[Long Read] Explained: How A 'Callous' Remark By The SC In An Income Tax Case Led To Unprecedented Strife In Sikkim

The tiny Himalayan state of Sikkim has been on the boil for the past ten days over the Supreme Court’s ‘callous’ branding of its Nepali-speaking citizens as ‘immigrants’ in an order issued on January 13 this year.

Widespread protests, some of them accompanied by violence, and vicious mud-slinging among political rivals has rocked the state which has an enviable history of tranquillity and social harmony. 

The state has already witnessed serial bandhs and a special session of the state Assembly is likely to be held to ask the apex court to take corrective action. The state health minister and additional advocate general have put in their papers and the chief minister has been facing a lot of flak. 

The Supreme Court, on January 13, delivered its judgement on a petition filed by Association of Old Settlers of Sikkim (AOSS) seeking exemption from paying income tax. The AOSS petition was admitted by the apex court on January 28, 2013. 

The AOSS had contended that since the subjects of the Chogyal (ruler) of Sikkim at the time of its merger with the Indian Union on April 26, 1975, were exempted from paying income tax, the Indian-origin ‘old settlers’ of the state should also be exempted on the basis of equality. 

The ‘old settlers’ are a group of over 100 families hailing primarily from north and west India who were engaged in business activities in Sikkim prior to its 1975 merger. While the Indian-origin ‘old settlers’ have voting and other rights, they are not exempt from paying income tax like the indigenous Lepcha, Bhutia and Nepali-speaking subjects of Sikkim. 

The Indian-origin old settlers were not included in the list of ‘Sikkimese subjects’ by the Chogyal under the 1961 Sikkim Subject Regulations because they did not renounce their Indian citizenship. Since they chose to retain their Indian citizenship while conducting business in Sikkim, they continued to be considered non-indigenous. 

A special provision--Article 371F--was incorporated in the Indian Constitution to give special protection to Sikkimese subjects in matters of land rights, employment and paying taxes to the Indian Union. 

The earlier Sikkim Democratic Front (SDF) government which ruled over the state from 1994 to 2019 as well as the present Sikkim Krantikari Morcha (SKM) government supported the AOSS plea before the Supreme Court. 

The indigenous communities of Sikkim also did not oppose the AOSS plea. It may be mentioned here that the families of the India-origin ‘old settlers’ in Sikkim own and run nearly 70% of Sikkim’s trade and business ventures. 

The AOSS had pleaded for amending the definition of ‘Sikkimese’ under Section 10 (26AAA) of the Income Tax Act, 1961, to include families and descendants of the Indian-origin old settlers. The AOSS also appealed to the Supreme Court to amend Section 10 that excluded Sikkimese women who married non-Sikkimese men after April 1, 2008, from the (income tax) exemption.  

All communities in the state have been living in perfect harmony and the scenic and sylvan state has never witnessed any ethnic strife or communal disharmony. The Supreme Court’s January 13 order now poses a grave threat to that harmony. 

What the Supreme Court order said:

The apex court ruled in favour of the AOSS petition and extended the income tax exemption to the ‘old settlers’ in its 118-page order (read the order here). 

But what triggered disquiet in the state was the Supreme Court’s ‘callous’ use of the term ‘immigrants’ for the Nepali-speaking indigenous community of Sikkim. 

The Supreme Court observed that the Nepali-speaking people of Sikkim--they constitute almost 80 per cent of the state’s population--were ‘immigrants’. The Supreme Court referred to Nepali-speaking Sikkimese as “persons of foreign origin settled in Sikkim”. 

This observation has triggered widespread protests with the indigenous communities of the state taking to the streets. 

Why the protests:

The Nepali-speaking people of Sikkim are outraged by the apex court’s remarks because they are as indigenous to the state as the Bhutias and Lepchas. 

Darjeeling’s Lok Sabha MP Raju Bista, who has voiced his “strong objection” to the Supreme Court’s observations, told Swarajya: “The very name, Sikkim, is derived from the Tsong (Limbu) words Su-Khyim, meaning New Palace. Limbus are one of the Gorkha sub-tribes and inhabitants of the present-day Sikkim since time immemorial”. 

Bista added: “When Phuntshog Namgyal was consecrated as the first Chogyal of Sikkim in 1642, he made a pact called Lho-Mon-Tsong-Sum (Lho-Bhutias, Mon-Lepchas, Tsong-Limbus, and sum-three), attesting to Gorkha presence in Sikkim when the modern-day Kingdom of Sikkim was established. The presence of Magars, Rai and other Gorkha-sub tribes in Sikkim has been very well documented, including in the Census of 1931 and 1941. Moreover, the Gorkha kingdom had annexed Sikkim from 1777, till the Gorkhas surrendered lands from Kangra in the west to Darjeeling-Sikkim region in the east following the Anglo-Gorkha war under the 1816 Sugauli Treaty”. 

