K. K. Narendran, J. - A question of some importance in taxation law arises for consideration in these Original Petitions. The question is this. An assessment made in accordance with law became final. Sub-sequently, in a similar case it was established by a judicial decision that the assessment was unlawful. Can a demand be made for the tax assessed and will this court interfere with the demand in a proceedings under Article 226 of the Constitution, in view of Article 265 of the Constitution of India which says that no tax shall be levied or collected except by authority of law.
2. The petition is these Original Petitions were assessed to the land cess by the 2nd respondent Panchayat under S. 66A of the Kerala Panchayats Act, 1960, and the Kerala Panchayats (Levy & Collection of Land Cess) Rules, 1971. The assessments became final. But, later this Court in Cochin Malabar Estate and others vs. Executive Officer, Varantharappilly Panchayat held that similar demands made under S. 66A of the Kerala Panchayats Act 1960, are unsustainable as the same were made without complying with the procedural safeguards in respect of the assessment proceedings. Thereafter, the 1st respondent, Executive Officer of the Panchayat, issued the demand notices marked as Ext. P1 in both the Original petitions to the petitioners calling upon them to pay the land cess in respect of the years 1973-74 to 1975-76. Thereupon the petitioners submitted objections to the demand notices produced as Ext. R.1 along with the counter affidavits filed by the 1st respondent in both the Original Petitions. Apprehending further steps for the collection of the land cess the petitioners approached this court with these original petitions for quashing Ext. P1 demand notices issued.
3. Sri K. Prabhakaran, learned counsel for the petitioners contends that view of the decision in Cochin Malabar Estates and Others vs. Executive Officer, Varantharappilly Panchayat, the land cess assessed upon of Article 265 of the Constitution of India. In support of this contention learned counsel refers to Royalseema Construction vs. Deputy Commercial Tax Officer. In the above case collection of Sales Tax on works contracts assessed on the petitioners there was questioned by them after the Madras High Court held in Gannon Dunkerly and Company, (Madras) Ltd. vs. State of Madras that works contracts did not involve any element of sale of materials and that therefore levy of Sales tax in respect of those materials was unlawful. A writ of mandamus was issued directing the officers to forebear from collecting the tax from the petitioners. In the above case the High Court of Madras held :-
'The words 'levy' and collection' are used in Article 265 of the Constitution of India in a comprehensive manner and they are intended to include and envelop the entire process of taxation commencing from the taxation statute to the taking away of the money from the pocket of the citizen. Article 265 enjoins that every stage in this entire process must be authorised by the law'.
The Court further held :-
'The finality of an assessment under the terms of a taxing statute is not always or necessarily conclusive of the legality of the assessment. An assessment made without jurisdiction or in pursuance of a provision which is found to be ultravires continues to be unlawful, and nothing less than a validating provision properly enacted would alter that fact.'
It was also held :-
'The constitution does not guarantee that the persons employed to administer the law will not make mistake when exercising the power conferred on them. If they make mistakes in the exercise of their powers, the persons affected must ordinarily use the remedies of appeal reference or revision, as the case may be. But, where there is an absence of jurisdiction the situation is materially altered. And, it would not make any difference whether the absence of jurisdiction arises out of an attempt to usurp jurisdiction, or because the officer has through ignorance or otherwise strayed beyond the limits of his jurisdiction. In relation to a tax, where an assessing officer acts outside the boundaries of his jurisdiction his acts would to that extent be null ad void. No one would have any power to call upon a citizen to make payment of a tax so imposed, and, if any authority seeks to collect a tax so imposed the citizen can call in aid Article 265 and seek the assistance of the High Court.'
In the above decision reference was made to Orient Paper Mills Limited vs. State of Orissa wherein it was held :-
'The mere fact that the assessment order was not challenged by way of appeal or revision under the other provisions of the Act seems immaterial.'
In the above decision the Madras High Court also referred to Whitney vs. Commissioners of Inland Revenue wherein Lord Dunedin has said :-
'Now, there are three stages in the imposition of a tax : there is the declaration oft liability, that is the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment. That, exhypothesis, has already been fixed. But assessment particularises the exact sum which a person liable has to pay. Lastly come the methods of recovery, if the person taxed does not voluntarily pay.'
4. Learned counsel for the respondent Panchayat points out that the cass was levied and the demand notice was issued as early as 15-8-1974. Hence, according to the learned counsel these Original Petitions filed only on 23-9-1975 to quash the notice dated 11-8-1975 is very much belated and not sustainable. Learned counsel has also a contention that the Cochin Malabar Estates case has no application to the facts of this case.
5. In view of the decision in Cochin Malabar Estates case levy of land cess by the Panchayats in the state became unlawful. So, inspite of the fact that the levy of land cess on the petitioners in these Original petitions have become final, the cess cannot be collected. Under Art. 265 of the Constitution of India no tax shall be levied or collected except by authority of collection of law. What the petitioners have questioned in these original petitions also is the collection of land cess demanded by the notices produced as Ext. P1 in these original petitions. In view of the decision in Cochin Malabar Estate case the Panchayat had no jurisdiction to make the assessments in question and hence the assessments are null and void. The petitioners can very well take shelter under Art. 265 of the Constitution against the demands. Under Art. 265 of the Constitution the tax levied unlawfully cannot be collected. As the assessments are null and void and as the collection is in contravention of Art. 265 of the Constitution the petitioners can invoke the writ jurisdiction of this court in the matter. Hence I set aside the demand notices produced as Ext. P. 1 in both the original petitions and allow the original petitions. There will be no order as to costs.