Andhra HC (Pre-Telangana)
Ecil Officers Association vs Government Of A.P. And Ors. on 28 April, 1998
Equivalent citations: 1998(4)ALD66, 1998(3)ALT749
Author: Umesh Chandra Banerjee
Bench: Umesh Chandra Banerjee, P. Venkatarama Reddi
ORDER Umesh Chandra Banerjee, C.J.
1. The powers of the High Court under Article 226 of the Constitution is of widest possible amplitude in the matter of grant of relief, but, that power is, however, limited by its very nature, since the Court desirous of protecting the citizens' constitutional rights and for strengthening the socio-economic fabric, needs to move with a degree of judicial circumspection with certain self-imposed limitations and in accordance with known principles of law. The Court needs to balance the authority of the past with the urges of the future. The essential identity of the institution that it is a Court must remain preserved so that every action of the Court is informed by fundamental norms of law and by the principles embodied in the Constitution and other sources of law. Roscopound's doctrine of flexibility of the law Courts ought to be read in consonance with the above limitations and not d'hors the same. The institutional remedy as the Constitution provides must be offered and not anything beyond the same. While it is true that the Court should not hesitate or falter to exercise its jurisdiction under Article 226, in the event if it is exercised, it should take care to remain within the restraints of its jurisdiction.
2. Having dealt with the basic features of exercise of jurisdiction of the Constitutional Courts under Article 226 of the Constitution and before turning our attention to the core point of discrimination raised in these writ petitions, let us now advert to the factual background giving rise to these writ petitions and the relevant provisions of the Act. The petitioners herein are Associations/Unions of employees employed in Public Sector undertakings, Banks, Central Government Departments and in private Industries. Some of the Associations represent the employees of the rank of officers in Public Sector undertakings. In some writ petitions, businessmen or Associations representing the businessmen, Contractors and Transport Agents also figure as petitioners. They challenge the constitutional validity of the Andhra Pradesh Tax on Professions, Trades, Callings and Employments Act, 1987. The collection and recovery of profession tax at enhanced rates as per First Schedule to the said Act as amended by Act 29 of 1996 with effect from 1-8-1996 is being questioned. Some of the writ petitions were filed at the point of time when Ordinance No.21 of 1996 (which was later replaced by Act 29 of 1996) was in force. In a few writ petitions, the relevant amended entry in the First Schedule prescribing the rates of tax has been challenged as violative of constitutional provisions.
3. A.P. Tax on Professions, Trades, Callings and Employment Act (hereinafter referred to as 'the Act') was enacted in the year 1987. The maximum rate of profession tax then prescribed was Rs.250/- per annum. This was in conformity with the ceiling prescribed by Article 276 of the Constitution. There was an unsuccessful challenge to the said Act by various sections of professionals and employees. However, the then existing Explanation No. 1 was struck down by this Court in W.P.Nos.13066, 13382 and 14184 of 1987 dated 17-7-1992. But that is not relevant for the purpose of these writ petitions; hence we need not go into the details thereof.
4. In tune with the 60th Constitutional Amendment made in the year 1988 raising the ceiling limit under Article 276 to Rs.2,500/-per annum, the State of A.P. amended the Act of 1987 by A.P. Act 29 of 1996. It was provided that the said amendment would come into force on and from 1-8-1996. The principal feature of this amendment is to substitute a new I-Schedule to the Act so as to raise the rates of profession tax upto the maximum level contemplated by Article 276 of the Constitution.
5. The rates of tax prescribed in the relevant entries in the First Schedule are as follows:
SI. No. Class of assessees Rate of tax per month/ per annum Rs.
1.
Salary and Wage earners, such persons whose monthly salaries or wages:
i) Upto Rs.1,500/-
Nil
ii) Range from Rs.1500/- to Rs.2000/-
16/- PM
iii) Range from Rs. 2000/- to Rs. 3000/-
25/- PM
iv) Range from Rs.3000/- to Rs.4000/-
35/- PM
v) Range from Rs.4000/- to Rs.5000/.
45/- PM
vi) Range from Rs.5000/- to Rs.6000/-
60/- PM
vii) Range from Rs.6000/- to Rs.10,000/-
80/- PM
viii) Range from Rs.10,000/- to Rs.15,000/-
100/- PM
ix) Range from Rs. 15,000/- to Rs. 20,000/-
150/- PM
x) Range above Rs.20,000/-
200/- PM ....
