The Tamil Nadu Tax on Professions, Trades, Callings and Employments Act, 1992 Complete Act - Bare Act

[Received the assent of the Governor on the 12th June, 1992 and published in the Tamil Nadu Government Gazette Extraordinary No.355, dated 15th June,1992 at Page Nos. 91 to 105.]

An act to consolidate and to provide for the levy and collection of tax on professions, trades, callings and employments in this State.

WHEREAS it is expedient to provide for the levy and collection of a tax on professions, trades, callings and employments;

BE it enacted by the Legislative Assembly of the State of Tamil Nadu in the Forty third Year of the Republic of India as follows :-

1.

- (1) This Act may be called the Tamil Nadu Tax on Professions, Trades, Callings and Employments Act, 1992.

(2) It extends to the whole of the State of Tamil Nadu.

(3) It shall be deemed to have come into force on the 1st day of April 1992.

:- As per Entry 60, the relevant tax is only on professions, trades, callings and employments and not on income which comes under Entry 82.

There is no bar for the State Legislature, the principal, to enact a consolidated law, applicable to all of its agents, the local bodies.

The general connection as to the scope of any tax is that, given sufficient territorial connection or nexus between the person sought to be charged with tax and the state seeking to tax him, the tax may properly extend to that person.

In the present case, we think that there is sufficient territorial nexus when the above referred to persons are sought to be charged to tax under the abovesaid sections 3(2) (a) (ii) and Section 3(2) (b), if we read down those provisions in the following way in the light of the definition of the term "person" under Section 2 (6).

As per Section 2 (6), the term "person" (which no doubt includes a company) means "any person who is engaged actively or otherwise in any profession, trade, calling or employment in the State of Tamil Nadu". Therefore, a person, other than a company, who is not engaged actively or otherwise in any profession or calling or employment in the State of Tamil Nadu cannot be an assessable entity at all under Section 3. Therefore, Section 3(2) (a) (ii) speaks of such a person generally as one engaged actively or otherwise in any profession, trade, calling or employment outside the limits of such local authority, it should be read only as a person who even though is not so engaged within the limits of the local authority concerned, is so engaged at least within the State of Tamil Nadu. Likewise in the case of Section 3 (2) (b) also unless the person concerned is in receipt, in the State of Tamil Nadu, of any income from investments (though not is in such receipt within the local limits of the local authority concerned), he cannot be charged to tax. Only in that way that provision has to be read down. If so viewed, there can be no infirmity in the above referred to two provisions.

Then, Section 3 (7) is attacked on the ground that even though a company is not actually transacting business in a particular locality, it shall be liable to pay tax if its agent is transacting the business within the limits of the said local authority. There is no merit in this argument since it is settled law that the agent's business could be treated as the business of the principal. So viewed, we think a person receiving "income from such investments" would also come under the term "person" engaged actively or otherwise in any profession, trade, calling or employment." within the meaning of that term in the abovesaid Section 2(6).

The attack with reference to Section 4 of the Act is as follows: Sec 4, provides for employer's liability to deduct and pay tax on behalf of the employees, who earn salary or wage, which comes under Entry 1 (a) of the Schedule. Here, the argument is that there is no individual "assessment" of tax at all on the respective employees before collecting the tax and that no opportunity to be heard is given to the individual employees before assessment is made in their respective employees. In this regard, the decisions in T.Govt Offices Union v. Chief Secretary Govt. T.N. (100 LW 450) is relied on. No doubt in the said decision since there is no provision for making assessment in the employer in relation to his employees a Division Bench of this Court held that the profession tax levy on the employees pursuant to the relevant provision under pre existing law was illegal. But now under the present enactment there is Section 7 which provides for assessment on the employer in relation to the salaries of the employees. But the contention now is that even though provision is there for making assessment in the employer there is no opportunity to the employees under him to be heard with reference to said assessment. But this contention has no merit since according to Sec 4, the employer is liable to pay tax on behalf of his employees and only in that capacity assessment is made on him under Section 7 pursuant to the return filed by the employer, Under Section 6(1). Therefore the employer acts as a agent of the employee and if the Agent is given the above said opportunity the principal viz., the employee cannot complain.

In both Section 5 (6) and Section 6(3) of the Act, necessary safeguards are there for the assessee, since in both cases, the executive authority, before levying penalty, has to give him a reasonable opportunity of being heard, Further in the former case, unless there is a wilful failure, and in the latter case, unless failure is without reasonable cause, penalty cannot be levied.

So, what is mentioned in Article 276(2) as the upper limit of Rs.2,500/- could only refer to the rate or question of tax proper, and not any interest or penalty levied incidentally, Viewing thus, any penalty levied under the above referred to provisions cannot be taken into account in coming to a conclusion whether the above referred to upper limit has been exceeded or not.

The attack on Section 11(1) of the Act is as follows:- Section 11 provides that where an employer liable to pay tax under Section 4 dies, his legal representative shall be liable to pay tax (including any penalty and interest) due from such employer, in the like manner and to the same extent as the deceased employer. This, according to the Counsel, is against the general law since according to general law, such legal representative would be liable only to the extent of the estate inherited by him. We find that there is some force in this argument. But, we find from a corresponding Section in the Income-tax Act, Section 159, that there too in a similar situation, the legal representative of the deceased assessee is personally liable for any tax payable by him in his capacity as a legal representative, if, while certain liability for tax remains undischarged, he creates a charge on, or dispose of, or parts with, any assets of the estate of the deceased which are in, or may come into, his possession, and such personal liability, however shall be limited to the value of the assets so charged, disposed of, or parted with. In the above circumstances, if likewise we read down the above said Section 11 of the Act also, there will be no infirmity. So, we also hold that the Section 11 should be read down so.

