' The petitioner in this case is aggrieved by the demand of Rs, 5,000 Created against him by the respondent No, I on account of professional tax under section 3 of the Punjab Finance Act, 1977 read with the Second Schedule to the Act. The relevant provision reads as under :- "Tax on persons engaged in professions, trades, callings or employments.-(1) With effect from 1st July 1977, there shall be levied and collected from the persons or class of persons mentioned in column 2 of the Second Schedule to this Act engaged in a profession, trade, calling or employment in the Province of the Punjab a tax for each financial year at the rates mentioned in column 3 of the said Schedule.
(2) If a person is engaged in more than one profession, trade, calling or employment he shall pay the tax only in respect of one such profession, trade, calling or employment for which rate of tax is the highest.
(3). The Government may exempt any person or class of persons from the payment of the tax."
2. Before me two objections were taken to the imposition of the levy. In the first place, the learned counsel for the petitioner contends that the petitioner has been reduced in rank and is now a "B" category contractor and according to the Second Schedule, he would not be liable to a tax of Rs, 5,000 according to column 3 of the Second Schedule to the Punjab Finance Act, 1977. An examination of the Schedule, however, reveals that any person who is approved as a contractor with a category of more than rupees twenty-five lacs is liable to a tax of Rs, 5,000. The learned counsel produced a document showing that the petitioner's category has been reduced yet it extends to rupees fifty lacs. The imposition of tax of Rs, 5,000 under the circumstances is not open to objection on this score. The first objection taken by the learned counsel, therefore, fails.
3. In the second place, the learned counsel for the petitioner contends that the petitioner being a partnership firm is not a "person" at law and as such no tax is exigible under section 3 of ,the Punjab Finance Act, 1977 which authorises the imposition of tax on any "persons or class of persons". He relies on a judgment of the Indian jurisdiction reported as Dulichand Laxminarayan v.
Commissioner of Income-tax, Nagpur (1) for the proposition that a partnership is not a person. In that case the Indian Supreme Court had to consider and decide the question whether the constituents of a partnership firm could themselves be a partnership firm. Upon consideration of the various provisions of the partnership, he Court came to the conclusion that section 4 of the Partnership Act, contemplates natural or juristic person only and that the constituent of a partnership firm could not be themselves .a partnership concern. In so far as the judgment of the Indian Supreme Court is concerned, it is only an authority for the proposition that it is not open for a partnership firm to enter into a partnership with another firm to form a bigger partnership. In the judgment the meaning of the word "person" appearing in section 4 of the Partnership Act, 1932 was subject matter of consideration. At page 278 the Court observed :- "It is clear from the foregoing discussion that the law, English as well as Indian, has, for some specific purposes, some of which are referred to above, relaxed its rigid notions and extended a limited (1) PLD 1956 SC (Ind.) 27 personality to a firm. Nevertheless the general concept of partnership, firmly established in both systems of law, still is that a firm is not an entity or "person" in law but is merely an association of individuals and a firm name is only a collective name of those individuals who constitute the firm. In other words, a firm name is merely an expression, only a compendious mode of designating the persons who have agreed to carry on business in partnership. According to the principles of English jurisprudence, which we have adopted, for the purposes of determining legal rights "there is no such thing as a firm known to the law" as was said by James, L. J., in Ex parte Corbett. In these circumstances to import the definition of the word "person" occurring in section 3 (42) of the General Clauses Act, 1897, into section 4 of the Indian Partnership Act will, according to lawyers, English or Indian, be totally repugnant to the subject of partnership law as they know and understand it to be. It is in this view of the matter that it has been consistently held in this country that a firm as such is not entitled to enter into partnership with another firm or individuals."
4. The case before me does not involve the determination of the question as to whether a partnership firm enjoys the capacity to enter into any contract of partnership under section 4 of the Partnership Act, 1932. On the contrary the only question arising for determination is whether the partnership firm itself is liable to pay the tax leviable under section 3 of the Punjab Finance Act, 1977.
