Motilal B. Naik, J.
1. Writ Petition No. 13066 of 1987 is filed by the Bar Council of Andhra Pradesh represented by its Secretary. Writ Petition No. 13382 of 1987 is filed by the various employees' associations of the Andhra Pradesh High Court, represented by their Presidents. Writ Petition No. 14184 of 1987 is filed by the Nuclear Fuel Complex Employees' Association, Hyderabad, represented by its acting Secretary.
2. In all these writ petitions, the constitutional validity of the Andhra Pradesh Tax on Professions, Trades, Callings and Employments Act, 1987 (for short, 'the Act'), is questioned on the ground that the provisions of the Act offend Articles 14 and 19(1)(g) of the Constitution of India. This apart, in Writ Petition No. 13382 of 1987 filed by the various employees' associations of the Andhra Pradesh High Court, it is contended that the High Court employees would not fall within the purview of the Act and, therefore, no profession tax could be levied or collected from them.
3. At the outset, the learned Government Pleader for commercial taxes has taken a preliminary objection that the writ petitions are not maintainable for the reason that no aggrieved person, i.e., the assessee, has directly filed the writ petition and, therefore, associations representing various categories cannot file the writ petitions.
4. Sri K. Subrahmanya Reddy, learned senior counsel, leading arguments on behalf of all the writ petitioners, has placed before us two decisions of the Division Benches of this court, viz., Warangal Chamber of Commerce v. Director of Marketing, : AIR1975AP245 and Taxpayers' Association, Tirupathi Municipality v. Commissioner and Special Officer, Tirupathi, AIR 1977 NOC 360 (AP); [1977] 2 APLJ 167, on the point of maintainability of the writ petitions filed by the associations. Furthermore, he has also placed reliance on the Full Bench decision of this court in Dhronamraju Satyanarayana v. N.T. Rama Rao, : AIR1988AP144 .
5. In so far as the maintainability of the writ petitions is concerned, we are of the view that the concept of locus standi has undergone tremendous changes and it is too late in the day to say that the writ petitions are not maintainable, particularly in view of the decisions cited supra. We, therefore, hold that the associations are competent to file writ petitions. For instance, in Section 6 of the Advocates Act, 1961, the functions of Bar Councils of the respective States have been illustrated. Section 6(1)(d) of the said Act reads :
'6. Functions of State Bar Councils.--(1) The functions of a State Bar Council shall be-- ....
(d) to safeguard the rights, privileges and interests of advocates on its roll ;....'
6. Thus, a reading of Clause (d) of Sub-section (1) of Section 6 of the Advocates Act would go to show that the Bar Council's main function is not only to admit persons as advocates on its rolls but also to safeguard the rights, privileges and interests of the advocates on its rolls. Looking from this aspect, we hold that the Bar Council in its representative capacity is competent to file a writ petition where the interest of the advocates is involved. As we have already held that writ petitions could be filed by the representatives in the light of the three decisions, we reiterate that there is no merit in the preliminary objection taken by the learned Government Pleader and the contention is, therefore, rejected.
7. Coming to the crucial issue raised in the writ petitions, Sri Subrahmanya Reddy mainly contended that the Legislature lacks competence to bring out an Act of this nature and also the provisions of the Act are violative of Articles 14 and 19 of the Constitution of India, because the classification of persons for imposing and collecting profession tax is arbitrary in nature and it is not based on intelligible differentia. Learned counsel has brought to our notice the First Schedule to the Act wherein classes of assessees and the amount of tax to be paid have been detailed. For instance, under categories (A) and (B) of item 2 of the First Schedule, the tax that is to be paid is as under :
'2. (a) Legal practitioners including solicitors and notaries public ; . . . .
Where the standing in the profession of any of the persons mentioned above-
(A) In any local area comprised in any municipal corporation or selection grade or special grade municipality is-
Rs.(i)less than three yearsNil(ii)three years or more but less thanfive years150 per annum(iii)five years or more250 per annum(B) In any other area in the State is-(i) less than three yearsNil(ii)three years or more but lessthan, five years100 per annum(iii)five years or more but less thanten years150 per annum(iv)ten years or more250 per annum.'
