Kerala High Court
Legal Aid Committee For Profession ... vs State Of Kerala And Ors. on 23 June, 1989
Equivalent citations: [1990]181ITR324(KER)
JUDGMENT Sukumaran, J.
The protest in the writ petition :
1. The writ petition presents a protest against profession tax by a local authority.
2. The legal war against the profession tax had been waged by various persons on numerous grounds. Some have been principled fights. Rajago-palachari, the last Governor-General of India, successfully resisted the levy of profession tax when the basis of levy was the receipt of pension. (Vide C. Rajagopalachari v. Corporation of Madras [1964] 53 ITR 454; AIR 1964 SC 1172). A rich agriculturist of Palghat District made a fight, supported by the Madras decision (Sankaranarayana Pillai v. Executive Officer [1966] AIR 1966 Mad 262.) to contend that agriculture is not a calling. This court struck a different note in Chengarath Velu v. Execu. tive Officer [1967] KLT 350. A senior lawyer was also in the array. The fight was more on principle than on monetary impact, D. H. Namboodiripad owned large tracts of land (and a larger heart which liberally donated for the very many cultural, artistic and other activities in the State). He fought and got partial success in D. H. Namboodiripad v. Executive Authority, Thekkumkara Panchayat [ 1970] KLT 1039.
3. In the present case, individually the impact of profession tax is inconsequential. Collectively, the deprivation of the tax can be crucially crippling for the local authority.
A threshold thrashing :
4. The protest comes from seven petitioners. The first petitioner is "The Legal Aid Committee for Profession Tax Payers, VSSC." The second petitioner, secretary of the first petitioner-society, seeks to figure as the representative of the other petitioners. Petitioners Nos. 3 to 7 are trade unions of engineers and of employees.
5. There is a serious hurdle even at the threshold for the petitioners. The unions as such are not aggrieved by any action of the local authority. The second petitioner does not present any facts in relation to his personal professional income and of any unjustified levy of profession tax on him. This court declared in Mathew v. Edathua Panchayat [1988] 2 KLT 329 that similar attacks and by similar organisations cannot be accepted as public interest litigation. The petition there was, consequently, dismissed on that ground. A recent Bench decision in Porathisseri Panchayat Tax Payer's Association v. Executive Officer [1989] 1 KLJ 664, has authoritatively spoken in a similar strain. In view of these weighty observations, the very maintainability of the writ petition is fatally undermined. The writ petition is liable to be dismissed in that view of the matter.
Nature of the legal fight:
6. The legal fight is in relation to some general and recurring questions. In a sense, the fight started even earlier, when the trade unions filed a writ petition, O. P. No. 10637 of 1983. The decision there brought about only an armistice; not peace. The decision ensured only a fresh assessment exercise conforming to procedural fairness as detailed therein.
7. The pattern of performance of the assessing functions by the local authority and the sweep of the procedural safeguards that could be claimed by the employees will have to be fully explored and neatly delineated. A definite decision is desirable from all points of view. The continuing suspense can prolong the tense distress. Those whose services are valuable need not dissipate their energy in wasteful exercises. For that reason, the grievance--one linked substantially with the fairness in procedure and conformity to the principles of natural justice as incorporated in the statutory rules--is better decided by this court. Keeping in mind that objective, the contentions are closely examined.
The place of action :
8. Thanks to the imaginative and intellectual endowments of the leaders, scientific research of independent India was always on the wings of vision. Great scientists were ready to serve science and the Nation. The scientific saga which started with Bhaba and Sarabhai continues with Gowariker and Kalam.
9. Exploration in space was an intellectual thrill when backed by brainy bravery. It gave spirit and fire to many a scientist and skilled workman. A rocket-launching station was thought about The choice of the site was dependent upon two relevant scientific factors ; a nearness to the sea to enable the launching operation; a proximity to the magnetic equator for scientific reason.
