Vol. 2 · pages 791–795

770 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES Dr. B. R. Ambedkar: That is so. ***** †8527. Dr. B. R. Ambedkar: Under the White Paper there is no means raising, say, one anna for Provincial purposes without raising in those circumstances another anna, which ex-hypothesis is not needed, for Federal purposes. The other hypothesis is that the Provinces do not need any more income-tax, but the Federal Government does and you then have to raise double the amount (assume that the percentage prescribed is 50 : 50) you have to raise two annas in order that the Federal Government may get one because, for every one it takes, it must give one to the Provinces, even though they do not want it ? Sir Samuel Hoare: I will take all these points into account. I would ask the members of the Committee to remember that there must be (whatever the arrangements) anomalies. I do not say exactly of the kind contemplated in the White Paper, but anomalies of some kind under any system under which the income-tax is shared between the Centre and the Provinces. Dr. B. R. Ambedkar: May I draw the attention of the Secretary of State and Sir Austen Chamberlain to two points ? Sir Austen said there is no provision for the Province to raise any income-tax if it wanted it for its own purposes. I wish to draw his attention to Proposal 139, and what appears in the brackets, “A prescribed percentage, not being less than 50 per cent, nor more than 75 per cent of the net revenues derived from the sources specified in the margin.” Sir Samuel Hoare: That is the income-tax—“(exclusive of any surcharges imposed by the Provinces).” I take it from that the Provinces will have the right to levy a surcharge on the income-tax for their purposes. Sir A. P. Patro: In addition. 8528. Dr. B. R. Ambedkar: That is Proposal 139 ? Sir Samuel Hoare: That is so, and the Committee will see that we alluded to it at the top of page 30 of the Introduction. 8529. Dr. B. R. Ambedkar: May I draw the attention of the Secretary of State to a statement that he made just now, that with regard to the imposition of surcharges for Federal purposes on the income, I think he said the key to the position was the previous sanction of the GovernorGeneral. I would like to draw his attention to the fact that Proposal 141 does not stipulate that the previous sanction of the Governor-General will be required to surcharges for Federal purposes. The previous sanction of the Governor-General refers to revenues assigned to the Provinces, namely, those enumerated in Proposals 138 and 139. Paragraph 141 is not made dependent on the previous consent of the Governor-General ? Sir Samuel Hoare: I think Dr. Ambedkar is quite right, and I must look into my answer in connection with the note I will circulate. Sir Akbar Hydari: There is also Head 49 in the exclusively Federal heads †Minutes of Evidence, Vol. II-B, 28th July 1933, pp. 1002-03.

771 EVIDENCE : RIGHT HON. SIR SAMUEL HOARE AND OTHERS where definitely it is said : “Imposition and administration of taxes on income other than agricultural income or the income of corporations, but subject to the power of the provinces to impose surcharges” under the exclusively Federal heads. Lord Eustace Percy: I do not think that exhausts it because all the evidence we have received, and all the evidence I ever heard in India was violently opposed to Provincial surcharges. Dr. B. R. Ambedkar: That was the view of the business people, I am sure. Lord Eustace Percy: It was the opinion of every single Indian to whom I had the opportunity of putting questions. Dr. B. R. Ambedkar: No, indeed, they were not. ***** 8537. Lord Rankeillour: May I ask a question arising out of Dr. Ambedkar’s. I think it is of some importance. With regard to the consent of the GovernorGeneral, surely all Federal taxation will be subject to the consent of the Governor-General. It can only be on his initiation, and a resolution such as we have here, that any tax can be considered ? Sir Samuel Hoare: Yes, but I think Lord Rankeillour really is confusing the two positions. There is the general constitutional position under which money votes originate with the initiative of the Crown. That position, of course, stands. I was contemplating the other position in which the GovernorGeneral intervenes under some special obligation in the Indian Constitution. 8538. Lord Rankeillour: I felt sure that was the meaning, but the actual answer given to Dr. Ambedkar would seem to suggest that under paragraph 141 the Federal Legislature would have the power to act without the Governor-General’s previous recommendation. Mr. M. R. Jayakar: May I ask Lord Rankeillour’s attention to Proposal 45, which deals with this question. “A recommendation of the GovernorGeneral will be required for any proposal in either Chamber of the Federal Legislature for the imposition of taxation.” Lord Rankeillour: Yes, so I thought. I quite agree. Dr. B. R. Ambedkar: That relates to the special power of the GovernorGeneral, and that is made so because the taxes contemplated in paragraph 138 are not to go to the Central fisc, but they are to be distributed amongst the Provinces. ***** †8575. Dr. B. R. Ambedkar: My Lord Chairman, may I just intervene for a moment for the purpose of asking for information, not for raising any controversy. The Committee knows that there is a certain amount of difference of opinion on the expression “existing and accruing rights”. The Civil Service takes one view, the Law Officers of the Crown take another view, and I believe this Committee will have to give some sort of opinion †Minutes of Evidence, Vol II-B, 28th July 1933, p. 1010.

