Salient Features in the Kerala Finance Bills, 1991

(Relating to Sales Tax with particular reference to Hire Purchase, Leasing and Works Contract)

(R. Krishna Iyer, B.Com., F.CA., Chartered Accountant, Ernakulam)

The Hon'ble Finance Minister has presented the Finance Bills for 1991-1992 and Government has issued notifications to regularise the budget proposals. In this article it is proposed to enlighten the salient points relating to the Sales Tax, particularly the Sales Tax on Works Contract, Hire Purchase and Leasing.

In the last year budget the Finance Minister had given importance and lot of concessions to the industries with the object of development of Indus tries in the State. Government had felt that only by the development of Industries, the most important . problem of unemployment can be solved. The development of Industries have not only the advantages of employment generation but also holds significant part of the State's economy, it improves average incomes and living standards, develop indigenous skills, reduces regional imbalances. With this object the Kerala Government in 1990-1991 budget reduced the sales tax rates of various industrial products. The exemption limit for the investment in machineries by small scale industries was increased to 100%. But of course for some reason, the concession for the investment in land and building was reduced. For the purpose of concession, the interstate sale was also included. Another important change in the reduction in the CST to 2%, in the case of new, large and small scale industries.

In the year 1991-92 budget, the Government has given further reduction/ concession for the industries. The important amendments are:

1. Purchase of goods by Industrial Units in the State.

As per the Budget for 1990-1991 the State and Central Government Undertakings has to pay only 4% Sales Tax on the purchases from local Manufacturers. These undertakings could purchase goods at 4% by issuing 'C Forms and this amendment was made in order to encourage purchases from the manufacturers of Kerala State.

As per the 1991-92 Amendment all the Industrial Units can purchase goods at 4% Sales tax. Therefore by this Amendment, the concessional rate has been extended to all the industrial units in the State. This is really a welcome change. Since the word 'Use of goods' is used in the notification it can be contended that the consumables can also be -purchased at 4%. There are two conditions:-

a) The goods manufacturered should be for sale. It is not necessary the goods have to be sold in the State (locally) and it can be for interstate sales also.

b) A Certificate has to be issued by the purchaser to the Seller in the prescribed form. The form can be issued by the purchaser. This form is very simple and the Certificate is only a declaration to the effect that the purchase is for use in manufacture.

Of course by this notification, the concession should not be enjoyed for the stock transfer of goods. There is a definite prohibition u/s.5(3)of the K.G.S.T. Act the purchase of raw-materials etc. at concessional rate by issuing Form No. 18 for export sales. Therefore even if the finished products are exported the benefit under the current notification can be availed, since there is no such express prohibition in the present notification.

There is a doubt whether in the case of industries who avail the benefit of exemption can avail this concessional purchase. In this cases, the Sales are not completely exempt. The Sales tax due on this turnover is computed and deduction is made on some basis, the effect is, as if they have paid the tax. This Sales are not completely exempt or they are not Non-taxable goods. Therefore those units can purchase goods at 4% Sales tax.

As per Section 5(3) of the K.G.S.T. Act, the Industrial Units can purchase raw-materials, component parts and Packing materials at a concessional rate of 2% if the good-are used in manufacture of Finished Products inside the State. But only 3 types of materials (Component Parts, Raw- materials and Packing materials) can be purchased by issuing Form 18 whereas, by the current notification, all the goods can be purchased, the only condition is the goods manufactured should be for Sale. Therefore the Industrial Units can still avail the benefit u/s. 5(3) for the purchase of these 3 items by issuing Form No.18.

II. Interstate Sales tax on certain items

1. Fibre foam                                                  --                     2%

2. Goods manufactured by SSI Units                  --               4%

3. Readymade Garments, brassiers and hosiery goods   4%

4.   Granite Slabs and Granite Tiles               .      -               2%

Coir and Coir Products are already exempted from Tax. But Coconut Fibre is taxed at 2% and Rubber packed coir products at 4%. However Coconut Fibre and rubberised coir is also completely exempt from tax as per the Amendment.

In the case of Fibre foam the rate of tax on Interstate sales is reduced to 2%. Similarly the goods manufacturered by SSI Units on interstate sales is 4%. It is a very welcoming change. It may particularly to be noted that this rate of 4% is for any goods, the only condition is they must be manufactured by SSI Units. As such no 'C Form is required on the sale of goods sold by SSI Units. The small scale industries are perhaps the most important sector of the country. SSI Units would prevent the encoders from the rural area in search of jobs. Enormous unemployment co-existed with the growing industrialisation of the country. The Government is paying greater attention to small scale sector to achieve the objectives of jobs to a larger number of people, balancing regional growth to reduce poverty and narrow the disparity in income. This amendment would to a greater extent benefit to promote the small scale units.

