IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 28862 of 2003(J)
1. SUBHALAKSHMI,
... Petitioner
2. B.RAMKUMAR,
3. B.LAVANYA,
Vs
1. THE DISTRICT COLLECTOR, IDUKKI.
... Respondent
2. THE AGRICULTURAL INCOME TAX AND
3. THE TAHSILDAR (REVENUE RECOVERY),
4. THE VILLAGE OFFICER, VANDANMEDU.
For Petitioner :SRI.PHILIP T.VARGHESE
For Respondent :GOVERNMENT PLEADER
The Hon'ble MR. Justice P.R.RAMACHANDRA MENON
Dated :11/12/2009
O R D E R
P.R. RAMACHANDRA MENON, J.
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WP(C) No. 28862 of 2003
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Dated, this the 11th day of December, 2009
J U D G M E N T
The petitioners are before this Court challenging the coercive
steps taken, in respect of the tax liability arising under the Agricultural
Income Tax Act 1950 and also under the KGST Act, in respect of the
original assessee, who in fact had sold her properties to somebody else
before the same came to the hands of the husband of the 1st petitioner
(father of the 2nd and 3rd petitioners).
2. With regard to the factual position, the late
Balasubramanyam, the deceased husband of the 1st petitioner and
father of the other petitioners, was the owner of the property having an
extent of 1.59 acres of Cardamom land in survey No. 159/1 of
Vandanmedu Village, who obtained the same by virtue of the Sale Deed
bearing No. 505/1994 dated 16.02.1994 of the SRO Kattappana.
According to the petitioners, the said property was purchased for valid
sale consideration from one Rosamma, who derived the title by virtue of
Ext.P1 Sale Deed dated 26.08.1992 executed by one Manikandan. It is
contended by the petitioners that, Manikandan derived the title to the
above properties much earlier, by virtue of the Sale Deed No. 569/1986
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dated 14.02.1986, whereby all the rights and interest of the vendors by name
K.Govinda Raj and C.V. Kannadasan were conveyed to him. Ever since the
execution of the Sale Deed in favour of the deceased Balasubramanyam, he
was stated as enjoying the same with absolute ownership, possession and
clear and marketable title.
3. While so, the 3rd respondent issued Ext.P2 notice dated
19.08.1998 to the deceased Balasubramanyam demanding a sum of
Rs.5235/- towards the Sales Tax arrears for 1977-78 to 1978-79 and
Rs.6799/- towards the AIT arrears for 1978-79 and 1979-80. It was further
stated in the said notice that the default was originally made by one
Manikandan, who was the previous owner of the property and that the
transfer of property was made by him after finalization of the assessment and
serving the demand notice; under which circumstance, the liability was
sought to be shifted to the shoulders of the deceased Balasubramanyam.
3. On receipt of Ext.P2 notice, the late Balasubramanyam filed
Ext.P3 reply pointing out the actual facts and figures; particularly as to the
vital fact that the predecessor-in-title of the property (Manikandan) had
purchased the property only in the year 1986 as such, there could not have
been any liability in respect of the assessment years 1978-79 and 1979-80
as stated in Ext.P2. It is contended that there was absolute silence for nearly
4 years after issuance of Ext.P2 notice and thereafter, Ext.P4 Revenue
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Recovery notice dated 11.12.2002 was served upon Balasubramanyam. Met
with the situation, Balasubramanyam caused to send Ext.P5 lawyer’s notice
to the revenue/departmental authorities, bringing the actual facts and figures
to their notice. However, this did not yield any positive result and the
authorities proceeded with the Revenue Recovery steps by issuing Ext.P6
demand notice under Section 7 of the Revenue Recovery Act on 19.05.2003.
But in the meanwhile, i.e., immediately after causing to send Ext.P5 lawyer’s
notice, Balasubramanyam took his last breath on 19.03.2003 and it was
thereafter, that Ext.P2 Revenue Recovery notice was served upon the
petitioners, which in turn is subjected to challenge in this Writ Petition.
