High Court · 2007

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 22.11.2007CORAMTHE HON'BLE MR.JUSTICE M.JAICHANDREN Writ Petition No.9602 of 1999Sree Visalam Chit Funds Ltd.,rep. by its Administrative Officer, 161, Mount Road,Chennai-2 .. Petitioner vs. 1. State of Tamil Nadu rep. by Secretary, Municipal Administration & Water Supply, Fort St. George Chennai-92. State of Tamil Nadu rep. by Secretary Rural Development Department Fort St. George Chennai-93. Director of Municipal Administration & Water Supply Department, Chepauk, Chennai-54. Director of Municipal Administration and Rural Development Directorate Kuralagam, Chennai-108 .. RespondentsThis writ petition is filed under Article 226 of the Constitutionof India praying for the issuance of a Writ of Mandamus forbearing allthe corporations (except Corporation of Chennai), Municipalities andPanchayats under the control of the respondents in whose local area thepetitioner is carrying on business in its branch offices, fromdemanding or collecting profession tax under the Tamil Nadu Act 59 of1998. https://hcservices.ecourts.gov.in/hcservices/ For petitioner : Mr.S.VisvanathanFor respondents : Mr.V.Manoharan Government Advocate O R D E RHeard the learned counsels appearing for the petitioner as well asfor the respondents. 2. It is stated on behalf of the petitioner that the petitioner isa Company incorporated under the Companies Act having its Head Officeat Tirunelveli and its Administrative Office at Pallathur. The CentralOffice is at Chennai and there are branches in several places in theState of Tamil Nadu, coming within the limits of the respectiveCorporations, Municipalities and Panchayats. The petitioner iscarrying on business in chits in accordance with the provisions of theChit Fund Act, 1982, and the rules framed thereunder. 3. It is further stated that before the enactment of the TamilNadu Tax on Professions, Trades, Callings and Employment Act, 1992(Tamil Nadu Act 24 of 1992), the local bodies were empowered to levyprofessional tax in accordance with the provisions contained in TheMadras City Municipal (Corporation) Act, 1919, and the Acts relating tothe other Corporations, the District Municipalities Act, 1920 and thePanchayats Act, 1958. 4. It is further stated that in case, a person carries onprofessional or business activities under more than one localauthority, it was sufficient if the person paid the highest amount oftax to any one local authority. The State Government would apportionthe tax paid amongst all the concerned local authorities. When theproblem of different local authorities levying professional tax arose,the Government had issued G.O.Ms.No.1575, Rural Development and LocalAdministration Department, dated 19.10.1982, stating that a Company isliable to pay professional tax to only one of the local bodies and notto every local body where it transacts business. However, after TheTamil Nadu Tax on Professions, Trades, Callings and Employment Act,1992, was enacted, consolidating the various laws providing for thelevy and collection of professional tax, the various local authoritieswere demanding the petitioner to pay professional tax wherever itsbusiness was transacted. Therefore, the petitioner was constrained tomove this Court by way of a writ petition in W.P.No.2112 of 1996. By anorder passed in W.M.P.No.3261 of 1996, interim injunction had beengranted by this Court restraining the various local authorities fromdemanding professional tax from the petitioner. However, after theTamil Nadu Tax on Professions, Trades, Callings and Employment Act,1992 had been repealed and amendments had been introduced in The TamilNadu Municipal Act, 1920, vide The Tamil Nadu Act No.59 of 1998, the https://hcservices.ecourts.gov.in/hcservices/ various authorities had started demanding payment of professional taxfrom the petitioner wherever its business was being transacted. In suchcircumstances, the petitioner has been constrained to file the presentwrit petition, invoking Article 226 of the Constitution of India. 5. In the counter-affidavit filed on behalf of the respondents,the claims made by the petitioner are denied and it has been statedthat the petitioner is liable to pay professional tax demanded by thelocal authorities wherever the petitioner's business is beingtransacted. 