III. Complete exemption of Sales Tax

1. Coconut Fibre

2. Rubberised coir products other than fibre foam

3. Pappad

4. Paddy straw etc.

As mentioned earlier, the Interstate Sales tax (C.S.T.) is reduced to 4% for SSI Units. Therefore 'C Forms are not required in interstate sales. Further that the said manufacturers are completely exempt for a period of 3 years if their turnover is less than 10.00 lakhs a year. Further if they can export not less than 50% of their product, they will get a full exemption from Sales Tax irrespective of their turnover (even if the turnover exceeds Rs. 10.00 lakhs they will get a complete exemption for a period of 3 years). The view of the Government is to encourage small and cottage industries and to provide employment opportunities.

Rate of tax on Bamboo Ply, Mosaic Tiles, Glaced Tiles

The rate of Sales tax on Bamboo Ply is reduced to a normal levy of 1%. Considerable reduction has been made in the rate of tax on Mosaic Tiles, Glaced Tiles etc. The reduction in Sales Tax of these items would certainly help the increase in collection. The tendency to purchase goods from neighbouring States will be reduced to a certain extent by reduction in the rates.

The rate of Sales Tax on Biscuits manufactured in the State is reduced to 5%.

Coconut Oil and Coconut Oil Cake

The rate of Sales Tax on Coconut Oil and Coconut Oil Cake sold inside the State (locally) is reduced to 2% from 5%.

The purchase of Coconut or Copra by an Oil Miller for production of Coconut oil and Oil Cake in the State for sale, the rate of tax is reduced to 1% from 4%, provided the sale attracts sales tax (local or interstate). If the sale does not attracts sales tax, the rate of tax is 3% from 4%.

The Oil Millers also are exempted from payment of Additional Sales tax and Surcharge on the Copra crushed.

Sales tax on Works Contracts

From 20-8-1987 onwards 4th Schedule was also included in the Act, exclusively for the rates for the Works Contracts. There were 21 items in the said schedule. The contracts were classified under 21 items. However, the rate of Sales tax was only 5% for all the items.

As per the 1991-1992 Amendment, there is substantial increase in the rate, maximum is 15%. There was some doubt earlier whether for the goods included under 1st and Ilnd Schedule, deductions can be given and the tax has to be paid only on the balance amount. Of course by this amendment it has been made clear that the deduction is possible, if the tax is levied on the earlier sale. After the decision of the Supreme Court, in the case of the Works Contracts, in short, the tax has to be paid by the Contractor only on the following 2 items.

1. On the goods included in 1st or Ilnd Schedule, if they are purchased from outside the State.

2. Multipoint items.

Before the 46th Amendment, in the case of indivisible contracts, the State Governments could not levy Sales tax on the goods involved in the execution of contract. The very object of 46th Amendment is that the State Government are given power to levy Sales tax on those goods. The goods are not sold as It is, they can be called as 'no sale' transactions and they are treated as deemed 'Sales'. There is an attempt to compute the taxable turnover on works contract, from the total contract receipts deducting the items of 1st. Ilnd and Vth Schedule and again by deducting labour charges .

For Example:

Total Contract Receipts                                                                          Rs.1,00,000

Less: Items like Cement, MS Roads etc. already suffered

tax in the State. (Included in 1st, Ilnd & Vth Schedule)         Rs.50,000

2. Labour charges                                                                  Rs.20,000

                                                                                                         -----------------------

                                                                                                                    Rs.70,000

                                                                                                                     ---------------

Total turnover                                                                                              Rs. 30,000

                                                                                                                      ========

This amount of Rs.30,000/- is comprising of the multipoint items, profit margin and the overhead expenses of the Contractor. This method of assessment is incorrect and against the very object of the Amendment. It is only possible to levy taxes on the items of 1st, Ilnd and Vth scheduled goods if they are not suffered tax on the first sale in the State and on the multipoint items. It is not expected to levy tax on profit or on the overheads of the Contractor.

Of course retreading charges of tyres also come under the purview of 'Works Contract'. All the materials used in the process are items included in the 1st Schedule. The balance amount represents labour charges, overhead charges, profit etc. Therefore if the materials are purchased locally have suffered tax, the dealer s not liable to pay any Sales tax. However-there is an attempt of levy Sales tax on the balance turnover, deducting the value of materials and labour charges from the gross turnover. This method is absolutely incorrect since the purpose of the amendment is to levy sales Tax on the value of materials which could be escaped assessment being 'Works Contract'.

