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PETITIONER: STATE OF PUNJAB & ANR.

       Vs.

RESPONDENT: PREM SUKHDAS & ORS.

DATE OF JUDGMENT01/04/1977

BENCH: BEG, M. HAMEEDULLAH (CJ) BENCH: BEG, M. HAMEEDULLAH (CJ) GUPTA, A.C. KAILASAM, P.S.

CITATION:  1977 AIR 1640            1977 SCR  (3) 408  1977 SCC  (2) 774  CITATOR INFO :  F          1989 SC1024  (12)

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

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       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

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       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

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       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