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Judgment
M. Ramachandran, J.
Section 288 of the Income Tax Act authorises representatives to appear on behalf of assessees. Such representatives may include legal practitioners and chartered accountants. For easy reference, the said section is extracted hereinbelow :
"288. Appearance by authorised representative.(1) Any assessee who is entitled or required to attend before any Income Tax authority or the Tribunal in connection with any proceeding under this Act otherwise than when required u/s 131 to attend personally for examination on oath or affirmation, may, subject to the other provisions of this section, attend by an authorised representative.
(2) For the purposes of this section, "authorised representative" means a person authorised by the assessee in writing to appear on his behalf, being :
(i) a person related to the assessee in any manner, or a person regularly employed by the assessee; or
(ii) any officer of a scheduled bank with which the assessee maintains a current account or has other regular dealings; or
(iii) any legal practitioner who is entitled to practise in any civil court in India; or
(iv) an accountant; or
(v) any person who has passed any accountancy examination recognised in this behalf by the Board; or
(vi) any person who has acquired such educational qualifications as the Board may prescribe for this purpose; or
(via) any person who, before the coming into force of this Act in the Union territory of Dadra and Nagar Haveli, Goa, Daman and Diu, or Pondicherry, attended before an income- tax authority in the said territory on behalf of any assessee otherwise than in the capacity of an employee or relative of that assessee; or
(vii) any other person who, immediately before the commencement of this Act, was an Income Tax practitioner within the meaning of clause (iv) of sub-section (2) of section 61 of the Indian Income Tax Act, 1922 (11 of 1922), and was actually practising as such.
Explanation : In this section, "accountant" means a chartered accountant within the meaning of the Chartered Accountants Act, 1949 (38 of 1949), and includes, in relation to any state, any person who by virtue of the provisions of sub-section (2) of section 226 of the Companies Act, 1956 (1 of 1956), is entitled to be appointed to act as an auditor of companies registered in that state."
Rule 49(a) defines an authorised Income Tax practitioner for the part as any authorised representative as defined in clause (v), (vi) or (vii) as above.
In the case of chartered accountants, the Income Tax department started to insist that the authorisation, in the form of power of attorney, required to bear stamp duty of Rs. 50, Ext. P2 communication addressed to a firm of chartered accountants, who is represented by the petitioner in O.P. No. 24070 of 1999 gives the reason for prescribing this stipulation. The relevant portion thereof may be extracted as following :
"As per section 2(p) of the Kerala Stamp Act, 1959, ''power of attorney'' includes any instrument (not chargeable with a fee under the law relating to court-fees in force) empowering a specified person to act for and in the name of the person executing it. Under article 16 of the II Schedule of the Kerala Court Fees Act, 1959, the instruments that are chargeable to court-fee are Muktharnama, Vakalatnama or any paper signed by an advocate signifying or intimating that he is retained for a party. An authorisation by a person of a Chartered Accountant or an Income Tax Practitioner to represent his case in Income Tax proceedings is not an instrument specified in article 16 of the II Schedule to the Court Fees Act and, therefore, subject to payment of no court fees under the court Fee Act. That being so, such an authorisation can only be considered as a ''Power of Attorney'' as defined in section 2(p) of the Kerala Stamp Act, 1959, in respect of which stamp duty is payable as specified in article 44 of the Schedule thereof. Accordingly while a Vakalatnama signed by an advocate is chargeable to Court-fee under the Court Fees Act, an authorisation in the case of a CA or an ITP is only a ''Power of Attorney'' which is subject to stamp duty under the Stamp Act.
Under clause (b) of article 44 of the schedule (as amended by Kerala Finance Act, 1996) the minimum stamp duty payable for a power of attorney for authorisation of one person or more to act in a single transaction is Rs. 50. The stamp duty required to be paid on authorisation filed by CAs and ITPs in Income Tax proceedings of Rs. 50 in a single transaction in the circumstances is in accordance with law and is in order."
This is under challenge. It is claimed that the Original Petition has been filed as a representative action. Though in the writ petition reference is made in respect of the fee pattern prevailing when authorisation is prescribed before other statutory functionaries, the submissions in the Original Petition were confined in respect of the justifiability of Ext. P2, viz., the stand taken by the Income Tax Authorities.
Writ petitions, challenging similar orders on a slightly different lines, filed by two other petitioners, viz., one by a chartered accountant in his individual capacity (O.P. No. 28900 of 2000) and another filed by the Kerala Chartered Accountants Association (O.P. No 6022 of 2001) were also listed along with the above Original Petition and opportunity was there to hear them as well. The State Government has filed a counter-affidavit. On behalf of the Commissioner, the senior standing counsel, Mr. Raveendranatha Menon was heard.
According to counsel Mr. B.K. Thomas, Ext. P2 proceeds on an erroneous basis and deserved to be set aside. He had, as a preliminary measure invited my attention to the judgment of the Honourable Supreme Court in Hindustan Steel Ltd. Vs. Messrs Dilip Construction Company, . He pointed out that the court had highlighted the basic nature of the Stamp Act as a fiscal measure enacted to secure revenue for the state on certain clauses of instruments. He compared this position with the Court Fees Act, and pointed out that the said Act was solely intended to benefit the administration of justice, usually carried on by the courts of the land.