772 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES upon that subject before the clause is drafted. I find exactly the same expression “existing and accruing rights” used in the South African Constitution of 1909, and I wonder whether it would not be possible for Your Lordship and the Secretary of State to obtain the Memorandum from the Dominions Office to find out exactly how that clause has been acted upon, and interpreted by the South African Government ? Sir Samuel Hoare: I will certainly look into that suggestion. In any case, it is a question which we must deal with when we come to the Services. It is not quite the same question though that Sir Purshotamdas put to us. 8576. Dr. B. R. Ambedkar: No ; that is why I said I did not want to raise any controversy. I am simply asking for information as to whether that would not be possible as a sort of comparative view ? Sir Samuel Hoare : Yes. ***** †8633. Dr. B. R. Ambedkar: I would like to ask one question about the statement made by Sir Akbar Hydari on the application of paragraph 141. You said yesterday, Secretary of State, in making your brief observations on that statement that you were glad that the States bad accepted, at a certain point, to bear the burden of the Federal Government ? Sir Samuel Hoare: Yes. 8634. Dr. B. R. Ambedkar: What I would like to know is this — you can give the answer now, or, if you like to refer to it later I have no objection— whether you agree that the stage which has been described by Sir Akbar Hydari is the stage at which the States should begin to bear the burden of the Federation ? He has, as you know, described certain stages through which the Federal finance must go before the States could be called upon to bear their share ? Sir Samuel Hoare: Yes. 8635. Sir Akbar Hydari: Additional burden ? Sir Samuel Hoare: There are really three burdens. There was first of all the burden of indirect taxation that they undertake from the start; secondly, there was the burden of the Corporation Tax, or the equivalent of the Corporation Tax that they undertake after a definite terms of years ; and, thirdly, there was the surtax that they undertake in the event of an emergency. 8636. Dr. B. R. Ambedkar: I thought he laid down certain conditions ? Sir Samuel Hoare: He laid down certain conditions — Sir Akbar will correct me if I am wrong for the third of these burdens, namely, the surtax. 8637. Dr. B. R. Ambedkar: I wanted to know whether you agree that those were the appropriate conditions under which the Federation will resolve to surcharge ? Sir Samuel Hoare: I think so. I do not want to tie myself down to the exact words, but I think, generally, that seems to me to be a fair basis of an arrangement. †Minutes of Evidence, Vol. II-B, 28th July 1933, pp. 1018-20.

