Central Administrative Tribunal - Hyderabad
Indian Navy Civilian Employees Union ( ... vs State Of Andhra Pradesh And Others ( ... on 6 March, 2009
IN THE CENTRAL ADMINISTRATIVE TRIBUNAL
HYDERABAD BENCH AT HYDERABAD
O.A. No.683 of 2008
DATE OF ORDER 06/03/2009
B E T W E E N:
1. Indian Navy Civilian Employees Union ( Regd. No. 983)
Rep. by its General Secretary, B.S. Prakash Rao,
Door No. 3-119/1, Sujatha Nagar, Pendurthy Mandal,
Visakhapatnam- 531 173.
( The list of the members of the Union is furnished in Annexture
to the O.A.)
2. CH JAYA RAO, HS, T.No.: 01709, MDS,
Eastern Naval Command, Visakhapatnam. Applicants
A N D
1. The State Govt. of Andhra Pradesh,
Rep. by its Chief Secretary,
Commercial and Profession Taxes Dept.,
Secretariat, Hyderabad;
2. The Flag Officer, Commanding-in-Chief,
Eastern Naval Command,
Visakhapatnam.
3. The Dy. Commissioner ( Commercial Taxes),
China Waltair, Visakhapatnam. ........ Respondents.
Counsel for the applicant : Mr. Ch. Sudhakar Babu
Counsel for the Respondents: Mr. G. Jaya Prakash Babu, Sr. CGSC Mr. D.Y. Setty, SC for State of A.P.
CORAM:
HON'BLE MR. JUSTICE P. LAKSHMANA REDDY, VICE-CHAIRMAN
HON'BLE MR. R. SANTHANAM, ADMINISTRATIVE MEMBER
ORAL ORDER
( HON'BLE MR. JUSTICE P. LAKSHMANA REDDY, VICE-CHAIRMAN.) Heard Mr. Ch. Sudhakar Babu, learned counsel for the applicants and and Mr. G. Jaya Prakash Babu, Senior Central Government Standing Counsel and Mr. D.Y. Setty, standing counsel for State of Andhra Pradesh.
2. This application is filed by the Indian Navy Civilian Employees Union and another, Visakhapatnam seeking for a declaration that the action of the respondents in deducting the Professional Tax from the pay and allowances of the Members of the applicants Union under the provisions of the A.P. Tax on Professions, Trades, Callings and Employment Act, 1987 and the rules made thereunder as illegal, and for a consequential direction to the respondents to exempt the Members of the applicants Union from payment of Professional Tax and for further direction to refund the deduction carried out against the Profession Tax.
3. The relevant facts of the case in brief are as follows:-
There are 4017 Members comprising the 1st applicants' union and the 2nd applicant, who are working in different cadres in the Eastern Naval Command, Visakhapatnam under the 2nd respondent. The Disbursing Officer was deducting the professional tax from the salaries of all the employees. Aggrieved of such deduction, they have filed the present O.A. on the ground that the very same Disbursing Officers are not deducting professional tax from the DAD employees basing on the letter addressed to all Principal Controllers of Defence Accounts, Jabalapur and Meerut and all Controllers of Defence Accounts by the Deputy Controller General, Defence Accounts (Proj) vide its letter dated 05.05.2003 wherein the Deputy Controller General, Defence Accounts (Proj) office in consultation with the Ministry of Defence ( Finance) clarified that since the DAD employees are also subjected to field service as per 69 of Office Manual Part-I and, therefore, it can be viewed that they form part of "Armed Forces" as a person employed in DAD is under obligation and considered for field service which are the service conditions and thus there is no reason as to why Members of the DAD should not be exempted from the liability to pay professional tax. In this context, the judgment of the Hon'ble High Court of Bombay dated 10.1.1994 is referred therein.
4. The applicants' claim is that they also form part of "Armed Forces" as they are similarly situated as that of the DAD employees and, hence, the recovery of the professional tax from the employees is illegal and the amount already recovered is to be refunded and no further deduction shall be made towards professional tax.
