Tax on Sales Tax

(Saju K. Abraham, Chartered Accountant, Ernakulam)

Can tax be levied on sales tax?

Taxation on income, taxation on wealth, taxation of gift, taxation on luxuries, taxation on sales etc. are popular and many of them are universal. But the. question - can tax be levied on amount received under the banner of sales tax is an eyebrow raising subject. It needs meticulous care and consideration before judging this question.

Sales tax on excise duty, Income tax on Sales tax payable, Wealth tax on Income-tax payable etc. have sustained many litigations from its constitutional validity to its mode of implementation. They are tax of one kind levied on tax of another kind. But, when taxing on tax under the same statute becomes a fact, it is unique. Thus, when turnover tax under the Kerala General Sales Tax Act, 1963 is levied on the salts tax collected under the same KG ST. Act, 1963 many eyebrows have been raised. Hence it is a topic for discussion.

Sub-s.(2A) to S.J to the Kerala General Sales Tax Act,1963 introduced by the Kerala Finance Act, 1987 (Act 18 of 1987) with effect from 1-7-1987 has authorised the never tax on the turnover of goods coming under the First or Fifth Schedule to the Act. ft is a tax payable @ 1.5% on the turnover of the above goods notwithstanding anything contained in the Kerala General Sales Tax Act, 1963.

Turnover

As Income-tax is charged on income, wealth tax on wealth and gift tax on gift, the turnover tax is a tax charged on turnover. Turnover is defined in S.2(xxvii) to mean the aggregate amount for which goods are either bought or sold, supplied or distributed by a dealer, either directly or through another, on its own account or on account of others, whether for cash or for deferred payment or other valuable consideration. Thus turnover includes the consideration for which goods are bought. The Supreme Court has taken the view in (12 STC476 (SC)) that in laws dealing with sales tax turnover includes sales tax. In England and the U.S.A. turnover has been held to include the tax. Justice Hidayathulla held that "in calculating the total turnover there is nothing wrong in treating the tax as part of the turnover, because 'turnover' means the amount of money which is turned over in the business (13 STC 98 (SC)). The Supreme Court has observed that in (43 STC13 (SC) "the test is what is the consideration passing from the purchaser tot the dealer for the sale of the goods. It is immaterial to enquire as to how the amount of consideration is made up, whether it includes excise duty, sales tax, or freight. The only relevant question to ask is as to what is the amount payable by the purchaser to the dealer as consideration for the same. These decisions and many more, brings us to the conclusion that sales tax collected along with the price of the goods whether shown seperately or not is forming part of the turnover." Justice Lawrence has stated in the case Paprika Ltd. v. Board of Trade (1944) 1 All ER 372 that "whenever a sale attracts purchase tax, that tax presumably affects the price which the seller, who is liable to pay the tax, demands but it does not cease to be the price which the buyer has to pay even if the price is expressed as 'X' plus purchase tax." The Supreme Court has approved the above view and also the statement of Justice Goddard in Love v.Norman Wright (Builders) Ltd. (1944) 1 All ER 618 that "where an article is taxed, whether by purchase tax, customs duty, or excise duty, the tax becomes part of the price which ordinarily the buyer will have to pay. The price of an ounce of tobacco is what it is because of the rate of tax, but on a sale there is only one consideration though made up of cost plus profit plus tax. So, if a seller offers goods for sale, it is for him to quote a price which includes the tax if he desires to pass it on to the buyer. If the buyer agrees to the price, it is not for him to consider how it is made up or whether that seller has included tax or not..........So far as the purchaser is concerned, he pays for the goods what the seller demands, namely, the price even though it may include tax. That is the whole consideration for the sale and there is no reason why the whole amount paid to the seller by the purchaser should not be treated as the consideration for the sale and included in the turnover.

In the light of the above, turnover shall mean to include purchase tax, sales tax, excise duty etc; paid by the buyer in consideration of the goods. Thus sub-s.(2A) to S.5 of the Kerala General Sales Tax Act, 1963 provides the levy of turnover in the First and Fifth Schedule computed as above.

