(1.) This case raises a very important question relating to the levy of profession tax under the Kerala Panchayats Act, 32 of 1960 (hereinafter referred to as the Act). This Act and the Kerala Municipalities Act 14 of 1961 contain similar provisions in respect of levy of profession tax; and so our decision in this case may apply also to Municipalities in the State. The question that falls for determination is whether a person, who resides within one Panchayat area and has paid to that Panchayat the maximum amount of profession tax leviable by a Panchayat, is liable to pay profession tax to other Panchayats within which be exercises a profession, or transacts business.
(2.) S.66 of the Act empowers every Panchayat to levy profession tax. S.69 contains the provision relating to the levy of the sai3 tax; and it reads:-
"69. Profession tax.- (1) The profession tax shall, subject to such rules as may be prescribed be levied every half year in every Panchayat area on
(i) every company which transacts business in such Panchayat area for not less than sixty days in the aggregate in that half year; and
(ii) every person who in that half year --
(a) exercises a profession, art or calling or transacts business or holds any appointment, public or private --
(i) within such panchayat area for not less than sixty days in the aggregate, or
(ii) without such Panchayat area but who resides in it for not less than sixty days in the aggregate, or
(b) resides in such Panchayat area for not less than sixty days in the aggregate and is in receipt of any pension or income from investments,
(2) The profession tax shall be levied at such rates as may be fixed by the Panchayat not exceeding the maximum rates prescribed.
(3) A person shall be chargeable under the class appropriate to his aggregate income from all the sources specified in sub-s.(1) as being liable to the tax.
(4) If a company or person proves that it or he has paid the sum due on account of the profession tax levied under this Act, or the companies or profession tax levied under the Trivandrum City Municipal Act, 1116, the Madras District Municipalities Act, 1920, Travancore District Municipalities Act, 1116, or the Cochin Municipal Act XVII of 113, or any tax of the nature of a profession tax imposed under the Cantonments Act, 1924, for the same half year to any Panchayat or Municipal Council or cantonment authority in the State of Kerala, such company or person shall not be liable by reason merely of change of place of business, exercise of profession, art or calling, appointment or residence to pay to any other Panchayat, Municipal Corporation or Municipal Council or cantonment authority more than the difference between such sum and the amount to which it or he is otherwise liable for the profession or companies tax for the half year under this Act or any of the aforesaid Acts.
(5) Nothing contained in this section shall be deemed to render a person who resides within the local limits of one local authority and exercises his profession, art or calling or transacts business or holds any appointment within the limits of any other local authority or authorities liable to profession tax for more than the higher of the amounts of tax leviable by any of the local authorities. In such cases the Government shall apportion the tax between the local authorities in such manner as they may deem fit and the decision of the Government shall be final:
Provided that where one of the local authorities concerned is a cantonment authority or the port authority of a major port, the decision of the Government shall be subject to the concurrence of the Central Government.
(6) The profession tax leviable from a firm, association, joint Hindu family or Marumakkathayam tarwad or Aliyasanthana Family may be levied from the agent of the firm or association or manager of the family or tarwad, as the case may be.
(7) (a) If a Company or person employs a servant or agent to represent it or him for the purpose of transacting business in any local area, such company or person shall be deemed to transact business in the local area, and such servant or agent shall be liable for the profession tax in respect of the business of such company or person whether or not such servant or agent has power to make binding contracts on behalf of such company or person.
(b) Where en company or person is the agent of another company or person, the former company or person stall not be liable separately to the profession tax on the same income as that of the principal."
Under the above section, profession tax shall be levied from every company and every person who fall within the ambit of the said provision. "Company" is defined in the Act, but not "person". In the case of a company, transacting business within the Panchayat area is the basis of the liability. In the case of a person, not only the transaction of a business, but the exercise of a profession art or calling or holding of any appointment would also make him liable for the tax. It has been held by a Division Bench of this Court in Velu v. Executive Officer, Erumayur Panchayat 1967 KLT 350 - that pursuit of agriculture is a calling within the meaning of S.69(1) of the Act. For the sake of brevity, we shall refer to all these activities of a person as transacting a business. There is one particular provision to be noticed in the case of a person; and it is that a person who transacts business outside a Panchayat would be liable for profession tax to that Panchayat, if he resides within its area. There can be no such provision in the case of a company; because a company has no place of residence, except places of business; and a place where it transacts business may be deemed to be a place of its residence.
(3.) There are a few more things to be noticed regarding the levy of profession tax. It is really a tax on income. Art.276 of the Constitution provides, among other things, that the total amount of profession tax payable in respect of any one person to any one Municipality or other local authority shall not exceed Rs. 250 per annum. Sub-s.(1) of S.69 of the Act provides that the profession fax shall be levied every half year, subject to such rules as may be prescribed. Sub-s.(2) provides that the rates of tax shall be as fixed by the Panchayat concerned but not exceeding the maximum rate prescribed. The relevant Rules are the Kerala Panchayats (Profession Tax) Rules, 1963 (hereinafter referred to as the Rules) made by the Government under S.69 and 129 of the Act. R.3 contains the classes into which companies and persons are divided on the basis of their half yearly income for the purposes of assessment, and also the maximum half yearly tax leviable on each class. Consistent with the provision contained in Art.276 of the Constitution, the maximum amount of half yearly fax fixed under the said Rule is Rs. 125/-. R.5 deals with determination of the income of a company or person transacting business, exclusively within a Panchayat area. R.7 deals with determination of the income of a company or person transacting business partly in the area of a Panchayat and partly outside it. R.6 provides that, in such a case, the income shall be deemed to be a prescribed percentage of the turnover of the business transacted within the Panchayat. Thus under the Rules, every company and every person shall be liable to pay profession tax to every Panchayat within whose area it or he transacts business on the basis of its or his income within the said area, subject to an half yearly limit of Rs. 125/-. The Rules do not contain any provision regarding the levy of profession tax by a Panchayat from a person who resides within its area, but transacts business outside it, Such a person would have no income within the Panchayat, in which he resides.;