Bapuji Educational Association, Davangere vs State of Karnataka and Another

The petitioner-society is running several educational institutions in the State of Karnataka. Such institutions are in terms of Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976 liable to pay a profession tax of Rs. 2,500/-p.a. A notice to this effect was issued by the Assistant Profession Tax Officer, Davangere, calling upon the petitioner to get itself enrolled under the Act and to pay the profession tax failing which it could attract a penalty of Rs. 20/- per day, apart from other penal action permissible under law. In response, the petitioner-society by a letter dated 27-4-1991 informed the Assistant Tax Officer that since the society was running various educational institutions which were all under its management and control and which institutions did not have any separate legal existence, it was liable to pay a sum of Rs. 2,500/- alone in respect of all such institutions. This reasoning does not appear to have found favour with the Assistant Profession Tax Officer, who by his endorsement dated 4-5-1991 informed the petitioner that professional tax at the rate of Rs. 2,500/- was payable by it is respect of all educational institutions separately. The stand taken by the Assistant Profession Tax Officer remained unaltered, even after the petitioner had by its communication dated 6-5-1991, pointed out that the institutions run by the petitioner were not independent bodies and did not have any independent legal existence as such, since they were all managed by the petitioner-society. Aggrieved by the insistence on the part of the respondent asking the petitioner to register itself in respect of each one of the institutions run and managed by it, the petitioner has filed the present writ petition challenging notice dated 15-4-1991 and the endorsement dated 4-5-1991.

The respondents have not filed any counter affidavit. Government Pleader however points out that the Joint Commissioner of Commercial Taxes (Legal) has in his communication dated 27-11-1991, addressed to the Secretary to Government, Department of Law and Parliamentary Affairs clarified that where an educational society is running one or more institutions, the liability to pay the profession tax rests only with the parent society and that each one of such educational institutions need not pay tax separately. A circular to the above effect is also said to have been issued separately, in the light whereof, the grievance made by the petitioner stands redressed. Even otherwise there appears to be no justification for taking any other view having regard to the fact that what is demanded is in the nature of a profession tax under the provision of the Act. A society which is running educational institutions would be liable to pay such a tax but its liability would not multiply with the number of institutions it is running. It makes little difference for a tax under the Act, whether the society runs one or more institutions. The insistence on the part of the Assistant Profession Tax Officer for registration of each one of the institutions run by the petitioner was therefore wholly misplaced and has been rightly corrected by the circular instructions said to have been issued on the subject.

It is not in dispute that the petitioner has already paid a sum of Rs. 2,500/- towards profession tax for the year 1991-92. It shall pay the amount for the remaining years also if not already paid. On its failure, the respondents shall be at liberty to initiate such proceedings as are otherwise permissible in law. Notice dated 15-4-1991 is to that extent valid and needs no interference. It is however difficult to sustain endorsement dated 4-5-1991 for what has been indicated above. The said endorsement shall therefore stand quashed. The writ petition is accordingly disposed of but in the circumstances without any orders as to costs.