As per case facts, the State of Haryana was already collecting a professional tax under a 1956 Act. Later, the Panchayat Samiti, Ballabgarh, also sought to levy a professional tax ...
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PETITIONER:
KAMTA PRASAD AGGARWAL ETC.
Vs.
RESPONDENT:
EXECUTIVE OFFICER, BALLABGARH & ANR.
DATE OF JUDGMENT20/12/1973
BENCH:
RAY, A.N. (CJ)
BENCH:
RAY, A.N. (CJ)
KHANNA, HANS RAJ
MATHEW, KUTTYIL KURIEN
ALAGIRISWAMI, A.
BHAGWATI, P.N.
CITATION:
1974 AIR 685 1974 SCR (2) 827
1974 SCC (4) 440
CITATOR INFO :
R 1984 SC 884 (46)
ACT:
Constitution of India, 1950, Art. 276--Scope of-whether
State and each of the authorities mentioned in Article can
impose tax up to a limit of Rs. 250.
HEADNOTE:
Under the Punjab Professions, Trades, Callings and
Employment Taxation Act, 1956, a professional tax on a
graded scale, subject to a maximum of Rs. 250 per annum, had
been and was being collected by the State of Haryana. The
Panchayat Samiti. Ballabgarh, in Haryana. issued a notice
that it intended to levy professional tax at the maximum
rate of Rs. 200 per annum according to the Scheduled
specified under the Gram Panchayat Samitis and Zila
Parishads Act. 1961. The appellants, in writ petitions in
the High Court, contended that the imposition was in
violation of Article 276 of the Constitution in that the
maximum limit of Rs. 250/- mentioned in the Article applies
to the totality of the tax recovered by all the authorities
mentioned in the Article taken together. The High Court
dismissed the petitions.
Dismissing the appeals to this Court,
HELD : The High Court was right in reaching the conclusion
that the State as well as the authorities mentioned in the
Article can each impose tax up to a limit of Rs. 250. [830
G-H]
(1)The power of the State to levy the tax is derived from
Entry 60 of List II of the VII Schedule to the Constitution
dealing with taxes on professions, trades, callings and
employments. The State Legislature is therefore, competent
to legislate and levy taxes on professions. trades and
employments and may also by law, confer a similar authority
on a local authority. [828 F]
(2) A tax on profession can be imposed if a person carries
on a professions. Such atax on profession is irrespective
of the question of income. [829 G]
(3) The words in the Article that the total amount payable
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to the State or to any one Municipality, District Board.
Local Board or local authority cannot mean that the word
'or' is used in a conjunctive sense as a substitute for the
word 'and'. This is clear from the proviso to Article
276(2) which provides that if before the commencement of the
Constitution any State or any, authority had imposed a tax
earning the limit of Rs. 250 such tax may continue; and this
indicates that both can tax separately to the limit imposed
by the Article. [830 B]
(4)The words 'any one person' in the Article are used in
juxtaposition with any one municipality etc. One and the
same person may be engaged in more than one of the items
suggested in Art. 276 and there may be imposition of tax on
more than one item. The word 'total' relates to am
authority levying various taxes and not to all authorities
put together. [830 D]
(5)If the total of the taxes should not exceed Rs. 250/-
as contended by the appellant 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 only upto the
balance of Rs. 100. This would lead to the anomalous
consequences, namely (a) one of the authorities will have to
tax persons with lower incomes while those with higher
incomes will escape; and (b) if one authority will impose a
tax of the balance sum left after deducting the tax imposed
by the State, all the other authorities may not impose the
taxes, [830 F]
828
JUDGMENT:
CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 2427-2428/68
From the Judgment and Order dated the 25th August, 1967 and
17th May 1968 of the Punjab and Haryana High Court in C.W.
Nos. 355 and 354 of 1967.
Brij Bans Kishore and M. M. Kshatrya, for the appellants.
S.K. Mehta, K. R. Nagaraja, M. Qummaruddin and Vinod
Dliawan. for respondents No. 1.
The Judgment of the Court was delivered by
RAY, C.J.-.These appeals are by certificate from the
judgment dated 17 May, 1967 of the Full Bench of the High
Court of Punjab and Haryana.
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
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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.
The Punjab Professions, Trades, Callings and Employment
Taxation Act, 1956 referred to as the 1956 Act by section 3
imposed liabi-
829
lity on persons who carried on trade or who followed
profession or calling or who was in employment to pay tax in
respect of such profession, trade, callings or employment at
rates specified in the Schedule. Income below Rs. 6000/-
was exempted from tax. Income between Rs. 6000/- and Rs.
8500/- was subjected to a tax of Rs. 120/per annum. The
maximum sum of Rs. 250/- per annum was levied on income
exceeding Rs. 2500/'-. The appellants were paying Rs. 250/-
per annum to the State by way of professional tax. Under
section 5 of the Punjab Temporary Taxation Act, 1962 the
Schedule to the 1956 Act was altered. Income between Rs.
