Kerala High Court
Tata Tele Services Ltd vs K. Satghiyarajan on 6 November, 2012
Author: N.K. Balakrishnan
Bench: N.K.Balakrishnan
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE N.K.BALAKRISHNAN
FRIDAY, THE 12TH DAY OF APRIL 2013/22ND CHAITHRA 1935
RSA.No. 475 of 2013 ()
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AGAINST THE JUDGMENT IN AS.53/2009 of DISTRICT COURT, ERNAKULAM
DATED 06-11-2012
AGAINST THE JUDGMENT IN OS.336/2007 of II ADDL.SUB COURT,ERNAKULAM
DATED 29-11-2008
APPELLANT(S)/APPELLANT/DEFENDANT:
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TATA TELE SERVICES LTD,
S.L.PLAZA, PALARIVATTOM, KOCHI-682025.
BY ADVS.SRI.M.GOPIKRISHNAN NAMBIAR
SRI.P.GOPINATH MENON
SRI.P.BENNY THOMAS
SRI.K.JOHN MATHAI
SRI.NITHIN GEORGE
RESPONDENT(S)/PLAINTIFF:
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K. SATGHIYARAJAN, AGED 70 YEARS
RAJAGIRI, 39/4209A, RAVIPURAM
M.G.ROAD, KOCHI-682016.
THIS REGULAR SECOND APPEAL HAVING COME UP FOR ADMISSION ON
12-04-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
JJJ
N.K. BALAKRISHNAN, J.
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R.S.A. No. 475 of 2013
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Dated this the 12th day of April, 2013
J U D G M E N T
The defendant is the appellant. The respondent/plaintiff obtained license from Corporation of Cochin to collect Advertisement Tax for the advertisements exhibited within the territorial limits of the Corporation for the period from 1.4.2006 to 31.3.2007. The respondent contends that he was given license by which he undertook to collect and remit a sum of Rs.31,10,000/- as Advertisement Tax. It was also stated by the plaintiff that he had remitted the entire amount. Thus, according to the plaintiff, the Corporation has farmed out the right to collect Advertisement Tax. The advertisers are bound to pay the Advertisement Tax for the advertisements and obtain seal on the advertisements before they are exhibited anywhere within the Corporation limits. The defendant/appellant is a R.S.A. No. 475/2013 -2- company which erected a number of advertisement boards at different places within the Corporation limits. But they failed to pay the Advertisement Tax. A notice was sent to them to pay the amount, to which no reply was sent nor was the amount paid. Hence, this suit was filed.
2. The defendant/appellant denied the liability to pay the amount.
3. PWs 1 and 2 were examined and Exhibits X1 to X1 (at) were marked. No evidence was adduced on the side of the defendants. It was pointed out that the plaintiff had served interrogatories. The defendant admitted some of the relevant questions put to them. The fact that the defendant had erected, name boards of it shops and other establishments within the Corporation of Cochin during the period 2006-07 was admitted. It was also admitted that R.S.A. No. 475/2013 -3- they did not pay the tax. Exhibit X1 series and the evidence given by PW2 would show that the defendants had erected name boards of its shops and other establishments within the Corporation of Cochin during the relevant period. The defendant made an evasive statement to question no.7 served on it stating that they did not have details of any other advertisements displayed during the period 2006-07.
4. The trial court found that the claim made by the plaintiff is reasonable and probable and hence the suit was decreed. The lower appellate court had a thorough re- appreciation of the evidence and concurred with the view taken by the trial court.
5. A contention was raised by the appellant before the lower appellate court that the Corporation alone has the right to levy tax from the appellant and that the plaintiff has R.S.A. No. 475/2013 -4- no right to collect tax. In support of that plea the appellant has relied upon the decision of Mohammed Basheer v. State of Kerala - 2009 (3) KLT 993 and also an unreported decision in The Manager. M/s. Harrisons Malayalam Ltd. v. T.V. Lalan and others - CRP No.669 of 2005 of this Court. The lower appellate court distinguished the two decisions relying upon an earlier decision of a Division Bench of this court in P.V. Pathrose v. State - 1952 KLT 430 and held that the suit is perfectly maintainable and hence the appeal was dismissed.
6. The following substantial questions of law have been raised by the learned counsel for the appellant.
(i) Whether the levy and collection of tax which is a sovereign function, as held by the apex Court in AIR 1962 (SC) 1621, AIR 1991 (SC) 704, 2002 (6) R.S.A. No. 475/2013 -5- SCC 227 can be delegated to a private individual?
(ii) Whether the decision reported in 1952 KLT 430 dealing with the delegation of right to collect fee and toll can be taken as an authority to decide the issues on taxation when a fee and a tax are entirely different concepts?
(iii) Is not the decision of this Court reported in 2009 (3) KLT 993 and in C.R.P. No.669 of 2005 reflect the correct proposition of law on the right to sue on behalf of a Municipal Corporation?
