K E MATHEW Vs. THOTTAPUZHASSERY PANCHAYAT

JUDGEMENT

(1.) THE petitioner was the licensee of Pamba Talkies within the jurisdiction on the respondent-Panchayat. He took stamped tickets as contemplated by the Kerala Local Authorities Entertainments Tax Act of 1961 and remitted the tax as well. Subsequently, the Executive Officer of the panchayat happened to know that the returns submitted by the petitioner to the several film distributors who sent films to him for exhibition showed higher figures regarding the persons who witnessed the films and the number of shows held than the figures shown in returns submitted by him to the panchayat. THE Executive officer then suspected that there was fraud and also large-scale evasion of tax. He issued Ex. P1 to the petitioner asking him to produce office copies of the return he submitted to the several film distributors for comparison with the returns submitted to the panchayat with a view to re-assess the petitioner for escaped tax. THE petitioner's agent produced some copies relating to some period and stated that records relating to the rest of the period were not available. On the basis of the records produced the Executive Officer assessed the petitioner for escaped tax for the period from 12th February to 18th June 1968; and for the rest of the period for which records were not available, he assessed him on an arbitrary basis a best-of judgment assessment. Fairly large amounts were found due from the petitioner; and the Executive Officer issued ex. P2asking the petitioner to show cause against the assessments and also against the realisation of the amounts assessed. THE petitioner seeks to quash exx. P1 and P2.

(2.) THE argument of the counsel of the petitioner is that under the Kerala Local Authorities Entertainments Tax Act the Executive Officer or the panchayat had no power to assess him, much less re-assess him, as attempted by Exx. P1 and P2. THE counsel argues further that since the panchayat had no jurisdiction to assess the petitioner, the petitioner can approch this Court under Art. 226 of the Constitution and get the unauthorised proposed assessments quashed without raising his objections before the Executive officer or filing an appeal against his decision to the panchayat.

(3.) NO specific provision has been brought to my notice by the counsel of the respondent authorising a local authority to assess entertainments tax, as the panchayat has now done in a case where the levy was by the issue of stamped tickets. It is a well-established principle of law that an authority can impose and collect tax only if it has power conferred on it by some statute; and if the statute under which such power is claimed does not have specific provisions authorising the authority to levy and collect tax, the authority cannot have any implied power to collect any tax. I do not think this well-established principle can be disputed. At any rate, I may refer to two decisions of the Supreme Court, where this principle has been reaffirmed. In the State of Punjab v. M/s. Jullundur Vegetables Syndicate (AIR. 1966 SC. 1295)Subba Rao J. has said: "it is settled rule of construction that in interpreting a fiscal statute the Court cannot proceed to make good the deficiencies, if there be any, in the statute; it shall interpret the statute as it stands and in case of doubt, it shall interpret it in a manner favourable to the tax payer: In considering a taxing Act, the Court is not justified in straining the language in order to hold a subject liable to tax". The same learned judge has expressed himself in The commissioner of Income-tax, Patiala v. M/s. Bhahzada Nand and Sons (AIR. 1966 sc. 1342) in the same terms. In Para. 8 of the judgment Subba Rao J. has quoted the following classic statement of Rowlatt J. in Cape Brandy Syndicate v. Inland Revenue Commrs (1921) 1 KB. 64): 'in a Taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. NOthing is to be read in, nothing is to be implied. One can only look fairly at the language used. " Subba Rao J. has himself added to this as a rider: "in a case of reasonable doubt, the construction most beneficial to the subject is to be adopted. " Therefore, there is no reason for any doubt that unless there is a specific provision in the Entertainments Tax Act, the panchayat cannot assess or re-assess the petitioner as the panchayat has now done. The only manner the panchayat could have met the fraud, if there was fraud, was to have sent its officer to the premises taking power under S. 9 of the Act and to have prosecuted the proprietor of the entertainment (the petitioner) as contemplated by S. 10. The panchayat has no power to re-assess the proprietor for escaped tax, as there is no provision in the Act giving such power to the panchayat. If that is a lacuna in the Act, the lacuna cannot be remedied by giving a wider or an equitable interpretation. In my opinion, there is no lacuna either, because the legislature appears to have intended only what has been provided in the sections referred to by me. I may also add that the panchayat being a statutory authority created by the Panchayats Act, it must find all its powers within the four walls of that Act: and no provision for assessing entertainments tax is found in that Act either. The first argument of the counsel of the panchayat on this aspect of the case is that under S. 6 (2) of the Entertainments Tax Act (already extracted) the tax in the case of admission otherwise than by ticket is recoverable from the proprietor: the present case being one of recovery of tax in a case of admission otherwise than by ticket, the tax can be recovered from the proprietor. Firstly, this sub-section has to be read and interpreted in the context of S. 6. Subsection (1) of the section provides for payment of tax by means of tickets; and sub-section (2) in the context means that in cases where admission is otherwise than by tickets the tax has to be recovered from the proprietor in contrast with the recovery of the tax from the purchasers of the tickets as contemplated by sub-section (1 ). Secondly, sub-section (2) deals with the recovery of the tax and not with its assessment. Therefore, this sub-section cannot enable the panchayat to assess or re-assess the petitioner to tax.