BANASHANKARY LEASING COMPANY LIMITED Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) Petitioners in these writ petitions are companies engaged in the business of hire purchase and automobile parts. They have called in question the constitutional validity of Entry 19 of the Karnataka Tax on Professions, Trades, Callings & Employments Act, 1976 (Karnataka Act 13 of 1989) (hereinafter referred to as the Act), levying a flat rate of tax of Rs 2,500/- per annum.

(2.) The grounds of attack raised by the petitioners are: that reading the entry under the Constitution at 60 of List II of Second Schedule to the Constitution and the charging section as well as Entry 19 the incidence of tax is upon profession, trade or calling; that when the tax base is profession, trade or calling classification made by singling out a company without reference to the profession, trade or calling carried on by it is per se bad and has totally no relevance for the purposes and objects of the Act; that even amongst companies there is no classification based upon the standing, the number of employees engaged and capital investment made and the like as has been done in cases of certain other categories of assessees falling under the Act, such as, lawyers and certain other employers; that the levy at a flat rate of Rs. 2,500/- without classification amongst the companies depending upon the nature of activity carried on by them, their standing, the number of employees engaged by them is discriminatory. The learned Counsel relying upon a decision of the Supreme Court in State of Kerala v Haji K. Kutty, AIR 1969 SC 378 attached the levy of flat rate adopted without taking into consideration the nature of activity carried on, the age, size and magnitude of the company as non-classification on that basis would lead to discrimination and results in refusal to make a classification on the basis of the above criterion, which factor is itself discriminatory.

(3.) The charging section viz., Section 3 of the Act and Entry 19 in the Schedule thereof read are follows: