All India Federation of Tax Practitioners
& Ors Vs. Union of India & Ors [2007] Insc 843 (21 August 2007)
S.
H. Kapadia & B. Sudershan Reddy Kapadia, J.
This
is an appeal filed by All India Federation of Tax Practitioners against the
Division Bench judgment of the Bombay High Court dated 22.2.2001 in Writ
Petition No. 142/99 upholding the legislative competence of Parliament to levy
service tax vide Finance Act, 1994 and Finance Act, 1998. According to the
impugned judgment, service tax falls in Entry 97, List I of the Seventh
Schedule to the Constitution.
2. The
question which arises for determination in this civil appeal concerns the
constitutional status of the levy of service tax and the legislative competence
of Parliament to impose service tax under Article 246(1) read with Entry 97 of
List I of the Seventh Schedule to the Constitution. The issue arising in this
appeal questions the competence of Parliament to levy service tax on practising
chartered accountants and architects having regard to Entry 60 List II of the
Seventh Schedule to the Constitution and Article 276 of the Constitution.
Background
Facts
3. On
1.6.1998 Finance Bill, 1998 was introduced in Parliament. Clause 119 of the
Notes sought to substitute Sections 65, 66 and 68 and amend Section 67 of the
Finance Act, 1994 relating to service tax so as to levy a tax on services
rendered by a practising chartered accountant, cost accountant and architect to
a client in professional capacity at the rate of five per cent of the amount
charged to the client. On 3.6.1998, Bombay Chartered Accountants Association
made a representation to the Central Government objecting to the aforestated
Bill. On 1.8.1998 the Finance Bill was however passed and the Finance (No. 2)
Act, 1998 received the assent of the President of India. The Act came into
force with effect from 1.4.1998. On 7.10.1998, Union of India issued
Notification No. 57/98 inter alia exempting taxable services other than
accounting and auditing. On 16.10.1998, Union of India issued another Notification
No. 59/98 inter alia reducing the scope of the exemption. On 20.1.1999, Writ
Petition No. 142/99 was filed by the Federation in the Bombay High Court
challenging the validity of the levy of service tax. By the impugned judgment
dated 22.2.2001 the Bombay High Court rejected the writ
petition and upheld the legislative competence of Parliament to levy service
tax.
Reason
for Imposition of Service Tax
4.
Service tax is an indirect tax levied on certain services provided by certain
categories of persons including companies, association, firms, body of
individuals etc.. Service sector contributes about 64% to the GDP.
Services
constitute heterogeneous spectrum of economic activities. Today services cover
wide range of activities such as management, banking, insurance, hospitality,
consultancy, communication, administration, entertainment, research and
development activities forming part of retailing sector. Service sector is
today occupying the centre stage of the Indian economy. It has become an Industry
by itself. In the contemporary world, development of service sector has become
synonymous with the advancement of the economy. Economics hold the view that
there is no distinction between the consumption of goods and consumption of
services as both satisfy the human needs.
5. In
late seventies, Government of India initiated an exercise to explore
alternative revenue sources due to resource constraints. The primary sources of
revenue are direct and indirect taxes. Central excise duty is a tax on the goods
produced in India whereas customs duty is the tax on
imports. The word goods has to be understood in contradistinction to
the word services. Customs and excise duty constitute two major
sources of indirect taxes in India. Both
are consumption specific in the sense that they do not constitute a charge on
the business but on the client. However, by 1994, Government of India found
revenue receipts from customs and excise on the decline due to W.T.O.
commitments and due to rationalization of duties on commodities. Therefore, in
the year 1994-95, the then Union Finance Minister introduced the new concept of
service tax by imposing tax on services of telephones, non-life
insurance and stock-brokers. That list has increased since then. Knowledge
economy has made services an important revenue-earner.
6. At
this stage, we may refer to the concept of Value Added Tax (VAT),
which is a general tax that applies, in principle, to all commercial activities
involving production of goods and provision of services. VAT is a consumption
tax as it is borne by the consumer.
7. In
the light of what is stated above, it is clear that Service Tax is a VAT which
in turn is destination based consumption tax in the sense that it is on
commercial activities and is not a charge on the business but on the consumer
and it would, logically, be leviable only on services provided within the
country. Service tax is a value added tax.
8. As
stated above, service tax is VAT. Just as excise duty is a tax on value
addition on goods, service tax is on value additioin by rendition of services.
Therefore, for our understanding, broadly services fall into two
categories, namely, property based services and performance based services.
Property
based services cover service providers such as architects, interior designers,
real estate agents, construction services, mandapwalas etc..
Performance
based services are services provided by service providers like stock-brokers, practising
chartered accountants, practising cost accountants, security agencies, tour
operators, event managers, travel agents etc..
9.
Government of India in order to tap new areas of
taxation and to identify the hidden one appointed Tax Reforms Committee under
the Chairmanship of Dr. Chelliah in August, 1991. The recommendations made by
the Committee were accepted and the Service Tax was introduced in the Budget
for 1994-95 through the Finance Act, 1994. Under the said enactment, Service
Tax is the tax on notified services provided or to be provided. After its
introduction, the constitutional validity of the services taxed by the Central
Government was challenged before the Constitution Bench of this Court which
took the view that the Central Government derived its authority from Entry 97
of List I of the Seventh Schedule to the Constitution for levying tax on
services provided.
10. To
provide necessary legal backup, the Government introduced a new Article 268A in
the Constitution in the year 2003 by Constitution (Eighty- eighth Amendment)
Act, 2003, which provides that taxes on services shall be charged by Union of
India and shall be appropriated by Union of India and the States. A new Entry
92C was also introduced in the Union List for the levy of taxes on services.
Section 65(16) of the Finance Act, 1994 provided for definition of taxable
service to mean any service provided by stock-broker, telegraph authority,
and by insurer. Section 67 provided for valuation of taxable service based on
gross receipts. In cases where value of taxable service could not be decided then
the cost of providing the service constituted the basis of the assessable value
of taxable service.
11. At
this stage, we may state that the above discussion shows that what was the
economic concept, namely, that there is no distinction between consumption of
goods and consumption of services is translated into a legal principle of
taxation by the aforestated Finance Acts of 1994 and 1998.
Scheme
of the Finance Act, 1994 and Finance Act, 1998
12.
