EXECUTIVE OFFICER v. VELAYUDHAN NADAR — 1988 DIGILAW 126 (KER)

Judgment :- 1. Athiyannoor Panchayat represented by its Executive Officer filed a complaint before the judicial Second Class Magistrate, Neyyattinkara against the respondent under the second proviso to S.74 of the Kerala Panchayat Act read with R.26 of the Taxation and Appeal Rules for non-payment of licence fee for a private market for the years 1971-72 to 1979-80. It was taken to file as S.T. No. 328 of 1983. The Magistrate accepted the pleas of the respondent that (i) the prosecution is barred by limitation; (ii) quid pro quo has not been established; and (iii) the provisions of the Panchayat Act and Rules were not complied with before launching prosecution, and acquitted him. Complainant has come up in appeal. 2. In accepting the plea of limitation, the Magistrate made certain wrong assumptions. Ext. 17 was considered to be demand notice under R.13 of the Taxation and Appeal Rules whereas it is only a bill under R.8 thereof. For no valid reason it was held to be not a genuine document. In fact it was issued only in continuation of Ext. P.12 bill for Rs. 8,476.66 from 1971-72 to 1978-79 which is an admitted document. Ext.P.17 covers only an additional amount of Rs. 1,095/- as licence fee due for the year 1979-80. Ext.P17 is a genuine bill and the finding to the contrary is patently wrong. 3. I do hot think that the Magistrate is justified in finding that the prosecution is barred by limitation for the entire claim. In spite of the penalty the provision for prosecution is more intended as a means of realisation of the tax due to the Panchayat. That is also the effect of the prosecution since, on conviction, the Magistrate is empowered by sub-rule (2) of R.26 of the Taxation and Appeal Rules to recover summarily, and pay to the Panchayat the amount due. If the finding of the Magistrate on the question of limitation is not correct regarding any portion of the claim, the Panchayat is irreparably prejudiced to that extent because the effect will be that the claim is finally written off. 4. If the finding of the Magistrate on the question of limitation is not correct regarding any portion of the claim, the Panchayat is irreparably prejudiced to that extent because the effect will be that the claim is finally written off. 4. It was argued for the appellant relying on the Full Bench decision in Saidu Mohammed v. Bhanukuttan (1967 K.L.T. 947) that the offence is not the omission to pay the amount on a particular time, but wilful omission without reference to any time limit, and hence it is a continuing offence and there cannot be any question of limitation. In the present case, we are not concerned whether the offence is a continuing one or not. The question whether it is a continuing offence or not will arise only when the omission results in an offence and the prosecution is launched after the expiry of three years from the starting point mentioned in S.117. In order to constitute the omission an offence under R.26 read with the second proviso to S.74 it must be of an amount "due by him" and the omission must be 'wilful' also. A claim that has become barred by limitation without taking any effective steps for recovery cannot be said to be 'due' for the purpose of constituting an omission 'wilful' and as such an offence, even though law of limitation only bars the remedy and does not extinguish the right. Omission to pay a liability which the creditor is debarred from enforcing through a court of law or otherwise on account of the bar of limitation cannot, at any rate, be said to be 'wilful' for the purpose of constituting it an offence. In Saidu Mohammed's case (1967 K. L. T. 947) there was proper demand and there was wilful omission to pay the amount which was legally recoverable. In the present case, a portion of the claim was evidently barred by limitation before the demand was made, distraint was attempted and prosecution launched. The question.of wilful omission can arise only after demand was made or distraint was attempted. Under the second proviso to S.74 one of the conditions precedent to prosecution is attempt to realise the amount by distraint and sale and failure of that attempt in full or part on account of impracticability and R.26 contemplates a condition of wilful prevention of distraint or sufficient distraint also. 5. Under the second proviso to S.74 one of the conditions precedent to prosecution is attempt to realise the amount by distraint and sale and failure of that attempt in full or part on account of impracticability and R.26 contemplates a condition of wilful prevention of distraint or sufficient distraint also. 5. In this case bills under R.8(1) of the Taxation and Appeal Rules were issued. What more was necessary was service of a demand notice under R.13. That was issued only on 4-3-1980 evidenced by Ext. P1. Though a continuous cold war was going on between the respondent and the appellant in which the respondent was making all attempts to challenge the levy, there is nothing to show that there was any stay against the Panchayat in issuing demand notice or realising the amount by suit, distraint and sale or by prosecution. Demand notice could be issued only for amounts not barred by limitation. As I have earlier stated, wilful omission to pay or wilful prevention of distraint will arise only if payment or distraint could have been legally enforced. 