Karnataka Bank Ltd vs State Of A.P. & Ors

(j) of Section 2 of the Andhra Pradesh Tax on Professions, Trades, Callings and Employments Act, 1987 (Act No.22 of 1987),for short the Act, as well as Explanation No.I to the First Schedule of the said Act as amended by Act No.29 of 1996 have been dismissed. In order to consider as to whether the said provisions of the Act suffer from any vice of unconstitutionality we shall briefly refer to the facts.

2. The appellant in C.A.No.2400/02 is M/s. Shaw Wallace and Company Limited, a Company registered under the Companies Act, 1956. It has its principal place of business at Secunderabad in A.P. State. In addition to its principal place of business at Secunderabad the appellant has branches and stock points where it transacts its business and stores its goods. At the material time, the appellant had about 74 stock points, every stock point has been duly recorded with the registering authority under the A.P. General Sales Tax Act. It is aggrieved by the notice issued by the first respondent requiring the appellant to pay profession tax at Rs.2500/- for each of its branches in A.P. for the years 1996-97 and 1997-98. The respondent altogether demanded a sum of Rs.3,42,000/- at the rate of Rs.2500/- per annum for each of the branches of the appellant Company. The first respondent obviously relied on the Explanation No. I to the First Schedule to the Act defining the expression person which we shall notice little later. It is under those circumstances the appellant invoked the jurisdiction of the High Court under Article 226 of the Constitution of India and prayed for grant of appropriate reliefs.

3. The appellant in C.A.No.1994/02 is a banking Company engaged in banking activities having the network of over 300 branches spread throughout India. The appellant altogether at the relevant time had branches in 17 places within the State of Andhra Pradesh. It had obtained the certificate of enrolment from the first respondent at Hyderabad where it has its principal place of business. The appellant was paying Profession Tax in respect of principal branch at Hyderabad alone. The first respondent herein issued similar notices requiring the appellant to pay Profession Tax of Rs.2500/- to be paid by each of its branches in the State of Andhra Pradesh.

4. The appellant in C.A.No.1995/02 is a partnership firm engaged in the business of sale of petroleum products. It has its principal place of business at Secunderabad in the State of Andhra Pradesh. In addition to its principal business premises, it has other petroleum outlets outside Hyderabad and Secunderabad. The first respondent issued similar notices demanding Profession Tax by treating the various branches of the appellant firm as a different person at the rate of Rs.2500/- per annum. Each of the appellants branch has been treated as a separate person for the purposes of levy and realization of tax under the provisions of the Act.

29. We have noticed that Section 4 of the Act which deals with levy and charge of tax mandates that there shall be levied and collected a tax on professions, trades, callings and employments etc. for the benefit of the State and every person engaged in any profession, trade, calling etc. in the State falling under any one or other of the classes specified in Column (2) of the first Schedule shall be liable to pay tax at the rate specified in the corresponding Entry in Column (3) thereof. The maximum rate specified in the First Schedule at which profession etc. is levied and liable to be paid by every person admittedly does not exceed Rs 2500/- per annum. Article 276(2) does not prohibit such levy and collection of tax from every one person not exceeding Rs. 2500/- per annum.

CONCLUSION:

45. For the aforesaid reasons, we hold the definition of the word person in the impugned Explanation and also Explanation No. I to the First Schedule of the Act is not intended to tax a person at a rate higher than Rs.2500/- per annum, per person, but to treat even a branch of a firm, company, corporation or other corporate body, any society, club or association as a separate person, and therefore, a separate assessee within the meaning of Section 2 (b) of the Act and the Andhra Pradesh State Legislature has undoubtedly the competency to adopt such a devise of taxation. The Andhra Pradesh State Legislature did not violate the mandate of Article 276(2) of the Constitution.

45. In the result, the appeals are dismissed with no order as to costs.