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of <h1>Supreme Court affirms 'Circumstances and Property Tax' legality, ruling it falls under State Legislature competence.</h1> <h3>RR. ENGINEERING CO. Versus ZILA PARISHAD, BAREILLY & ANR.</h3> The Supreme Court upheld the validity of the 'Circumstances and Property Tax' imposed by the Zila Parishad, Bareilly, and the Town Area Committee of ... - Issues Involved:1. Validity of the 'Circumstances and Property Tax'.2. Application of Article 276(2) of the Constitution.3. Legislative competence of the State Legislature to impose the tax.Summary:1. Validity of the 'Circumstances and Property Tax':The Supreme Court examined the validity of the 'Circumstances and Property Tax' imposed by the Zila Parishad, Bareilly, and the Town Area Committee of Kuraoli. The tax was initially imposed by the District Board of Bareilly under the District Boards Act, 1922, and continued under the U.P. Kshetra Samitis and Zila Parishads Act, 1961. The appellants challenged the tax's constitutional validity, arguing it was a tax on income, which the local authorities were not competent to levy.2. Application of Article 276(2) of the Constitution:The appellants contended that the tax on 'circumstances and property' was essentially a tax on professions, trades, callings, and employments, and thus, the total amount payable could not exceed Rs. 250 per annum as per Article 276(2) of the Constitution. The Full Bench of the Allahabad High Court, however, held that the tax was a composite tax on a person's status and financial position, not merely on professions, trades, callings, or employments. Consequently, the limitation under Article 276(2) did not apply.3. Legislative Competence of the State Legislature:The Supreme Court affirmed that the tax on 'circumstances and property' is not a tax on income but a composite tax on a person's financial position and status. The Court held that the tax falls within the legislative competence of the State Legislature under Entries 49 and 60 of List II of the Seventh Schedule, which relate to 'taxes on lands and buildings' and 'taxes on professions, trades, callings, and employments,' respectively. The Court also noted that the tax could be referable to other entries in List II, such as Entry 58, which relates to 'taxes on animals and boats.'The Court rejected the view that the tax fell under the residuary entry (Entry 97 of List I) and thus required saving under Article 277 of the Constitution. The Court emphasized that the substance of the tax, rather than its name, determines its legislative competence.Conclusion:The Supreme Court upheld the validity of the 'Circumstances and Property Tax' in both appeals, dismissing the appeals with costs. The tax was deemed within the legislative competence of the State Legislature and not subject to the limitations of Article 276(2) of the Constitution.
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