5.b) Contractors
i) Contractors falling in the categories mentioned below as per the guidelines issued by the Government from time to time for registration of contractors.
(a) Class I Contractors 2, 500/- PA
(b) Class II Contractors 1,500/- PA
(c) Class III Contractors 500/- PA
ii) Contractors not falling. In sub-category (i) mentioned above and the amount of works contract executed by them during a year is
(a) below rupees ten lakhs 500/- PA
(b) above rupees ten lakhs 1,500/- PA ....
....
9. Dealers ragistered or liable to be registered under Andhra Pradesh General Sales Tax Act 1957 (other than those mentioned in item (19) whose total turnover in any year ranges.
(a) Upto Rs.1,00,000/-
Nil
(b) frorn Rs. 1,00,000/- to 2,00,000/-
300/- PA
(c) from Rs. 2,00,000/- to 5,00,000/-
550/- PA
(d) from Rs. 5,00,000/- to 10,00,000/-
800/- PA
(e) from Rs.10.00,000/- to 25.00,000/-
1,200/- PA
(f) from Rs.25,00,000/- to Rs.50,00,000/-
1,500/- PA
(g) above Rs. 50,00,000/-
2,500/- PA ....
...
...
21. Persons, other than those mentioned in any of the preceding entries, who are engaged in any profession, trade or callings or employments.
750/- PA
6. Explanation No.II lays down that notwithstanding anything contained in this schedule, where an assessee is covered by more than one entry in the schedule, the highest rate of tax specified under any ofthose entries shall be applicable in his case.
7. Coming to the other provisions of. the Act, Section 4 is the charging section, which reads as follows :
"4. Levy and charge of tax :--(1) There shall be levied and collected a tax on professions, trades, callings and employments for the benefit of the State.
(2) Every person engaged in any profession, trade, calling, employment in the State falling under any one or other of the classes specified in column (2) of the First Schedule, shall be liable to pay a tax at the rate specified in the corresponding entry in column (3) thereof."
8. Section 5 provides for the liability of the employer to deduct from the salary or wage payable to any person earning a salary or wage, the amount of tax payable. The Section further lays down that the employer shall, irrespective of whether any deduction has been made or not, be liable to pay tax on behalf of all such persons. The proviso says that where the employer is an officer of the State Government or Central Government, the manner in which such employer shall discharge the said liability shall be such as may be prescribed.
9. The definition 'employee' (vide Section 2-e), the definition of 'person' (vide Section 2-j) and the definition of 'salary or wages' (vide Section 2-m) deserve notice.
10. Section 2(e) : "employee" means a person employed on salary or wages and includes, --
(i) an employee of the Central Government or any State Government to whom the salary is paid either from the Consolidated Fund of India or of a State;
(ii) a person in the service of a body, whether incorporated or not, which is owned or controlled by the Central Government or any State Government even though its head-quarters may be situated outside the State; and
(iii) a person engaged in any employment of an employer not covered by items (i) and (ii) above.
11. Section 2-j - "person" means any person who is engaged in any profession, trade, calling or employment in the State of Andhra Pradesh and includes a Hindu Undivided Family, Firm, Company, Corporation or other corporate body, any society, club or association, so engaged but does not include any person who earns wages on a casual basis.
12. Section 2(m) - "salary or wages" includes pay or wages, deamess allowances and all other remunerations received by any assessee on regular basis, whether payable in cash or kind and also includes perquisites and profits in lieu of salary and defined in Section 17 of the Income-Tax Act, 1961, but docs not include bonus in any form and on any account or gratuity.
13. It is not in dispute that after the Act came into force on 15-6-1987, the tax was being deducted by the employers from the members of the petitioner-Associations and the employees and the amounts were being paid over to the State Government directly. After the ordinance was promulgated on 1st August, 1996, the State Government by G.O.Ms.No.227, Finance and Planning dated 21-9-1996 directed the drawing and disbursing officers to deduct the amount as per the revised rates from the salary of each State Government employee, who has to pay the tax, commencing from the month of September, 1996. Then came a spate of G.Os. postponing the recovery of profession tax at the enhanced rate from the salaries of the non-gazetted State Government employees upto a particular point of time. These G.Os. came to be issued pursuant to the representations made by the Non-Gazetted Officers' Associations. The first of its kind is G.O.Ms.No.235, Finance and Planning, dated 29-10-1996.