Chapter V of the Finance Act, 1994 referred to Service Tax. It defined assessee
to mean a person responsible for collecting the service tax. Under the Act,
service tax was defined to mean tax chargeable under Chapter V.
Under
the Act, taxable service was defined to mean any service provided by
a stock-broker to an investor in connection with the sale or purchase of
securities listed on a recognized stock exchange; services rendered to a
subscriber by the telegraph authority; and services rendered by an insurer to a
policy holder. Under the Act, it was clarified that words and expressions not
defined in Chapter V but used therein shall bear the same meaning as given in
the Central Excise Act, 1944. Section 66 stated that service tax shall be
levied at the rate of five per cent of the value of taxable services provided
to any person by the service provider who was responsible for collecting the
service tax. It was similar to Section 3 of Central Excise Act, 1944. Section
67 dealt with valuation of taxable services. Section 68 dealt with collection
and recovery of service tax. Section 71 dealt with assessment. Section 72 dealt
with best judgment assessment. Section 73 dealt with value of taxable services
escaping assessment. Section 83 inter alia stated that Section 9C, 9D, 11B etc.
of the Central Excise Act shall apply also to collection and recovery of
service tax. Further, it may be stated that the administration of service tax
is given to the authorities under the Central Excise Act.
13.
Broadly, to the same effect, is the Finance Act of 1998. The said Act has
increased the list of notified services so as to include advertising agencies,
travel agencies, architects, caterers, clearing and forwarding agents, credit
rating agencies, customs house agents, practising chartered accountants, practising
cost accountants, real estate agents, security agencies etc.. We are concerned
in this case with the services provided by architects, chartered accountants
and cost accountants covered by the Finance Act, 1998.
Relevant
Provisions of the Constitution of India 14. The relevant provisions of the Constitution of India are as
follows:
Article
246. Subject-matter of laws made by Parliament and by the Legislatures of
States. (1) Notwithstanding anything in clauses (2) and (3), Parliament has
exclusive power to make laws with respect to any of the matters enumerated in
List I in the Seventh Schedule (in this Constitution referred to as the
Union List.
xxx
Article 265. Taxes not to be imposed save by authority of law.No tax shall be
levied or collected except by authority of law.
xxx
Article 268A. Service tax levied by Union
and collected and appropriated by the Union
and the States.-
(1)
Taxes on services shall be levied by the Government of India and such tax shall
be collected and appropriated by the Government of India and the States in the
manner provided in clause (2).
(2)
The proceeds in any financial year of any such tax levied in accordance with
the provisions of clause (1) shall be
(a) collected
by the Government of India and the States;
(b) appropriated
by the Government of India and the States, in accordance with such principles
of collection and appropriation as may be formulated by Parliament by law.
Article
269. Taxes levied and collected by the Union
but assigned to the States.
(1)
Taxes on the sales or purchase of goods and taxes on the consignment of goods
shall be levied and collected by the Government of India but shall be assigned
and shall be deemed to have been assigned to the States on or after the 1st day
of April, 1996 in the manner provided in clause (2).
Explanation.
For
the purposes of this clause,-
(a) the
expression "taxes on the sale or purchase of goods" shall mean taxes
on sale or purchase of goods other than newspapers, where such sale or purchase
takes place in the course of inter-State trade or commerce;
(b) the
expression "taxes on the consignment of goods" shall mean taxes on
the consignment of goods (whether the consignment is to the person making it or
to any other person), where such consignment takes place in the course of
inter- State trade or commerce.
(2)
The net proceeds in any financial year of any such tax, except in so far as
those proceeds represent proceeds attributable to Union territories, shall not
form part of the Consolidated Fund of India, but shall be assigned to the
States within which that tax is leviable in that year, and shall be distributed
among those States in accordance with such principles of distribution as may be
formulated by Parliament by law.
(3)
Parliament may by law formulate principles for determining when a sale or
purchase of, or consignment of, goods takes place in the course of inter-State
trade or commerce.
xxx
Article 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. Entry No. 92C of List I of the Seventh Schedule
to the Constitution is as follows:
92C.
Taxes on services. Entry Nos. 53, 60 and 62 of List II of the Seventh
Schedule to the Constitution are as follows:
53.
Taxes on the consumption or sale of electricity. xxx 60. Taxes on
professions, trades, callings and employments. xxx 62. Taxes on
luxuries, including taxes on entertainments, amusements, betting and gambling.
Entry 38 of List III of the Seventh Schedule to the Constitution is as follows:
38.
Electricity. Arguments:
15.
The basic argument advanced on behalf of the appellant-Federation before us was
on Entry 60 of List II of the Seventh Schedule reproduced above. The said Entry
refers to taxes on professions, trades callings and employments. The argument
advanced by Shri Shyam Divan, learned counsel on behalf of the appellant, was
that every entry in the Lists in the Seventh Schedule represents a field of
legislation. Therefore, it should be read in a broad sense. The appellant did
not dispute before us the proposition that the service tax was a tax on service
and that it was not a tax on the service providers. The basic contention of the
appellant was that the State Legislature alone has an absolute jurisdiction and
legislative competence to levy service tax. It was submitted that service tax
was a tax on profession. It was submitted that service tax fell within the
ambit of Entry 60 of List II. It was submitted that the word profession in the
said Entry was not limited by any restriction/qualification and, therefore, it
must be read with the widest possible sense. It was submitted that the word profession
has been defined in Blacks Law dictionary to mean a vocation requiring
advance education and training. It was submitted that the word
profession has been defined in the English dictionary by Collins to
mean an occupation requiring special training in the liberal arts or
sciences, especially one of the three learned professions, law, theology, or
medicine. It was contended on behalf of the appellants that there was no
difference between tax on profession and tax on services. According to the learned
counsel, the word profession in Entry 60 List II was synonymous with
the word service and, therefore, tax on profession would include tax
on service, which tax could be levied only by the State Legislature. It was
submitted that there cannot be a profession without service. It was submitted
that service rendered by a chartered accountant/cost accountant to his client
is the service rendered as a professional. It was urged on behalf of the
appellant that it was not the case of the appellant that services cannot be
taxed. The only argument advanced on behalf of the appellant was that the tax
on profession was the State Entry and, therefore, Entry 97 of List I cannot be
invoked and that Parliament had no legislative competence to levy service tax. It
was submitted that under the Finance Acts, taxability was limited to rendition
of professional services and, therefore, tax on profession under Entry 60 of
List II would include tax on service. In short, according to the learned
counsel, the word profession in Entry 60 of List II was nothing but
service and, therefore, levy of service tax came within the competence of State
Legislature alone. Placing reliance on Article 276(1), learned counsel on
behalf of the appellants submitted that the words used in Article 276(1),
namely, no law of the State Legislature relating to taxes in respect of
professions, callings etc. were words of widest amplitudes and, therefore, the
word profession would cover every aspect connected with it; that the
word service was not an aspect of the word profession it
was in fact synonymous to each other; that they were inseparable and,
therefore, tax on services could be levied only by State Legislature. Learned
counsel urged that the expression relating to and the expression
in respect of are the two expressions which have linkage to levy of
taxes on profession, calling etc. and to the words profession, trade, calling
etc. in Article 276(1) and, therefore, if the aforestated two expressions are
read in their proper context, they indicate the intention of the Constitution
framers in incorporating taxes on profession under a separate Legislative Head.