8. It is pointed out by Sri Subrahmanya Reddy that according to Clause (A) of item 2 of the First Schedule, in any local area comprised in any municipal corporation or selection grade or special grade municipality, if the standing of an advocate in the profession is three years or more but less than five years, he has to pay Rs. 150 per annum ; and if it is five years or more, he has to pay Rs. 250 per annum. According to Clause (B), in any other area in the State, if the standing of an advocate at the Bar is three years or more but less than five years, he has to pay Rs. 100 per annum ; if it is five years or more but less than ten years, he has to pay Rs. 150 per annum and if it is ten years or more, he has to pay Rs. 250 per annum. Sri Subrahmanya Reddy submits that this classification is clearly arbitrary, as the Legislature equates an advocate of five years' standing at the Bar practising at some places to that of an advocate of ten years standing at the Bar practising at some other places and they are all treated as belonging to the same group thereby fixing a maximum tax of Rs. 250 per annum. It is contended by learned counsel that in the legal profession, it is very difficult for a beginner, whether he is practising in a specified municipal area or other area, to survive, as he has to struggle in the profession in the initial stages of his career and, therefore, subjecting the advocates to the maximum rate of tax grouping them in the higher category basing on their place of practice and collecting maximum tax, would put them to a lot of hardship. Learned counsel has invited our attention to the interesting feature of the provisions of Explanation No. 1 to the First Schedule, which reads as under :
'Explanation No. 1.--Notwithstanding anything contained in this Schedule where an assessee is liable to pay income-tax, the rate of tax under this Act shall be Rs. 250 per annum.'
9. It is contended by Sri Subrahmanya Reddy that this Explanation would go to show that irrespective of the fact whether an advocate has one year or ten years standing at the Bar, once he is an assessee liable to pay income-tax, he has to pay the maximum rate of profession tax under this Act at the rate of Rs. 250 per annum. Income may be earned from sources other than the legal profession. He, therefore, contends that the standing at the Bar and income from other sources cannot form the basis for levying profession tax on the advocates and they are not relevant factors to be taken into consideration for such levy.
10. In so far as the first submission that the State Legislature has no competence to enact the statute in question is concerned, we are unable to appreciate the contention. Entry 60 of List II of the Seventh Schedule to the Constitution of India, i.e., 'Taxes on professions, trades, callings and employments' covers the field. Article 276 of the Constitution, which is relevant, reads as under :
'276. Taxes on professions, trades, callings and employments.-
(1) Notwithstanding anything in Article 246, no law of the Legislature of a 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 professions, 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 thousand and five hundred rupees per annum,
(3) The power of the Legislature of a State to make laws as aforesaid with respect to taxes on professions, trades, callings and employments shall not be construed as limiting in any way the power of Parliament to make laws with respect to taxes on income accruing from or arising out of professions, trades, callings and employments.'
11. From the above, it is clear that the State Legislature has the power to make law with respect to taxes on professions, trades, callings and employments. The only limitation or restriction is that the total amount payable in respect of any person to the State by way of taxes on professions, trades, callings and employments shall not exceed the amount specified in Article 276(2). In view of the constitutional provisions, it cannot be said that the State Legislature lacks competence to make the law in question. In two Division Bench decisions of this court in Writ Petition No. 2771 of 1988, dated November 11, 1991, and Writ Petition No. 1819 of 1989, dated January 21, 1991, to which one of us (A. Lakshmana Rao J.), was a party, it has been held that the State Legislature has competence to make this enactment. At the time the Act was made, the maximum amount of profession tax payable by any person was only Rs. 250 per annum and it has been raised to Rs. 2,500 per annum by amending Article 276(2). It is contended that the State Government may, at any time, enhance the profession tax from Rs. 250 per annum to Rs. 2,500 per annum by just issuing a notification to that effect and in such an event it amounts to imposition of unreasonable restriction on the fundamental right to carry on any profession, trade or business. We cannot render a decision on hypothetical considerations or assumptions. The levy of profession tax at present at the rate of Rs. 250 per annum on certain categories of advocates cannot be said to be unreasonable.
