LexThe Tax on Employment Act,1976
Kerala · state statute
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THE KERALA TAX ON EMPLOYMENT ACT, 1976
(Act 14 of 1976)
CONTENTS
Preamble.
Sections
1 Short title, extent and commencement
2. Definitions
3. Authorities.
4 Charges of tax.
5. Requisition on employers or their representatives to
furnish list
6. Returns
7. Return after due date and amendment of return.
8. Assessment
9. Power to assess in case of escape from assessment.
10. Notice of demand.
11. Recovery of tax.
12. Mode of recovery.
13. Appeals.
14. Reference to District Court
15. Powers of revision of the District Collector.
16. Rectification of mistakes.
17. Power ,to take evidence on oath, etc.
18. Refunds.
19. Limitation of claims for refund.
20. Prosecutions
21. Offences by companies. *
22. Manner of service of notice.
23. Liability of agents of companies, firms, associations,
etc., to tax on employment.
24 Statements, returns, etc, to be confidential
25 Computation of periods of limitation.
26. Bar of jurisdiction.
4$
27. Power of assessing authority, etc., to call for information
from local authorities.
28 Removal of difficulties.
29. Power to make rules
30 Establishment of Housing Fund and its utilisation. V- 31. Repeal.
The Schedule
THE KERALA TAX ON EMPLOYMENT ACT, 1976*
(Act 14 of 1976)
An Act to provide for the levy of a tax on employment
/
Preamble.—WHEREAS it is expedient to provide for the levy
of a tax on employment,
BE it enacted in the Twenty-seventh Year of the Republic of
India as follows —
1 Short title, extent and commencement.—(1) This Act may
be called the Kerala Tax on Employment Act, 1976.
(2) It extends to the whole of the State of Kerala.
(3) It shall come into force on such date as the Govern ment
may, by notification in the Gazette, appoint.
2 Definitions.—In this Act, unless the context otherwise
requires,—
(a) "appellate authority” means an appellate authority
appointed under section 3 ,
(b) the expressions "appoint”, "appointment”, "lodging
house”, "residence” and "reside” shall have the meanings res-
pectively assigned to them in the Kerala Municipalities Act, 1960
(14 of 1961),
* Received the assent of the Governor on the 22nd day of March, 1976
and published in the Kerala Gazette Extraordinary No 181. dated
22nd March 1976
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(c) "assessee” means a person by whom the tax on
employment or any other sum of money is payable under this Act and
includes every person in respect of whom any proceeding under this
Act has been taken for the assessment of the tax on employment
payable by him ,
(d) "assessing authority” means the assessing authority
appointed under section 3,
(e) "company” means a company as defined in section 6 of
the companies Act, 1956 (Central Act 1 of 1956), and includes a
foreign company within the meaning of section 591 of that Act and a
co-operative society registered or deemed to be registered under the
law relatmg to co-operative societies for the time being in force,
whether its principal place of business is situated in the State or not,
(f) "employment” includes self-employment,
(g) "local authority” means a municipal corporation or a
municipal council or a township committee or a panchayat,
(h) "prescribed” means prescribed by rules made under this
Act,
(i) "State” means the State of Kerala,
Q) the expression "transacts business” shall be deemed to
include the doing of acts of business of whatever nature, whether
isolated or not, such as soliciting, obtaining or trans mitting orders or
buying, making, manufacturing, exporting, importing, recovering,
transmitting or otherwise dealing with goods,
(k) "year” means the financial year,
3. Authorities —(1) The Government may, by notification in the
Gazette, appoint such officers as they think fit to be assessing
authorities for the purpose of this Act and may assign to them such
local limits as the Government may think fit
(2) The Government may, by notification in the Gazette,
appoint such officers as they think fit to be appellate authorities for
the purposes of this Act and may assign to them such local limits as
the Government may think fit.