14. The last in the series of G.Os which is still in operation is G.O.Ms.No.48 (Finance and Planning) dated 15-3-1997. The said G.O., which is self-explanatory is extracted hercunder:
"Sub: Profession Tax Keeping the recovery of Profession Tax at the enhanced rates from the salaries of the Non-Gazetted Employees of the State Government in abeyance till further orders - Orders -Issued.
ORDER:
1. In the Government Order 2nd read above, orders were issued enhancing the rates of Profession Tax with effect from 1-8-1996. After carefully considering the representations received from the Employees Associations, Government had issued orders in the Government Order 6th read above for the postponement of recovery of Profession Tax at the enhanced rates from the salaries of the Non-Gazetted Employees of the State Government till the end of February, 1997.
2. After careful consideration of the matter further, Government hereby order that the recovery of Profession Tax at the enhanced rates from the Non-Gazetted employees of the State Government, be kept in abeyance till further orders. However, Profession Tax shall continue to be recovered from the salaries of the Non-Gazetted employees of the State Government at the pre-enhanced rates,
3. These orders are applicable only to the Non-Gazetted Employees of the State Government and Profession Tax shall continue to be recovered at the enhanced rates from all other categories."
15. The main and principal contention advanced by M/s. V. Srinivas, L. Ravichander and M.S. Ramachandra Rao is that when the action of the State Government in putting off the liability to pay the profession tax at enhanced rates as far as its Non-Gazetted Employees are concerned and failing to extend the same treatment to the other classes of employees - be it of Central Government, Public Sector or Private Sector is grossly unfair and amounts to discrimination prohibited by Article 14 of the Constitution. It is contended that the same advantage or benefit must be made available to the petitioners as well and this Court in exercise of jurisdiction under Article 226 of the Constitution ought to intervene so as to give such a direction. One of the Counsel, Mr. Ravichander further submitted tliat favourable treatment ought not to have been accorded to State Government employees without exercising the power of exemption under Section 31 of the Act. If such power of exemption had been exercised, the order granting exemption would have been invalid on the ground of lack of reasonable classification and the same objection would hold good even now in relation to the executive order issued by the Government. M/s. G. Vidyasagar, D. Sudarshan Reddy contend that the enhancement is excessive and unreasonable, thereby violating Article 19(1)(g) of the Constitution.
16. Before we take up for discussion the specific plea of violation of Article 14 in the light of contextual facts, we consider it appropriate to recapitulate the well-settled principles bearing on the doctrine of equality. The word 'discrimination' in common acceptation means and implies differentiation in treatment among the same class of persons. The constitutional safeguard as envisaged in terms of Article 14 offers a right to equal treatment in similar circumstances both in regard, however, to the privileges conferred and liabilities imposed. The Principle being that there should be no discrimination between one person and another, if, as regards the subject-matter of the State action, their position is the same, hi other words, State action must not be arbitrary and must be based on some valid principle which itself must not be irrational or discriminatory. Let us be not, however, understood to mean that the equality clause in the Constitution is of no exception and of rigid application. The Supreme Court in the early years did explain the matter to point out that the equality principle does not take away from the State, the power of classifying persons or tilings for legitimate purposes and the law cannot but be termed to be well settled on that score and as such we need not dilate much in that regard, excepting in, however, to record that differential treatment "per se' does not constitute violation of Article 14 and it is only when there is no reasonable basis for such a differentiation, then and in that event, it cannot but be said to' be violative of the principles of equal treatment as enshrined in the Constitution. The Supreme Court in the recent past in the case of Venkateshwara Theatre v. Slate of Andhra Pradesh, very succinctly and upon consideration of a long catena of decisions in regard to the equal protection clause observed:
"18. The challenge to the impugned provisions on the basis of Article 14 is grounded on the principle that discrimination would result if unequals are treated equally and reliance is placed on the decision of this Court in K.T. Moopil Nair v. State of Kerala, . It has been urged that under Section 4, as substituted by Act 24 of 1984, a uniform rate has been prescribed for cinema theatres of a particular class situate in different parts of the same local area although the average rate of occupancy in the cinema theatres located in different parts of the same local area is not the same and a cinema theatre which is located in the central part of the local area would have better rate of occupancy as compared to a theatre located in a remote part and further that the occupancy in the theatre depends on various factors which have not been taken into account. We find it difficult to accept this contention.
