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PUNJAB & HARYANA HIGH COURT
Harbans Singh, D.K.Mahajan and S.S.Sandhawalia JJ.
Madan Tarlok Singh
Versus
Union Of India Through Home Secy.To Govt.Of India, New Delhi
Civil Writ No. 3759 of 1968,
Decided On : APRIL 28, 1970
PROFESSIONS TAX ACT - TAXATION - CONSTITUTIONALITY - ARTICLE 276 OF THE CONSTITUTION OF INDIA - TAXES FOR THE BENEFIT OF THE STATE OR A MUNICIPALITY, DISTRICT BOARD, LOCAL BOARD OR OTHER LOCAL AUTHORITY - UNION TERRITORY OF CHANDIGARH - CONSOLIDATED FUND OF INDIA - REORGANISATION ACT, 1966 - SECTIONS 87 TO 90 - INTERPRETATION - APPLICABILITY OF THE ACT TO THE UNION TERRITORY OF CHANDIGARH - VALIDITY OF THE ACT - EMPLOYEES OF THE HIGH COURT - RECOVERY OF TAX - SECTION 7 OF THE ACT AND RULE 8 FRAMED THEREUNDER - APPLICABILITY - ACADEMIC ISSUE.
Fact of the Case:
The Punjab Professions, Trades, Callings and Employments Taxation Act, 1956 (Punjab Act No. 7 of 1956) (hereinafter referred to as the Professions Tax Act) was passed by the Punjab Legislature in the year 1956. This Act was validly passed by the Punjab Legislature in view of the provisions of Article 276 of the Constitution of India read with Entry No. 60, List II, Schedule Seventh of the Constitution of India. It is by reason of the subsequent events that the present controversy has arisen. The erstwhile State of Punjab, as it existed prior to 1966, was reorganized, with the result, that part of its territories was transferred to Himachal Pradesh; another part of its territories formed a new State of Haryana and certain territories around Chandigarh and Including the town of Chandigarh were declared as Union Territory of Chandigarh. This was effected by the Punjab Reorganisation Act, 1966 (hereinafter referred to as the Reorganisation Act). This Act came into effect on the 1st of November, 1966. This Act is divided into ten parts. Part II deals with the reorganisation of the State of Punjab and Part X, with which we are concerned, deals with Legal and Miscellaneous Provisions. The relevant provisions in this part are Sections 87, 88, 89 and 90.
Finding of the Court:
1. The Professions Tax Act was applicable to the Union Territory of Chandigarh even before it was made such territory, for it was an integral part of the undivided Punjab. 2. The combined reading of Sections 87 to 90 of the Reorganisation Act clinch the matter. 3. There is no dispute that in view of the provisions of Article 246 of the Constitution of India, Parliament has the power to legislate with regard to items mentioned in List II of Schedule Seventh. 4. It is also conceded that the Act, as adapted, will be deemed to have been passed by the Parliament. 5. The only attack against the Act is the one already mentioned, namely, that there being no Consolidated Fund of the Union Territory of Chandigarh, the applicability of the Professions Tax Act will be hit by Article 276 of the Constitution of India. 6. The administration of the Union Territory of Chandigarh vests with the Central Government under the Reorganisation Act; and a law validly passed by the Parliament regarding the Union Territory cannot be struck down merely on the ground that there is no Consolidated Fund of the Union Territory of Chandigarh. 7. Article 276 does not talk of the tax being deposited In the Consolidated Fund of the State or Territory enacting the law. 8. Moreover, when a law is enacted, it is obviously enacted for the benefit of the State 01 Territory for which it is enacted. 9. In any case, that intention has to be ascribed to the framers of the law. 10. Even if a very limited and narrow interpretation is placed on Article 276, that also is satisfied. 11. The Professions Tax Act is not ultra vires the Constitution. 12. The method of recovery of tax from the High Court employees under Section 7 of the Act and Rule 8 framed thereunder is not arbitrary or violative of any right to or in property. 13. The High Court employees are serving in connection with the affairs of the State and, therefore, Section 7 of the Act is applicable to them.
Issues: 1. Whether the Punjab Professions, Trades, Callings and Employments Taxation Act, 1956 (Punjab Act No. 7 of 1956) (hereinafter referred to as the Professions Tax Act) is applicable to the Union Territory of Chandigarh? 2. Whether the Professions Tax Act is ultra vires the Constitution of India? 3. Whether the method of recovery of tax from the High Court employees under Section 7 of the Act and Rule 8 framed thereunder is arbitrary or violative of any right to or in property? 4. Whether the High Court employees are serving in connection with the affairs of the State and, therefore, Section 7 of the Act is applicable to them?