With reference to Section 21 of the Act which provides for search and seizure of accounts and documents in any premises where any profession, trade, calling or' employment which is liable to tax under the Act, is carried on or is suspected to be carried on, the attack is that even when there is mere suspicion that in the above said premises the said profession, etc., are carried on, the abovesaid power to make search and seizure of the abovesaid accounts and documents has been given according to the Counsel, this is without any guidelines, and hence offends Article 14 and also Article 19(1) (g) of the Constitution of India. The said Section 21 is also contrasted with Section 132 of the Income-tax Act 1961, which provides for such search and seizure only where the officer concerned has the requisite "reason to believe", then only such search or seizure would be possible. But, according to the Counsel, in the present case even on "suspicion", the abovesaid search and seizure are possible under this Act. In this connection the decision in Income Tax Officer v. Seth Brothers (741TR836(SC), Commissioner of Commercial Taxes v. R S J have (66 ITR 664 (SC) and Income-tax Officer v. Lakhmani Mewal Das (103 ITR 437 (SC)) were relied on. Here again, there is no doubt just as in the Income-tax Act and other taxing enactments, the requisite "reason to believe" must be there on the part of a fairly high official before launching upon such search or seizure and there must also be proper safeguards provided under Sec. 165 Cr. P.C. In the above circumstances, the expression "premises where any profession, etc., is suspected to be carried on "in Section21 of the Act, should be read down only as any premises where the executive authority has reason to believe that any profession, trade etc., is carried on. Further, as provided in Section 41 of the Tamil Nadu General Sales Tax Act, the safeguards provided under Section 165 Cr. P.C. also should apply to all searches made under Section 21 of the Act, Even though it is not specifically stated in the Section, we think that the said safeguards must be applied to all searches made pursuant to Section 21. If so read, we do not think that there is any infirmity in Section 21.

Regarding the finality mentioned in the above referred to Section 27 of the Act also, a faint attack was made. But it is well known that despite the above referred to stipulation regarding the finality attached to the Act mentioned in Sec.27, the said finality cannot be a total or absolute one. First of all that stipulation cannot be bar to the invoking of the jurisdiction under Article 226 of the Constitution of India. That apart, despite the stipulation of finality, even a regular civil suit could be filed in certain cases as has been held in Dhulabhai v. State of Madhya Pradesh (AIR 1969 SC 78).

The attack on the Entries 2 (a), (b) & (c) of the Schedule to the Act, dealing with legal practitioners and different medical practitioners and fixing the maximum and minimum rates of tax based on the standing of the abovesaid person is that the said standing has no nexus with the income actually earned by the respective persons and that hence such a basis for the levy is unreasonable, offending Article 14 of the Constitution of India, unequals being treated as equals. Further, it is also pointed out that while in the case of salary earning people, the basis for the above said tax is their income, it is not so in the case of the legal and medical practitioners.

The learned Advocate General, in this regard, drew our attention to the above referred to 1992 (2) An. WR 531, wherein in relation to the above referred to Andhra Pradesh tax on professions, etc., it has been held that classification of the members of legal profession on the basis of the standing and the potentiality of the area where they practice, is not discriminative.

We also adopt the same reasoning not only with regard to the legal practitioners, but also with regard to other medical practitioners mentioned above. No doubt in the Andhra enactment, potentiality of the area where the legal practitioners and practising, is also taken into account. But, simply because that is not taken into account in the Act, we do not think that the relevant provision is violative of Article 14 of the Constitution of India.

Anyway, on the whole, we think in respect of these two categories of persons, viz., who come under Entry 2(d) and 2(e) of the Schedule to the Act, in the absence of the above referred to gradation or any minimum taxable limit, the said entries read with the relevant charging Section would offend Article 14 of the Constitution of India. Therefore, we strike down Entries 2(d) and 2(e) of the Schedule to the Act as unconstitutional.

However, in the case of "dealers", who come under Entry 8, we are unable to come to the same conclusion since there is a gradation therein and we are unable to hold that the said entry read with the relevant charging Section palpably arbitrary violating Article 14, of palpably unreasonable, violation Article 19(1) (g) of the Constitution of India, viz the fundamental right to practice any profession etc. Even though Entry 8 rates are based only on annual gross turnovers and not correlated to income actually earned by the said dealers normally there is likely to be correlation between the said turnover and the income realised. Therefore, we are unable to hold in the same way, as we did in the case of the above referred to Entry 2(d) and 2(e) of the Schedule to the Act.

The attack with reference to levy on each partner of a firm as per Entry 20 of the Schedule to the Act is that not only a "firm" is charged to tax, but also, the partners therein. Further, while a partner in a registered firm is charged to tax, a partner in an unregistered firm, is not, thereby offending Article 14. The first part of this argument has no merit. The assessment both of the firm and the partners, cannot be condemned on the ground of double taxation. But, with reference to the second part of the argument, we have to hold that the said distinction between a partner of registered firm and a partner of an unregistered firm, certainly offends. Article 14. In this connection we may also point out. that the Karnataka, (1991 (35) Kar. L.J., (Tri Suppl.) 250 (DB) has held that such a levy is violative of the Constitution. Any way, the learned Advocate General represents to us that here again the proposed amendment of the Act would altogether take away the charge on the partners, and there will be levy only on the firm. Anyway since Entry 20 is now in the statute book, offending Article 14 of the Constitution of India, we hereby strike it down as unconstitutional.

Likewise, another entry, viz., Entry 5, dealing with Directors of Companies also has to be struck down since the attack made in some of the petitions is that certain Directors receive only sitting fees and that both the Directors who only receive sitting fees and whole time Directors who receive full remuneration are treated alike for the levy of profession tax - 1993 TLNJ 44 (D.B.)

