Chandra Prakash Bhatia
Additional Commissioner,
Income Tax (Technical Unit),
Regional e-Assessment Centre
(ReAC), Kolkata
chandra.p.bhatia@incometax.gov.in

Shri Chandra Prakash Bhatia, Additional Commissioner, is an IRS Officer of 2006 Batch. He has served in various units of Income Tax Department. He has been posted mostly in Bihar and Jharkhand and West Bengal. Though a science graduate, he has special interest in studying the ‘Medieval Financial History’. For last three years, he served in Gujarat and had a close view of the art, culture and history of this area. He is a member of the Editorial Board of Taxalogue. At present, he is posted as Additional Commissioner (Technical Unit), ReAC, Kolkata.

Executive Summary

Gujarat area is known to have been inhabited by man for thousands of years. It has fertile land and great sea shores, which have been utilized to travel to distant countries. Right business attitude and peace has bestowed this area with wealth. Gujarat and nearby areas not only pioneered business ideas, but had an impact on religious and charitable activities of every age. Mughal period and later-on British era took trade and commerce to a new high in this area. Corresponding ripples were felt in art and literature of this area. Some of the rulers, like Maharajas of Baroda, invited best of talents in bureaucracy, science art and technology to their state. Such efforts contributed to overall development of not only this area but whole of India. Various movements during India’s Independence struggle were initiated in Gujarat. Leaders from this area had and all India and even international recognition. This article is a small effort to present a few instances from rich cultural history of Gujarat area.

Bandergah

Areas falling under present Gujarat state have witnessed human habitation for thousands of years. There are many traces of primeval life here. Archaeologists have found ruins of port towns, factories and agricultural operations, which existed in the 3rd or the 2nd millennium BC. Gujarat is known for its industry, trade and navigation from ancient times and its trade links with many ancient civilizations.

Historical information about the ports of Gujarat is found in the Mahabharata, Harivansh Purana, Bhagvat and in Matsaya Purana. Kautilya has mentioned in his Arthashstra about navigation as major activity in coastal areas. The ancient Greek and Roman books refer to famous Gujarat ports of Gujarat famous during that period.

Historical evidences show that the Rann of Kutch was once a gulf and was suitable for shipping and up to the seventh century ships were plying in this area. The busiest Port of India at Kandla, was built by Maharao Khengarji III of Kutch (1876-1942) on a deep water creek.

Around 6th BC, during the Buddha period, Bharuch, in south Gujarat, was a prosperous port. Trade relations were established with the Middle East countries. Ships used to ply in the Gulf of Khambhat for centuries. Being a coastal area, people of Gujarat have been active in export and import. Their business trend has been influenced by overseas experiences and has been a benchmark for rest of India to follow. As taxation and business have close relation, instances of close encounters with the tax gatherers have also been reflected in the literature. Some instances of medieval taxation history of Gujarat, extracted from folklore and literature are being mentioned below.

There was a trader named Jagadusha, in 13th century, who owned many ships, which he used for travelling to travel West to Persia, Arabia and Africa. He traded mainly in grains, cotton and spices. He had a vast maritime trade empire. The Jagaducharita is a thirteenth century verse biography by Sarvananda Suri which deals with episodes from the life of Jagadu and his philanthropy. Biography may not be historically accurate and praises Jagadu, yet it is a good source of information about trade and influence of traders of that era. He was a great philanthropist and built famous Harsidhhi Mata temple at Porbandar apart from many other Jain temples. He also helped people by providing grains during famine years from 1256 to 1258 CE. His biography ends with death of Jagadu. His funeral was attended by royals.

Active trade requires capital. Besides trading and navigation, From the medieval times, Gujarat is known to be a leader in providing financial services, almost like an indigenous bank. Persons engaged in such trade were called ‘Shroffs’ or ‘Sarrafs’ in the Indian context and their business houses were called as ‘Pedhis’.

During the Mughal period, land revenue was regularly transferred from the provinces to the capital. The reverse flow was also made for running the administration and military operations and procuring supplies. Such work was handled by Sarrafs not only within the kingdom but outside the territories also. They had to maintain offices, branches and agents for such work.

Shantidas Jhaveri (c. 1580s–1659) was an influential jeweller, bullion trader (sarraf) and money lender (sahukar) during the Mughal era. He was the wealthiest merchant in the Ahmedabad city during the 17th century. He was also a philanthropist, who made donations to temples and schools. Shantidas Jhaveri had personal relation with the family members of the Mughal  mperors, Jahangir and Aurangzeb. He was consulted by the Mughal authorities on matters affecting the state of economy in the city. The other traders accepted him as their spokesman and he was definitely ‘the first’ among them.

