Profession tax on company directors fails where directorship is not a profession, and the exemption classification is unreasonable.

Ordinary company directors are not engaged in a profession, calling, trade or employment merely by holding office and performing intermittent board duties, so profession tax cannot be levied on them under the charging provision. The Court also held that directorial fees do not alter that character for the relevant tax purpose. The exemption for Government-nominated directors was found to lack a real and rational basis, because nomination alone does not create a distinct class with materially different functions or powers. On those grounds, the impugned entry was struck down as beyond the charging provision and invalid for unreasonable classification.

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Issues: (i) Whether directors of companies are engaged in any profession, calling, trade or employment so as to fall within the charging provision for profession tax under the State Act; (ii) Whether the exemption granted to Government-nominated directors in the Schedule constitutes an unreasonable classification.

Issue (i): Whether directors of companies are engaged in any profession, calling, trade or employment so as to fall within the charging provision for profession tax under the State Act.

Analysis: The taxing power under the relevant constitutional entry extends to taxes on professions, trades, callings and employments, and the levy can operate only where a person in fact carries on such an activity. An ordinary director is not an employee of the company, does not carry on the company's business personally, and performs intermittent duties at board or committee meetings. The nature of directorship, as recognised by the Companies Act framework, does not amount to carrying on a profession, calling, trade or employment. The Court also treated the income-tax treatment of directors' fees as supporting the conclusion that such fees are not salary or business/profession income in the relevant sense.

Conclusion: The petitioners, as ordinary directors, are not liable to profession tax under the charging provision, and the entry imposing such liability is beyond the scope of the Act.

Issue (ii): Whether the exemption granted to Government-nominated directors in the Schedule constitutes an unreasonable classification.

Analysis: Directors nominated by Government are not shown to form a distinct class different in functions and powers from other directors merely by reason of nomination. The suggested basis that they are usually Government servants or are confined to safeguarding Government investment was held insufficient and misconceived, because Government nominees may be private persons and their role is not limited in the manner suggested.

Conclusion: The classification in favour of Government-nominated directors is unreasonable and invalid.

Final Conclusion: The impugned entry was struck down as void, both for exceeding the charging section and for falling outside the legislative competence supporting the levy.

Ratio Decidendi: A profession tax on directors can be sustained only if their directorial functions amount to carrying on a profession, calling, trade or employment, and a classification in a taxing schedule must rest on a real and rational distinction related to the object of the levy.

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