Opinion under The Maharashtra State Tax on Professions, Trades, Callings and Employment Act, 1975 (Professional Tax Act)
Vinayak Patkar Advocate

Query

We are having Corporate Office at Mumbai. We control all Corporate Office employees as well as Sales employees, ( i. e. field employees ) employed all over India, from our Corporate Office i.e. their recruitment to cessation of employment. All employees salary is processed at our Corporate
Office.

At our Corporate Office all our employees are recruited in Management Cadre and they are designated as Officers, Executives, Asst /Deputy Manager, Sr. Manager etc.

The field employees are designated as Executive – Sales Promotion / Clinical Business Associates i. e. Medical Representatives, Area Business Manager (1st line Managers), Manager Business Development (2nd Line Managers) etc, and are placed all over India at various towns and cities, who operates from their residences. We do not have any branch Office anywhere in India.

Under The Maharashtra State Tax on Professions, Trades, Callings and Employment Act, 1975 (Professional Tax Act), we carry out deductions of Professional Tax of the employees employed in the state of Maharashtra and pay to the state Government every month as required under the Act.

However, we are not carrying out deduction of Professional Tax from the salary of Trainees appointed at Maharashtra or outside of the Maharashtra State.

So also we are not carrying out deduction of Professional Tax, of the employees posted out side of the State of Maharashtra but paid salary/wages from our Corporate Office.

We seek your legal opinion under The Maharashtra State Tax on Professions, Trades, Callings and Employment Act, 1975. (Professional Tax Act)

  1. Whether we are required to deduct Professional Tax from the salaries of Trainees appointed at Maharashtra and appointed out side the State of Maharashtra

  2. Whether we are required to deduct Professional Tax of the employees who are posted and working out of the State of Maharashtra.

  3. If yes, where we should deposit the deducted amount, since we do not have any branch office any were in India.

  4. If not, what stand we should take before Professional Tax Inspector and whether we have any supporting documents/ legal cases for the same.

Opinion

  1. This is with reference to the case for opinion forwarded by you in relation to the profession tax to be paid on behalf of the employees who are working outside the State of Maharashtra.

  2. Under article 246 (3) of the Constitution of India, each State of India has power to make laws with regard to the matters enumerated in list II of the 7th schedule to the Constitution. The State of Maharashtra has enacted the law to levy tax on professions, trade, callings and employments under entry number 60 of such State List. Some other States have also enacted similar laws in their own States. However, article 246 has to be read with article 276 of the Constitution and any such law enacted by the State should be for either of its own benefit or for
    the benefit of the local bodies in that State.

  3. The law enacted by the State of Maharashtra to levy tax on professions, trade et cetera extends only to the State of Maharashtra. It shall apply to the persons engaged in any employment of an employer. The term ‘engaged’ means occupied. You have no branches in other States. However, the employees are engaged in the employment in those States. They are Medical Representatives and their area of operation is in the respective States. In our view therefore they are in your employment in those States. The fact that their salaries or wages are being paid from the office in the State of Maharashtra does not change the nature of their engagement in the employment. As aforesaid, the law relating to the tax on profession etc. is the State law and is for the benefit of the State in which the profession is carried on or the person employed is engaged. Therefore, in our considered view the State of Maharashtra has no jurisdiction to levy profession tax on the salaries or wages paid to the employees engaged in employment outside the State. The States in which such persons are engaged are competent to levy tax.

  4. The States in which such levy is in force have made arrangement for the payment of this tax. Some States
    have also provided for online
    payment.

  5. The Trainees in our view are not employees of the company and therefore not liable to pay the profession tax. However, in Asbestos cement Limited, PTQ No.1177/ADM/5/64/B-5 dt. 8th May 1978 the Commissioner of Profession Tax has held that the probationers are the employees and therefore liable to pay profession tax.

  6. You are also advised to apply to the Commissioner u/s 12 A of the Profession Tax Act.