VISHNUDATHA ANTHERTANAM v. TAHSILDAR — 1981 DIGILAW 85 (KER)

Judgment :- 1. The points that arise for consideration in this case are: (1) In a case where the whole or any portion of a plantation chargeable to plantation tax for any financial year has escaped assessment for that year, can the extent of such plantation or portion thereof, as the case may be, be determined and the plantation tax payable in respect thereof assessed under S 6A of the Kerala Plantations Tax Act, 1960, for short, the Act, by issuing a notice after seven years of the end of that financial year; (2) If the notice issued proposing assessment under S 6A gives only time less than the thirty days insisted by S.4 (3) of the Act will the assessment be with jurisdiction; and (3) If the assessment is not valid, can the assessee challenge the revenue recovery proceedings initiated for the collection of the tax The petitioner is an assessee to plantation tax under the Act For the years 1967-6S, 1968-69 and 1969-70 the 1st respondent-Tahsildar levied plantation tax and the petitioner paid the the same in full. Then on 25-6-1977 the petitioner received Ext. P1 notice of the 1st respondent proposing 'to back assessment of the plantations under S.6A of the Act' and directing the petitioner to appear before him and file objections, if any, to the proposed action. The petitioner deputed her agent, but the agent who went to the 1st respondent, could not set him as he was not available at his office. So, the agent filed an application for adjournment The 1st respondent then by Ext. P2 order dated 19-8-1977 took a decision that the "case will be revised taking into account of the escaped plantations also for the years 1967-68, 68-69 and 69, 70 only under S 6A of the K P T Act. Ext P2 was followed by Exts P3 and P4 assessment orders. The indication in Exts P3 and P4 is that the assessments were made under S.6A and 5 (4) of the Act Steps were taken to collect the tax assessed by initiating revenue recovery proceedings. The petitioner challenges Exts. P3 and P4 and the collection of the tax by resorting to revenue recovery proceedings. 2. A counter-affidavit has been filed by the Ist respondent. The petitioner challenges Exts. P3 and P4 and the collection of the tax by resorting to revenue recovery proceedings. 2. A counter-affidavit has been filed by the Ist respondent. In the counter-affidavit it is stated: There is no provision in the Act and Rules to issue Form II notice afresh if the plantation tax case is revised under S.3 (3) of the Act. A preliminary notice initiating the proposed revision will do in a revision case. This notice has already been sent in this case. The revision was effected, as the plantation has escaped from assessment earlier, under S.6A of the Act. 3. S.6A of the Kerala Plantation Tax Act, 1960 reads: "6A. Plantations escaping assessment'. (1) If the assessing authority has reason to believe that the whole or any portion of a plantation chargeable to the plantation tax for any financial year has escaped assessment for that year, it may, at any time within seven years of the end of that financial year, serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-section (3) or S 4 and may proceed to determine the extent of such plantation or the portion thereof, as the case may be, and assess the amount of plantation tax payable in respect thereof, and the provisions of this Act shall, so far as may be, apply as if the notice had been issued under the said sub-section (3)1 (2) ... S. 4(3) of the Act reads: "(3) In the case of any person who, in the opinion of the assessing authority, holds such extent of plantations as to render such person liable to plantation tax for any financial year, the assessing authority may serve a notice in the prescribed form requiring the person to furnish within such period, not being less than thirty days as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner and containing such particulars as may be provided for in the notice." Section 5 (4) of the Act reads: "(4) If any person fails to make a return under sub-section (3) of S.4, or fails to comply with all the terms, of a notice issued under sub-section (5) of that section or under sub-section (2) of this section, the assessing authority shall determine the extent of plantation to the best of his judgment and assess the plantation tax payable by the assessee on the basis of extent of the plantation so determined." Article 265 of the Constitution of India reads: "265. Taxes not to be imposed save by authority of law. No tax shall be levied or collected except by authority of law." As per S.6A, if any plantation chargeable to plantation tax for any financial year has escaped assessment the assessing authority may, at any time, within seven years of the end of that financial year, issue a notice as insisted by S.4 (3) and assess the plantation which has escaped assessment. So, the power is there only upto the end of the seventh financial year. After that, no notice for assessment of plantation escaping assessment can be issued. Not only that, the notice must satisfy the requirements of S.4 (3) As per S.4 (3). the notice must give a minimum of thirty days to the assessee to furnish the particulars and file the return In this case, the notice was issued after the time-limit prescribed by S.6A and the minimum time as insisted by S.4 (3) was not given to the assessee to furnish the particulars. The notice insisted by S.6A is not a mere procedural formality. The notice insisted by S.6A is not a mere procedural formality. The service of the notice within the time given in the section is a condition precedent for the validity of an assessment of a plantation escaping assessment Similarly if the notice does not give the assessee the minimum time insisted in S.4 (3) the notice is clearly illegal. This will also be a failure to comply with a condition precedent for the exercise of jurisdiction under S.6A. So, an assessment under S.6 A ignoring the time limit insisted by S.6A and 4 (3) is illegal and void. Collection of tax assessed under orders which are illegal and void can be challenged even it the assessment orders are not challenged in appeal or revision in view of Art.265 of the Constitution which insists that no tax shall be levied or collected except by the authority of law. In this case, it is seen from Exts. P-3 and P4 assessment orders that the assessments were under S.5 (4) also. It goes without saying that no appeal lies from an order of assessment under S.5(4). This is clear from the proviso to S.9 (1). So, the fact that Exts. P-3 and P4 orders were not challenged in appeal does not also make the original petition not maintainable. 