JUDGMENT : (Bechu Kurian Thomas, J.) A local authority has questioned the defiance of a medical polyclinic to pay the profession tax under the Kerala Panchayat Raj Act, 1994 (for short, ‘the Act’). 2. The Ex-Servicemen Contributory Health Scheme (for brevity, ECHS) has set up medical clinics in different parts of the country to provide health care to ex-servicemen. The said polyclinics are allegedly run by the Ministry of Defence, to provide free medical services and treatment to Ex-servicemen and their family members. A medical clinic was established on 01.11.2010 under the aforementioned scheme, at a place within the jurisdiction of the petitioner. The said clinic continues even today. 3. While so, the Panchayat issued a notice calling upon the second respondent, who was the person in charge of the ECHS Polyclinic, to submit details of the employees working in the said establishment as per Rule 14 of the Kerala Panchayat Raj (Profession Tax) Rules, 1996 (for short, ‘the Rules’). The demand triggered a dispute between the local authority and the Polyclinic. The second respondent claimed that they are not liable to pay the profession tax demanded by the Panchayat, while the latter insisted that the clinic is exigible for the said tax. Due to the failure to submit returns as contemplated under Rule 14 of the Rules, Panchayat initiated a criminal prosecution against the second respondent. However, the prosecution remains in a state of suspense as the learned Magistrate called upon the petitioner to produce the sanction to prosecute the second respondent. 4. Faced with hurdles in imposing the profession tax on the Polyclinic and its employees, the Panchayat has filed this writ petition seeking a declaration that the Polyclinic is liable to pay the profession tax. This writ petition also seeks a direction to the second respondent to furnish the list and details of the employees who are liable to pay the profession tax and to remit the entire arrears. 5. A counter affidavit has been filed by the second respondent stating that the ECHS Polyclinic provides free medical care to around 30,000 ex-servicemen and their dependents under the aegis of the Ministry of Defence and also stated that these clinics are neither business ventures nor are they profit-making bodies and the employees are mostly ex- servicemen working only for 11 months on a contract basis. The second respondent further stated that ECHS Polyclinic is a welfare measure formulated by the Government. It was stated that they are not liable to pay the profession tax since the employees are engaged on a contract basis. The second respondent has also pleaded that they are not transacting any business and hence not liable to pay any profession tax as contemplated by the local authority. 6. I have heard Sri. Sebastian Philip, the learned counsel for the petitioner, and Sri.P.R.Ajith Kumar, the learned Central Government Counsel appearing on behalf of the second respondent. 7. To appreciate the controversy, it is necessary to advert to the statutory provisions. Section 204 of the Act deals with profession tax, which reads as follows:- 204.Profession tax.-(1) The profession tax shall, subject to such rules as may be prescribed be levied every half year in every Village Panchayat area on,- (i) every company which transacts business in such Panchayat area for not less than sixty days in the aggregate in that half year and (ii) every person who, in that half year- (a) exercise a profession, art or calling, or transacts business or holds any appointment, public or private-- (I) within such Panchayat area for not less than sixty days in the aggregate, or (ii) outside in such panchayat area but who resides in it for not less than sixty days in the aggregate, or (b) resides in such panchayat area for not less than sixty days in the aggregate and is in receipt of any income from investments. 8. It is evident on a reading of the above statutory provision that two categories of entities are liable to be taxed under the head ‘Profession Tax’ by a local authority. They are (i) a company, which transacts business in a Panchayat area for not less than sixty days in the aggregate, and (ii) every person who, in a half year exercise a profession, art or calling, or transacts business or holds any appointment, public or private within the Panchayat area for not less than sixty days or resides in it for not less than sixty days and is in receipt of any income from investments. Thus, if the entity that is proposed to be taxed is a company, it must transact a business and if it is a person it must either exercise a profession, art, calling or transact business or hold any appointment, or even reside in the area and is in receipt of any income from investments. 9. The term ‘Transacts Business’ is defined in Rule 2(c) of the Rules and the said rule is extracted below:- ‘Transacts Business' means the doing of acts or business of whatever nature whether isolated or not, such as soliciting, obtaining or transmitting orders or buying, making, manufacturing, exporting, importing, receiving, transmitting or otherwise dealing with goods. 10. Similarly, Rule 4, which deals with transaction of business and exercise of a profession reads as follows:- “4. Transaction of business and exercise of a profession.- A company shall be deemed to have transacted business and a person shall be deemed to have exercised a profession, art or calling or held an appointment within a Village Panchayat area if such company or person or persons has an office or place of employment within such Village Panchayat area.” 11. A reading of the above provision indicates that though the term ‘transacts business’ means doing of acts or business of whatever nature. However, notwithstanding the above definition, a fiction has been created by Rule 4, which deems the existence of an office or place of employment within the Panchayat area, as coming within the purview of the term ‘transacting a business’ or ‘exercising a profession’. It is evident from the fiction created by Rule 4 that the existence of an office or place of employment within the Panchayat area is sufficient to bring a person within the term ‘Transaction of business and exercise of a profession’. 12. Once a person is found to have an office or place of employment within the local area, the statutory fiction is attracted and he will be deemed to be exercising a profession within the Village Panchayat area, attracting the provisions of Section 204(i)(ii)(a) of the Act. 13. In the decision in Bharat Sanchar Nigam Ltd., v. Secretary to Government [ (2016) 4 KLT 898 ] a Division Bench of this Court had observed that doing of acts or business of whatever nature, whether isolated or not itself would come within the scope of the expression 'transacts business'. 13. In the decision in Bharat Sanchar Nigam Ltd., v. Secretary to Government [ (2016) 4 KLT 898 ] a Division Bench of this Court had observed that doing of acts or business of whatever nature, whether isolated or not itself would come within the scope of the expression 'transacts business'. It was also observed that a company shall be deemed to have transacted business within a panchayat area, if that company has an office within the panchayat area. Thus it goes without saying that if a person has an office within the Panchayat area he shall be deemed to have exercised a profession or holds an appointment within that local area. 14. In this context, the decision in Varandarapally Panchayat v. Cochin Malabar Estates Ltd. [ 1967 KLT 1149 ] is also relevant. While interpreting Rule 125 of Travancore-Cochin Panchayat Rules 1951, which is similar to Rule 4 of the Rules, it was held that it is not necessary to find out the nature of the business that is transacted in the Panchayat area. 15. The second respondent is conducting a polyclinic which no doubt has an office. Though it is claimed that free medical services are provided, such services are not expressly or impliedly excluded from the purview of the profession tax. Free medical services or charitable activities are not exempted and, therefore, even if they may not come within the purview of the word ‘business’ in the strict sense of the term, for the purpose of profession tax, the existence of the office will deem the entity or person to have exercised a profession, as the case may be. 16. In such circumstances, it is declared that ECHS Polyclinic at Thumpamon falls within the purview of the profession tax under Section 204 of the Kerala Panchayat Raj Act, 1994 and its employees are liable to pay profession tax to the petitioner. 17. Hence, respondents 2 and 3, including the Competent Officer of the ECHS Polyclinic at Thumpamon, are bound to furnish the list of employees as contemplated under Rule 14 of the Kerala Panchayat Raj (Profession Tax) Rules, 1996, and the petitioner will be entitled to collect the same as contemplated by law. This writ petition is allowed.