In seventeenth century, Virji Vora of Surat, (1590–1670) was one of such trader and financier.

His opinion was sought by the Mughal emperors in respect of financial policies. He had such excellent terms with the custom and administration that English and Dutch were at his mercy for import and export as well as for banking services in Surat.

The East India Company factory records describe him as the richest merchant in the world at the time. According to the English records, his personal worth was estimated to be worth 8 million rupees, a substantial amount of money, during those days. He has been described as a merchant prince. From 1619 to 1670, Virji Vora dominated the business environment in Surat, the premier port of India. He had offices and agents outside India as well.

Bhimji Parekh (1610–1680) is remembered today primarily for setting up the first printing press in Bombay in during 1674–75. Bhimji intended to use this printing press for ‘the common good’ by printing ancient manuscripts. At various times Bhimji Parekh worked as broker for the East India Company, as a money lender, and as a printer. For services to the East India Company, Parekh was awarded a medal and chain of gold in 1683.

(A) Instances of Taxation in Gujarati Literature

Edalji Dosabhai, a Parsi, was an enthusiastic supporter of colonial administration. His assessment of the British presence in the subcontinent was both positive and optimistic. He wrote Gujarat No Itihas, published in Gujarati in 1850 and in English titled A History of Gujarat from the Earliest Time to Present, in 1894. He has described various historical events of the area in that publication. Some of such instances are being quoted below:

14 August 1573: Emperor Akbar, after defeating Hussain Mirza took control of Ahmedabad. Emperor felt that farmers were groaning under the weight of oppressive assessment. He deputed his minister Raja Todamal to make full inquiry and to fix a suitable rate of assessment for agricultural land. This reform was duly carried out. (p. 140)

It is said that during Jahangir’s stay of nine months in Gujarat, his favourite Begum Nur Jahan ruled as the Lady Governor of Gujarat. She had a say in all matters, including taxation. She had her own seal and Jahangir released some coins bearing her name. The legend on these coins reads: ‘By order of Shah Jahangir gold gained a hundred beauties by the name of Nur Jahan Padshahi Begum.’ (p. 153)

Begum Nur Jahan and Coins

The inscription on coin is:

Ba hukm Shah Jehangir yafta sad zevar Ba nam-e-Noor Jehan badshah begam ze.

However, later on, Emperor Shah Jahan banned such coins and made their use punishable.

On the 29th of August 1844, a riot broke out in Surat, as a consequence of the imposition of a new duty on salt. It was suppressed by the District Magistrate, and a body of troops and artillery was dispatched from Bombay to prevent further disturbances. Accordingly, when the Salt Tax was formally introduced on the 14th of September following, perfect tranquility prevailed. (p. 282).

As regards city of Ahmadabad, it has been mentioned that the town duties had been reduced, after which its commerce rapidly revived. The citywall had fallen to ruins, and as a consequence, thefts and robberies had become frequent. It was, therefore, in the year 1832 thoroughly repaired out of proceeds of a special voluntary cess, called the Kot-fee (town-wall fee) (p 305)

Custom duties from 25 ports in and around Gujarat in 1560 AD was Rs. 4,50,00,000 (p. 324-325). No comparable conversion rate or index is available to equate the taxes raised at that period, to the present day value. However, we can only say that Gujarat and surrounding areas were important tax bearing areas even about five hundred years ago.

There were large scale protests after imposition of Salt Tax in 1844. Surat was again on boil when the new weights & measures system was introduced in 1848, on the Bengal model. Traders protested it and the government was forced to withdraw it. The imposition of ‘Income Tax’ in the year 1860 gave rise to fresh rounds of protest in Surat. The incidences of Surat, have been mentioned by another great Gujarati writer, lchharam Suryaram Desai (1853-1912) in his monthly journal Swatantrata. It was started in January 1878 and he showed his spirit of resistance and taste for controversy with an open call for cultural nationalism and his criticism of the ‘License Tax’, which caused the monthly publication to be banned by the government under the Vernacular Press Act 1878. He was arrested and tried for treason. (Sir) Phiroz Shah Mehta, his advocate, defended him successfully. License tax was condemned by other vernacular papers also. In a protest meeting against this tax, some 15,000 people had gathered.

