Op/35453/2000 Of P.a.porinchu v. Agrl.incometax ,Sales Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.N.RAVINDRAN THURSDAY, THE 8TH JANUARY 2009 / 18TH POUSHA 1930 OP.No. 35453 of 2000(U) --------------------------------- PETITIONER(S): ------------------------ P.A.PORINCHU,PADIKKALA HOUSE, LURDPURAM,THRISSUR. BY ADV. SRI.K.M.V.PANDALAI RESPONDENT(S): ------------------------- 1.AGRICULTURAL INCOME TAX AND SALES TAX OFFICER,CIVIL LINES, THRISSUR.CIVIL LINES, THRISSUR. 2.THE DISTRICT COLLECTOR,THRISSUR. 3.THE TAHSILDAR, THRISSUR. 4.THE VILLAGE OFFICER, CHEMBUKAVU. GOVERNMENT PLEADER SRI.K.P.PRADEEP (TAX) FOR R1 TO 4 THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 15/07/2008, THE COURT ON 08/01/2009 DELIVERED THE FOLLOWING: ORDER ON CMP. NO.60676/2000 IN OP. NO.35453/2000 DISMISSED 08.01.2009SD/- P.N.RAVINDRAN, JUDGE APPENDIX PETITIONERS EXHIBITS P1:- COPY OF THE ASSESSMENT ORDER DT. 27.3.84 PASSED BY THE IST RESPONDENT. P2:- COPY OF THE APPELLATE ORDER DT. 2.11.85 PASSED BY THE ADDL. APPELLATEASST.COMMISSIONER. P3:- COPY OF THE STAY ORDER DT. 24.1.86 BY THE TRIBUNAL. P4:- COPY OF THE DEMAND DRAFT DT. 17.2.86. P5:- COPY OF THE APPELLATE ORDER DT. 29.1.2000 BY THE TRIBUNAL. P6:- COPY OF THE RECEIPT ISSUED BY THE 4TH RESPONDENT DT. 24.10.2000. P7:- COPY OF THE ASSESSMENT ORDER DT. 17.10.2000 PASSED BY THE ISTRESPONDENT. /TRUE COPY/ P.S. TO JUDGE tss P.N.Ravindran, J. ================ O.P.No.35453 of 2000================= Dated this the 8[th] day of January, 2008. JUDGMENT The petitioner is an assessee on the files of the first respondent.By Ext.P1 order passed on 27.3.1985, the first respondent assessed thepetitioner to pay the sum of Rs.11,961.50, Rs.25,324.20 andRs.32,712.90 as agricultural income tax for the assessment years 1978-79, 1979-80, and 1980-81 respectively. Ext.P1 order of assessment waspassed under Section 18(3) of the Kerala Agricultural Income Tax Act,1950, hereinafter referred to as the “1950 Act” for short. The petitionerchallenged Ext.P1 order of assessment in three separate appeals filedbefore the Additional Appellate Assistant Commissioner. By Ext.P2 orderpassed on 2.11.1985, the appellate authority granted cultivationexpenses for the assessment years 1979-80 and 1980-81 and directedthe assessing officer to modify Ext.P1 order of assessment accordingly.The petitioner thereupon filed Second Appeals before the AgriculturalIncome Tax Appellate Tribunal, Palakkad and sought stay of collection ofthe tax. By Ext.P3 order passed on 24.1.1986 the Appellate Tribunal OP 35453/00 granted stay of collection of the tax on the petitioner paying the sum ofRs.2,000/- each towards the tax demanded for the assessment years1978-79 1979-80 and 1980-81. As directed in Ext.P3, the petitionerremitted the sum of Rs.6,000/- on 17.2.1986 by way of demand draftdrawn in favour of the first respondent. The appeals filed by thepetitioner before the Appellate Tribunal were thereafter heard anddisposed of by Ext.P5 order passed on 29.1.2000. OP 35453/00 granted stay of collection of the tax on the petitioner paying the sum ofRs.2,000/- each towards the tax demanded for the assessment years1978-79 1979-80 and 1980-81. As directed in Ext.P3, the petitionerremitted the sum of Rs.6,000/- on 17.2.1986 by way of demand draftdrawn in favour of the first respondent. The appeals filed by thepetitioner before the Appellate Tribunal were thereafter heard anddisposed of by Ext.P5 order passed on 29.1.2000. 