R. Gopinathan Nair v. Palode Panchayat — 1958 DIGILAW 85 (KER)

Judgment :- 1. These Original Petitions were heard together as the main question for decision in both is the same. 2. O. P. No. 60 is by the Proprietor of the Theatre Central, Palode, Nedumangad Taluk. The Respondents are the Palode Panchayat, Shri. P. K. Abdulla the Director of Panchayats, the Stationary First Class Magistrate, Nedumangad, and the State of Travancore-Cochin. On 7-6-1955 the 1st Respondent issued a notice Ext. A to the petitioner calling upon him to pay a sum of Rs. 2,842-1-9 as entertainment tax for the period between 27-7-1954 and 3-6-1955. As the petitioner did not comply with the same the 1st Respondent launched criminal prosecution against him in C. C. Nos. 51 to 87 of 1955 of the First Class Magistrate's Court, Attingal. The demand notice Ext. A and the prosecutions are sought to be quashed. The main grounds relied on by the petitioner are that the demand is illegal and that the levy and collection of entertainment tax by the Respondent are ultra vires since bye-laws had not been framed in this behalf by the 1st Respondent as required by S.12 of the Travancore-Cochin Local Authorities Entertainment Tax Act (VI of 1951). The 2nd Respondent, the Director of Panchayats, had issued a notification dated 19-7-1954 fixing the rate of entertainment tax and the validity of this notification is also questioned by the petitioner. Refund of a sum of Rs. 260-12-6 collected as entertainment tax from the petitioner is also sought. The prayers in the petition are for the issue of a writ of certiorari or other appropriate writ to quash the demand notice Ext. A and the criminal prosecutions and for the issue of directions or orders for the refund of the tax collected. On behalf of the 1st Respondent the Palode Panchayat, a counter-affidavit has been filed by the President contending that the petition should be dismissed on the ground of laches as the notification was issued on 19-7-1954 and the petition was filed only on 18-10-1955. It is further contended that the rate of tax originally fixed was 121/2 per cent, that it was reduced to 10 per cent on the petitioner's application, that the petitioner had accepted the same and that he was therefore incompetent to question it by these proceedings. The objections raised by the petitioner against the imposition and levy of entertainment tax by the Panchayat are also denied. 3. The objections raised by the petitioner against the imposition and levy of entertainment tax by the Panchayat are also denied. 3. After the filing of this original petition the State Legislature passed the Travancore-Cochin Entertainment Tax (Validation of Levy and Collection) Act XXVI of 1955) and this was published in the Government Gazette on 13th December 1955. This Act was passed to validate the levy and collection of entertainment tax by various local bodies before framing bye-laws as required by S.12 of Act VI of 1955. Some of the assessees had taken up the matter to the High Court and it was held that such levy and collection were illegal in the absence of bye-laws passed in respect of the same. Act XXVI of 1955 was passed to get over this difficulty. In view of this Act which was passed after the institution of these proceedings, the petitioner raised an additional ground in his reply affidavit that the Act was illegal and ultra vires. The State was impleaded as the additional 4th Respondent after this point was taken by the petitioner. 4. O.P. No. 76 is by the Proprietor of Krishna Talkies, Attingal and the same is directed against the levy and collection of entertainment tax by the Attingal Municipality. The 1st Respondent is the Attingal Municipality and the 2nd Respondent, the State of Travancore-Cochin. Ext. A is the demand notice dated 8-3-1956. For non-payment of the sum demanded, the petitioner was prosecuted in C. G. No. 318 of 1956 of the Second Class Magistrate's Court, Attingal. A sum of Rs. 2,917-10-4 had been collected as entertainment tax by the 1st Respondent and refund of the same was claimed by the petitioner. This original petition was filed after Act XXVI of 1955 was passed and the validity of the Act is also challenged. The petitioner prays for quashing the demand notice as well as a memo Ext. B sent by the 1st Respondent stating that his objections regarding collection of entertainment tax had been rejected. The prosecution against the petitioner is also sought to be quashed by appropriate direction or order. Orders for refund of the amount collected from the petitioner were also prayed for. There is also a prayer for declaring Act XXVI of 1955 as unconstitutional and void. The prosecution against the petitioner is also sought to be quashed by appropriate direction or order. Orders for refund of the amount collected from the petitioner were also prayed for. There is also a prayer for declaring Act XXVI of 1955 as unconstitutional and void. The 1st Respondent has filed a counter-affidavit raising contentions similar to those of the 1st Respondent in O. P. No. 60. It is also contended that Act XXVI of 1955 is valid. 