CORPORATION OF MADRAS Vs. SCINDIA STEAM NAVIGATION COLIMITED BY THEIR AGENTS, KPVSHEIK MAHOMED ROWTHER AND CO

JUDGEMENT

(1.) This appeal is by the Corporation of Madras against a decree of the Additional Judge, City Civil Court, granting a declaration that the amount to which the plaintiff, the Scindia Steam Navigation Company, Limited, hereinafter called the Company, was assessed is not legally payable by it and an injunction restraining the Corporation from taking any coercive steps to realise the amount to which the Company was assessed.

(2.) Under section no of the City Municipal Act, companies are liable to pay half-yearly tax in accordance with the rules laid down in Schedule IV of the Act. According to Rule 7, Schedule IV, companies are ordinarily liable for a tax on the basis of their paid-up capital; but in cases where the head or principal office is not in the City of Madras, but elsewhere, the tax is assessed on the gross income derived from or received in the City. Since the company has its headquarters at Bombay, the Corporation sought to assess the company at the rates specified in Rule 7, Schedule IV, on its gross income; and so it asked the Company what its gross income was. The company made a return which showed its gross income at a figure not far below four lakhs; but the Corporation made an allowance for the fact that two of the vessels of the Company had been commandeered by the Government. That reduced the gross income to two lakhs odd, on which, according to the rules laid down in part II of the schedule, the tax was Rs. 1,000 a half year. The Commissioner accordingly assessed the Company at their own figure and demanded payment. On 31 January, 1945, by Ex. P 6, the Company replied that it had by mistake given as gross income the gross receipts and asked the Commissioner to revise his previous assessment. The Assistant Revenue Officer pointed out that as a sum equal to the tax due during the previous years had not been deposited as required under Rule 12 of Schedule IV before a revision application can be entertained, the Company must pay the amount to which it had been assessed. In the ensuing correspondence the Company made some attempt to estimate its net income, but said that it was found impracticable to do so as the necessary details and figures were not available locally. Finally, on 16 July, 1945, the company filed the present suit for a declaration and injunction as stated.

(3.) Schedule IV prescribes the procedure to be adopted in connection with the assessment of taxes and the reliefs open to the assessee if he feels aggrieved by the assessment. Rule 12 makes provision for a revision of the assessment if an application is made within 15 days and the tax based on the assessment prevailing in the previous year has been paid. If the assessee is still aggrieved, he has a remedy under Rule 14 by way of appeal to the Taxation Appeals Committee. Finally, he can appeal against an adverse decision of the Taxation Appeals Committee to the Court of Small Causes, after giving notice to the Commissioner and paying the tax to which he has been assessed.