Not fearful of the British administration, Ichcharam Desai published his novel Hind ane Bartannia. In this publication, the author has described in detail the vices and virtues of both the characters named ‘Hind’ and ‘Britannia’, that is, native Indians and Anglo-Indians. Comparing the British regime to Maratha and Mughal rules, the argument provided by Hind Devi says, ‘You talk about Maratha and Mughals. But the riches were not taken to another region. Whereas today the loots are no more, how much money, through indirect ways, is being collected and sent abroad? Are taxes less?’

This work was referred to as ‘the first political novel in Gujarati’, by the author. Its publication in a full book1 form again created controversy in 1886.

(B) Protest by Poet Narmad

After imposition of Income Tax in India by the Act of 1860, an interesting incidence happened with Sri Narmadashankar Lalshankar Dave, (1833–1886). Popularly known as Narmad, he was a prominent Gujarati poet, playwright and reformer, considered as the founder of modern Gujarati literature. He was issued a notice from the Income Tax in 1863 by Curtis, the Commissioner of Surat. The following interesting description about Income Tax notice is found in Mari Hakikat, the first autobiography in Gujarati, published after the death of this celebrated poet:

A notice for the surcharge for the year 1862-63 was issued to me on 28th January, 1863. At that time I was living at Majgam. I was so angry that I thought why a public figure like me, should be doubted for his honesty when I have declared solemnly. I worried too much for four days. On the 3rd February, against the desire of my friends and assessors, I went to see the Income Tax Commissioner, Mr. Kartis who was very obstinate. They feared that I would definitely be sent to jail on that day. I went inside the office directly and said to the officer, “This is the detail of the income, this is my reputation and this is my spirit. I am ready to pay the surcharge if demanded more but I have declared here what I believe to be true.” The officer was annoyed too much but looking at my appearance he said, “Give such lectures at your home. and then he asked me to leave. However, the surcharge was cut down a bit afterwards.

Yet another instance of ‘Pilgrimage Tax’ is found in Gujarati literature. Narbheram (1768-1852 AD), a saint poet, while on a pilgrimage to Dwarka, the holy city in the West, the officers on the bank of the river Gomti asked him for the tax or toll which each pilgrim has to pay before being allowed to bathe in the sacred waters. Narbheram, an avid devotee of Krishna, said, he was unable to pay and instead of the money presented the officers with a short poem, in which he told the deity that he had nothing to pay, ‘the oil seed had no oil in it2 and that he should be allowed to go free.’ The song is still said to be sung in Dwarka temple.

(C) Baroda, A Welfare State Showed the Way

State of Baroda was under the rule of Gaekwars and had its own civil administration. Sureshwar Desai and Dala Patel helped Pilajirao Gaekwar takeover Baroda around 1724. Sureshwar was awarded ‘Desaigiri’ (Revenue collection) of Baroda for this help. This term was coined under Peshwa rule. A section of community under the Peshwas was allowed to do the ‘Tax Farming’ and was called ‘Desais’. Later, a system of collecting land revenue direct from the cultivators was introduced, and cash allowances payable hereditarily were made to the Desais to compensate them for the loss of office.

The following detail about imposition of Income Tax is found in records: The Survey and Settlement Commissioner submitted a report in the year 1892 on the verso (taxes in Gujarati). The report made proposals to reform the non-agricultural taxes in one uniform system. It was found that there were one hundred and eighty two non-agricultural taxes of which only major nine were continued and the rest were abolished. The long established taxes on the non-agricultural population however could not be so speedily removed. The ‘veros’ as they were termed, formed an enormous list and much investigation went into ascertaining the area of the taxes and the nature of taxes. The complication arose when multiple taxation were implemented in the same area. These were met with opposition from the people. People appealed to the Maharaja to lessen the burden by nullifying a few of them. Sayajirao-III asked the Suba of Baroda district to submit a scheme of the abolition of a number of small taxes. The Suba recommended Aypat Vero or Income Tax. Income Tax was thus introduced in the Padra Taluka of Baroda prant of the State in 1896; then in Baroda prant and later in 1904 in the whole State with uniform rates both in towns and villages. However, the Income Tax Act or ‘Aypat Vero Nibandh’ was passed in the year 1908 on the lines of British Income Tax Act of 1886 with necessary changes to suit the Baroda administration.

