Point of Law : Process of revenue recovery cannot be used as a source of revenue for the State.

JUDGMENT :

Petitioner has filed this writ petition challenging Exhibit P4 demand raised by the Deputy Tahsildar (RR), Office of the Deputy Tahsildar, Kerala Financial Corporation, Kozhikode, respondent No.2, whereby the petitioner was directed to remit collection charges at the rate of 7.5% and 1% towards service charges amounting to Rs.88,565/- as per the provisions of the Kerala Revenue Recovery Act, 1968 (‘Act, 1968’ for short) and the rules thereto.

2. The primary contention advanced by the petitioner is that since the loan transaction was settled after initiating the revenue recovery action as per the provisions of the Act, 1968, he is not liable to pay 7.5% collection charges.

3. Brief material facts for the disposal of the writ petition are as follows:

The petitioner, in order to start a small scale industrial unit, availed an amount of Rs.12,00,000/- on 12.07.2013 and Rs.3,50,000/- on 12.12.2014 from the Kerala Financial Corporation. He defaulted payment of installments to the Kerala Financial Corporation, consequent to which revenue recovery action was initiated and the properties belonging to the petitioner were attached. Thereafter, on receiving a notice for settling the transaction in an adalath, the petitioner settled the loan transaction, evident from Exhibit P3 dated 03.04.2019, which is a note issued by the Chief Manager recording that subsequent to the RR conformation, the party has remitted Rs.10,01,000/-. After the approval of the settlement under adalath, the party has remitted Rs.13,49,075/-. Therefore, it was directed to release the documents deposited with the Corporation on receipt of NOC.

4. According to the petitioner, in spite of earnest efforts made by the petitioner, the documents were not released. However, later, after a period of more than three years, he received Exhibit P4 letter dated 04.06.2022 directing him to remit an amount of Rs.88,565/- towards the RR charges and Rs.340/- towards other charges with a further rider that 18% GST also to be remitted on RR charges. The grievance of the petitioner is that even though he submitted Exhibit P5 representation dated 22.06.2022, that was not considered by the District Collector, Wayanad. It was accordingly that the writ petition was filed.

5. I have heard the learned counsel for the petitioner Sri. P.I. Davis and the learned Standing Counsel for the Kerala Financial Corporation Sri. M.R. Venugopal, and the learned Senior Government Pleader Smt. Deepa N.

6. The sole question to be considered is whether the Kerala Financial Corporation is entitled to recover the collection charges at the rate of 7.5% from the petitioner, when the amounts were directly paid by the petitioner after the initiating the revenue recovery action and on settlement in the adalath constituted by the Head Office of the Corporation.

7. The issue is guided by Rule 4(viii) of the Kerala Revenue Recovery Rules, 1968 dealing with collection of charges, and it reads as follows :

“[5% of the arrears to be collected], when the arrears does not exceed Rupees Five lakhs and 7.5% of the arrears to be collected, when the arrears exceed Rupees Five Lakhs.]”

8. Rule 5 specifies the manner in which collection charges are to be imposed and recovered, and it reads thus :

“[5. (1) [Collection charges at the rate of 5 percent of the arrears to be collected under the provisions of the Act on behalf of any institution notified under Section 71 or collected on behalf of any institution under Section 68 [when the arrears does not exceed Rupees Five Lakhs and at the rate of 7.5% when the arrears exceed Rupees Five Lakhs] shall be realised from the defaulters and accounted as arrears to such institutions.]

(2) The collection charges shall be deducted from the amount recovered and the balance alone shall be payable to the institution.]

[(3) Institutions except Government Departments accepting defaulted payments directly from the defaulter after initiating Revenue Recovery Proceedings under the Kerala Revenue Recove