1800:/- to Rs. 3000/- was subjected to a tax of Rs. 28/- per
annum. Income exceeding Rs. 11,500/was subjected to a tax
of Rs. 250/- per annum. By Punjab Act 6 of 1967 the 1956
Act was repealed. There is now no professional tax so far
as the reorganised State of Punjab is concerned. The
provisions of the 1956 Act however continued to be
applicable to the State of Haryana and also to the Union
Territory of Chandigarh under the relevant provisions of
law.
The Panchayat Samiti, Ballabgarh issued a notice on 19
September-, 1962 that it intended to levy professional tax
at the maximum rate of Rs. 200/-per annum according to
the Schedule specified under the 1961 Act. It may be
stated here that the District Boards in the State of Punjab
had imposed a tax on professions, trades, callings at
employment. The District Boards were abolished in
consequence of the 1961 Act. There was however a saving
provision in the 1961 Act. Section 64 of the 1961 Act
provided that a Panchayat Samiti shall be deemed to have
imposed tax at the rate at which immediately before the
commencement of the Act it was lawfully levied by the
District Board of the District in which the Panchayat Samiti
is situate until a provision to the contrary is made by the
Panchayat Samiti with the previous sanction of the
Government. The rates which were adopted by the Panchayat
Samiti were different rates on different slabs of income.
Income exceeding Rs. 10,000/- was subjected to a tax of Rs.
200/- per annum. It is this levy of additional professional
tax against which the appellants complaint.
The contention of the appellants that the imposition of tax
by the Panchayat Samiti amounts to double taxation and is,
therefore, illegal is unsound. A tax on profession is not
necessarily connected with income. This is clear from the
tax on professions imposed by several municipal authorities
at certain rates mentioned in the relevant statutes. A tax
on income can be imposed if there is income. A tax on pro-
fession can be imposed if a person carries on a profession.
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Such a tax on profession is irrespective of the question of
income.
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,
830
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
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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.
831
For these reasons the judgment of the High Court is upheld.
The appeals are, therefore, dismissed. The parties will pay
and bear their own costs as they did in the High Court.
Appeals dismissed.
V.P.S.
13 748SCI/74
832
In the landmark judgment of Kamta Prasad Aggarwal Etc. Vs. Executive Officer, Ballabgarh & Anr., now prominently featured on CaseOn, the Supreme Court of India provided a definitive interpretation of Article 276 of the Constitution. This case critically examined the scope of the professional tax limit, settling the long-standing debate on whether the constitutional cap of Rs. 250 per annum applies to the cumulative tax levied by all authorities or if each authority can impose the tax up to that limit individually. This analysis delves into the Court's reasoning, which remains a cornerstone for understanding the division of taxation powers between State and local governments.
The central legal question before the Supreme Court was whether the maximum limit of Rs. 250 for taxes on professions, trades, callings, and employments, as stipulated under Article 276(2) of the Constitution, applies to the total amount collected by the State and all local authorities combined, or if each of these bodies has the independent power to levy a tax up to this limit on a single individual.
The case revolved around the interpretation of two key constitutional provisions:
The appellants were already paying a professional tax to the State of Haryana. When the Panchayat Samiti of Ballabgarh issued a notice to levy an additional professional tax, the appellants contended that this amounted to double taxation and violated the Rs. 250 cap under Article 276. The Supreme Court, upholding the High Court's decision, systematically dismantled this argument.
The Court's analysis focused on several key points:
For legal professionals and students grappling with such constitutional interpretations, understanding the Court's nuanced reasoning is crucial. Platforms like CaseOn.in offer 2-minute audio briefs that can help you quickly absorb the essence of complex rulings like this one, making your case preparation more efficient.
The Supreme Court concluded that the High Court was correct in its finding. It held that the State, as well as each of the other authorities mentioned in Article 276 (such as a Municipality, District Board, or Panchayat Samiti), has the independent power to impose a tax on professions, trades, callings, and employments up to the constitutional limit of Rs. 250 per annum. The limit is not a cumulative cap on the total tax paid by an individual to all such bodies.
The judgment in Kamta Prasad Aggarwal is a seminal decision that clarifies the financial autonomy of local self-governing bodies. By allowing each authority to levy its own professional tax, the Supreme Court reinforced the federal structure of India, where both the State and local bodies are empowered to raise their own revenues to discharge their respective duties. The appellants' appeal was dismissed, affirming the legality of the separate tax notices issued by the State of Haryana and the Ballabgarh Panchayat Samiti.
Disclaimer: The information provided in this article is for informational purposes only and does not constitute legal advice. For specific legal issues, it is recommended to consult with a qualified legal professional.
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