Gurdev Singh and Others vs State of Punjab and Others

J.M. Tandon, J.—This order will dispose of two Civil Writ Petitions Nos. 2796 of 1968 and 31 of 1969 wherein common questions of law and fact are involved.

The petitioners in C.W.P. No. 2796 of 1968 are teachers in Government schools within the limits of Panchayat Samiti, Mehal Kalan Tehsil Barnala, District Sangrur. The Panchayat Samiti, Mehal Kalan imposed tax on trades, professions, callings and employments u/s 65 read with section 67 of the Punjab Panchayat Samitis and Zila Perishads Act, 1961, (hereafter the Act) with effect from May 11, 1964, on a graded scale/vide notification No. 2856-3LG (P & B) 64/11855 (Annexure ''A''). The maximum tax payable on the income of Rs. 10,000/- derived from sources other than agriculture was Rs. 200/- per, annum and the minimum on such income exceeding Rs. 400/- was Rs. 400/- was Rs. 7/- per annum. The Panchayat Samiti, Mehal Kalan, in their resolution dated January 21, 1967 (Annexure ''B'') resolved that the Government and semi Government employees be exempted from the payment of professional tax. In another resolution dated December 13, 1967, (Annexure ''C'') the Pnchayat Samiti further resolved to remit the professional tax due from the Government employees for the years 1964-65, 1965-66 and 1966-67. The professional tax could be remitted with the sanction of the Deputy Commissioner. The Deputy Commissioner when approached for Sanction declined it. The Government abolished the professional tax with effect from April 1, 1967, vide notification dated March 31, 1967 (Annexure ''H''). The petitioners have filed the present writ petition challenging the vires of section 65 of the Act. The petitioners have therefore, prayed that the notification Annexure ''A'' imposing the professional tax and the notices issued to them for the recovery of the, same be quashed.

In C.W.P. No. 31 of 1969 the petitioners are the teachers appointed in Government schools within the limits of Panchayat Samiti, Sunam, District Sangrur. The Panchayat Samiti, Sunam, also imposed professional tax with effect from May 11, 1964, on a graded scale vide notification Annexure ''A''. The Panchayat Samiti then resolved to exempt the Government employees from the payment of professional tax. The Deputy Commissioner declined to accord sanction u/s 74 of the Act. The petitioners called upon to pay the arrears of professi onal tax for the years 1964-65, 1965-66 and 1966-67. The professional tax stands abolished with effect from April 1, 1967. The petitioners have filed the writ petition challenging the vires of section 65 of the, Act They have prayed that the notification Annexure ''A'' imposing tax and also the notices issued to them for the recovery of professional tax may be quashed.

The learned counsel for the petitioners has argued that sec. 65 of the Act which confers power on the Panchayat Samitis to impose the impugned tax is ultra vires the Constitution in as much as it suffers from the vice of excessive delegation and no guidelines are prescribed therein. Reliance has been placed on Devi Das Gopal Krishnan and Others Vs. State of Punjab and Others, Section 65 of the Act reads:-

Subject to the general direction and control of the Government, a Panchayat Samiti may with the previous permission of the Zila Parishad concerned, impose any Tax which the Legislature of the State has power to impose under the Constitution of India:

Provided that no tax under this section shall be imposed in respect of any property subject to the local rate.

In Messers Devi Das Gopal Krishnan''s case (supra), section 5 of the Punjab General Sales Tax Act, 1948, as it stood was under attack. This section read:-

Subject to the provisions of this Act, there shall be levied on the taxable turnover every year of a dealer a tax at such rates as the Provincial Government may by notification direct.

The section was subsequently amended and after the word "rates" the following words were inserted and were deemed always to have been inserted, namely, ''not exceeding two pice in a rupee.'' The High Court held that Section 5 of the Act as it originally stood was void as it gave an unlimited power to the executive to levy sales-tax at a rate which it thought fit. It, however, held that the amendment of section 5 cured the defect in the said Act and had the effect of giving a new life to it. The order of the High Court was challenged in the Supreme Court and their Lordships upheld the view taken by the High Court. It was held that section 5 as it originally stood conferred uncontrolled power on the Provincial Government to levy every year on the taxable turnover of a dealer a tax at such rates as the said Government might direct. Under that section the Legislature practically effaced itself in the matter of fixation of rates and did not give any guidance either under the section or under any other provisions of the Act. Section 5 as is originally stood was therefore, bad.

The ratio of Messers Devi Das Gopal Keshan''s case (supra) is not applicable to the instant case in view of the provisions contained in Article 276 of the Constitution which reads:-

Taxes on professions, trades, callings and employments:-

(1) Notwithstanding anything in Article 216, no law of the Legislature of a State relating to taxes for the benefit of the state or of a municipality, district board, local board or other local authority therein inrespect of professions, trades callings, or employments shall be invalid on the ground that it relates to a tax on income.

(2) The total amount payable in respect of any one person to the state or to any one municipality, District Board, local Board or other local authority in the State by way of taxes on professions trades, callings and unemployments shall not exceed two hundred and fifty rupees per annum:

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It is clear that clause (2) of Article 276 limits the authority of Panchayat Sarmti to impose professional tax at Rs. 250/- per annum Section 65 of the Act deal with Article 276(2) of the Constitution'' therefore, does not empower the Panchayat Samiti to impose tax on professions, trades, callings and employments to any extent.

The learned counsel for the petitioners has argued that u/s 65 no guidelines are presscribed for imposing the tax on persons having different in cones. I see no force in this contention A similar argument was raised in Messers Devi Dass Gopal Krishanan''s case (supra). It was held that conferment of reasonable area of discretion by a fiscal statute has been approved by the Supreme Court in more than one decision. At the same time a larger statutory discretion placine a wide gap between the minimum and the maximum rates and thus enabling the Government to fix an arbitrary rate may not be sustained In the ultimate analysis, the permissible discretion depends upon the facts of each case. The discretion to fix the rate between 1 pice and 2 pice in rupee is so insignificant that it is not possible to hold that it exceeds the permissible limits. These observations of their Lordshim are applicable to the instant case. The maximum tax that can be imposed under Article 276(2) of the Constitution is Rs. 250/- per annum. The discretion to fix the rate of tax upto the maximum of Rs. 250/- per annum is relatively insignificant and it is difficult to hold that it exceeds the permissible limits. Section 65 of the Act therefore cannot be held unconstitutional on this ground.

Another point urged by the learned counsel for the petitioners is that assuming that section 65 of the Act empowers the Panchayat Samitis to impose a valid tax on professions, trades callings and employments. It is liable to be struck down because other taxes can also be imposed thereunder for which no maximum limit is prescribed in the event of section 65 of the Act being so struck down the Panchayat Simitis cannot impose professional are as well I am not impressed by this contention. The Panchayat Samitis have imposed professional tax u/s 65 of the Act and it has been held above that it can be validly imposed thereunder. Under these circumstances, the question of striking down this section on some other hypothetical considerations thereby negativing the right of the Panchayat Samitis to impose even the prefossional tax does not arise.

The learned counsel for petitioners has argued that the Panchayat Samitis stand superseded with effect from October 10, 1978, and the effect of such supersession is that the arrears of professional tax cannot be recovered. This contention is devoid of force. The professional tax which was validly imposed from 1964-65 to 1966-67 can be recovered and the spersession of the Pacnhayat Samitis in 1978 is no bar to its recovery.

The learned counsel for the petitioners has then contended that the professional tax was abolished by the Government with effect from April 1, 1967. The effect of the abolition is that the petitioners cease to be liable to pay the professional tax even for the years prior to 1967. I do not agree with this contention as well. The abolition of the professional tax with effect from April 1, 1967, does not absolve the petitioners of their liability to pay it for the previous years.

The last contention of the learned counsel for the petitioners is that the Deputy Commissioner Sangrur, approved the resolution of Panchayat Samiti, Sehna, exempting the Government employees within its jurisdiction from the payment of professional tax vide his order dated January 2, 1965 (Annexure ''F'') but did not accord sanction to the similar resolutions passed by the Panchayat Samitis, Mehal Kalan and Sunam. The Deputy Commissioner has passed a discriminatory order in the case of Panchayat Samitis Mehal Kalan and Sunam and is liable to be struck down. The Deputy Commissioner, Sangrur, in his return has averred that after the receipt of the instructions of the Government conveyed vide Development Commissioner and Secretary to Government, Punjab, Memo. No. 1281-3LG (PB) 66/30966, dated September 14, 1966 no resolution regarding exemption of Government servants from the payment of profession tax was approved. It is clear that u/s 114 of the Act, the Government is competent to issue instructions. The Deputy Commissioner declined to accord sanction to the resolutions of the Panchayat Samitis, Mehal Kalan and Sunam in view of the instructions issued by the Government. His orders, therefore, cannot be held discriminatory and ultra-vires.

In the result, both the writ petitions fail and are dismissed with no order as to costs.