10. Attipra is a coastal village. "Thumba" is situate within its area. It has a geographical peculiarity, a proximity to the earth's magnetic equator. The waves of the Arabian Sea caress its coast. About a mile and a half away runs a rail line. These physical features turned out to be advantageous.
11. Preliminary experiments conducted prompted a preference for Thumba. The nucieus of VSSC was then formed. Attipra Panchayat was thus launched into a spectacular space of science and research. The rest is history. The basic facts and the nostalgia which takes in earlier sufferings and sacrifices of the scientists are contained in an attractive publication of "20 Years of Rocketry in Thumba--1963-1983." The growth of manpower was somewhat fantastic : 6 in 1964 and near 6,000 by about 1984. (The authentic chart gives the figure for 1983 as 4,862, a scientific and technical staff of 3,408 and administrative staff of 1,454.)
12. Many thousands practise their profession in the Attipra Panchayat area. And those who practise a profession are liable to pay profession tax. In later years, a comfortable environment, unavailable earlier to many, was their justly deserving privilege. Understandably enough, scientific talents and skilled workmanship carry with them high emoluments. The profession tax can be correspondingly high. The Panchayat was annoyed when payment was defaulted. "The oysters have been eaten but the bill remains unpaid", felt the Panchayat.
Reflections :
13. Profession tax is one of the revenue resources for the local authorities. It was a new find for the Attipra Panchayat which hitherto had not witnessed massive industrial activity. When prestigious institutions spring up, correspondingly greater responsibilities are cast on the local authorities. Potable water, pathways without potholes, functional drains and healthy environs are some among the long list of demands. If taxes are not collected promptly, the local authorities can get into "a hopeless tangle, their duties heavily in arrears, their streets dirty and unlighted."
14. Taxation has always been distasteful to those who are its victims. Yet, in a welfare State, the obligation is primary and fundamental. As regards profession tax, it does not make a deep dent into the budget of the taxed class--the members of the middle class. However, these little collections amount to substantial sources for the local authorities.
The current controversy :
15. In the early years, at least some of the employees used to pay the tax. That is evident from the appendix to exhibit P-l judgment (in O. P. No. 10637 of 1983 to be referred to in detail later) and receipts like exhibits P-5 of 1977, P-6 of 1979, P-6(b) of 1982 and R-4(c) to (l) of 1983. Some of the employees, thereafter, felt like resisting the tax. No local authority, naturally, could view it with indifference. Recovery steps including prosecution were pressed into service. Such steps embittered the feelings of the parties. Facing the trial in the crowded court rooms was felt uncongenial by many of them. The organised might of the employees, canalised the attacked projected it to the arena of a constitutional court. The judgment therein, exhibit P-1, however, did not put a lid on the controversy. The controversy continued (as is evident from 0. P. No. 7488 of 1988 which relates to the period September 30, 1987, to April 1, 1988) and continues in the present petition which relates to the period April 1, 1988, to September 30, 1988. The antecedents of the litigation need not unnecessarily cloud the simple issue arising for determination in that connection. Yet, a reference to them is desirable to delineate the background of this litigation.
16. When, in 1983, profession tax was sought to be levied and collected, five trade unions of employees approached this court in proceedings under Article 226 of the Constitution. (The first petitioner-society in the present case was not born then). The issues were discussed elaborately, decided duly, by a judgment, exhibit P-l, dated November 12, 1984. Balakrishna Menon J. summarised the various rules connected with the levy, assessment and collection of profession tax as contained in the Kerala Panchayats (Profession Tax) Rules, 1963. The effect of the provisions was summarised as follows :
"These provisions of the Act and the Rules contemplate an assessment calling for return, and after giving the assessee an opportunity to prove his return, and in cases where the returns are not accepted or no returns are submitted, to make assessment after giving the assessee an opportunity as contemplated by Sub-rule (3) of Rule 10. A demand is permissible only after an assessment."