Precipitation of tax on computation

The proviso to S.5(2A) of the Kerala General Sales Tax Act. 1963 gives various^ exemptions that shall be reduced from the turnover computed as above for the purpose of fixing the liability of turnover tax. Though many of these exemptions are similar to the exemptions in Rule 9 of the Kerala General Sales Tax Rules, 1963 in determining the taxable turnover for sales tax computation, all those exemptions in Rule 9 are not allowed under the proviso to S.5(2A). Thus the sales tax collected by the dealer and shown separately in the bills is given exemption in rule 9 as clause (e), similar exemption is not provided for the computation of turnover tax. The proviso (1) to S.5(2A) allows deduction of that part of such turnover on which tax is leviable under sub-s.(l) or sub s.(2) of S.5 of the Act. This exemption is limited to the amount of turnover finally determined by the assessing authority for levy of tax under sub-s.(l) or sub-s(2) of S.5 of the Act. Here, in this proviso, the words 'such turnover' is something more than the word 'turnover' in the light of the use of the word 'such', which refers to the turnover of goods coming under the First or Fifth Schedule on which turnover tax is leviable. By the use of this word 'such' in front of the word turnover the meaning of the word turnover used in the section and in the proviso should be identical as discussed above. Thus sales tax, purchase tax etc. forms part of the turnover. But the proviso (1) allows exemption to that part of such turnover on which tax is leviable under sub-s.(l) or sub-s.(2) of S.5 which means the taxable turnover after deduction under Rule 9 of the Kerala General Sales Tax Rules, 1963. When the turnover of goods coming under the First and Fifth Schedule including the sales tax collected is reduced by the turnover of goods in the above schedules on which tax is leviable under sub-s.(l) or sub-s(2) of S.5, the sales tax collected will be precipitated to attract turnover tax. Sometimes, when the turnover includes only taxable turnover on goods coming under First and Fifth Schedule to the Act and if the total turnover exceeds the limit of 50 lakhs, the law builds up a situation to levy turnover tax on the sales tax precipitated only, as above. It is well established that logical has no place in the law. There are many instances where the law defeats logic.

Though the fact in the above circumstance is that, turnover tax is a tax on sales tax, in the legal vision it is purely a tax on the turnover. When the sales tax collected is precipitated as above it is taxed under the banner of turnover tax under S.5(2A) of the Act. The levy of the turnover tax is on the turnover of the goods which include the sales tax collected. It is only the computation of turnover for charging turnover tax that brings forth an amount equal to the sales tax collected or sometimes the aggregate of the sales tax collected and non-taxable turnover of goods coming under the First or Fifth Schedule.

Purchase tax

In the light of the decision cited early the purchase tax paid by buyer also falls within the meaning of the word turnover. Hence the seller will have to include the purchase tax paid by the buyer on goods sold by him in the computation of the turnover for determination of turnover tax. Though such events are rare, levying of turnover tax on the purchase tax cannot be ruled out as unlawful.

Tax on Sales tax

Thus "the tax on Sales tax" is a legal phenomena. It differs from Additional Sales tax and surcharge since the Kerala Additional Sales Tax Act, 1978 and the Kerala Surcharge of Taxes Act, 1957 provides for an increase on the Kerala General Sales Tax by the rates prescribed thereon. Whereas turnover tax is charged on the amount of sales tax collected. Though such amount of sales tax collected is not the sales tax in the legal view, since the collection of sales tax is only collection of an amount equivalent to sales tax payable from the customers permitted by S.22 of the Kerala General Sales Tax Act, 1963. Hence in the pure legal eyes turnover tax on sales tax cannot be considered as tax on tax, but a tax on the amount collected from the customers equivalent to sales tax. Unlike Income tax on Sales tax payable, Wealth tax on Income tax payable, Sales tax on excise duty etc. turnover tax on sales taxis Sales tax on sales tax collected, since turnover tax under S.5(2A) is a branch of the sales tax. This tax on tax is protected by the fact that turnover tax is not levied on sales tax, but it is levied on the turnover which includes sales tax. Hence it is not double taxation. The Article 366 (29A) of the Constitution of India includes tax on the transfer of property in any goods in the definition of the word 'Tax on sale or purchase of goods 'in entry 54 of the list II of the 7th schedule. Hence tax on the turnover, which means consideration for transfer of property in any goods is constitutionally valid. Turnover tax on sales tax collected will appear prima facie as a tax on tax, which is un-ethical and unsocial. But in its deep legal sense it is a pure law in crystal clear. Still some one may ask: can tax be levied on sales tax?

A Comment on Section 17 of the Indian Divorce Act and the Division Bench Decision in 1999 (2) KLT 248

(By Tony George Kannanthanam, Advocate, Kochi)

Section 17 of the Indian Divorce Act says that a decree for dissolution of marriage passed by a District Judge has to be confirmed by a Full Bench of the High Court. This confirmation is applicable only to Christians and so it is arbitrary, discriminatory and violative of Art.13(1), 14and 15(1) of the Constitution of India as far as Christians are concerned. The Indian Divorce Act is an enacted personal law and so it has to comply with Art. 13(1) and Part III of the Constitution. The Indian Divorce Act came into force on 1.4.1869. It extends to India the main provisions of the Matrimonial Causes Act 185 7 and its amendments till 1866. The object of the Act is to place the Indian law on the same footing as the English Law of Divorce. The object of the above section is to enable the Full Bench to review the evidence and come to an independent conclusion by it. The requirements for confirmation was introduced only in India and it has no parallel in the English Law. The present law in England regarding Divorce is the Matrimonial Causes Act 1973. The Christian Community has been demanding for making appropriate changes in the Act for a long time. The Law Commission of India in its Fifteenth report in 1960 on law relating to marriage and divorce among Christians has said on page 40 para.79 that "we see no need for such provision". As per Art.13(1) all pre constitutional laws have to be consistent with Part III of the Constitution and to the extent it is not consistent it is void. S.17 is not consistent with Part III of the Constitution since it violates Arts.14, 15(1), 21 and 25 of the Constitution of India. Since it violates Arts.14, 15(1), 21 and 25 of the Constitution of India it violates Art.13(1) of the Constitution of India.

