Bombay High Court
Pratiraksha Mazdoor Sangh And Ors. vs State Of Maharashtra And Ors. on 6 September, 2000
Equivalent citations: 2001(2)BOMCR414
Author: V.C. Daga
Bench: A.P. Shah, V.C. Daga
JUDGMENT V.C. Daga, J.
1. Rule. Returnable forthwith. Respondents waive service. Heard respective parties in extenso.
2. A legal battle has been initiated at the instance of the petitioners, to get themselves equated with the persons falling in the definition of "Member of the Forces" as defined under the Army Act, 1950, so as to get themselves included in the class of persons exempted under section 27-A of the Maharashtra State Tax on Professions, Trades, Callings and Employments Act, 1975 ("Act" for short) from payment of professional-tax.
3. Since common questions of law arise in all the petitions, they were heard together and are being disposed of by this common judgment.
FACTUAL MATRIX
4. In all the petitions, the registered unions along with their members are in the field to claim exemption from the provisions of the Act. The first petitioner, in all the petitions, is registered union representing vast majority of employees employed in the different Ordnance Factories in the State run by the Defence Department of the Government of India. Other co-petitioners are the employees working in the respective Ordnance Factories located in different parts of the State of Maharashtra.
5. All the employees working in the Ordnance Factories are the members of "All India Service Cadre" and are subjected to the rules framed under Article 309 of the Constitution of India. The entire expenditure incurred on Ordnance Factories is debited to the account of Government of India. The petitioners claim that majority of the civil personnel/employees working with the Ordnance Factories were initially recruited for field services and are presently working as civilians. Every civilian employed in the defence services including employees of the Ordnance Factories are liable to render field services, whenever called upon to do so, as such, they claim to be integral part of the "Armed Forces of India".
RIVAL CONTENTIONS
6. The petitioners, on the above backdrop, claim to be the members of forces as defined under the Army Act, 1950 and claim to be the persons falling in the category of persons exempted, from liability of payment of professional tax, under section 27-A of the Act. The petitioners claim that the challenge raised in all the petitions had been answered in their favour by the Division Bench of this Court in the case of B.S. Raut v. State of Maharashtra, 1992 Mh. L.J. 360. According to them, as per the ratio of this judgment, civilian defence personel, who can be ordered to render field service and follow the Army in certain situations, are exempted under section 27-A of the Act from the liability to pay professional tax.
7. Alternatively, the petitioners are also seeking declaration that section 27-A of the Act as amended by Maharashtra Act No. 12 of 1992 purporting to exclude the civilians, employed in the Ordnance Factories, so as to deprive them of the exemption from payment of professional tax, is liable to be declared as ultra vires to the provisions of Article 14 of the Constitution of India as it has an effect of creating two different classes amongst persons rendering defence services without any intelligible criterion and the petitioners have further claimed exemption from payment of professional tax under the Act.
8. The learned A.G.P. appearing for the State of Maharashtra contended that in view of the amendment to section 27-A by virtue of Maharashtra Act No. 12 of 1992, the exemption to which the employees of Ordnance Factories were enjoying stands withdrawn. He further contended that in the light of the amended provisions of the Act, the benefit of the judgment of this Court in the case of B.S. Raut v. State of Maharashtra (supra) is no longer available to the petitioners as on date. According to the submission of the State, the substratum of the said judgment stands withdrawn in view of the amended provision of the Act. The learned A.G.P. requested for fresh look to the provisions of the Act vis-a-vis the provisions of Army Act, 1950 and took us through the provisions of the said legislations, which definitely need minute judicial dissection.
POINTS FOR DETERMINATION
9. In the light of the aforesaid rival contentions, the following points arise for our consideration:
(1) Whether persons on the establishment of Defence Ordnance Factories in any part of the State are exempted from the provisions of the Act?
(2) Whether civil defence personnel working on the establishment of Defence Ordnance Factories of the State are members of Forces as defined in the Army Act, 1950?
(3) Whether the judgment of the Division Bench of this Court in the case of B.S. Raut v. State of Maharashtra (supra) continues to hold the field even after amendment to section 27-A of the Act by virtue of Maharashtra Act No. 12 of 1992?