12. In so far as the contention that the grouping of advocates into different categories under the First Schedule to the Act requires their reclassification on a rational basis is concerned, we hold that the provisions of the Act, the enumeration of classes of assessees in the First Schedule and fixing of rates of profession tax payable by each category of assessees are not vitiated by the vice of discrimination and that the State Legislature has classified the assessees into different categories and fixed the rates of tax having regard to the nature of profession carried on, the area where it is carried on and other relevant factors. The Legislature has wide latitude in classifying the subjects of taxation and fixation of appropriate rates of tax. It would be very difficult to apply a particular yardstick in classifying subjects of taxation into different categories. May be, a junior advocate who enters into the profession may not be earning much at the threshold of his career when compared to a senior advocate. None the less, a classification of the members of the legal profession made on the basis of their standing at the Bar and the potentiality of the area where they practise for the purpose of levy of profession tax cannot be said to be either arbitrary or unreasonable. It is, however, submitted by Sri Subrahmanya Reddy that it would be rational and reasonable if the minimum standing at the Bar for subjecting an advocate to levy of profession tax is uniformly fixed at ten years without reference to the local area where he practises, as that would be the minimum period for which an advocate has to struggle before he picks up some work. When the classification made by either the Legislature or the State Government cannot be said to be either unreasonable or arbitrary, it would not be proper for this court to direct them to classify persons in a manner different from the one they adopted.
13. Sri Subrahmanya Reddy has relied on a catena of decisions enlightening us on the issue of arbitrariness in grouping of persons for the purposes of levying profession tax and contended that the arbitrary act of the Legislature offends Articles 14 and 19 of the Constitution of India. In the event of this court not accepting his contention, he pleaded that at least the State Government may be directed to bring out modifications in the Act on par with the Karnataka Tax on Professions, Trades, Callings and Employments Act (35 of 1976), the validity of which was the subject-matter of the decision of the Supreme Court in Shivananjundappa v. State of Karnataka, : AIR1992SC231 . The point for consideration in that case was whether the Karnataka Legislature was competent under the Act to classify, for the purpose of profession tax, the lawyers practising within the Bangalore urban agglomeration separately from those practising within the municipal limits of district headquarters and further classifying lawyers between those who had below ten years of practice and others above ten years of practice. It was held (at page 231):
'Both classifications appear to us to be based on professional opportunities while being in a particular set or surrounding or being in a particular age group. The Legislature is the best judge to determine who has the capacity to pay taxes and who should be burdened and how much.'
14. Thus, the place where one practises and the standing at the Bar are the two relevant criteria on the basis of which lawyers can be classified into different categories and different rates of tax can be fixed. It is for the Legislature to classify lawyers into different categories and fix the rate of tax payable by each category.
15. In the light of what we have discussed above, we cannot hold that the classification of the advocates made on the basis of their standing with reference to the local area where they practise, for the purpose of levy of profession tax and fixation of different rates of tax accordingly, cannot be said to be either arbitrary or unreasonable. Merely because in the Karnataka State, the Legislature adopted the criterion of less than and above ten years of standing for the purpose of classification, it does not follow that the Legislatures of other States cannot adopt the criterion of different duration of standing for classifying lawyers for the purpose of profession tax. It all depends upon the nature of professional prospects available in the particular State, generally, and potentialities of the place of practice, in particular. Under the Act, the State Legislature has classified the lawyers into different categories following the two relevant criteria approved by the Supreme Court in the aforesaid decisions and, therefore, the classification in the instant case is based on intelligible differentia.
16. The next attack of Sri Subrahmanya Reddy is on Explanation No. 1 to the First Schedule, which contemplates payment of maximum profession tax by the assessee under the Act. For instance, when it comes to advocates, a particular period of standing in the profession is taken into consideration for levying the amount of profession tax. As far as employees, who are recipients of salaries or wages are concerned, their total emoluments are taken into consideration for arriving at the quantum of profession tax leviable. Explanation No. 1 to the First Schedule gives a goby to the basis of classification. An advocate may have income from sources other than his profession, such as income from property, etc. Under the head 'Income from property', he may be liable to pay income-tax. But that cannot be a criterion for fixing the liability on him to pay the maximum profession tax under the Act. The same is the case in respect of employees also. Sri Subrahmanya Reddy has submitted that this Explanation is contrary to the letter and spirit of the Act and, therefore, needs striking down. We see force in the contention. When the tax is leviable in respect of profession, calling, vocation or trade, we see no rational nexus between the income derived from a source other than the particular profession or trade or vocation and the tax leviable in respect of that profession, trade or vocation. The Explanation leads to an arbitrary levy of profession tax. Therefore, we hold that Explanation No. 1 to the First Schedule to the Andhra Pradesh Tax on Professions, Trades, Callings and Employments Act, 1987, is arbitrary and unreasonable and, therefore, invalid.
