The main legal point established in the judgment is that amendments to tax laws must conform to the constitutional limitations, and any amendments that go beyond the formal alterations necessitated by the replacement of tax acts may not be sustainable under the Constitution.

1. This is an appeal from the decision of Vaidialingam, J. in 0. P. No. 981 of 1960. That petition which has been allowed was by the respondent before us, Messrs. Harrisons and Crosfield Limited, Quilon. The appellant the 1st respondent in O. P. No. 981 of 1960 is the Commissioner of the Quilon Municipality.

2. The controversy relates to the assessment of the respondent to profession tax for the two half years of the financial year 1958-59. The assessment was on the basis of the proviso to R.18 (2) of the Taxation Rules in Schedule II to the Travancore District Municipalities Act, 1116 (M. E). The assessment order is Ext. B and the resolution of the Municipal Council dismissing the respondent's appeal and confirming the assessment is Ext. F dated the 15th March 1960.

3. R.18 (1) of the Taxation Rules reads as follows:

"Where a company or person transacts business in any half-year exclusively in the area of a single municipality, the income of such company or person from the transaction of such business shall, for

the purpose of levying profession tax under this Act during the half-year, be deemed to be

(a) where income tax is assessed on such company or person under the Travancore Income tax Act for the year, comprising the half-year, one-half of the amount at which the profits and gains of such business are computed under S.8 of the Travancore Income-tax Act, for the purpose of assessing the income-tax; and

(b) where the amount of the said profits and gains is not ascertainable or where such company or person is not assessed to income tax, such percentage as Our Government may prescribe, of the turnover of the business transacted in the area of the municipality during the half-year or where this is also unascertainable during the corresponding half-year of the previous year";

and E.18 (2):

"Where a company or person transacts business partly in the area of a municipality and partly outside such area, the income of such company or person from the transaction of business in the area of the municipality shall, for the purpose of levying profession tax under this Act, be deemed to be the percentage prescribed under clause (b) of sub-rule (1) of the turnover of the business transacted in such area during the half-year or the corresponding half-year of the previous year, as the case may be:

Provided that in the case of a company or person assessable to income tax, the total profits earned by the company or person as disclosed by the income tax assessment for the whole State for the year comprising the half-year for which the profession tax is to be levied, shall be divided in the proportion of the turnover of the business of the company or person in the municipality and outside for purposes of assessment to profession tax."

The proviso to R.18 (2) was not originally part of that rule. It was added by a notification dated the 26th August 1947 in exercise of the powers conferred by S.325 of the Travancore District Municipalities Act, 1116 (M.E.).

4. The Finance Act of 1950 replaced the Travancore Income-tax Act, 1121 (M. E.) by the Indian Income-tax Act, 1922. The workability of the proviso after the disappearance of the Travancore State by its merger in the Union of India and after the replacement of the Travancore Income-tax Act, 1121 (M. E.), by the Indian Income-tax Act, 1922, came up for consideration before a Division Bench of the Travancore-Cochin High Court in Harrisons & Crosfield Limited v. Commissioner, Quilon Municipality ILR.1955 TC.1003. The Court came to the conclusion that the proviso was no longer workable & that it had become obsolete.

5. A notification amending R.18 (1) (a) and the proviso to R.18 (2) followed on the 15th February 1956. It was issued in exercise of the powers conferred by S.325 of the Travancore District Municipalities Act, 1116 (M. E). The amendments effected by the notification read as follows:

"(1) In clause (a) of sub-rule (1) of R.18,

(a) for the words 'Travancore Income-tax Act' wherever the