According to the learned counsel, therefore, this Court must give a wide
interpretation to the words taxes on professions, trades, callings etc. Learned
counsel submitted that the words in respect of professions, trades, callings
etc. in Article 276(1) indicate amplitude and the wide field open to the State
Legislature to make laws imposing taxes on professions, trades, callings etc..
It was urged that the above two expressions, namely, relating to and
in respect of are known in law as words of widest amplitude and if
the significance of the said two expressions is kept in mind, then it becomes
clear that the Constitution framers intended the State Legislature alone to be
competent to impose taxes on professions, trades, callings and employments and
that they did not intend to give such a power to Parliament. Learned counsel
submitted that if due weightage is given to the aforestated two expressions
then the word profession in Article 276(1) and Entry 60 of List II
would cover every aspect of the concept of professions, trades, callings and
employments. It was submitted that profession cannot exist without service as
service is the core of profession. Learned counsel submitted that if the above
two expressions in Article 276(1) are given due weightage then there would be
no difference between the words profession and service;
that these two words would be interchangeable and if used interchangeably, it
is clear that the State Legislature alone has the absolute competence to levy
tax on services as there was no difference between the two words, namely,
service and profession. Reliance was also placed on Article
276(3) in support of the contention that the Constitution itself had made a
dichotomy between taxes on professions, trades, callings and employments on one
hand and taxes on incomes arising out of professions, trades, callings and
employments on the other and that the said dichotomy between tax on profession
(service) vis-a- vis the tax on income arising out of professions, trades,
callings etc. itself indicates that a separate field is demarcated for
Parliament to enact laws imposing tax on incomes arising out of professions
and, at the same time, the State Legislature alone shall have the competence to
impose tax on professions, trades, callings etc.
16. Shri
V. Shekhar, learned senior counsel for the Department, placing reliance on
judgments impugned of various High Courts, submitted that service tax
was a tax on activities undertaken for consideration; that it was a tax on
services and not on the service-provider; that the tax on profession was
essentially a tax on the professional and, therefore, Parliament had the
legislative competence to levy service tax under Entry 97 of List I. It was
further submitted that with the Constitution (Eighty-eighth Amendment) Act,
2003 by which Entry 92C is inserted, the controversy is closed and, therefore,
there is no question of going behind the said entry which has accepted the
validity of the impugned judgments by Constitutional Amendments.
Findings:
(i)
Meaning of Service Tax:
17. As
stated above, the source of the concept of service tax lies in economics. It is
an economic concept. It has evolved on account of Service Industry becoming a
major contributor to the GDP of an economy, particularly knowledge-based
economy. With the enactment of Finance Act, 1994, the Central Government
derived its authority from the residuary Entry 97 of the Union List for levying
tax on services. The legal backup was further provided by the introduction of
Article 268A in the Constitution vide Constitution (Eighty-eighth Amendment)
Act, 2003 which stated that taxes on services shall be charged by the Central
Government and appropriated between the Union Government and the States.
Simultaneously, a new Entry 92C was also introduced in the Union List for the
levy of service tax. As stated above, as an economic concept, there is no
distinction between the consumption of goods and consumption of services as
both satisfy human needs. It is this economic concept based on the legal
principle of equivalence which now stands incorporated in the Constitution vide
Constitution (Eighty-eighth Amendment) Act, 2003. Further, it is important to
note, that service tax is a value added tax which in turn is a
general tax which applies to all commercial activities involving production of
goods and provision of services. Moreover, VAT is a consumption tax as it is
borne by the client.
18. In
Moti Laminates Pvt. Ltd. v. Collector of Central Excise, Ahmedabad 1995(76) E.L.T.241(SC)
we get a clue of an important principle, namely, principle of
equivalence. In that judgment, this Court was required to explain the
words excisable goods and produced or manufactured. It was
held by this Court that the expression excisable goods has been
defined in Section 2 of the Central Excise Act, 1944 to mean goods specified in
the Schedule. It was held that the object for having a schedule in the Act was
to fix rates under different entries including residuary entry. At this stage,
we may say that the object of the Finance Act is also to fix rates of duty
under different entries. However, the question which arose before this Court in
Moti Laminates (supra) was the meaning of the word goods in Central
Excise Act, 1944. This Court noticed that Section 3 of the 1944 Act levied duty
on all excisable goods mentioned in the schedule provided they are produced and
manufactured, therefore, this Court laid down the test that where goods are
specified in the schedule they are excisable goods but whether such goods can
be subjected to duty would depend on whether they were produced or manufactured
by the assessee.
This
Court further explained that the expression produced or manufactured
would mean that the goods produced must satisfy the test of saleability/marketability.
The reason being that the duty under the 1944 Act is on manufacture/production
but the manufacture/production is intended for taking such goods to the market
for sale. It was observed that the obvious reason for levying excise duty
linked with production or manufacture is that the goods so produced must be a
distinct commodity known in the market.
We
quote hereinbelow para 7 of the said judgment, which is as follows:
The
duty of excise being on production and manufacture which means bringing out a
new commodity, it is implicit that such goods must be useable, moveable,
saleable and marketable. The duty is on manufacture or production but the
production or manufacture is carried on for taking such goods to the market for
sale. The obvious rationale for levying excise duty linking it with production
or manufacture is that the goods so produced must be a distinct commodity known
as such in common parlance or to the commercial community for purposes of
buying and selling. Since the solution that was produced could not be used as
such without any further processing or application of heat or pressure, it
could not be considered as goods on which any excise duty could be levied.
