ORAL ORDER

(As per Honble Mr. Justice P. Lakshmana Reddy, Vice-Chairman)

Heard Mr. K.R.K.V. Prasad, learned counsel for the applicants and and Mr. G. Jaya Prakash Babu, learned Senior Central Government Standing Counsel for the respondents 1 to 4 and Mr. D.Y. Setty, learned standing counsel for State of Andhra Pradesh.

2.This application is filed seeking for the following reliefs:-

"...to call for the records pertaining to Letter No. Pay Tech/4007/P.T dated 19.06.2007 issued by Accounts Officer (Pay). O/o. CDA, Secunderabad and Letter No. PT/1/2007-08 dated 02.07.2007 issued by DCTO, Maredpally circle, Secunderabad and set aside the same by holding that the decision to recover Professional Tax with arrears from the pay and allowances of the applicants with future liability to pay the Professional Tax for recovery from the monthly salary of the applicants as discriminatory, arbitrary, illegal and violative of Articles 14 and 21 of the Constitution of India.

3.The relevant facts of the case in brief are as follows:-

This application is filed by the members of the Combined Civilian Employees Union of Controllerate of Quality Assurance- Comprising of 5 Units viz., Controller of quality Assurance (System), Controller of Quality Assurance (Electronics) Warfare, Senior Quality Assurance Establishment (Electronics), Senior Quality Assurance Establishment (Systems), Quality Assurance Establishment (Naval) situated at DGQA Complex, Manovikas Nagar, Cantonment, Secunderabad 500 009, represented by its General Secretary and another applicant, in individual capacity, who is working as Electrician (Skilled) in the office of the 3rd respondent herein. The members of the 1st applicant union and the 2nd applicant are under the overall administrative jurisdiction of the 3rd Respondent. The Disbursing Officer was deducting the profession tax from the salaries of all the employees. Aggrieved of such deduction, they have filed the present O.A. on the ground that the very same Disbursing Officers are not deducting profession tax from the DAD employees basing on the letter addressed to all Principal Controllers of Defence Accounts, Jabalapur and Meerut and all Controllers of Defence Accounts by the Deputy Controller General, Defence Accounts (Proj) vide its letter dated 05.05.2003 wherein the Deputy Controller General, Defence Accounts (Proj) office in consultation with the Ministry of Defence ( Finance) clarified that since the DAD employees are also subjected to field service as per para 69 of Office Manual Part-I and therefore, it can be viewed that they form part of "Armed Forces" as a person employed in DAD is under obligation and considered for field service which are the service conditions and thus there is no reason as to why Members of the DAD should not be exempted from the liability to pay professional tax. In this context, the judgment of the Honble High Court of Bombay dated 10.1.1994 is referred therein.

4.The applicants claim is that they also form part of "Armed Forces" as they are similarly situated as that of the DAD employees and, hence, the recovery of the profession tax from their salaries is illegal, arbitrary and violative of Article 14 of the Constitution of India and the amount already recovered is to be refunded and no further deduction shall be made towards professional tax.

5.Mr. D.Y. Setty, learned counsel for the State Government contended that there is no exemption provided even to Armed Forces under the Andhra Pradesh Tax on Profession, Trades, Callings and Employments Act & Rules, 1987 and that the said legislation is now upheld by the Honble Supreme Court in the case of Karnataka Bank Ltd. Vs. State of Andhra Pradesh and Others ( Civil Appeal No. 1994 of 2002) reported in (2008) 12 VST 459 (SC). He also relied upon the decision of the Honble High Court of A.P. in the case of M.E.S. Employees Union Vs. Government of Andhra Pradesh and Others dated 5th July, 2001 reported in 2002 Sales Tax Cases, page 523 wherein similar Writ Petition filed by the Employees of M.E.S was dismissed holding that under the provisions of Andhra Pradesh Tax on Professions, Trades, Callings and Employments Act & Rules 1987, there was no such provision granting exemption even with reference to the members of the armed forces of the Union and that once there is no provision with reference to the members of the armed forces, the contention of the employees regarding exemption is not tenable and that there is no similar provision as that of Section 27A of the Maharastra Act in the Andhra Pradesh Tax on Professions, Trades, Callings and Employments Act & Rules, 1987.

6.The points that arise for consideration in this O.A. are :

i)Whether the State Government of Andhra Pradesh is entitled to levy profession Tax from the employees working under the 3rd respondent

ii)Whether the letter addressed to all the Principal Controller of Defence Accounts/ Controller of Defence Accounts dated 5.5.2003 issued by the Deputy Controller General Defence Accounts in consultation with Ministry of Defence (Finance) is binding on the State Government of Andhra Pradesh

iii)Whether the applicants are entitled to claim the exemption on the ground that the Disbursing Officers are not deducting the Professional Tax from the DAD employees