Since this Section and confirmation is applicable only to Christians it is discriminatory arbitrary, unreasonable, unfair and violative of Art.14 of the Constitution. The classification has not only to be reasonable but that reasonableness should have a nexus with the object sought to be achieved. Classification between Christians and others is not reasonable and the reason for this classification has no nexus with the object sought to be achieved by this classification. In effect this amounts to discrimination on the basis of religion and so is violative of Art.15(1) of the Constitution of India. Intention is immaterial in deciding the Constitutional validity. What matters in deciding the constitutional validity is the effect or consequence of the impugned section on the fundamental rights. The effect of this section is that it violates Art. 14, 15(1), 21 and 25 of the Constitution of India. Minimum six months has to elapse before a case is taken for confirmation before the Full Bench. The Full Bench may remand the case. If it is remanded then it will further lead to much delay. Parties can remarry only 6 months after confirmation. So parties have to wait for a long time and suffer in various ways during this period.

The near and dear ones of the parties are also forced to suffer because of this. This delay and suffering may effect even the looks of parties which will adversely affect their future marriage prospects especially that of females. This delay will adversely affect the right of the parties to start a fresh life. The parties will have to incur various types of expenses due to this confirmation proceedings. All this affects their right to live with dignity and right to decent life and right to life guaranteed under Art.21 of the Constitution of India and so is violative of Art.21 of the Constitution.

The precious time of High Courts are wasted unnecessarily due to this Section. This Section in effect violates the right to freedom of conscience and the right to freely practice religion because on the ground that one is a Christian one has to undergo the hardships, agonies and expenses of confirmation. None of the decisions relied on by the Division Bench in 1992 (2) KLT 248 is applicable. One of the decisions relied on by the Division Bench was AIR 1970 Mad 12. But the question considered in that case was entirely different. The question raised before the Division Bench was not even raised, considered and argued in the Madras case. Another decision relied on by the Division Bench was AIR 1950 Bom.84. That decision is not applicable because that decision did not consider whether enacted personal laws have to comply with Art.13(1).

In the above Bombay case the observation that personal laws will not come under Art.13 was made in reference to the Muslim Polygamy which is not an enacted personal law. The Full Bench of this Court in 1995 (1) KLT 644 had rejected the above Bombay decision and the contention that Indian Divorce Act is a Personal Law and so it will not come under Art.13 by holding that the above contention and Bombay decision will not apply to enacted personal laws. Another decision relied on by the above Division Bench was (1997) 3 SCC 573. That decision is also not applicable. The above decision of the Supreme Court did not specifically consider whether an enacted personal law has to comply with Art.13 and that question was not even argued or raised before the Apex Court. The Supreme Court in the above case was referring to non-enacted personal laws. None of the decisions referred to in the above Supreme Court decision has considered the question whether enacted personal law has to comply with Art.13. One of the decisions referred to in the above decision in AIR 1952 Bom.84 and that shows that the Supreme Court was referring only to non-enacted personal laws.

In the above Supreme Court judgment there is no discussion on the arguments made before it and none of the arguments made before it are mentioned and whether any arguments were at all made supporting the reliefs sought is also not traceable from the judgment.

The view of the Division Bench that this is a personal law and so Court cannot interfere is also not correct because this is an enacted personal law and it has to comply with Art.13 and has to be consistent with Part III of the Constitution, Even according to the Division Bench there is no justification for continuation of this procedure especially since it is applicable only to Christians and so the D.B. directed the State of Kerala to amend the law. When even according to the Division Bench there is no justification for continuation of this procedure especially since it applies only to Christians the D.B. ought to have held it as discriminatory, arbitrary, and vioaitive of Arts.14, 15(1) and 13(1) of the Constitution of India. Holding that there is no justification for continuation of this procedure especially since it applies only to Christians in effect amounts to holding that this procedure is arbitrary, discriminator and violative of Art.14 and 15(1) of the Constitution of India.

How long more the poor victims of this Section have to wait to get rid of this section and get it declared as ultra vires the Constitution and unconstitutional, discriminatory, arbitrary and violative of Arts.13(1), 14, 15(1) and 21 of the Constitution of India.

