Shah, J. - (1.) The respondent-a Join Stock Company-has its principal place of business in Bombay, and a branch office in New Delhi. The Assessing Authority, Karnal, exercising power under the Punjab Professions, Trades, Callings and Employments Taxation Act 7 of 1956, assessed the respondent to profession tax for the years l960-61 and 1961-62 and issued a notice of demand for the amount so assessed. The High Court of Punjab quashed the notices of demand and the assessment orders holding that the respondent did not carry on trade within the State of Punjab and was not liable to be assessed to tax under the Act. The State of Punjab has appealed to this Court against the order of the High Court.
(2.) Section 3 of Act 7 of 1956 provides: "Every person who carries on trade, either by himself or by an agent or representative, or who follows a profession or calling or who is in employment, either wholly or in part, within the State of Punjab, shall be liable to pay for each financial year or a par' thereof a tax in respect of such profession, trade calling or employment. Provided **********" The respondent, it is common ground, has no branch office or any other place of business in the State of Punjab. It has also not appointed any agent or representative to carry on business on its behalf within the State. The respondent supplies goods to the Government of Punjab and certain "semi Government bodies" in the State in execution of orders received at its branch office at Delhi. The goods are despatched from Delhi by rail or by public motor transport. Pursuant to the terms and conditions of the "Rate Contract" between the respondent and the Controller of Stores for the State of Punjab, the respondent consigns the goods sold by it to the appropriate Government Department F. O. R. destination. Inspection of the goods is made within the State of Punjab. The price for the goods sold is collected by presenting bills or railway receipts through Banks to the consignees.
(3.) The Assessing Authority held that the respondent" may reasonably be regarded as selling goods within" the State of Punjab because it was supplying goods F. O. R. destination. The High Court held that the respondent could not in law be regarded as carrying on trade at the place at which the goods were supplied, merely because the railway or other receipts were taken out in the name of the respondent and presented to the purchasers duly endorsed in their favour to secure realization of the price of the goods.;