17. For deciding the question raised in W. P. No. 13382 of 1987, filed by the various associations of the Andhra Pradesh High Court employees as to whether the High Court employees would fall within the purview of the Act and are liable to pay the tax, it is necessary to read the definitions of 'employee' and 'person' in Sections 2(e) and 2(j) of the Act :
'2. (e) 'employee' means a person employed on salary or wages and includes,--
(i) an employee of the Central Government or any State Government to whom the salary is paid either from the Consolidated Fund of India or of a State ;
(ii) 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 the body operates in any part of the State, even though its headquarters may be situated outside the State ; and
(iii) a person engaged in any employment of an employer, not covered by items (i) and (ii) above.'
'2. (j) 'person' means any person who is engaged in any profession, trade, calling or employment in the State of Andhra Pradesh 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 who earns wages on a casual basis.'
18. From a reading of these provisions, it is clear that the word 'employee' means any person employed on salary or wages and includes an employee of the Central Government or any State Government. The provisions of Section 2(e)(iii) of the Act are wide enough to cover employees of the High Court also. For further clarification, it is necessary to extract Article 229 of the Constitution of India :
'229. Officers and servants and the expenses of High Courts.-
(1) Appointments of officers and servants of a High Court shall be made by the Chief Justice of the court or such other judge or officer of the court as he may direct :
Provided that the Governor of the State may by rule require that in such cases as may be specified in the rule no person not already attached to the court shall be appointed to any office connected with the court save after consultation with the State Public Service Commission. (2) Subject to the provisions of any law made by the Legislature of the State, the conditions of service of officers and servants of a High Court shall be such as may be prescribed by rules made by the Chief Justice of the court or by some other judge or officer of the court authorised by the Chief Justice to make rules for the purpose :
Provided that the rules made under this clause shall, so far as they relate to salaries, allowances, leave or pensions, require the approval of the Governor of the State. (3) The administrative expenses of a High Court, including all salaries, allowances and pensions payable to or in respect of the officers and servants of the court, shall be charged upon the Consolidated Fund of the State, and any fees or other money taken by the court shall form part of that Fund.'
19. From a reading of the above provisions, it is evident that the appointment of officers and servants of a High Court is made by the Chief Justice and their service conditions are prescribed by rules made by the Chief Justice subject to the provisions of any law made by the Legislature of the State. The administrative expenses, including salaries, allowances and pensions payable to High Court employees are charged upon the Consolidated Fund of the State. Section 2(j) of the Act defines 'person'. It means any person who is engaged in any profession, trade, calling or employment in the State of Andhra Pradesh 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 who earns wages on casual basis. Thus Section 2(j) makes it clear that any person residing in the State of Andhra Pradesh, who is engaged in any profession, trade, calling or employment is liable to pay tax under the Act. Therefore, High Court employees, who are persons engaged in employment within the State of Andhra Pradesh, fall within the purview of this Act. Further, the Government, in exercise of powers conferred under Section 37 of the Act, has brought out G. O. Ms. No. 202 dated August 21, 1987, with instructions to deduct tax as mentioned therein from the salaries of the employees. This is done in accordance with the provisions of the Act under Section 5(1) read with Section 37. The definition of 'employee' under Section 2(e) is very wide and covers the petitioners in W. P. No. 13382 of 1987 also. Thus, there is no special status given to them as contended by the petitioners. We, therefore, hold that employees of the High Court also fall within the purview of the Andhra Pradesh Tax on Professions, Trades, Callings and Employments Act, 1987, and are liable to pay tax.
20. So also, the petitioners in W. P. No. 14184 of 1987 are liable to pay tax under the Act.
21. In view of the aforesaid discussion, we allow the writ petitions only to the extent of declaring Explanation No. 1 to the First Schedule to the Andhra Pradesh Tax on Professions, Trades, Callings and Employments Act, 1987, as invalid. All other contentions advanced on behalf of the petitioners are rejected.
22. The writ petitions arc allowed to the extent indicated above. No order as to costs. Advocate's fee Rs. 250 in each.