R.L. Gulati, J. - (1.) BY this petition Under Article 226 of the Constitution, the Petitioner Ganesh Sugar Mills, Gorakhpur, has challenged the imposition of a sum of Rs. 2,000/ - by way of Circumstances and Property Tax in respect of the assessment year 1962 -63 by the Zila Parishad, Gorakhpur. The tax has been imposed under the provisions of the UP Kshettra Samiti and Zila Parishad Act.
(2.) THE levy of the tax has been challenged on a number of grounds, including the ground relating to the vires of the provision authorising the imposition of the tax. At the hearing Sri Bharat Ji Agarwal, learned Counsel for the Petitioner, has given up all the grounds and has confined himself to only one ground; the ground being that during the assessment year in question the Petitioner company earned no income and in fact suffered a loss, therefore, no tax could have been imposed for the assessment year in dispute. The Assessee company is engaged in the business of manufacture and sale of sugar. On the receipt of the notice proposing to levy a tax of Rs. 2,000/ -which is the maximum tax permissible under the Act, the Petitioner company filed objections stating that during the assessment year in question it had suffered a net loss of Rs. 1,56,150/ - and in support of this contention it filed its audited profit and loss account and the balance -sheet. The Tax Officer, Zila Parishad, Gorakhpur, scrutinised the profit and loss account and the balance sheet and found to be correct. He, however, took the view that for purposes of levying Circumstances and Property Tax the 'gross income' of the company and not the 'net income' had to be taken into consideration. He accordingly reconstructed from the profit and loss account the manufacturing account of the Assessee's business and determined the gross profit of Rs. 8,43,523/ -. He thus held that the maximum tax of Rs. 2,000/ - was justified as the maximum tax becomes leviable on a gross income of Rs. 1,28,000/ -. The Petitioner took the matter in appeal before the Commissioner, Gorakhpur Division, who also concurred with the view taken by the Tax Officer. The Petitioner has now invoked the writ jurisdiction of this Court Under Article 226 of the Constitution and has prayed for a writ of certiorari.
(3.) SECTION 121 of the UP Kshettra Samiti and Zila Parishad Act (hereinafter referred to as the 'Act') lays down the conditions and restrictions with regard to the imposition of the Circumstances and Property Tax. According to Clause (b) of that section "no tax should be imposed upon any person whose total taxable income is less than Rs. 600/ - per annum and according to the Explanation annexed to that section, "for purposes of this section taxable income" means 'estimated income'". It is true that the Circumstances and Property Tax is not tax on income as such, because a tax on income is called income -tax and is leviable only by the Central Government. The Circumstances and Property Tax as its name suggests is a composite tax on a person's property and income. It can, of course, be said to be an income on a man's status as a whole, but according to the restrictions contained in Clause (b) of Section 121, no tax can be imposed upon a person whose total income is less than Rs. 600/ - per annum regardless his financial worth or status. That is a condition precedent for the imposition of the tax.;