(iv) Whether the courts below have correctly comprehended the decisions reported in 1952 KLT 430, 2009 (3) KLT 993 and that of the decision in C.R.P. No.669 of R.S.A. No. 475/2013 -6- 2005 (The Manager, Harrisons Malayalam Ltd. v. T.V. Lalan and others)?
7. The learned counsel for the appellant would submit that the lower appellate court was not justified in distinguishing the decision in Mohammed Basheer v. State of Kerala - 2009 (3) KLT 993. I find no merit in that submission. It is true, collection of Advertisement Tax was entrusted to an authorised contractor. Section 511 of Kerala Municipality Act was considered in that case. That is a general provision regarding penalties specified in the Schedule. That was actually a case where criminal prosecution was initiated against the petitioner by the contractor and thus it was held by this Court that only the Secretary of the Corporation is authorised to file a complaint for taking action for the offence committed under the Kerala Municipality Act. Annexure A complaint therein was not filed R.S.A. No. 475/2013 -7- by the Secretary but by the authorised contractor of Advertisement Tax. Since section 545 of the Kerala Municipality Act makes it abundantly clear that it is the Secretary who has to institute or withdraw from proceeding against any person who commits any offence against the provisions of the Kerala Municipality Act or the Rules, Bye- laws or Regulations made thereunder. It was held by this Court that the complaint filed by the Contractor is not competent under section 545 of the Act. Here, it is not a criminal prosecution but the suit was filed by the plaintiff - a contractor who obtained license to collect tax, as the said right was farmed out in the public auction conducted for that purpose. Therefore, the facts dealt with in Mohammed Basheer's case does not apply to the facts of this case.
8. The learned counsel has also relied upon the unreported decision of a Single Bench of this court in C.R.P. R.S.A. No. 475/2013 -8- No.669 of 2005 where in a Civil Revision Petition this court followed the decision in Mohammed Basheer's case and held that the authority to institute a civil case is vested with the Secretary of the local authority and hence the decree granted against the defendant was set aside. The lower appellate court has rightly pointed out that the decision of the Division Bench of this Court in P.V. Pathrose v. State
- 1952 KLT 430 was not brought to the notice of this Court while considering CRA No.669/2005. When there is a binding decision of the Division Bench, there can be no doubt that that decision has to be followed. The decision in P.V. Pathrose v. State - 1952 KLT 430 was not referred in C.R.P. No.669/2005.
9. The decision of the apex court in Yadlapati Venkateswarlu v. State of Andhra Pradesh and another - 1992 Supp. (1) SCC 74 has been relied upon R.S.A. No. 475/2013 -9- by the learned counsel for the appellant to fortify his submission that the power to tax is a sovereign power and so it has to be exercised within the constitutional limitations and such right cannot be given to somebody else. State's power to tax is derived from the Constitution and the Municipality's power to tax is derived from the State Legislature, which could delegate that power, in the manner the Constitution permits, to the Municipal Council. In that case it was held:
"On September 18, 1969 the government of Andhra Pradesh issued G.O. Ms. No. 749 M.A. in exercise of its powers under the aforesaid Rule 12 of Schedule IX directing that all Municipal Councils, shall with effect from April 1, 1970 levy the property tax as per the provisions of the new Act. But due to certain administrative difficulties the revision could not be completed before April 1, 1970 and the government, R.S.A. No. 475/2013 -10- therefore, issued G.O. Ms. No. 293 M.A. dated April 18, 1970 directing the Municipal Councils to levy the property tax as per the provisions of the new Act from October 1, 1970. By another G.O. Ms. No.81 M.A. dated January 30, 1971 the government directed the Municipal Council of Vijayawada to continue to levy the property tax under the provisions of the old Act as certain rate payers had filed writ petition in the High Court and obtained stay.
However, by G.O. Ms. No. 675 M.A. the G.O. Ms. No.81 was rescinded and the Vijayawada Municipal Council was directed to collect revised taxes under the provisions of the new Act with effect from October 1, 1970. This latter G.O. Ms. No. 675 was in its turn rescinded by G.O. Ms. No. 255 M.A. dated June, 15, 1973 whereby the government ordered that the Vijayawada Municipal Council shall continue to levy the property tax R.S.A. No. 475/2013 -11- under the provisions of the old Act and that G.O. was to be deemed to have come into force from October 1, 1970.
As a result the Vijayawada Municipality continued to levy and enhance the property tax under the provisions of the old Act."
10. The main argument in that case was that the Amendment Act was not retrospective and that the enhancement of the tax was not made following the procedure prescribed by law. That contention was negatived holding that the procedure prescribed under the old Act was followed in as much as under the old Act the property tax was levied on the basis of only rental value whereas under the new Act it was on the basis of the rental value or of the capital value. There is nothing in the decision cited supra to support the argument advanced by the learned counsel for the appellant that the right to collect R.S.A. No. 475/2013 -12- tax cannot be farmed out by the Municipality under a public auction conducted by it. The very purpose of farming out the said right is to avoid the burden of spending that much amount for collecting the charges and to avoid such other incidental charges. The contention that the licensee/contractor cannot fix the advertisement charges nor can such a contractor/licensee decide whether a particular item is exempted from being taxed also does not arise since the standards/rates and norms are fixed by the Corporation. What remains is only the calculation of the tax which is to be levied from the advertisers. Evidence worthy of acceptance was adduced by the respondent by producing Ext.X1 series and also by the oral evidence of PW2, which could not be controverted by the defendants. The contention that the lower appellate court was not justified in relying upon the decision of P.V. Pathrose v. State - 1952 KLT 430 is found to be unsustainable.