Similarly there is a view that all the leasing contracts are taxable. This is also not correct. The object of the amendment is to levy tax on the goods manufactured by a dealer, who leases the goods to various parties and finally disposes of the same, then he gets only a scrap value of the goods and tax can be levied only on that scrap value. Before the amendment, the leasing charges, the manufacturers collects his sale value by way of leasing charges, since the leasing charges do not come under the purview of sale, the Government was losing the sales tax and the amendment is only to levy the Sales tax on such circumstances. Therefore if an item which is included in the 1st Schedule and tax is levied on the first sale in the State, such equipment if it is leased by the buyer, no tax has to be levied on the leasing charges.

However there is doubt if the rate of tax in the point of levy of the leasing equipment is multipoint and if the leasing equipment is leased out in the same State, whether a levy of Sales tax is necessary on the leasing charges received. Of course, it can be contended that the leasing charges also are treated as 'deemed sales' after the amendment and if so, the levy of Sales tax is necessary since it is a multipoint item. The leasing charges include finance charges and other overhead expenses and therefore, if the levy is made, it is made on these items also. As already stated, the object of the amendment is to levy Salestax on the manufacturers when he leases the equipment by which it cannot be treated as a sale and Government loses revenue.

Similarly there are two types of hire purchase transacts - The manufacturer of an equipment/machinery sells the same on hire purchase basis. Since the hire charges could not be treated as sale, before the amendment it could not be brought under the purview of Sales tax. After the Amendment, such type of transactions can be brought under the purview of Sales tax. The second type is financing companies like Sundaram Finance etc., advances money on the security of Machinery/Equipment. In those cases Sales tax has been paid on the purchase value (Invoices may be drawn in favour of the buyer or financing Company). Apparently such financing Companies become dealers since the so called hire charges come under the purview of Sales tax. Therefore there is a doubt whether the said financing Companies are dealers and whether they are liable to pay Turnover tax if the goods are included in the 1st Schedule. It is to be noted that if the whole transactions and the clauses of the agreement are looked into, it is very clear that the financing companies have no intention either to take possession or sell the goods except when the hirer fails to pay the installments/hire charges. The power of taking possession of the goods is only to safe guard the interest of the financing Company. This is very clear from the fact that in all the Hire purchase agreements, if the installments are paid, the hirer is given the option to purchase the asset by payment of a nominal amount of Rs. 1 (Rupee only). This nominal amount also shows that there is no intention of sale of goods, but only to regularise the legal title of the assets. Those transactions are only financing transactions as per the decision of the Courts and if so, they are not dealers or not liable to pay the turnover tax. Again if they are multipoint items the problems as in leasing also would arise.

Certain rules have been amended by a notification dated 16-3-1991. Any works executed through a contractor by Government, local authority etc., they are called as 'Awarder'. It is particularly to be noted that a partnership firm has also been included in 'Awarder', Therefore, even if a 'Partnership firm constructs a building for factory, godown, office etc. or when a Partnership firm executes some works through a Contractor, the firm is an 'Awarder' and liable to comply with all the amended rules and regulations. The present amendment makes it clear that, the labour charges and the value of material included in the 1st Schedule for which tax has been suffered, can be deducted from the total turnover and the tax has to be paid only on the balance turnover. In the original act, there was also a doubt whether the goods supplied by the Contractor (Awarder) can be deducted. This has also been clarified and as per the amended rules the goods supplied by such awarder can be deducted. However there is some doubt the method of deduction proposed is not clear in 4(C) of the Rules. There are two types of Contracts:

1. There are free supply of certain material to the Contractor.

2. The materials supplied to the Contractors are deducted at particular rates from their bills.

In the first case the value of such materials will not form part of the turnover and therefore the question of deduction does not arise. In the second case, the value of goods supplied is correctly known and therefore such amount can be deducted to arrive at the taxable turnover. It is suggested that the rules maybe modified accordingly to avoid misinterpretations.

It has also been made clear in the amended rules that the contract for the earth work alone or does not involve in transfer of goods is completely exempt.

