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High Court Of Rajasthan
Judgename : Jagat Narayan
RATAN CHAND - Appellant
Versus
PANCHAYAT SAMITI - Respondent
Civil Writ Petn. 204 Of 1965
Decided On : 03/23/1966
TAXATION - Money Lending Tax - Validity - Assessment - Procedure - Quasi-Judicial - Article 19 (1) (f) of the Constitution.
Fact of the Case:
The petitioners, money lenders, challenged the imposition of a tax on money lending by the Panchayat Samiti, Sojat, on the grounds that it was unconstitutional and the assessment procedure was not quasi-judicial.
Finding of the Court:
The court held that the imposition of the tax on money lenders was constitutionally valid, but the assessment procedure followed by the Panchayat Samiti was not quasi-judicial and violated Article 19 (1) (f) of the Constitution.
Issues: 1. Whether the imposition of a tax on money lending by the Panchayat Samiti was constitutionally valid? 2. Whether the assessment procedure followed by the Panchayat Samiti was quasi-judicial?
Ratio Decidendi: 1. The court relied on the decision in Firm Jalamchand Deepchand v. Rajasthan State, ILR (1964) 14 Raj 265, which held that the imposition of a tax on money lenders was constitutionally valid. 2. The court held that the assessment procedure followed by the Panchayat Samiti was not quasi-judicial as it did not provide for a notice to the assessee, an opportunity to contest the proposed assessment, or a duty on the Assessing Authority to act judicially.
Final Decision: The court allowed the writ petitions in part, quashed the demand notices, and restrained the Panchayat Samiti from recovering any tax on money lending from the petitioners in future till the Rules were suitably amended to provide for a quasi-judicial assessment procedure.
JAGAT NARAYAN, J.
( 1 ) THESE are sixteen connected writ petitions under Article 226 of the Constitution for a number of reliefs in regard to the tax on money lending imposed by the panchayat Samiti, Sojat, on the petitioners. The petitions have been contested on behalf of the respondents.
( 2 ) SECTION 33 (2) (i) of the Rajasthan Panchayat Samitis and Zilla Parishads Act, 1959 empowers the Panchayat Samiti to impose and levy in the prescribed manner a tax on such trades, callings, professions and industries as may be prescribed. The Rajasthan Panchayat Samitis Taxation Rules 1960 (hereinafter referred to as the Rules) were framed prescribing the manner of imposition and levy of taxes. The schedule attached to these Rules prescribes the trades, callings, professions and industries on which tax may be imposed and also lays down the maximum rate per annum of such tax. The maximum tax leviable on money lenders is Rs 200 per annum.
( 3 ) ON 19-9-61 the Panchayat Samiti passed a resolution under Rule 3 of the Rules proposing to impose a tax on money lenders at the following rates : -
(12) Income Rs. 1,000 to Rs. 5,000 rs. 100 P. A.
(13) Income Rs. 5,000 to Rs. 10,000 rs. 150 P. A.
(14) Income above Rs. 10,000 , Rs. 200 P. A. , objections against the above proposals were Invited and were considered by the panchayat Samiti at its meeting dated 18-11-61 and final resolution under Rule 6 was passed on that date imposing a tax on money lenders at Rs. 2 per cent of the annual income upto a maximum of Rs. 200. Money lenders having annual income of Rs. 1,000 or less were exempted. Taxes for 3 years were demanded from the petitioners in 1965.
( 4 ) THE validity of the imposition and levy of the taxes is challenged on behalf 6f the petitioners on a number of grounds.
( 5 ) THE first ground is that the Panchayal Samiti did not decide the objections on merits and that a fresh proposal was put forward by the Collector at the meeting of the Panchayat Samiti dated 18-11-61 which was not published and the people affected thereby had no opportunity of filing any objection against it. On behalf of the respondents it is stated that the Collector did not put forward any fresh proposal.
( 6 ) WHAT is mentioned in the resolution of the Panchayal Samiti dated 18-11-61 in this regard is that the Collector Pali put forward a suggestion about the imposition of taxes which was full of substance and that he explained at length why it was necessary to levy them. In the absence of an assertion by the petitioners that the collector put forward some fresh proposal I am unable to hold that he did so. The resolution shows that the objections which had been filed against the imposition of taxes were placed before the Panchayat Samiti along with the comments of the block Development Officer. They must have been duly considered by the panchayat Samiti before it passed its final resolution imposing taxes. This ground has therefore no force.
( 7 ) THE next ground is that the tax on money lenders amounts to a tax on income and as the Legislature did not expressly authorise the imposition of this tax on the basis of the annual income from money lending the imposition is invalid. This matter was considered in Firm Jalamchand Deepchand v. Rajasthan State, ILR (1964) 14 Raj 265 and the imposition of this tax on money lenders was held to be constitutionally valid.
( 8 ) THE next contention is that Rule 10 provides for the recovery of lax in two half, yearly equal instalments and that taxes which have fallen in arrears cannot be recovered. Rule 10 runs as follows:
"due dates of Taxes-- (1) The tax on rent and rental value as provided in clauses (a), (b) and (c) of Sub-rule (2) of Rule 3, shall become due on the dates on which the land revenue falls due. (2) The tax on trades, callings, professions and industries shall be realised half-yearly in two equal instalments and shall fall due on 1st may and 1st December every year. (3) The primary education cess shall b
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