Indian Overseas Bank, Quilon vs The Quilon Municipality, Quilon

Ramkumar, J.—The appellant which is the Kollam branch of the Indian Overseas Bank, was the plaintiff in O.S. No. 5 of 1986 on the file of the I Additional District Court, Kollam. The said suit was for recovery of excess profession tax levied and collected by the Quilon Municipality (which is presently the Corporation of Kollam) for the six half yearly assessment periods for the years 1978-79 to 1980-81. The trial court decreed the suit only for the two half yearly periods during the year 1980-81 but dismissed the suit so far as it relates to the two earlier years on the ground of limitation. Aggrieved by the decree passed by the trial court, the appellant preferred A.S. No. 262/1987 before this Court. A learned Judge of this Court dismissed the appeal. Hence this intra-court appeal u/s 5 of the Kerala High Court Act, 1958.

The facts leading to the impugned appellate decree can be summarised as follows:-

The plaintiff was originally a company incorporated under the Companies Act, 1913. Subsequently it became a deemed company under the Companies Act, 1956. The plaintiffs undertaking stood transferred wholesale to a fully Government owned public sector corporation, created under the provisions of the Banking Companies (Acquisition and Transfer of Undertaking) Ordinance, 1969 which came into force with effect from 19.07.1969. The said Ordinance was later replaced by the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970 with effect from 10.02.1970 onwards. Since the plaintiff company was transacting business within the limits of the Kollam Municipality (thenQuilion Municipality) the plaintiff was an assessee to profession tax. The said Municipality has now become the Corporation of Kollam. According to the plaintiff the maximum limit of profession tax that could be collected for each of the half years during the years 1978-79 to 1980-81 was only Rs. 125/-, since Article 276 of the Constitution of India, as it stood then, provided a maximum limit of only Rs. 250/- per annum. u/s 19 of the Kerala Municipalities Act, 1960, the maximum half yearly tax leviable on profession tax was Rs. 125/-. Under the proviso thereto, the preexisting tax rates were allowed to continue. Hence by virtue of the proviso to Section 19 of the Kerala Municipalities Act, 1960, the plaintiff was being levied to tax as a company at the pre-existing ad valorem rates without limit. By reason of the change of status of the plaintiff with effect from 19.07.1969 into a state owned statutory Corporation under the Banking Companies(Acquisition and Transfer of undertaking) Act, 1970 the plaintiff ceased to be liable for levy in excess of Rs. 275/- per half year, which was applicable only to companies. Without either the plaintiff or the Municipality realizing this, the plaintiff continued to be levied as a company. On realizing the mistake the plaintiff filed 5 revision applications before the Commissioner, Kollam Municipality some time in the year 1981 against the six half year assessments under Rule 22(4) of Schedule II of Taxations and Finance Rules for the years 1978-79 to 1980-81. By virtue of Rule 22(5)(b) of the said Rules, the plaintiff paid the tax as a condition for entertaining the revisions. With regard to the two half yearly tax levied for the year 1978-79 a composite revision was filed and with regard to the remaining two years, four separate revisions for each half year were filed. In the meanwhile, a Full Bench of this Court in Canara Bank and Others Vs. State of Kerala and Others, decided the status of the banks which were similarly situate as the plaintiff and held that such banks were not liable to be assessed as companies but only as persons. The above decision of the Full Bench of the Kerala High Court was subsequently confirmed by the Supreme Court on an appeal by the Kollam Municipality in the decision in Commissioner, Quilon Municipality v. Canara Bank, Quilon, . Since the revisions filed by the plaintiff before the Commissioner Kollam Municipality were pending for an unduly and unreasonably long period and the Municipality was, notwithstanding the decision of the Full Bench, levying professional tax at the earlier rates applicable to companies, the plaintiff was constrained to institute suits before the civil court. On 23.05.1983, the plaintiff instituted the present suit as O.S. No. 189/1983 before the Sub Court, Kollam for recovery of excess tax levied and collected for the six half years together with the interest thereon. The said suit was transferred to the I Additional District Court, Kollam and re-numbered as O.S. No. 5/1986. The said suit was jointly tried along with another suit as O.S. No. 186/1983 originally filed before the Munsiffs'' Court, Kollam and subsequently transferred as O.S. No. 22/1986 before the Additional District Court. O.S. No. 22/1986 was for a perpetual injunction restraining theKollam Municipality from assessing and collecting tax on the original pattern prior to the decision of the Full Bench of the Kerala High Court. On 14.11.1986, the Additional District Court disposed of both the suits granting the perpetual injunction as prayed for in O.S. No. 22/1986 but decreeing partly O.S. No. 5/1986 limiting the plaintiff''s claim for recovery of excess tax collected to three years prior to the suit and ending with the date of institution of suit by applying Article 24 of the Limitation Act, 1963. In other words, the suit was decreed only so far as it related to the two half yearly periods of 1980-81 and the suit was dismissed so far as it related to the four half yearly periods of 1978-79 and 1979-80. Aggrieved by the decree, so far it disallowed the claim for the previous two years, the plaintiff preferred A.S. No. 262/1987 before this Court. On 10.02.1992 the learned Single Judge dismissed the appeal confirming the dismissal of the plaint claim with regard to the two previous orders. Hence this present intra-court appeal by the plaintiff.