“I am most fearful that the careless words used by the highest court in the land can very well be made to be the basis for further discrimination and ethnic cleansing of Gurkhas in the coming days. I stand with the people of Sikkim in seeking these offensive opinions expunged from the order,” said Bista, whose Lok Sabha constituency (Darjeeling) adjoins Sikkim and has a large number of Nepali-speaking Indians, or Gorkhas. 

Bista has correctly and succinctly articulated the anger and dismay of lakhs of Nepali-speaking citizens of Sikkim who have been holding protests almost daily. 

Political mud-slinging:

The SDF held the SKM government responsible for the ‘foreigner’ tag imposed on Nepali-speaking citizens of Sikkim by the apex court. It had called for a two day statewide bandh on February 4 and 5 (read this) to protest the state government’s inaction.

The bandh was marked by rallies in which effigies of chief minister Prem Singh Tamang were burnt. SKM cadres tried to foil the bandh and attacked offices of the SDF. 

Chief minister Tamang, in turn, blamed the SDF which ruled the state for many years for allowing matters to come to such a pass. He said that the SDF failed to address the demands of the Indian-origin old settlers, thus forcing them to approach the Supreme Court which made the “objectionable observations”. 

The newly-formed Citizen Action Party (CAP) blamed both the SDF and SKM for the controversy and said that the protests stage by both the parties against the Supreme Court's observations was only ‘theatrics’. 

Sikkim’s health minister M.K. Sharma, a physician by profession, resigned earlier this month in protest against the government “not taking the sentiments of the people seriously”. 

Sharma wrote in his resignation letter: “In view of the Honourable Supreme Court’s verdict dated January 13, 2023 on Writ Petition 59 of 2013, the State government has not taken the sentiments of the Sikkimese people seriously and I feel it is not necessary to remain in the State Cabinet further. Hence I submit this resignation with immediate effect” 

Sikkim’s additional advocate general Sudesh Joshi also resigned earlier this month after he was accused by many of being complicit in the Supreme Court’s observations. Joshi belongs to a family of Indian-origin ‘old settlers’ and his family is also one of the AOSS petitioners. Joshi was accused of ‘dereliction of duty’. 

Government of India’s stand:

The Government of India had opposed the AOSS plea for income tax exemption and had also opposed any dilution of Article 371F of the Constitution that accords special privileges to the indigenous communities of Sikkim. 

Additional Solicitor General N. Venkataraman, who represented the Government of India, defended the provisions of Article 371F and Section 10 (26AAA) of the Income Tax Act  as being based on a “reasonable classification of Sikkim Subjects as a distinct group, separate from migrants or settlers of Indian origin”. 

Venkataraman argued that this classification (of Sikkimese subjects) was made to maintain peace and harmony within the Sikkimese society and requested that it not be interfered with. 

The damage control

Rattled by the development, the Sikking government filed a review petition before the apex court pleading for rectification of its January 13 order. 

Tamang announced: “This is to inform everyone that the Government of Sikkim has filed a review petition before the Hon’ble Supreme Court of India for suitably addressing the grievances and sentiments of the people of Sikkim concerning certain observations in the judgement pronounced on January 13, 2023”. 

Union Law Minister Kiren Rijiju also announced earlier this week that the Union Government will file another review petition supporting the Sikkim government’s petition before the Supreme Court. Chief minister Tamang had met Rijiju earlier this week. 

Union Home Minister Amit Shah also assured a BJP delegation from Sikkim led by state party chief D.R.Thapa that corrective action will be taken by the Union Government. He assured the delegation that there will be no dilution of Article 371F. 

IT exemption sought by ‘Old Settlers’ Questioned:

The raging controversy over the apex court’s ‘objectionable observations’ about the Nepali-speaking community in Sikkim has also brought focus on the exemption sought by the Indian-origin old settlers from paying income tax. 

Many members of the indigenous communities of Sikkim have started asking why the Indian-origin old settlers who are all affluent need exemption from paying income tax. 

“This community of old settlers are all businessmen or in other professions like lawyers, chartered accountants, doctors, architects etc. None of them are poor and all are quite affluent, unlike the Bhutias, Lepchas and Nepali-speaking communities. This current controversy is creating an unfortunate divide between the indigenous communities and the Indian-origin old settlers. This divide did not exist earlier,” P.D.Lepca, a retired bureaucrat, told Swarajya from state capital Gangtok. 

Many among the indigenous communities accuse the AOSS of being too greedy. “They (the affluent Indian-origin old settlers) can easily afford to pay income tax. By going to Supreme Court and trying to put themselves at par with the indigenous communities, they have created an unfortunate chasm in society,” said Sonam Dorjee, a prominent tour operator. 

This article written by social commentator Deepak Tewari explains why the Indian origin old settlers are wrong in asking for IT exemption and why successive state governments have supported their pleas. Tewari’s piece has been widely shared and appreciated by the indigenous communities of the state. 

While the outcome of the curative petitions filed by the state and Union governments cannot be predicted, what is clear for now is that the Supreme Court’s observations have caused deep disquiet and triggered unrest in a state that is known for its social harmony and order.