Before this enactment came into force, municipal Corporations Act and District Municipalities Act dealt with the profession tax. Local bodies were empowered to levy and collect profession Tax.

Now the present Act is passed to consolidate and to provide for the levy and collection of tax on professions, trades, callings and employments. This act has come into force on 1-4-92.

- In this Act, unless the context otherwise requires-

(1)

"employer"

in relation to an employee earning any salary on a regular basis under him means, the person or the officer who is responsible for disbursement of such salary and includes the head of the office or any establishment as well as the manager or agent of the employer,

(2)

"employee"

means a person employed on salary and includes, -

a Government servant receiving pay from the revenues of the Central Government or any State Government;

a person in the service of a body, whether incorporated or not, which is owned or controlled by the Central Government or any State Government, where such body operates within the jurisdiction of a local authority even though its headquarters may be outside that local authority; and

a person engaged in any employment by an employer not covered by sub-clauses (a) and (b);

(3) "

executive authority"

means the Commissioner or other functionary of the local authority concerned, who is vested with the general executive power under the Madras City Municipal Corporation Act, 4 of 1919, the Madurai City Municipal Corporation Act 15 of 1971, the Coimbatore City Municipal Corporation Act 25 of 1981 or under any law for the time being inforce, constituting any other Municipal Corporation or under the Tamil Nadu District Municipalities Act 5 of 1920, or the Tamil Nadu Panchayats Act, 35 of 1958, the Mettur Township Act 9 of 1940, the Courtallam Township Act 16 of 1954, the Bhavanisagar Township Act 15 of 1954 and includes any functionary who is vested with the general executive powers of township constituted under the Tamil Nadu District Municipalities Act, 5 of 1920 or the Tamil Nadu Panchayats Act 35 of 1958;

It has a wide definition compared to the word used in the Municipal Corporation and District Municipalities Act. A mere making an individual with all the powers of a higher authority will not make him a higher Authority -69 LW 504; 2(6) " "Person"" meaning of - (1975) 2 MLJ 256

(4) "

local authority"

means-

(a) the Municipal Corporations of Madras, Madurai, Coimbatore or any other Municipal Corporation constituted under any law for the time being in force;

a municipal council constituted under the Tamil Nadu District Municipalities Act, 1920; or

a panchayat constituted under the Tamil Nadu Panchayats Act, 1958; or

a township committee constituted under the Tamil Nadu District Municipalities Act, 1920 or the Mettur Township Act, 1940 or the Courtallam Township Act, 1954 or the Bhavani Sagar Township Act, 1954 or the Tamil Nadu Panchayats Act, 1958;

(5)

"month'

means a calendar month;

(6)

"person"

means any person who is engaged actively or otherwise in any profession, trade, calling or employment in the State of Tamil Nadu and includes a Hindu undivided family, firm, company, corporation or other corporate body, any society, club or association, so engaged but does not include any person employed on a casual basis;

(7)

"salary"

includes pay or wage, dearness allowance and all other remuneration received by any person on regular basis, whether payable in cash or in kind, and also includes perquisites and profits in lieu of salary as defined in Section 17 of the Income-tax Act, 1961 but does not include bonus in any form or gratuity;

(8)

"Schedule"

means the Schedule appended to this Act

(9)

"tax"

means the tax on profession, trade, calling and employment levied under this Act;

(10)

'year'

means the financial year.

: (1) There shall be levied and collected by every local authority a tax on profession, trade, calling and employment.

2) Every company which transacts business within the limits of any local authority for not less than sixty days in the aggregate in any half year and every person, who in any half year-

(a) is engaged actively or otherwise in any profession, trade, calling or employment-

(i) within the limits of a local authority for not less than sixty days in the aggregate, or

(ii) outside the limits of such local authority but resides within the limits of such local authority for not less than sixty days in the aggregate, or

(b) resides within the limits of a local authority for not less than sixty days in the aggregate and is in receipt of any income from investments, shall pay a half - yearly tax levied at such rates as determined in accordance with such procedure as may be prescribed, by the local authority which shall not be less than the minimum and not more than the maximum specified in the Schedule.

The mere employment of a person as an agent to do work for the company within the municipality will not attract the section - 52M 207;

There cannot be levy of tax from persons carrying on business within their limits except when the principal office is also within the same jurisdiction.- 1934 Mad 420; Pension and commutation money - levy of tax

-41

LW 146; Place of carrying on business and levy of tax - (1940) 1 MLJ 437.

(3) A person shall be chargeable under the class appropriate to his aggregate income from all the sources specified in sub-section (2) as being liable to the tax:

Provided that, entry 21 in the Schedule shall apply only to such classes of persons as may be specified by the State Government by notification from time to time.

(4) Where a company or person proves that it or he has paid the sum due on account of the tax levied under this Act or under any other Tamil Nadu Act or any tax of the nature of a profession tax imposed under the Cantonments Act, 1924 for the same half year to any local authority or cantonment in the State of Tamil Nadu, such company or person shall not be liable, by reason merely of change of place of business, exercise of profession, trade, calling or employment or residence, to pay the tax to any other local authority or cantonment authority more than the difference between such sum and the amount to which it or he is otherwise liable for the tax for the half year under this Act.

