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Kamta Prasad Aggarwal And Others v. Executive Officer, Ballabgarh And Another
Factual and Procedural Background
The appellants, who were already paying a profession tax of Rs 250 per annum to the State of Haryana under the Punjab Professions, Trades, Callings and Employment Taxation Act, 1956 (as extended to Haryana), received notices from the Executive Officer of the Ballabgarh Panchayat Samiti demanding an additional profession tax of Rs 200 for the year 1963-64. The notices were issued under Section 76 of the Punjab Panchayat Samitis and Zila Parishads Act, 1961.
Challenging these notices, the appellants filed writ petitions before the Punjab and Haryana High Court. A Full Bench upheld the Panchayat Samiti’s power to levy the tax. The High Court having rejected their challenge, the appellants obtained certificates and filed the present civil appeals (Nos. 2427 & 2428 of 1968) before the Supreme Court of India. The judgment was delivered on 20 December 1973.
Legal Issues Presented
- Whether Article 276 of the Constitution limits the aggregate profession tax recoverable from any individual by all authorities combined to Rs 250 per annum, or permits each authority named in the Article (State, municipality, district board, local board or other local authority) to levy its own tax up to that ceiling.
- Consequently, whether the Panchayat Samiti’s demand of Rs 200 was invalid because the appellants were already paying Rs 250 to the State.
Arguments of the Parties
Appellants' Arguments
- The phraseology of Article 276(2) should be read conjunctively, meaning the total profession tax payable by any one person to all enumerated authorities together cannot exceed Rs 250 per annum.
- Since they were already remitting Rs 250 to the State, any further levy by a Panchayat Samiti amounted to impermissible double taxation and contravened Article 276.
Respondents' Arguments
- Article 276 uses the word “or” in a disjunctive sense; therefore, each authority may independently levy a profession tax up to Rs 250.
- The Panchayat Samiti’s power is preserved by Section 76 of the 1961 Act and by Article 276, and the levy does not constitute double taxation within the meaning of the Constitution.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Court, speaking through A. N. Ray, C.J., adopted the following line of reasoning:
- Professional tax distinct from income tax: A tax on professions is triggered by the carrying on of a profession, trade, calling or employment and is not necessarily linked to the level of income (para 9). Its constitutional validity cannot be challenged merely because the taxpayer also pays income tax.
- Construction of Article 276: The key word “or” separating “the State” from “any one municipality, district board, local board or other authority” is disjunctive, not conjunctive (para 11). Therefore, the ceiling of Rs 250 applies individually to each authority listed.
- Role of the proviso to Article 276(2): The proviso allows pre-Constitution levies exceeding Rs 250 by any single authority to continue. This reinforces the interpretation that each authority’s levy is treated separately (para 11).
- Meaning of “total amount”: The word “total” refers to the different kinds of profession-related taxes that a single authority may impose, not to the aggregate of taxes by all authorities taken together (para 13). If the petitioners’ interpretation were accepted, practical anomalies would follow, such as uneven tax burdens and administrative uncertainty.
- Legislative competence: Entry 60 of List II empowers State legislatures to impose such taxes and to delegate that power to local authorities (para 5). The Panchayat Samiti therefore acted within legally conferred competence.
Holding and Implications
DISMISSED. The Supreme Court affirmed the Full Bench decision, holding that each authority mentioned in Article 276 may individually levy a profession tax up to Rs 250 per annum, rendering the Panchayat Samiti’s Rs 200 demand lawful.
Implications: The ruling clarifies the constitutional scope of Article 276, confirming that multiple authorities may impose separate profession taxes so long as each stays within the Rs 250 ceiling. While it upholds the appellants’ immediate liability, it does not create a new principle beyond this interpretive clarification of Article 276.
(From Punjab and Haryana High Court)
(Before A.N Ray, C.J and H.R Khanna, K.K Mathew, A. Alagiriswami and P.N Bhagwati, JJ.)
KAMTA PRASAD AGGARWAL AND OTHERS . . Appellants;
Versus
EXECUTIVE OFFICER, BALLABGARH AND ANOTHER . . Respondents.
Civil Appeals Nos. 2427 & 2428 of 1968, decided on December 20, 1973
Constitution of India — Article 276 — Scope — Whether recoveries of profession tax can be made by each one of the authorities mentioned in Article 276 up to a maximum of Rs 250 per annum — Claim under Section 76 of Punjab Panchayat Samitis and Zila Parishads Act if valid when appellant already paying Rs 250 as profession tax under Punjab Professions Trades, Callings and Employment Taxation Act, 1956 (as applicable in Haryana) Profession tax — Nature of Held : 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. (Para 9) 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 ‘and’. 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. (Para 11) 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. So the State as well as the authorities mentioned in Article 276 of the Constitution can 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. (Para 13) Appeal dismissedM/1857.SCT
Advocates who appeared in this case :
Brij Bans Kishore, Senior Advocate (M.M Kshatriya, Advocate, with him), for the Appellants;
S.K Mehta, K.R Nagaraja, M. Qamaruddin and Vinod Dhawan, Advocates, for Respondent 1.
The Judgment of the Court was delivered by
A.N Ray, C.J— These appeals are by certificate from the judgment dated May 17, 1967 of the Full Bench of the High Court of Punjab and Haryana.
2. 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 Punjab Panchayat Samitis and Zila Parishads Act, 1961 referred to as the “1961 Act”.
3. 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 the State of Haryana.
4. 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.
5. 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 Municipality, District Board, Local Board or other local authority.
6. 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 one person to the authorities enumerated in the Article by way of taxes on professions, trades, callings and employments not exceeding Rs 250 per annum.
7. The Punjab Professions, Trades, Callings and Employment Taxation Act, 1956 referred to as the 1956 Act by Section 3 imposed liability 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, calling 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 25,000. 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 1500 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.
8. The Panchayat Samiti, Ballabgarh issued a notice on September 19, 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 and 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 complain.
9. 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 profession can be imposed if a person carries on a profession. Such a tax on profession is irrespective of the question of income.
10. Article 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 provisions in Article 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 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 “and”. 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 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.
12. 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.
13. 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. The High Court was right in reaching the conclusion that the State as well as the authorities mentioned in Article 276 of the Constitution can 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.
14. 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.
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