R.S.A. No. 475/2013 -13-
11. In P.V.Pathrose's case this court has relied upon two decisions of the Madras High Court. Karuppanna v. F.W. Haughton AIR 1936 Mad. 547 was a case where prosecution was launched by the Chairman of Coonoor Municipality against the Councilor of that Municipality for persistent refusal by the latter to pay the prescribed fee for the use of the municipal cart-stand. The prosecution therein failed since the dues were really payable to the contractor to whom the right of collecting cart-stand fee had been granted by the Municipal Council. The Councilor, therefore, brought a suit for damages on malicious prosecution against the Chairman. Ultimately, the Hon'ble High Court of Madras restored the decree passed by the Subordinate Judge awarding damages to the plaintiff therein and the prosecution launched by the Chairman was thrown out. R.S.A. No. 475/2013 -14-
12. The decision in United Motors Ltd. v. Palghat Municipality - AIR 943 Mad. 122 was also considered in that case. In that case it was held that a person to whom the Municipality had sold the right to collect certain fees and not the Chairman of the Municipality who had to take necessary steps to collect those fees, whether by litigation or otherwise. It was held in P.V.Pathrose's case:
"These two cases fully support the view we expressed earlier that once a local body farms out the right to collect tolls or other fees due to it the responsibility to take the steps necessary to realise it is that of the farmer and not that of the local body concerned. No doubt sometimes the assistance of a Municipal Council or a Local Board might be found necessary when the contractor seeks to realise it by seizure or distraint. The relevant Act or Rules may also provide for such assistance, but it is entirely a different proposition R.S.A. No. 475/2013 -15- to hold that the right to receive unpaid tolls or fees would continue to vest in the Municipal Council or other local body notwithstanding the farming out of the right"(underlined by me to lay emphasis)
13. Section 271 of the Act reads:
"Every person who erects, exhibits, fixes or retains upon or over any land, building, wall, hoarding or structure in a municipal area any advertisement or who displays any advertisement to public view in any manner whatsoever in any place in such area, whether public or private, shall pay on every such advertisement a tax calculated at such rates and in such manner and subject to such exemptions as the Council with the approval of the Government, by resolution determine:
[Provided that the rates shall not be less than the rate specified by the Government for this purpose.] R.S.A. No. 475/2013 -16- Provided further that the tax under this section in any advertisement displayed in a public service vehicle a defined in the Motor Vehicles Act, 1988 (Central Act 59 of 1988) passing through the local limits of more than one local authority shall be levied by a Municipality only if such vehicle -
(a) commences its operation from the municipal area of that Municipality; or
(b) commences its operation from a place other than a municipal area and passes through that municipal area before it passes through the local limits of any other local authority:
Provided also that no tax shall be levied under this section on any advertisement or a notice;-
(a) of a public meeting; or
(b) of an election to any legislative R.S.A. No. 475/2013 -17- body or a Municipality, or a Panchayat; or
(c) of a candidature in respect of such an election:
Provided also that no such tax shall be levied on any advertisement which is not a sky sign and which -
(a) is exhibited within the window of any building which is not a public place; or
(b) relates to the trade or business carried on within the land or building upon or over which such advertisement is exhibited, or to any sale or letting of such land or building or any effects therein or to any sale, entertainment or meeting to be held upon or in the same; or
(c) relates to the name of the land or building upon or over which the advertisement is exhibited, or to the name of the owner or occupier of such land or building; or R.S.A. No. 475/2013 -18-
(d) relates to the business or any railway administration; or
(e) is exhibited within any railway station or upon any wall or other property of a railway administration except any portion of the surface of such wall or property fronting any street."
14. Section 276 of the Act says that the Secretary may farm out the collection of any tax on advertisement leviable under section 271 for any period not exceeding one year at a time on such terms and conditions as may be provided for by bye-laws made under section 567.Therefore, it cannot be held that the Secretary cannot farm out the right of collection of Advertisement Tax to the contractor. Once, that right is farmed out the argument that the Secretary of the Corporation alone can collect tax will have no legs to stand.
R.S.A. No. 475/2013 -19-
15. Therefore, in the light of the binding decision of the Division Bench, arguments to the contrary advanced by the learned counsel for the appellant cannot be sustained. The lower appellate court has rightly repelled the arguments advanced on behalf of the appellant. The questions of law raised are answered against the appellant. No other point survives for consideration.
In the result this Regular Second Appeal is dismissed in liminie Sd/-
N.K. BALAKRISHNAN, JUDGE //True Copy// P.A. to Judge jjj