KARNATAKA BANK LTD. versus STATE OF A.P. & ORS.

Citation: [2008] 1 S.C.R. 986 · Decided: 21-01-2008 · Supreme Court of India · Bench: S.H. KAPADIA, B. SUDERSHAN REDDY · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2008] 1 S.C.R. 986 
KARNATAKA BANK LTD. 
A 
V. 
STATE OF A.P. & ORS. 
(Civil Appeal No. 1994 of 2002 etc.) 
JANUARY 21, 2008 
B 
[S.H. KAPADIA AND B. SUDERSHAN REDDY, JJ.] 
-~ 
Andhra Pradesh Tax on Professions, trades, Callings and 
~ 
Employments Act, 1987 - s. 2 (b} Explanation and First 
Schedule Explanation No. 1 - Levy of profession tax - On the c 
branches of a company - Treating them as a 'person' -
Constitutional validity of - Held: Inclusion of the branches in 
the definition of person does not violate Article 276 (2) of the 
Constitution - State legislature is competent to make law in 
respect of profession tax by virtue of Entry 60 of List II of 
Seventh Schedule - The power to make law on the tax also D 
~ 
includes power to .determine the persons who are liable to pay 
such tax - Definition of 'person' under General Clauses Act, 
as adopted for interpretation of Constitution, being illustrative 
and not exhaustive, does not restrict the power of State 
Legislature to define 'person' differently- Constitution of India, 
E 
1950 -Articles 246, 276 (2) and 367; Seventh Schedule List 
II Entry 60- General Clauses Act, 1897 - s. 3 (42). 
Interpretation of statutes - Inclusive definitions -
Interpretation of 
F 
~ 
Taxation -
Tax on profession and tax on income -
Difference between. 
Appellant-companies were having various branches 
within the State of Andhra Pradesh. The authority 
concerned issued notices requiring them to pay G 
-.· 
profession tax of Rs. 2500/- by each of their branches 
".., 
within the State. Appellants filed writ petitions challenging 
the constitutional validity of explanation to the definition 
of the term 'person' defined in clause (j) to s. 2 of Andhra 
986 
H 
987 
SUPREME COURT REPORTS 
[2008] 1 S.C.R. 
A Pradesh Tax on Professions, trades, Callings and 
..... 
Employments Act, 1987 as well as Explanation I to the First 
Schedule of the Act. High Court upheld the validity of the 
provisions. 
B 
In appeal to this court, the question for consideration 
was whether the Explanation to the terms 'person' defined 
u/s 2 (j) of the Act and Explanation I to the Fist Schedule 
of the Act, was violative of Article 276 (2) of the Constitution 
1 
of India, 1950. 
~ 
c 
Dismissing the appeals, the Court 
HELD: 1.1 The definition of the word "person" in the 
impugned Explanation and also Explanation No. I to the 
First Schedule of Andhra Pradesh Tax on Professions, 
trades, Callings and Employments Act, 1987 is not 
D intended to tax a person at a rate higher than Rs.2500/-
per annum, per person, but to treat even a branch of a 
~ 
firm, company, corporation or other corporate body, any 
h 
society, club or association as a separate person, and 
therefore, a separate assessee within the meaning of 
E Section 2 (b) of the Act and the Andhra Pradesh State 
Legislature has undoubtedly the competency to adopt 
such a devise of taxation. The Andhra Pradesh State 
Legislature did not violate the mandate of Article 276(2) of 
the Constitution. [Para 45] [1011-E-G] 
F 
1.2. The State Legislature undoubtedly is competent 
to make a law relating to taxes for the benefit of the State 
or other local authorities therein in respect of professions, 
trades, callings or employments. It is traceable to Entry 
60 of List II of the Seventh Schedule but that power of the 
G Legislature to make such a law to levy and collect the 
profession tax is made subject to the restrictions as 
r 
provided for under Article 276 (2) of the Constitution. · 
[Para 25] [1002-8-C] 
H 
Kesavananda Bharati vs. State of Kera/a 1973 (suppl) 
;·;i 
KARNATA~ BANK LTD. v. STATE OF AP. & ORS. 
988 
_.._ 
SCR 1; Bharat Kala Bhandar Ltd. vs. Municipal Committee, A 
Ohamangaon 1965 (3) SCR 499; The Bengal Immunity 
Company Limited vs. The State of Bihar and Ors. 1955 (2) 
SCR 603; Atiabari Tea Co. Ltd. vs. The State of Assam and 
..... -
Ors. 1961 (1) SCR 809 - referred to. 
R. vs. Burah 1878 (5) I.A. 178 - referred to. 
B 
1.3 Enfry 60 of List II of Seventh Schedule of the 
Constitution, which authorizes the State Legislature to . 
make a law relating to tax on profession is to be read along 
with Article 276 of the Constitution. Article 276 is also C 
declaratory, in its nature inasmuch as it declares that 
notwithsta~ing anything contained in Article 246, no law . 
of the Legig•ature of a State relating to taxes for the benefit 
of State etlSt in respect of profession, trades etc. shall be 
invalid on the ground that it relates to ta

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