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TMI Blog2024 (6) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and also justified the collection of service charges at 1% in respect of the amounts paid directly by defaulters to the institutions notified under Section 71 of the Act. A reading of paragraph No. 3 of the judgment in Usha Mary indicates beyond doubt that this Court was of the view that even in cases where steps are taken for recovery of amounts due to the institutions notified under Section 71 of the Act, where the amounts are paid immediately after the issuance of notice under Section 7 and/or Section 34 of the Act, even the service charge of 1% could not be levied. In the facts and circumstances of the present case, immediately on notice for recovery being issued to the petitioner, the tax amount was paid by the petitioner. A further amount of Rs. 36,79,791/- was paid by the petitioner as a condition for stay against recovery in an appeal filed by the petitioner challenging the order imposing penalty. Both these amounts were voluntarily paid by the petitioner and there is nothing on record to show that any steps were taken by the revenue recovery authorities to recover the amount from the petitioner apart from the issuance of notice. It is therefore clear that no collection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances, going by the law laid down by a Division Bench of this Court in Usha Mary v. Kerala Financial Corporation and Others; 2009 (4) KHC 254, no amount could have been collected from the petitioner towards collection charges. Considerable emphasis was placed on paragraph Nos. 3 and 4 of the aforesaid judgment to contend that when only notice under Section 7 or Section 34 of the Kerala Revenue Recovery Act, 1968, (hereinafter referred to as the Act ) had been issued and the amount is immediately paid there cannot be any collection charges. It is submitted that even in the case of the institutions notified under Section 71 of the Act, in respect of which this Court recognized the right to collect 1% of the amount as collection charges, this Court has clarified in paragraph No. 3 of the aforesaid judgment that if notices alone had been issued under Section 7 or Section 34 of the Act and amounts had been immediately paid, such charges also cannot be levied. 3. The learned Senior Government Pleader refers to the judgment of a Division Bench of this Court in W.A. No. 1107 of 2009 to contend that even when the defaulter had paid amounts as permitted by this Court to settle a liability wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, in paragraph No. 3 of the aforesaid judgment (Usha Mary (Supra)), this Court held as follows: 3. In order to appreciate the rival contentions, it is necessary to refer to the scheme of the Act and the rules. The Kerala Revenue Recovery Act, 1968 was enacted to consolidate and amend the laws relating to the recovery of arrears of public revenue in the State of Kerala. Under Section 71, appearing in Chapter IV, the Government has been vested with power to declare the Act as applicable to any institution. In the amendment introduced with effect from 27/02/1980, it is stated that the Act is also intended for the realization of collection charges from all the institutions and autonomous bodies on whose behalf recoveries are made by the Government. Section 2(a) defines arrear of public revenue due on land which reads as follows: 2(a) arrear of public revenue due on land means the whole or any portion of any kist or instalment of such revenue not paid on the day on which it falls due according to the kistbandy or any engagement or usage. Section 2(d) provides for cost of process. It is an inclusive definition. The provision reads as follows: 2(d) cost of process includes - i. t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, 1968 were thus framed under the authority of Section 86. Rule 4 provides for batta and other charges. A table is also provided for the charges. The rule and the table read as follows: Rule 4: Batta and other charges at the rates specified in column (2) of the Table below; shall be levied in respect of the item specified against them in column (1) of the said Table. These charges shall be recovered from the defaulters along with the arrears due. TABLE Item Rate (1) (2) i. Demand notice fee (either under Section 7 or under Section 34). Rs. P [Rs. 2 per demand notice] ii. Fee for the distraint and sale of movables 1.00 (per case) iii. Fee for the attachment and sale of immovable to meet the cost of labour 1.00 do. iv. Tom tom charges 1.00 do v. Publication charges Actual expenses incurred vi. Transport charges or other charges At the rates prescribed in the Financial Code vii. For arrest and detention in civil jail Subsistence allowance at such rates as may be specified by the State Govt, for judgment debtors under Section 57 of the Code of Civil Procedure, 1908 viii. Collection charges [5% of the arrears to be collected, when the arrears does not exceed Rupees Five lakhs and 7.5% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the cost of process given in detail under the table below. Rule 4, along with interest alone is leviable in the process of revenue recovery. But, it has to be seen that Section 2(d) while defining cost of process provides for an inclusive definition, only indicating thereby that the cost in the process of recovery would take any other expense or charges incurred for the recovery. Though under proviso to Section 71, what is stated is only collection charges as far as institutions are concerned, except for the difference in the terminology, for all purposes and effects it is one and the same. Government machinery is used in the process of coercive steps taken for recovery. The institutions notified under Section 71 do not have to undergo the long drawn litigative process by incurring heavy expenditure. On a requisition made to the District Collector, the recovery machinery is set in motion and by various coercive steps the money is recovered from the defaulter. As a matter of fact, many of the institutions have attractive offers to the defaulters for settlement and by making use of such opportunities, the defaulters directly pay the amounts to the institutions. But, the fact rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount collected is nothing but an extortion and thus unreasonable and not permitted or warranted under the statute or the Constitution. The process of revenue recovery cannot be used as a source of revenue for the State. That is plainly beyond the legislative competence under the Constitution of India. Therefore, we hold that item viii under Rule 4 and Rule 5 (1) are unreasonable and discriminatory and ultra vires the parent Act and the Constitution of India. The duty of the Court normally is to leave the matter at that Stage. But, that would certainly be against public interest. The Court has also the duty in such circumstances to construct, if situation so warrants. This is a case warranting the exercise of such a duty. Since we have already held that collection of 1% towards collection charges from institutions is permissible, we hold that in the process of recovery under the provisions of the Revenue Recovery Act by taking recourse to coercive steps, only 1% of the amount in addition to the cost of process and other charges as permitted under Rule 4, is permissible as collection charges. A reading of paragraph No. 3 of the judgment in Usha Mary (Supra) indicates beyond doub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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