According to him, entry 3 in the state list of the VIIth Schedule of the Constitution empowers the State Government to prescribe ''fees taken in all courts, except the Supreme Court''. Earlier, the Court Fees Act, 1870, governed the field, but territories which immediately before the 1-11-1956, comprised in Part B states stood excluded from its purview. As far as Kerala was concerned, the T.C. Court Fee Act and Madras court Fee Act governed the situation. The Kerala Court Fees and Suits Valuation Act, 1959 (Act 10/60) had come into effect in the state with effect from 1-2-1962, and it is the one, according to the counsel, which governs the situation, and reference or advertence to Stamp Act was wholly out of place.
Elaborating his submissions, he emphasised that section 3(ii) of the Court Fee Act defined Courts, as including any Civil, revenue or criminal court, and also Tribunals or authority having jurisdiction under any special or local law to decide questions affecting rights of parties. The gist of the argument was that the comprehensive definition is intended to include all courts functioning within the territorial limits of the state. For a moment, we may proceed as if the Court Fees Act governs the situation. If so, the petitioner submits that the Court-fee leviable is as per article 16, Schedule II. It reads as following:
Mukhtarnama, Vakalatnama or any paper signed by an advocate signifying or intimating that he is retained for a partyWhen presented :
(i) to any court other than the High Court or to any Collector or Magistrate or other executive officer (Two rupees)
(ii) to the Board of revenue or a Chief Executive Authority (Three rupees)
(iii) to the High Court (Five rupees)
(iv) to the government (Five rupees)
The fee leviable is Rs. 2, and this alone, according to him, should have been chargeable. Counsel made also a passing comment that it was absurd to suggest that depending upon the profession of the person who represented a party, the fee could not change. If so, it would be discriminatory and hit by the vice of article 14 of the Constitution of India.
The stamp duty, according to him, is a levy in the nature of tax, which went to the general revenue, and court-fee, was a fee which were to go to the head of administration of justice. Mr. Thomas, therefore, submitted that Ext. P2 was erroneous and power of attorney was a Muktharnama, and the same presented by an accountant very well come within article 16 as above, and there was no purpose in drawing a distinction as between accountants and an advocate. However, I may observe that the question of any discrimination as to whether it is there, whether it can be there or whether it may be permissible in law are not matters within the scope of enquiry here, especially for want of presence of parties representing the interest of such group of persons in these proceedings. Suffice is to record his contention that the stand adopted by the department as highlighted in Ext. P2 was without justification.
Advocate Latha, appearing for the petitioners in the two other Original petitions however, was not prepared to endorse the submission of her learned friend as projected by him. Relying on the pleadings in the two Original Petitions, however, she submitted that reliance placed on the Stamp Act by the revenue, was erroneous. She had straightaway referred to a reported Full Bench case, Ganpat v. Prem Singh (1912) 15 Indian Cases 122 (Punjab)(FB). (Mr. Thomas too has referred to this case in the course of his arguments). The Full Bench of Punjab had observed that all sums realised from court-fees are devoted, in the first instance to the maintenance of courts, while sums realised from stamps are devoted to other purposes. This, according to the Judges, was sufficient to come to a presumption that any sum payable as a condition precedent for availing remedy through a court would be leviable under the Court Fees Act. The Court Fees Act, therefore, was to be considered as the excluding Act, while Stamp Act applied to any document but only those excluded from the provisions of Court Fees Act.
Learned counsel thereafter submitted that the charging provision, can only be article 15 of Schedule II of the Court Fees Act. According to her, clause 16 had no application, as they concerned the authorisation, coming from the office of an advocate. Only article 15 had application, which was to the effect that ''Every copy of power of attorney when filed in a suit or proceedings, was chargeable with a court-fee of Re. 1. According to her, neither the Stamp Act nor article 44 had relevancy since it deals with only power of attorney in relation to transactions not related to any suits or proceedings. She submits that under Stamps Act, by section 3, instruments are to be charged with stamp duty, and instrument is defined by section 2(j) as document, by which any right or liability is created, transferred, limited, extended, extinguished or recorded. It was further argued that if the authorisation did not come within article 15 of the Court Fees Act, there were no other charging provision, and no fee was at all leviable on the power of attorney presented.
Before going into the contentions of the respondents, we may recapitulate the situation so far presented. There appear to be hurdles, than those which had posed by Ext. P2 as well. As could be seen from the pleadings petitioners had understood about the difficult situation wherein they are placed. The Kerala Court Fees and Suits Valuation Act, 1959, while it declares its applicability, prescribes by section 2(1) as following :
(2) Application of the Act(1) The provisions of this Act shall not apply to documents presented or to be presented before an officer serving under the Central Government."