Later, it was laid down :
"There cannot be recovery proceedings unless there had been an assessment and demand in accordance with the rules. Shri K. Sudhakaran and Shri Pirappancode V. Sreedharan Nair, counsel appearing on behalf of respondents Nos. 4 and 5, submit that the panchayats are willing to hear the objections of those who want to object to the demands for profession tax made to them."
17. As is evident from the above observation, counsel appearing for the panchayat submitted to the view taken by the learned judge. It is doubtful whether the court had been assisted with much researched materials in the constitutional history of the levy of profession tax, in the course of the arguments in the case. (Such legal researches are no doubt difficult and time-consuming.) There is no indication of an effective presentation of the various possible points of view.
18. Notwithstanding the view taken on the scope and ambit of Rule 10 and allied rules, the learned judge observed :
"I do not think it is necessary in this case to invalidate every assessment and demand for the reason of the non-compliance to the requirements of Rule 10."
19. Further directions followed by which the assessees were directed to file their objections and the panchayat was directed to consider them and thereafter to determine the profession tax due. The proceedings have continued thereafter in the light of the directions.
20. It would appear that objections to the fresh proposals had been filed individually. Exhibit P-2 is a specimen of such objections. The panchayat too replied them individually. Exhibit P-3 is a typical reply. According to the panchayat, the objections raised were not in accordance with the directions contained in the judgment, exhibit P-l.
21. It was asserted in paragraph 2 of exhibit P-3 that details regarding the income of the particular assessee had been obtained from the head of the institution in which he was serving and that the tax was fixed on the basis of "the definite income", he had derived for each of the half years. Other and general claims were met by similarly general and vague answers. A claim for exemption from the profession tax was one such. The claim was rightly rejected.
22. This individual communication from the panchayat to the assessee was sought to be attacked by a general letter, exhibit P-4, dated January 21, 1986, forwarded by the first petitioner, Legal Aid. Committee for Profession Tax Payers of Vikram Sarabhai Space Centre, Such a general communication did not merit any attention from the local authority, either on the basis of law or even under the specific directions of exhibit P-l judgment. The panchayat published a notification on August 24, 1988, directing that the defaulters in relation to payment of profession tax, shall comply with the demand within an extended time as indicated therein. That too was sought to be questioned by a further communication from the first petitioner, exhibit P-6, dated September 9, 1988. Promptly came the reply of the panchayat, exhibit P-7, dated September 17, 1988. The last sentence is sufficiently indicative of the mood and mind of the local authority :
"As a matter of fact, you have raised no sustainable objection with reference to your assessment of tax. The vague objections contained in your letter cited are hereby rejected."
23. The panchayat took steps in tune with Rule 15 of the Profession Tax Rules, to obtain information relating to the professional income and other particulars of the employees from the employer, the VSSC. The panchayat ultimately obtained the same. (I do not intend to comment upon the intermediate events, in view of the pendency of a case, Criminal Miscellaneous Civil No. 786 of 1988 before this court. Those at a very responsible and high level, should, however, take due note of the tone and tenor of publications in responsible newspapers evidenced by exhibits P-8 to P-10.)