5. Mr. D.Y. Setty, learned counsel for the State Government contended that there is no exemption provided even to Armed Forces under the Andhra Pradesh Tax on Profession, Trades, Callings and Employments Act & Rules, 1987 and that the said legislation is now upheld by the Hon'ble Supreme Court in the case of Karnataka Bank Ltd. Vs. State of Andhra Pradesh and Others ( Civil Appeal No. 1994 of 2002) reported in (2008) 12 VST 459 (SC). He also relied upon the decision of the Hon'ble High Court of A.P. in the case of M.E.S. Employees Union Vs. Government of Andhra Pradesh and Others dated 5th July, 2001 reported in 2002 Sales Tax Cases, page 523 wherein similar Writ Petition filed by the Employees of M.E.S was dismissed holding that under the provisions of Andhra Pradesh Tax on Professions, Trades, Callings and Employments Act & Rules 1987, there was no such provision granting exemption even with reference to the members of the armed forces of the Union and that once there is no provision with reference to the members of the armed forces, the contention of the employees regarding exemption is not tenable and that there is no similar provision as that of Section 27A of the Maharastra Act in the Andhra Pradesh Tax on Professions, Trades, Callings and Employments Act & Rules, 1987.
6. The points that arise for consideration in this O.A. are
i) Whether the State Government of Andhra Pradesh is entitled to levy professional Tax from the employees working in the Eastern Naval Command, Visakhapatnam;
ii) Whether the letter addressed to all the Principal Controller of Defence Accounts/ Controller of Defence Accounts dated 5.5.2003 issued by the Deputy Controller General Defence Accounts in consultation with Respondent No.1 is binding on the State Government of Andhra Pradesh;
iii) Whether the applicants are entitled to claim the exemption on the ground that the Disbursing Officers are not deducting the Professional Tax from the DAD employees;
iv) to what result?
7. Point Nos. i, ii & iii:-
This dispute emanated on account of the letter dated 5.5.2003 issued by the Deputy Controller General Defence Accounts referred to supra wherein the DAD employees are given benefit of non-deduction of Professional Tax. The said letter was addressed basing on the decision of the Bombay High Court in respect of employees working within the jurisdiction of Maharastra State. Some Writ Petitions were filed before the Hon'ble High Court of Bombay claiming exemption from payment of Professional Tax Under Section 27(A) of Maharastra State Tax on Professions, Trades, Callings and Employments Act in B.S. Raut V. State of Maharashtra reported in (1992) Maharashtra Law Journal page 360. Section 27A of Maharashtra State Act provides exemption to Members of the Armed Forces of the Union, that is to say, to whom the provisions of the Army Act, 1950, the Air Force Act, 1950 or the Navy Act, 1957 apply serving in any part of the State. The issue before the Hon'ble High Court of Bombay was whether the term"members of the armed forces of the Union" would include the employees, such as clerks, Superintendents, meter readers, electricians, drivers, stenographers, librarians, storekeepers, education instructors, carpenters, draftsmen, senior mechanics, cooks, watchmen etc working in the Naval Establishment so as to fall within the exempted category of employees under section 27(A) of that Act. The Hon'ble Bombay High Court after elaborate references to the provisions of the Maharashtra Act held that the petitioners therein would come within the purview of the members of the armed forces and, therefore, they are entitled for exemption contemplated under Section 27A of the Maharashtra Act. The Hon'ble High Court of Andhra Pradesh considered the similar issue in the case of M.E.S. Employees Union V. Government of Andhra Pradesh and Others reported in (2002) Sales Tax Cases, 523. The Writ Petitioners before the Hon'ble High Court of Andhra Pradesh relied upon the above cited decision of the Hon'ble High Court of Bombay. The Hon'ble High Court of A.P. considered the said decision and held that under the Andhra Pradesh Tax on Professions, Trades, Callings and Employments Act & Rules, 1987 (herein after referred to as A.P. Act), there is no similar provision as that of Section 27A of the Maharashtra Act granting exemption with reference to the Members of the Armed Forces and that there is no such exemption given to the Members of the Armed Forced in the A.P. Act and therefore the decision of the Hon'ble High Court of Bombay is not applicable to the employees working within the state of Andhra Pradesh. The Hon'ble High Court of Andhra Pradesh further held that even the Armed Forces are not given any exemption under the A.P. Act. The Hon'ble High Court of Andhra Pradesh considered the various provisions of the A.P. Act viz. Section 2(e), which defines the word 'employee'; Section 2 (f) which defines the word "employer"; Section 4 which deals with "Levy and Charge of tax" and Section 5 which deals with "employer's liability to deduct and pay tax on behalf of employees" and their lordships have also considered the Section 31 which deals with "Power to exempt" and also considered Sections 32 & 35. Section 32 prohibits "Local authorities not to levy profession tax and also Section 35 which provides "Grant to local authorities for loss of revenue." Their lordships have also considered the Regulations 288A of the regulations framed under Army Act 1950. After elaborate consideration of all the provisions, their lordships held that the petitioners therein i.e. who are the members of the M.E.S. Employees Union are not entitled to get the relief in the absence of any provision in the A.P. Act similar to that of the Section 27A contained in the Maharashtra Act.