The title is passed from the Contractor to the 'Awarder* as per the majority agreements, only after the completion of the work. Therefore, the question of 'Sales' takes place only in that year and as such the tax can be levied only in that year. However it has been made clear in the amended rules that when system of Progressive billing is stipulated then the amount received or receivable for the year will be the turnover of that year. If there is no provision for progressive billing the turnover will be the portion of the work completed during that year. It is only correct to treat the turnover for the year of the bill amounts received in that year. But as per the rules, 'receivables' is also included and therefore the department may take a view that the 'work-in-progress' or the bills issued by the Contractor which has not been accepted or paid can also be included in the turnover of that year. There may be chances for reducing the bill by the 'Awarder'. Further it will be difficult to correctly ascertain the amount receivable or the portion of work completed during the year. It will cause unnecessary litigation for estimating the amount, especially in view of the fact that the contractor has a right to collect Sales tax and he has to remit the amount only when the amount is received and only such amount can be treated as 'Sale'.

Provision has also been made in the amended rules to insist for the Clearance Certificate from the assessing authority. Even though the 'Partnership Firm' is also an 'Awarder' for the payment and recovery of tax 'the partnership firm and body of individuals' are not included. Therefore the provision for payment or recovery in their cases do not arise. Probably this may be a*n omission in the rules. As per the amended rules the 'Awarder' has to insist for a Clearance Certificate before making the Ilnd or subsequent installments or the final payment to the Contractor. As such for the 1st payment of the bill, no clearance certificate has to be produced. The Certificate should be to the effect that the tax due in the previous instalments has been paid by the Contractor. Therefore the contractor has to obtain certficate from the Sales Tax Authority except for the 1st bill and if he has number of contracts or more than one bills are paid in the same month, he has to obtain number of certificates from the assessing authority. This is a very impracticable proposition. As per the Sales Tax Act, the dealer is liable to file the monthly return on or before 15th day of succeeding month and to remit the tax. There is no provision in the act or rules to make the payment of the tax due for one month in installments. Again it has been specified in the rules that in the absence of such a Certificate the 'Awarder' has to recover tax equal to the tax due on the contract amount. 'Contract Amount 'has not been defined. However it is meant that total contract value. In case the total contract value is 3 crores and the amount in the Ilnd bill is Rs.10.00 lakhs, the tax on the contract value will be more than the bill amount. Probably the intention is to recover the tax on the previous bill amount only. However this has to be clarified.

As per the Amendment the Works Contracts have been classified under 23 items. In the case of a building contract, includes supply and fixing, laying of glazed tiles, granite tiles, painting and polishing etc. and the rates for each items are different. Of course there is an item 'Civil works like construction of building' etc. It is not clear from the rules in such circumstances where the 'Contract amount' is total value of the contract or each item of the work has to be classified under different heads and the tax has to be computed separately for each item, or 5% tax has to be worked out on the total amount, treating the work as a composite work under Civil works. Almost all the States have made a provision to compound the payment of tax in the case of Contractors. In Karnataka Sales Tax Act only 2% tax is to be paid on civil works like construction of building etc., and in other cases at 4%, on his total turnover and in that case no accounts have to be produced. The only point is that such 2% or 4% has to be paid on the total value without deduction for labour charges etc.

The Government has to seriously consider this compounding system in Kerala also, by which most of the assessment can be completed without any difficulty and collection of tax would be easier. If the contractor has opted for composition, he can obtain a Certificate from the Sales Tax Department to that effect, that the said Contractor has applied for composition and therefore, it is sufficient if the tax at 2% is recovered from his bills and in that case no Clearance Certificate is to be insisted. This will reduce the work load of the Department as well as the unnecessary work for the Contractor for obtaining Clearance Certificates.

Photograph on the Application of Registration

It has been made in the amended rules that the application for registration shall be accompanied by a Passport Size Photograph. Of course this is required only in the case of individuals and Partnership Firms.

Security Bond

There are instances where the Appellate Assistant Commissioner or the Appellate Authority are granting stay on making part payments and on furnishing securities for the balance amounts. One of the mode of security is furnishing a Security bond in a particular form with two sureties. As per the amended Rules, the sureties must be solvent enough for the amount assured. Further they should execute a bond which should also be registered along with title, possession and valuation certificate of the Tahsildar. The value of the property should not be less than the amount as per the Bond. Therefore even if the stay is granted by the appellate authorities, they have to obtain two sureties who holds property as per valuation of the Revenue Department and property should be mortgaged. Normally 2 to 4 weeks time are granted for furnishing the security. During the period the dealer has to find out two sureties who hold the properties, they should get possession and legal opinion regarding the title, valuation certificate from the Tahsildar so as to enable him to mortgage the property and execute the deed. No provision has so far been made regarding the authority for releasing the bond. As per the existing practice the excess amount paid if any is not refunded on the ground that the department is filing a second appeal before the Tribunal or appeal is filed before the High Court. Even if the 1st Appellate Authority modifies of allows the appeal if the Department file an appeal, it has to be seen whether the Sales Tax Department will release the property based on the order of the First Appellate Authority. The effect of this provision in the mode of security by executing bond will become infructuous. In almost all the cases the dealers are furnishing security in the form of bond only.'

