Case: State Of Punjab &amp; Anr Vs. M/S. Bajaj Electricals Ltd

1. The respondent-a Join Stock Company-has its principal place of business in Bombay, and a branch office in New Delhi. The Assessing Authority, Karnal, exercising power under the Punjab Professions, Trades, Callings and Employments Taxation Act 7 of 1956, assessed the respondent to profession tax for the years l960-61 and 1961-62 and issued a notice of demand for the amount so assessed. The High Court of Punjab quashed the notices of demand and the assessment orders holding that the respondent did not carry on trade within the State of Punjab and was not liable to be assessed to tax under the Act. The State of Punjab has appealed to this Court against the order of the High Court.

Court's reasoning:
The question, though one of mixed law and fact, must in each case he determined on a consideration of the nature of the trade, the various steps taken for carrying on the trade and other relevant facts.5. In the present case, the respondent has no shop or office within the State of Punjab. The respondent supplies goods within the State pursuant to orders received and accepted at New Delhi, and also receives price for the goods within the State. But these are ancillary activities and do not in our judgment amount to carrying on trade within the State of Punjab.We need not refer in detail to cases such as Graingerand Son v. Gough (Surveyor of Taxes), (1896) Tax Cas 462L. Smidth and Co. v. F. Greenwood (Surveyor of Taxes), (1922) 8 Tax Casne Tyre and Rubber Co. Ltd. v Llewellin, (1957) 37 Tax Cas111 which interpret the expression "trade exercised within the United Kingdom" in the English Income-tax Acts, for they merely lay down that for the purpose of the Income Tax Acts, there is no single decisive or crucial test to determine whether the taxpayer exercises trade at a given place.Liability to pay tax under Act 7 of 1956 arises if a person carries on trade by himself, or through his agent, or follows a profession or is in employment within the State, and not otherwise. The expression "trade" is not defined in the Act. "Trade" in its primary meaning is the exchanging of goods for goods or goods for money; in its secondary meaning, it is repeated activity in the nature of business carried on with a profit motive, the activity being manual or mercantile, as distinguished from the liberal arts or learned professions or agriculture.The question whether trade is carried on by a person at a given place must be determined on a consideration of all the circumstances. No test or set of tests which is or are decisive for all cases can be evolved for determining whether a person carries on trade at a particular place.The question, though one of mixed law and fact, must in each case he determined on a consideration of the nature of the trade, the various steps taken for carrying on the trade and other relevant facts.