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HIGH COURT OF KERALA
P. G. Ajithkumar, J
PHILIP A MULLAKKAL – Appellant
Versus
THE STATE OF KERALA – Respondent
Crl.MC 4129 2014
Tax - Building Tax Dispute - Kerala Panchayat Raj Act, 1994 - Sections 1(2), 210 - Court found the retrospective amendment to be unconstitutional under Article 20(1) and ruled that the absence of a required notice made the complaint unsustainable.
Fact of the Case:
The petitioner, accused in a building tax complaint, argued the tax was not applicable as the building was exempt under the Kerala Panchayat Raj Act, 1994. The complaint was filed after an amendment that purportedly imposed tax retroactively.
Finding of the Court:
The court highlighted that penal statutes cannot be applied retrospectively. Furthermore, without a legitimate notice under relevant tax rules prior to prosecution, the complaint was deemed unsustainable.
Issues: The primary issue was whether the retrospective amendment to the Kerala Panchayat Raj Act could impose a tax obligation and if due process under tax rules was followed before prosecution.
Ratio Decidendi: It was established that amendments to tax laws cannot create liabilities retroactively against individuals without explicit notification, thus protecting against ex post facto application of law.
Final Decision: All proceedings against the petitioner were quashed.
ORDER
The petitioner is the accused in S.T.No.1551/2013 pending before the Judicial First Class Magistrate Court, Kunnamkulam. It is a private complaint filed by the Avanoor Grama Panchayath under section 210 of the Kerala Panchayath Raj Act, 1994 (for short Act 1994). The case of the complainant is that the accused has not paid the building tax for the building in the industrial unit of the petitioner situated at Velakode Industrial Estate, Thrissur.
2. Annexure-A12 is the complaint filed by the Panchayat against the petitioner. It is the case of the petitioner that, the building is situated in the industrial development plots at Velakode under the auspices of the Department of Industries, Government of Kerala, and have been exempted from payment of building tax. According to the petitioner, as per section 1(2) of the Kerala Panchayat Raj Act, Panchayat has no jurisdiction over the industrial areas. The unamended section 1(2) of the Kerala Panchayat Raj Act, 1994 is extracted herebelow:
“1(1)XXXX (2). It extends to the whole of the State of Kerala except the areas which are within the limits of the Cantonments, Nagar Panchayats, Municipal Councils, Municipal Corporations and the Industrial areas of the State.”
3. Subsequently, section 1 of the Act of 1994 was amended with two provisos. It will be better to extract the amended section 1 of the Act.
‘1. Short title, extent and commencement (1) This Act may be called the Kerala Panchayat Raj Act, 1994 .
(2) It extends to the whole of the State of Kerala except the areas which are within the limits of the Cantonments, Nagar Panchayats, Municipal Councils, Municipal Corporations and the Industrial areas of the State.
Provided that the provisions in chapters XXV B, XXV C of this Act shall extent to the areas within the limits of Town Panchayats, Municipal Councils and Municipal Corporations in the State of Kerala.
Provided further that the provisions of Chapter XIX of this Act shall extend to the areas declared as industrial areas under the Kerala Industrial Single Window Clearance Boards and Industrial Township Area Development Act, 1999 (3) It shall come into force at once.
Provided that Sections 235A to 235Z shall come into force on the 1st day of January, 2006.’
4. The amendment of Section 1 (2) of the Panchayat Raj Act by which the 2nd proviso was inserted, was carried out as per the Kerala Panchayat Raj (Amendment) Act, 2014. (2) of the Amendment Act, 2014 says that the amendment shall be deemed to have come into force on 14th day of June, 2010. Annexure-A12 complaint was filed on 29.03.2014. Therefore, it is stated that, in the light of the Amendment Act, the petitioner is liable to pay tax and therefore the prosecution is sustainable under 210 of the Kerala Panchayat Raj Act.
5. Heard counsel for the petitioner and the Public Prosecutor. I also heard the counsel appearing for the Panchayat.
6. The short point raised by the counsel for the petitioner is that the amendment to section 1(2) of the Kerala Panchayat Raj Act with retrospective effect came into force with effect from 28.10.2013. But, it is submitted by the learned counsel that, as per Rule 14 of the Kerala Panchayat Raj (Taxation, Levy and Appeal) Rules, 1996 [for short, ‘the Rules 1996’] a notice under Rule 14 is necessary before initiating prosecution. It is submitted that, as on the date of notice issued as per the above Rule in this case, there was no amendment of section 1(2) and hence, there is tax exemption. It is also submitted that, a notice issued by the Panchayat cannot be treated as retrospective. But the counsel for the Panchayat submitted that, since the amendment is retrospective, the complaint is maintainable. 7. This Court considered the contention of the petitioner and the counsel appearing for the Panchayat. It is a settled position that making a penal statute retrospective is not possible. This principle is originated from under Article 20(1) of the Constitution of India. This point is considered by t
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