In a recent decision, the Kerala High Court ruled that BSNL is liable to pay Profession tax under the provisions of the Panchayat Raj Act. The Court observed that the BSNL, a Company shall be deemed to transact business attracting levy of tax under Section 204 of the Kerala Panchayat Raj Act.
In the instant case, the petitioners, BSNL, a Government company approached the High Court challenging the notices issued by the Grama Panchayat demanding profession tax. The petitioners, contended that it is not liable to pay profession tax to any one of the Panchayats in the State of Kerala merely because its telephone exchanges are functioning within the Panchayat areas.The petitioners, further relied on the decision in Indira v Kunhimangalam Grama Panchayat and contended that it is not liable to be taxed since BSNL is not transacting any business as defined in Rule 2(c) of the Kerala Panchayat Raj (Profession Tax) Rules, 1996.
Section 204 of the Kerala Panchayat Raj Act provides for levy of profession tax. As per Section 204(1)(i), profession tax, subject to such rules as may be prescribed, shall be levied every half year in every village panchayat area as per sub section (1), on every company which transacts business in such Panchayat area for not less than sixty days in the aggregate in that half year.
while analyzing the provisions of Rule 2(c), which is a deeming provision, the division bench observed, “A reading of 2(c) shows that the expression ‘transacts business’ means the doing of acts or business of whatever nature whether isolated or not such as soliciting, obtaining or transmitting orders or buying, making, manufacturing, exporting, importing, receiving, transmitting or otherwise dealing with goods. Reading of this provision itself show that doing of acts or business of whatever nature whether isolated or not itself would come within the scope of the expression’transacts business’. Even apart from that, in view of Rule 4, the vires of which is not under challenge, a company, like BSNL, shall be deemed to have transacted business within a panchayat area, if that company has an office, within the panchayat area.
According to the Court, BSNL, being a company which is maintaining telephone exchanges within the jurisdiction of the Panchayats in the State shall be deemed to have transacted business for the purposes of section 204 of the Kerala Panchayat Raj Act.
“Therefore, irrespective of whether its activities come within any one of those enumerated in 2(c) of the Rules or not, in view of the deeming provision contained in Rule-4 of the Rules, BSNL shall be deemed to transact business attracting levy of tax under Section 204 of the Kerala Panchayat Raj Act. Therefore, the contention that it is not transacting any business and therefore, is not liable for profession tax under Section 204 of the Kerala Panchayat Raj Act is plainly untenable.”
Further, it was observed that the decision in Indira’s case is applicable to the present case since the issues raised in both these cases are totally different from each other.
Read the full text of the Judgment below.