6. Before distraint or prosecution, a demand notice under R.13 is necessary. We are not concerned whether such a demand notice is a condition precedent to the filing of a suit. Remedies for realisation of the amount are: (i) by distraint and sale of the movable properties of the defaulter; or (ii) by filing a regular civil suit; or (iii) by prosecution; or (iv) by revenue recovery proceedings. The remedy resorted to in this case is prosecution after distraint. In order to sustain a successful prosecution there must be demand notice and omission by the assessee to pay as well as failure to show cause why it should not be paid. Then steps for distraint and sale of movables under R.14 must be resorted and distraint or sufficient distraint must be found impracticable. It must also be shown that the omission to pay was wilful or that he wilfully prevented distraint or a sufficient distraint. In this case demand notice under R.13 evidenced by Ext. P1 was issued after issuing bills under R.8 (1) evidenced by Exts. P12 and 17. Distraint was resorted and it was found impracticable and there is evidence of wilful omission also. 7. S.117 of the Kerala Panchayat Act deals with limitation for recovery of dues. In this case demand notice under R.13 evidenced by Ext. P1 was issued after issuing bills under R.8 (1) evidenced by Exts. P12 and 17. Distraint was resorted and it was found impracticable and there is evidence of wilful omission also. 7. S.117 of the Kerala Panchayat Act deals with limitation for recovery of dues. Limitation covers periods for making distraint, instituting suit and commencing prosecution. Period of limitation in all the cases is three years from the date on which distraint might first have been made, a suit, might first have been instituted and prosecution might first have been commenced, as the case may be. For filing a suit, it is not a condition precedent that distraint or prosecution should have been resorted. Therefore period of limitation for a suit will expire immediately after the expiry of three years from the date on which cause of action arose by the amount becoming legally due and recoverable. If a distraint is barred the prosecution also will be barred because distraint and its impracticability fully or sufficiently is a condition precedent to prosecution. Bar of limitation for distraint is not an impracticability for distraint entitling prosecution. If distraint was in time, prosecution will lie only when it becomes fully or sufficiently impracticable or when the wilful omission to pay or wilful prevention of distraint was fully or sufficiently made. Then only prosecution will lie and the period of limitation for prosecution will expire only after three years from that date. Even before that the remedy by way of suit will be barred by limitation because period of limitation for filing a suit start much earlier since it need not await distraint or prosecution. 8. On the basis of the above guidelines the Magistrate will have to consider the exact arrears for which distraint might have been made when the distraint was made in this case. In order to ascertain that date, it must first be found which was the date on which the amount was due. That is the date on which it has to be paid and on the failure the Panchayat is entitled to issue demand notice under R.13. The Panchayat cannot postpone the starting point of limitation by delaying demand notice or distraint and sale. Earliest date on which things would have been done is the criterion. That is the date on which it has to be paid and on the failure the Panchayat is entitled to issue demand notice under R.13. The Panchayat cannot postpone the starting point of limitation by delaying demand notice or distraint and sale. Earliest date on which things would have been done is the criterion. For making distraint the earliest point of time is 15 days after the due date and for the prosecution, the earliest date is of wilful omission or impracticability or prevention of distraint. In this manner and in the light of what is stated in the previous para the Magistrate will have to decide to what extent the distraint and the prosecution were barred or not barred by limitation. To the extent the prosecution is not barred it must be allowed to proceed and will have to be decided on the merits. 9. There is no basis for the finding of the Magistrate that the provisions of the Panchayat Act and Rule were not complied with before launching the prosecution. The only question involved is whether steps were taken in time and whether limitation is there. S.468 of the Code of Criminal Procedure is the general provision for prosecution contained in the general statute regarding limitation. Kerala Panchayat Act is a special statute which contains special provisions for limitation for prosecutions coming under that statute. Provisions in general statutes dealing with the general contingencies will have to give way to the special provisions so far as matters covered therein are concerned. Therefore period of limitation for prosecution could be considered only under the Panchayat Act and not under the Code of Criminal Procedure. 