8. We have also gone through the relevant provisions of the A.P. Act. Under Section 31 of the Act, the State Government may by notification make exemption or reduction in the rate of tax payable under this Act by any specified clause of assessee subject to such restrictions and conditions as may be specified in the notification. Admittedly, no notification has been so far issued by the State Government of Andhra Pradesh exempting any class of Assessee from payment of professional tax. At this stage, it is brought to our notice that the employees' unions have submitted their representations to the State Government to provide exemption to those who are working in the Eastern Naval Command, Visakhapatnam and the said representation is pending before the State Government. But the fact remains that so far no notification is issued exempting the employees including the armed forces working in the Eastern Naval Command from payment of professional tax. As per the provisions of the Act, the Disbursing Officer is bound to deduct the profession tax from the employees at the time of paying salary and then remit the same to the State Government. Therefore as long as no notification has been issued exempting any employees from payment of professional tax, the Disbursing Officers are bound to deduct the profession tax from its employees at the time of disbursement of salaries. As and when the notification is issued by the State Government exempting any employees, the Disbursing Officers are refrained from deducting the professional tax. But, till then they are bound to deduct as per the provisions of the A.P. Act. The circulars or letters issued by the office of the Chief Controller General Defence Accounts, New Delhi dated 05.05.2003 is not binding on the State Government. The said letter was issued based on the judgement of the Bombay High Court which dealt with the provisions contained in the Maharashtra Act. The said Circular is applicable for those employees who are working within the State of Maharashtra. It is not applicable to the employees working within the State of Andhra Pradesh; for those who are working in the State of Andhra Pradesh, the provisions of A.P. Act are applicable. Merely because the Disbursing Officers are not recovering the professional tax from the DAD employees, the other employees cannot claim that the same benefit is to be extended to them. As per the provisions of the A.P. Act, even DAD employees are liable to pay profession tax and the Disbursing Officers have to deduct tax from their respective salaries and remit the same to the State Government. If the Disbursing Officers are not deducting it, it is at their own risk. However, the present petitioners cannot claim that as the Disbursing Officers are not recovering the Profession Tax from the DAD employees, they are also not liable to pay professional tax. Unless there is notification granting exemption issued by the State Government, the applicants herein contend that no amount towards profession tax can be recovered from their salaries.
9. The learned counsel for the applicants submit that the State Government appeared to have given exemption to certain cadres of defence personnel and that the applicants also come under defence personnel and, therefore, the respondents 2 to 3, who are the disbursing officers of the applicants are not entitled to deduct the professional tax. If there is any such order granted to the defence personnel by the State Government and the applicants also come under the defence personnel who have been exempted, the applicants are at liberty to make a representation to their disbursing officers for appropriate orders and in case they failed to get any favour orders, they are at liberty to approach this Tribunal again.
10. In the result the O.A. is dismissed. However, with an observation that the State government, who is 1st Respondent, herein may consider the representations said to have been made by the employees unions seeking exemptions from payment of profession tax and may pass appropriate orders within three months. The interim orders granted earlier stands vacated. However, there shall be no order as to costs.
(R. SANTHANAM) (P. LAKSHMANA REDDY ) MEMBER(A) VICE-CHAIRMAN Dated 6th March, 2009 (Dictated in open court)