4. The 1st respondent has filed a counter affidavit seeking to explain
the discrepancy and inconsistency pointed out from the part of
Balasubramanyam (when he was alive) as projected in Ext. P3. It is stated in
paragraph 2 of the said counter affidavit that the property originally belonged
to one Nagajyothi Ammal, who was an assessee under the KGST and AIT
Acts; for the year 1978-79 and 1979-80. The assessments were completed
on 07.03.1984 and 06.02.1984 respectively, fixing the liability of Rs.5170/-
and 8427/- respectively, when the said assessee filed a petition before the
appellate authority stating that she had sold the entire property to one
C.V.Kannadasan as per Sale Deed No. 1233 dated 01.12.1978 of the SRO,
Kattappana, though no evidence was adduced by her for substantiating the
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said contention. It is further stated in paragraph 3 of the counter affidavit that
the assessment for the years 1980-81 and 1981-82 was proposed to be
completed in the name of C.V. Kannadasan and pre-assessment notice
dated 03.03.1986 was issued to him, which was replied by him mainly
referring to the devolution of title. In 1986, the said Kannadasan sold 1.59
acres to one Manikandan and it was from Manikandan, that the property
came to the hands of the deceased Balasubramanyam, after passing through
Rosamma. It is the case of the 1st respondent that the appeals preferred by
the original assessee Nagajyothi Ammal was dismissed for default on
12.08.1995 and thereafter, notice was issued to Manikandan to pay the
arrears, which however was returned as refused;under which circumstance,
Revenue Recovery steps were recommended on 15.12.1995, finally leading
to the impugned proceedings.
5. The learned Government Pleader, referring to the contents of the
counter affidavit as well as the relevant provisions of law, asserted that the
arrears of Agricultural Income Tax as well as the Sales Tax are having ‘prior
charge’ over the property of the defaulter. The attempt to sustain the
impugned proceedings is vehemently questioned from the part of the
petitioner, referring to the relevant provisions of law, stating that the same is
quite wrong and misconceived.
6. True, there is a provision in the KGST Act (Section 26 B) which
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says that the tax payable is to be of ‘first charge’ over the property; which
however was brought into force only with effect from 01.04.1999. There is a
specific bar with regard to the transfer of property as provided under Section
26 A, to the effect that, any transfer during the pendency of any proceedings
under the said Act, whereby the assessee creates a charge on or parts with
the possession by way of sale, mortgage, exchange or other mode of
transfer, will be null and void. The above provision was incorporated in the
Act by virtue of the Act 13 of the 93 with effect from 01.04.1993. The said
provision obviously does not come to the rescue of the respondents for the
fact that the liability is in respect of the assessment years 1978-79 and 1979-
80.
7. With regard to the position pertaining to the Agricultural Income
Tax, the learned Government Pleader submits that the stipulation similar to
Section 26 B of the KGST Act prescribing ‘prior charge’ over the property in
question, is very much available under the Agricultural Income Tax Act 1950,
as stipulated under sub section 2 of Section 40, which was incorporated
therein much before. But then, the question is whether it can have any valid
existence, to be attracted to the case in hand, in view of the limitation
prescribed under the statute. Sub section 4 of Section 41 of the very same
Act says that no proceedings for the recovery of any sum payable under the
said Act shall be commenced after the expiry of 3 years. Of course there is
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an averment in the counter affidavit filed by the 1st respondent as to the
proceedings taken, but absolutely nothing has been mentioned as to when
the said proceedings were commenced.
8. In any view of the matter, the assessment in respect of the
assessment years 1978-79 and 1979-80 were admittedly finalised on
07.03.1984 and 06.02.1985 respectively as stated in paragraph 2 of the
counter affidavit. In the said circumstance, no liability could have been shifted
to shoulders of the petitioners under any circumstance. Absolutely no
material, to contrary, has been brought to light in the counter affidavit filed
from the part of the 1st respondent. In the above circumstances, Exts.P2, P4
and P6 notices issued by the respondents cannot stand in the eye of law and
accordingly they are hereby set aside.
The Writ Petition is allowed. No cost.
P. R. RAMACHANDRA MENON
JUDGE
dnc