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TMI Blog1991 (6) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... ing entry in the third column of the Schedule. It is under the Schedule that entry 19 provides a flat rate of taxation at the rate of Rs. 250 per annum on every company registered under the Companies Act, 1956, and engaged in any profession, trade or calling. Though originally it was Rs. 250 per annum, it was increased to Rs. 2,500 by the Karnataka Act 15 of 1989. This was challenged on the ground that a flat rate is impermissible in law, in disregard of the paying capacity of the company. It was further urged that the Legislature ought to have made a distinction between the nature of profession, trade or calling carried on by the company. In other words, a distinction ought to be made depending on the nature of the profession, trade or calling. In support of this, reliance was placed on a few decisions of the Supreme Court, but the learned judge negatived these contentions. Hence, they have come up in appeal. In these two appeals which arise out of the common judgment of our learned brother, Rajendra Babu J., learned counsel for the appellants, Sri B. Veerabhadrappa, urged two points for consideration-(1) Every company, irrespective of the nature of its profession, trade or ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the other, a further distinction as to video parlours will not render the levy of taxation invalid. State of Karnataka v. Ganesha Krishna Bhat [1990] ILR (2) Kar 1045, is an authority for this proposition. Having regard to the above submission, we will consider these two points seriatim,(1) Whether entry 19, in so far as companies registered under the Companies Act, is the subject of profession tax, irrespective of the nature of the profession, trade or calling, is invalid. In order to appreciate this point, we will now extract section 3 of the Act : "3. Levy and charge of tax.-(1) There shall be levied and collected a tax on professions, trades, callings and employments for the benefit of the State. (2) Every person who exercises any profession or calling or is engaged in any trade or holds any appointment, public or private, or is employed in any manner in the State, specified in the second column of the Schedule, shall be liable to pay to the State Government tax at the rate mentioned in the corresponding entry in the third column of the said Schedule : Provided that no tax shall be payable by persons referred to in Sl. Nos. 2, 3 and 8 of the Schedule who have attaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity means treating equals as equals and not unequals as equals. Once this position is arrived at, in that a company is person distinct from individuals, no principle of equality can ever arise. Then again, the law of equality is not one of arithmetic exactitude as El Dorado will put it. Therefore, it is not open to the appellants to contend that the classification must have a nexus with the object to be achieved. Only when a classification is made by the Legislature, the court can examine whether such a classification is sound in law. It was this which was pointed out in the very decision cited by the appellants, namely, P. Rajendran v. State of Madras, AIR 1968 SC 1012, 1016, where it was observed as follows : ". . . It is true that article 14 does not forbid classification, but the classification has to be justified on the basis of the nexus between the classification and the object to be achieved, even assuming that territorial classification may be a reasonable classification. The fact however that the classification by itself is reasonable is not enough to support it unless there is nexus between the classification and the object to be achieved. Therefore, as the object to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the Act and the Rules made thereunder as well as all recognised principles of valuation for the purpose of taxation. If levy of tax in a municipal district based on floor area in respect of a factory building violates article 14 of the Constitution when the tax is sought to be levied by the Municipal Corporation, we see no reason to uphold the tax imposed under the impugned Act when the State, in exercise of legislative authority conferred by entry 49, List II, Sch. VII, imposes liability to tax buildings, solely on floor area. The vice of the Act in the present case is more pronounced than it was in New Manek Chowk Spinning and Weaving Mills' case [1967] 2 SCR 679, AIR 1967 SC 1801 ; in that case, the Rules under which the tax was sought to be levied on the basis of floor area were restricted in their operation to factory buildings within the Corporation limits of Ahmedabad, whereas Act 19 of 1961, which is challenged in the present case applies to the whole State of Kerala in respect of buildings completed on or after March 2, 1961, whatever may be the nature or class of the building, the use to which it is put, materials used in its construction and the extent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es as distinguished from irrelevant and artificial ones. The constitutional standard by which the sufficiency of the differentia which form valid basis for classification may be measured, has been repeatedly stated by the courts. If it rests on a difference which bears a fair and just relation to the object for which it is proposed, it is constitutional. To put it differently, the means must have nexus with the ends. Even so, a large latitude is allowed to the State for classification upon a reasonable basis and what is reasonable is a question of practical details and a variety of factors which the court will be reluctant and perhaps ill-equipped to investigate. In this imperfect world perfection even in grouping is an ambition hardly ever accomplished. In this context, we have to remember the relationship between the legislative and judicial departments of Government in the determination of the validity of classification. Of course, in the last analysis, courts possess the power to pronounce on the constitutionality of the acts of the other branches whether a classification is based upon substantial differences or is arbitrary, fanciful and consequently illegal. At the same time, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 3 or 3A or 4A of the Act. It is a consolidated sum of charge on the activity of showing video shows instead of adopting a, cumbersome process of fixing the capacity of a theatre, the number of shows held and dependent on the number of shows held the tax should be assessed. A rough and ready rule is adopted on the basis of each video cassette parlour irrespective of the days of shows, the capacity or the number of shows exhibited by him. This position would be necessitated considering the huge spurt in video parlours in the State irrespective of the fact that they are either in rural or urban areas and that is one of the modes of collection of tax and less difficult for the parlour owners to pay the tax. This obviates the necessity of maintaining account books, issue of tickets and the periodical visits of the officers to the parlours and the procedure for assessment. Thus, this measure adopted by the Legislature therefore cannot be stated to be unreasonable." These two cases afford a complete answer to the second of the contentions urged on behalf of the appellants. Therefore, we reject this point as well. In the result, agreeing with the learned single judge, we dismiss the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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