1973 (12) TMI 99 - SC - Indian Laws

Summary

Issues:
Challenge to legality of notices for profession tax under 1961 Act
Interpretation of Article 276 of the Constitution regarding tax limits
Imposition of additional professional tax by Panchayat Samiti
Validity of double taxation claim
Interpretation of Article 276(2) proviso
Construction of total tax limit under Article 276
Applicability of tax limits to State and local authorities

Analysis:

The Supreme Court heard appeals challenging the legality of notices for profession tax under the 1961 Act issued by the Executive Authority, Ballabgarh Panchayat Samiti. The appellants argued that the tax claim violated Article 276 of the Constitution due to existing professional tax collections by the State of Haryana. The Court examined the power of the State to levy taxes on professions, trades, and employments derived from Entry 60 of List II in the Seventh Schedule of the Constitution.

The appellants contended that the maximum limit of &8377; 250 under Article 276 applies collectively to all authorities mentioned, while the State had imposed a professional tax of &8377; 250 per annum. The Court considered the Punjab Professions, Trades, Callings and Employment Taxation Act, 1956, and subsequent amendments affecting tax rates based on income levels.

The Panchayat Samiti's imposition of additional professional tax at a maximum rate of &8377; 200 per annum was challenged by the appellants, claiming it amounted to double taxation. The Court clarified that a tax on profession is distinct from income tax, and Article 276(2) and its proviso safeguard existing taxes exceeding the limit.

The interpretation of Article 276(2) was crucial, with the appellants arguing for a collective tax limit of &8377; 250, while the Court emphasized that each authority mentioned in the Article could levy tax up to the limit individually. The Court highlighted that the word "or" in the Article is used in a disjunctive sense, allowing separate taxation by the State and local authorities.

Ultimately, the Court upheld the High Court's judgment, dismissing the appeals and affirming that both the State and authorities listed in Article 276 can levy taxes up to a limit of &8377; 250 per annum individually. The parties were directed to bear their own costs, as decided in the High Court.