Therefore, even if an item is manufactured or produced, it will not fall in the
concept of goods till the test of marketability is satisfied. In the case of Moti
Laminates (supra) the solution was an intermediate product produced
in the course of manufacture of laminated sheets. It had a short shelf life. It
was not marketable, therefore, this Court took the view that the solution was
not goods and, therefore, not dutiable.
19.
The importance of the above judgment of this Court is twofold.
Firstly,
applying the principle of equivalence, there is no difference between
production or manufacture of saleable goods and production of
marketable/saleable services in the form of an activity undertaken by the
service provider for consideration, which correspondingly stands consumed by
the service receiver. It is this principle of equivalence which is in-built
into the concept of service tax, which has received legal support in the form
of Finance Act, 1994. To give an illustration, an Event Manager (professional)
undertakes an activity, namely, of organizing shows. He belongs to the
profession of Event Manager. As long as he is in the business or calling or
profession of an Event Manager, he is liable to pay the tax on profession,
calling or trade under Entry 60 of List II. However, that tax under Entry 60 of
List II will not cover his activity of organizing shows for consideration which
provide entertainment to the connoisseurs. For each show he plans and creates
based on his skill, experience and training. In each show he undertakes an
activity which is commercial and which he places before his audience for its
consumption. The tax on service is levied for each show. This situation is very
similar to a situation where goods are manufacture or produced with the
intention of being cleared for home consumption under the Central Excise Act,
1944. This is how the principle of equivalence equates consumption of goods
with consumption of services as both satisfy the human needs. In the case of
Internet Service Provider, service tax is leviable for on-line information and
database provided by web sites. But no service tax is leviable on E-commerce as
there is no Database Access.
20. On
the basis of the above discussion, it is clear that service tax is VAT which in
turn is both a general tax as well as destination based consumption tax leviable
on services provided within the country.
(ii)
Object of enacting the Finance Act:
21.
Finance Act is passed every year to fix the rate of tax. This is the primary
object for enacting the Finance Act. But it does not mean that a new distinct
charge cannot be introduced by the Finance Act. For example, what is not
income under the Income Tax Act (IT Act) can be made income
by the Finance Act. This is, however, subject to the Finance Act complying with
the Constitutional limitations. Additional tax revenue can be collected either
by increasing the rate or by levy of a fresh charge. All levies through the
medium of the Finance Act may either enhance the rate or levy a fresh charge.
The Finance Act can also make an extensive modification in an Act.
22. In
the case of The Madurai District Central Co-operative Bank Ltd. v. The Third
Income Tax Officer, Madurai reported in AIR 1975 SC 2016 this Court held that
the IT Act, 1961 and the annual Finance Acts are enacted by Parliament in
exercise of the power conferred by Article 246(1) read with Entry 82 of List I.
It was further held that though it was unconventional for Parliament to amend
the taxing statute by incorporating the amending provision in an Act of a
different pith and substance, such course would not be unconstitutional. It was
held that though the IT Act, 1961 was a permanent Act while Finance Acts are
passed every year to prescribe the rates at which the tax has been charged
under the IT Act, 1961 still it would not mean that a new and distinct charge
cannot be introduced under the Finance Act. Therefore, what is not income under
the IT Act, 1961 can be made income by a Finance Act. Similarly an
exemption granted by the IT Act can be withdrawn by the Finance Act. Similarly,
subject to Constitutional limitations, additional tax revenue could be
collected by enhancement of the rate of tax or by the levy of a fresh charge
vide the Finance Act. Parliament, through the medium of Finance Act, may do
what the amendment to the IT Act, 1961 by a separate Amendment Act, can do. It
was further held that, the Finance Acts, though annual Acts, are not
necessarily temporary Acts as they may contain provisions of a general
character which are of permanent operation. Thus, Parliament is competent to
introduce a charging provision in a Finance Act. In the said judgment, it had
been further held that even an additional charge (surcharge) can be levied by
Finance Act for the purposes of the Union.
23.
The aforestated judgment was in the context of the IT Act, 1961.
However,
the ratio of that judgment would apply equally to the Finance Acts enacted
annually for enhancement of the rate of excise duty by levy of a fresh charge
under that Act. Applying the test laid down in the aforestated judgment of this
Court, we hold that a new charge by way of service tax or tax on service came
to be levied statutorily by the said Finance Act, 1994, which has subsequently
attained Constitutional status by virtue of the Constitution (Eighty-eighth
Amendment) Act, 2003.
(iii)
Interpretation of Taxing Entries in the Seventh Schedule to the Constitution:
24.
Constitutional law, like taxing law, essentially concerns concepts and
principles.
25. In
the present case, it has been vehemently urged on behalf of the appellant that
legislative Entries in the Seventh Schedule are legislative heads/fields and,
therefore, they should be given widest interpretation. There is no dispute
regarding the said proposition. However, there are two groups of entries in
each of the three Lists in the Seventh Schedule. In List I, Entries 1 to 81
refer to several matters over which Parliament has authority to legislate. But
Entries 82 to 92 enumerates the taxes which could be imposed by a law of
Parliament. An examination of these two groups of entries shows that while the
main subject of legislation finds place in the first group, a tax in relation
thereto is separately mentioned in the second group. For example, Entry 22 in
List I refers to Railways whereas Entry 89 refers to Terminal
taxes on goods or passengers, carried by railway. If Entry 22 is construed
as involving taxes to be imposed, then Entry 89 would be superfluous.
Similarly,
Entry 41 of List I refers to Trade and commerce with foreign countries;
import and export across customs frontiers, however, Entry 83 refers to
Duties of customs including export duties. If Entry 41 of List I,
which refers to trade and commerce with foreign countries and which refers to
import and export, is to be interpreted as including duties of customs under
that Entry, then Entry 83 would be rendered superfluous. Similarly, Entries 43
and 44 of List I relate to incorporation, regulation and winding up of
corporations whereas Entry 85 provides for Corporation tax. If
Entries 43 and 44 are to cover taxes then Entry 85 would be rendered
superfluous.
26.
