Questioning legality of levy.

This Civil Revision Petition arises out of a small cause suit filed by the Respondent, Mannargudi Bank, Limited, for refund of a sum of Rs. 125 collected by the petitioner, Mannargudi Municipality, as profession tax for the half year ending 31st March, 1957. The learned District Munsif decreed refund of a sum of Rs. 113, after deducting Rs. 12 which, according to him was the tax payable by the bank. According to the Municipality, in decreeing the suit the learned District Munsif acted without jurisdiction and has further misconstrued and misapplied the relevant rules pertaining to levy of profession tax under the District Municipalities Act.

The Respondent carries on banking business among other places within the Mannargudi Municipality and is liable under section 93 of the District Municipalities Act to pay profession tax in accordance with the rules laid down in Schedule IV of the Act. When the Municipality called upon the Respondent for a return of its income for the second half year 1956-57, it submitted a return showing a loss of Rs. 5,514-0-1 at Mannargudi Head Office. The Respondent also produced before the Executive Authority the income-tax assessment order for the assessment year 1956-57. The Executive Authority did not accept the return or act upon the assessment order, but estimated the income of the Respondent at Rs. 19,097 on the basis of the Respondent’s audited balance sheet for the relevant period and assessed it to a tax of Rs. 125 under Class I of Rule 16 (i) of Schedule IV. The Respondent paid the amount under protest and filed an appeal to the Council. This proved unsuccessful. Therefore it filed the suit alleging that in levying the tax in question the Municipality had not, in substance and effect, complied with the relevant provisions of the District Municipalities Act and therefore the levy was illegal. It further averred that the Municipality should have acted upon the income-tax assessment order which was conclusive. The learned District Munsif upheld the respondent’s contention that the Municipality had not in substance and effect complied with the rules, but instead of declaring the levy illegal on this ground he estimated the income of the respondent for the relevant half-year at Rs. 3,118 on the basis of the assessable income as found in the assessment order; and after’ deducting the tax payable on the said amount, he decreed the suit for the balance.

The question is whether, in levying the tax in question the petitioner-Municipality had in substance and effect conformed to the relevant rules, in other words whether in not acting upon the income-tax assessment order it had contravened Explanation to Rule 19 (2) of Schedule IV. Under Rule 19(1) of Schedule IV:

“If, in the opinion of the Executive Authority, profession-tax is or will be due from any company or person for any half-year, he shall serve a notice on such company or person either in that half-year or in the succeeding half-year requiring the company or person to furnish........a return in the prescribed form showing the income on the basis of which, according to such company or person, it or he is liable to be assessed to profession-tax for the half-year in question. Thereupon it shall be open to such company or person to submit a return showing the income derived by it or him during the half-year for which profession-tax is claimed or for the corresponding half-year of the previous year and produce any evidence on which the company or person may rely in support of the return made.”

Rule 19 (2) prescribes the following procedure. If a return as required under sub-rule (1) is made and the Executive Authority is satisfied that it is correct and complete, he shall levy the profession-tax on the basis of such return. Explanation to sub-rule (2) provides:-

“ in cases not falling under clause (b) of sub-rule (1) or under sub-rule (2) of rule 18, if the Company or person produces the notice of demand of income-tax served on it or him unde