(4) Whether section 27-A of the Act purporting to exclude persons like petitioners is ultra vires to the provision of Article 14 of the Constitution of India?
SCHEME OF THE LEGISLATION
10. Before proceeding to consider the rival contentions raised on behalf of the respective parties, it would be profitable to take review of the relevant provisions of law in this regard.
The legislature of the State thought it expedient to provide for levy and collection of a tax on profession, trades, callings and employments for the benefit of the State for raising additional resources needed for implementing the Employment Guarantee Scheme of the State Government and to provide for establishment of the Employment Guarantee Fund and for the matters connected therewith and legislated the Act in question.
Section 3 of the Act is a charging section and determines the liability of the persons engaged in any profession, trade, calling or employment (either actively or otherwise) as set out in Schedule I. Article 276 of the Constitution of India as amended provides for levy of professional tax by a State subject to a maximum limit of Rs. 2,560/- per year. The present Act also provides for a maximum tax of Rs. 2,500/- per year in conformity with the above provision of the Constitution.
Section 3 reads as under:
"3. Levy and charge of tax.--(1) Subject to the provisions of Article 276 of the Constitution of India and of this Act, there shall be levied and collected a tax on professions, trades, callings and employments for the benefit of the State.
(2) Every person engaged actively or otherwise in any profession, trade, calling or employment and falling under one or the other of classes mentioned in the second column of Schedule I shall be liable to pay to the State Government the tax at the rate mentioned against the class of such persons in the third column of the said Schedule:
Provided that, the tax so payable in respect of any one person shall not exceed two thousand and five hundred rupees in any year:
Provided further that, entry 23 in Schedule I shall apply only to such classes of persons as may be specified by the State Government by notification in the Official Gazette, from time to time."
The Act, when it was brought on the statute book, did not contain any power to grant exemption in favour of any person from the provision contained in section 3 of the Act. The legislature later on thought it necessary to provide for such power to grant exemption. Consequently, section 27-A was inserted by Maharashtra Act No. 21 of 1976 with effect from 1st November, 1976. The said section provides for power to grant exemption from the provision of section 3 of the Act. The said section 27-A was amended from time to time. Relevant for our purpose to unveil the present controversy, amendments made to section 27-A from time to time are divided in the following four parts detailed hereinbelow:---
(A) Text of section 27-A from the date of its insertion in the enactment by Maharashtra Act No. 21 of 1976 till its substitution on 22nd February, 1991 by Maharashtra Act No. 12 of 1991 i.e. for the period from 1st November, 1976 to 22nd February, 1991:
"Nothing contained in section 3 and other provisions of this Act shall apply to-
(a) the 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,
(b) x x x
(c) x x x
(d) x x x (B) The amended section 27-A of the Act after its substitution by virtue of Maharashtra Act No. 12 of 1991 on 22nd February 1991 with retrospective effect i.e. with effect from the date of its insertion on 1st November, 1976:
"27-A. Exemptions.---Nothing contained in section 3 and other provisions of this Act shall apply to:
(a) the members of the forces as defined in the Army Act, 1950 or the Air Force Act, 1950 and the members of Indian Navy as defined in the Navy Act, 1957 serving in any part of the State and drawing pay and allowances as Army or Air Force or Navy, as the case may be, including the members of auxiliary forces for reservists, or reserve and auxiliary services serving in any part of the State and drawing pay and allowances as such auxiliary forces or reservists, or reserve and auxiliary services, as the case may be under the budgetary allocations of the defence services.
(b) ............
(c) ............
(d) ............
(e) ............
(f) ............
(g) ............
(C) The amended section 27-A was once again amended and Clause (a-1) was inserted by Maharashtra Ordnance No. 12 of 1996 with effect from 1st October, 1996, substituted by Maharashtra Act No. 9 of 1997:
"(a-1) Persons on the establishment of Defence Ordnance Factories in any part of the State."
(D) The above clause has now been deleted by Maharashtra Act No. 28 of 2000 with effect from 1st May, 2000:
"In section 27-A of the Profession Tax Act, Clause (a-1) shall be deleted."
With the deletion of the said Clause (a-1), the same stands removed from the said Act and exemption in favour of the persons on the establishment of Defence Ordnance Factories in any part of the State no longer exists.
