PETITIONER:
STATE OF PUNJAB & ANR.
Vs.
RESPONDENT:
PREM SUKHDAS & ORS.
DATE OF JUDGMENT01/04/1977
BENCH:
BEG, M. HAMEEDULLAH (CJ)
GUPTA, A.C.
KAILASAM, P.S.
CITATION:
1977 AIR 1640 1977 SCR (3) 408
1977 SCC (2) 774
ACT
Punjab Professions, Trades, Callings & Employments
Taxation Act, 1956-SS. 2(b) and 3--Scope of.
HEADNOTE
Section 3 of the Punjab Professions, Trades, Callings
and Employment$ Taxation Act, 1956, imposes a tax in re-
spect of a profession, trade, calling or employment carried
on or followed within the State. Section 5 lays down the
manner of determination of tax .on the gross income. The
term "total gross income" is defined by s. 2 of the Act as
"aggregate gross income derived from various professions,
trades, callings and employments". The words "whether such
profession or calling is followed, trade is carried on or
employment within or outside the State" were added to the
section by an amendment of 1962.
Before the amendment of s. 2(b), the High Court had
taken the view that in determining the aggregate gross
income, only the income derived within the State by a call-
ing, occupation, trade or profession must be taken into
account for the purposes of taxation.
On the question whether the Act restricts taxation of
income made within the State.
Allowing the State’s appeal and remitting the case to the
High Court
HELD: By reading the provisions of s. 5 and s. 2 togeth-
er, it is clear that the determination in accordance with
the scale laid down in the Schedule, of the aggregate gross
income on which tax is assessed, will have to take into
account the income of the individual concerned earned both
inside and outside the State. [409 G]
1 (a) The High Court has clearly erred in interpreting
s. 3 in such a manner as to make s. 2(b) read with s. 5 of
the Act, useless in determining the tax in. accordance with
the gradation laid down in the Schedule to the Act. This
amounts nothing short of legislation. [410 E-F]
(b) The only condition for making a person taxable under
the Act is that he must also have some profession, trade,
calling or occupation which is to be taxed, which he carries
on within the State. It does not matter whether the person
is employed or carries on the same or other profession,
trade, or calling outside the State also. Section 3 is only
meant to indicate that the person who is to be made liable
had carried on some profession, calling, trade, or occupa-
tion within the State and it has nothing to do with the
calculation of the aggregate amount of the tax to be levied.
That is dealt with by s. 5 read with s. 2(b) as amended. In
determining the amount of tax, the amount an assessee makes
outside must also be added to what he makes inside the
State. His total gross income determines only his grade or
amount of tax he has to pay. His subjection to a profession
or calling tax depends only on the fact that he carries on
some business or has some trade or calling within the State.
[410- A-C]
2. The principle that where a provision ’is capable of
one of two interpretations, the interpretation which vali-
dates rather the one which may invalidate a provision ap-
plies only where two views are possible. It cannot be pushed
so far as to alter the meaning of the clear words used in an
enactment and to repeal statutory provisions by making them
useless without holding them to be void. [410 F]
[The case was remanded to the High Court for deciding
the validity of the amendment made to s. 2(b) of the Act]
409
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2152-
2153 of 1968
(From the Judgments and Orders dated the 25.2.1966 of
the Punjab and Haryana High Court in Civil Writ Nos. 2588
and 2392/ 1964)
V.C. Mahajan for the appellants (in CA 2152).
K.S. Surt and O.P. Sharma, for the the appel-
lants (in CA 1755)
E.C. Agrawala, for respondent in CA 1754
Hardev Singh and R.S. Sodhi, for respondent in
CA 1755
R.K. Mathut and V. Goswami, for respondent in
CA 1497
N.N. Goswamy and A. Minocha, for respondent in
CA 2153.
The Judgment of the Court was delivered by
BEG, C.J.--The only question decided by the High Court
of Punjab & Haryana in the cases now before us by special
leave was whether section 3 of the Punjab Professions,
Trades, Callings and Employments Taxation Act, 1956 (herein-
after referred to as ’the Act’) restricts taxation upon
persons in Punjab to the income made within the State of
Punjab. This section reads as follows :--
"3. Levy of tax--Every person who
carried on trade either by himself or by an
agent or representative, or who follows a
profession or calling, or who is in employ-
ment, either wholly or in part, within the
State of Punjab, shall be liable to pay for
each financial year or a part thereof a tax in
respect of such profession, trade, calling or
employment:
Provided that for the purpose of this
section a person on leave shall be deemed to
be a person in employment".
