The State Trading Corporation Of … vs The Commercial Tax Officer, … on 26 July, 1963 – Case Summary
In the case of The State Trading Corporation of India Ltd. & Others vs The Commercial Tax Officer, Visakhapatnam and Others, which was decided on 26th July 1963, the Supreme Court of India was confronted with a significant constitutional question regarding the status of corporations and their ability to claim fundamental rights under the Constitution of India.
Facts of the Case
The State Trading Corporation of India, a private limited company registered under the Indian Companies Act, 1956, with its entire capital contributed by the Government of India, was assessed for sales tax by the authorities of the States of Andhra Pradesh and Bihar under their respective Sales Tax Acts. The Corporation, claiming to be an Indian citizen, filed petitions under Article 32 of the Constitution for quashing the proceedings on the grounds that they infringed its fundamental rights under Article 19(1) (f) and (g) of the Constitution.
Issues Raised
The case raised two primary issues:
- Whether the State Trading Corporation, a company registered under the Indian Companies Act, 1956, is a citizen within the meaning of Article 19 of the Constitution and can ask for the enforcement of fundamental rights granted to citizens under the said article.
- Whether the State Trading Corporation is, notwithstanding the formality of incorporation under the Indian Companies Act, 1956, in substance, a department and organ of the Government of India with the entirety of its capital contributed by Government; and can it claim to enforce fundamental rights under Part III of the Constitution against the State as defined in Article 12 thereof.
Court’s Observations and Decision
The court observed that the Constitution makes a clear distinction between fundamental rights available to “any person” and those guaranteed to “all citizens”, indicating that under the Constitution all citizens are persons but all persons are not citizens. The court also noted that the provisions of the Constitution and the Citizenship Act, 1955, contemplate only natural persons and do not recognize a corporation as a citizen.
The court held, with dissenting opinions, that the State Trading Corporation of India, despite being a company registered under the Indian Companies Act, 1956, and having its entire capital contributed by the Government of India, is not a citizen within the meaning of Article 19 of the Constitution and therefore, cannot ask for the enforcement of fundamental rights granted to citizens under the said article.
This case is significant as it clarified the constitutional position of corporations in India and their ability to claim fundamental rights. It established the principle that corporations, despite being legal entities, do not enjoy the same status as natural persons under the Constitution of India.