11. Now, in order to find out who are the "members of the forces" as defined under Army Act, 1950, let us turn to the provisions of the said Army Act of 1950, a central legislation.
Section 3 of the Army Act defines different words used in the said Act.
Clause (xi) of section 3 defines the words "the Forces" as under:---
"(xi) "the Forces" means the regular Army, Navy and Air Force or any part of any or more of them."
Clause (xxi) of section 3 defines the words "regular Army" to mean:---
"(xxi) "regular Army" means officers, junior commissioned officers, warrant officers, non-commissioned officers and other enrolled persons who, by their commission, warrant, terms of enrolment or otherwise, are liable to render continuously for a term military service to the Union in any part of the world, including persons belonging to the Reserve Forces and the Territorial Army when called out on permanent service."
FINDINGS ON THE RIVAL CONTENTIONS Point No. 1:
12. Having surveyed the history of the legislation in question it is clear that the words "members of the armed forces of the Union" were used in Clause (a) of section 27-A as existed prior to 22nd February, 1991. It was neither defined by the Professional Tax Act nor by the Army Act, Air Force Act or the Navy Act. The Division Bench of this Court taking into account the provision of Article 33 of the Constitution of India and considering the effect of the Apex Court judgments in the matter of Ous Kutilingal Achudan Nair v. Union of India, , R. Viswan v. Union of India, 1983 S.C.C. 401 and also after taking note of the ratio of Gopal Upadyaya v. Union of India, has reached to the conclusion that the civilian defence personnel, who can be ordered to render field service and follow the army in certain situations, mainly during war time, were exempted from the liability to pay professional tax in view of provision of section 27-A of the Act as existed at the relevant time. In order to give effect the above judicial pronouncement of the Division Bench of this Court in the matter of B.S. Raut v. State of Maharashtra (supra), the State of Maharashtra amended section 27-A and Clause (a-1) was inserted by Maharashtra Ordinance No. 12 of 1996, with effect from 1st October, 1996, which was later on substituted by Maharashtra Act No. 9 of 1997. Thus an exemption from payment of professional tax was provided to the persons working in the Ordnance Factories run in the State of Maharashtra.
13. The aforesaid exemption continued till its withdrawal by virtue of Maharashtra Act No. 28 of 2000 which came into effect on 1st May, 2000. Now Clause (a-1) extracted in paragraph 10(C) hereinabove is not on the statute book, with the result, exemption which was operating in favour of the employees or persons on the establishment of Defence Ordnance Factories in any part of the State on the basis of law laid down by this Court in the matter of B.S. Raut v. State of Maharashtra (supra) no longer exists. Therefore, the submission of the respondents, that the said judgment is of no assistance to the petitioners, gets credence.
Points No. 2:
14. The contention of the petitioners that in spite of deletion of sub-clause (a-1) of section 27-A they are entitle for exemption, on the text of existing Clause (a) of section 27-A of the Act, needs independent consideration. According to them, when the case of B.S. Raut v. State of Maharashtra (supra) was decided by the Division Bench, admittedly, Clause (a-1) of section 27-A was not on the statute book, even then the Division Bench held that such persons were entitled for exemption from payment of professional tax, as such, in the submission of petitioners, on the bare text of Clause (a) of section 27-A of the Act, they are entitled to claim exemption from payment of professional tax.
15. While considering the above submission, one cannot escape radical specific amendment made to Clause (a) of section 27-A of the Act. The said Clause (a) has now been substituted in toto. The said legislative changes at glance are as under :
----------------------------------------------------------------------------------------------
Section 27-A(a) prior to amendment. Sec. 27-A(a) after amendment.
----------------------------------------------------------------------------------------------
(a) the members of the armed forces (a) the members of the
of the Union, that is to say, to Forces as defined (a) the
whom the provisions of the Army members of the Force as
Act, 1950, the Air Force Act, 1950, defined in the Army Act,
or the Navy Act, 1957 apply serving 1950 or the Air Force
in any part of the State. Act, 1950 and the members
of Indian Navy as
defined in the Navy Act,
1957 serving in any part
of the State and drawing
pay and allowances
as Army or Air Force or
Navy, as the case may
be, including the members
of auxiliary forces or
reservists, or reserve
and auxiliary services
serving in any part of
the State and drawing
pay and allowances as
such auxiliary forces or
reservists, or reserve
and auxiliary services,
as the case may be un
der the budgetary
allocations of the defence
services.
