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Judges : SREEDHARAN
Assainar - Appellant
Versus
State of Kerala - Respondent
Case No : O.P. No. 11304 of 1990
Decided On : 07/08/1991
Advocates Appeared :
Govind K. Bharathan For Petitioners V.P. Mohankumar & Government Pleader (M.C. Gopi) For Respondents
Profession Tax - Panchayat Act - Kerala Panchayat (Profession tax) Rules, 1963 - Summary of Acts and Sections: S.A. Profession tax shall be levied every half year in every Panchayat area on every person who in that half year exercises a profession art or calling or transacts any business or holds any appointment public or private within such Panchayat area for not less than sixty days in the aggregate. The Rules prescribe the maximum rate of half yearly tax. Rule 3 of the Kerala Panchayat (Taxation and appeal) Rules 1963 deals with the procedure for passing resolution determining levy of tax. Rule 10(t) of the Rules states that if in the opinion of the Executive authority profession tax is or will be due from any person for any half year, he shall serve notice on such person either in that half year or in the succeeding half year requiring the person to furnish a return in the form given in the schedule.
Fact of the Case:
Petitioners, 69 in number, are working in Chapparapadava High School, situated within the jurisdiction of Chapparapadava Panchayat, the third respondent. Panchayat resolved to levy profession tax in accordance with the Panchayat Act and the Rules. The rates of tax are specified in Rule 3 of the Kerala Panchayat (Profession tax) Rules, 1963. Executive officer of the Panchayat issued an order seeking to levy profession tax assessed at the rates which existed prior to the notification issued by Government dated 17-5-1990. Petitioners preferred objections to that course. Fourth respondent rejected those objections by order. Petitioners filed this Original Petition.
Finding of the Court:
The court found that the Panchayat cannot claim any amount exceeding the maximum rates prescribed as per Rules from 17-5-1990. The assessment of profession tax is for each half year, and the bar contained in the 3rd proviso to Rule 3 of Taxation and Appeal Rules cannot be pressed into service in assessing a person to Profession Tax. The court quashed the orders of assessment and notices issued by the respondents.
Issues: The main issue was whether the Panchayat had the authority to levy profession tax at a rate exceeding the maximum rate prescribed in the Rules, and whether the amended rates of profession tax could be given effect from a date earlier than 1-4-1991.
Ratio Decidendi: The court held that the Panchayat cannot claim any amount exceeding the maximum rates prescribed as per Rules from 17-5-1990. The assessment of profession tax is for each half year, and the bar contained in the 3rd proviso to Rule 3 of Taxation and Appeal Rules cannot be pressed into service in assessing a person to Profession Tax.
Final Decision: The Original Petition is allowed, and the court quashed the orders of assessment and notices issued by the respondents. Petitioners are liable to pay profession tax not exceeding the maximum fixed by the State for the first and second half years of 1990-91. No order as to costs was made.
When C.M.P. 2683/91 came up for orders, learned counsel appearing on either side wanted the Original Petition itself heard and disposed of. Accordingly I heard them at length. I am disposing of the Original Petition.
2. Petitioners, 69 in number, are working in Chapparapadava High School, situated within the jurisdiction of Chapparapadava Panchayat, the third respondent. Panchayat resolved to levy profession lax in accordance with the Panchayat Act and the Rules. The rates of tax are specified in Rule 3 of the Kerala Panchayat (Profession tax) Rules, 1963, hereinafter referred to as "the Rules". Executive officer of the Panchayat, 4th respondent, issued Exhibit P2 order to the headmaster of the school seeking to levy profession tax assessed at the rates which existed prior to the notification issued by Government dated 17-5-1990. Petitioners preferred objections to that course. Fourth respondent rejected those objections by Exhibit P4 order. Hence this Original Petition.
3. Under the panchayat Act as per S.A. Profession tax shall be levied every half year in every Panchayat area on every person who in that half year exercises a profession art or calling or transacts any business or holds any appointment public or private within such Panchayat area for not less than sixty days in the aggregate. The Profession tax shall be levied at such rate as may be fixed by the panchayat not exceeding the maximum rate prescribed. The Rules prescribe the maximum rate of half yearly tax. As per the Rules in force prior to 17-5-1990 the maximum rate fixed was Rs. 125/- and the minimum Rs. 4-30. This rate was changed by S.R.O.674/90 dated 17-5-1990. As per this the minimum was fixed at Rs. TO/-and the maximum at Rs. 1250/-. Rules further provides that it is the responsibility of the panchayat to determine the tax leviable on each class within the maximum specified. The Executive Authority shall have to assign to., a person the class in the scale appropriate to the half yearly income of such person as estimated by him. The panchayat had decided to impose profession tax half yearly at the maximum rate. When the maximum rate was changed by amending Rule 3 of the rules with effect from 17-5-1990 the maximum rates payable by petitioner who came within different slabs were reduced. Without noting this change in the maximum rate leviable the panchayat issued Ext. P2 notice requiring the petitioners to pay higher amounts. This claim was objected to by the petitioners by filing objections. Executive Officer rejected the objections and proceeded to take coercive steps for realising the amounts claimed as per the unamended Rules.
4. Fourth respondent has filed a detailed counter affidavit. The stand taken therein is to the following effect.-The amendment to Rule 3(i) of the Rules which came into force with effect from 17-5-1990 is not for the levy of the profession tax for the financial year 1990-91. Rule 3 of the Kerala Panchayats (Taxation and appeal) Rules, 1963 provides that any resolution of a Panchayat determining a levy of tax enumerated in the Act shall specify the rate at which such tax shall be levied and the date from which it shall be levied. Panchayat passed a resolution on 25-9-1990 to the effect that the amended rates of profession tax shall be given effect in the Panchayat with effect from the financial year commencing from 1-4-1991. That decision has been notified in the Malayala Manorama daily dated 10-10-1990 as per Rule 4 of the Taxation and Appeal Rules. The third proviso to rule 3 of this rule provides that when a resolution has taken effect for a particular financial year, no proposal to alter the rates or date fixed in such a resolution so far as that financial year is concerned, shall be considered. Thus a bar is imposed on change of profession tax during that financial year. Accordingly it is contended that the amended rates of profession tax can be given effect to only from 1-4-1991 in view of the resolution passed by th
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