Turning to List II, Entries 1 to 44 form one group mentioning the
subjects on which States could legislate. Entries 45 to 63 in that
List form another group, and they deal in with taxes. At the relevant time,
Entry 18 referred to Lands whereas Entry 45 referred to Land
Revenue. If land revenue was to fall under Entry 18 then Entry 45 would be
rendered superfluous. The above analysis is not exhaustive. However, the above
analysis shows that taxation is not intended to be compromised in the main
subject in which an extended construction can be given as that test cannot be
applied to taxation. Taxing entries are distinct entries. This distinction
between the abovementioned two groups of entries is also manifest in the
language of Article 248 clauses (1) and (2) as also in the language of Entry 97
in List I of the Seventh Schedule to the Constitution. [See M.P.V. Sundararamier
& Co. v. The State of Andhra Pradesh and anr. AIR1958SC468 para 51]
27.
The above distinction between the group of general entries and the group of
taxing entries to the Lists in the Seventh Schedule has also been highlighted
in the case of Southern Pharmaceuticals & Chemicals v. State of Kerala
reported in (1981) 4 SCC 391 in which this Court took the view that enactment
of the Medicinal Act, 1955 by Parliament under Entry 84 List I does not prevent
the State Legislature from making a law under Entry 8 List II as Entry 8 was a
general entry whereas Entry 84 List I was a taxing entry. This distinction has
been brought to light in another judgment of this Court to which one of us, Kapadia,
J., was a party in the case of State of Bihar and ors. v. Shree Baidyanath Ayurved
Bhawan (P) Ltd. and ors. reported in (2005) 2 SCC 762 (para 28), which is
quoted hereinbelow:
28.
Before concluding, we may point out that in the case of Southern
Pharmaceuticals & Chemicals, Trichur and Ors. v. State of Kerala and Ors.
(1981) 4 SCC 391 this Court has taken the view, which we have taken
hereinabove. In that case, this Court held, that, by enactment of Medicinal
Act, 1955 by Parliament under Entry 84 List-I of the Seventh Schedule of the
Constitution or by the framing of rules by the Central Government thereunder
for recovery of excise duty on manufacture of medicinal and toilet preparations
containing alcohol, a State Legislature is not prevented from making a law
under Entry 8 List II with respect to intoxicating liquor or a law under Entry
51 List II levying excise duties on alcoholic liquors for human consumption. In
that case it was held that the Abkari Act of Kerala is relatable to the State's
power to make a law under Entry 8 and Entry 51 List II of the Seventh Schedule
to the Constitution. There is a difference between the word "on" and
the expression "with respect to". When we refer to levy on excise
duty under Entry 84 List I, we emphasize the word "on". On the other
hand, when we refer to Entry 8 List II, which is a general entry, relating to
"intoxicating liquor", we refer to a wider activity. The words
"in respect of or the words "with respect to" used in the aforestated
judgment in the context of Entry 8 List II bring out the above difference.
Entry
8 List-II is an entry on general subject unlike Entry 84 List-II which deals
with taxation. Keeping in mind the difference between the two, we hold that the
State law under Entry 8 List-II covers a wider field of use, consumption, possession,
diversion etc. vis-a-vis Entry 84 List I, which deals with duty on manufacture
of medicinal preparation, as such. This difference is lost sight of by the High
Court in the impugned judgment. (emphasis supplied)
28.
Applying the above tests laid down in the aforestated judgments to the facts of
the present case, we find that Entry 60 of List II, mentions Taxes on
professions, trades, callings and employments. Entry 60 is a taxing entry.
It is not a general entry. Therefore, we hold that tax on professions etc. has
to be read as a levy on professions, trades, callings etc., as such. Therefore,
Entry 60 which refers to professions cannot be extended to include services.
This
is what is called as an Aspect Theory. If the argument of the appellants is
accepted, then there would be no difference between interpretation of a general
entry and interpretation of a taxing entry in List I and List II of the Seventh
Schedule to the Constitution. Therefore, professions will not include
services under Entry 60. For the above reasons, we hold that Parliament had
absolute jurisdiction and legislative competence to levy tax on services. While
interpreting the legislative heads under List II, we have to go by schematic
interpretation of the three Lists in the Seventh Schedule to the Constitution
and not by dictionary meaning of the words profession or
professional as was sought to be argued on behalf of the appellants
otherwise the distinction between general entries and taxing entries under the
three Lists would stand obliterated. The words in relation to and the
words with respect to are no doubt words of wide amplitude but one
has to keep in mind the context in which they are used.
(iv)
Meaning of the words Taxes on professions:
29. As
stated above, Entry 60 List II refers to taxes on professions etc.. It is the
tax on the individual person/firm or company. It is the tax on the status. A
chartered accountant or a cost accountant obtains a licence or a privilege from
the competent Body to practise. On that privilege as such the State is
competent to levy a tax under Entry 60. However, as stated above, Entry 60 is
not a general entry. It cannot be read to include every activity undertaken by
a chartered accountant/cost accountant/architect for consideration. Service tax
is a tax on each activity undertaken by a chartered accountant/cost accountant
or an architect. The cost accountant/chartered accountant/architect charges his
client for advice or for auditing of accounts.
Similarly,
a cost accountant charges his client for advice as well as doing the work of
costing. For each transaction or contract, the chartered accountant/cost
accountant renders professional based services. The activity undertaken by the
chartered accountant or the cost accountant or an architect has two aspects.
From the point of view of the chartered accountant/cost accountant it is an
activity undertaken by him based on his performance and skill. But from the
point of view of his client, the chartered accountant/cost accountant is his
service-provider. It is a tax on services. The activity undertaken by
the chartered accountant or cost accountant is similar to a saleable or
marketable commodities produced by the assessee and cleared by the assessee for
home consumption under the Central Excise Act. For each contract, tax is levied
under the Finance Acts, 1994 and 1998. Tax cannot be levied under that Act
without service being provided whereas a professional tax under Entry 60 is a
tax on his status. It is the tax on the status of a cost accountant or a
chartered accountant. As long as a person/firm remains in the profession, he/it
has to pay professional tax. That tax has nothing to do with the commercial
activities which he undertakes for his client. Even if the chartered accountant
has no work throughout the accounting year, still he has to pay professional
tax. He has to pay the tax till he remains in the profession. This is the ambit
and scope of Entry 60 List II which is a taxing entry. Therefore, Entry 60
contemplates tax on professions, as such. Entry 60 List II refers to Tax
on employments. In one case, the question arose whether Parliament was
entitled to impose income tax on pension under Entry 82 of List I. The
controversy was that pension is a retiral benefit. It was argued that
pension was an incident of employment and, therefore, Parliament had
no legislative competence to impose income tax under Entry 82 of List I and
that the State Legislature alone had absolute jurisdiction to make a law
imposing tax on pension. This argument was rejected on the ground that Entry 60
of List II refers to Tax on employments, as such. So long as a person
is in the employment, he does not earn pension. He earns pension only on
retirement. On retirement, he ceases to be in the employment, therefore, on
retirement the receipt of pension constitutes income in the hands of
the pensioner and, therefore, Parliament had legislative competence to enact
Income Tax Act, 1961 under which pension was taxable as income. This example demonstrates
the meaning of the word Taxes on professions, callings, trades and
employments. It also indicates two aspects of the same item, namely,
pension. One aspect falls in the category of employment, the other
falls in the category of income.