5. The Respondents in both the petitions stated at the hearing that they were prepared to support the action taken by the Panchayat and the Municipality respectively on the basis that Act XXVI of 1955 was a valid piece of legislation. It therefore became unnecessary to consider the other grounds raised by the Respondents such as laches, acquiescence of the petitioner, validity of the steps taken before framing bye-laws etc. Thus the two points on which the parties were heard were: (1) Whether Act XXVI of 1955 offends Part III of the Constitution and is invalid; and (2) Whether the demand notices are valid. 6. As regards the first point it is contended on behalf of the petitioners that S.3 of Act XXVI of 1955 infringes the fundamental rights guaranteed by the Constitution. Relying on the decision of the Supreme Court in A.K. Gopalan's case (A.I.R.1950 S.C.27) it is urged that the Legislative power given by Art.246 of the Constitution is cut down by the provisions of Art.19 and that laws made by the State must, in order to be valid, observe these limitations. The question here is whether S.3 transgresses these limitations. Relying on the decision of the Supreme Court in A.K. Gopalan's case (A.I.R.1950 S.C.27) it is urged that the Legislative power given by Art.246 of the Constitution is cut down by the provisions of Art.19 and that laws made by the State must, in order to be valid, observe these limitations. The question here is whether S.3 transgresses these limitations. S.3 is extracted below: "Notwithstanding that bye-laws under S.12 of the Travancore-Cochin Local Authorities Entertainments Tax Act, 1951 have not been made by a local authority, all entertainments tax levied and collected by it on and from the 10th day of December 1951 and all orders passed and all action taken by it on and from the said date in connection with the levy or collection of entertainments tax in the exercise or purported exercise of jurisdiction or powers conferred by or under any law authorising the levy and collection of entertainments tax by local authorities are hereby declared to have been validly made, passed or taken, as the case may be, and shall not be called in question on the ground only that the said bye-laws have not been made by it; and any judgment, order or decree pronounced or passed by any Court, in so far as such judgment, order or decree is based on the ground only that a local authority has not made bye-laws under S.12 of the Travancore-Cochin Local Authorities Entertainments Tax Act, 1951 shall be void and of no effect; Provided that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable if this Act had not been passed." The first argument is that it violates Art.19 (1) g of the Constitution which guarantees the right to practise any profession or to carry on any occupation, trade or business. We are unable to see how this argument can be sustained. It is not as though a new impediment which interferes with the right to carry on a trade or business is introduced. What S.3 provides is that notwithstanding the omission to frame bye-laws under S.12 of Act VI of 1951, all orders passed and all actions taken in connection with the levy of or collection of entertainment tax by local authorities are valid. What S.3 provides is that notwithstanding the omission to frame bye-laws under S.12 of Act VI of 1951, all orders passed and all actions taken in connection with the levy of or collection of entertainment tax by local authorities are valid. If the Act is not otherwise invalid it is not clear how the collection of tax in respect of the antecedent period can be taken to interfere with the right to carry on the trade or profession. There is no scope for applying the principles laid down by the Supreme Court in Mohammed Yasin v. Town Area Committee, Jalalabad A.I.R. 1952 S.C.115) to this case. We do not consider it necessary to refer to the decisions cited by the learned counsel for the petitioner in support of his argument that if the Parliament or State Legislature makes any law which takes away or destroys the fundamental rights guaranteed by Part III of the Constitution, such law would be void. This is what Art.13 of the Constitution expressly provides. The objection based on alleged infringement of Art.19 (1)g is not sustainable. 7. Another objection raised is that S.3 violates Art.31 of the Constitution. Art.31 provides that no person shall be deprived of his property save by authority of law. The Supreme Court has held in Laxmanappa v. Union of India (A.I.R.1955 S.C.3) that Cl.