Sibanibala Das and Others vs Municipal Corporation of Chandernagore

B.N. Maitra, J.—The plaintiff has alleged that they are the partners of an unregistered firm, which is carried on under the name and style of Messrs Das & Co. The trade tax of that firm was assessed at Rs. 4/- by the Municipal Corporation of Chandernagore (defendant) under the Schedule IV, Serial 2, Clause (h) of the Bengal Municipal Act, 1932. But the Corporation acted according to the provisions of Serial no. 1 of Clause (d) of the Schedule IV of the Act and arbitrarily raised the tax to Rs. 20/- for six months and at Rs. 40/- per annum. A bill was sent to that effect on 29.1.1967 for the trade tax of the second half of 1966-67. Such assessment is illegal and without jurisdiction. The suit is for a permanent injunction on declaration that assessment is illegal. The defendant filed a written statement pleading inter alia that the suit was barred by limitation and the imposition was properly made.

The suit has a chequered career. Initially the suit was dismissed. An appeal was taken out and the suit was sent back on remand. The learned Munsif held that the plaintiffs'' firm should be described as a joint Hindu family business. The notice u/s 535 of the Act was issued on behalf of the partners. There was no paid up capital of the firm and so the imposition of trade tax according to the provisions of the serial no. 1 of the Schedule IV of the Bengal Municipal Act was not legal and valid. That court held that the cause of action accrued on 29.1.1967, when the tax was first imposed. But the plaint was filed on 22nd December, 1967, that is beyond six months from 29.1.1967. He held that in view of the provisions of sub-section (2) of section 535 of the Act, the suit was barred by special law of limitation. The plaintiffs preferred an appeal and the appellate court came to the same findings. Hence this appeal.

The learned Advocate appearing on behalf of the plaintiffs-appellants has contended that imposition of trade tax is a recurring liability for the plaintiffs. Hence there is no bar of special limitation of six months envisaged by sub-section (2) of Section 535 of the Act. He has referred to the Full Bench decision of Chunder v. Obhoy, ILR 6 Cal. 3 (FB), to the cases of Ambica Charan Majumder v. Satish Chandra, in 2 CWN 689 and of Sudhangshu Bhusan v. Bejoy Kali in 3 CLJ 376. An English case has been cited to show the meaning of the term "paid up capital."

It has been argued that since it is a recurring liability, there is no bar of limitation. Moreover, the plaintiff firm has no paid up capital. The P.W. 1, Mrityunjoy Das, has stated so in his evidence. He was not cross-examined on this. Reference has been made to the case of A.E.G. Carapiet Vs. A.Y. Derderian, at page 362 to show that whenever the opponent has declined to avail himself of the opportunity of cross-examining a witness, it must follow that he believed that the testimony given could not be disputed at all, and if he asks no question with regard us this, then he must be taken to accept the plaintiff''s account in its entirety. Section 123 of the Act is the charging section. So assessment should have been made according to the provisions of Serial No. 2 and not of Serial No. 1 of the Schedule IV of the Act.

The learned Advocate appearing on behalf of the respondents has contended that the fate of the appeal is concluded by the findings of fact arrived at by the learned Subordinate Judge. Reference has been made to the case of Afsar Sheikh and Another Vs. Soleman Bibi and Others, at pages 167-68 to show that a second appeal is competent only on the ground of an error of law or procedure and not on the ground of an error on a question of fact. The High Court had no jurisdiction to entertain any second appeal on the ground of an erroneous finding of fact, however gross or unacceptable the error may seem to be. This Court should find that the suit is hopelessly barred by time and the suit is not maintainable.

The expression ''paid up capital'' has been defined in section 2(32) of the Companies Act, 1956. On this there is concurrent findings of fact by both the courts that the plaintiffs do not hold any paid up capital.

In the instant case trade tax was assessed under Serial 1(d) of Schedule IV of the Act. The relevant provision of that Serial shows that trade tax is payable by a Company or association or body of individuals which exercise any profession, trade or calling whatever for profit or has a benefit society (not being a registered Co-operative society) of which the paid up capital is equivalent to Rs. 1,00,000/- or less. Since the plaintiffs do not hold any paid up capital, the learned Munsif rightly held that in such circumstances the imposition of trade tax under Serial No. 1 of Schedule IV of the Bengal Municipal Act was not legal and valid and I find accordingly. The basis for such taxation is possession of paid up capital. When there is no foundation, i.e., paid up capital, such assessment is not valid in law.

Then about the bar of limitation. Section 535 of the Act says that a notice of suit must be given to the Commissioner. Sub-section (2) enjoins that every such suit shall be commenced within six months next after the accrual of the cause of action and not afterwards. It has already been held that the assessment in question is an illegal one. Reference may be made to the decision of Hardat Roy Misra Vs. Municipal Commissioners of Kalna to show that a suit for a declaration about illegal assessment brought beyond six months of the date of assessment is within time because the cause of action in such a suit is a recurring one. I, therefore, hold that in the instant case the plaintiffs'' liability to pay trade tax is a recurring one and hence special law of limitation envisaged by sub-section (2) of section 535 of the Bengal Municipal Act has no application and the suit is within time. The submissions made on behalf of the respondent cannot be sustained. The appeal be allowed, the judgment and decree appealed against be hereby set aside and the suit decreed. It is hereby declared that the assessment in question made by the defendant is illegal. The defendant be restrained from realising the trade tax in question from the plaintiff.

There will be no order as to costs in all Courts.