Form No. 25 Declaration:

This Form relates to a declaration to be furnished by the purchasing dealer. When goods taxable at the point of last purchase in the State, the dealer has to furnish this declaration from his purchaser by which he will be given exemption on the said purchases, since he has proved that he is not the last purchaser in the State. The said declaration has to be submitted on or before 25th of the succeeding month. There is substantial change in the wordings of the form. As per the amended form, the purchasing dealer has also to certify that he has filed his monthly return and the tax due for the goods is paid or he has to declare that he has claimed exemption and he has filed declaration in Form No,25. The effect of this declare Lion is the purchasing dealer has to certify either i£ has paid the tax or he has filed the declaration for exemption. This declaration is also to be submitted on or before 15th of the succeeding month or in other words the effect is he has to submit the same along with his monthly return. This declaration can be filed only when the goods purchased by the purchasing dealer are sold before 15th of Next month. If the goods are in stock or if it is sold after 3 or 4 months it is not possible for the purchasing dealer to furnish the declaration before 15th of the succeeding month. Suitable amendment has to be made in the form. Further this declaration should hereafter to be submitted in duplicate.

Form No. 25(a)- Declaration:

This is a new form introduced in the Finance Act, 1991-1992. Rule 32(13A) has also been introduced by the Amendment. This declaration has to be furnished by the Purchasing Dealer to the Selling Dealer, when the goods are taxable at the point of last sale in the State.

Turnover Tax:

As per the amendment the dealer is liable to pay Turnover Tax shall maintain separate accounts for the goods liable for turnover tax.

Monthly/Annual Returns:

There were separate forms for furnishing monthly and annual returns (Form No.8&9). As per the amendment there is only one form (Form No.9) which can be used for monthly and annual turnover. The important point to be noted is that a copy of the inventory as on 31st March should also be attached along with the Annual Return. This -provision is not applicable when the dealer maintains a day-to-day Stock Register.

Right to Live Repugnant to Right to Die!?

(C.K. Radhakrishnan, Advocate, Ernakulam)

If a person has got the right to choose his residence, spouse, profession and mode of living, what impedes him to end his life too? Shall it be a matter of choice, how to die and when to die? If one has got the right to retain his being what prevents him to end it too? If a Socialistic Welfare State cannot provide a person adequate humane living conditions, why shall the law retrench his right to die?

Article 21 of Indian Constitution lays down that "No person shall be deprived of his life or personal liberty, except according to the procedure established by law." Whereas S.309 of I.P.C. state "whoever attempts to commit suicide and does any act towards the commission of such offence, shall be punished with simple imprisonment for a term which may extend to one year or with fine or with both. But catena of judicial pronouncements have accentuated that the term "life" is not limited to a mere physical existence, but it means life with dignity. Decency and dignity are non-negotiable faces of human life. The very canon of Art.21 enlivens that right to live with human dignity and all the bare necessities of life like food, clothing and shelter. II protection against the arbitrary deprivation of life is enunciated, enabling vistas for retention of life must also be ensured. Every right has a positive as well as negative aspects. Thus logically right to live corresponds right to end life also. If it is so, what gives the State the right to dictate to an individual as to how to exercise his rights? Such paternalistic approach should be abhorred. S.309 of Indian Penal Code clamps a restriction on the right of life guaranteed by Art.21. Indeed all rights may not be absolute, it may fall within the reasonable precincts erected by the State.

Suicide does not harm others and does no damage to the persons or properties of others. One's life or one's body with all its limbs are his sole property, and if the State transgresses on its disposal as and when one desires, it is arbitrary. This Section 309 of Indian Penal Code is an abrogation on the tenets of Article 21 of Indian Constitution. Suicide is an act of self destruction. It is an act of extinguishing one's own life by one's own act. If the State cannot keep a person contented with his life, what rationale is there to claim a right over him?