773 EVIDENCE : RIGHT HON. SIR SAMUEL HOARE AND OTHERS 8638. Dr. B. R. Ambedkar: The next question I want to put to you, arising out of that, is this : that if that position is maintained or even the position as it is under Proposal 141 is maintained, would it not be the fact that the Federation will have to carry on its finances entirely on the basis of indirect taxation ? Sir Samuel Hoare: Not entirely on the basis of indirect taxation. 8639. Dr. B. R. Ambedkar: To a very large extent ? Sir Samuel Hoare: Obviously, to a large extent. Indirect taxation will then, as it does now, play a very prominent part in the Indian revenue. 8640. Dr. B. R. Ambedkar: What I want to put to you is this, Sir Samuel Hoare, that it will be more so under the Federation than it is now, for the simple reason that the British Indians would not consent to direct taxation, because the States will not consent, and, consequently both of them would rather go in for indirect taxation, to be borne by both apart, rather than agree to direct taxation, which would be borne by British India alone. From that point of view indirect taxation would be more and more forced upon them than is now the case ? Sir Samuel Hoare: From the other point of view, I can imagine the States very often on the side of the less indirect taxation. 8641. Dr. B. R. Ambedkar: That is because they do not have their finger in the pie now. Would it be the same thing afterwards when, if they are opposed to indirect taxation they have to bear the brunt of the taxation ? Sir Samuel Hoare: Dr. Ambedkar will also remember in this triangle of forces that the Provinces will have an interest in direct taxation, as they have a share in it. 8642. Dr. B. R. Ambedkar: Yes, that may be so, but the Province also will see that the Federation is not entirely a charge on Indian Revenue raised in British India. It is a pure matter of speculation, but I want to pay attention to what would be the drift of the finance under the Federation. If I may say so, the Federation would entirely have to build a tariff wall round itself in order to carry on ? Sir Samuel Hoare: Dr. Ambedkar says it is a subject of speculation. I am inclined to agree with him, but I am not inclined, having assumed it is a subject of speculation, then to prophesy exactly what is going to happen. 8643. Dr. B. R. Ambedkar: I will leave it at that. The next question I would like to ask of Sir Samuel Hoare arising out of the same proposal, 141, is this : You said that the States will contribute an equivalent amount to the Federal Revenues on a sum to be assessed on a prescribed basis. Of course, you have explained this morning how the word “prescribed” is used, and I am not going to ask you any questions upon that, but what I would like to ask you is this. Is there any provision made in the White Paper to see that the sum assessed on this prescribed basis, which becomes payable by a particular State, will be ultimately paid to the Federation ?

774 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES Sir Samuel Hoare: It would then mean a default, would it not, on the part of a State ? 8644. Dr. B. R. Ambedkar: Yes, supposing the State does not pay. I am assuming only one case now, for the moment ? Sir Samuel Hoare: The Viceroy then, I assume, could intervene. 8645. Dr. B. R. Ambedkar: The Viceroy, as you know, is outside the Federal Constitution ? Sir Samuel Hoare: If Dr. Ambedkar will look at paragraph 129, he will see there : “The Governor-General will be empowered in his discretion to issue general instructions to the Government of any State-Member of the Federation for the purpose of ensuring that the Federal obligations of that State are duly fulfilled.” 8646. Dr. B. R. Ambedkar: Yes. What I want to say is this. Paragraph 129, if I may make the distinction, only gives the Governor-General the power to give a direction. It does not give the Governor-General the power to take remedial measures, if the directions are not obeyed ? Sir Samuel Hoare: The Act nowhere provides explicit sanctions in situations of that kind either for the Provinces or for the States. 8647. Dr. B. R. Ambedkar: For the Provinces it does, because the Governor has a special responsibility to see that the orders of the Governor-General are carried out and obeyed, and to that extent he will be directly under the control of the Governor-General, and so provision does there exist, so far as the relations between the Provinces and the’ Centre are concerned, that his orders will be carried out ? Sir Samuel Hoare: 1 think there is just the same sanction. Is there not, with the Governor-General and the States ? 8648. Dr. B. R. Ambedkar: No, if I may say so, as you explained on the Memorandum on the Instrument of Instructions if he disobeyed, the Governor could be recalled. There is no such provision in the relations between the States and the Centre ? Sir Samuel Hoare: In each case the responsibility is the responsibility of the Governor-General at his discretion, that is to say, subject to his instructions from here. Dr. B. R. Ambedkar: But my point is that just as the Governor would be subject to the power of the Governor-General with respect to the administration of the Province, the ruler of a State is not subject to the directions of the Governor-General beyond, I suppose, the administration of such matters which appertain to the Federation; that is with the Viceroy. ***** 8650. Dr. B. R. Ambedkar: But, as you said, the paramountcy will be assigned to the Viceroy, and not to the Governor-General ? Sir Samuel Hoare: Yes, but nevertheless the result will be the same. Mr. Zafrulla Khan: The Governor-General will formally make a request to the Viceroy and the Viceroy will thereupon act.