24. A notification about the profession tax, had been published in the newspaper 'Kerala Kaumudhi' having very wide circulation in the locality. There was a further publication exhibit P-5 in the same newspaper on August 28, 1988, specifically extending the time for filing objections, if any, to the particulars contained in the assessment register. The time for filing objections was extended from the original date fixed from August 30, 1988, to September 15, 1988. Exhibit P-6 letter dated September 9, 1988, of the second petitioner (couched in intemperate and unrefined language) was then sent. According to the counter-affidavit of the panchayat, when the notices were served on the employees, objections were filed only from a limited category of employees. Immunity from tax was claimed by some of the ex-servicemen ; some others contended that only basic pay was to be reckoned for the purpose of computing professional income. These contentions were rightly turned down by the panchayat
25. Assessments were made on the basis of such information and assessment register prepared. Intimation of the type of exhibit P-16, was issued to the employees. That notice gave all the relevant particulars such as the name of the employee, the half-year for which the demand was made and the tax payable. The employee was requested to verify and satisfy about the correctness of the assessment. Specific opportunity was given to file objection within 30 days from the date of the receipt of the notice. A post-script to the notice sought to indicate the stand of the panchayat in the matter. A notice, exhibit P-13, dated January 2, 1989, mentioned about the assessment based on the particulars furnished by the Competent Authority indicated that the assessment register was open for inspection by every taxpayer, and specific opportunity was offered for inspection of the assessment register up to January 31, 1989. The panchayat, by exhibit P-14(2), forwarded on January 25, 1989, to the Controller of VSSC, the assessment on the various employees. A request was made to serve them on the various employees. The assessees were to file objections within 13 days from the receipt of the notice. In pursuance thereof, exhibit P-14 circular was issued by the VSSC. That circular dated February 2, 1989, gave intimation to the employees about the receipt of assessment orders/ notices. The employees were directed to collect the assessment notices before February 8, 1989.
26. The first petitioner, Legal Aid Committee--the name need not be confused with the organisation engaged in general legal aid activities; the committee exclusively cater to the interests of the employees of the VSSC--then sent exhibit P-17 in a printed form. The panchayat received the objections and the letters dated March 7, 1989, and March 17, 1989 on March 14, 1989, and March 20, 1989, respectively. According to the panchayat, there was hot even a whisper about any possible error or mistake in the fixation of the income as furnished by the employer. The objections were, accordingly, rejected by the panchayat. The panchayat asserts that even in the original petition, the employees had not pointed out any specific incidents of erroneous assessments. On March 13, 1989, a requisition was made by the panchayat to the employer, the VSSC, for deducting from the salary the profession tax and paying it over to the panchayat. Demand notices of the type of exhibit P-19 were also sent to the individual employees. The finalisation of the assessment was indicated in that communication. The facility for filing an appeal in the event of the employee having any grievance was also pointed out therein. The first petitioner reacted to it by sending exhibit P-20 letter, indicating its resistance to the collection of profession tax.
27. The original petition was filed soon thereafter on March 30, 1989. The writ petition was entertained on March 30, 1989, and the panchayat was interdicted from collecting the tax demanded by an interim order.
28. The counter-affidavit on behalf of the panchayat was filed on June 8, 1989. The third respondent, VSSC thought it necessary to clarify its stand, apparently when pressures were exerted on it from opposite directions--its own employees on the one side and the panchayat in which the, establishment was situate on the other. A counter-affidavit was, therefore, filed on June 18, 1989. Though the interpretation of the panchayat rules came up for decision in the writ petition, the State has been content to keep silent. It did not make any effort whatever to clarify its stand or to think about the possible impact an adverse interpretation could have on the working of the local authorities.
29. The issue involved in the original petition is not that complicated. Is there a violation of the relevant rules and in particular. Rule 10? It is unnecessary to embark on this aspect, inasmuch as two decisions have been rendered on the identical point. The first one is of Batakrishna Menon J. already referred to. In Thoshibka Anand L. W. A. v. Executive Officer [1985] KLT 95, Bhat J. adverted to that decision. Bhat J. and Balakrishna Menon J. have taken the view that Rule 10 is mandatory. Yet, the asessments were not invalidated for non-compliance with Rule 10. The panchayats were directed to give to the aggrieved assessees an opportunity to put forward their objections. The panchayat was directed to consider their objections.
