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Kerala High Court · body

1993 DIGILAW 33 (KER)

Yousef v. State of Kerala

1993-01-15

T.L.VISWANATHA IYER

body1993
Judgment :- The petitioner is the owner of a building situate in Thiruvangad Village, which bear Door Nos. 13/408-A to 13/408-M of the Tellicherry Municipality. The building was assessed to tax under the Kerala Buildings Tax Act, 1975, (hereinafter referred to as the act), on a capital value of Rs.2,94,000/- on the basis of the annual value fixed by the Tellicherry Municipality, namely Rs.29,400/-. A copy of the order of assessment is Ext.P2 dated 9-7-1986. Petitioner has paid the tax of Rs.7,700/- demanded of them under the assessment. 2. The Assessing Authority viz. the Tahsildar, Tellicherry subsequently issued a notice Ext.P5 to the petitioner intimating them that the District Collector had directed him to reopen the assessment Ext.P2 as some "irregularities and omissions had crept in" while finalising the said assessment. The Tahsildar therefore proposed to inspect the building at 11 a.m. on 21-7-1988 and he requested the petitioner to be present at the site with all documents. The petitioner was later directed by Ext.P7 notice to produce the Kychit executed between him and the occupiers of the shops, for verification, on 18-10-1988. Petitioner did not hear anything further in the matter before they were served with theorderExt.P9dated 30-12-1988 together with a notice of demand, Ext.P8 of even date, calling upon them to make payment of an amount of Rs.39,260/- as additional building tax for the building. It was stated in Ext.P9 that further enquiry after the" original order of assessment Ext.P9 was completed, revealed that the actual annual value of the building was Rs.73,200/-, which was higher than the amount of annual value adopted in the original assessment. The higher rate of annual value had therefore to be adopted for assessing the annual value. Accordingly the capital value of the building was fixed at Rs.7,32,000/- with a consequent liability for tax of Rs.46,960/- out of which credit was given for the amount of Rs.7,700/- paid pursuant to Ext.P2, and demand made for the balance. Petitioner has filed this writ petition challenging the order Ext.P9 and the consequent demand Ext.P5 with the plea that the Act does not contain any provision for reopening the order Ext.P2 in this fashion or for passing an order of the nature of Ext.P9, which is also alleged to be one passed in violation of the principles of natural justice. 3. 3. The Act contains provisions for assessment of the tax and also provides appellate/revisional remedies for any person aggrieved by any assessment made under the Act. Section 5, which is the charging section, provides that building tax shall be charged at the rate specified in the Schedule in respect of every building the construction of which is completed on or after April, 1973 and the capital value of which exceeds Rs.75,000/-. Capital value of the building is defined in S.2(f) as the value arrived at by multiplying the annual value of the building by sixteen, as the Act originally stood, and now by ten, after an amendment of the year 1980. Section 6 provides the machinery for determining the capital value. Sub-section (1) mentions that for determining the capital value for the purposes of the Act, the annual value of building shall be the annual value fixed for that building in the assessment books of the local authority within whose area the building is situate. But sub-section (2) makes an exception by providing that notwithstanding anything contained in sub-section (1), if the assessing authority is of opinion that the annual value fixed for a building in the assessment books of the local authority is too low, he may, after giving the person or persons affected thereby an opportunity of being heard, fix the annual value of the building. In so fixing the annual value of the building, the assessing authority must have regard to the various factors made mention of in sub-section (4). Section 7 contains provisions regarding the filing of returns. S.9 prescribes the procedure for assessment. An appeal against the order of assessment lies to the Revenue Divisional Officer (the Appellate authority) under S.11 with a remedy of reference to the District Court on a question of law under S.12. Section 7 contains provisions regarding the filing of returns. S.9 prescribes the procedure for assessment. An appeal against the order of assessment lies to the Revenue Divisional Officer (the Appellate authority) under S.11 with a remedy of reference to the District Court on a question of law under S.12. At the same time, the District Collector is also empowered by S.13 to call for and examine the record of any order passed by the Appellate Authority or the Assessing Authority, and pass such order in reference thereto as he deems fit but no such order shall be passed without notice to the party who may be affected by the order, with an added proviso that the District Collector shall not call for and examine the record of any order passed by the Assessing Authority if the period of thirty days specified for presentation of an appeal under sub-section (3) of S.11 has not expired, or if an appeal against that order is pending before the Appellate Authority. It is also provided that the District Collector shall not exercise his power suo motu if the order sought to be revised has been passed more than three months previously. S.14 vests the Government with a revisional jurisdiction over the orders of the District Collector passed suo mote. S.15 is the one with which we are concerned in this case and that provides for rectification of mistakes in the order of any authority. Sub-section (1) which alone is relevant for our purposes reads: - . "15. Rectification of mistakes. - (1) The appellate authority or the revisional authority may, at any time within three years from the date of an order passed by it on appeal or revision, as the case may be, and the assessing authority may, at any time within three years from the date of any assessment or order passed by it, of its own motion, rectify any mistake apparent from the record of the appeal, revision, assessment or order, as the case m ay be, and shall, within the like period, rectify any such mistake which' has been brought to its notice by an assessee: Provided that no such rectification shall be made which has the effect of enhancing an assessment or reducing a refund unless the assessee has been given a reasonable opportunity of being heard in the matter." 4. Section 16 is another provision, which provides for revision of the building tax when the annual value is revised by the local authority. It provides that when the annul value of the building fixed by the local authority is enhanced or reduced under the law governing the local authority, the building tax levied under this Act shall be revised by the Assessing Authority in confirmity with such variation. 