The Hindu : Karnataka / Bangalore News : High Court quashes tax notice on banks

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Saturday, Jul 05, 2008
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Karnataka

Karnataka - Bangalore

High Court quashes tax notice on banks

Staff Reporter

BANGALORE: The Karnataka High Court on Thursday said that branches of banks were not liable to pay profession tax.

Justice D.V. Shylendra Kumar passed the order on petitions by Vijaya Bank and State Bank of Mysore. The banks had challenged the amended explanation to Karnataka Tax Professions, Trades, Callings and employments Act.

The State had amended the Act to ensure that profession tax at the rate of Rs. 2,500 was levied on each branch of a bank, industry or insurance company or business undertaking. The two petitioners had challenged the amendment, saying that it was illegal and ultra vires the Constitution.

They said although they had filed their Commercial Tax returns as per the law, the department had sent notices to them asking them to pay profession tax for each branch. They had urged the court to quash the notices.

The State had defended the amendment saying that the Supreme Court had upheld the amendment and that it had every right to classify a branch as a business unit. It said the State Bank of Mysore had 505 branches and Vijaya Bank 330 branches. The branches were being taxed at Rs. 2,500 a branch for five years. It said the amount due from these two banks stood at nearly Rs. 8 crore.

Justice D.V. Shylendra Kumar allowed the petitions and quashed the notices issued to the banks by the Commercial Tax Department.

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