(1) of Art.31 must be regarded as concerned with deprivation of property otherwise than by imposition or collection of tax. Reference was made in the above judgment to the decision in Ranji Lal v. Income Tax Officer Mohinder Garh (A.I.R.1951 S.C. 97 (b) where it was held that as there is a special provision in Art.265 of the Constitution that no tax shall be levied or collected except by authority of law, Clause (1) of Art.31 must be regarded as concerned with deprivation of property otherwise than by the imposition or collection of tax. It was further held in that decision that the right conferred by Art.265 was not a right conferred by Part III of the Constitution. Even though the validating Act makes the levy or collection of tax in respect of the period before the date of passing of the bye-laws, it cannot be said that Art.31 of the Constitution has been violated. Even though the validating Act makes the levy or collection of tax in respect of the period before the date of passing of the bye-laws, it cannot be said that Art.31 of the Constitution has been violated. It was argued in this connection that the petitioner is asked to pay tax which he could not legitimately or legally collect and which he has not actually collected. This cannot make the legislation invalid. The fact that Act XXVI of 1955 is thus retrospective in its operation is no ground for invalidating it. It was held by the Hyderabad High Court in Potti Sarvaiah v. Narsing Rao (A.I.R.1955 Hyd. 257) that it was open to the Legislature acting within the sphere of its constitutional authority to pass a validating statute or to give retrospective effect to the new statute, notwithstanding the fact that the earlier law governing the same matter was declared by the courts of law as invalid, unenforceable or inoperative. We are also of the same view and the objections raised by the petitioner must therefore fail. Our conclusion is that S.3 of Act XXVI of 1955 does not violate any of the provisions of Part III of the Constitution. 8. Coming to the second point the position contended for is that notice of demand in O. P. 60 was issued under the provisions of the Panchayat Act and that it was therefore invalid. It was argued that the Panchayat Act does not confer authority on the Panchayat to realise entertainment tax. This tax is levied or collected by the Panchayats, not on the strength of any provision in the Panchayat Act but by virtue of S.8 of the Travancore-Cochin Local Authorities Entertainment Tax Act VI of 1951 which provides as follows:-"Any amount due on account of the entertainment tax may be recovered by the local authority in the same manner as any tax payable to the local authority." The Palode Panchayat only indicated in Ext. A the relevant provisions which enable it to collect tax. It is expressly stated in Ext. A that the demand is for entertainment tax. We do not therefore see any illegality in the notice issued to the petitioner. 9. A the relevant provisions which enable it to collect tax. It is expressly stated in Ext. A that the demand is for entertainment tax. We do not therefore see any illegality in the notice issued to the petitioner. 9. Learned counsel for the petitioner submitted that even if Act XXVI of 1955 be found valid, the 1st Respondent in O. P. 60 was not entitled to collect the tax between the date on which the said Act was passed and the date on which the bye-laws were approved by the Government and published in the Government Gazette. The argument was that Act XXVI of 1955 could validate only the collection of tax up to the date of the Act and not thereafter. It is true that there is an interval between the two dates viz., 8-12-1955 on which Act XXVI of 1955 was passed and 3-7-1956 on which the bye-laws were approved and published by the Government. Ext. A is in respect of the tax due for the period ending on 3-6-1955. The question whether the 1st Respondent in O. P. 60 is entitled to collect tax for the period between 8-12-1955 and 3-7-1956 will arise only if and when a demand is made for the same. Such a demand does not appear to have been made till now and this question does not therefore arise as we are concerned only with the legality of the demand in Ext. A. We do not therefore consider it necessary to express any opinion on this question, at this stage. 10. As regards the criminal prosecutions launched by the Panchayat and the Municipality we have to point out that the same cannot stand in view of the proviso to S.3 of Act XXVI of 1955. The prosecutions, if not already withdrawn, are directed to be withdrawn forthwith. 11. In the result Original Petitions 60 and 76 are allowed only to this extent viz., that the criminal prosecutions against the petitioners which are referred to above are quashed. The petitions are dismissed in other respects. The petitioners and Respondents in O.P. 60 of 1955 will bear their costs as the Validating Act had not been passed on the date of filing of this etition. The petitioner in O. P. 76 of 1956 will pay the costs of the Respondents including Advocate's fees of Rs. 100 to each of the Respondents. Partly allowed.