(5) Nothing contained in this section shall be deemed to render a person who resides within the limits of any local authority or cantonment and exercises his profession, trade, calling or employment or transacts business within the limits of any other local authority or authorities or cantonment, liable to tax for more than higher of the amounts of the tax leviable by any one of the local authorities or cantonment. In such a case, the State Government shall apportion the tax between the local authorities including cantonments in such manner as they deem fit and the decision of the State Government shall be final:

Provided that where one of the local authorities concerned is the port authority of a major port or a cantonment authority, the decision of the State Government shall be subject to the concurrence of the Central Government. Levy of tax - 62 MLJ 662;

Persons who are not independent dealers or commission Agent but act as del credere agents of the company would come under the section- 1927 Mad 1020; transacts business - meaning of - 27 LW 243;

Assessment by two authorities - Rights of assessee - 54 MLJ 147; Advocate clerk - when liable - 62 MLJ 259; Dividend - not taxable - 41 LW 170;

(6) The tax leviable from a firm, association or joint Hindu family may be levied on any adult member of the firm, association or family.

(7) (a) If a company or person employs a servant or agent to represent it or him for the purpose of transacting business within the limits of a local authority; such company or person shall be deemed to transact business in such local authority and such servant or agent shall be liable for the tax, in respect of the business of such company or person, whether or not such servant or agent has power to make binding contract on behalf of such company or person.

(b) Where one company or person is the agent of another company or person and transacts business within the limits of the same local authority, the former company or person shall not be liable separately to the tax, on the same income as that of the principal.

The tax is levied not on Income and irrespective of the income. The local authority is authorised to levy tax.

- The tax payable by any person earning a salary shall be deducted by his employer from the salary payable to such person, before such salary is paid to him and such employer shall, irrespective of whether such deduction has been made or not, when the salary is paid to such person, be liable to pay tax on behalf of such person:

Provided that, if the employer is an officer of the State or Central Government, the State Government may, notwithstanding anything contained in this Act, prescribe the manner in which such employer shall discharge the said liability.

Provided further that, where any person earning a salary is also covered by one or more entries other than entry 1 in the Schedule and the rate of tax under any such other entry is more than the rate of tax under entry 1 of the Schedule, or is simultaneously in the employment of more than one employer and such person furnishes to his employer or employers a certificate in the prescribed form declaring, inter alia, that he shall get enrolled under sub-section (2) of Section 5 and pay the tax himself, the employer or employers of such person shall not deduct the tax from the salary payable to such person and such employer or employees, shall not be liable to pay tax on behalf of such person.

The employer is authorised to deduct the tax under the Act from the salary. A special procedure is prescribed as to the manner in which it is to be deducted.

(1) Every employer (not being an officer of the State or Central Government) liable to pay tax under Section 4 or under sub-section (5) of Section 11, shall obtain a certificate of registration from the executive authority in the prescribed manner.

(2) Every person liable to pay tax other than a person earning salary in respect of whom the tax is payable by his employer, shall obtain a certificate of enrolment from the executive authority in the prescribed manner.

(3) Notwithstanding anything contained in this section and in Section 4, where a person is a citizen of India and is in the employments of any diplomatic or consular office or in the office of the trade commissioner of any foreign country situated within the limits of any local authority, such person shall obtain a certificate of enrolment under sub-section (2) and pay the tax himself.

(4) Every employer or person required to obtain a certificate of registration under sub-section (1) or a certificate of enrolment under sub section (2) shall, within thirty days from the date of commencement of this Act or, if he was not engaged in any profession, trade, calling or employment on that date, within thirty days from the date of commencement of his profession, trade, calling or employment and, in respect of a person referred to in sub-section (2), who becomes liable to pay tax at a rate higher or lower than the one specified in his certificate of enrolment within thirty days of his becoming liable to pay higher or lower tax, apply to the executive authority for a certificate of registration or enrolment, or a revised certificate of registration or enrolment, as the case may be, in the prescribed form and the executive authority shall, after making such inquiry as he may deem fit within thirty days of the receipt of the application (which period in the first year of the commencement of this Act may be extended to ninety days), if the application is in order, grant him such certificate:

Provided that where on account of revision of rate of tax, the person liable to pay tax is required to pay tax at a rate higher or lower than the one mentioned in the certificate of enrolment, the rate of tax mentioned in such ^certificate shall be deemed to have been revised accordingly on the date of such revision of rate of tax as aforesaid; and pending such person applying for a revised certificate of enrolment and grant of such certificate to him, such person shall, notwithstanding anything contained in this Act, be liable to pay tax at such revised rate.

(5) The executive authority shall specify, in every certificate of enrolment, the amount of tax payable by the holder of the certificate according to the Schedule and the date before which it shall be paid and such certificate shall, subject to the provisions of the proviso to sub-section (4), be deemed to be a notice of demand for the purpose of section 10.

(6) Where an employer or a person liable to registration or enrolment has wilfully failed to apply for such registration or enrolment within the required time the executive authority may, after giving him a reasonable opportunity of being heard, impose (Substituted by Tamil Nadu Act 9 of 1994) [a penalty not exceeding rupees twenty for each day of delay in case of an employer and not exceeding rupees five for each day of delay in the case of others] (Substituted by Tamil Nadu Act 9 of 1994).

(7) Where an employer or a person liable to registration or enrolment has given false information or suppressed any information in any application, the executive authority may, after giving him a reasonable opportunity of being heard, impose a penalty not exceeding rupees one thousand.

Employer other than Officers of State and Central Government have to obtain Certificate of Registration.

S. 5(4) Is in the nature of assessment order. A period 'of limitation of 30 days is prescribed for enrolment and registration from the date of commencement of the act or from the date of commencement of the profession.

S. 5(5) : Under the executive authority has specify the amount of tax and the time within which it is payable.

S. 5(6) : Attracts penalty if the employer or a person liable for registration or enrolment fails to apply for registration. Suppression of material particulars or giving false information attracts penalty.

- (1) Every employer registered under this Act shall file a return to the executive authority, in such form, for such period and by such date as may be prescribed, showing therein the salaries paid by him to the employees and the amount of tax deducted by him in respect of such employees.

