1988 (6) TMI 36 - HC - Income Tax

Summary

Issues:
1. Validity of demand notice issued under section 74 of the Kerala Panchayats Act, 1960.
2. Compliance with procedure prescribed in rule 10 of the Kerala Profession Tax Rules, 1963.
3. Locus standi of the petitioner to challenge the impugned orders.

Analysis:

1. The petitioner, acting as the secretary of an association representing taxpayers, challenged the validity of a demand notice (exhibit P-1) issued under section 74 of the Kerala Panchayats Act, 1960. The contention was that there was no proper levy of profession tax as required under section 69 of the Act. It was argued that the procedure outlined in rule 10 of the Kerala Profession Tax Rules, 1963, was not followed, and no notice was issued to the assessee. The first respondent admitted the lack of a notice under rule 10 but questioned the petitioner's locus standi to raise these issues on behalf of the assessees who were not parties to the petition.

2. Section 69 of the Act mandates the levy of profession tax subject to prescribed rules. The court emphasized that a valid levy is a prerequisite for invoking section 74 for recovery of arrears. Rule 10 specifies the procedure for service of notice and levy of profession tax, including the requirement for the Executive Authority to serve a notice to the company or person liable to pay tax, allowing them to furnish a return showing their income for assessment. In this case, it was acknowledged that the procedural safeguards of rule 10 were not adhered to before issuing the demand notice (exhibit P-1), rendering it legally unsustainable.

3. The court delved into the issue of the petitioner's locus standi to challenge the impugned orders. While recognizing the role of associations in public interest litigation, it clarified that this case pertained to individual interests of the assessees who were members of the association. Each assessee had the right to approach the court individually under Article 226 of the Constitution. Since the petitioner was not an aggrieved person and lacked the authority to represent the assessees, the court held that the petitioner had no standing to challenge the impugned orders. Consequently, the petition was dismissed, emphasizing that actions by the panchayat must always adhere to the law to prevent any constitutional violations.