Profession tax liability for Military Engineering Service employees upheld; municipal tax exemption rules did not apply to the State levy.

Employees of the Military Engineering Service were treated as falling within the wide statutory definition of "employee" under the A.P. Tax on Professions, Trades, Callings and Employments Act, 1987, and the definition of "employer" was not limited to Government departments. Section 4 operated as the charging provision for profession tax, while Sections 32 and 35 did not support exemption because they concern local authorities and compensation to them. Regulation 288A applied only to taxes levied by municipal or cantonment authorities under earlier local laws, not to the State profession tax under the 1987 Act. In the absence of a notification under Section 31, no exemption was available, and the challenge to the levy failed.

---

---

Issues: Whether the employees of the Military Engineering Service establishment were liable to pay profession tax under the A.P. Tax on Professions, Trades, Callings and Employments Act, 1987, and whether Regulation 288A of the Financial Regulations framed under the Army Act, 1950 exempted them from such levy.

Analysis: The definition of "employee" in Section 2(e) of the 1987 Act was held to be wide enough to cover the writ petitioners, and the definition of "employer" in Section 2(f) was not confined to Government departments alone. Section 4 was treated as the charging provision, under which profession tax is levied and collected for the benefit of the State. Sections 32 and 35 were found not to assist the petitioners, since they concern the exclusion of local authorities from levying profession tax and the grant of compensation to such local authorities. Regulation 288A was held to apply to taxes levied by municipal or cantonment authorities under the earlier local laws, but not to the profession tax imposed by the State under the 1987 Act. No notification under Section 31 exempting the petitioners, or any class including them, had been issued.

Conclusion: The petitioners were held liable to pay profession tax under the Act, and Regulation 288A did not confer exemption from the State levy.

Final Conclusion: The challenge to the deduction of profession tax failed, and the writ petitions were dismissed.

Ratio Decidendi: A statutory exemption applicable to municipal or cantonment taxes does not extend to a distinct State-imposed profession tax unless the later enactment itself provides, or authorises by notification, a corresponding exemption.

---