LexC. RAJAGOPALACHARI versus CORPORATION OF MADRAS
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Morch, J. SUPREME COURT REPORTS C. RAJAGOPALACHARI v. CORPORATION OF MADRAS (P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, J. C. SHAH, N. RAJAGOPALA AYYANGAR AND s. M. S!KRJ JJ.) City Munici_nality Act 1919 (Act No. 4 of 1919), 1. lll(b), Govern- ment ;f India Act, 1935, ss. 142A(l), 143(2), 292, Constitution of India, Art. 271-Drawing pension-If amounts to employment or pro- fession within the meaning of Act-Whether taxable. The appellant held office as the last Governor-General of India. He bas been drawing Rs. 15,000 prr annum as pension while residing Jn the city of Madras. The Corporation of Madras demaaded profession tax from him under section lll(i)(b) of the City Municipal Act, 191~ for the year 1958-59 on the ground of his residence tJeing within J\.fadras city and his drawing the pension to which he wa3 entitlei:I. The ap.. pellant addressed a communication to the Corporation asserting that this derpand was illegal as the Corporation was empowered by the rele- Yant constitutional provisions merely to levy a tax "on a profession, trade calling or employment" and that as he as a pensioner did not fall under any of these classes, the said demand was illegal. The Corporation diCl not accept the contention of the appellant and therefore, the appellant filed a writ petition under Art. 226 of the Constitution before the High Court. The High Court dismisse'd the writ petition of the appellant. The High Court granted a certificate under Art. 133(J)(c) of the'" constitution to the appellant to file on appeal t'J the Supreme Court. Hencl! tho appeal. The question before the Supreme Court was whether the Corporation was entitled to levy a tax on pensioners in respect of the pensions receiv- ed by them in Madras City. Htld: (l) that the power of the Corporation Lo levy the tax is dependent on the subject of the tax being within the State Legislative power under the Constitution. The present levy comes within the purview of item 60 in the State list in Schedule VII of the Constitution, which reads as follows:...:. HJ'axcs on profeMion, tra'<IC8, callings and employments." Beina a "pensioner" cannot be a "profession, trade, business or calling", nor could a tax on a person because he is in receipt of a pension be said to be a tax on ''employments". The tax. therefore,. under the last portion of sec. I 11 (I )(b) reading-profession tax on persons' .. in receipt of any pension or income from investments"-is aothina but a ~ 011 income fallina wilhin EntJy 32 of the Union List. . , ' - 6 S.C.R. SUPREME COURT REPORTS 963 The taxes specified in item 60 are taxes on the carryiDi on of a pro- 1116' fcssion, trade etc., and would, therefore, apply only to a case of present -- employment. Tho mere fact that a person has previously been in a C. &jagopalac,..,_ profession or carried on trade etc. cannot justify a tax under this entry. Corpor:i;011 •I The tax on the receipt of pension or on the income from investments Madru which is referred to in the last part of sec. 111 ( 11 is in truth and subs- tance a tax on income. At the time the tax is levied the appellant·pen- aioner is in no employment but is only in receipt of income. (ii) The present levy of tax cannot be saved by Art. 277 of the Constitution because the tax was a new levy and nut a continuance of a tax which had been levied just prior to April 1, 1937. On thC facts of this case it was held that if the statutory charge to profession tax imposed on pensioners by the Act of 1919, ·was lifted by the Act of 1936, and the trix again came into operation only on April I, 1937. it would follow that there was no "ievy of the tax" immediately before the commencement of P1rt Ill of the Government of India Act. 1935. so as to bring it within the saving in s. 143(2) of that Act. Besides. the two circum~t«nces, viz., that residence within the city for a specified ~riod was 11'!' .... IC a condition of the liability to the tax, as well as the increase in tht .:'ltes would both serve to emphasise that the levy was a nc\v one, wilh a different texture and not a continuation of the tax which \Vas le··~ed just prior to April 1, 1937. (iii) "['he mere fact that prior to 1st April, 1937 the Corporation had under Act of 1936 the power to bring the tax into force by a resolution does not on a proper construction of s. 143(2) bring it within the range of those taxes or duties which "were being lawfully levied" prior t
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