The main legal point established in the judgment is that corresponding new banks were not liable to pay additional profession tax as they were not considered 'companies' under the Travancore Act. The court also clarified that the trust was not conclusively determined to be an 'association carrying on business' and dismissed the appeal regarding the collection of half yearly profession tax at rates higher than Rs. 275/- per half year for textile-business.

GEORGE VADAKKEL, J. :- The ambit of the proviso to Art.276(2) of the Constitution is by now well defined by the decisions of the Supreme Court and of this Court. While Art.276(2) curtails the legislative power of the State to enact tax laws in respect of professions, trades, callings or employments for the benefit of the State or a local authority (which power it has despite Art.246 as clarified by Art.276(1)) by providing that the total tax payable thereunder by any one person to the State or to any one local authority shall not exceed Rs. 250/- per annum, the proviso thereto enables the State Legislature to make legislation for the continuance of any such tax at a higher rate that was in force in any State or any local authority in the financial year immediately preceding the commencement of the Constitution until Parliament by law provides otherwise. As ruled by this Court in Travancore Minerals Ltd. v. Commissioner, Quilon Municipality (1965 Ker LJ 376) and State Bank of Travancore v. Alwaye Municipal Council (ILR (1978) 2 Ker 519): (1979 Tax LR NOC 49) by the proviso to R.19(1) of the Taxation and Finance Rules in Schedule JJ to the Kerala Municipalities Act, 1960 (hereinafter the Kerala Act) the Kerala Legislature has validly provided for the continuance of the levy of profession tax by the municipalities in this State at the higher rates that were in force in those municipalities as contemplated by the proviso to Article 276(2) of the Constitution. The correctness of these decisions on this point is not canvassed before us.

2. It is common case that the Quilon and Kottayam Municipalities were levying profession tax in accordance with the provisions contained in R.16(1) in Schedule II of the Travancore Municipalities Act, 1116 (for short: the Travancore Act) in the financial year immediately preceding the commencement of the Constitution and that these local authorities continued to levy profession tax so till the commencement of the Kerala Act. Thereunder the maximum profession tax payable by a 'person' and a 'company' is Rs. 275/- per half year. Where the half-yearly income of either is more than Rs. 21,000/- the profession tax payable by each is Rs. 275/- for that half year. Under the proviso to R.16(1) in the II Sch. of the Travancore Act, a 'company' the half-yearly income of which is more than Rs. 21,000/-, is liable to pay an additional half-yearly profession tax on such excess income calculated at the rate of one rupee per one hundred rupees or part thereof. The assessees in these cases, namely, the petitioners and appellants before us, have been assessed by the concerned municipality at the rates that are applicable to 'companies' as provided in the aforesaid R.16(1) and its proviso.

3. Four of the assessees herein are corresponding new banks as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and the remaining one is a trust. They raise the following questions for consideration in these cases :- (1) are the Municipalities concerned in these cases the same as those constituted under the provisions of the Travancore Act; (2) in view of S. 153 of the Kerala Act, is a corresponding new Dank liable to pay profession tax; (3) is a corresponding new bank, a 'company' mentioned in S.91 of the Travancore Act; and (4) is a trust, a 'company' mentioned in Section 91 of the Travancore Act.

4. It is contended by Mr. Govinda Warrier appearing in O.P. No.272 of 1976 that the Quilon Municipality which is concerned in that case is not 'such Municipality' as was levying profession tax at such higher rate at the commencement of the Constitution. The argument is : Quilon Municipality constituted under the Travancore Act was levying profession tax at a higher rate; but this Municipality is not in existence because:- (i) under the 2nd proviso to Section 2 of the Kerala Act all Municipalities constituted under the Travancore Act and other Acts repealed by Section 2 thereof are to be deemed