Cochin Devaswom Board v. State of Kerala and Thrissur Municipal Corporation and Deputy Director, Local Fund Audit

# **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ``` THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH ``` ``` WEDNESDAY, THE 7[TH] DAY OF FEBRUARY 2024 / 18TH MAGHA, 1945 ``` ## **`WP(C) NO. 21362 OF 2023`** ## **`PETITIONER/S:`** ``` COCHIN DEVASWOM BOARD, REPRESENTED BY ITS SECRETARY, COCHIN DEVSAWOM BOARD OFFICE, ROUND NORTH, THRISSUR, PIN - 680001 BY ADV K.P.SUDHEER ``` ## **`RESPONDENT/S:`** - **`1 STATE OF KERALA, REPRESENTED BY ITS SECRETARY, DEPARTMENT OF LOCAL SELF GOVERNMENT INSTITUTIONS, SECRETARIAT, THIRUVANANTHAPURAM, PIN - 695001`** - **`2 DEPUTY DIRECTOR, LOCAL FUND AUDIT, COCHIN DEVASWOM AUDIT, ROUND NORTH, THRISSUR, PIN - 680001`** - **`3 THRISSUR MUNICIPAL CORPORATION, REPRESENTED BY ITS SECRETARY, MUNICIPAL OFFICE, THRISSUR, PIN - 680001 BY ADV SANTHOSH P.PODUVAL`** ## **`OTHER PRESENT:`** ## **`SANTHOSH P. PODUVAL-SC`** ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 07.02.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` WP(C) NO. 21362 OF 2023 ``` ``` 2 ``` ## **JUDGMENT** ## **Dated this the 7[th] day of February, 2024** The petitioner is the statutory Board and owns a shop room bearing Door No. XXVIII/657 (New No. XXXVI/7158). The said shop room is situated within the jurisdictional limit of Thrissur Municipal Corporation in Sree Vadakkunnathan Shopping Complex owned by the petitioner Board. Altogether there are 85 shop rooms in the said shopping complex including one electric meter room. The shop room in question was given on lease by the petitioner to the Indian Coffee House since 15.04.1993. According to the petitioner, the total plinth area of the shop room is 3971 ft[2] . No assessment for the property tax was made by the Corporation till 2014 of the said shop room, despite of the fact that the petitioner had submitted his return in respect of the entire building in which the shop room in question is situated. 2. On 28.02.2014, the petitioner represented the 3[rd] respondent Corporation to assess the property tax in respect of the shop room in question. Based on the request, the 3[rd] respondent assessed the property tax in respect of the shop room and levied the property tax with effect from 01.04.1994 by the order dated 28.03.2014 in Ext.P2. The amount assessed is Rs.12,994/- half ``` WP(C) NO. 21362 OF 2023 ``` ``` 3 ``` yearly including Cess. The petitioner filed a revision petition disputing the retrospective assessment from 1994. However, the revision petition came to be rejected by the 3[rd] respondent by order dated 27.06.2014 and affirmed the assessment order. The petitioner had paid the amount as per the assessment order allegedly on the pressure put by the Corporation. 3.Adv. Parvathy, the learned counsel for the petitioner submits that in view of the provisions of Section 282 of the Act, the 3[rd] respondent Corporation does not have any power to make assessment in respect of the property tax beyond a period of four years, from the date of issuance of the notice in case of escaped assessment. Even if it is considered that the shop room in question is ‘a core’ escaped assessment for the property tax, the Corporation could have assessed the tax for 4 years prior to the date of issue of notice ie.,from 01.04.2010 and not before that. In this present case, the assessment order has been passed levying the property tax to the effect from 01.04.1994 and therefore, even if the petitioner had paid the tax for the period prior to 01.04.2010, the said tax was not payable as there is a specific bar created under the statute ie., under Section 282 of the Kerala Municipality Act, 1994 (‘the Act’ for short), and therefore, the tax collected by the Corporation for ``` WP(C) NO. 21362 OF 2023 ``` ``` 4 ``` the period prior to 01.04.2010 is without any authority of law. She further submits that under Article 265 of the Constitution of India it is specifically provided that no tax shall be levied without authority of law. When the Corporation did not have authority to levy the tax prior to 01.04.2010, the tax levied and collected for the period prior to 01.04.2010 ie., from 01.04.1994 till 31.03.2010 was without authority of law. 4.Learned counsel for the petitioner has also placed reliance on the judgment of the Supreme Court in the case of **Salonah Tea** **Co. Ltd and others v. Superintendent of Taxes [(1988) 1 SCC** **401],** and submits that even if a person has paid the tax voluntarily under misconception of law but if it is found that the person was not liable to pay the tax, he would be entitled to claim refund of the tax paid under the misconception of law. 5. The learned counsel for the petitioner therefore submits that the petitioner is entitled to claim refund of the tax paid by the petitioner for the period prior to 01.04.2010. 6. Adv. Santhosh P Poduval, the learned counsel for the respondent Corporation however, submits that the petitioner has paid the tax on their own voluntarily, in pursuance to the assessment order and demand notice, therefore, the petitioner is ``` WP(C) NO. 21362 OF 2023 ``` ``` 5 ``` not entitled to claim the refund of tax voluntarily paid. He therefore, submits that when the petitioner had paid the tax without any demur, now coming before this court by filing this writ petition challenging their own action, does not warrant any interference by this court, the writ petition is liable to be dismissed. 7. I have considered the submissions advanced. 8. Section 282 of the Act, provides for escaped assessment in respect of the property tax on a building. It provides that in case of escaped assessment, the tax can be assessed for a period of four years from the date of issuance of the notice. Section 282 of the Act reads as under:- “Power to assess in case of escape from assessment.— Notwithstanding anything to the contrary contained in this Act or the rules made thereunder, where for any reason a person liable to pay any tax or fees leviable under this Chapter has escaped assessment in any half- year, the Secretary may at any time within four years from the date on which such person should have been assessed, serve on him a notice asseessing to the tax or fee due and demanding payment thereof within fifteen days from the date of such service and thereupon the provisions of this Act and the rules made thereunder shall, so far as may be, apply as if the assessment was made in the halfyear to which the tax or fee relates.” 9.From the scrutiny of the provision of Section 282 of the Act, it is evident that the Corporation is not entitled to assess the tax beyond the period of past four years from the date of issuance of the notice. In this case, the notice was issued in the year 2014 and ``` WP(C) NO. 21362 OF 2023 ``` ``` 6 ``` tax has been assessed with effect from 01.04.1994. Thus, the assessment proceedings beyond the period of four years are without jurisdiction and not sustainable. Therefore, the demand of the tax in pursuance to the said assessment order before 01.04.2010 is without authority of law. It is also well settled that no tax can be levied and collected without any authority of law as provided under Article 265 of the Constitution of India. The Supreme Court in the case of **Salonah Tea Co. Ltd(supra),** paragraphs 5,6 and 7 reads as under. “5)In this case indisputably it appears that tax was collected without the authority of law. Indeed the appellant had to pay the tax in view of the notices which were without jurisdiction. It appears that the assessment was made under section 9(3) of the Act. Therefore, it was with out jurisdiction. In the premises it is manifest that the respondents had no authority to retain the money collected without the authority of law and as such the money was liable to refund. 