5. The Punjab Finance Act, 1977 is a fiscal enactment imposing charge of professional tax against "persons" and the adoption of the meaning given by clause (xxxix) of section 3 of the General Clauses Act, 1897 is neither inconsistent with the provisions of section 3 of the Punjab Finance Act, nor would it result in any repugnancy, incongruity or inconsistency with the text of the charging provision.
6. The definition of "persons" given by clause (xxxix) of section 3 of the General Clauses Act reads as under :- "Person shall include any company or association or body of individual whether incorporated or not."
The definition is of a very wide import and would embrace a natural person, a juristic person or a body of individuals whether incorporated or not. Now a partnership is defined by section 4 of the Partnership Act, 1932 to mean that relation between persons who have agreed to share the profit of a business carried on by all or any of them acting for all. There is no compelling reason why the definition given by clause (xxxix) of section 3 of the General Clauses Act, 1897 should not be read in section 3 of the Punjab Finance Act, 1977.
7. In Bhagwanji Morarji Goculdas v. Alembic Chemical Works Co. Ltd. And others (1) the Privy Council held that "before the Board it was argued that under the Indian Partnership Act, 1932, a firm is recognized as an entity apart from the persons constituting it, and that the entity continues so long as the firm exists and continues to carry on its business. It is true that the Indian Partnership Act goes further than the English Partnership Act, 1890, in recognizing that a firm may possess a personality (1) PLD 1948 P C 178 distinct from the persons constituting it the law in India in that respect being more in accordance with the law of Scotland, than with that of England. But the fact that a firm possesses a distinct personality does not involve that the personality continues unchanged so long as the business of the firm continues. The Indian Act, like the English Act, avoids making a firm a corporate body enjoying the right of perpetual succession. The agreement of 7th December, 1907 was made between the company and four named individuals. And when all of those four individuals had ceased to be members of the firm, there was no privity between the company and the firm as it then existed.-
8. In re : Swaranath Bhatia (1) : The question whether the partnership is a person liable to the penalties under the Defence of India Rules, 1939 came up for consideration. The Court observed that according to section 3 (39) of the General Clauses Act, a person includes a partnership and where a partnership fails to secure compliance with the orders made under the Defence of India Rules such partnership should be deemed to have contravened the provisions of the rules.
Nevertheless it was held that partnership as such has no existence apart from the individuals constituting the firm. Therefore, any partner who fails without lawful excuse to secure compliance that such order shall be deemed to have contravened the provisions of the Madras Cotton Cloth and Apparel (Exports) Control Order, 1946, was promulgated under the Defence of India Rules, It was held that in the event of contravention of the Control Order every partner of the firm shall be deemed to have contravened the provisions of the order and the burden of proving that circumstances exculpating him exist is on such partner.
9. 1 have no doubt that the charge created by the provisions of section 3 of the Finance Act, 1977 is enforceable from "all persons or classes of persons mentioned in the second schedule' irrespective of the fact whether or not such persons enjoy the status of a distinct legal entity. There is nothing in the charging section to restrict its application to legal entities. Thus even if partnership firm does not enjoy a legal entity nevertheless the partners would fall within the mischief of the expression "the persons or class of pet sons", liable to tax under the aforesaid provision. In other words the partners constituting the partnership would nevertheless be "persons" engaged in profession, trade or callings within the meaning of the charging section.
10. There is nothing in the Finance Act, 1977 to support the proposition that the charge created by section 3 shall be enforceable only if the persons engaged in the Trade are shown to enjoy the status of a "person" or a legal entity. To my mind the charge created by section 3 of the Punjab Finance Act, 1977 is enforceable if it is shown that any pet son or group of persons sought to be assessed are engaged in some profession, trade etc. And the requirements of the second schedule to the Act are satisfied.
11. In view of the above, both the points raised by the learned counsel for the petitioner fail and consequently the writ petition is dismissed in limine.
(1) AIR 1948 Mad. 427