Therefore,
there is no merit in the contention advanced on behalf of the appellant that
the widest possible interpretation should be given to the word
profession in Entry 60 List II. We have to keep in mind while
interpreting the Entries in the three Lists the distinction between the general
entry and the taxing entry.
30. In
the case of Western India Theatres Ltd. v. Cantonment Board reported in AIR
1959 SC 582 the appellant was a public limited company. It was a lessee of two
cinema Houses. It was an exhibitor of cinematograph films. A notice was issued
to the appellant by the Cantonment Board under Section 60 of the Cantonments
Act, 1924 imposing tax on entertainments.
The
said levy was challenged on the ground that under Section 100 of the Government
of India Act, 1935 (GOI Act, 1935) read with Entry 50 in Schedule
VII, the Provincial Legislature had power to make law with respect to
Taxes on luxuries, including taxes on entertainments, amusements, betting
and gambling. It was urged on behalf of the appellant that Entry 50 was
not applicable since Entry 50 contemplated enactment of a law imposing taxes on
persons who receive or enjoy the entertainments/amusements and, therefore, the
said entry did not authorize imposition of tax on assessees/persons who provide
entertainments or amusements. According to the appellant, Western India
Theatres were entertainment providers; that they were not entertainment
receivers; that they simply carried on their profession, trade or calling and,
therefore, Entry 50 was not applicable. It was further urged that
entertainment-providers fell under Entry 46, which Entry is similar to Entry 60
of List II in the present case and which referred taxes on professions, trades,
callings and employments. This argument advanced on behalf of the appellant was
rejected by this Court. It was held that Entry 50 contemplated a tax on
entertainment and amusement as objects on which a tax is to be imposed and,
therefore, it was not possible to differentiate between the entertainment-
provider and the entertainment-receiver. It was held that entertainment was
trade or calling of Western India Theaters and, therefore, the tax imposed on
entertainment under the Cantonment Act came within Entry 50 of the Provincial
List. The importance of this judgment lies in the fact that this judgment makes
a distinction between tax imposed for the privilege of carrying on any trade or
calling on one hand and a tax on every show that is to say on every incidence
of the exercise of the particular trade or calling. It was held that if there
was no show, there was no tax. It was further observed that a lawyer has to pay
tax to take out a licence irrespective of whether he actually practices or not.
That tax is a tax for the privilege of having the right to exercises the profession
if and when the person taking out the license chooses to do so. It was held
that the impugned tax on entertainment levied by the Cantonment Board was a tax
on the act of entertainment resulting in a show and, therefore, the impugned
law imposing tax on entertainment fell under Entry 50 of the Provincial List in
Schedule VII to the GOI Act, 1935 and not under Entry 46 (similar to Entry 60
of List II). Therefore, it was held that Bombay Legislature had power to enact
the law imposing tax on entertainment which had nothing to do with the law
imposing tax on the privilege of carrying on any profession, trade or calling
under Entry 46.
(similar
to Entry 60 of List II in the present case.) Therefore, this Court has
clarified the dichotomy between tax on privilege of carrying on any trade or
calling on one hand and the tax on the activity which an entertainer undertakes
on each occasions. The tax on privilege to practice the profession, therefore,
falls under Entry 60, List II. It is quite different from tax on services.
Keeping in mind the aforestated dichotomy, it is clear that tax on service does
not fall under Entry 60 List II. Therefore, Parliament has absolute
jurisdiction and legislative competence to enact the law imposing tax on
services under Entry 97 List I of the Seventh Schedule to the Constitution.
(v)
Significance of Article 276:
31.
Learned counsel for the appellants in support of his argument that the words
professions and services are synonymous for the purposes of
deciding the question of legislative competence of the State Legislature under
Entry 60 List II, placed heavy reliance on Article 276, which has been quoted
hereinabove.
32.
Article 276 corresponds to Section 142A of the GOI Act, 1935.
However,
under a large number of laws enacted before the 1935 Act came into force, power
was conferred on local Governments and local authorities to impose taxes on
certain activities which broadly came under the Heads Taxes on
professions, trades etc. on one hand and Taxes on income on the
other hand. This resulted in the enactment of Section 142A by British
Parliament, which saved the power conferred by pre-existing laws to impose tax
on professions, callings etc. but limited the amount payable to a specified
amount. At that time, it was Rs. 50.00, which was the tax payable on
profession. That was in 1935. Article 276 was, therefore, preceded by Section
142A of the GOI Act, 1935. The limit has been subsequently enhanced. The
States power to tax professions etc. is founded on Entry 60 of List II and
the purpose of Article 276 is not to amend that power but to provide that such
tax on professions, trades etc. shall not be invalidated on the ground that it
relates to a tax on income. Once the State seeks to exercises its power under
Entry 60 List II, it has to comply with the provisions of Article 276. Where,
however, the exercise of power by the State overlaps with its power under some
other Entry, then the limitation under Article 276(2) shall have no relevance.
Thus, Article 276 will not apply to levy of tax on circumstances and
property which is referable to Entry 49 and Entry 60 of List II and
amongst other Items to Entry 58, taxes on cinematograph shows, taxes on entry
of goods. A tax on profession can be imposed if a person carries out a
profession whereas a tax on income can be imposed only if there is income.
Therefore, a tax on profession is irrespective of the question of income.
Article 276 enables the State Legislature to make laws for imposition of taxes
on profession, for the benefit of the State, Municipality, District Board etc.
by stating that such law shall not be invalid on the ground that it relates to
a tax on income. There is a distinction between a tax on professions, trades,
callings and employments and a tax on income arising out of such professions,
trades etc.. In the former case, it will have to be paid by any person practising
that trade, profession etc., whether he derives any income from it or not. This
is where the above example of pensioner becomes relevant. A pensioner does not
carry out any profession, trade, business or calling. A tax on profession is
not a tax on employment. At the time, the tax is levied, the pensioner is not
in employment, but he receives an amount of pension that receipt constitutes his
income though it might be for past services from an employment.