10. Then the only other question is regarding quid pro quo. There is no generic difference between a tax and a fee. Tax is broadly a compulsory extraction as part of a common burden, without promise of any special advantages to classes of tax payers. Fee is a payment for services rendered, benefit provided or privilege conferred. This is all the difference. Compulsion is not the basic feature of the distinction. Money collected under both heads go to the same fund. The nexus which the fee is having to the services rendered or the advantages conferred need not be direct. A mere casual relation is enough. Incidence of the fee and services need not be uniform. This is all the difference. Compulsion is not the basic feature of the distinction. Money collected under both heads go to the same fund. The nexus which the fee is having to the services rendered or the advantages conferred need not be direct. A mere casual relation is enough. Incidence of the fee and services need not be uniform. Benefit derived by persons other than payees of the fee, by the services, is also no ground to exclude it from fee. The special benefit or advantage to the payers of the fees may only be of secondary importance when compared to the public interest which is the motive of the regulation. It is not the duty of the court to assess the cost of services and compare it with the fee collected in order to balance the two. Quid pro quo is not the only index of a fee and it is present in tax also. What is required is only a broad co-relationship. 11. It was increasingly felt by the Supreme Court, as seen from several decisions, that the element of quid pro quo in its strict sense is not a sine qua non for a fee and the co-relationship of the levy and services rendered or expected is one of general character and not of mathematical exactitude. The traditional concept of quid pro quo has undergone a transformation. Now a mere casual relationship between the fee and the services may be enough and it is not even necessary to establish that those who pay fee must receive direct benefit of the services rendered. General benefit from the authority levying the fee will satisfy the element of service required for collecting the fee. No special benefit to the person making the payment need be established. The evidence in this case is that the Panchayat is cleaning the market by employing a sweeper. That itself is a special service. Other numerous services are also being rendered by the Panchayat in the area of operation. (See Municipal Corporation, of Delhi. v. Mohammed Yasin (AIR 1983 SC 617), Sreenivasa General Traders v. State of Andhra Pradesh (AIR 1983 SC 1246), Amarnath Om Prakash v. State of Punjab (AIR 1985 SC 218) and The City Corporation of Calicut v. Sadasivan and others (1985 KLT 549: AIR 1985 SC 756). 12. (See Municipal Corporation, of Delhi. v. Mohammed Yasin (AIR 1983 SC 617), Sreenivasa General Traders v. State of Andhra Pradesh (AIR 1983 SC 1246), Amarnath Om Prakash v. State of Punjab (AIR 1985 SC 218) and The City Corporation of Calicut v. Sadasivan and others (1985 KLT 549: AIR 1985 SC 756). 12. The Magistrate before whom the prosecution is launched, is not expected to sit in judgment over the validity of the bye-laws or resolutions on the basis of which the fee was levied or the correctness or propriety of the amount as was done by the Magistrate in this case. If those things are also subject to Magisterial scrutiny on questions of correctness and propriety the working of the local bodies will become difficult. That will amount to assumption of jurisdiction which the Magistrates are not having. A collateral challenge of the levy or its quantitative or qualitative propriety by way of defence in a prosecution without challenging the same before the appropriate forum cannot be entertained. Element of quid pro quo, apart from the question of its application and extent, is not a matter to be agitated when the assessee is prosecuted (See Kodakara Panchayat v. Sukumaran 1986 K.L.T. 618). 13. In this case it is seen that prior to and subsequent to this prosecution the accused was resorting to repeated and continuous actions in several form in an attempt to see that payment of fee is avoided. At any rate, the fee was not liable to challenge before the Magistrate and the accused was also precluded in this respect by the adverse decisions against him by this Court in O.P. 3616 of 1981 and Criminal Appeal No. 261 of 1983. The only question that the Magistrate has to look into is the extent of limitation involved and the maintainability or otherwise of the prosecution on that ground. The prosecution being essentially a mode of realisation of the fee, inspite of the penalty involved, it is necessary that the matter will have to be considered on the merits to the extent it is not barred by limitation. The Criminal Appeal is allowed and the acquittal is set aside. The case is sent back to the Magistrate for disposal afresh on the merits according to law in the light of what is stated above. The Criminal Appeal is allowed and the acquittal is set aside. The case is sent back to the Magistrate for disposal afresh on the merits according to law in the light of what is stated above. Being a very old matter, the Magistrate will see that the case is disposed of within three months of the receipt of records. Office will transmit the records forthwith and the parties will appear before the Magistrate on 10-5-1988. Allowed.