19. Article 14 enjoins tlie State not to deny to any person equality before the law or the equal protection of the laws. The phrase "equality before the law" contains the declaration of equality of the civil rights of all persons within the territories of India. It is a basic principle of republicanism. The phrase "equal protection of laws" is adopted from the Fourteenth Amendment to tlie U.S. Constitution. Tlie right conferred by Article 14 postulates that all persons similarly circumstanced shall be treated alike both in privileges conferred and liabilities imposed. Since the State, in exercise of its governmental power, has, of necessity, to make laws operating differently on different groups of persons within its territory to attain particular ends in giving effect to its, policies, it is recognised that the State must possess the power of distinguishing and classifying persons or things to be subjected to such laws. It is, however, required that the classification must satisfy two conditions, namely (i) it is founded on an intelligible differentia which distinguishes those that are grouped together from others; and (ii) the differentia must have a rational relation to the object sought to be achieved by the Act. It is not the requirement that the classification should be scientifically prefect or logically complete. Classification would be justified if it is not palpably arbitrary. (See Re Special Courts Bill, ). If there is equality and uniformity within each group, the law will not be condemned as discriminative, though due to some fortuitous circumstances arising out of a peculiar situation some included in a class get an advantage over others, so long as they are not singled out for special treatment. (See Khandige Sham Bhat v. Agricultural Income-tax Officer, ).
17. As regards the taxing statutes, the Legislature enjoys, however, a greater latitude in regard to the user of discretion so far as classification is concerned. As a matter of fact, the Legislature has a very wide discretion in a taxing statute and as long as it refrains from clear and hostile discrimination against particular persons or classes, question of judicial intervention on the ground of equal treatment clause would not arise. The U.S. Supreme Court in San Antonio Independent School District v. Rodriquez, (1973) 411 U.S. 1 at p.41 observed:
"No scheme of taxation, whether the tax is imposed on property, income or purchases of goods and services, has yet been devised which is free of all discriminatory impact. In such a complex arena in which no perfect alternatives exist, the Court does well not to impose too rigorous a standard of scrutiny lest all local fiscal schemes become subjects of criticism under the Equal Protection Clause."
18. In Venkateshwara Theatre's case (supra) the Supreme Court recorded that in the field of taxation the decisions of the Courts have permitted the Legislature to exercise an extremely wide discretion in classifying items for tax purposes, so long as it refrains from clear and hostile discrimination against particular persons or classes.
19. The submission of there being a discriminatory treatment in the contextual facts at the first blush seems to be of some substance, but on closer scrutiny of facts, the same, however, does not seem to be so. There is no classification as such between the employees by the legislation. It is a mere temporary abeyance for a section and identified class of employees and not that the liability stands extinguished. The liability to pay remains but stands suspended for the time being by means of an executive order issued by the Government. It is not an absolute withdrawal of liability, but it is a grant of temporary relief for a certain period of time and is liable for review at any point of time. The invocation of Article 14 in such a situation is, in our view, inapt irrespective of the consideration whether the non-Gazetted employees of the State could be treated as a separate class for the purpose of imposing or exempting the tax liability.
20. At this stage, we may notice the decision of the Supreme Court in Rajalakshmiah v. State of Mysore, AIR 1967 SC 993. In that case the appellant sought for a writ of Mandamus commanding the State Government to promote them to the cadre of Assistant Engineers from the date on which they were placed in-charge of a sub-division. The Appellants' contention was that a special concession which was shown to the 41 officers in the matter of assignment of seniority, though they were not entitled under the Rules, should also be extended to them as they are similarly situated. The appellants, therefore, claimed the seniority from the dates on which the vacancies against which they were working had occurred. Repelling this contention, the Supreme Court at paragraph 12 observed :
"No doubt some concession had been shown to the first batch of 41 persons and the batches of persons who had come in after the batch of 63 persons also received some concession, but after all these were concessions and not something which they could claim as of right. The State of Mysore might have shown some indulgence to this batch of 63 persons but we cannot issue a writ of Mandamus commanding it to do so. There was no service rule which the State had transgressed nor has the State evolved any principle to be followed in respect of persons who were promoted to the rank of Assistant Engineers from Surveyors. The indulgence shown to the different batches of persons were really ad hoc and we are not in a position to say what, if any, ad hoc indulgence should be meted out to the appellants before us."
