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Issues:
1. Constitutional validity of the Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976 concerning tax on companies. 2. Legislative competence to levy tax on companies under the Act. 3. Whether the levy of tax is an unreasonable restriction on trade, business, or calling. 4. Alleged discrimination due to lack of classification for different types of companies. Analysis: Issue 1: The petitioner challenges the constitutional validity of the Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976, specifically regarding the tax imposed on companies. The Act levies tax on companies engaged in professions, trades, or callings, with a specified rate in the Schedule. The petitioner contests this legislation on various grounds. Issue 2: The petitioner argues that there is no legislative competence to levy tax on companies under the Act, citing the Union Legislature's authority over incorporation, regulation, and winding up of trading corporations. The petitioner also contends that the tax on professions, trades, or callings of a company could be considered a form of corporation tax, which falls under the Union's jurisdiction. Issue 3: Another point raised is that the levy of tax under the Act imposes an unreasonable restriction on the operation of trade, business, or calling for companies. The petitioner claims that the additional tax burden of Rs. 2,500 per annum is excessive and could hinder the company's activities. However, the court finds this argument unsubstantiated unless it leads to the complete cessation of trade. Issue 4: The petitioner further argues that the lack of classification for different types of companies results in discrimination. However, the court references previous decisions to explain that the absence of further classification does not necessarily indicate discrimination under Article 14 of the Constitution. In the judgment, the court examines the constitutional framework and the distribution of legislative powers between the Union and States. It clarifies that the tax on professions is distinct from corporation tax, emphasizing that the Act falls within the State's authority to levy taxes on professions, trades, and callings. The court dismisses the petitioner's contentions regarding unreasonable restrictions and discrimination, ultimately upholding the validity of the Act and dismissing the petition.
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