Right from the dawning days of republic Indian Judiciary has reproached the kernel of S.309 I.P.C. In State v. Sanjay Kumar (1985 Crl.L.J. 931) it was held that "Continuance of S.309 I.P.C. is an anachronism, unworthy of a humane society like ours. Instead of sending accused to a psychiatric clinic, society gleefully sends him to mingle with criminals, as if trying its best to see that in future he does fall foul of the punitive sections of Penal Code. S.309 has no justification right to continue, remaining on the statute book. Need is for humane, civilised and socially-oriented out look and penology". Even the Law Commissions had recommended for the deletion of this aboriginal provision - S.309 I.P.C - from the Code. Still the chauffers of administration are going on unheeded. The irony of this offence is that, if the accused fails in his mission he is incacerated, and if he succeeds, he escapes from the cudgils of law.

Legal Profession - Some Restrictions

(By P.S. Vasavan Pillai, Advocate, Trivandrum)

One of the problems that besets the legal profession today is the over-crowding of advocates in it. When the number of professionals increases, all. won't get enough remuneration. This will tempt them to adopt methods and habits which derogate from the high standards of professional ethics, manners and behaviour patterns. This in the result will lower the prestige and usefulness of this time-honoured and noble profession. So it is absolutely necessary to check the flow of hands into the legal profession.

With the above object in view I would suggest the following points.

1. The time between two enrolment functions should be increased. Now there is one enrolment after every three months or so. It is enough only once in a year the enrolment is held. This will tempt many not-too-serious candidates to seek other avenues.

2. Legal profession is one where more dedication, perseverance and intellectual acumen are required than in any other profession. Now any one with an LLB degree, however less meritorious it may be, can be allowed into the profession. Hereafter only those with atleast a second class LLB degree should be enrolled as advocates.

3. A limit to the number of advocates to be enrolled in a year should be prescribed taking into consideration the need of the hands required for a State Bar. I understand there is such a method before licensing the Chartered Accountants.

To compensate for the loss of revenue .to the Bar Council on account of this numerical restriction, the fee of enrolment can be increased from the present Rs.250/-to Rs.1000/- or so.

4. It is only good that an upper age limit is prescribed for future enrolment. Now there is a lower age limit. A person can get the LLB degree before he is 25. So the upper age limit can be fixed at 30. One need not be allowed to enter the profession because he does not find a place anywhere else. Those who love the profession shall come into it sufficiently early. Those who do not love it, will be liabilities for the profession. They will only deteriorate the standards. So they can be kept away.

An exception to this upper age limit can be given in the case of judicial officers because they are already associated with the legal profession and courts.

5. Now some advocates have more than enough briefs while some others have no briefs at all. This also is not an ideal situation. Accumulation of too many briefs in some hands will itself cause delay to the disposal of cases. On the other hand those without enough files will stoop to habits which militate against professional values, standards and prestige. To remedy the situation I would suggest that a limit should be fixed to the briefs which an advocate can accept in a year.

This is not at all a volatile suggestion in view of the fact that there are .already some restrictions enjoined on those advocates conferred with 'Senior" status.

The Bar Councils have a duty to see that the profession upholds the high standards and prestige. So they can legitimately enforce the above suggestions. If at present they are not empowered to do it fully, they can persuade the Government to amend the law.

An Anachronism

(By P.S. Vasavan Pillai, Advocate, Trivandrum)

India is proclaimed to be a secular democracy and its Constitution envisages equality of all persons. Art. 14 of the Constitution quite proudly states that all persons will have equality before the law and that there will be equal protection of laws within the territory of India. Art. 15 categorically prohibits discrimination on grounds of religion, race, caste, sex etc.

However, the Code of Civil Procedure, 1908 which is subject to the Constitution of India contains a section that prescribes discrimination on the basis of rank, race and nationality, even after its amendment in 1976. S.57 of the Code of Civil Procedure which guides all Civil Courts in India reads, "Subsistence allowance—The State Government may fix Scales, graduated according to rank, race and nationality, of monthly allowances payable for the subsistence of judgment debtors". Needless to say this section is violative of the explicit mandates of the Constitution and also its spirit.

It is astonishing that the offensive wording of S.57 of the Civil Procedure Code has escaped so far the notice of lawyers, the Ministry of Law and the Law Commission. It is a shame to retain this Section as such. Therefore it is to be reworded at the earliest.