The words "members of the Forces" are defined under the Army Act, 1950 to mean regular Army, Navy and Air Force or any part of any one or more of them. Regular Army has also been defined to mean the officers, junior commissioned officers, warrant officers, non-commissioned officers and other enrolled persons who, by their commission warrant, terms of enrolment or otherwise, are liable to render continuously for a term military service to the Union in any part of the world, including persons belonging to the Reserve Forces and the Territorial Army when called out on permanent service. The petitioners do not fall in any of the part of this definition, therefore, they cannot be said to be members, of the forces under section 3(xi) of the Army Act, 1950.
16. It is an established principle of interpretation that when the amending Act alters the language of the statute, the alteration must be taken to have been made deliberately. When the legislatures substitute certain provisions in the Act for those which existed earlier, it must be taken to have done so with intention and motive. On the dissection of the above various provisions, we are of the confirmed view that the petitioners, who are the employees or persons on the establishment of Defence Ordnance Factories in the State cannot be equated with or cannot be grouped with the members of the Forces as referred to under Clause (a) of section 27-A of the Act. The petitioners being the persons on the establishment of Defence Ordnance Factories form class by themselves. They are distinct from that members of the forces. They cannot be included in the class of persons known as "members of forces" as defined under section 3(xi) of the Army Act, 1950.
Point No. 3 :
17. The substratum of the very basis of the judgment of the Division Bench delivered in the case of B.S. Raut v. State of Maharashtra (supra) does not exist as on date, as such, the said judgment is no longer a good law and it cannot be allowed to hold the field in the light of the existing provisions of the Act. A statute after its amendment is to be read and construed with reference to the new provisions and not with reference to the provisions which originally existed. It is needless to mention that when legislature intended by any particular amendment to make substantial changes in the existing statute, it is impossible to arrive at a conclusion without noticing the change suggested or intended and after taking into account the changes made by the legislature, it is not possible for us to hold that the said judgment still holds the field. In view of the amendment to section 27-A of the Act, the said judgment cannot be applied to the facts of the present case. It is no longer a good law.
Point No. 4 :
18. So far as the challenge to section 27-A of the Act on the touchstone of Article 14 of the Constitution of India is concerned, it is needless to mention that Article 14 forbids class legislation but permits reasonable classification for the purpose of legislation which classification must satisfy the twin test of classifications, being founded on intelligible differentia which distinguishes persons or things that are grouped together from those that are left out of the group and that the differentia must have a rational nexus with the object sought to be achieved. The economic wisdom of a tax is within the exclusive province of the legislature. The only question for the Court is to consider whether there is a rationality in the belief of the legislature that capacity to pay tax differs between two distinct group of persons. In respect of taxation laws, the power of legislature to classify goods, things or persons are necessarily wide and flexible so as to enable it to adjust its system of taxation in all proper and reasonable ways. The legislature in order to tax some, need not tax all. It can adopt a reasonable classification of persons in imposing tax liabilities. A law of taxation cannot be termed as being discriminatory merely because some are exempted from liability to pay tax provided it is possible to hold that the said exempted class belongs to a distinct and separate group and that there is a reasonable nexus between the classification and the object sought to be achieved. The courts lean more readily in favour of upholding the constitutionality of taxing laws in view of complexities involved in the social and economic life of the community. The Apex Court in the matter of Malwa Bus Service Pvt. Ltd. v. State of Punjab, laid down that unless the fiscal statute in question is manifestly discriminatory, the Court should refrain from striking it down on the ground of discrimination. In the instant case not only classification is reasonably based on intelligible differentia which distinguished the persons grouped together from those who are left out of the group but the exemption in favour of members of the forces is extended considering their economic life and situation in which they are placed. In the circumstances, challenge to section 27-A on the score of Article 14 of the Constitution must fail.
19. In the result, petitions are dismissed. Rule is discharged with no order as to costs.