Till 1939-40, experiments were made with the minimum taxable income, the amount varied from Rs. 100 to Rs. 300 and from Rs. 300 to Rs. 500. It was in 1907 that the minimum taxable income was raised to Rs 750 which remained the same up to the year 1939-40 when it was raised to Rs. 2000. The advantages of the new system were that it made a clean sweep of all the numerous and oppressive veros used to be levied before; and it exempted the poor from taxation and was imposed only on the wealthier class3.

(D) Gujarati: The Business Language of India

During British occupation, on the occasion of visit of Prince of Wales (King Edward VII) to India in 1875-76, a message4 was read out by prominent citizen (Nuggerseth) in Baroda state which says: ‘The people of this Province are to be found engaged in trade in distant parts of this great country and even beyond it. Hence the language of Guzerath (Gujarat) is, properly speaking, the commercial language of India.’

Books of accounts are still written in Gujarati and no one seems to disagree about the status of Gujarati as the business language of India. In fact, as early as in 1860, the Government had acknowledged this fact by publishing the First ever Indian Income Tax Act in Gujarati language. It was titled: Ayepat Upar Kar Levano Dharo5.

(E) The Bardoli Satyagraha

In 1922, Mahatma Gandhi declared aggressive civil disobedience by resorting to a mass ‘No Tax’ campaign at Bardoli. Only a few days later came the tragedy of Chauri Chaura. Thereafter, this Civil Disobedience Movement was withdrawn. Bardoli figured again in the history of Indian freedom in 1928. It launched the ‘No Tax’ campaign, which constituted a landmark in the history of Satyagraha Movement in India.

The Bombay Presidency, was known as Bombay and Sind from 1843 to 1936 and the Bombay Province, headquartered in the city of Bombay, had a large geographical areas of present day Gujarat, Maharashtra, Sindh (now in Pakistan), Aden (now Yemen) and some parts of present-day Oman. Bhulabhai Desai was a Gujarati Brahmin born at Valsad. He became a member of the Indian National Congress on invitation by Mahatma Gandhi. He was a very successful lawyer of Bombay High Court and was a contemporary of Md. Ali Jinnah, Jamshedji B. Kanga and Dinshah Fardunji Mulla. All of these advocates rose up to great heights in their legal and political careers. Shree J.B. Kanga became the Advocate General of Bombay and later a Judge of Bombay High Court. For many years, the commentary of Income Tax by Kanga and Palkiwala has been the last word. Shree D.F. Mulla was a member of the judicial committee of Privy Council and was knighted in 1930. His commentary of Mohommedan Law is held in high regard in Indian sub-continent. Shree K.M. Munshi, founder of Bhartiya Vidya Bhawan and a great Gujarati writer, was a junior to Shree Bhulabhai Desai.

In 1928, Shree Bhulabhai Desai was closely associated with the enquiry agreed upon by the British Government for withdrawal of Satyagraha campaign against increase in land assessments in Bardoli. It was a major episode of civil disobedience and revolt in the Indian Independence Movement. The movement was eventually led by Sardar Vallabhbhai Patel, and he became one of the main leaders of the independence movement

An agreement was finally brokered by a Parsi member of the Bombay government. The government agreed to restore the confiscated lands and properties, as well as cancel revenue payment not only for the year, but cancel the 30% raise until after the succeeding year. Shree Bhulabhai vindicated in law the attitude of the Satyagrahis against the unjust land assessments.

In yet another court case involving ‘Pilgrimage Tax’ on Palitana Hills, a holy place of Jains, Bhulabhai Desai handled in successfully and negotiated a lower tax.

Dandi March was a major non-violent protest action in India led by Mahatma Gandhi in March–April 1930. Protests against the Salt Tax began in 19th century and remained a major contentious issue throughout the period of British rule of the sub-continent. In early 1930, Gandhi decided to mount a highly visible demonstration against the increasingly repressive Salt Tax. It was a major
civil protest targeted against taxation on salt, a commodity of mass use.

(F) Tales from Some Mufassil Areas of Gujarat

Borsad, a small town in Anand, faced dual tyranny in 1922; a string of daylight robberies by armed dacoits Babar Deva and Ali whereas the British imposed a 2.4 lakh one-time punitive tax on the entire population of the town. Deva had committed 22 murders and to counter him the British had secretly provided arms to Ali. The peasants approached Mahatama Gandhi and Sardar Patel. On Bapu’s direction, Patel, who was a lawyer gave Borsad residents the confidence to refuse to pay taxes. On January 4,1924, the British revoked the tax.