6)The only question that falls for consideration here is whether in an application under Article 226 of the Constitution the Court should have directed refund. It is the case of the appellant that it was after the judgment in the case of Loong Soong Tea Estate the cause of action arose. That judgment was passed in July 1973. It appears thus that the High Court was in error in coming to the conclusion that it was possible for the appellant to know about the legality of the tax sought to be imposed as early as 1963, when the Act in question was declared ultra vires as mentioned hereinbefore. Thereafter the taxes were paid in 1968. Therefore the claim in November, 1973 was belated. We are unable to agree with this conclusion. As mentioned hereinbefore the question that arises in this case is whether the Court should direct refund of the amount in question. Courts have made a distinction between those cases where a claimant approaches a High Court seeking relief of obtaining refund only and ``` WP(C) NO. 21362 OF 2023 ``` ``` 7 ``` those where refund is sought as a consequential relief after striking down of the order of assessment etc. Normally speaking in a society governed by rule of law taxes should be paid by citizens as soon as they are due in accordance with law. Equally, as a corollary of the said statement of law it follows that taxes collected without the authority of law as in this case from a citizen should be refunded because no State has the right to receive or to retain taxes or monies realised from citizens without the authority of law. 7)In Suganmal v. State of Madhya Pradesh and others, AIR 1965 SC 1740, this Court held that the High Courts have power to pass any appropriate order in the exercise of the powers conferred on them under Article 226 of the Constitution. A petition solely praying for the issue of a writ of mandamus directing the State to refund the money alleged to have been illegally collected by the State as tax was not ordinarily maintainable for the simple reason that a claim for such refund can always be made in a suit against the authority which had illegally collected the money as a tax and in such a suit it was open to the State to raise all possible defences to the claim, defences which cannot in most cases,, be appropriately raised and considered in the exercise of writ jurisdiction. It appears that Section 23 of the Act deals with refund. In the facts of this case, the case did not come within section 23 of the Act. But in the instant appeal, it is clear as the High Court found in our opinion rightly that the claim for refund was a consequential relief.” 10.Thus, considering the provisions of Section 282 of the Act, Article 265 of the Constitution of India and the law laid down by the Supreme Court in the case **Salonah Tea Co. Ltd (supra),** I am of the view that the Corporation has no authority to collect the tax from the petitioner, for the shop in question, for the period from 01.04.1994 - 31.03.2010. Even if the petitioner has paid the said tax, the petitioner is entitled to get refund of the said amount or get ``` WP(C) NO. 21362 OF 2023 ``` ``` 8 ``` the same adjusted in future demand. In view thereof, the present writ petition is allowed, the impugned notices are quashed. The Corporation is directed to refund the levied tax only with effect from 01.04.2010 and thereafter. The tax paid by the petitioner for the period from 01.04.1994 to 31.05.2010 is to be adjusted or refunded by the Corporation for the future demand, as the case maybe. **Sd/DINESH KUMAR SINGH JUDGE** **SJ** ``` WP(C) NO. 21362 OF 2023 ``` ``` 9 ``` ## **`APPENDIX OF WP(C) 21362/2023`** ``` PETITIONER EXHIBITS EXHIBIT P 1 ``` ``` TRUE COPY OF REQUEST DATED 28.2.2014 SUBMITTED BY THE PETITIONER AND THE ACKNOWLEDGMENT RECEIPT ISSUED BY THE 3RD RESPONDENT CORPORATION. ``` ``` EXHIBIT P 2TRUE COPY OF ORDER NO. R4. 