iv)To what result

7.Point Nos. i, ii & iii:-

This dispute emanated on account of the letter dated 5.5.2003 issued by the Deputy Controller General Defence Accounts referred to supra wherein the DAD employees are given benefit of non-deduction of Professional Tax. The said letter was addressed basing on the decision of the Bombay High Court in respect of employees working within the jurisdiction of Maharastra State. Some Writ Petitions were filed before the Honble High Court of Bombay claiming exemption from payment of Professional Tax Under Section 27(A) of Maharastra State Tax on Professions, Trades, Callings and Employments Act in B.S. Raut V. State of Maharashtra reported in (1992) Maharashtra Law Journal page 360. Section 27A of Maharashtra State Act provides exemption to Members of the Armed Forces of the Union, that is to say, to whom the provisions of the Army Act, 1950, the Air Force Act, 1950 or the Navy Act, 1957 apply serving in any part of the State. The issue before the Honble High Court of Bombay was whether the term "members of the armed forces of the Union" would include the employees, such as clerks, Superintendents, meter readers, electricians, drivers, stenographers, librarians, storekeepers, education instructors, carpenters, draftsmen, senior mechanics, cooks, watchmen etc working in the Naval Establishment so as to fall within the exempted category of employees under section 27(A) of that Act. The Honble Bombay High Court after elaborate references to the provisions of the Maharashtra Act held that the petitioners therein would come within the purview of the members of the armed forces and, therefore, they are entitled for exemption contemplated under Section 27(A) of the Maharashtra Act. The Honble High Court of Andhra Pradesh considered the similar issue in the case of M.E.S. Employees Union V. Government of Andhra Pradesh and Others reported in (2002) Sales Tax Cases, 523. The Writ Petitioners before the Honble High Court of Andhra Pradesh relied upon the above cited decision of the Honble High Court of Bombay. The Honble High Court of A.P. considered the said decision and held that under the Andhra Pradesh Tax on Professions, Trades, Callings and Employments Act & Rules, 1987 (hereinafter referred to as A.P. Act ), there is no similar provision as that of Section 27(A) of the Maharashtra Act granting exemption with reference to the Members of the Armed Forces and that there is no such exemption given to the Members of the Armed Forces in the A.P. Act and therefore, the decision of the Honble High Court of Bombay is not applicable to the employees working within the state of Andhra Pradesh. The Honble High Court of Andhra Pradesh further held that even the Armed Forces are not given any exemption under the A.P. Act. The Honble High Court of Andhra Pradesh considered the various provisions of the A.P. Act viz. Section 2(e), which defines the word employee; Section 2 (f) which defines the word "employer"; Section 4 which deals with "Levy and Charge of tax" and Section 5 which deals with "employers liability to deduct and pay tax on behalf of employees" and their lordships have also considered the Section 31 which deals with "Power to exempt" and also considered Sections 32 & 35. Section 32 prohibits "Local authorities not to levy profession tax and also Section 35 which provides "Grant to local authorities for loss of revenue." Their lordships have also considered the Regulations 288A of the regulations framed under Army Act 1950. After elaborate consideration of all the provisions, their lordships held that the petitioners therein i.e. who are the members of the M.E.S. Employees Union are not entitled to get the relief in the absence of any provision in the A.P. Act similar to that of the Section 27A contained in the Maharashtra Act.

8.We have also gone through the relevant provisions of the A.P. Act. Under Section 31 of the Act, the State Government may by notification make exemption or reduction in the rate of tax payable under this Act by any specified clause of assessee subject to such restrictions and conditions as may be specified in the notification. Admittedly, no notification has been so far issued by the State Government of Andhra Pradesh exempting any class of Assessee from payment of professional tax. At this stage, it is brought to our notice that the employees and their unions have submitted their representations to the State Government to provide exemption to those who are working under the 3rd respondent and the said representation is pending before the State Government. But the fact remains that so far no notification is issued exempting the employees including the armed forces working under the 3rd respondent from payment of profession tax. As per the provisions of the, the Disbursing Officer is bound to deduct the professional tax from the employees at the time of paying salary and then remit the same to the State Government. Therefore, as long as no notification has been issued exempting any employees from payment of professional tax, the Disbursing Officers are bound to deduct the profession tax from its employees at the time of disbursement of salaries. As and when the notification is issued by the State Government exempting any employees, the Disbursing Officers are refrained from deducting the profession tax. But, till then they are bound to deduct as per the provisions of the A.P. Act. The circulars or letters issued by the office of the Chief Controller General Defence Accounts, New Delhi dated 05.05.2003 is not binding on the State Government. The said letter was issued based on the judgment of the Bombay High Court which dealt with the provisions contained in the Maharashtra Act. The said Circular is applicable for those employees who are working within the State of Maharashtra. It is not applicable to the employees working within the State of Andhra Pradesh; for those who are working in the State of Andhra Pradesh, the provisions of A.P. Act are applicable. Merely because the Disbursing Officers are not recovering professional tax from the DAD employees, the other employees cannot claim that the same benefit is to be extended to them. As per the provisions of the A.P. Act, even DAD employees are liable to pay professional tax and the Disbursing Officers have to deduct tax from their respective salaries and remit the same to the State Government. If the Disbursing Officers are not deducting it, it is at their own risk. However, the present petitioners cannot claim that as the Disbursing Officers are not recovering Professional Tax from the DAD employees, they are also not liable to pay professional tax. Unless there is notification granting exemption issued by the State Government, the applicants herein cannot contend that no amount towards professional tax can be recovered from their salaries.

9.The learned counsel for the applicants submit that the State Government appeared to have given exemption to certain cadres of defence personnel and that the applicants also come under defence personnel and, therefore, the respondent No.3, who is the disbursing officer of the applicants is not entitled to deduct the professional tax. If there is any such order granted to the defence personnel by the State Government and the applicants also come under the defence personnel who have been exempted, the applicants are at liberty to make a representation to their disbursing officers for appropriate orders and in case they failed to get any favourable orders, they are at liberty to approach this Tribunal again.

10.In the result the O.A. is dismissed. However, with an observation that the State government, who is 5th Respondent herein may consider the representations said to have been made by the employees unions seeking exemptions from payment of profession tax and may pass appropriate orders within three months. The interim orders granted earlier stands vacated. However, there shall be no order as to costs.