JUNAGARH state was ruled by Nawabs till independence. However, it had many important pilgrimage centres of Hindus as well as Jains, which were subject to ‘Pilgrimage Tax’ before East India Company came into picture. An inscription6 dating back to 1596 was found in Una-Delvada, recording the fact that Akbar, the greatest of Mughal emperors, abolished the pilgrim tax at the Shatrunjaya hill and also repealed the Jazia and other dues: so that Junagadh can boast with every justification that she enshrines mementoes of the two greatest emperors, India has ever known, Asoka and Akbar.

Cutch (Kutch): The following instance of tax collection in Kutch and Kathiawar is found in a book published in 18397: ‘In connection with the duties of these retainers of his Highness, is a singular custom called Mohsulsee. The Rao, when he may happen to require submission from a Rajpoot chief to any particular demand, notifies the same to the party; when, if uncomplied with, his Highness sends a horseman to the particular town or village governed by the rebellious chief, who is compelled by original contract to pay whatever fine per diem his Highness may choose to levy, until the demand is complied with. The servant of the Rao who levies the fine, is called a Mohsul.

There is no fixed amount of tax; this depends on the will of the enforcing authority, and is usually regulated by the urgency of the case. The highest fine which I believe has been levied in Cutch, was twenty coories a-day; but in the province of Kattywar, where Mohsuls are even more used than in Cutch, a fine was levied on the Jam of Noanugger, of five hundred rupees a-day. The case, however, seems to have been considered insufficient to authorize the imposition of this immense fine, as it was levied only to compel the prince to produce some papers, connected with a trifling pecuniary dispute”.

Porbandar: Savaji Kabanji Parekh of Porbandar was another important Jain trader. He complained to Shah Jahan when the local administrator raised tax from 3% to 6% on goods sold by him. He succeeded in securing an imperial firman from the Mughal Emperor in Delhi which ordered all the local officials not to exact more than 3% as tax.

In 1684 AD, there was a great famine (dukaal) in villages around Ahmedabad and prices of grain soared high. Aurangzeb stayed all taxes for one year.

The taxes raised by the government are primarily, ploughed back for social welfare works. Noble citizen consider help of the poor their moral responsibility. Gujarat has never been found lacking in this quality. Seth Hutheesing amassed a colossal fortune from trading during the first half of the 19th century. He built a great Jain temple in Ahmedabad as well a school for girls in Ahmedabad. This was a time, when people were not inclined towards female education. His business interests included export of wooden furniture in association with Lockwood de Forest which was a craze in the US. He also exported Kundan jewellery to Tiffany’s in the US.

Taking a break from the medieval history, let us move to a recent example. I cannot help myself quoting the real life story of Manubhai Madhwani and family of Uganda, a nineteenth century migrant from Ranavav area of present day Porbandar district. They were once called ‘Rockefellers of Uganda’ due to huge business empire named ‘Kakira Sugar Estates’. In 1971, their business was taken over by Idi Amin government and he was thrown in jail. They had to move to other countries as refugees. Displaced Gujaratis started a ‘Corner Shop Revolution’ in Britain and excelled in business once again. After nearly two decades, Manubhai’s family went back to Uganda again and revived their business from zero. Manubhai Madhwani with the help of Giles Foden, published a book titled Tide of Fortune: A Family Tale on his experiences. Manubhai says at one place, ‘So much has happened and so much has been forgotten’.

….And the great tales of Gujarat entrepreneurship continue not only in India but every part of the world.

Note

1. (Hind ane Britannia: A Political Picture. Bombay: The Gujarati News Printing Press, 1925).

2. The officers were so pleased with it that they allowed him to bathe tax free. (Milestones in Gujarati Literature- by Krishanlal M. Jhaveri, p-201)

3. (BSA- Baroda Administrative Report-1908-1909, p-54)

4. The Prince of Wales’ Tour, A Diary in India; With Some Accountby William Howard Russell, 1877.

5. Published by Government. The Income Tax Act- Published at press- Bajibhai Amichand- Ahmedabad. Year I860 pages. 87. Price Annas 8

6. From The Ruling Princes of India- Being a Historical, Archeological, Political and Statistical Account of The Premier State of Kathiawar, by S. M. Edwards, 1907

7. Cutch: Random Sketches,taken during a Residence in One of the Northen Provinces of Western India- By Mrs. Postans. Pub by Smith, Elder & Co. Cornhill,London, 1839.

Source- Taxaloguue – Volume 1- Issue 2- OCT-Dec 2019 Issued by Directorate of Legal & Research -Central Board of Direct Taxes

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