33. As
stated above, every Entry in the Lists has to be given a schematic
interpretation. As stated above, Constitutional law is about concepts and
principles. Some of these principles have evolved out of judicial decisions.
The
said test is also applicable to taxation laws. That is the reason why the
Entries in the Lists have been divided into two Groups, one dealing with
general subjects and other dealing with taxation. The entries dealing with
taxation are distinct entries vis-`-vis the general entries. It is for this
reason that the doctrine of pith and substance has an important role to play
while deciding the scope of each of the entries in the three Lists in the
Seventh Schedule to the Constitution. This doctrine of pith and substance flows
from the words in Article 246(1), quoted above, namely, with respect to
any of the matters enumerated in List I. The bottom line of the said
doctrine is to look at the legislation as a whole and if it has a substantial
connection with the Entry, the matter may be taken to be legislation on the
topic. That is why due weightage should be given to the words with respect
to in Article 246 as it brings in the doctrine of pith and
substance for understanding the scope of legislative powers. Competence to
legislate flows from Articles 245, 246 and the other Articles in Part XI. A
legislation like Finance Act can be supported on the basis of a number of
Entries. In the present case, we are concerned with the Constitutional status
of the levy, namely, service tax.
The
nomenclature of a levy is not conclusive for deciding its true character and
nature. For deciding the true character and nature of a particular levy, with
reference to the legislative competence, the court has to look into the pith
and substance of the legislation. The powers of Parliament and State
Legislatures are subject to Constitutional limitations. Tax laws are governed
by Part XII and Part XIII. Article 265 takes in Article 245 when it says that
the tax shall be levied by the authority of law. To repeat, various entries in
the Seventh Schedule show that the power to levy tax is treated as a distinct
matter for the purpose of legislative competence. This is the underlying
principle to differentiate between the two Groups of entries, namely, general
entries and taxing entries. We are of the view that taxes on services is a
different subject as compared to taxes on professions, trades, callings etc.
Therefore,
Entry 60 of List II and Entry 92C/97 of List I operate in different spheres.
(vi)
Discussions of Judgments cited on behalf of the appellants:
34. In
the case of Godfrey Phillips India Ltd. and anr. V. State of U.P. and ors.
reported in (2005) 2 SCC 515 the assessees/appellants, who were either
manufacturers, dealers or sellers of tobacco, had challenged the levy of luxury
tax on tobacco and tobacco products by treating them as luxuries
within the meaning of the word in Entry 62 of List II of the Seventh Schedule
to the Constitution of India. Uttar Pradesh Tax on Luxuries Act, 1995 and
certain other State enactments imposed luxury tax on tobacco by treating it as
luxury within the meaning of the word in Entry 62 of List II. It was
held by the Constitution Bench of this Court that the word luxuries
in Entry 62, List II refers to activities of enjoyment, indulgence or pleasure
and since none of the impugned enactments had sought to tax any activity and
since the impugned enactments sought to tax goods as luxuries it was
held that the said U.P. Tax on Luxuries Act, 1995, Andhra Pradesh Tax on
Luxuries Act, 1987 and West Bengal Luxury Tax Act, 1994 were beyond the
legislative competence of the State Legislature.
In
this connection, it was observed, vide para 57, by the Constitution Bench of
this Court that a tax on a thing or goods can only be with reference to a
taxable event but there is a distinction between such a tax and a tax on the
taxable event. In the first case, the subject-matter of tax is the goods and
the taxable event is within the incidence of the tax on the goods. In the
second case, the taxable event is the subject-matter of tax itself. In our
view, para 57 supports the reasoning given by us hereinabove. As stated above,
service tax is a value added tax. Value addition is on account of the activity
like planning, consultation, advising etc.. It is an activity, which provides
value addition as in the case of manufacturer of goods, which attracts service
tax.
In the
present case, tax falls on the activity which is the subject-matter of service
tax. In other words, we are substituting the word service in place of
goods by applying the principle of equivalence. Under the Act, the
Taxable Event is each exercise undertaken by the service-provider in giving
advice on tax planning, auditing, costing etc.. It is the said principle of
equivalence which equates service tax to the Central Excise Duty, one
taxes the provision of services and other production of goods. See para 2.14 of
the recommendations made by Tax Reforms Committee headed by Dr. Chelliah which
has stated that from the economic point of view, there is little difference
between the taxation of commodities and taxation of services.
35. In
the case of International Tourist Corporation and ors. v. State of Haryana and
ors. reported in (1981) 2 SCC 318 the appellants were transport operators. The
State of Haryana levied a tax on passengers and goods under the Haryana
Passengers and Goods Taxation Act, 1952. The appellants questioned the vires of
Section 3(3) insofar as the levy of tax on passengers and goods carrying by
their vehicles plying along the National Highway. It was urged on behalf of the
appellants that there was nothing in the Constitution to prevent Parliament
from combining its power to legislate with respect to any matters enumerated in
Entries 1 to 96 of List I with its power to legislate under Entry 97 of List I
and, if so, then the power to legislate with respect to tax on passengers and
goods carried on National Highway was within the exclusive legislative
competence of Parliament and, therefore, Section 3(3) of Haryana Passengers and
Goods Taxation Act, 1952 was beyond the legislative competence of the State
Legislature. This argument was rejected by the Division Bench of this Court,
which took the view that before exclusive legislative competence can be claimed
for Parliament by resort to Entry 97 List I, the legislative competence of the
State Legislature must be established. Entry 97 itself was specific. In that, a
matter can be brought under that Entry only if it is not enumerated in Lists II
or III, and in the case of a tax, if it is not mentioned in either of those
Lists.
We do
not dispute the above proposition. That proposition is well settled.
This
Court is concerned with the application of the said principle in this case. In
the present matter, as stated hereinabove, the State Legislature is empowered
to levy tax on professions, trades, callings etc., as such and, therefore, the
word services cannot be read as synonymous to the word profession
in entry 60. Therefore, tax on services do not fall under Entry 60 List II. That,
service tax would fall under Entry 92C/Entry 97 of List I.