The later views on Rule 10 read with Rule 15 :
30. Balakrishnan J. had to consider a similar case of employees in a company. Special attention was paid to Rule 15(2) and its impact on Rule 10. The reasoning is contained in paragraph 3. The learned judge observed :
"The respondents are, admittedly, employees working in a company and, therefore, Rule 10 is not applicable. Rule 10 relates to the recovery of profession tax from a company or a person doing any particular business. Whereas Rule 15 says that the executive authority may by notice require any employer . . . (a) to furnish a list in writing of the names of all persons employed by such employer . . . After obtaining information, under Rule 15 the Panchayat is entitled to demand profession tax from the concerned employee by issuing notice under Section 13 of the Profession Tax Rules, 1963 ... It is not necessary that there should be an individual assessment in respect of the employees working in a firm or a company." (emphasis supplied) (See Criminal Appeals Nos. 578, 586 and 587 of 1986)
31. This view was followed by Padmanabhan J. in Executive Officer v. Mohammed [ 1989] 1 KLT 360. The learned judge observed :
"All these are cases involving employees of different offices. Notices were issued under Rule 15(2) to all the heads of the offices and statements were obtained from them. Assessments were only on the basis of those statements. Therefore, on-compliance of Rule 10 cannot be taken as a defect in the prosecution."
(The word "on-compliance", is patently a printer's error for "non-compliance".) An easy escape route, but. ..
32. If the decisions are to be followed, the writ petition is liable to be dismissed. Counsel for the petitioners submitted that the decisions require reconsideration. Having regard to the conclusion ultimately reached, it is not necessary to undertake that work in this judgment. I must, however, with respect, acknowledge the reservations I have as regards the two decisions.
33. Padmanabhan J. has followed, without independent discussion, the dictum as laid down by Baiakrishnan J. That judgment does not refer to the earlier decisions of Balakrishna Menon and Bhat JJ. Rule 10, on its plain reading, does not contain any restrictive classification as is assumed in the judgment: the wording is :
"... company or person for any half year, he shall serve a notice on such company or person ..." (emphasis supplied)
34. The qualification "transacts any business" is absent as regards the person referred to in this rule. The generality of the class of persons referred to in Rule 10 cannot ordinarily be subjected to a fatal constriction by a court's construction. The conclusion about a swift collection of tax soon after the collection of information from the employer without any other intervening exercise can, at least in some cases, visit innocent persons with a harassing but avoidable burden. A possibility of an honest mistake by an employer cannot be ruled out. The mistake can be easily cured if only an employee has some opportunity to know about it and offer his remarks to the local authority. The matter is not pursued further, as it can be done properly and profitably only by a Bench.
Constitutional discipline regarding tax matters.
35. Citizens of India are protected against illegal exactions. There is a constitutional provision, Article 265, which mandates that any levy or collection of tax shall be supported by the authority of law. This constitutional protection is available right from the time the levy is imposed, up to the time the currency is collected from the taxpayer. Any collection lacking the sanction of law, the apex Court declared, is a violation of Fundamental Right.
36. Profession tax levied by the local authorities, had received attention of the administrators and jurists alike, on very many previous occasions. It is unnecessary to trace its history in the present case. The rich and useful deliberations on profession tax, as available from the Constitutional Assembly Debates, cannot be easily missed, even when the court is concerned only with the interpretation of a rule or a concept in a Section . The report of the Taxation Enquiry Commission 1953-54, Vol. I, contains a useful discussion on the topic. Among other things, it noted that the proportionate cost of collection of tax was high when the area is small. The report approved of the recommendations of the Local Finance Enquiry Committee that local bodies should not be empowered to call for the accounts of the assessees and that they should only call for a return of income from persons who appear to be liable to the tax. The Debates on Article 256 of the Draft Bill as available in the Constituent Assembly Debates, Vol. 9, will pay a perusal.
37. The conferment of power on the local bodies for levy of profession tax is noticeable in the Devolution Rules under the Government of India Act, 1915. It enumerated the taxes which could be levied for the purpose of local bodies. Item No. 9 was "a tax on trades, professions and callings." This corresponded to entry 46 in the Government of India Act, 1935, and entry 60 in Last II of the VIIth Schedule to the Constitution. The history of profession tax from the year 1915 has been traced by the Supreme Court, though in a different context, in Bangalore Woollen, Cotton and Silk Mills Co. Ltd. v. Corporation of the City of Bangalore, AIR 1962 SC 562.