Ratio Decidendi: 1. The Professions Tax Act was applicable to the Union Territory of Chandigarh even before it was made such territory, for it was an integral part of the undivided Punjab. 2. The combined reading of Sections 87 to 90 of the Reorganisation Act clinch the matter. 3. There is no dispute that in view of the provisions of Article 246 of the Constitution of India, Parliament has the power to legislate with regard to items mentioned in List II of Schedule Seventh. 4. It is also conceded that the Act, as adapted, will be deemed to have been passed by the Parliament. 5. The only attack against the Act is the one already mentioned, namely, that there being no Consolidated Fund of the Union Territory of Chandigarh, the applicability of the Professions Tax Act will be hit by Article 276 of the Constitution of India. 6. The administration of the Union Territory of Chandigarh vests with the Central Government under the Reorganisation Act; and a law validly passed by the Parliament regarding the Union Territory cannot be struck down merely on the ground that there is no Consolidated Fund of the Union Territory of Chandigarh. 7. Article 276 does not talk of the tax being deposited In the Consolidated Fund of the State or Territory enacting the law. 8. Moreover, when a law is enacted, it is obviously enacted for the benefit of the State 01 Territory for which it is enacted. 9. In any case, that intention has to be ascribed to the framers of the law. 10. Even if a very limited and narrow interpretation is placed on Article 276, that also is satisfied. 11. The Professions Tax Act is not ultra vires the Constitution. 12. The method of recovery of tax from the High Court employees under Section 7 of the Act and Rule 8 framed thereunder is not arbitrary or violative of any right to or in property. 13. The High Court employees are serving in connection with the affairs of the State and, therefore, Section 7 of the Act is applicable to them.
Final Decision: Both the writ petitions were allowed, but no order as to costs was made.
D.K.Mahajan, J.
1. This order will dispose of Civil Writ Petitions Nos. 3759 of 1968 and 470 of 1969. Both these cases were referred to a Full Bench by Harbans Singh and S.S. Sandhawalia, JJ. That is how, these cases have been placed before us for disposal.
2. Initially, three points were urged before the Division Bench, namely:-
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(1) That in view of the preamble of the Punjab Professions, Trades, Callings and Employments Taxation Act, 1956 (Punjab Act No. 7 of 1956) (hereinafter referred to as the Professions Tax Act), the Act does riot apply to the Union Territory of Chandigarh, because no change has been made by the Adaptation Order in the preamble; and the Act only applies to the territories of the Punjab;
(2) That the Act has become ultra vires the Constitution with effect from the date of formation of the Union Territory of Chandigarh, in view of Art, 276 of the Constitution of India; and, therefore, no tax can be levied on persons engaged in any trade, calling or profession; and
(3) That the employees of the High Court are not serving under a State or under any Local Authority etc. and consequently Section 7 of the Professions Tax Act and Rule 8 framed under the said Act are not applicable to them and that recovery cannot be effected by deduction from their pay bills, as provided in the above-said rule; and that if tax is recoverable, it can only be recovered in the manner provided in Rule 9.
The first two contentions are common to both the petitions and the third contention only arises in Civil Writ No. 3759 of 1968, which has been filed by the High Court employees.
3 Before dealing with these contentions, it will be necessary to set out the preliminary facts: The Professions Tax Act was passed by the Punjab Legislature in the year 1956. This Act was validly passed by the Punjab Legislature in view of the provisions of Article 276 of the Constitution of India read with Entry No. 60, List II, Schedule Seventh of the Constitution of India. It is by reason of the subsequent events that the present controversy has arisen. The erstwhile State of Punjab, as it existed prior to 1966, was reorganized, with the result, that part of its territories was transferred to Himachal Pradesh; another part of its territories formed a new State of Haryana and certain territories around Chandigarh and Including the town of Chandigarh were declared as Union Territory of Chandigarh. This was effected by the Punjab Reorganisation Act, 1966 (hereinafter referred to as the Reorganisation Act). This Act came into effect on the 1st of November, 1966. This Act is divided into ten parts. Part II deals with the reorganisation of the State of Punjab and Part X, with which we are concerned, deals with Legal and Miscellaneous Provisions. The relevant provisions in this part are Sections 87, 88, 89 and 90. These provisions are reproduced below for facility of reference:-
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"87.-- Power to extend enactments to Chandigarh:-
- The Central Government may, by notification in the Official Gazette, extend with such restrictions or modifications, as it thinks fit, to the Union territory of Chandigarh any enactment which is in farce in a State at the date of the notification. 88.-- Territorial extent of Laws:-- The provisions of Part II shall not be deemed to have effected any change in the territories to which any law in force immediately before the appointed day extends or applies, and territorial references in any such law to the State of Punjab shall, until otherwise provided by a competent Legislature or other competent authority, be construed as meaning the territories within that State immediately before the appointed day.
89.--Power to Adapt Laws:-
- For the purpose of facilitating the application in relation to the State of Punjab or Haryana or to the Union territory of Himachal Pradesh or Chandigarh of any law made before the appointed day, the appropriate Government may, before the expiration of two years from that day, by order, make such a
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