Rameshwar Dutta Sharma v. Zila Parishad — 1971 DIGILAW 152 (ALL)

JUDGMENT R. L. Gulati, J. - This is a petition under Article 226 of the Constitution of India. 2. The petitioner is a teacher in the Junior High School, Kinoni, a place situated in the rural area of the district of Muzaffarnagar, within the territorial limits of the Zila Parishad, Muzaffarnagar the respondent no. 1. In respect of the assessment year 1969-70 the Zila Parishad imposed upon the petitioner a sum of Rs. 38.25 by way of Circumstances and Property Tax through its Kar Adhikari, Zila Parishad, Muzaffarnagar, the respondent no. 2. The tax was deducted at source out of the petitioner's salary. By this petition the petitioner has challenged both the imposition and the collection of tax. 3. Under Section 121 of the U.P. Kshettra Samiti and Zila Parishad Adhiniyam (Act No. XXXVII of 1961), the Zila Parishad is authorised to impose tax on the circumstances and property of any person residing or carrying on business in the rural within its territorial jurisdiction. The petitioner's contention is that he neither resides nor carries on business in the rural area. He has stated that he lives in Mohalla Ariyapuri in the city of Muzaffarnagar which is a municipality and is at a distance of three miles from the school where he is a teacher. His further submission is that his employment as a teacher in the rural area does not amount to the carrying on of a business. 4. In the counter-affidavit of Mohammad Shafi filed on behalf of the respondents. it has been stated that the petitioner is a teacher in village Pinni and not in village Kinoni and the school at Pinni is a branch of the Junior High School of Kinoni and that both villages are situated in the rural area. It has further been stated that the petitioner has been residing in village Pinni, where he is posted. As this averment was rather vague, this Court called upon the respondents to file a supplementary counter-affidavit to mention the exact location where the petitioner resides. According to the supplementary counter affidavit of Sri Raghunandan Verma. who is the tax amin in the Zila Parishad, Muzaffarnagar, it appears that the petitioners is residing in one of the rooms of the school itself. According to the supplementary counter affidavit of Sri Raghunandan Verma. who is the tax amin in the Zila Parishad, Muzaffarnagar, it appears that the petitioners is residing in one of the rooms of the school itself. Obviously there is a controversy on facts and this Court in the exercise of its jurisdiction under Article 226 of the Constitution cannot undertake to resolve that controversy. The first contention of the petitioner, therefore, that he is not liable to tax because he does not reside in rural area must, therefore, be rejected. 5. The second contention of the petitioner is that the Zila Parishad has adopted an arbitrary method of calculating the taxable income of the petitioner and other teachers similarly employed in the rural area. According to the petitioner, the total income of a teacher is calculated by taking the salary payable to him in the month of October and multiply it by twelve to work out the Total income of the year. This mode of calculation results in an exaggerated figure of income, because every teacher gets an increment in the month of July and his emoluments for the months of April, May and June are also calculated the increased figure of salary payable in the month of October. The petitioner has stated that the actual salary received by him during the whole year comes to Rs. 1,827- whereas the total income computed by the Zila Parishad is Rs. 1,836/- which has been arrived at by multiplying the salary payable to him in the month of October by twelve. This assertion of the petitioner has also been denied on behalf of the opposite parties and it has been stated that it is the actual salary received by a teacher during the year which is taken for the purpose of calculating the tax. In paragraph 9 of the counter affidavit it has been stated that the petitioner's income of Rs. 1,836- was proposed to be assessed and in his objection the petitioner did not specify the amount upon which he was liable to pay tax, but vaguely stated that the amount was wrong. It has further been stated that the petitioner personally appeared before respondent No. 2 in support of his objection and said nothing about the amount of income proposed to be assessed. It has further been stated that the petitioner personally appeared before respondent No. 2 in support of his objection and said nothing about the amount of income proposed to be assessed. Likewise he did not raise any such objection to the amount of his income in his appeal filed before the Commissioner against the order of assessment. Paragraph 10 of the counter-affidavit contains a categorical statement that the tax is assessed on the actual payment to a teacher in the whole year. This means that the allegation of the petitioner that the total income is worked out by multiplying the salary payable in the month of October by twelve is not accepted by the respondents. In the circumstances the second contention raised by the petitioner must also fail. It was the petitioner's duty to raise the objection. which he is now seeking to raise, before the respondent no. 2 in the first instance and thereunder before the appellate