6544/2014 DATED 28/03/2014 ISSUED BY THE 3RD RESPONDENT EXHIBIT P 3TRUE COPY OF MEMO BEARING NO. R4-6544/2014 DATED 27/06/2014 ISSUED BY THE 3RD RESPONDENT. ``` ``` EXHIBIT P 4TRUE COPY OF REPLY DATED 12/09/2014 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER EXHIBIT P 5TRUE COPY OF APPEAL PETITION DATED 11/09/2014 AND THE ACKNOWLEDGEMENT RECEIPT ISSUED BY THE 3RD RESPONDENT CORPORATION. EXHIBIT P 6TRUE COPY OF PETITION DATED 01/10/2014 AND THE ACKNOWLEDGEMENT RECEIPT ISSUED BY THE 3RD RESPONDENT CORPORATION DATED 09/10/2014 EXHIBIT P 7TRUE COPY OF DEMAND NOTICE BEARING NO. 39459 DATED NIL ISSUED BY THE 3RD RESPONDENT. ``` - **`EXHIBIT P 8 TRUE COPY OF RECEIPT NO. 01/11608500029 DATED 06/05/2016 ISSUED BY THE 3RD RESPONDENT CORPORATION.`** - **`EXHIBIT P 9 TRUE COPY OF LETTER NO. R4/10684/16 DATED 20/06/2016 ISSUED BY THE 3RD RESPONDENT CORPORATION TO THE PETITIONER`** - **`EXHIBIT P 10 TRUE COPY OF LETTER DATED 30/06/2016 SUBMITTED BY THE PETITIONER BEFORE THE 3RD RESPONDENT.`** - **`EXHIBIT P 11 TRUE COPY OF REPLY LETTER NO. R4-10684/16 DATED 03/09/2016 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER.`** ``` EXHIBIT P 12TRUE COPY OF LETTER NO. R1. 853/89 DATED 22/05/2017 SUBMITTED BY THE PETITIONER TO THE FIRST RESPONDENT. EXHIBIT P 13TRUE COPY OF NOTICE BEARING NO. M.T.F. NO. 31 DATED 24/03/2022 ISSUED BY THE 3RD RESPONDENT CORPORATION TO THE PETITIONER. EXHIBIT P 14TRUE COPY OF OBJECTION LETTER NO. R1. ``` ``` WP(C) NO. 21362 OF 2023 ``` ``` 10 ``` ``` 853/1989 DATED 29.3.2022 AND THE ACKNOWLEDGMENT RECEIPT ISSUED BY THE OFFICE OF THE 3RD RESPONDENT ``` ``` EXHIBIT P 15 ``` ``` TRUE COPY OF NOTICE NO. R4. 10684/16 DATED 26.10.2022 ISSUED BY THE REVENUE OFFICER OF THE 3RD RESPONDENT ``` ``` ENGLISH TRANSLATIONTrue copy of request dated 28.2.2014 OF EXHIBIT P 1submitted by the petitioner and the acknowledgment receipt issued by the 3rd respondent Corporation ENGLISH TRANSLATIONTrue copy of memo bearing No. R4-6544/2014 OF EXHIBIT P 3dated 27/06/2014 issued by the 3rd respondent. ENGLISH TRANSLATIONTrue copy of reply dated 12/09/2014 issued OF EXHIBIT P 4by the 2nd respondent to the petitioner ENGLISH TRANSLATIONTrue copy of appeal petition dated OF EXHIBIT P 511/09/2014 and the acknowledgement receipt issued by the 3rd respondent corporation. ENGLISH TRANSLATIONTrue copy of petition dated 01/10/2014 and OF EXHIBIT P 6the acknowledgement receipt issued by the 3rd respondent corporation dated 09/10/2014. ``` ``` ENGLISH TRANSLATIONTrue copy of demand notice bearing No. OF EXHIBIT P 739459 dated nil issued by the 3rd respondent. ``` ``` ENGLISH TRANSLATIONTrue copy of letter No. R4/10684/16 dated OF EXHIBIT P 920/06/2016 issued by the 3rd respondent Corporation to the petitioner ENGLISH TRANSLATIONTrue copy of letter dated 30/06/2016 OF EXHIBIT P 10submitted by the petitioner before the 3rd respondent. ENGLISH TRANSLATIONTrue copy of reply letter No. R4. 10684/16 OF EXHIBIT P 11dated 03/09/2016 issued by the 3rd respondent to the petitioner ENGLISH TRANSLATIONTrue copy of letter No. R1. 853/89 dated OF EXHIBIT P 1222/05/2017 submitted by the petitioner to the first respondent. ``` ``` ENGLISH TRANSLATIONTrue copy of notice bearing No. M.T.F. No. OF EXHIBIT P 1331 dated 24/03/2022 issued by the 3rd respondent corporation to the petitioner. ENGLISH TRANSLATIONTrue copy of notice No. R4. 10684/16 dated OF EXHIBIT P 1526.10.2022 issued by the Revenue Officer of the 3rd respondent ```