Section 4 of the Act provides for taxation in accordance
with a schedule annexed to it. Section 5 lays down the
manner of determination of the tax which is to be assessed
on the total "gross income". The term "total gross income"
is defined by s. 2 of the Act as "aggregate gross income
derived from various professions, trades, callings and
employment". The Legislature amended this provision by
adding in 1962, "Whether such profession or calling is
followed, trade is carried on or employment is, within or
outside the State of Punjab" to the definition. The annexed
schedule, conformably with the provisions of Article 276 of
the Constitution does not tax any person, under the scale
laid down in the schedule, to an extent more than Rs. 250/-
per annum. Nevertheless, it is clear, by reading the provi-
sions of s. 5 and s. 2 together, that the determination in
accordance with the scale laid down in this schedule of the
aggregate gross income on which tax is assessed, will have
to take into account the income of the individual concerned
earned both inside and outside Punjab.
The result is that the only condition for making a
person taxable under the Act is that he must also have some
profession, trade, calling
410
or occupation which is to be taxed, which he carries on
within the State of Punjab. It does not matter whether that
person is employed or carries on the same or some other
profession trade, or calling outside Punjab also.- Section 3
is only meant to indicate that the person who is to be made
liable has carried on some profession, calling, trade, or
occupation within Punjab. It does nothing more. It has
nothing to do with the calculation of the aggregate amount
of the tax to be levied. That is dealt with by s. 5 read
with s. 2 (b) of the Act as amended. And, in determining
the amount of tax which an assessee has to pay or the
grade in which he falls, the amount he makes outside must
also be added to what he makes inside Punjab. His total
gross income determines only his grade or amount of tax he
has to pay. His subjection to a profession or calling tax
depends only On the fact that he carries on some business.
or has some trade or calling "within the State of Punjab".
The words qualifying the whole or a part of the calling
which determines only the taxability of the person cannot
possibly, on the language used, fix also the grade of taxa-
tion in which the individual falls.
We, however, find that the Punjab High Court, in accord-
ance with a view it had been consistently taking even before
the amendment of s. 2(b) of the Act, has held that, in
determining the aggregate gross income, only the income made
within Punjab by the calling, occupation, trade, or profes-
sion carried on must be taken into account. We think that
this view of the Punjab High Court is based on a very
forced interpretation given to the; clear words of s. 3 of
the Act, probably because it thought it necessary to do so
to make the effect of the section correspond to provisions
of Article 245(1) of the Constitution. We think that the
Punjab High Court has clearly erred in interpreting s. 3 in
such a way as to make s. 2(b), read with s. 5 of the Act,
useless in determining the tax in accordance with the grada-
tion laid down in the schedule 2 of the Act. This amounts
to nothing short of legislation. We think that the view is
an impossible one. The principle that, where a provision
is capable of one of two interpretations, the interpretation
which validates rather than one which may invalidate a
provision applies only where two views are possible. It
cannot be pushed so far as to alter the meanings of the
clear words used in an enactment and to., in effect, repeal
statutory provisions by making them useless without holding
them to be void.
It is true that the question of the validity of the
provisions of the Act on the ground that they contravene
Article 245 (1) of the Constitution was also raised in the
High Court, but, the High Court left this question open as
it held in favour of the assessee on the first question. As
the first question was decided by clearly misinterpreting
the provisions of the Act as they stand, we have to allow
these appeals. A Division Bench of the High Court, in the
judgment under, appeal, had purported to follow an earlier
Division Bench decision of the High Court in Beli Ram v. The
Assessing Authority(1), which had interpreted the provi-
sions of s. 3 of the Act as the Act stood before the amend-
ment of s. 2 in the manner indicated above. As the High
(1) 1960 P.L.R. 846.
411
Court had not decided the question of validity of the amend-
ment these cases cannot be disposed of without deciding that
question. We do not propose to express any opinion on this
question as we do not have the benefit of the High Court’s
views on it.
In the circumstances mentioned above, we set aside the
judgments and orders of the High Court on these cases. We
send the cases back to the High Court for deciding the
question of validity of the amendment to s. 2 of the Act.
The parties will bear their own costs.
P.B.R. Appeals allowed.
412