authority to him he went up in appeal against the assessment order. No. Such objection having been taken at either of the two stages, we cannot permit the petitioner to raise such an objection for the first time before us. 6. The last contention of Mr. N.D. Ojha, relates to the mode of recovery of the tax. His contention is that the recovery of tax cannot by effected by deduction at source from the petitioner's salary. Such a procedure, according, to the learned counsel, is not warranted by law and is contrary to the statutory provisions relating to the recovery of tax. This contention of the petitioner appears to be well founded. Sub-Sec. (3) of sec. 120 of the Adhiniyam provides that the recovery of arrears of tax on circumstances and property may be made under Chapter VIII or as arrears of land revenue in the discretion of the Zila Parishad. Chapter VIII deals with the recovery of taxes and certain other claims. Sec. 147 prescribes that unless otherwise provided by this Act, taxes and other dues referred to in Section 148 may be recovered by the Zila Parishad by distraint and sale of a defaulter's movable property in the manner provided in that Section. Chapter VIII deals with the recovery of taxes and certain other claims. Sec. 147 prescribes that unless otherwise provided by this Act, taxes and other dues referred to in Section 148 may be recovered by the Zila Parishad by distraint and sale of a defaulter's movable property in the manner provided in that Section. Sec. 148 then provides that as soon as a person becomes liable for the payment of any sum on account of a tax imposed by the Zila Parishad, the Zila Parishad shall, with all convenient speed, cause a bill to be presented to the person so liable. Sec. 149 prescribes the contents of the bill. Sec. 150 requires that that if the sum for which a bill has been presented as not paid within fifteen days from the presentation thereof, the Zila Parishad may cause to be served upon the person liable for the payment of the said sum of notice of demand in the prescribed form. Sec. 151 then provides that if the person liable to payment of tax does not make payment with in 30 days from that date of the service of the notice of demand, or does not show cause within the said period to the satisfaction of the Zila Parishad, the sum so demanded with all costs of the recovery may be recovered under a warrant caused to be issued by the Parished in the prescribed manner for the distress and sale of the movable property of the defaulter. Sec. 152 and 153 then provide for the execution of the warrant. The subsequent sections then relate to the sale of the goods under the warrant and the application of the proceeds thereof. finally Section 158 provides an alternative power to file a suit or to recover the sum as arrears of land revenue. 7. A perusal of Chapter VIII shows very clearly that a compete Code is provided for the recovery of Circumstances and Property Tax imposed upon a person. The mode of recovery by deduction at source is not provided at all. The mode of recovery of tax by deduction at source is, of course, one of the recognised methods of recovery in taxing statutes like the Income-tax Act, but there is always a statutory provision whenever such a mode is permitted. The mode of recovery by deduction at source is not provided at all. The mode of recovery of tax by deduction at source is, of course, one of the recognised methods of recovery in taxing statutes like the Income-tax Act, but there is always a statutory provision whenever such a mode is permitted. In the Income-tax Act there is a definite provision authorising recovery of tax by deduction at source from the person who derives income from salary or from a person who derives income interest or dividend, etc. In the absence of any statutory provision like the one existing in the Income-tax Act authorising the recovery, of tax by deduction at source such a mode cannot be resorted to. It is no doubt true that the method of collection of tax by deduction at source is a convenient method of collection but the convenience of the taxing authorities cannot over-ride the statutory provisions relating to the recovery of tax, particularly when the provisions relating to the recovery confer upon the assessee certain rights and privileges. It is clear that under Chapter VIII the assessee is to be presented with a bill and thereafter he is to be served with a notice of demand which gives a period of 30 days within which either to pays the tax or to file on objection, in case he cannot do so. It is only when he does not pay the tax within the time specified in the notice of demand or does not show sufficient cause for non-payment that coercive process of recovery by attachment and sale of his immovable property is resorted to. By resorting to the recovery of tax by deduction at source without presenting a bill to the assessee or without giving him a notice of demand deprives him of all the rights ant privileges contemplated by Chapter VIII. This in our opinion is not possible because of the provisions contained in Article 235 of the Constitution which provides that no tax shall be levied or collected except by authority of law. It is. therefore, clear that both the imposition and the collection of tax must be according to the law. The collection of the Circumstances and Property Tax has been specifically provided in Chapter VII and the recovery must be in accordance with the provisions contained in Chapter VIII and not in any other manner. 