2. Pursuant to Exts.P2 and P5 orders, the assessing authorityissued Ext.P7 order dated 17.10.2000 giving effect to the directionissued by the first appellate authority and the Appellate Tribunal. By thetime Ext.P5 order was passed by the Appellate Tribunal, the 1950 Actwas repealed and replaced by the Kerala Agricultural Income Tax Act,1991, hereinafter referred to as the “1991 Act” for short. The 1991 Actcame into force on 1st April, 1991. In Ext.P7, the assessing officer leviedinterest on the tax assessed in terms of Section 37(4) of the 1991 Act.The interest levied was Rs.930/- for the assessment year 1978-79,Rs.11,160/- for the assessment year 1979-80 and Rs.48,539/- for theassessment year 1980-81. In Ext.P7, the balance tax demanded for theassessment year 1978-79 was nil, for the assessment year 1979-80 wasRs.3,921/- and for the assessment year 1980-81 was Rs.19,645/-. Onreceipt of Ext.P7, the petitioner remitted the tax component amountingto Rs.23,566/- as can be seen from Ext.P6 receipt dated 24.10.2000.This Original Petition was thereafter filed on 18.12.2000 challenging OP 35453/00 Ext.P7 to the extent it levies interest on the tax for the assessment years1978-79, 1979-80 and 1980-81. The petitioner has in this OriginalPetition prayed for the following reliefs: (a) quash Exhibit-P7 order to the extent it relates tolevy of penal interest for the year 1978-79, 1979-80 and1980-81 by issue of a writ of certiorari; (b) issue a writ of mandamus forbearing therespondents from taking any further steps for therealisation of the penal interest levied as per Exhibit-P7order for the years 1978-79, 1979-80 and 1980-81 till thedisposal of this Original Petition; (c) declare that the petitioner is not liable to pay anypenal interest for the years 1978-79, 1979-80 and 1980-81in the circumstances of the case." 3. The petitioner contends that since the 1950 Act alone governsthe assessment years in question no interest can be levied in the absenceof a stipulation in the 1950 Act that where tax or penalty due is not paidin time, it will attract interest. The petitioner further contends that hehad complied with the condition imposed in Ext.P3 interim order passedby the Appellate Tribunal and that as no notice of demand had beenissued under the provisions of the 1991 Act, as stipulated in Section 45(1) thereof, he cannot be deemed to be a person in default as stipulatedin Section 62 thereof and therefore, the assessing officer was notjustified in levying interest. 4. The first respondent has filed a counter affidavit contending OP 35453/00 3. The petitioner contends that since the 1950 Act alone governsthe assessment years in question no interest can be levied in the absenceof a stipulation in the 1950 Act that where tax or penalty due is not paidin time, it will attract interest. The petitioner further contends that hehad complied with the condition imposed in Ext.P3 interim order passedby the Appellate Tribunal and that as no notice of demand had beenissued under the provisions of the 1991 Act, as stipulated in Section 45(1) thereof, he cannot be deemed to be a person in default as stipulatedin Section 62 thereof and therefore, the assessing officer was notjustified in levying interest. 4. The first respondent has filed a counter affidavit contending OP 35453/00 inter alia that in view of sub-section (3) of Section 99 of the 1991 Act, therespondents are entitled to complete the proceedings pending under the1950 Act, regarding the assessment, levy, collection and recovery of thetax chargeable under the 1950 Act. Relying on sub-section (4) of Section99 of the 1991 Act, the respondents contend that the Appellate Tribunalwas entitled to continue and decide the proceedings pending before itunder the provisions of the 1950 Act. Relying on sub-section (5) ofSection 99 of the 1991 Act, the respondents contend that any arrears oftax or other amount pending can be collected and any recoveryproceedings initiated or continued under the 1950 Act can be continuedas if the levy, collection and recovery are made or is continuing under theprovisions of the 1991 Act. The respondents also rely on Section 46(b)of the 1991 Act to contend that it is not necessary to serve a fresh noticeof demand where the demand is reduced in appeal. The respondentstherefore contend that though the demand made by the assessing officerwas reduced by the Appellate Tribunal, it was not necessary to issue anotice of demand and as the amount demanded was paid only partly, thepetitioner is liable to pay interest on the unpaid tax from the date ofdemand till the date of actual payment. As regards Section 62(2) of the1991 Act, the respondents contend that 1991 Act is not applicable andthat the only effect of the proviso to sub-section (2) of Section 62 of the1991 Act is to keep the coercive proceedings in abeyance. 