1991 (2) KLT 306 - A Land Mark Decision

(By P.S. Vasavan Pillai, Advocate)

Disputes regarding the flow of natural water are too common now-a-days. Peace of the community is often disturbed on account of such controversies over the passage for water. Property owners usually do not allow water from adjacent properties on a higher level to flow on to their lands and consequently quarrels are galore.

In this context the decision in Yesoda v. YusuffHaji (1991 (2) KLT 306) by His Lordship Justice G. Rajasekharan is a landmark one. It fulfils a long-awaited declaration by the apex Court with regard to the right to drain off water on to the adjacent land owned by another. It should put an end to quarrels between adjacent property owners on account of flow of natural water.

While dismissing the petition to up-hold the right to prevent the flow of water from the high-lying adjacent land, the Learned Judge categorically declared, "Every property owner has a natural right of drainage of surface water to the property lying at a lower level... This is a natural right independent of an easement, grant or custom... ...This right of an owner of a land lying on a higher level could be an easement, quasi-easement right as well. Easement of drainage is the right of the owner of one land to cause the water on his land to flow in defined channel on the land of his neighbour. This is also a natural right of the owner of the higher land that the water rising in or falling on his land, shall be allowed by his neighbour owning the lower land to run naturally thereto. The natural right mentioned above is not restricted to natural drainage of water from higher to lower land but includes discharge, of it through a particular route at a specified point. This natural right is a right which can be claimed in respect of water naturally rising in or falling on one's land and not passing in defined channels. The right of an upper proprietor to throw natural water on the lower land is a natural right inherent in property. The lower riparian proprietor has no right to prevent such natural flow or to throw the flow back on to the upper riparian property".

Such decisions which will foster good neighbourly relations and peace and harmony in society are more and more welcome and it is necessary to highlight such decisions especially in the present day turbid atmosphere of the society.

Manikantan Pillai Laments I

(Varghese T. Abraham, BA., LLM, Addl. District Judge, Kollam)

Born Manikantan in a blue blood Nair Tarward

Land Reforms in the State snatched away its wealth

Loss of parents eclipsed his mirth

Brought him up his sisters like apple in their eyes

Put two and two together, and went he to Law School

Toiled and moiled he in the class room

Learned he the subjects over head and ears

Secured a top and thought he to make bread and butter

Joined he the bar and weathered storm of infancy period

Burnt he the candles at both ends in the court rooms

Adorned he law as a jealous mistress in mind

Spared he no time for gossip and plays

Fought he battles with elders in the Bar

Brought he success with ease to his clients

Never he demanded fees as per rules

Nor did he chase ambulance for "Claims"

At daggers drawn were youngsters in the bar

Looked at him they with envy and venom

Judges in the Bench and elders in the Bar

Saw in him a future Patriarch in their line

Heard he then about a state-wise RACE

Stood he at sixes and seven to join or not

Judges advised and threw cold water on Grey

haired elders pursuaded him

"Societal Status, you get you know

Certainty in income will avoid your tear

Salutes of Police will put you in cheer

Step by Step to the top you can rise"

Encouraged by these joined he the race

Mediocre friends thought to test their case

Ran he as fast as he could and finished the point

Lagged behind him his friends at far away place

Another hurdle he had to cross - a tough one

Queries they put and gave he answers in hurry

Showered he tit for tat replies to their embarrassing queries

Battle he won and stood first in the victory stand

Conferred on him a seat lowest in the ladder

Sat he in that seat for a decade and more

Answers he wrote to questions beside the mark

Heard he for days lawyers on odds and ends

Wrote he verdicts and quoted he jurists

Never he cared for conjugal happiness

Yet, moved they complaints without rhyme or reason

Dharnas they held and meetings they convened

Took he bag and buggage to different places

Paid he through nose at commercial cities

Pulled he a long face through out the career

Paltry income was his wife's apple of discord

Gone he rack and ruin in finance and romance

Passed he a life through thick and thin

Suffered he all the built castles in the air

For a seat at the top of the ladder

One day he looked upwards and saw to his surprise

Above the ladder his friends who met Waterloo in the RACE

Shed he tears and cursed his caste

Sat for a while and then proceeded with that seat.

Concept of 'Workman' Under the Workmen's Compensation Act, 1923

(By Valsamma Paul, M.A., LLM., Applied Economics, University of Cochin)

The Workmen's Compensation Act, 1923 is an Act, which provides for the payment of compensation by employer to his workman for injury by accident. It is a legislation, beneficial to workman and hence, the question. 'who is a workman?' assumes significance. In common parlance, a ‘workman' means a person who does manual work. 'Workman' under the Workmen's Compensation Act, 1923, however, has a wider connotation.