(2) Every such return shall be accompanied by a treasury challan in proof of payment of the full amount of tax due according to the return and a return without such proof of payment shall not be deemed to have been duly filed.

(3) Where an employer, without reasonable cause, has failed to file such return within the required time, the executive authority may, after giving him a reasonable opportunity of being heard, impose upon him a penalty not exceeding ²[ten rupees]² for each day of delay.

Under this Section 6 the

Employer

is required to file a return regarding the salaries paid to the employee and the amount of tax deducted therein.

- (1) The executive authority, if satisfied that any return filed by any employer under sub-section (I) of section 6 is correct and complete, shall accept the return.

(2) The amount of tax due from any employer shall be assessed separately for each year during which he was liable to pay tax:

Provided that, the executive authority may, subject to such conditions as may be prescribed, assess the tax due from any employer during any part of half year.

Provided further that, where a registered employer fails to file a return for any part of a year, the executive authority may, if he thinks fit, assess the tax due from such employer separately for different parts of such year.

(3) Where an employer has failed to register under sub-section (1) of section 5 or has failed to file any return under sub-section (1) of section 6 within the time or if the return filed by him appears to the executive authority to be incorrect or incomplete, the executive authority shall, after making such enquiry as he considers necessary, determine the tax due and assess the employer to the best of his judgment and issue a notice of demand for the tax so assessed:

Provided that before assessing the tax due, the executive authority shall give the employer a reasonable opportunity of being heard.

(4) The amount of tax so assessed shall be paid by the employer within fifteen days of the receipt of the notice of demand from the executive authority.

Assessment has be made on the basis of the return submitted by the employer.

- (1) The tax under this Act, shall be paid in such manner as may be prescribed.

(2) The amount of tax due from an enrolled person as specified in his enrolment certificate shall be paid in respect of a person -

(a) who stands enrolled before the commencement of a half year or is enrolled on or before the 31st March and the 30th September of a year, before the 30th April and the 31st October of that year;

(b) who is enrolled after the 31st March and the 30th September of a year, within one month of the date of enrolment and

(c) who is enrolled and the rate of tax at which he is liable to pay tax is revised, within one month of the date of such revision.

Sec-8 relates to the mode of payment of tax and prescribe the period within which the tax is to be paid.

- (1) Where, any employer, not being an officer of the State or Central Government, fails to pay the tax as required by or under this Act, he shall, without prejudice to any other consequences or liability be deemed to be an assessee in default in respect of the tax.

(2) An employer deemed to be an assessee in default under sub-section (1) shall be liable to pay simple interest every month at two per cent of the amount of the tax payable by such employer for the period for which the tax remains unpaid.

(3) Where the amount of tax as assessed under section 7 or the amount of tax as found liable under section 15. is more than the amount of tax paid by the employer, then such employer shall be liable to pay simple interest on the amount of difference of tax at the rate and in the manner laid down in sub-section (2).

(4) Where an enrolled person fails to pay the tax, he shall be liable to pay simple interest at the rate and in the manner laid .down in sub-section (2).

Sec-9 Section deals with the duty of employer who fails to pay the tax and he is deemed to be an assessee and liable to pay interest on the tax at the rate of 2% for the default period till such date of payment. See Sec -15.

- Where a registered employer or an enrolled person fails, to make payment of the tax within the required time or date as specified in the notice of demand, the executive authority may, after giving him a reasonable opportunity of being heard, impose upon him a penalty not exceeding fifty per cent of the amount of tax due.

Section-10 deals with penalty for non-payment of tax. There is a statutory obligation for the executive authority to give notice before exercising the power.

- (1) Where an employer liable to pay tax under Sec.4 dies, his successor in office or the legal representative shall be liable to pay tax (including any penalty and interest) due from such employer, in the like manner and to the same extent as the deceased employer, whether such tax including any penalty and interest has been assessed before the death of the employer but has remained unpaid, or is assessed after the death of the employer.

In this sub-section, the expression legal representative shall have the same meaning as in clause (11) of Sec.2 of the Code of Civil Procedure, 1908.

(2) Where an employer liable to pay-tax under Sec. 4 is a Hindu undivided family and the joint family property is partitioned amongst the various members or group of members, each member or group of members shall be jointly and severally liable to pay the tax (including any penalty and interest) due from such employer up to the time of partition, whether such tax (including any penalty and interest) has been assessed before the partition but has remained unpaid, or is assessed after the partition.

(3) Where an employer liable to pay tax under Sec. 4, is a firm, and the firm is dissolved, then, every person who was a partner shall jointly and severally be liable to pay the tax (including any penalty and interest) due from the employer firm upto the time of dissolution, whether such tax (including any penalth and inferent) has been assessed before such dissolution but has remained unpaid, or is assessed after the dissolution.,

(4) Where an employer liable to pay tax under Sec.4 transfers or otherwise disposes of his office or establishment or activity in whole or in part or effects any change in employment in consequence of which he is succeeded in the office or establishment or activity or part thereof, by any other person, the employer shall jointly and severally be liable to pay the tax (including any penalty and interest) due from the employer up to the time of such transfer, disposal or change, whether such tax (including any penalty and interest) has been assersed before such transfer, disposal or change but has remained unpaid or is assessed after such transfer disposal or change.

(5) Where an employer liable to pay tax under Sec. 4, is succeeded in the office or establishment or activity by any person in the manner specified in sub-section (4), the person succeeding the employer shall,-

(a) be liable to pay tax in respect of the period from the date of such succession; and

(b)within thirty days from the date of such succession apply for a certificate or registration.