5. I have considered the submissions made at the Bar by the OP 35453/00 learned counsel appearing on either side. It is common ground that the1991 Act does not apply to the assessment years 1978-79, 1979-80 and1981-81. It is also not in dispute that under the provisions of the 1950Act, interest was not leviable on the tax assessed by the assessingofficer. Sub-sections (3) and (4) of Section 99 of the 1991 Actempowered the Appellate Tribunal to continue with and dispose of theappeal. Section 99 (5) of the 1991 Act also empowers the respondents tolevy and collect or recover the arrears of tax or other amount pending ason the date of the commencement of the 1991 Act. In the instant case,the assessment order and the first appellate order were passed while the1950 Act was in force. The petitioner filed the Second Appeal in January,1986 while 1950 Act was in force. By Ext.P3 interim order passed on24.1.1986, the Appellate Tribunal stayed the collection of the disputedtax on condition that the petitioner shall remit Rs.2,000/- each for thethree assessment years within four weeks from the date of the order.The petitioner admittedly complied with the said condition. The SecondAppeal filed by the petitioner was disposed of only on 29.1.2000 longafter the 1991 Act came into force. In my considered opinion, the standtaken by the respondents is not tenable. Though sub-sections (3) and (4)of Section 99 of the 1991 Act empower the Appellate Tribunal to disposeof the appeals, the Appellate Tribunal was bound to decide the appealsunder the provisions of the 1950 Act. This is clear from sub-section (4)of Section 99 of the 1991 Act. Therefore, the petitioner's liability has to OP 35453/00 OP 35453/00 be decided with reference to the provisions of the 1950 Act. In myopinion, though sub-section (5) of Section 99 of the 1991 Act enablesinitiation and continuance of proceedings to recover the arrears of tax orother amount due under the 1950 Act, such recovery can only be of aliability under the 1950 Act. The respondents admit that the 1991 Actdoes not apply to the assessment years in question. The respondentsalso do not dispute that under the 1950 Act, there was no provision tolevy interest on the tax assessed, where there is delay in remittance ofthe tax assessed. Sub-section (4) of Section 37 of the 1991 Actregarding levy of interest does not admittedly apply to the assessmentyears in question. The petitioner was therefore not liable to pay tax inaccordance with the provisions of the 1991 Act for the assessment yearsconcerned. Under sub-section (4) of Section 37 of the 1991 Act, interestis payable only if the assessee fails to pay the tax in accordance withSection 37 of the 1991 Act in pursuance to a demand issued underSection 45 of the 1991 Act. The respondents admits that no notice ofdemand under the 1991 Act was issued and served on the petitioner. Asa matter of fact, they contend relying on Section 46(1)(b) of the 1991 Actthat no demand is necessary where the demand is reduced in appeal. Iam therefore persuaded to agree with the petitioner that the levy ofinterest on the balance tax payable for the assessment years concernedwas without the sanction or authority of law. In the result, the Original Petition is allowed and Ext.P7 to the OP 35453/00 -: 7 :- extent it levies interest for the assessment years 1978-79, 1979-80 and 1980-81 is quashed. No costs. ess 26/7 P.N.Ravindran,Judge.