8. It is. therefore, clear that both the imposition and the collection of tax must be according to the law. The collection of the Circumstances and Property Tax has been specifically provided in Chapter VII and the recovery must be in accordance with the provisions contained in Chapter VIII and not in any other manner. 8. Our attention has been drawn by the learned counsel for the petitioner to the decision of the Nagpur High Court in Chhotabhai Jethabhai Patel and Co. v. Union of India, A.I.R. 1952 Nag. 139. While dealing with the recovery of duties under the Central Excise and Salt Act, 1944 the Nagpur High Court held that according to Article 265 of the Constitution not the levy but also the collection of tax must be sanctioned by the law. It was held in that case that the Collector or the Central Excise Officer were empowered to exercise power conferred by the Rules and if the rules did not so provide, they could not proceed to collect a tax that had been properly levied but was not payable to the Government in the manner sought to be employed by the Excise authorities. 9. Learned counsel for the respondents placed reliance upon rules 77 and 78 of the General Accounts Rules printed in the District Board Manual. Rule 77 provides that the salary bill of a teacher shall be drawn up in form 21. Sub-rule (2) of rule 78 contains certain instructions with regard to the preparation of the bills. One of the instruction is with regard to deductions. It is mentioned there that deductions on account of fines, provident fund, income-tax and other recoveries shall be distinctly specified and shall be shown in the columns provided for the purpose in the bill and the net amount payable to each person shall be entered in column 8. The submission of the, learned counsel is that rule 78 permits deduction from the salary of a teacher of fines, provident fund, income tax and other recoveries and that the Circumstances and property Tax can be included in the category of other recoverise and as such, can be deducted while preparing the salary bill of a teacher. The submission of the, learned counsel is that rule 78 permits deduction from the salary of a teacher of fines, provident fund, income tax and other recoveries and that the Circumstances and property Tax can be included in the category of other recoverise and as such, can be deducted while preparing the salary bill of a teacher. Learned counsel for the petitioner contends that these rules are not statutory rules but are merely instructions and, secondly, that the rules were framed under the United Provinces District Board's Act and not under the Adhiniyam with which we are concerned. 10. We do not agree with this contention. Sub-Sec. (1) of Section 120 of the Adhiniyam provides clearly that where immediately before the appointed date there was in force a tax on circumstances and property in any district imposed or continued under the U.P. District Boards Act, 1922, such tax until abolished or altered will continue to be levied by the Zila Parishad, at the same rate and under the same conditions as it was being levied under the Act aforesaid and notwithstanding anything contained in Section 121, all rules, regulations and bye-laws, all orders and notifications, and all appointments relating to the levy of such taxes in force on the appointed date shall continue in force as if they had been made under this Act. It is, clear therefore that the rules framed or the instruction issued under the District Boards Act, 1922 shall continue to apply even for the purpose of the Adhiniyam. 11. However, we do not agree with the contention of the learned counsel for the respondents that rule 78 permits deduction at source of the Circumstances and property Tax. In our opinion the deduction mentioned in rule 78 are only those which are permissible under the law. We have already said that the deduction of the Income-tax at source is permissible under the Income-tax Act itself and so is the case of the deduction of the Provident Fund. The recovery of Circumstances and property Tax is not permitted by deduction at source and as such no such deduction with regard to the Circumstances and Property Tax can be made from the salary of an employees of the Zila Parishad. The recovery of the Circumstances and Property Tax can, and must always, be made only in the manner provided in Chapter VIII of the Adhiniyam. The recovery of the Circumstances and Property Tax can, and must always, be made only in the manner provided in Chapter VIII of the Adhiniyam. We accordingly hold that the deduction of the Circumstances and Property Tax from the salary of the petitioner was unauthorised. 12. We accordingly allow this petition in part and quash the order of the respondents directing deductions of the tax from the petitioner's salary. We further direct that the amount deduction from the petitioner's salary on a account of the Circumstances and Property Tax shall be refunded to him. It will, of course, be open to the respondents to recover the tax in the manner provided in Chapter VII subject to such objections with regard to the limitation etc. as may be open to the petitioner under the law. In the circumstances, however, we make no order as to costs.