The successors in office and legal representatives are liable to pay tax. There is joint and several liability to pay the tax and even a successor of partnership firm is liable to pay tax under the Act and thus does not depend upon the dissolution of the firm as the dissolved firm is also liable to pay the tax. Sub-section (5) of this section deals with the manner of taxing the successors is indicated.

- All arrears of tax, penalty and interest payable under this Act shall be recovered by the executive authority as an arrear of land revenue.

This Section prescribes mode of recovery adopted by the executive authority. The executive authority is given power to delegate his duties to collect under this Section to a commissioner or any other officer subordinate to him.

:- The executive authority, may delegate all or any of his powers and functions to any officer subordinate to him.

:- (1) The executive authority and the officer subordinate to him shall, in the exercise of the powers and performance of the functions under this Act and the rules made thereunder, be subject to the control and Superintendence of -

(a) in the case of Municipal Corporations, the State Government;

(b) In the case of municipalities and townships constituted under the Tamil Nadu District Municipalities Act, 1920 and the Mettur, Courtallam and Bhavani Sagar Townships, the Director of Municipal Administration; and

(c) in the ease of panchayats and townships constituted under the Tamil Nadu Panchayats Act, 1958, the Director of Rural Development.

(2) It shall be lawful for the State Government or the Director of Municipal Administration or the Director of Rural Development or an officer duly authorised by the State Government or by the Director of Municipal Administration or as the case may be, the Director of Rural Development, to have access to and to cause the production and examination of books, registers, accounts or documents maintained or required to be maintained by any local authority for the purpose of this Act and the executive authority shall, whenever called upon to do so, produce such books, registers, accounts or documents for examination by the State Government or by the Director of Municipal Administration or by the Director of Rural Development or by the authorised officer.

:- (1) (a) If any question arises, about the interpretation of any entry in the Schedule before the commencement of assessment of an employer under section 7, the executive authority shall make a reference-

(i) in the case of Municipal Corporations, to the State Government;

(ii) in the case of municipalities and townships constituted under the Tamil Nadu District Municipalities Act, 1920 and the Mettur. Courtallam and Bhavani Sagar Townships to the Director of Municipal Administration; and (iii) in the case of panchayats and townships constituted under the Tamil Nadu Panchayats Act, 1958, to the Director of Rural Development.

(b) The decision of the State Government, the Director of Municipal Administration or as the case may be, the Director of Rural Development on such question shall be final.

Explanation:-

For the purpose of this sub-section, the executive authority shall be deemed to have commenced assessment of any employer under Section 7, when the employer is served with a notice under that section.

(2) The decision on any question under sub-section (1) shall not affect the liability of any person under this Act, and respects the period prior to such decision.

(3) If any question referred to in sub-section (1) arises from any order already passed under this Act no such question shall be entertained for decision under this Section.

Where there is any dispute between assessee and executable authority under this Act regarding the rate of assessment, mode of assessment and the person liable for assessment, authorities mentioned are empowered to decide the same.

- (1) Any person or employer aggrieved by any order or decision of the executive authority in relation to the payment of tax (including penalty and interest) may, within such time as may be prescribed, appeal"

(a) in the case of Municipal Corporation, to the Taxation Appeals Tribunal concerned:

(b) in the case of municipalities and townships constituted under the Tamil Nadu District Municipalities Act, 1920 and the Mettur. Courtallam and Bhavani Sagar townships and other townships constituted under the Tamil Nadu Panchayats Act, 1958 to the Taxation Appeals Committee concerned.

(c) in the case of panchayats, to the panchayat concerned.

(2) The decision of the Taxation Appeals Committee, the Taxation Appeals Tribunal, or as the case may be, the panchayat shall be final and shall not be questioned in any court of law:

Provided that no such decision shall be made except after giving the person affected a reasonable opportunity of being heard.

(3) For the purpose of sub-section (1) the Taxation Appeals Committee constituted under the Tamil Nadu District Municipalities Act, 1920 and the Taxation Appeals Tribunal Constituted under the Madras City Municipal Corporation Act, 1919 the Madurai City Municipal Corporation Act, 1971 and the Coimbatore City Municipal Corporation Act, 1981 or, under any law for the time being in force constituting any other Municipal Corporation and the Panchayat constituted under the Tamil Nadu Panchayats Act, 1958, shall be the Taxation Appeals Committee, the Taxation Appeals Tribunals and the panchayat, respectively, under this Act and accordingly, the provisions of the said Acts in so far as they relate to appeal shall, in so far as they are not inconsistent with the provisions of this Act, apply in relation to the appeals made to the Taxation Appeals Committee, the Taxation Appeals Tribunal and the panchayat referred to in sub-section (1).

:- (1) The executive authority may,

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or on an application made at any time within two years from the date of any order or decision made or taken under this Act, rectify any error apparent on the face of the record.

Provided that no such rectification which has the effect of enhancing an assessment or any penalty, shall be made unless the executive authority has given him a reasonable opportunity of being heard.

(2) Where such rectification has the effect of reducing an assessment or penalty, the executive authority shall refund such amount as may be due to the employer or to the enrolled person, as the case may be.

(3) Where any such rectification has the effect of enhancing an assessment or penalty, the executive authority shall give the employer a revised notice of assessment or penalty and thereupon the provisions of this Act and the rules made thereunder shall apply as if such notice had been given in the first instance.

(4) The power under sub-section (1) may be exercised by the executive authority even though the order of assessment if any, passed in the matter has been the subject matter or an appeal.

(5) The provisions of this Act relating to appeal shall apply to an order of rectification made under this section as they apply to the order in respect of which such order of rectification has been made.

Under Section -17 a period of 2 years is fixed for rectification of mistakes for rate of assessment. The executive authority is empowered to take

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proceedings.