38. Profession tax is indeed a different form of tax on income. Tax on income is a legislative prerogative of the Centre. Express Constitutional provision had, therefore, to be found for this exceptional patronage to the local authority with a source of revenue.
39. Section 142A of the Government of India Act, 1935, had fixed the maximum limit of profession tax at Rs. 50. There have been complaints from local authorities that the amount was meagre. A Committee, Local Finances Committee, was set up, some time in 1949 to go into the finances of local bodies. The Committee duly submitted its report. It was soon thereafter that the Constitutional provision relating to profession tax was debated and discussed by the Constituent Assembly.
40. A compromise was struck between two competing claims : the Centre which desired a broader buffer of revenue and the panchayats clamouring for a larger trickle of financial resources to carry on its functions. Article 276 came into the Constitution in that background.
41. In the course of the debates in the Constituent Assembly, Dr. Ambedkar succinctly stated the legal position about a local authority. He pointed out:
". . . in every Constitution, the taxing resources of a State are generally distributed between the Centre and the States. The question of distributing the resources between the States and the local authorities is left to be done by law made by the State, because the local authority is purely a creation of the State. It has no plenary jurisdiction ; at is created for certain purposes..."
42. The views expressed by the Members of Parliament were reflective of their great erudition and intimate personal experience. Ananthasayanam Ayyangar from Madras pointed put how the profession tax is an invasion into a source of revenue for the Centre. According to him :
"In the villages, there is no profession tax. Agriculture is the only profession there."
43. There were others like Babu Ramnarayan Singh from Bihar, who spoke passionately for the panchayat. He stated :
"I was under the impression that all the powers of the country will be directly transferred to the people in the villages. Now, what do I find ? AH the powers are concentrated in the Centre and some powers are allowed to trickle down to the provinces."
He pleaded :
"All the money should belong to the local bodies. As it is, they are getting some funds by way of mercy from the local Government which in turn gets something from the Central Government. I do not think this is right This process should be reversed. Everything should belong to the villagers. The provincial Government should get contributions from the local bodies and the Central Government should get contribution from the provincial Governments."
44. Chaudhari Ranbir Singh from Punjab did not find any justification for imposing a limitation of profession tax to an amount of Rs. 250 a year. R. K. Sidhva from C. P. and Berar drew upon his experience as to how the State Governments used to deal with local bodies. He stated :
"From my own experience, I may say that they should not be treated in this way because, the provincial Governments are always stingy in the matter of granting funds for these bodies and unless we in this Constitution make better provision for them, the lot of people Jiving in those areas will not improve."
45. Prof. Shibanlal Saksena particularly emphasised :
"... local boards are starved for very small sums. They are the bodies who really want the money so that they can give proper attention to the people in their areas, give them better roads and schools and other amenities which they very much need ..."
46. A very elaborate assessment procedure would be inapposite in the context of such a small grievance, as had been noted in the Taxation Enquiry Commission Report and in the discussions concerning the levy, assessment and collection of profession tax.
Natural justice and procedural protection--vis-a-vis professional tax :--
47. Certain principles are now well established. The State, its authorities and functionaries have to act fairly, rationally and reasonably. They have to stick to the letter of the law (and a fortiorari, the law of the laws--the Constitution). Fundamental Rights are especially important. Taxation measures too are subordinate to these paramount provisions.
48. Natural justice is an inseparable ingredient of fairness and reasonableness. Ordinarily, therefore, the State or a local authority will have to observe the principles of natural justice. Statutory provisions in taxation administration generally encapsulate that concept.
49. Natural justice, however, is not a straight-jacketed formula. Its area of operation, working pattern and the consequences of violation would depend upon particular situations. If the Legislature so feels, the principles of natural justice can even be excluded by a positive provision in the statute itself. Those would ordinarily be exceptional situations, but not totally non-existent Even in the observance of the principles, different yardsticks and different time schedules could be provided for or fixed, depending upon the exigencies of the situation (See Marietta Gandhi's case). It would, therefore, be proper to analyse the taxing-scheme and examine the scope of the taxing measure to find out the exact extent of the performing part of the principles of natural justice. Such an examination must necessarily be consistent with common sense and the Constitutional principles.
