STATE OF PUNJAB & ANR. versus PREM SUKHDAS & ORS.

Citation: [1977] 3 S.C.R. 408 · Decided: 01-04-1977 · Supreme Court of India · Bench: M. HAMEEDULLAH BEG · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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408 
STATE OF PUNJAB & ANR. 
v. 
PREM SUKHDAS & ORS. 
April 1, 1977 
(M. H. BEG, C.J., A. C. GUPTA AND P. S. K.AILASAM, JJ.] 
Punjab Professions. Trades, Callines &:: Employnrents Taxation Act, 1956-
SS. 2(b) and 3-Scope of. 
, 
Section 3 of the Punjab Professions, Trades, Callings 
and 
Employment& 
Taxation Act, 1956, imposes a tax in respect 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 gros&-
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 is-
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 th•t 
in determining the aggregate gross income, only the income derived within tire 
State by a calling, 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 tho High Court 
HELD : By reading the provisions of s. 5 and s. 2 together, 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 
S1aie. 
[409 GJ 
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 whethet 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 aggre-
gate amount of the tax to be levied. That is dealt with by s. 5 read with 
s. 2(b) as amended. Io 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 cal1ing tax depends only on the fact that he carriei 
on some business or has some trade or calling within the State. [410- A-CJ 
2. The principle that v.·here a provision is capable of one of two interpreta-
tions, the interpretation which validates rather the one which may invalidate a 
provision applies 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 Fl 
[The case was remanded to the High Court for deciding the validity of the 
amendment made to s. 2(b) of the Act] 
r 
' 
PUNJAB V. PREM SUKHDAS (Beg, C.J.) 
409 
CIVIL APPELLATE JuRISDICTmN : Civil Appeal Nos. 2152-2153 
A. 
of 1968 
(From the Judgments and Orders dated the 25.2.1966 of the 
Punjab andi Haryana High Coun in Civil Writ Nos. 2588 and 2392/ 
1964) 
V. C. Mahajan for the appellants (in CA 2152). 
K. S. Suri and 0. P. Sharma, for the the appellants (in CA 1755) 
E. C. Agrawa/a, for respondent in CA 1754 
Hardev Singh and R. S. Sodhi, for respondent in CA 1755 
R. K. Mathur and V. Goswami, for respondent in CA 1497 
N. N. Goswarny 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 
c 
& Haryana in the cases now before us by special leave was whether 
section 3 of the Punjab Professions, Trades, Callings andi Employments 
Taxation Act, 1956 (hereinafter referred to as 'the Act') restricts 
taxation upon persons in Punjab to the income made within the State 
D-
of Punjab. 
This section reads as follows :-
"3. Levy of tax-Every

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