TaxTMI 
TaxTMI 
1979 (3) TMI 58
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed to annual tax of Rs. 200 by the Municipal Committee. On October 30, 1960, the appellants filed a suit for permanent injunction restraining the defendant-Committee from realising the profession tax demanded by it per letters Nos. 15 to 20, dated May 31, 1960, amounting to Rs. 1,200. The appellants challenged the validity of the assessment contending that, construed in the light of the definition given in s. 2(40) of the Punjab General Clauses Act, the term " person " occurring in s. 61(1)(b) of the Punjab Municipal Act, 1911, includes a " firm " and since the trade carried on by the " firm " is one, the tax could be levied only on the firm, and not on the partners individually. On these premises, it was pleaded that the Municipal Committee in levying the tax on the individual partners had exceeded its statutory powers under s. 61(1)(b) of the Municipal Act. The trial court dismissed the suit. On appeal by the plaintiffs, the Additional District judge, Amritsar, reversed the judgment of the trial court and decreed the suit. The Municipal Committee carried a further appeal to the High Court. The learned single judge, who heard the appeal, affirmed the judgment and decre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1547, which also dealt with the provisions of the Municipal Act, follow that the impugned assessment could only be questioned under the provisions of ss. 84 and 86 of the Act, and the jurisdiction of the Civil Court in respect of tax levied or the assessment made is excluded ". In the result, the appeal was allowed and the trial court's decision dismissing the suit was restored. Before us, Mr. C. K. Mahajan, learned counsel for the plaintiff-appellants, has adopted the reasons given by the learned single judge of the High Court. In support of his contentions, he relied upon the aforesaid Madras decisions. His argument is that if the interpretation placed by the appellate Bench of the High Court is allowed to stand, it will lead to anomalous and unconstitutional results. Mr. Mahajan concedes that the individual partners are also " persons " within the meaning of cl. (b) of s. 61(1). He however, maintains that the firm also is a " person " within the contemplation of this provision and, as such, liable to be taxed; that if in respect of the one trade, which is being carried on by the firm, apart from each of the individual partners, the firm also is separately assessed to Rs. 200 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lity " within the contemplation of cl. (b) ? In our opinion, for reasons that follow, the answer to this question must be in the affirmative. " Partnership " as defined in s. 4 of the Indian Partnership Act, 1932, is the relation between persons who have agreed to share the profits of a business carried on by all or any of them for the benefit of all. The section further makes it clear that a firm or partnership is not a legal entity separate and distinct from the partners. Firm is only a compendious description of the individuals who compose the firm. The crucial words in the definition of " partnership " are those that have been underlined. They hold the key to the question posed above. They show that the business is carried on by all or any of the partners. In the instant case, admittedly, all the plaintiff-appellants are carrying on the business in partnership. All the six partners are sharing the profits and losses. All the six partners are jointly and severally responsible for the liabilities incurred or obligations incurred in the course of the business. Each partner is considered an agent of the other. This being the position, it is not possible to hold that each of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d even unconstitutional results. But in the instant case, nothing of this kind has happened. The firm has not been assessed. No question of double taxation or exceeding the constitutional ceiling of Rs. 250 fixed by art. 276(2) of the Constitution arises on the facts of the present case. The arguments advanced on behalf of the appellants on this aspect of the matter are merely hypothetical and speculative. This takes us to the second question, whether the Civil Court had jurisdiction to hear and determine the suit. Section 84(1) of the Punjab Municipal Act provides that " an appeal against the assessment or levy of any ... tax under this Act, shall lie to the Deputy Commissioner or to such other officer as may be empowered by the State Government in this behalf ". Then, there is a proviso to this sub-section which says that when the Deputy Commissioner or such other officer, as aforesaid, is or was, when the tax was imposed, a member of the Committee, the appeal shall lie to the Commissioner of the Division. Sub-section (2) is important. It provides : " 84. (2) If, on the hearing of an appeal under the section, any question as to the liability to, or the principle of asses....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al Committee in the Civil Court, contending that Sambhar salt ought to have been assessed at the rate of 3 pies per maund under item 68, that he had been illegally assessed under item 69 at the higher rate, and claimed refund of the amount paid by him, with interest. The Committee, inter alia, contended that Sambhar salt was not common salt, and the Civil Court had no jurisdiction to entertain the suit. The trial court held that Sambhar salt was common salt within the meaning of item 68 of the Schedule, that the imposition of tax on it under item 69 of the Schedule was illegal, and, therefore, the Civil Court had jurisdiction to hear and determine the suit by virtue of s. 9 of the Code of Civil Procedure. On appeal, the High Court held that the Civil Court had no jurisdic- tion and dismissed the suit. The assessee came in appeal to this court by certificate granted by the High Court, and contended that since the impugned levy was not made under the Municipal Act but in derogation thereof, the Civil Court had jurisdiction to entertain and determine the suit. Delivering the judgment of the court, Subba Rao J. (as he then was) repelled this contention, observing that the rate....