50. Illustrations are not difficult to draw upon to demonstrate the principle. Take the instance of a person holding a very small extent of land. Basic tax is payable, at a comparatively low rate. Even in the case of a person owning or holding land up to the ceiling limit provided under the Land Reforms Act, the quantum of tax payable will be comparatively small. The extent of the land does not vary in the absence of any voluntary transaction entered into by the assessee (such as sale, gift and the like) or involuntary actions such as acquisition of land by the State, or sale of the property in pursuance of a decree of court or a revenue recovery certificate. Even then the original assessee is in the know of the facts. He can, therefore, know the tax liability and pay it accordingly, explaining, if necessary, the variation of the tax. Detailed procedural formalities or prolonged correspondence would be a redundant requirement to conform to the principles of natural justice in that context.
51. The cost and consequences of such protracted correspondence may also be examined in the very same context.
52. If prior intimation of a proposal for taxation or any important step therein posits the issue of an appropriate notice, it would be ordinarily prudent, and even necessary, that such a notice is sent by a method which ensures effective service by an official of the authority on whose behalf the notice is issued. Sending it by registered post could be an alternate method. In either case, the cost can be much in excess of the tax that is received. In such circumstances, an assessee who knows the original extent of the land and who ordinarily must be in the know of any transaction or action relating to his land could not, with grace, or as a matter of right, demand intimation of his statutory obligation in an over-liberal manner which could defeat the very purpose of the taxation itself.
53. The principles of natural justice or statutory provisions involving and incorporating such principles will have to be understood in a pragmatic and practical manner in relation to different situations. This is particularly so when the tax impact is, comparatively speaking, nominal. Taxes payable to a local authority, by the very nature and circumstance of its levy, would not be such as require punctilious observations of over-refined principles of natural justice. A resident of a local authority, paying his share of small taxes is an illustration. In relation to a small amount payable as his house tax, he can, with easy facility, get at the relevant particulars even when he entertains a doubt about the impost being on the higher side. The position is entirely dissimilar from that of a citizen having to fight a massive measure of tax such as is imposed on one with extensive trading or business activities, in the form of sales tax or income-tax. Sometimes, even when the quantum of tax is not unduly huge in a particular year, a principle may be involved and may require an authoritative final determination, in view of its recurring nature. Even if no particular principle is involved, the quantum of tax by itself can be a matter of life and death for an assessee. In such a situation, even in relation to intermediary steps (such as facility for inspection of a material on which the assessing authority relies or the cross-examination of a person whose testimony is intended to be acted upon by the Department), a court of law may insist on faithful and punctilious observance of the statutory provisions incorporating the principles of natural justice. The interpretation of the relevant rules, in the context of a levy of profession tax, could be better attempted with this basic background.
54. One peculiar feature of levy of tax on employees has been particularly noted in discussions connected with tax problems. Those observations will help furnishing a background for understanding the scheme of the procedural rules in the assessment and collection of the tax in question. According to Feldman and Kay, one major area "in which income-tax works relatively well", is "the area of income from employment".
55. In support of the observations, they state :
"The reason the tax works well is that there is for each employee a single transaction at the end of each week or month and it is that transaction which yields the tax base. There is little problem of definition ; and since every payslip has a name and an amount on it there is no problem of identification or of measurement. The tax works in a straightforward manner because its base is cash flow."
(See Article on " Tax Avoidance" by J. Feldman and J. A. Kay in " The Economic Approach to Law", Paul Burrows-Cento G. Veljanovski, pages 331, 332.)
