Biswanath Somadder, Justice Meenakshi Madan Rai

[Read/Download order]