Indian Airlines Corporation vs The State of Assam and Another

B.L. Hansaria, J.—A small matter has brought a mighty Corporation before this Court because, according to it a big question is involved. The Appellant Corporation is the Indian Airlines Corporation and it has felt aggrieved at the demand of Rs. 1,192 00 from it being the Assam Professional Tax payable by its employees under the Assam Professions. Trades, Callings and Employments Taxation Act, 1947, for short "the Act". This sum of Rs. 1,192/- was for the assessment years 1965 to 1966 The grievance of the Appellant is not so much about the levy of the tax on its employees, as to the invocation of Section 9(4) of the Act for realising the tax from it on its failure to have deducted the same from the employees.

The first submission of Shri Paul Majumdar is that there was no liability even on the employees to pay the tax u/s 3 of the Act. Shri Sen submits that in any case the Corporation should not have been made liable u/s 9(4) of the Act. Let us read Section 3.

Liability to tax.-As from the first day of April 1947 and subject to the provisions of this Act, every person who carries on a trade either by himself or by an agent or representatives or who follows a profession or calling, or who is in employment, either wholly or in part within the State shall be liable to pay for each financial year a tax in respect of such profession, trade, calling or employment find in addition to any tax, rate, duty or foe which he is liable to pay under another enactment for the time being in force:

Provided that for the purposes of this section a person on leave shall be deemed to be a person in employment.

The liability to pay tax u/s 3 is on "every person". The word "person" bus been defined in Section 2(c) of the Act as below:

"person" includes a company, firm or other association pf persons;

There is thus nothing to doubt, that any employee as a human being who is in employment of the Corporation would be liable to pay tax. As the recovery is not to any tax imposed on the Corporation as such, the liability under the Act to pay tax cannot be denied. Let it be seen whether the tax could have been realised from the Corporation. For this, we have to read Section 9 which runs:

Deduction of tax at source.-(1) The tax payable under this Act by any person in the employment of any Government, local authority, company, firm or other association of persons, shall, in the manner prescribed, be deducted by the principal officer thereon from any amount payable to such person on behalf of such Government, local authority, company, firm or other association of persons.

(2) The principal Officer making any deduction under Sub-section (1) shall submit to the assessing authority such returns and within such time as may be prescribed.

(3) The assessing authority may take action, if he thinks fit in the manner provided by Sub-section (2) of Section 7 and by Section 8, in the case of any person in respect of whom he is satisfied that no return under Sub-section (2) has beep furnished or a return furnished under that Sub-section is inaccurate or deficient.

(4) Where any principal officer fails to deduct any tax or after deducting fails to pay it as required by or under this Act, he shall, without prejudice to any other consequences he may incur under this Act, be deemed to be a person in default in respect of the tax not deducted or paid and all the provisions of Section 13 shall apply to him:

Provided that the assessing authority shall not make a direction under Sub-section (2) of Section 13 for the recovery of any penalty from such person unless it is satisfied that such person has willfully failed to deduct and pay the tax.

The submission on this count is that the Manager of the Corporation posted at Jorhat cannot be regarded to be a "principal officer" within the meaning of the section. The definition of "principal officer" finding place in Section 2(g) of the Act reads as below:

2 (g), "principal officer" means with reference to-

(i) a Government, the head of an office or the disbursing officer,

(ii) a local authority, company, firm or other association of persons, the Chairman, Secretary, Treasurer, Manager, or Agent of such local authority, company, firm or other association of persons;

Shri Sen contends that this definition is not attracted in the case of Corporation as it is neither a ''''company" nor a "firm" nor is included in the expressions "other association of persona". It would be useful to remember that the expression "person" has also been defined in the Act to include "a company, firm or other association of persons". On principle of law, there does not appear to be any logic to me to exclude a body like the Corporation from the purview of the Act when even a firm is sought to be brought in. If a firm could be made liable to pay tax under the Act, there is no reason why a taken tax whose amount cannot exceed a sum of Rs. 250/- per annum as laid down under Article 276 of the Constitution India should not be realised from the Appellant Corporation. The contention, however, is that as the Corporation owes it" existence and birth to the Air Corporation Act, 1953, it has to be excluded from the expressions "other association of persons", Shri Sen has referred in this connection to the definition of "Corporation" as given in section 2(iv) of the Air Corporation Act, 1953, In that clause "Corporation" have been defined to mean "Indian Airlines" and "Air India International'''' and it has been further stated that "Corporation" means either of the Corporations. This definition is for the purpose of that Act. It cannot be taken to be the real meaning of the word "Corporation" for which one has to turn, if required at all, to dictionary. In Webster''s Dictionary, the word "Corporation" has been defined Inter alia to mean "a group of people who get a charter granting them as a body certain of the legal powers, rights, privileges, and liabilities of an individual distinct from those of the individuals making up the group". In the Oxford Dictionary as well the word "Corporation'''' has been defined to mean "united body of persons, esp. one authorised to act as an individual: artificial person created by charter, prescription, or act of the legislature, comprising many persons".

Thus there is nothing to doubt that a Corporation is an association of persons and would, therefore, be a "person" within the meaning of Section 2(c) of the Act. The definition of ''''Principal officer" in Section 2(g) would also, therefore, be attracted as it includes a Manager of the association also.

In view of the above, I hold that the Manager of the Jorhat Branch of the Corporation was rightly called upon to pay the amount of Rs. 1,192 00 which he had not deducted from its employees as required by Section 9(1) of the Act.

This appeal has, therefore, no force and is dismissed with costs.