PRAKASAN Vs. STATE OF KERALA

JUDGEMENT

(1.) THE validity of the Kerala Tax on Employment Act, 1976 (Act 14 of 1976) has been challenged in these writ petitions. THE grounds of challenge raised in the various writ petitions may usefully be preceded by a brief survey of the provisions of the Act.

(2.) S. 4 is the charging section. Clause (1) thereof, which is the main. provision, reads: "4. Charge of tax (1) Subject to the other provisions contained in this Act, there shall be charged on every person who exercises a profession, art or calling or transacts business or holds any appointment, public or private, within the State, a half-yearly tax (hereinafter referred to as tax on employment) at the rate specified in the schedule. Explanation: A person shall be deemed to have exercised a profession, art or calling or held an appointment within the State, if that person has an office or place of employment within the State. " S. 5 provides for deduction of the tax on employment by the employer from the salary or wage payable to a person. S. 4 provides for every employer liable to pay tax under S. 5 obtaining a certificate of registration from the assessing authority. We skip over the provisions which provide for submission of return, assessment, recovery, penalty, appeals etc. S. 26 bars the jurisdiction of a civil court to set aside or modify any assessment made under the Act and grants immunity to the Government or any authority or officer for anything done in good faith under this Act. The provision follows the familiar pattern known to many tax legislations. S. 29 is the rule making section. S. 30 provides for the establishment of a housing fund and its utilisation. The Kerala State Poor Housing Fund is to be established on the commencement of the Act. Clause. 2 to 6 of S. 30 are as follows: "30. Establishment of Housing Fund and its utilisation- (2) The proceeds of the tax on employment levied and collected under this Act, together with the fines, interest and fees recovered thereunder, shall first be credited to the Consolidated Fund of the State, and, after deducting the expenses of collection and recovery as determined by the Government, the remaining amount shall, under appropriation duly made by law in this behalf, be entered into, and transferred to, the Housing Fund. (3) Any amount transferred to the Housing Fund shall be charged on the Consolidated Fund of the State. (4) No sum shall be paid or applied from and out of the housing Fund except in the manner and for the purpose provided in sub-sections (5) and (6 ). (5) The amount standing to the credit of the Housing Fund shall be expended in such manner and subject to such conditions as may be prescribed for the purpose of providing house sites for landless poor persons. Explanation For the purposes of this sub-section, "landless poor person" means a person who does not hold any land which is fit for construction of a dwelling house, either as owner or as tenant having fixity of tenure, and whose annual income is not more than six hundred rupees. (6) The Housing Fund shall be held and administered on behalf of the Government by an officer not below the rank of Secretary to the government, subject to such general or specified directions as may be given by the Government from time to time. " Turning to the schedule, it is enough to notice that the tax is on a graded scale depending on the half yearly income of the person liable to pay. Those having half yearly income of Rs. 1800/-and less, are completely exempt; those with income ranging from Rs. 1800/- to Rs. 3000/- are liable to pay Rs. 6/-per half year; those between Rs. 3000/- and Rs. 4800/- are liable to pay Rs. 18/-; and so on.

(3.) THE decision in Kamta Prasad v. Ex. Officer Ballabgarh (AIR. 1974 SC. 685) was cited in answer. That decision clearly stated thus: "9. THE contention of the appellants that the imposition of tax by the Panchayat Samtti 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 profession can be imposed if a person carries on a profession. Such a tax on profession is irrespective of the question of income. 10. Art. 276 (2) as well as 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. 11. THE provision in Art. 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 Art. 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 'and'. THE word 'or' is used in a disjunctive sense. THE proviso to Art. 276 (2) not only supports that construction but also makes the provision clear. In the proviso to Art. 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. " (underling ours)