The ratio of this decision equally governs the cases on hand.
21. The law is well settled to the effect mat it is for the State to decide what economic and social policy it should pursue and what preferences should be had to advance those socio-economic policies. The Supreme Court in the case of Ashwathanarayana Setty v. State of Karnataka, (1989) Supp. 1 SCC 796 upon consideration of a long catena of cases came to a definite conclusion that in view of the inherent complexity of fiscal adjustments, Courts give larger discretions to the Legislature in the matter of its pursuit of economic and social policies and effectuate the chosen system in all possible and reasonable ways and the law is well settled as regards the scope for classification permitted in taxation being much wider and greater and it ought always to be left to the legislative wisdom to choose the yard-stick of the classification in the background of the fiscal policy of the State and we need not dilate much on this score. This is even assuming, however, that the Government employees are classified separately, which is, however, not the factual situation. The classification can only be under challenge in the event of palpable arbitrariness leading to the vice of discrimination under Article 14 and it is only on the basis of this test applied in the context of the felt needs of time and social exigencies informed by experience the intervention of the Law Courts is possible and not othenvise. While the Legislature has some greater authority to classify, the Executive deems it expedient having due regard to the economy of the State and maintenance of harmonious relations with its own employees, decides to keep in abeyance the higher rate of taxation pending further consideration and in such an event, the question of declaring the same as an invalid or illegal action would not arise.
22. The challenge made on the score of steep enhancement of the rate of tax from Rs.250/- to Rs.2,500/- as the maximum is equally unsustainable. This enhancement also, in our view, ought not to stand the scrutiny of the Law Courts unless it is patently oppressive and confiscatory in nature, it being a legislative exercise having due regard to the socio-economic conditions and over-all fiscal needs of the State. Intervention of Law Courts as regards the quantum would be an undue usurpation of power of Legislature, who is, as the Constitution provides, the proper authority for the purposes thereof and the Law Courts cannot and ought not to have any say in regard thereto. It must not be forgotten that the Constitution itself raised the ceiling prescribed by Article 276, having due regard to the long passage of time. The State Legislature has fallen in line with this amendment. We are not in a position to say that the rates of tax provided in the Schedule as amended cast such an unreasonably heavy burden that affects the petitioners' right to carry on business or practice the profession. Be it noted that different rates of tax are prescribed having due regard to the nature of profession, the extent of income and the expected capacity of tax payers. For salaried class, the maximum payable is Rs.200/-per month, if the salary is Rs.20,000/- or more. Different slabs are prescribed depending on the quantum of salary drawn.
