1932 (6) TMI 13 - HC - Income Tax

Summary

Issues Involved:
1. Liability for terminal tax collection and payment under Section 69(2) of the Rangoon Development Trust Act, 1920.
2. Consistency of rules made under Section 95 of the Rangoon Development Trust Act with the Act itself.
3. Validity of proceedings taken under Sections 44 and 45 of the Lower Burma Land and Revenue Act, 1876.
4. Entitlement to relief under Section 45 of the Specific Relief Act.

Issue-wise Detailed Analysis:

1. Liability for Terminal Tax Collection and Payment under Section 69(2) of the Rangoon Development Trust Act, 1920:
The appellants, a corporation created by the Rangoon Development Trust Act, 1920, claimed that the respondents, as agents of the Andhra Burma Steamship Company (1929) Ltd., were liable to pay a terminal tax collected under Section 69(2). The respondents argued they were not liable as the Act specified that the tax should be collected and paid by the "owner" of the vessel. The court held that the term "owner" in Section 69(2) did not include "the agent of the owner." The court emphasized that the legislature could have easily included agents if it intended to make them liable, but it expressly refrained from doing so.

2. Consistency of Rules Made under Section 95 of the Rangoon Development Trust Act with the Act Itself:
The appellants' defense relied on rules made by the Local Government under Section 95, which purported to impose liability on agents for collecting and paying the terminal tax. The court found that Rules 1 and 3, which extended liability to agents, were inconsistent with Section 69(2) and therefore ultra vires (beyond the powers conferred by the Act). The court stated that if the Act specifies that the owner is liable, a rule cannot extend this liability to agents without being inconsistent with the Act.

3. Validity of Proceedings Taken under Sections 44 and 45 of the Lower Burma Land and Revenue Act, 1876:
The appellants initiated proceedings under Sections 44 and 45 of the Lower Burma Land and Revenue Act, 1876, to recover the tax from the respondents. The court held that these sections could only be invoked if a sum had fallen due and a notice of demand had been served on a person liable for the tax. Since the respondents were not liable under Section 69(2), the notice of demand served on them was ineffective, and consequently, the proceedings were null and void. The court cited established legal principles that if a condition precedent to jurisdiction is not fulfilled, all subsequent proceedings are invalid.

4. Entitlement to Relief under Section 45 of the Specific Relief Act:
The trial court had granted an order in the nature of a mandamus under Section 45 of the Specific Relief Act, directing the appellants to collect the tax according to Section 69(2) and in no other manner. The appellate court, however, found that the respondents were entitled to a declaration that the proceedings against them were ultra vires and void, thus providing a specific and adequate legal remedy. The court held that an order under Section 45 of the Specific Relief Act is only appropriate if no other specific and adequate legal remedy is available. The appellate court varied the trial court's decree to declare the proceedings and the writ of attachment null and void, and ordered the release of the respondents' property from attachment.

Conclusion:
The court concluded that the respondents, as agents, were not liable for the terminal tax under Section 69(2) of the Rangoon Development Trust Act, 1920. The rules made under Section 95 that extended liability to agents were ultra vires. The proceedings initiated under Sections 44 and 45 of the Lower Burma Land and Revenue Act, 1876, were invalid due to the lack of a valid notice of demand. The respondents were entitled to a declaration that the proceedings were ultra vires and their property should be released from attachment. The appeal was dismissed with costs.