The use of the words 'employment' and 'employed' in the definition [1] suggests the existence of a master and servant relationship. This relationship is characterised by a contract of service. The indicia of contract of service are the master's power of selection of his servant, payment of wages or other remuneration, the master's right to control the method of doing the work and the master's right of suspension of dismissal [2].The prima facie test to decide the existence of master and servant relationship could be the master's right to supervise and control the work done by the servant not only in the matter of directing what work the servant was to do, but also the manner, in which it was to be done. The nature or extent of the control might vary from business to business and is by its nature incapable of precise definition [3].

It is the master's right to control the work of the servant that makes the latter a workman and distinguishes him from an independent contractor. In Hasbannessa v. Zahiruddin [4], the Calcutta High Court applied the test of control to the case of drivers. The court admitted that a driver can be a workman. But all drivers cannot be categorized as workmen. The driver, who hires out a car and has complete freedom during the period of hire to use the car for purposes and routes, as he may think best, with no control from the owner, is not a workman. This is because there is no employment and he does not have an employer. He is only a bailee of the taxi.

A contractor is a person who, in the pursuit of an independent business, undertakes to do specific jobs of work for other persons. But he will not submit himself to their control in respect of the details of work [5]. There is a clear-cut distinction between a contractor and a workman. An independent contractor is charged with a work, and has to produce a particular result. But the manner, in which the result is to be achieved, is left to him. A workman, on the other hand, may also be charged with a work and asked to produce a particular result. But he is subject to the directions of the master as to the manner, in which the result is to be achieved [6].

But the language of the definition of workman [7] does not import in the contract of employment powers of dismissal or power of direct superintendence or control. A coolie employed by a mistry for a specified remuneration on behalf of the principal to do the work of the principal is, therefore, a ‘workman’ under the Act. His employment by the mistry is a contract of service within the meaning of the definition [8].

The criterion of control came before the Supreme Court in Silver Jubilee Tailoring House v. Chief Inspector of Shops and Establishments[9]. The Court laid down that for deciding the question of relationship of master and servant, the test of control over the manner of work is unrealistic. In its application to skilled and particularly, the professional work, the control test, in its traditional form, has really broken down.

The main chunk of the definition of 'workman' under the Workmen's Compensation Act focuses on a 'railway servant', who can be said to fall within the concept of 'workman' under the Act [10]. As per the definition, any person, who is a railway servant as defined in S.3 of the Indian Railways Act, 1890 [11], is a workman. But he must not be permanently employed in any administrative, district or sub-divisional office of a railway. Moreover, he must not be employed in any such capacity as is specified in Schedule II [12]. Accordingly, a person employed on a railway, in connection with the operation or maintenance of a lift or a vehicle propelled by steam or other mechanical power or by electricity or in connection with the loading or unloading of any such vehicle, is not a workman [13].

The definition excludes a railway servant, who has to work habitually and continuously in the office. If it can be established that the person concerned has to perform out-door duties in addition to his duties in the railway office, he would be a workman. This is manifest from the expression 'not permanently employed' in any administrative, district or sub-divisional office of a railway [14].

In order that a person may claim to be a workman within the meaning of the Act, he must, unless he is a railway servant and is covered under clause (i) of S.2(1)(n), prove that he comes under one or other of the clauses set out in Schedule II [15]. This Schedule gives a list of persons who are workmen within the meaning of clause (ii) of S.2(1)(n) of the Act. The words 'in any such capacity as is specified in Schedule IF clearly indicate that the list given in Schedule II is completely exhaustive and not illustrative. If the employment is one that would not come under any of the categories mentioned in Schedule II, the definition of 'workman' in S.2(1)(n) cannot be applied to that person [16]. It is worth noting that Schedule II excludes persons employed in clerical capacity from the concept of 'workman’ under the Act.

To make a person a 'workman', it is not necessary that his contract of employment must be in writing. It is immaterial whether the contract of employment is express or implied, oral or in writing.

Definition of "workman' includes dependants of a workman also. The need for the inclusion of dependants within the purview of the definition arises, when an injured workman dies. This enables legal proceedings being continued even after the death of the workman.

Any person, working in the capacity of a member of the Armed Forces of the Union, falls outside the purview of S.2(1)(n) of the Act. Therefore, such a person is not a 'workman', entitled to enjoy the protection afforded by the Act.

One of the grounds, on which a person is excluded from being considered a workman under the Act, is that his employment is of a casual nature. The word 'casual' has not been defined in the Act. It may not be possible to define exactly what casual employment is. There are some cases, in which employment is obviously not casual and other cases, in which employment is obviously casual. But there are a number of debatable cases in between. Thus, the question, whether an employment is of a casual nature or not, depends on the circumstances of each particular case. An employment is not of casual nature, if there is regularity or periodicity of employment [17]. When the owner of a coconut garden engaged professional climbers for plucking coconuts from time to time and once in 50 days or so, the climber had to be engaged, it was held that it cannot be said that he was employed casually [18]. Casualness, in the context in which it is used in Act, indicates employment by chance.