:- Where the executive authority has reason to believe that an employer has been assessed at a lower rate, in respect of a particular period, he may reassess within five years from the date of the order of assessment for that particular period after making such enquiry as he may consider necessary and after giving such employer a reasonable opportunity of being heard.

The executive authority is empowered to re-assess in the case of under assessment within the period of 5 years.

:- (1) (Substituted by Tamil Nadu Act 9 of 1994) [The executive authority other than the Commissioner of a Municipal Corporation with prior approval of the authority referred to section 21, and the Commissioner of a Municipal Corporation] may, if satisfied that the books of account and other documents maintained by an employer in the normal course of his business are not adequate for verification of the returns filed by such employer under this Act, direct the employer to maintain the books of account or other documents in so far as it relates to the tax payable under this Act in such manner and within such time and thereupon the employer shall maintain such books of account or other documents accordingly.

(2) Where an employer wilfully fails to maintain the books of account or other documents as directed under sub-section (1), the executive authority may, after giving him a reasonable opportunity of being heard, impose a penalty not exceeding rupees twenty for each day of delay.

Section - 19 deals with method of accounts that should be maintained by executive authority. It prescribes penalty if the assessee refused to produce accounts directed to be produced by the executive authority.

:- (1) Notwithstanding anything contained in any law or contract to the contrary, the executive authority may, at any time, by notice in writing, a copy of which shall be forwarded to the assessee at his last address known, require -

(a) any person from whom any amount of money is due, or may become due, to an assessee on whom notice of demand has been served under this Act, or

(b) any person who holds or may subsequently hold money for or on account of such assessee, to pay to the executive authority either, forthwith upon the money becoming due or being held or within the time as may be specified in the notice but not before the money becomes due, or is held as aforesaid, so much of the money as is sufficient to pay the amount due by the assessee in respect of the arrears of tax, penalty and interest under this Act, or the whole of the money, when it is equal to or less than that amount.

For the purpose of the section, the amount due to an assessee or money held for or on account of an assessee by any person shall be calculated after deducting therefrom such claims if any, lawfully subsisting, as may have fallen due for payment by such assessee to such person.

(2) The executive authority may, at any time, amend or revoke any such notice or extend the time for making any payment in pursuance of the notice.

(3) Any person making any payment in compliance with a notice under this section shall be deemed to have made the payment under the authority of the assessee, and the receipt of the executive authority shall constitute a good and sufficient discharge of the liability of such person to the extent of the amount referred to in the receipt.

(4) Any person making any payment to the assessee, after receipt of the notice under sub-section (1) shall be personally liable to the executive authority to the extent of the payment made, or to the extent of the liability of the assessee for the amount due under this Act, whichever is less.

(5) Where any person to whom a notice under sub-section (1) is sent proves to the satisfaction of the executive authority that the sum demanded or any part thereof is not due to the assessee or that he does not hold any. money for or on account of the assessee, then nothing contained in this section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, to the executive authority.

(6) Any amount of money which a person is required to pay to the executive authority or for which he is personally liable to the executive authority under this section shall, if it remains unpaid, be recoverable as an arrear of land revenue.

Section-20 deals with special mode, of recovery after issuing notice to the assessee.

21. (Substituted by Tamil Nadu Act 9 of 1994) [

] (a) The Commissioner of a Municipal Corporation ; or

(b) any executive authority other than a Commissioner of a Municipal Corporation, with the prior approval of, -

(i) in the case of Municipalities and townships, constituted under the Tamil Nadu District Municipalities Act, 1920 (Tamil Nadu Act 5 of 1920 ) and the Mettur, Courtallam and Bhavanisagar Townships, the Director of Municipal Administration; and

(ii) in the case of panchayats and townships, constituted under the Tamil Nadu Panchayats Act, 1958 (Tamil Nadu Act 35 of 1958) the Collector of the District concerned, may inspect and search any premises, where any profession, trade, calling or employment which is liable to tax under this Act is carried on and may cause production and examination of books, registers, accounts or documents, relating thereto and may seize such books, registers, accounts or documents as may be necessary:

Provided that, if the said authority removes from the said premises any book, register, account or document, he shall give to the person in charge of the place, a receipt describing the book, register, account or document so removed by him and retain the same only for so long as may be necessary for the purpose of examination thereof and in any case for a period not exceeding thirty days or such further period not exceeding sixty days as may be prescribed:

Provided further that in the case of a Municipal Corporation the powers under this section may also be exercised by any officer other than the Commissioner of a Municipal Corporation, with the prior approval of the Commissioner concerned;

Provided also that no residential accommodation (not being a place of business-cum-residence) shall be entered into and searched except on the authority of a search warrant issued by a Magistrate having jurisdiction over the area, and all searches under this section shall, so far as may be, made in accordance with the provisions of the Code of Criminal Procedure, 1973 (Central Act 2 of 1974)

Under Section-21 The executive authority is authorised to search and seize documents.

:- The executive authority shall, on application, refund to a person the amount of tax, penalty and interest, if any, paid by such person in excess of the amount due from him. The refund may be made either by cash payment or, at the option of the person, by deduction of such excess from the amount of tax or interest or penalty, due in respect of any other period.

Section-21 deals with refund of tax paid in excess due under the Act.

Save as otherwise provided in section 10, any employer or person who, without sufficient cause, fails the comply with any of the provisions of this Act or the rules made thereunder shall, on conviction, be punished with fine not exceeding five thousand rupees and when the offence is a continuing one, with fine not exceeding fifty rupees for each day during which the offence continues.

