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High Court Of Calcutta
P. K. BANERJI, M. K. MUKHERJEE
DEBABRATA BASU - Appellant
Versus
STATE OF WEST BENGAL - Respondent
FMA 732 Of 1979
Decided On : 09/26/1980
WEST BENGAL STATE TAX ON PROFESSIONS, TRADES, CALLINGS AND EMPLOYMENTS ACT, 1979 - CONSTITUTIONALITY - CHALLENGED - HELD VALID - POWER TO TAX PROFESSIONS UNDER ARTICLE 276 (2) OF THE CONSTITUTION OF INDIA - INCIDENTAL AND ANCILLARY POWERS IMPLIED - EXPRESS POWER TO TAX PROFESSION INCLUDES POWER TO ENFORCE REALISATION AND RECOVERY OF TAX - LEGISLATURE COMPETENT TO ENACT THE IMPUGNED LEGISLATION - DEFINITION OF "STANDING" - NOT VAGUE AND UNCERTAIN - PROVISION FOR APPEAL AND REVISION - SUFFICIENT - SPECIAL MODE OF RECOVERY OF TAX NOT UNREASONABLE RESTRICTION - PENALTY NOT AN ADDITIONAL TAX - TAXATION OF ADVOCATES PAYING INCOME-TAX AT A HIGHER RATE - NOT DISCRIMINATORY - CLASSIFICATION OF PROFESSIONAL PEOPLE INTO DIFFERENT CATEGORIES FOR THE PURPOSE OF TAXATION - NOT VIOLATIVE OF ARTICLE 14 - LEGISLATION NOT COLOURABLE EXERCISE OF POWER - ACT NOT ULTRA VIRES.
Fact of the Case:
The petitioners, practicing advocates enrolled under the Advocates Act, 1961, challenged the constitutional validity of the West Bengal State Tax on Professions, Trades, Callings and Employments Act, 1979 (the Act), contending that it was ultra vires and bad in law.
Finding of the Court:
The Court upheld the constitutional validity of the Act and dismissed the petitions. It held that the State Legislature had the power to tax professions under Article 276 (2) of the Constitution of India and that the incidental and ancillary powers implied in this power included the power to enforce the realization and recovery of tax. The Court also held that the definition of "standing" in the Act was not vague and uncertain, that the provision for appeal and revision was sufficient, that the special mode of recovery of tax was not an unreasonable restriction, that the penalty imposed under the Act was not an additional tax, and that the taxation of advocates paying income-tax at a higher rate was not discriminatory. The Court further held that the classification of professional people into different categories for the purpose of taxation was not violative of Article 14 of the Constitution and that the legislation was not a colourable exercise of power.
Issues: 1. Whether the West Bengal State Tax on Professions, Trades, Callings and Employments Act, 1979 (the Act) was ultra vires and bad in law? 2. Whether the State Legislature had the power to tax professions under Article 276 (2) of the Constitution of India? 3. Whether the incidental and ancillary powers implied in the power to tax professions included the power to enforce the realization and recovery of tax? 4. Whether the definition of "standing" in the Act was vague and uncertain? 5. Whether the provision for appeal and revision in the Act was sufficient? 6. Whether the special mode of recovery of tax under the Act was an unreasonable restriction? 7. Whether the penalty imposed under the Act was an additional tax? 8. Whether the taxation of advocates paying income-tax at a higher rate was discriminatory? 9. Whether the classification of professional people into different categories for the purpose of taxation was violative of Article 14 of the Constitution? 10. Whether the legislation was a colourable exercise of power?
Ratio Decidendi: 1. The State Legislature has the power to tax professions under Article 276 (2) of the Constitution of India. 2. The incidental and ancillary powers implied in the power to tax professions include the power to enforce the realization and recovery of tax. 3. The definition of "standing" in the Act is not vague and uncertain. 4. The provision for appeal and revision in the Act is sufficient. 5. The special mode of recovery of tax under the Act is not an unreasonable restriction. 6. The penalty imposed under the Act is not an additional tax. 7. The taxation of advocates paying income-tax at a higher rate is not discriminatory. 8. The classification of professional people into different categories for the purpose of taxation is not violative of Article 14 of the Constitution. 9. The legislation is not a colourable exercise of power.
Final Decision: The petitions challenging the constitutional validity of the West Bengal State Tax on Professions, Trades, Callings and Employments Act, 1979 were dismissed.
( 1 ) THESE appeals at the instance of a number of petitioners are against the judgment passed by the Hon'ble Judge discharging the rules obtained by them.
( 2 ) ALL of them argued that the Act, being the West Bengal State Tax on Professions, Trades, Callings and Employments Act, 1979, is ultra vires and as suit bad in law. Before dealing with the question it is convenient for us to state the provisions of the Act. We are not going to quote the whole Act, as it is, but we are only mentioning the main provisions of the Act against which the challenge was sought to be made. The preamble of the Act provides "for the levy and collection of tax on professions, trades, callings and employments for raising additional resources for the benefit of the State and for matters connected therewith or incidental thereto". The Act was promulgated, it got the assent of the Governor on March 31, 1979, and it came into force on and from April 1, 1979.
( 3 ) IN so far as we are concerned in these appeals, all the petitioners are practising advocates enrolled under the Advocates Act, 1961, and entitled to practice in this court as well as in the Supreme Court. The definition of person has been given in Section 2 (f) in the following terms : "a person means any person who is engaged in any profession, trade, calling or employment in West Bengal and includes. . . . . . . . . " section 3 of the Act is the section for the levy and charge of the tax. It specifically provides that subject to the provisions of Article 276 of the Constitution of India, there shall be levied and collected a tax on professions, trades, etc. , in accordance with the provisions of the Act. Section 3 (2) provides that every person engaged in any profession, calling, etc. , under one or the other of the classes mentioned in the second column of the Schedule shall be liable to pay to the State Government tax at the rate mentioned against the class of such persons in the third column of the said Schedule. So far as the petitioners are concerned they fall under item 2 of the Schedule to the Act. Under Section 5 (2) of the Act every person, as in these cases, the advocates engaged in the profession liable to pay tax under the Act, shall obtain a certificate of enrolment from the prescribed authority in the prescribed manner. In exercise of powers conferred by Section 25 of the Act, the West Bengal State Tax on Profession, Trade, Callings and Employments Rules were framed on March 31, 1979. In so far as the professional people are concerned they are required to apply for a certificate of enrolment in the manner prescribed in Rule 4 (1) and the prescribed authority will issue a certificate of enrolment under Rule 4 (4) in form II-A, wherein the amount of tax payable by the holder according to the Schedule, and the date by which it shall be paid will be mentioned, and such certificate shall serve as a notice of demand for the purpose of Section 10 (vide Section 5 (5) of the Act ). Section 10 provides that if an enrolled person fails, without reasonable cause, to make payment of any amount of tax within the time or date specified in the notice of demand the prescribed authority may, after giving him a reasonable opportunity of being heard, impose upon him a penalty not exceeding fifty per cent. of the amount of tax due. Under Section 11 all arrears of tax, penalty, interest and fees under the Act shall be recoverable as arrears of land revenue. In Section 14 of the Act provision has been made for appeal, revision and rectification of mistakes. Section 19 of the Act provides that any person or employer who, without reasonable cause fails to comply with any of the provisions of the Act or the Rules made thereunder shall be punishable with fine which may extend to five thousand rupees and where the offence is a continuing one, with a further fine which may extend to fifty rupees for every day during which the offence continues.
( 4 ) WE have not quoted the provisions verb
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