We heard the learned Senior Advocate Sri.Chacko George appearing for the appellant/plaintiff and Advocate Sri.M.K.Chandramohandas the Learned Counsel appearing for the Kollam Municipality which is presently the Corporation of Kollam.

The question as to whether the profession tax which was collected by the Kollam Municipality from the appellant was by treating the appellant as a company for the years 1978-79 and 1979-80 is not disputed. Similarly, the question as to whether the tax which was leviable from the appellant/plaintiff was only as a person and not as a company in the light of the decision of the Apex Court is also not disputed. But the only question now germane for consideration in this appeal is as to whether the suit so far as it related to the claim for recovery of excess tax collected for the years 1978-79 and 1979-80 was barred by limitation. This question will loom large only if the suit claim is considered in this appeal. It is an admitted fact that the suit itself was necessitated on account of the unreasonably long pendency of the five revisions filed by the appellant before the Commissioner,Kollam Municipality. In the light of the decision of the Apex Court reported in Commissioner, Quilon Municipality v. Canara Bank, Quilon, the levy of professional tax from the plaintiff treating the plaintiff as a company cannot be justified and the revisions filed by the plaintiff will have to be allowed. If the said revisions were disposed of accordingly, there would not have been the necessity for the plaintiff to institute the present suit. We requested the Learned Counsel appearing for the Municipality (presently the Corporation of Kollam) to ascertain as to whether the revisions are sill pending. Neither the appellant''s counsel nor the Corporation''s counsel were able to categorically inform us whether those revisions have been disposed of or not. As a matter of fact, both sides frankly confessed that it is not possible to trace those revisions which were filed in the year 1981. Even the copies of the revisions cannot be traced out by the respective parties. Under these circumstances, and in view of the admitted fact that the revisions were filed by the appellant before the Commissioner of Kollam Municipality, the Standing Counsel for the Corporation of Kollam submitted that in case the appellant files fresh revisions with regard to the assessment years in question within a reasonable time, the same can be disposed of on merits within three months without raising the plea of limitation. Even without any such offer, we were inclined to direct the Corporation of Kollam to dispose of fresh revisions to be filed in case the appellant is willing to submit fresh revision petitions. Learned counsel for the appellant submitted that the appellant is willing to file revisions before the Secretary, Corporation of Kollam challenging the assessments for the years 1978-79 and 1979-80. Now, after the decree passed by the Civil Court, the revisions pertaining to the year 1980-81 have become infructuous. Hence, the appellant is permitted to file fresh revision petitions for the four half yearly period covered by the years 1978-79 and 1979-80. In case fresh revision petitions are filed within one month from today, the Secretary of the Corporation of Kollam shall dispose of the same on merits within three months of receipt of such petitions, without raising the plea of limitation as a defence. Fresh revisions,if any, filed shall be disposed of by the Secretary after giving the appellant/revision petitioner an opportunity of being heard.

This appeal is disposed of as above. There shall be no order as to costs.

Dated this the 29th day of February, 2012.