56. Even as regards profession tax itself, this absence of complication has been indicated by the Supreme Court in Ram Bachan Lal v. State of Bihar, AIR 1967 SC 1404, 1408. The court observed :
"The subject-matter of profession tax is not very complicated ..."
Conclusions in the present case and the reasons :
57. In the present case which concerns the half year ending September 30, 1988, the petitioners were in fact issued notices under Rule 10. They were specifically intimated about the information obtained from their employer on the basis of a requisition made under Rule 15(2). The preparation of an assessment register was particularly highlighted in the notice issued to them. That anyone interested in that behalf could inspect the register during the period specified in that behalf was also clearly and specifically indicated. Having regard to the steps so taken by the panchayat, there cannot be any doubt whatever that it has endeavoured to scrupulously comply with the requirements in the matter of assessing the profession tax. An honest assessee, if entertaining a bona fide feeling about any possible inaccuracy of the figures, should, on receipt of such information, take the pains to peruse the register and to persuade the panchayat to apprise itself of the correct facts. Necessary materials and data will have necessarily to be furnished by the aggrieved assessee in such a situation. This is not what has been done by the assessees. They issued a fiat as it were, calling upon the executing authority to furnish them the details. The statute did not provide for the same. The clear implication of the statutory scheme is that such a step is supremely redundant. It is a responsible authority, the pay master of the assessee, that furnishes the particulars relating to the professional income of the assessee. An opportunity to scrutinise the particulars is given to the assessee by a notice issued in that behalf. If the assessee does not avail of the opportunity, he has to suffer the consequences. The finalisation of the assessment and the issue of the notice of demand would be fully justified in such circumstances in the light of the principles discussed above.
58. Even in the original petition there is no demur that, in any particular case, the assessment register contains an inflated figure in relation to their professional income. When that is the case, technical contentions appear in an unattractive attire. A Constitutional court, exercising powers under Article 226 of the Constitution, is concerned with substantial justice. The court is totally unenthusiastic about fights between individuals or institutions on petty personal "prestige" issues. The assessees in this case do not have anything to present by way of substantial grievance. There is not even a tittle of grievance in relation to substantial justice. Such a case supremely deserves a strong disapproval from this court. On the facts of the case, there is no case whatever for invalidating the assessments or interfering with the demand for tax,
59. It is unfortunate that there has been a meaningless fight between the local authority and the employees working in an institution within its area. It is equally unfortunate that there has been some misunderstanding even between the panchayat and the VSSC. It is profitless to apportion the blame. The parties must be in a position to treat bygones as bygones, at least when their respective stands have been anxiously examined and judicially adjudicated.
60. The local authority appears to have a genuine grievance that its attempts at collecting what is its legitimate dues have so far been a labour of Sisyphus'. Its anguish at the dues becoming barred by efflux of time is visible in many places and on many occasions. The Legislature had at one time taken note of some such problems and reacted by enacting Section 69A. That it may turn out to be inadequate appears to be the apprehension. The Legislature is not helpless in the matter. If the State is so inclined, reclamation of eroded revenue may be possible by exercises such as enlargement of time or engrafting of exclusions, in the provisions, for giving the statutory time bar. An imaginative and intellectual agility is, of course, essential.
61. The assessees'have been ambitious enough to seek an exemption from profession tax. The panchayat has already turned it down. Of course, they can knock at different doors. However, the court cannot, despite its goodwill for the scientific talents and their administrative assistants, show any undue enthusiasm to sympathise with such a claim. As a sagacious statesman, observed in a different context:
"It is not to the sturdy marching troops that extra rewards and indulgences are needed at the present time. It is to the stragglers, to the exhausted, to the weak, to the wounded, to the veterans, to the widows and the orphans that the ambulances of the State and the aid of the State should, as far as possible, be directed."
(See Winston S. Churchill--Speeches 1897-1963, Vol, IV, page 126.)
62. The writ petition is dismissed with costs ; each of the petitioners shall pay the costs to the panchayat, costs including advocate fee of Rs. 500.