The transient or protracted nature of an employment can be the criterion for deciding its casualness or regularity. If an employment is reasonably and normally spread over sometime, how can it be 'casual'? On the other hand, if it is very brief and transitory, it may be a casual employment [19]. But from the mere fact that a person worked for two days only, before he died in an accident, it would not automatically follow that his employment was of a casual nature. The reason is that even a regular employee may meet with an injury immediately after he joined duty [20].

Is the mode or the time of payment conclusive on the question of the casualness of an employment? It cannot determine the question of the casualness of an employment. The mode or the time of payment is only a matter of convenience and mutual adjustment. Merely because a workman is paid on daily basis, his employment cannot be casual [21].

The burden of proof of the casual nature of employment is on the employer [22]. If an employer does not produce the muster roll, the issue as to the employment being casual must go against the employer [23].

But if a person is employed casually, he would be a 'workman' under the Act, if he is employed for the purpose of the employer's trade or business. Trade means exchange of goods for goods or goods for money. It may be any business carried on with a view to making profit. Such business may be manual or mercantile as distinguished from the liberal arts or learned professions [24]. 'Business' is taken to mean anything that occupies the time, attention, and labour of men for the purpose of livelihood or profit [25]. Though the word 'business' is ordinarily more comprehensive than the word 'trade', quite often 'business' is used as synonymous with trade [26].

An agriculturist started boring operations in his well so as to make it fit for purposes of irrigation. A person was employed by him as a labourer for the purpose. It may be true that the labourer in this case is a casual worker. But the agriculturist engaged him for the purpose of his agricultural business. So, he was held to be a ‘workman' [27].

The fact that a person is employed for the purposes of his employer's subsidiary and not principal business cannot affect his claim to be a workman. A person, though working as clerk, was letting out houses to others and deriving benefit therefrom. Letting out of houses was only his subsidiary business. Still, it cannot be denied that his employment of workmen, in the construction of houses to be let out, was for the purposes of his trade or business [28].

In order to exclude a person from the category of 'workman', both the conditions, that is to say (1) that his employment is of a casual nature and (2) that he is not employed for the purpose of employer's trade or business, have to be satisfied [29]. Both these qualifications must be present together [30]. This is because the word 'and' occurring between the above mentioned conditions has been used conjunctively [31].

In view of the Apprentices Act, 1961 [32], the definition of ‘workman' under the Workmen's Compensation Act, 1923 stands modified. Now the definition of ‘workman' includes any person who is engaged as an apprentice as defined in the Apprentices Act, 1961 and who in the course of his apprenticeship training is employed in any such capacity as is specified in Schedule II to the Workmen's Compensation Act [33].

Under the Workmen's Compensation Act, the exercise and performance of the powers and duties of a Government Department are considered to be trade and business of such Department [34]. Therefore, a person engaged for driving a jeep of the Central Excise Department is a workman [35].

Are railway porters workmen? A licensed railway porter has to work under the overall supervision of the officers of the railway according to the roster drawn by the authorities. He is under the disciplinary control of railway. His licence is liable to be cancelled for misconduct, disobedience and inefficient working. There is, therefore, the relationship of employer and employee between the railway and the porter. Hence, a railway porter was held to be a 'workman' [36].

The question, whether workmen employed by contractors are 'workmen' for the purpose of the Workmen's Compensation Act, 1923, has provoked judicial analysis [37]. A building contractor appointed a person to do white washing work on piece-rate basis. He was doing white washing as part of parcel of the contract undertaken by the contractor. The appointee was expected to use the material supplied only under the supervision of the contractor. Because of this control, he was held [37a] to be not an independent contractor, but a workman paid on job basis.

Suppose an agent of a contractor appoints a person to help him in performing the work undertaken by the contractor. Is a person appointed by the agent a 'workman'? If he is, of whom? This question has also come for examination by courts. A contractor had a contract to unload wagons. He employed a maistri who worked under him with the assistance of coolies. One of the coolies met with an accident, while engaged in unloading a wagon and died. The question arose whether the cooly was a workman of the contractor. At the time of the accident, the cooly was employed for the purpose of unloading the wagon, which was the business of the contractor. It is true that the cooly was employed by the maistri and not by the contractor. But he was employed for executing the purpose of the business of the contractor. Therefore, he was held to be a workman of the contractor [38].

Another issue analysed by courts was whether a 'contractor' and his 'coolies' are workmen of the person, whose work the former executes. The work in the coal department of a mill was carried through a contractor. He was paid a fixed monthly sum as per a contract. Out of it, he paid to persons employed as coolies for the work. The contractor and his coolies were granted bonus and annual leave with wages just like the other employees of the mill. This led the court to conclude that the so-called 'contractor and his coolies' were workmen of the employer of the mil [39].

