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5. The Writ Petitions filed by each of the appellant challenging the constitutional validity of the provisions of the said Act referred to hereinabove came up before a Division Bench of the A.P. High Court which has upheld the validity of the provisions.

RELEVANT CONSTITUTIONAL PROVISIONS AND SCHEME OF THE ACT

6. Clause (1) of Article 276 of the Constitution enables a State Legislature to enact a Legislation imposing tax on professions, trades, callings and employments and further provides that such law made by a State Legislature shall not be declared invalid on the ground it relates to tax on income. Clause (2) of Article 276 as it stood prior to the Constitution (Sixtieth Amendment) Act, 1988 commands that the total amount payable in respect of any one person to the State or to any local authority in the State by way of taxes on professions, trades, callings and employments shall not exceed Rs.250/- per annum. The Constitution (Sixtieth Amendment) Act, 1988 enhanced the tax limit prescribed under clause (2) of Article 276 and increased it to Rs.2500/-. The relevant Entry empowering the State Legislature to enact the law imposing taxes on professions, trades etc. is founded on Entry 60 of List II to the Seventh Schedule. The purpose of Article 276 is not to amend that power of State Legislature but to merely to provide that such tax is not invalid on the ground that it relates to a tax on income.

23. In The Bengal Immunity Company Limited vs. The State of Bihar and others ,this court while recognizing that the Constitution makers by Article 246(3) read with Entry 54 in List II of the Seventh Schedule to the Constitution conferred power on the Legislatures to make law with respect to taxes on the sale or purchase of goods other than newspapers held that the Constitution at the same time by Article 286 clamped on the legislative power several fetters. Likewise Article 276 imposes fetters on the law making power of a State Legislature in the matter of making a law relating to taxes on professions, trades, callings and employments. Those restrictions are found in Article 276 (2) which commands that the total amount payable in respect of any one person to the State or to any one Municipality etc. or other local authority in the State by way of taxes on professions etc. shall not exceed Rs. 2500/- per annum.

26. Article 276 of the Constitution of India corresponds to Section 142A of the Government of India Act, 1935. The legislative history upon which Section 142A of the Government of India Act, 1935 was enacted and on which Article 276 of the Constitution now rests was noticed by this court in Bharat Kala Kendra (Supra). It is observed :

. . . . . It is that the legislative spheres of the Provinces and the Centre came to be clearly demarcated in regard to items falling within Lists I and II of Schedule VII of the Govt. of India Act and now to those falling within the same lists of Schedule VII of the Constitution. Taxes on professions, trades, callings and employments are taxes on income and are thus outside the provincial/ and now State  lists and belong exclusively to Parliament and before that to the Central Legislature. Yet under a large number of laws enacted before the Govt. of India Act, 1935 came into force, power was conferred on local Governments and local authorities to impose taxes on such activities. This was obviously in conflict with S.100 of the Govt. of India Act. When this was realized S.142-A was enacted by the British Parliament which saved the power conferred by pre-existing laws but limited the amount payable to Rs.50 after 31st March, 1939. A saving was made, however, of pre-existing laws subject to certain conditions with which we are not concerned. The provisions of this section have been substantially reproduced in Article 276 of the Constitution with the modification that the upper limit of such tax payable per annum would be Rs.250 instead of Rs.50. A tax can be recovered only if it is payable and it would be payable only after it is assessed.

27. The purpose of Article 276 is not to amend the States power to tax profession founded on Entry 60 but is to provide that such tax is not invalid on the ground that it relates to a tax on income.

28. A plain reading of Article 276 makes it abundantly clear that a State Legislature is precluded from making laws enabling the authorities to impose tax on professions, trades, callings etc. in excess of the prescribed amount, such law if enacted by a Legislature would be in the teeth of Article 276 of the Constitution. The total amount payable in respect of any one person to the State or to any one municipality or other local authority etc. in the State by way of tax on profession etc. shall not exceed Rs.2500/- per annum. Entry 60 of List II which authorizes the State Legislature to make a law relating to tax on profession is to be read along with Article 276 of the Constitution. Article 276 is also declaratory in its nature inasmuch as it declares that notwithstanding anything contained in Article 246, no law of the Legislature of a State relating to taxes for the benefit of State etc. in respect of profession, trades etc. Shall be invalid on the ground that it relates to tax on income. Likewise, it also declares the power of the Legislature of a State to make such laws with respect to taxes on professions etc. shall not be construed as limiting in any way the Parliaments power to make laws with respect to taxes on income accruing from or arising out of profession, trade etc. For the purposes of this case, it is not necessary to notice the distinction between tax and profession and income. It is well settled that a tax on profession is not necessarily connected with income. A tax on income can be imposed if a person carries on a profession, trade, calling etc. Such a tax on profession is irrespective of the question of income. There is no other restriction imposed upon a State Legislature in making law relating to tax on profession, trade, calling and employment. There can be no doubt whatsoever that a State Legislature cannot make any law to levy and collect profession tax at the rate of more than Rs.2500/-per person, per annum, in view of the restriction in Article 276(2) of the Constitution.