5. There is no case here, nor is it possible to contend that the order Ext.P9 is sustainable with reference to S.13, the power of revision conferred on the District Collector. For one thing, apart from inspecting the property, the District Collector has not initiated any proceedings to revise the assessment Ext.P2 under S.13. No notice was given to the petitioner proposing to revise the said order in exercise of the power under S.13. Apart from that, the proceedings under S.13 are barred by time under sub-section (2) thereof as no order has been passed within a period of three months from the date of Ext.P2, namely 9-7-1986. The impugned proceedings Ext.P9 cannot, therefore, be related to the exercise of any power of revision by the District Collector. The only other provision which could be and was relied on to sustain Ext.P9 is S.15, which enables the authorities functioning under the Act to rectify any mistake apparent from the record. I may mention here that S.16 is not applicable in this case, as there was no variation in the annual value fixed by the local authority attracting S.16. 6. The Act nowhere provides for the reopening of an order, and to substitute it with a fresh order on a different basis. There is no provision in the Act akin to S.147 of the Income Tax Act, 1961 or S.19 of the Kerala General Sales Tax Act, 1963. Such a provision is significant by its absence in the Act. S.15, which is invoked, in this case is analogous to S.154 of the Income Tax Act, 1961 and S.43 of the Kerala General Sales Tax Act, 1963. There is a distinct difference between the re-opening of an assessment and the rectification of any mistake in it, apparent from the record. The consequence of re-opening an assessment is to set aside the original order of assessment, and to substitute it with another order of assessment, in accordance with law. There is a distinct difference between the re-opening of an assessment and the rectification of any mistake in it, apparent from the record. The consequence of re-opening an assessment is to set aside the original order of assessment, and to substitute it with another order of assessment, in accordance with law. In the case of rectification of a mistake, the order, which is vitiated by the mistake, continues to subsist, and operate, but with the mistake in it rectified. A provision for re-opening an assessment has to be specifically conferred as the finality, which, otherwise attaches to it stands affected by the reopening. Ordinarily, the authority passing the order becomes functus officio once the assessment is completed, unless the statue in question vests him with further power either to reopen it, or to rectify any mistake in it. Either way, he has to function strictly within the parameters of that power. Therefore, and in the absence of any provision in the Act to reopen an assessment, the power, which could be exercised by the statutory authorities, is only to rectify any mistake apparent from the record and not to reopen an assessment changing the basis of it, or to substitute another assessment in its place. A mistake to be so rectified must be apparent from the records, and not with reference to extraneous materials, and this is crucial in the exercise of the jurisdiction under S.15. 7. In this connection I may refer to the decision of the Supreme Court in Income Tax Officer v. The Asok Textiles Ltd„ AIR 1961 5C 699, where the court while dealing with the analogous provision S.35 of the Income Tax Act, 1922, observed that the power of the Income Tax Officer is to examine the record and to rectify any mistake discovered on such examination. This was reiterated in Anchor Pressings (P)Ltd. v. Commissioner of Income Tax, AIR 1987 5C 575. Sukumaran, J. has also touched upon this question in his decision in Aradhana Lodge v. Tahsildar, (1990 (1) KLT 33). The mistake, which is liable to be rectified under S.15, should be one, which is apparent from the record, and not one, which could be discovered with reference to extraneous materials. Going by this principle, the order Ext.P9 is vitiated by absence of jurisdiction as being beyond the purview of S.15. The mistake, which is liable to be rectified under S.15, should be one, which is apparent from the record, and not one, which could be discovered with reference to extraneous materials. Going by this principle, the order Ext.P9 is vitiated by absence of jurisdiction as being beyond the purview of S.15. It is evident from the order Ext.P9 that the mistake alleged has been discovered not with reference to the record, but outside it, on further enquiry conducted pursuant to the proceedings initiated by the notice Ext.P5. It is also clear from this notice that it was not any mistake that prompted the further proceedings, but alleged irregularities and omissions in the original order Ext.P2, as pointed out by the District Collector. In fact the District Collector had directed the Assessing Authority to reopen the case, for which he had no power under the Act. 8. Ext.P9 is therefore without jurisdiction and unsustainable. It also suffers from another vice viz. violation of the principles of natural justice. It was never indicated to the petitioner previous to the passing of Ext.P9 that the annual value of the building was proposed to be enhanced from Rs.29,400/- to Rs.73,200/-. The petitioner was not afforded any opportunity to be heard on this point before the order was passed. The only notices issued to them were the notices of inspection of the building and the notice to produce the kychit. Nothing else happened. Any assessment to tax is a quasi judicial proceeding at which the assessee is entitled to know the basis of the assessment proposed to be made and the materials sought to be relied on (See Gurmukh Singh v. Commissioner of Income Tax, AIR 1944 Lah. 353 (FB), and Dhakeswari Cotton Mills Ltd. v. Commissioner of Income Tax, AIR 1955 5C 65). None of these was disclosed to the petitioner so that there was gross violation of the principles of natural justice in passing the order Ext.P9. 9. The order Ext.P9 and the demand made consequent thereto, namely Ext.P5 are therefore liable to be quashed. It is true that the petitioner has an alternate remedy of appeal under S.11 of the Act. But this is a case of flagrant usurpation of a jurisdiction, which the assessing authority did not possess. 9. The order Ext.P9 and the demand made consequent thereto, namely Ext.P5 are therefore liable to be quashed. It is true that the petitioner has an alternate remedy of appeal under S.11 of the Act. But this is a case of flagrant usurpation of a jurisdiction, which the assessing authority did not possess. When the action is vitiated by total absence of jurisdiction, besides being one passed in gross violation of principles of natural justice, this court should not fold its hand and refrain from exercising its jurisdiction under Art.226. The original petition is therefore allowed. Exts.P5 and P9 are quashed. There will be no order as to costs.