Entries in Schedule II to the Workmen's Compensation Act, in fact, form the fulcrum, around which the broadness of the concept of "workman' under the Workmen's Compensation Act revolves. These entries have also been subject to judicial interpretation, which led to the widening of the concept. A person was employed to operate a tractor. When an accident occurred, the said vehicle was not in operation but was merely loaded on a truck for being sent to another place. Still the operator has to be treated as a person employed in connection with the operation of the said vehicle. This was because the expression "employed.........................in connection with the operation" [40] of the vehicle cannot be construed to be confined to its actual mechanical operation. It extends to other activities connected with it. The emphasis appears to be on the factum of employment, which has to be in connection with the operation or maintenance of a vehicle [41].

A traffic controller had to see that the bus arrived at and departed from the bus-stand at the proper time. He was to count the number of passengers in the bus and verify it with the tickets, and make an endorsement on the way-bill and also make a note in the register maintained in the bus-stand. He was also required to report to the Divisional Manager in the event of any breakdown. These functions were not held to be clerical, in spite of the argument to that effect. The words 'in connection' [42] were held quite wide as to include employees not merely operating the vehicle but also in connection with it otherwise. In view of the fact that the traffic controller was expected to report in the event of any breakdown, his duty was connected with maintenance of the vehicle. Similarly his duties were also connected with the loading of the vehicle, as he was to check the number of passengers in each vehicle. Hence it was held, he would come within the meaning of the term 'workmen' [43].

A watch man was expected to preserve a building against unwarranted interferences from unauthorised persons and cattle. He was to keep it clean by sweeping the premises and dusting it. He was thus engaged in the upkeep of the office for the purpose of keeping it in an efficient state. His services were held to be for the maintenance [44] of the office and building and that he was a 'workman' [45].

A person employed by a farmer for crushing sugarcane on a power driven charkhi was held to be a workman', since 'farming' [46] is not confined to cultivation, but would also mean raising of crops, poultry, sale of chicken and eggs and takes in all operations which a farmer necessarily engages in including crushing of sugarcane. [47].

The condition that to be a 'workman', one's employment should not be of a casual nature and that one should not be employed otherwise than for the employer's trade or business, may appear to curtail the broadening concept of 'workman'. But in fact, the curtailing effect is not so serious. This is because only when a person is both casually employed and employed otherwise than for the purposes of the employer's trade or business, he will fall outside the ambit of the definition of 'workman'. But the requirement for the simultaneous assembling of the two conditions for excluding a person from the category of 'workman' makes the concept play round the expression 'trade or business'. Suppose the work of the employer, for the execution of which a person is employed cannot be labelled as 'trade or business', will the person employed by the employer be a 'workman'? It appears he will not be. This lacunae in the law affects adversely domestic servants, who will be helpful if they sustain injury in the course of their employment. The definition of workman' deprives the clerical staff of a business establishment of the benefits under the Workmen's Compensation Act. All persons employed for the purposes of the employer's trade or business, should be considered as his ‘workmen' entitled to the protection of the Act. A widening of the concept of 'workman' under the Workmen's Compensation Act is called for.

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Footnotes:

1. S.2(1)(n) of the Workmen's Compensation Act, 1923 defines a 'workman' to mean "any person (other than a person, whose employment is of a casual nature and who is employed otherwise than for the purposes of the employer's trade or business) who is --

(i) a railway servant as defined in S.3 of the Indian Railways Act, 1890, not permanently employed in any administrative, district or sub-divisional office of a railway and not employed in any such capacity as is specified in Schedule II, or

(ii) employed in any such capacity as is specified in Schedule II, whether the contract of employment was made before or after the passing of this Act and whether such contract is expressed or implied, oral or in writing; but does not include any person working in the capacity of a member of [the Armed Forces of the Union]; and any reference to a workman who has been injured, shall, where the workman is dead, 'include a reference to his dependants or any of them".

2. Short v. J.W. Henderson Ltd., (1946) AC. 24 (H.L.): 1946 62 T.L.R.427.

3. Dharangadhara Chemicals Ltd. v. State of Saurashtra, AIR 1957 S.C.264; (1957) 1 LLJ.477.

4. AIR 1964 Cal.61: (1963) 1 LLJ.593.

5. Chintaman Rao v. State of Madhya Pradesh, AIR 1958 S.C. 388 :(1958) 2 LLJ. 252.

6. State of Kerala v. V.M. Patel (1961) 1 LLJ.549 (S.C).

7. Supra, n.1.

8. Armugham v. Nagammal, AIR 1949 Mad.462.

9. (1974) 3 SCC.498.

10. Supra, n.1.

11. S.3(7) of the Indian Railways Act 1890defines a 'railway servant' as any person employed by a railway administration in connection with the service of a railway.