23. In any event, assuming there is an unauthorised and illegal action on the part of the State-respondents in the matter of keeping the Government Order in abeyance insofar as the enhancement is concerned pertaining to a section of the Government employees -Does it clothe the High Court with the power to grant the similar relief to other employees ? - this is again assuming that the non-Gazetted Government servants are being left out of the purview of the enhancement of the tax on profession, trade, calling or employment. The answer, however, cannot but be in the negative. The act, which is otherwise unauthorised or illegal and not in accordance with the due process of law, cannot be taken recourse to legitimise the illegality by the aid of Article 14 of the Constitution and the observations of the Supreme Court in the case of Secretary, Jaipur Development Authority v. Daulatmal Jain, lend concurrence to the same, In this context, the observations of the Supreme Court in the case of Chandigarh Administration v. Jag/it Singh, also seem to be very apposite. The Supreme Court in paragraph 8 observed:
".... Generally speaking, the mere feet that the respondent-authority has passed a particular order in the case of another person similarly situated can never be the ground for issuing a writ in favour of the petitioner on the plea of discrimination. The order in favour of the other person might be legal and valid or it might not be. That has to be investigated first before it can be directed to be followed in the case of the petitioner. If the order in favour of the other person is found to be contrary to law or not warranted in the facts and circumstances of his case, it is obvious that such illegal or unwarranted order cannot be made the basis of issuing a writ compelling the respondent-authority to repeat the illegality or to pass another unwarranted order.'' The Supreme Court went on to observe:
"By refusing to direct the respondent-authority to repeat the illegality, the Court is not condoning the earlier illegal act/order nor can such illegal order constitute the basis for a legitimate complaint of discrimination. Giving effect to such pleas would be prejudicial to the interests of law and will do incalculable mischief to public interest. It will be a negation of law and* the rule of law..... It is not more appropriate and convenient to examine the entitlement of the petitioner before the Court to the relief asked for in the facts and circumstances of his case than to enquire into the correctness of the order made or action taken in another person's case, which other person is not before the Court nor is his case. In our considered opinion, such a course - barring exceptional situations - would neither be advisable nor desirable. In other words, the High Court cannot ignore the law and well-accepted norms governing the writ jurisdiction and say that because in one case a particular order has been passed or a particular action has been taken, the same must be repeated irrespective of the fact whether such an order or action is contrary to law or otherwise. Each case must be decided on its own merits, factual and legal, in accordance with relevant legal principles."
24. Similar is the view expressed by the Supreme Court in the case of Guntsharan Singh v. New Delhi Municipal Committee, . The Supreme Court in no uncertain terms has laid down that the concept of equality before law as envisaged under Article 14 of the Constitution cannot be enforced in a negative manner since the same is a positive concept and it cannot be invoked to perpetuate an illegal order.
25. The learned Counsel for some of the petitioners relied on the decision in M/s. Jain Exports Pvt. Ltd v. Union of India, . In that case, the Central Government having granted partial exemption from payment of import duty in exercise of powers under Section 25(2) of the Customs Act declined to grant exemption to a similarly situated importer. The Supreme Court held that having regard to the special facts and circumstances of the case, the appellant was entitled to relief as nothing has been placed on record to justify discrimination. The factual matrix of the case is vastly different from the cases with which we are concerned and the ratio of that decision cannot have any application here.
26. Another decision on which reliance was placed in Mediwell Hospital v. Union of India, . The ratio in paragraph 11 has been relied upon. However, the view taken in that case was dissented by a three Judge Bench in Faridabad CT Scan Centre v. D.G. Health Services, 1997 (7) SCC 752. It was observed that Article 14 is not attracted in cases where wrong orders arc issued in favour of others.
27. Be it noted, however, that the issue above is being dealt within this judgment by reason of strenuous submissions made in the matter, though, however, not strictly germane in the factual matrix of the matter under consideration.
28. The learned Government Pleader for Finance has raised an argument that the writ petitions filed by the Associations are not maintainable and the Associations have no locus standi in the matter. We are not inclined to go into this question at this stage, more so, when the writ petitions filed by the affected individuals are also before us.
29. In the view as above, we do not see any merit in these writ petitions, more so by reason of the fact that there is no conferment of benefit to any section of the employees, but the liability to pay remains suspended during a particular period of time. The mere suspension or keeping in abeyance of the enhancement of tax in regard to a particular section of employees, in our view, docs riot confer any right to invoke the 'equality clause' as provided in Article 14 of the Constitution. In any event, if that be termed to be an illegality, the question of taking advantage of such an illegality does not and cannot arise by reason of the fact that the Legislature is within its limits and rights to fix quantum subject to the maximum as is prescribed. Fixation of Rs.2,500/- does not, in any way, offend any of the provisions of law and as such, recovery from the salaries of the concerned employees, the said amoun^of Rs.2,500/- cannot be said to be unjustifiable and the present writ petitions cannot be allowed by reason of conferment of a benefit of an abeyance-order in regard to a set of employees. This cannot be said to be discriminatory in nature in any sense of the term and as such docs not come within the purview of the jurisdiction of the Writ Court, hi that view of the matter, these writ petitions fail and are dismissed. No order as to costs. The employers are directed to deposit in terms of the requirement of law the amount as is envisaged under the Law. The arrears are directed to be recovered in six monthly instalments commencing from 1st May, 1998.