36. In
the case of Sodan Singh and ors. v. New Delhi Municipal Committee and ors. reported
in (1989) 4 SCC 155 the appellants claimed a right to engage in trading
business on the pavements of Delhi city. In that context, it was held by the
Constitution bench of this Court that, the guarantee under Article 19(1)(g)
extends to practise any profession, or to carry on any occupation, trade or
business. In that case, the word profession had been defined to mean
an occupation carried on by virtue of specialized qualifications, personal
qualifications, training or skill. We do not find any relevance of this
judgment to the present case. As stated above, we are concerned with
interpretation of legislative heads under the three Lists in the Seventh
Schedule to the Constitution. As stated above, we have to go by the schematic
interpretation of those entries. Moreover, we are concerned with a distinct
taxing entries and not general entries. Hence, the judgment in the case of Sodan
Singh (supra) has no application to the present case.
37. In
the case of Tamil Nadu Kalyana Mandapam Assn. v. Union of India and ors. reported
in (2004) 5 SCC 632 the Division Bench of this Court held that service tax is
an indirect tax and is to be paid on all the services notified by the
Government of India. It has been further held that the said tax is on
service and not on the service-provider. In paragraph 58 it has been
observed that under Article 246(1) of the Constitution, Parliament has
exclusive powers to make laws with respect to any of the matters enumerated in
List I in the Seventh Schedule to the Constitution. As per Article 246(3), the
State Government has exclusive powers to make laws with respect to matters
enumerated in List II (State List). In the said judgment, it has been held that
service tax is made by Parliament under Entry 97 of List I. In our view,
therefore, the point in issue in the present case is squarely covered by the
judgment of this Court in the case of Tamil Nadu Kalyana Mandapam (supra). Of
course, in the present case, we are not concerned with the services rendered by
a Mandap-keeper, who performs what is called as property based services. In
this case, we are concerned with performance based services. However, both the
categories fall within the ambit of the word services.
38. In
the case of Gujarat Ambuja Cements Ltd. and anr. v. Union of India and anr. reported
in (2005) 4 SCC 214 it was held that service tax is not a tax on goods or on
passengers but it was on the transportation itself and, therefore, it falls
under residuary power of Parliament under Entry 97 of the Seventh Schedule to
the Constitution. It was further held that service tax is not a levy on
passengers or goods but on the event of service in connection with the carriage
of goods and, therefore, it was not possible to hold that the Act was in pith
and substance within the States exclusive powers under Entry 56 of List
II. It was held that service tax came within Entry 97 of List I. In the present
case, as stated above, we are concerned with Entry 60 of List II. As stated
above, service tax is on performance based services itself. It is on professional
advice, tax planning, auditing, costing etc.. On each of the exercise
undertaken tax becomes payable.
Therefore,
the above judgment has no application.
39. In
the case of Bharat Sanchar Nigam Ltd. and anr. v. Union of India and ors. reported
in (2006) 3 SCC 1 the question which arose for determination before this Court
was whether a telephone service (mobile or fixed) would attract liability to
service tax. It was held that in order to attract the liability under the
service tax there has to exist what is called as goods.
Since
goods in question consisted of electromagnetic waves or radio frequencies,
which carries voice, messages or other data, a telephone service was nothing
but a service. We are not concerned with such a controversy in the present
case. In the present case, we are concerned with the legislative competence of
Parliament to legislate in respect of service tax under Entry 97/92C of List I.
In the present case, we are concerned with the period covered by the Finance
Acts of 1994 and 1998. However, learned counsel for the appellants has relied
upon para 82 of the said judgment in the case of Bharat Sanchar Nigam Ltd.
(supra) in which it is observed that the residuary powers of Parliament under
Entry 97 of List I cannot swamp away the legislative Entries in the State List.
Entry 54, List II read with Article 366(29-A), therefore, cannot be whittle
down by referring to the residuary provision. As stated above, we are concerned
with the application of the above principles. In the present case, as stated
above, we are concerned with the Constitutional status of the levy. As stated
above, we have to examine the nature of the levy. We have done so and we have
come to the conclusion that the word profession in Entry 60 List II cannot be made
synonymous with the word service and, therefore, service tax would fall under
the residuary Entry 97 read with Entry 92C after 2003. This position is also
made clear by Article 268A, inserted by the Constitution (Eighty-eighth
Amendment) Act, 2003.
40.
Lastly, in our view, the judgment of this Court in the case of R.R. Engineering
Co. v. Zila Parishad, Bareilly and anr. reported in (1980) 3 SCC
330 has no application to the facts of the present case. In that case this
Court observed that there was a basic distinction between a tax on
income and a tax on circumstances and property. If there is
no income, there can be no income tax. In contrast, in the case of a tax on
circumstances and property there can be a tax on the total turn-over
of the assessee from his trade or calling or on his having an interest in the
property. It was held that whereas Entry 49 of List II relates to taxes on
lands and buildings, Entry 60 relates to taxes on professions and, therefore,
the true nature of the tax in that case was not a tax on income but it was a
tax referable to Entry 49 and Entry 60 of List II. It was held that the
impugned tax was a composite tax, one of its components being the
circumstance, namely, the financial position of the assessee. It may
be clarified that in the case of R.R. Engineering Co. (supra) the validity of
the levy was under challenge and that levy constituted what is called a
composite tax. We do not see any relevance of the judgment in the case of R.R.
Engineering Co. (supra) to the facts of the present case. In the present case,
we are not concerned with a composite tax. Hence, the judgment of this Court in
the case of R.R. Engineering Co. (supra) has no relevance to the facts of the
present case.
Conclusion:
41.
For the above reasons, we find no merit in Civil Appeal No. 7128 of 2001 filed
by All India Federation of Tax Practitioners and ors.. We hold that Parliament
has legislative competence to levy service tax by way of impugned Finance Acts
of 1994 and 1998 under Entry 97 of List I on chartered accountants, cost
accountants and architects. We further hold that the above position now stands
fortified by the Constitution (Eighty-eighth Amendment) Act, 2003 which has
inserted Article 268A and Entry 92C which clearly indicates that Entry 60 of
List II and Entry 92C of List I operate in different spheres. However, we make
it clear that before us there is no challenge to the Constitutional validity of
the said Constitution (Eighty-eighth Amendment) Act, 2003.
42.
Accordingly, the civil appeal is dismissed with no order as to costs.
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