4. Shri K P. Radhakrishna Menon, the learned counsel for the petitioner, relied on certain authorities in support of his contentions. In Narayana Chetty v Income-tax Officer (35 ITR. 388) the Supreme Court had occasion to consider S.34 of the Income-tax Act 1922 the wording of which is similar to S.6A of the Act extracted above. The Supreme Court said: "The argument is that the service of the requisite notice on the assessee is a condition precedent to the validity of any re-assessment made under S.34; and if a valid notice is not issued as required, proceedings taken by the Income-tax Officer in pursuance of an invalid notice and consequent orders of re-assessment passed by him would be void and inoperative. In our opinion, this contention is well-founded. The notice prescribed by S.34 cannot be regarded as a mere procedural requirement; it is only if the said notice is served on the assessee as required that the Income-tax Officer would be justified in taking proceedings against him. In our opinion, this contention is well-founded. The notice prescribed by S.34 cannot be regarded as a mere procedural requirement; it is only if the said notice is served on the assessee as required that the Income-tax Officer would be justified in taking proceedings against him. If no notice is issued or if the notice issued is shown to be invalid then the validity of the proceedings taken by the Income-tax Officer without a notice or in pursuance of an invalid notice would be illegal and void. (page 392) In Commissioner of Income-tax v. Ramsukh Motilal (27 ITR. 54) S.22(2) of the Income-tax Act, 1922 came up for consideration. S.4(3) of the Act is also similarly worded. The High Court of Bombay said: "If a notice under S.34 of the Indian Income-tax Act, 1922, embodies any of the requirements under S.22(2) it must at the same time permit the assessee to comply with . that requirement within a period which is not less than 30 days. If therefore a notice under S.34 gave only six days to the assessee to make a return under that section, the notice is clearly illegal and such illegality cannot be waived by the assessee. Whereas it will be perfectly true to say that S.22(2) is a procedural section and the failure to give notice or a defect in a notice is a procedural defect, in the case of S.34 it is not a procedural defect but is a failure to comply with a condition precedent to the assumption of jurisdiction." (Head Note) In Khurai Municipality v. Kamal Kumar (AIR. 1965 SC. 1321) the Supreme Court said: "Under Art.265 of the Constitution no tax shall be levied or collected except by authority of law. This clearly implies that the procedure for imposing the liability to pay a tax has to be strictly complied with. Where it is not so complied with the liability to pay the tax cannot be said to be according to law. The objections which the assessees had filed in pursuance of the notification actually published by the Chief Municipal Officer were based upon the list published under S.136 and not in pursuance of what the liability would be under the Resolution of the Municipal Council dated April 28,1963. The objections which the assessees had filed in pursuance of the notification actually published by the Chief Municipal Officer were based upon the list published under S.136 and not in pursuance of what the liability would be under the Resolution of the Municipal Council dated April 28,1963. Therefore, it cannot be said that the opportunity as contemplated by the Act was at all given to the assessees for lodging their objections as required by S.137 of the Act." (para. 9) In R. Constructions v Dy. Commercial Tax Officer (AIR. 1959 Mad. 382) it is said: "The word 'levy' is frequently used to include both of the first two stages involved in the process of taxation, viz.. the levy properly so called and the determination of the amount of the tax. The words 'levy' and 'collection' are used in Art.265 of the Constitution in a comprehensive manner and they are intended to include and envelop the entire process of taxation commencing from the taxing statute to the taking away of the money from the pocket of the citizen. And, what Art.265 enjoins is that every stage in this entire process must be authorised by the law." (Head Note) In the above case, it is further said: "The finality of an assessment under the terms of a taxing statute is not always or necessarily conclusive of the legality of the assessment. An assessment made without jurisdiction or in pursuance of a provision which is found to be ultra vires, continues to be unlawful, and nothing less than a validating provision properly enacted would alter that fact." (para. 31) 5. An attempt is seen made in the counter-affidavit to save Exts. P3 and P4 assessments as assessments made under S.3 (3) of the Act S.3 (3) provides for revision of the extent of plantations at the end of five years. But in view of the clear statement in Ext. P1 notice that what was proposed by the assessing authority was to proceed under S.6A it is now too late in the day to contend that the assessments were under under S 3 (3). Exts P3 and P4 assessment orders do not give S.3(3) as the provision under which the assessments were made. 6. In the result, Exts. P3 and P4 are set aside. Exts P3 and P4 assessment orders do not give S.3(3) as the provision under which the assessments were made. 6. In the result, Exts. P3 and P4 are set aside. The petitioner is given a declaration that she cannot be proceeded against in pursuance of the demand notice P.R. 1333/77-78 issued in revenue recovery proceedings. The original petition is allowed. No costs.