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Interpretation of liability under the Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976 for a partner of a tax consultancy firm. Analysis: The judgment dealt with the issue of whether a partner of a firm engaging in tax consultancy is liable to pay professional tax both as an individual and on behalf of the firm under the Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976. The respondent had issued a show-cause notice to the appellant for not enrolling himself under the Act despite the firm being enrolled. The appellant argued that the firm's payment should cover his liability and that taxing him separately would result in double taxation. The learned single judge held that a partner is a separate legal entity from the firm and can be taxed in both capacities. The judge relied on the Act's provisions and a Supreme Court decision to support this conclusion. The appellant contended that the single judge's view was not supported by the Act's provisions and contradicted Supreme Court decisions. The charging section of the Act mandates tax on persons carrying on professions listed in the Schedule, including natural persons, firms, and other entities. The Schedule specifies rates for different professions, with entry 20 covering firms engaged in professions. The appellant claimed to practice tax consultancy only through the firm, not individually. Therefore, he should be taxed under entry 20. The court emphasized that a firm and its partners are not separate entities for tax purposes unless specific provisions exist for double taxation. The court referenced Supreme Court cases to support its interpretation and highlighted that the Act's amendment in 1989 made partners liable for tax, reinforcing the view that prior to the amendment, partners were not individually liable. The court disagreed with the single judge's interpretation and set aside the order, quashing the proceedings requiring the appellant to enroll individually. The court held that partners of firms engaging in professions should not be taxed separately under the Act before the 1989 amendment. The judgment clarified that the Act did not provide for double taxation of the same profession in the hands of both a firm and its partners. Consequently, the court allowed the writ appeal in favor of the appellant, ruling that the appellant was not individually liable for professional tax under the Act.
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