1984 (5) TMI 8 - HC - Income Tax

Summary

Issues:
1. Refund of profession tax deposited under Bihar Taxation on Trades, Professions, Callings and Employment Ordinance, 1973.
2. Interpretation of liability for payment of profession tax under the Ordinance.
3. Effect of Ordinance expiry on refund eligibility.

Analysis:
The judgment involves a writ application seeking a refund of Rs. 1,10,125 deposited by a petitioner-company as profession tax under the Bihar Taxation on Trades, Professions, Callings and Employment Ordinance, 1973. The petitioner argued that the liability for payment of tax did not accrue as registration and assessment were prerequisites for payment. The court examined the provisions of the Ordinance, emphasizing Section 3 which mandates tax payment by employers based on deductions made from salaries. The court rejected the argument that liability depended on assessment, citing precedents like Kesoram Industries & Cotton Mills Ltd. v. CWT and Setu Parvati Bayi v. CWT to establish that tax liability arises from the charging section itself, regardless of assessment.

Regarding the contention that the amount became refundable upon the Ordinance's expiry, the court held that payments made during the Ordinance's validity accrued liabilities unaffected by its expiry. The court referred to the principle that obligations and liabilities incurred under an expired Ordinance remain valid unless expressly stated otherwise. It cited the Calcutta High Court's Full Bench decision in Tarak Chandra Mukherjee v. Ratan Lal Ghosal and a recent Bench decision in Shree Gopal Krishna Sinha v. State of Bihar to support this interpretation. Ultimately, the court dismissed the application, stating that the petitioner's liability was created and accrued monthly under the Ordinance, independent of assessment or Ordinance expiry.

The judgment clarifies the interpretation of liability for profession tax payment under the Bihar Ordinance and establishes that tax liability arises from the charging section itself, not dependent on assessment. It also affirms that obligations and liabilities under an expired Ordinance remain valid unless expressly stated otherwise, rejecting the argument that payments made during the Ordinance's validity become refundable upon its expiry. The court's decision highlights the importance of understanding statutory obligations and liabilities under tax laws, emphasizing that tax liability accrues based on statutory provisions, regardless of assessment or Ordinance expiry.