The Income Tax Officers were officers serving under the Central Government, and naturally, the application of the Act as far as proceedings before them were to be deemed as excluded from the purview of Court Fees Act. It was anticipating this that Mr. Thomas had attempted to draw a distinction between a tax and a fee, and relied on the theory behind the Court Fees Act. He could have succeeded only if the position was found acceptable that adjudication of dispute by a court, including that were at the presence of the Income Tax Officer, came within the purview of the State Act.
But it is settled position that notwithstanding theories of jurisprudence, the rule-making authorities have power, in their zones to legislate, and even bring in artificial definition, defying common sense views. Situated as such, I am of the view that Court Fees Act cannot have application here, and consequently the law laid down in Ganpat''s need not bother us.
At this juncture, I may also deal with the divergent stand as between the two sets of petitioners, though it is academic as at present. Advocate Latha submitted that it is only article 15 of IInd Schedule of the Court Fees Act which was relevant. According to her, article 16 dealt exclusively with the rights of advocates, and what was relevant was article 15. Mr. Thomas had, however, submitted that article 16 was to apply. On a careful examination of the articled I am inclined to hold that article 16 deals with the rights of advocates alone. Of course the word Muktharnama is used in the article, but the context and general scope of the article show that it did not deal with the right of any other group. Therefore, if at all Court Fees Act was applicable, the accountants would have been bound to pay fee, as prescribed by article 15 and not article 16.
Now we may examine whether the stipulation for payment of Rs. 50 as directed by Ext. P2 is sustainable. The arguments that definition of instrument under the Stamps Act [2(j)] are not intended to take in a power of attorney presented by an accountant does not at all sound valid. By the document in consideration, it cannot be disputed that a right is created in favour of an accountant to represent the executant, as recognised by section 288 of the Income Tax Act. u/s 3 of the Stamps Act, it is essential that the instrument mentioned in the Schedule, in the territories of the State of Kerala, are chargeable to duty. It cannot be taken, therefore, that power of attorney is not a document that is not envisaged, as chargeable. The submissions is para. 3 of the reply affidavit (O.P. No. 28900/2001) to the effect that :
"Thus, there is no doubt that authorisation filed u/s 288 of the Income Tax Act is an instrument chargeable with a fee under the law relating to court-fees for the time being in force and hence Kerala Stamp Act is not applicable. Since Kerala Ccourt Fees and Suits Valuation Act is not applicable to any documents presented or to be presented before an officer under the Central Government, the court-fee required in such authorisation has to be nil."
has no basis in view of section 3, referred to earlier. The contention cannot be acceptable.
As such we may examine article 44 as to whether it has relevance. Mr. Raveendranatha Menon, senior counsel submits that since the provisions of Court Fees Act are not applicable to documents presented before officers serving under the Central Government, as even admitted by a few of the parties, going by the definition of the term ''document'' in the General Clauses Act, reliance could well be placed on section 2(p) of the Stamps Act. Any instrument empowering a specified person to act for and in the name of the person executing it, not chargeable with fee under the law relating to Court Fees Act in force, becomes chargeable thereunder. The key words are ''not chargeable with fee'', and it is not required to be examined, as to what is the underlying reason therefor. He reiterates that the statute is clear, and interpretation with the aid of extraneous materials are, therefore, not called for, and it will be wholly beyond the jurisdiction of this court to strain itself to get over the express provisions of the statute. If that be the position, article 44, according to him, is the entry relevant, as highlighted by Ext. P2.
I find considerable force in the submission so made. The fine distinction between the revenue collected by the Court Fees Act and Stamp Act, even if real, can be of no solace, since the bar is in absolute terms. The legislature was not unaware that officers under the Central Government in the state are exercising administrative, executive, judicial and quasi judicial powers affecting the assessees. An interpretation conferring overtones, nuances or suggestive meanings, nullifying the scope of the provisions altogether, according to me, will be usurpation of legislative powers. There is no ambiguity as far as the meaning of the excluding section and perhaps it is engrafted so as to position it within the legislative powers of the state. That the entry of Court-fees appears in the state list, therefore, cannot have any special significance.
Insofar as I find that stamp duty is payable on a power of attorney, if it is executed in the territories of Kerala, it has to attract monetary liability. This can be, as in the present case, under article 44(b) but it need not be under the residuary clause (f), though this was the suggestion of the senior counsel. The only point now remaining to be considered is as to whether there can be a basic difference between a stamp duty and court-fee. The terms fee, duty, tariff and tax are almost synonyms in current days usage. Fee was understood as a charge for labour or service, and duty and tariff can very well be envisaged as a payment arising almost out of similar situation. The funds sought to be realised ultimately reaches the Government Treasury. It may sound perhaps strange that instead of court-fee stamp, stamp duty is payable for an authorisation to appear in a quasi judicial or judicial proceedings. But the levy cannot be held as unsustainable for the above reason alone. I also note that there is no challenge about the expropriatory nature of the levy.
Ext. P2 in O.P. No. 2470 of 1999, Ext. P4 in O.P. No. 28900 of 2000 and Ext. P1 in O.P. No. 6022 of 2001 are, therefore, upheld to the extent they have insisted for duty on the instruments as under the Stamp Act. The Original Petitions stand dismissed. There will be no order as to costs.
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