Mental Insanity and Nullity of Marriage According to

Church Jurisprudence

(Fr. Joseph Vadakumcherry, Archdiocesan Tribunal, Ernakulam)

For Christians marriage is a covenant by which the spouses establish between themselves a partnership of their whole life and which of its own very nature is ordered to the well-being of the spouses and to the procreation and upbringing of children. A marriage is brought into being by the lawfully manifested consent of the spouses who are legally capable, and the matrimonial consent is an act of the will by which the spouses by an irrevocable covenant mutually give and accept one another for the purpose of establishing a marriage. No human power can replace this matrimonial consent (CIC, Can. 1055, 1057; CCEO, Can. 776, 817). It follows that the bilateral consent of the spouses is the efficient cause of the marriage covenant, which, were it be deficient, cannot be supplied by any human authority.

Those who lack sufficient use of reason, and those who suffer from a grave lack of discretionary judgment concerning the essential rights and obligations to be mutually given and accepted, are incapable of contracting a valid marriage (CIC, Can. 1095; CCEO, Can. 818). This Canon refers to the unique mental capacity of the contractants, or the so called mental discretion, which is required for eliciting a valid marriage consent. The due mental discretion embraces all the powers of the mind and soul, namely, the cognitive, reasoning, deliberative, and volitional faculties, and the freedom of choice, which make up the deliberate, mature, and free human act of marriage consent.

Analysing the process of development of the act of marital consent we can see that the cognitive faculty supplies the basic intellectual knowledge about marriage that 'it is a permanent life-partnership between a man and a woman ordered to the procreation of progeny through some form of sexual cooperation'. It is presumed bylaw that one who has attained the age of puberty knows at least so much about marriage (CIC, Can. 1096; CCEO, Can. 819). Given that the contractant person knows this, he should, by making use of his reasoning and deliberative faculties, be able to combine reasoned judgments and deduce others from them. That means he will have to figure out the implications of the decision he is going to take so that he can bind himself to the same. This power of weighing the pros and cons and the implications thereof is called the deliberative, or appreciative, or critical faculty.

In the case of marriage consent the critical faculty makes the process of judgment mature by weighing the pros and cons and the essential basic implications of the marriage covenant. When the intellect has prepared the ground for the marital consent by way of a speculative judgment, the will, endowed with the freedom of choice gives forth the consensual act of marriage by way of a practical decision. Since the marriage covenant is a serious contract which involves life-long commitment, in order to enter it validly, a greater degree of discretion is required than would be necessary to consent to some action which only concerns the present. Hence the spouses must have that mental capacity to make a deliberate, mature, and free practical decision as to choose something as serious as marriage. This is the minimum standard of the mental discretion required for eliciting a valid marriage consent.

Lack of due discretion is strictly a consensual defect, i.e., the person does not realise adequately what the marriage covenant means and what it entails, in other words, the seriousness of the marriage contract. Hence the invalidity of a marriage on the grounds of lack of due discretion can be established only if at the time of the marriage the contractant was unable or incompetent the negotiate the matter of a real marriage.

Any substantial impairment in the functioning of the intellect or the will results in mental illness or insanity. In fact, mental illness or grave psychic disorders can deprive the patient of that mental discretion required for a valid marriage consent. The main categories of mental disorders are Psychoisis, Neurosis, and Psychopathy or Personality Disorders. Of these, Psychosis is generally wont to eliminate the discretion-airy power of the mind. Psychosis is distinguished into three types, namely, Schizophrenia, Manic-depressive, and Paranoide. The characteristic of any Psychosis is to disturb the coordinated functioning of the intellect, the will, and the affect, whereby to cause mental disequilibrium in the patient. Consequently the patient gradually estranges himself from reality and withdraws into his own imaginary world, thus falling victim to delusions and hallucinations. The basic mental disturbance is manifested in the maladjustment or incoherence of the patient with the environment.

The foremost among the Psychotic disorders, which eliminate the mental discretion, is Schizophrenia. By the onset of Schizophrenia there begins the process of a break-up of that correlativity which exists between the functioning of the intellect, the will, and the affect. The dissociated functioning of the intellect, the will and the affect tends to produce such disorders like 'apathy' (absence of affect whereby want of feeling), 'abulia' (absence of will power which implies that the individual has a desire to do something but the desire is without power or energy), 'ambivalence' (coexistence of antithetic emotions, attitudes, ideas or wishes towards a given object or situation), and 'autism' (subjective way of thinking which implies that the matter of thought is derived from the subject himself and appears in the form of daydreams, phantasies, delusions, hallucinations etc.). On the basis of accentuated manifestation of symptoms, Schizophrenia is distinguished as 'Simple', 'Hebephrenic', 'Catatonic', and 'Paranoide'.