12. Supra, n.1.

13. See Schedule II to the Workmen's Compensation Act, 1923.

14. See Supra, n.1

15. See Ibid.

16. Pattammal v. Janakirama Kounder, 1975 Lab.I.C.984.

17. Kochappan v. Krishnan, (1987) 2 LLJ. 174 (176) (Ker.), per Kochu Thommen,J.

18. Kochu Velu v. Joseph, 1980 Lab.LC.902 (Ker.).

19. Mahmoodv. Balwant Singh, 1980 Lab.I.C.300 (AIl). The question before the Court was whether a person employed by agriculturists for thrashing wheat by instrument operated by tractor was a 'workman' as per S.2(1)(n) and Schedule II, Clause (xxix). The act of thrashing with the aid of a device worked by means of a tractor driven by mechanical power was ancillary to farming or agriculture making the case fall under clause (xxix). Hence the person employed for the purpose was held to be a "workman'.

20. Patel Engg. Co. Ltd. v. Commr. For W.C. 1978 Lab.I.C. 1279 (1281) (AP.). The point in dispute here was whether workman employed by contractors, availing themselves of the facility of the Government lorry for coming to the workspot, can claim workmen's compensation, if an accident occurs while availing themselves of the facility. The court held that it is not necessary that the workmen concerned should either travel in a conveyance provided by the employer or that it would be obligatory on their part to do so in order to conclude that they were in the course of employment while travelling in that conveyance. The contractors had no lorry belonging to them for carrying the workers employed by them. Hence they used to avail themselves of the Government lorry. This practice was in force for about four years before the accident. It could be inferred from the circumstances that the contractors expected the workers to avail themselves of the facility of the Government lorry for arriving at the workspot. It could therefore, be concluded that the accident arose out of and in the course of employment, entitling the workmen to compensation.

21. Mahmood v. Balwant Singh, Op. Cit.,

22. Madanlal v. Mangali, AIR 1961 Raj. 45 (47).

23. Ladi Jagannadham v. Smt. Padmabati Baurani, AIR 1962 Orissa 7 (8).

24. The Secretary, Madras Gymkhana Club Employees' Union v. Management, AIR 1968 SC.554 (562,563) : 1968 Lab.LC. 547.

25. S. Mohan Lai v. R. Kondiah, AIR 1979 S.C 1132 (1133): (1979) 2 SCJ. 362.

26. Krishna Kumar v. J. & K. State, AIR 1967 S.C. 1368 (1371): (1967) 2 SCJ. 373.

27. Popatal v. Bai Lakhu, AIR 1952 Sau.72.

28. Madan Lai v. Mangali, Op. cit.

29. Kamala Devi v. Bengal National Textile Mills Ltd. (1975), 2 LLJ. 81, see also Kochappan v. Krishnan, (1987) 2 LLJ. 174 (Ker.) pp. 175-176.

30. Periyakkal v. S.I. Railway, AIR 1935 Mad. 721 (722): Huseinbhai Ahamedbhai Memon v. Mangiben, AIR 1985 (N.O.C) 73 (Guj): 1984 AC.J.701 (705) (DB) (Guj.).

31. Vijay Ram v. Chander Prakash, 1981 Lab. I.C. 359.

32. The Apprentices Act, 1961 is an Act to provide for the regulation and control of training of apprentices and for matters connected therewith.

33. Vide item (l)(d) of the Schedule to the Apprentices Act, 1961, read with S.16 thereof.

34. S.2(2) of the Workmen's Compensation Act, 1923 provides: "The exercise and performance of the powers and duties of a local authority or of any department (acting on behalf of the-Government) shall, for the purposes of this Act, unless a contrary intention appears, be deemed to be the trade or business of such authority or department".

35. Union of India v. Mohd. Wasi, 1980 Lab. I.C. (NOC) 57 (All.): (1980) 40 Fac. L.R. 17 (All.).

36. K. Narayanan v. Divisional Supdt. Southern Railway 1980 Lab. I.C. 776. The issue to be decided was whether master and servant relationship existed between railway administration and licensed railway porters. The latter being railway servants within S.3(7) of Railways Act, were held to be workmen under S.2(1)(n).

37. S.B. Gurbax Singh v. Dhani Devi, 1981 Lab. I.C. (NOC).

37a. Ibid.

38. Armugam v. Nagammal, Op. cit.

39. Kanpur Mill Mazdoor Union v. Muir Mills Co. Ltd. (1955) 2 LLJ. 537.

40. See Workmen's Compensation Act, 1923, Sch. II, Clause (1).

41. New India Assurance Co. Ltd. v. Smt. Fatmabai, 1982 Lab. I.C. 732.

42  Supra, n.40.

43. Malatibai v. Mysore SRTC, (1968) 2 LLJ.443.

44. See Workmen's Compensation Act, 1923, Sch. II, Clause (viii).

45. Smt. Satiya v. Sub-Divisional Officer, P.W.D. (1974) Lab. I.C. 1516.