IMPORTANT POINT
The revision brought upon by substitution of revised schedule in the Kerala Plantations Tax Act, not only effects revision in the rates, it also revises the tariff categories as well as the tariff structure and such a revision could be given effect to only in the next immediate financial year.

Headnote:Kerala Plantations Tax Act, 1960-Schedule I as substituted by Section 1(2) of the Kerala Finance Act, 18 of 1987-Scope and operation-Revision of tariff in the midst of the year-Validity-Plantation Tax-For the assessment year commencing from 1-4-1987, respondent firm was assessed to tax @ Rs 130/- per hectare for the period from 1-4-1987 to 30-6-1987 and at the revised rate of Rs . 350/- per hectare for the remaining nine months period from 1-7-1987 to 31-3-1988-Said assessment was made pursuant to substitution of Schedule I to 1960 Act -Whether plantation tax at the revised rate of Rs. 350/- per hectare introduced by the Kerala Finance Act, 18 of 1987 w.e.f . 1-7-1987 was leviable for any part of financial year 1987-88-(No)-Revised schedule altered the tariff categories-Revision in question came within the ambit of Section 3(2) of the 1960 Act-Such a revision could be given effect to only in the next immediate financial year 1988-89.
Held : We have to examine the effect of the Finance Act, 18 of 1987 qua section 3 of the 1960 Act. The said Finance Act, 18 of 1987 was enacted to give effect to the budget proposals for the financial year 1987-88. To augment the revenues of the State, schedule-I to the 1960 Act was sought to be amended by revising the existing rate of plantation tax. In the present case, we are concerned with the content of the expression "revision". Revision simpliciter in the rate of tax is different from revision which alters the tariff structure and the tariff categories. Revision in the rate of tax simpliciter does not affect the assessable extent of the lands in the plantation. This category of revision in the rates does not come within the ambit of section 3(2) of the 1960 Act and consequently, such revisions do not require revision in the assessment of tax. However, in the present case, the revision brought upon by substitution of revised schedule not only effects revision in the rates, it also revises the tariff categories as well as the tariff structure and consequently, such a revision would fall within the ambit of section 3(2) of the 1960 Act. In the case of revision in the rates simpliciter, the assessable extent of the holding remains constant throughout the year, whereas in the case of revision in the tax structure, the assessable extent of the holding undergoes a change. In this case, the revised schedule increased the assessable extent of the holding. In the present case, the revised schedule altered the tariff categories. Therefore, the revision in question in this case squarely came within the ambit of section 3(2) of the 1960 Act and such a revision could be given effect to only in the next immediate financial year 1988-89. As stated above, chargeability is independent of the passing of the Finance Act. Therefore, one has to read the Finance Act in consonance with the provisions of the charging section. The function of the Finance Act primarily is to prescribe the rate of tax and the manner of calculation of tax; and it is not intended to incorporate the entire procedural and substantive law relating to tax. In the circumstances, we do not find merit in the contention advanced on behalf of the appellant-State that the object of the Finance Act, 18 of 1987 was only to revise the rates of plantation tax. We may reiterate that the State can always revise the rates in the middle of the financial year provided the assessable extent of the lands comprised in the plantation as on 1st April of each year is not altered. (Paras 24 and 25)

JUDGMENT

Kapadia, J.-This batch of civil appeals by special leave against the judgment and order of the Kerala High Court dated 28.8.1998 raises the question as to the true scope and operation of section 1(2) of the Kerala Finance Act, 18 of 1987 substituting schedule-I to the Kerala Plantations Tax Act, 1960 w.e.f. 1.7.1987.

2. Since the aforestated question arises in all the civil appeals, the same are taken up together and disposed of by this common judgment.

3. Since the facts in this batch of civil appeals are almost identical, we mention hereinbelow the facts of Civil Appeal No. 983 of 1999.

4. E.K. Mathew & Brothers is a registered partnership firm carrying inter alia the business of planting tea in Alampally estate in Pasuppara in the State of Kerala. For the assessment year commencing from 1.4.1987, the firm was assessed under section 3 of the Kerala Plantations Tax Act, 1960 (hereinafter for the sake of brevity referred to as "the 1960 Act"). Under assessment order dated 6.9.1988, the said firm was assessed to tax @ Rs. 130/- per hectare for the period from 1.4.1987 to 30.6.1987 and at the revised rate of Rs. 350/- per hectare for the remaining nine months period from 1.7.1987 to 31.3.1988. The said assessment was made pursuant to the substitution of schedule-I to the said 1960 Act by the Kerala Finance Act, 18 of 1987 w.e.f. 1.7.1987. By the said amendment, the tariff in existence as on the first day of the financial year, viz. 1.4.1987 stood revised in the midst of the year w.e.f. 1.7.1987. Consequently, in terms of the demand notice, the assessee was asked to pay the tax at the rate of Rs. 130/- per hectare for the period 1.4.1987 to 30.6.1987 and at the rate of Rs. 350/- per hectare for the period 1.7.1987 to 31.3.1988.

5. Aggrieved, by the assessment order dated 6.9.1988, the said firm preferred an appeal before the Sub-Collector, Devicolam, Idukki district. By order dated 20.6.1989, the Sub-Collector, as an Appellate Authority, confirmed the assessment order dated 6.9.1988 and consequently dismissed the appeal.

6. Against the said order of dismissal, the said firm moved an application under section 9A of the 1960 Act requesting the Sub-Collector to refer the following question of law to the District Judge:

"Whether in the facts and circumstances of the case, plantation tax at the revised rate of Rs. 350/- per hectare introduced by the Kerala Finance Act, 18 of 1987 w.e.f. 1.7.1987 was leviable for any part of the financial year 1987-88?"

7. In the meantime, by judgment and order dated 21.10.1988, in O.P.No. 3610 of 1988 entitled M.J. Vijaya Padman v. The State of Kerala & another, the learned Single Judge of the High Court of Kerala held that the amended rates applied from the commencement of the financial year 1987-88 as the object of the said Act 18 of 1987 was to give effect to the budget proposals for that year. Consequently, the applicability of the levy was upheld and original petitions filed by the assessees stood dismissed.

8. Placing reliance on the above judgment of the High Court, the Sub-Collector dismissed the application for reference under section 9A filed by the said firm.

9. At this stage, it may be mentioned that prior to 21.10.1988, there was conflict of opinion in the decisions of the District Judges under section 9A.

10. In the case of Udayagiri Rubber Co. Ltd. v. State of Kerala, it was held, that, the plantation tax was assessable under section 3 at the rate prevalent on the first day of each financial year and that the same could not be altered during the year.

11. Consequent upon this difference of opinion, the assessees and the State, both being the aggrieved parties, came before the Division Bench by filing writ appeals and writ petitions respectively.

12. By the impugned judgment dated 28.8.1998, the Division Bench has held that the assessees were liable to be taxed for the assessment year 1987-88 on the basis of the rates specified in schedule-I as on 1.4.1987; that the revision in tariff in the

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2004 Supreme(SC) 1433

Cases Referred (4)