Schizophrenia develops slowly and insidiously over a long period of months or years passing through three consecutive stages, called 'initial or oid\'sympomatic or qualified', and' terminal'. It is to be noted that not all cases of Schizophrenia cover all the three phases during its development. The initial stage (Schizoid) does not affect adversely and impair yet the mental faculties. By the onset of the qualified stage, even if symptoms are not conspicuously manifest, the mental faculties are impaired and the patient is rendered incapable of making a mature judgment or decision. Hence if the marriage takes place at a period starting from the onset of the symptomatic qualified stage, even if during a lucid interval, the presumption is that the marriage consent would not be valid. The Rotal Judge, Sabattani, in a decision dated 14 June 1963, invokes the traditional Rotal Jurisprudence that 'if the insanity both antecedent and subsequent is verified (having had the episodes of mental illness before and after the marriage), the concomitant insanity (at the time of marriage) could be inferred according to the principle "probatis extremis et media praesumitur probata amentia". The same Judge in another decision has held that 'the fact of someone having held a public office or a career does not exclude a possible diagnosis of a Psychotic illness in the said individual.

The psychiatric insights into Psychotic anomalies today made available by the progress of science reveal that the impairment of the mental faculties takes place not in precise connection with the first episode, but rather when the malady reaches the symptomatic stage during the slow and insidious development of the same. Moreover, it is certain that an acute onset of symptoms must have necessarily been preluded by the less conspicuous symptoms anterior to the episode, which would have escaped the attention and notice of the close associates of the patient.

In almost all the marriage nullity cases we can see that the marriage had taken place when the symptoms were in recess either under the spell of medicine drugs, or during a lucid interval. Referring to such marriages a Rotal decision points out that 'nobody ever marries a mentally insane person (when the symptoms are active) unless he himself might be insane or has had a cunning motive in conducting the marriage. Hence in nullity cases introduced on the grounds of mental insanity, the Tribunal cannot simply rule out the fact of insanity for the reason that no external gross symptoms of the malady were manifested at the time of marriage, and therefore the Tribunal should undertake the difficult task of discerning whether the apparent sanity at the time of marriage was true to fact'.

Further, it is admitted by the Rotal Jurisprudence that' the kith and kin of a respondent would not easily expose the symptoms of mental illness manifested by him before the marriage!. Hence the Tribunal, in its bid to ascertain the antecedence of the mental illness in a given case has to take proper account of the above phenomenon while assessing the evidences being supplied by the witnesses through their depositions in the Tribunal. The Rotal Jurisprudence also holds that when a mental patient suffers from other diseases, the signs of the concomitant mental illness may not be easily discerned, but that it could be ascertained from the patient's aftermath behaviour.

The expert opinion of the psychiatrists could easily be availed of today in order to assess marriage cases introduced on the grounds of mental insanity, and hence Canon Law rules that the Church Tribunals shall seek the opinion of such experts in the matter (CIC, Can. 1680; CCEO, Can. 1366). The expert however is not supposed to pass any judgment on the merit of the case he has examined. His only duty is to bring home to the Tribunal his findings on the very nature (whether psychotic or any other kind) of the malady, its causes, period of onset, seriousness, probability of cure by psychotherapy, and finally the reasons for his expert reading about the psychic disorder. Then the Tribunal on its part should verify the evidences adduced by the expert and convert, those conclusions drawn up by the psychiatrist from the points of view of psychology and psychiatry, into juridical and formal conclusions on the given case of the psychic disorder.

According to the ruling of Canon Law (CIC, Can. 1608; CCEO, Can. 1291), the Eccl. Judge must have moral certainty about the merit of the case before the pronouncement of the judicial sentence. Pope Pius XII in an allocution to the Officials of the Apostolic Tribunal of the Roman Rota explains that moral certainty, which lies in between the two expremes of absolute certainty and quasi-certainty or mere probability, is characterised by the exclusion of well-founded or reasonable doubt. Sometimes moral certainty is derived only from an aggregate of indications and proofs which taken singly do not provide the foundation for true certitude, but which, when taken together, no longer leave room or any reasonable doubt on the part of a man of sound judgment, in which case, the moral certainty arises from the wise application of a principle which is absolutely secure and universally valid, namely, the principle of a sufficient reason. The Rotal Judge Grazioli in a decision says that when the subject is impotence or insanity where truth is often only available from the circumstantial evidences, a very great probability is equivalent to moral certitude, as opposed to infallible or absolute certitude which cannot and need not be had in such cases.