6. It has also been stated that section 124-D of The Tamil NaduDistrict Municipalities Act, 1920, as amended by the Tamil Nadu Act 59of 1998, is the charging Section. Section 138-B (1) of the Chennai CityMunicipal Corporation Act, empowers the council to levy tax onProfession, Trade, Calling and Employment. Similarly, Section 124-D ofThe Tamil Nadu District Municipalities Act, 1920, empowers theMunicipal Council to levy tax on profession, trade, calling andemployment. As per Section 124-(D) (4), it has been stated that where aCompany or person proves that the professional tax had been paid to anylocal authority, such Company or person shall not be liable, by reasonmerely of change of place of business, profession, trade, calling oremployment, to pay the tax to other local authorities. 7. It has also been stated that the petitioner Company had notchanged their place of business. Instead, they are running theirbusiness simultaneously in various towns and therefore, the localauthorities are charging the professional tax in their respective areascoming under their jurisdiction. The contention of the petitioner thatthe Company is liable to be levied only a single professional tax byany one authority at the highest rate, relying upon Section 3(5) ofTamil Nadu Act 24 of 1992, is not correct. Section 3(5) of the Act isapplicable only to the person who resides within the limits of anylocal authority and exercises his profession, trade, calling oremployment and transacts business within the limits of any other localauthority. The said Section will not be applicable to a Company whichhas branches in many towns and transacts business in all such places. 8. Considering the contentions raised on behalf of the petitionerand in view of the prayer sought for in the present writ petition, itis clear that the petitioner, who is in chit fund business is preparedto pay professional tax, as levied by the Corporation of Chennai andnot to the other local authorities. It has also been contended onbehalf of the petitioner, citing a decision of the Supreme Court inShriram Chits and Investment (P) Ltd., Vs. Union of India and others(1993 Supp (4) SCC 226), that chit fund companies are not liable to payprofessional tax, under the provisions of the Chit Funds Act, 1982. It https://hcservices.ecourts.gov.in/hcservices/ has also been contended that Section 3(5) of the Tamil Nadu Act 24/92is applicable only to persons residing within the jurisdictional limitsof a local authority and carrying on business and it would not apply toa company having branches in many towns in various places coming underthe jurisdiction of a number of local authorities.9. Considering the contentions raised on behalf of the petitioner,it is clear that the requirement of the petitioner to pay professionaltax would depend on various factual aspects connected with the businessof the petitioner, as well as the corporate nature of the petitioner.In such circumstances, it is not open to the petitioner to pray for awrit of mandamus, under Article 226 of the Constitution of India,seeking for a remedy in the nature of prohibiting various localauthorities from charging professional tax from the petitioner inrelation to the business carried on by the petitioner. However, itcould be open to the petitioner Company to challenge the specificorders that may be issued by the local authorities stating that it isnot liable to pay the professional tax to the concerned localauthority. In such circumstances, it is not proper for this Court topass a general order, as prayed for by the petitioner in the presentwrit petition. Therefore, the writ petition stands dismissed, making itclear that the dismissal of the writ petition will not preclude thepetitioner Company from challenging the individual orders, that may beissued by the local authorities concerned, claiming payment ofprofessional tax relating to its chit fund business. Sd/Asst.Registrar/true copy/Sub Asst.RegistrarTo1. The Secretary, State of Tamil Nadu Municipal Administration & Water Supply, Fort St. George Chennai-9 https://hcservices.ecourts.gov.in/hcservices/

2. The Secretary State of Tamil Nadu Rural Development Department Fort St. George Chennai-93. Director of Municipal Administration & Water Supply Department, Chepauk, Chennai-54. Director of Municipal Administration and Rural Development Directorate Kuralagam, Chennai-108+1cc to Mr.S.Viswanthan, Advocate Sr 69443+1cc to Govt. Pleader Sr 69467KG (CO)km/22.1. Writ Petition No.9602 of 1999