Indian Kanoon - Search engine for Indian Law

The appellants in writ petitions in the High Court challenged the legality of notices issued by the Executive Authority, Ballabgarh Panchayat Samiti claiming Rs. 200/- on account of profession tax for the year 1963-64. The notice was issued under section 76 of the Gram Panchayat Samitis and Zila Parishads Act, 1961 referred to as the 1961 Act. The appellants contended that the claim under section 76 of the 1961 Act was in violation of Article 276 of the Constitution because a similar professional tax on a graded scale subject to a maximum limit of Rs. 250/- per annum had been and was being collected by tile State of Haryana. The Full Bench of the High Court upheld the contention of the respondents that the recoveries can be made by each one of the authorities mentioned in Article 276 of the Constitution to a maximum sum of Rs. 250/- per annum. The power of the State to levy tax is derived from Entry 60 of List II in the Seventh Schedule of the Constitution. The Entry speaks of taxes on professions, trades, callings and employments. The State legislature is, therefore, competent to legislate and levy taxes on professions, trades and employments. The State legislature may also by law confer a similar authority on a Municipality, District Board. Local Board or other local authority.

The appellants contended that the maximum limit of Rs. 250/- mentioned in Article 276 applies to the totality of the tax recovered by all the authorities mentioned in the Article taken together. It was said that each authority could not levy tax up to a limit of Rs. 250/-. it was said that the opening and the concluding portions of Article 276(2) should be construed conjunctively to represent the total amount payable in respect of any person to the authorities enumerated in the Article by way of taxes on professions, trades, callings and employments not exceeding Rs. 250/- per annum.

Article 276(2) as well is the proviso has the combined effect which precludes a challenge on the ground that the tax on profession is a tax on income or that it exceeds Rs. 250/- per annum. The proviso saves existing taxes. The proviso states that notwithstanding that a profession tax exceeds Rs. 250/- per annum it can continue to be levied until provision to the contrary is made by Parliament by law.

The provisions in Article 276(2) were contended by counsel for the appellants to indicate that the total of taxes imposed on professions, trades, callings and employments by the State, Municipality or any other authority should not exceed Rs. 250/- per annum. it was said that the words "total amount by way of taxes" shall not exceed Rs. 250/-. That is totally misreading the Article. It cannot be denied that the State Legislature has power to impose taxes. The words in Article 276 that the total amount payable to the State or to any one Municipality, District Board, local board or other local authority cannot mean that the word 'or' is used in a conjunctive sense as a substitute for the word land'. The word 'or' is used in a disjunctive sense. The proviso to Article 276(2) not only supports that construction but also makes the provision clear. In the proviso to Article 276(2) it is mentioned that if before the commencement of the Constitution any State or any municipal board or authority had imposed a tax exceeding the limit of Rs. 250/- such tax may continue. Therefore, when the proviso speaks of any State or any such municipality it indicates that both can tax separately to the limit imposed by the Article. Again, the language of Article 276(2) shows that the Constitution uses the words "any one person" in juxtaposition with any one municipality, district board, local board or other authority. The provisions are clear in their effect that the word "or" occurring between the words "the State" and the words "to any one municipality" cannot be read as the word "and" in a conjunctive sense. The words "the total amount payable in respect of any one person to the State or to any one municipality, district board, local board or other authority" mean that tax of and up to the sum of Rs. 250/- can be imposed by any one of the authorities mentioned. If the Constitution wanted the total taxes to be imposed by the State and other authorities to be Rs. 250/- the Constitution would have said that the total amount payable in respect of any one person by way of tax on professions, trades, callings and other employments shall not exceed Rs. 250/- per annum whether imposed by the State, municipality, district board, local board or other local authority. Further, if the total of the taxes be a sum of Rs. 250/- as contended for by counsel for the appellants it will mean that if a person is paying professional tax of Rs. 150/- to the State, the local authority can impose on him a similar tax up to the balance sum of Rs. 100/- That may lead to two consequences. One is that one of the authorities will have to tax persons with lower income while those with higher income will escape any payment of tax. The other is that if one authority will impose a tax of the balance sum left after considering the amount imposed by the State all the authorities may not impose taxes. That will be entirely a wrong construction. High Court was right in reaching the conclusion that the State as well as the authorities mentioned in Article 276 of the Constitution can each impose tax up to a limit of Rs. 250/-. One and the same person may be engaged in more than one of the items suggested in Article 276, namely, professions, trades, callings and employments. Such imposition of tax on more than one item in respect of one and the same person cannot be anything but taxes. The word "total" relates to an authority levying various taxes and not to all authorities put together.