(1) This is a writ petition under Art. 226 of the Constitution directed against the imposition of a tax on commission agents at 5 per cent on their income derived from their business as commission agents. It is not disputed that the permission of the Punjab Government under S. 82 of the Punjab Gram Panchayat Act, 1952 (IV of 1953) had been obtained by the Gram Panchayat of village Machhiwara in Ludhiana district and that such tax can be imposed up to a limit of Rs. 250/- per annum. In this connection, reference may be made to Art. 276 of the Constitution which is in these terms:
'276. (1) Notwithstanding anything in Art. 246, no law of the Legislature of State relating to taxes for the benefit of the State or of a municipality, district board, local board or other local authority therein in respect of profession, trades, callings or employments shall be invalid on the ground that it relates to a tax on income.
(2) The total amount payable in respect of any one person to the State or to any one Municipality, district, board, local board or other local authority in the State by way of taxes on professions, trades, callings and employments shall not exceed two hundred and fifty rupees per annum:
Provided that if in the financial year immediately, preceding the commencement of this Constitution there was in force in the case of any State or any such municipality, board or authority a tax on professions, trades, callings or employments the rate or the maximum rate, of which exceeded two hundred and fifty rupees per annum, such tax may continue to be levied until provision to the contrary is made by Parliament by law, and any law so made by Parliament may be made either generally or in relation to any specified states, municipalities, boards or authorities. (3) The power of the Legislature of a State to make laws as aforesaid with respect to taxes on professions, trades, callings and employment shall be construed as limiting in any way the power of the Parliament to make laws with respect to taxes on income accruing from or arising out of profession, trades, callings and employments.'
In the present case, the Panchayat has not fixed the maximum limit up to which the tax can be levied. On the basis of percentage fixed the amount of tax may be far in excess of Rs. 250/-, the maximum limit prescribed by Art. 276. In a chart filed by the petitioner (which is at page 29 of the paper-book) the income from commission of Defendants Raj Hukam Chand, Saghru Mal Karam Chand and Ram Parkash Bhushan Lal, exceeds Rs. 10,000/- in each case, and on the basis of the resolution of the Panchayat their liability to pay tax goes beyond the permissible limit of Rs. 250/-. In this situation the question that has to be decided is whether the resolution should be red in conjunction with Article 276 so as to imply that the maximum limit is Rs. 250/- or whether the resolution should be struck down on the ground that it does not lay down the maximum limit in accordance with Art. 276. A similar question came up of reconsideration before the Madhya Bharat High Court in a case reported as Shrikrishna v. Ujjain Municipality, AIR 1953 Madh-B, 145. The learned Chief Justice observed as under:
'It is clear, therefore, that though Art. 276 lays down a tax imposed by a State for the purpose of a Municipality on a calling shall not be invalid on the ground that it relates to a tax on income, every legislation relating to such a tax cannot ignore the provisions of Clause (2) of the said Article. There must be something either in the language of such legislation or in the circumstances or manner of the imposition of the tax which makes it clear that the liability of one person to pay taxes on profession, trades and callings to any one Municipality shall not exceed the sum of rupees two hundred and fifty per annum. It was frankly conceded by the learned Advocate General who appeared for the Ujjain Municipality that the imposition of the said performance tax under consideration was open to this criticism. In the absence of any such restriction as is contemplated by Art. 276, clause (2), the Notification under which the tax in question has been imposed makes a person liable to pay sums for exceeding Rs. 250/- per annum. To take a concrete illustration, if any one of the applicants before us displays in his cinema house one or more shows for one hundred days in a year he will be liable to pay Rs. 500/- under the said Notification. That the tax in question was open to this criticism was further admitted in the return filed on behalf to the Ujjain Municipality, I hold therefore that the Notification by which the performance tax in question was imposed invalid.'
(2) I am in entire agreement with this decision. A taxing provision has to be construed strictly in accordance with the law. The argument that a law, which may in certain circumstances be in accordance with the Constitution and in others may not be in accordance with the constitution, should be held valid so far as it is in accordance with the Constitution, was negatived by their Lordships of the Supreme Court in Romesh Thappar v. State of Madras, AIR 1950 SC 124: At page 129 Fazl Ali J. observed as under:
'Where a law purports to authorise the imposition of restrictions on a fundamental right in language wide enough to cover restrictions both within and without the limits of constitutionally permissible legislative action affecting such right it is not possible to uphold it even so far as it may be applied within the constitutional limits, as it is not severable. So long as the possibility of its being applied for purposes not sanctioned by the Constitution cannot be ruled out, it must be held to be wholly unconstitutional and void.'
These observations fully apply to the facts of the present case.
(3) For the reasons given above, I allow this petition and quash the resolution passed by the Panchayat as being opposed to Art. 276 of the Constitution. It will be open to the Panchayat to pass a proper resolution keeping in view the provisions of Art. 276 of the Constitution and other State legislative enactment's where under profession tax is imposed within the State inasmuch as the aggregate of profession tax cannot exceed the sum of Rs. 250/- per annum. In this view of the matter it is not necessary to decide the order contentions raised by the learned counsel. There will be no order as to costs in the Court.
(4) Petition allowed.