:- (1) Where an offence under this Act has been committed by a company every person who at the time the offence was committed was in charge of and was responsible to the company, for the conduct of the business of the company as well as the company shall be guilty of the offence and shall be liable to be proceeded against and punished accordingly;

Provided that, nothing contained in this sub-section shall render any such person liable to any punishment, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-section (1). Where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

,- For the purpose of this section,"

(a)

"company"

means anybody corporate and includes a firm or other association of individuals; and

(b)

"director"

in relation to a firm, means a partner in the firm.

- (1) Subject to such conditions as may be prescribed, the executive authority may either on application or otherwise, give any person who has committed or is reasonably suspected of having committed an offence under this Act, an option to pay within a specified period, by way of composition of such offence"

(a) where the offence consists of the failure to pay or the evasion of, any tax recoverable under this Act, in addition to the tax so recoverable, a sum of money not exceeding one thousand rupees or double the amount of the tax recoverable, whichever is greater, and

(b) in other cases, a sum of money not exceeding one thousand rupees.

(2) On payment of such sum of money and the tax, if any, recoverable under this Act, no prosecution for an offence under this Act shall be instituted in respect of the same facts on which a composition has, been allowed under this section.

:- All authorities under this Act shall , for the purposes of this Act, have the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908 while trying a suit, in respect of enforcing the attendance of and examining any person on oath

To enforce the provisions of the act is made applicable. Certain provisions of

27.

:- Save as otherwise provided in this Act, no order passed or proceeding taken by any authority or officer under this Act shall be called in question in any court, in any suit or application and no injunction shall be granted by any court in respect of any action taken or to be taken by such authority or officer in pursuance of any power conferred by or under this Act.

:- No suit, prosecution or other legal proceedings shall lie against any authority or person for anything which is in good faith done or intended to be done in pursuance of this Act or the rules made thereunder.

(Section 28-A Inserted by Tamil Nadu Act 12 of 1995)

:- (1) The State Government may, by notification, alter, amend or add to the Schedule or omit any of the entries specified in the Schedule.

2. Where a notification has been issued under sub-section (1) , there shall, unless the notification is in the meantime rescinded, be introduced in the Legislative Assembly, as soon as may be, but in any case during the next session of the Legislative Assembly following the date of the issue of the notification, a bill on behalf of the State Government, to give effect to the alteration, amendment, addition or omission, as the case may be made in the Schedule specified in the notification shall cease to have effect when such bill becomes law whether with or without modifications, but without prejudice to the validity of anything previously done thereunder;

Provided that if the notification under sub-section (1) is issued when the Legislative Assembly is in session, such a bill shall be introduced in the Legislative Assembly during that session:

Provided further that where for any reason a Bill aforesaid does not become law within six months from the date of its introduction in the Legislative Assembly the notification shall cease to have effect on the expiration of the said period of six months.

(3) All references made in this Act to the Schedule shall be considered as relating to the schedule as for the time being amended in exercise of the powers conferred by this section.

:- (1) The State Government may make rules to carry out the purposes of this Act.

(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for-

(a) all matters expressly required or allowed by this Act to be prescribed;

(b) generally regulating the procedure to be followed and the forms to be adopted in the proceedings under this Act;

(c) the payment of fees payable in respect of any application or appeal to be made, forms to be supplied, certificate to be granted and also any applications for certified copies of documents filed and orders made under this Act.

(3) (a) All rules made under this Act and all orders issued under section 32, shall be published in the

Tamil Nadu Government Gazette

and unless they are expressed to come into force on a particular day, shall come into force on the day on which they are so published.

(b) All notifications issued under this Act, shall, unless they are expressed to come into force on a particular day, come into force on the date on which they are published.

(4) Every rule made or every notification issued under this Act and every order made under section 32, shall, as soon as possible, after it is made or issued, be placed on the table of the Legislative Assembly and if, before the expiry of the session in which it is so placed or the next session, the Assembly makes any modification in any such rule or notification or order or the Assembly decides that the rule or notification or order should not be made or issued, the rule or notification or order shall thereafter have effect only in such modified form or be of no effect, as the case may be, so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or notification or order.

The State Government is empowered to make rules.

: Nothing contained in this Act shall apply to:-

(a) the members of the armed forces of the Union serving in any part of this State, that is to say, to whom the provisions of the Army Act, 1950, the Air Force Act, 1950 or the Navy Act, 1957 applies:

(Clause (aa) to Sec-30 Inserted by Tamil Nadu Act 9 of 1994) [(aa) the members of the Central Reserve Police Force to whom the Central Reserve Police Force Act, 1949, (Central Act 66 LXVI of 1949) applies and serving in any part of this State.)]

(b) physically disabled persons with total disability in one or both the hands or legs, spastics, totally dumb or deaf persons or totally blind persons.

Provided that such physical disability shall be d

uly

certified by a registered medical practitioner in the service of the State Government not below the rank of Civil Surgeon.

Section-30 exempts the certain class of person paying tax under this Act

:- Save as otherwise provided in this Act, the provisions of this Act in so far as the relate to the levy and collection of profession tax, shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force and the provisions in any such law authorising the local authority to levy and collect any tax on professions, trades, callings or employments shall, on and from the date of commencement of this Act, stand repealed.

Section 31 of this provides that in any law authorising the local authority to levy and collect any tax on professions, trades callings or employment shall on and from the date of commencement of this Act (1.4.1992) shall stand repealed.

This is a taxing statute and has to be construed strictly- (1937) 2 3VILG 569 (case under T.N. Dt. Municipalities Act 1920)

:- If any difficulty arises in giving effect to the provisions of this Act, the State Government may, by an order published in the

, make such provisions not inconsistent with the provisions of this Act as appear to them to be necessary or expedient for removing the difficulty;

Provided that no such order shall be made after the expiry of a period of two years from the date of commencement of the Act.

SCHEDULE

(SEE SECTION 3)