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1990 DIGILAW 367 (KER)

Kottayam Municipality v. Parthas Trust

1990-09-13

PADMANABHAN

body1990
Judgment :- O.S. No.398 of 1977 filed by Parthas Trust, Alappuzha and O.S.No.123 of 1978 filed by M/s. S. Veeriah Reddiar, Kottayam against the Kottayam Municipality were jointly tried by the Munsiff, Kottayam and disposed of by a common judgment. O.S.No.123 of 1978 was dismissed and O.S.No.398 of 1977 was decreed. The dismissal of O.S.No.123 of 1978 was not taken up in appeal. The decree in 6.S.No.398 of 1977 was the subject matter of A.S.No.35 of 1983 filed by the defendant Municipality before the Subordinate Judge, Kottayam. The appeal was dismissed in confirmation of the decree of the trial court. That is how the defendant Municipality came up in second appeal. 2. The reliefs sought for in the suit are: i) for a declaration that the appellant is not entitled to levy anything more than Rs.250/- per year as profession tax from the respondent; ii) for refund of the excess amount already realised; and iii) for injunction to restrain the appellant from realising anything more than as stated above in future also. The appellant Municipality claimed the benefits of the proviso to R.19(1) of Schedule II of the Taxation and Finance Rules and contended that the reliefs claimed in the plaint cannot be allowed. 3. The trial court as well as the appellate court came to the conclusion that the respondent will not come within the definition of company' in S.3(9) of the Kerala Municipalities Act and that it being a trust, could be treated only as a person. On that basis, it was found that the benefit of the proviso is not available. That is how the suit was decreed and the decision was confirmed in appeal. 4. From the evidence of P.W.I, who represented the plaintiff Trust, it is seen that the plaintiff business started as a partnership firm in 1960. It was converted into Parthas Trust from 17-8-1971 and it continued like that till 16-8-1978. Thereafter, it is now run as a partnership firm. 5. The Kerala Municipalities Act, by S.3(9), adopted the definition of 'company' in S.3 of the Companies Act and provided that it includes a foreign company, a co-operative society, a firm or association of persons carrying on business. Prior to 17-8-1971 and subsequent to 16-8-1978, the respondent-plaintiff was and is a partnership firm. 5. The Kerala Municipalities Act, by S.3(9), adopted the definition of 'company' in S.3 of the Companies Act and provided that it includes a foreign company, a co-operative society, a firm or association of persons carrying on business. Prior to 17-8-1971 and subsequent to 16-8-1978, the respondent-plaintiff was and is a partnership firm. In my opinion, it is immaterial whether the respondent-plaintiff will come within the definition of company or it could be treated only as a person. Either for the purpose of S.110 of the Kerala Municipalities Act or for the purpose of R.19(1) of the Taxation and Finance Rules, it is immaterial whether the assessee of profession tax is an individual oracompany. R.19 (1) itself says that the classes into which companies and persons shall, for the purposes of assessment to the profession tax, be divided and the maximum half-yearly tax leviable on each class shall be as follows: That means, the rules are applicable both to companies and persons equally. The classes mentioned in the rule by categorisation are only on the basis of the half-yearly income irrespective of the question whether the assessee is an individual or a company. I fail to understand how the trial court and the appellate court came to the conclusion that the benefit of the proviso is not available to the Municipality solely for the reason that the assessee is not a company, but only an individual. 6. The only question germane for consideration is whether the benefit of the proviso to R.19(1) is available to the appellant. A reading of the proviso along with Rule 19(1) shows that its benefit is available to the Municipality irrespective of the question whether The assessee is an individual or a company. The proviso says that if in the financial year immediately preceding the commencement of the Constitution of India any municipality was imposing profession tax at a rate higher than two hundred and fifty rupees per annum and continued to levy the tax at much higher rate till immediately before the commencement of the Kerala Municipalities Act, such municipality may continue to levy profession tax at such rates. This is evidently an exception to the rule that the maximum annual assessment of profession tax should not exceed Rs.250/-. This is evidently an exception to the rule that the maximum annual assessment of profession tax should not exceed Rs.250/-. Therefore, in order to decide whether the respondent-plaintiff is entitled to the reliefs claimed in the plaint, the only question for consideration is whether the appellant Municipality was imposing profession tax at a higher rate even prior to the commencement of the Constitution of India and continued to make such assessment till the Kerala Municipalities Act came into force. I do not find any basis for the contention that the assessment contemplated in the proviso has any nexus to the nature of the assessee. I said so because there is a contention that the appellant did not succeed in establishing that a higher rate of assessment was made concerning any company or individual dealing in textiles. That is why I said that the proviso has no relation to the type of business conducted by the individual or company. 7. DW1 was the Manager of the Municipal Office, Kottayam. She is an able and experienced officer, who was associated with the Kottayam Municipality for a very long time. She gave evidence that even before the commencement of the Constitution of India and upto the commencement of the Kerala Municipalities Act and thereafter, the Kottayam Municipality was assessing profession tax as against companies and individuals at a higher rate than the maximum fixed under R.19(1) of the Taxation and Finance Rules. Her evidence in this connection is amply supported by Ext.Bl, which is a copy of the notification issued by the Municipality in the Government Gazette dated 24-10-1944. Ext.Bl shows that the Municipality was assessing at the rate of Rs.275/- as profession tax half-yearly against companies and individuals having half-yearly income of Rs.21, 000/- and less and in case of income above that amount, an additional amount of one per cent was being levied. In view of Ext.Bl and the evidence of D W 1,1 do not think that it was necessary for the Municipality to produce and prove records relating to individual assessments. If so, it has to be found that the Municipality succeeded in establishing that it is entitled to the benefits of the proviso mentioned above. Therefore, the normal ceiling under R.19(1) is not applicable to the appellant. The trial court as well as the appellate court were not, therefore, justified in granting the reliefs prayed for. If so, it has to be found that the Municipality succeeded in establishing that it is entitled to the benefits of the proviso mentioned above. Therefore, the normal ceiling under R.19(1) is not applicable to the appellant. The trial court as well as the appellate court were not, therefore, justified in granting the reliefs prayed for. The appeal is allowed and the decrees and judgments of the courts below are set aside. The suit is dismissed, but, in the circumstances, without any order as to costs.