$6
(3) All officers and other persons employed in the
execution of this Act shall observe and follow the orders,
instructions and directions of the Board of Revenue •
Provided that no such orders, instructions or directions shall be
given so as to interfere with the discretion of the appellate authority
in the exercise of its appellate functions
4 Charge of tax.—(1) Subject to the other provisions contained
in this Act, there shall be charged on every person who exercises a
profession, art or calling or transacts business or holds any
appointment, public or private, within the State, a half-yearly tax
(hereinafter referred to as tax on employ ment) at the rate specified
in the Schedule.
Explanation.—A person shall be deemed to have exercised a
profession, art or calling or held an appointment within the State, if
that person has an office or place of employment within the State.
(2) A person shall be chargeable under the class appropriate
to his aggregate income from all the sources specified m sub-
section (1) as being liable to the tax on employment.
(3) Where, for the purpose of transacting business within
the State, a person has an office or has an agent or firm to represent
him, such person shall be deemed to transact business within the
State, whether or not such office, agent or firm has power to make
binding contracts on behalf of such person, and the person in charge
of such office or the agent or firm, as the case may be, shall be
liable to the tax payable by the first mentioned person.
(4) A person otherwise liable to the tax on employment
shall not cease to be liable to that tax by reason only of his head
office or the place from which his business is controlled being
situated outside the State or by reason only of the fact that his
transactions are closed outside the State.
Explanation.—For the purposes of this section, "aggre gate
income” shall not include overtime wages or local allowances or
allowances for house rent, carriage hire or travelling expenses or
pension
5 Requisition on employers or their representatives to
furnish list.—The assessing authority may by notice require any
51
employer or the head or secretary or manager of any public or private
office, lodging house or club or a firm or company—
(a) to furnish, within a specified time, a list in writing of the
names of all persons employed by such employer 01 by such office,
lodging house, club, firm or company as officers, servants, dubashes,
agents, suppliers or contractors, with a statement of the salary or
income of such employed persons; and
(b) to furmsh particulars in regard to any person of whom
such employer, or head, secretary or manager, as the case may be, is
the agent.
6 Returns.—(1) If m the opinion of the assessing authority the
tax on employment is or will be due for any half-year from any person other
than a person in respect of whom the assessing authority obtains to his
satisfaction particulars of income under section 5, it shall serve a notice on
such person either in that half-year or in the succeeding half-year N requiring
him to furnish within such period, not being less than thirty days, as may be
specified in the notice, a return showing the income on the basis of which,
according to such person, he is liable to be assessed to the tax on
employment for the half-year in question.
(2) On receipt of a notice under sub-section (1), the person
shall submit a return showing the income derived by him durmg the
half-year for which the tax on employment is claimed or during the
previous half-year and may produce any evidence on which such
person may rely in support of the return made
7. Return after due date and amendment of return.—If
any person has not furnished a return within the time speci fied in a
notice under sub-section (1) of section 6 or having furnished a return under
that section discovers any omission or wrong statement therein, he may
furnish a return or a A revised return, as the case may be, at any time before
the assessment is made
8 Assessment.—(1) If a list with the statement as required by
section 5 or a return as required by sub-section (1) of section 6 is
furnished and the assessing authority is satisfied
52
that it is correct and complete, it shall levy the tax on employ ment
from the person liable to be assessed on the basis of such statement
or return.
Explanation —If a person produces the notice of demand of
income tax served on him under the Income Tax Act, 1961 (Central
Act 43 of 1961), for the year comprising the half-year in question,
the assessing authority shall be bound to take one- half of the
income mentioned in such notice of demand as the income derived
from the sources on which the tax on employ ment is leviable under
this Act, as the income of the said sources for the purpose of levying
the tax on employment.
(2) If the assessing authority is not so satisfied, it shall
serve a notice on the person concerned, requiring him either to
attend in person at its office on a date to be specified in the notice or
to produce or cause to be produced on that dale evidence on which
he may rely in support of his return
(3) The assessing authority, after hearing such evidence as
the person may produce and such other evidence as it may require
on any specified points, shall, by order in writing, assign to the
person the class in the scale appropriate to the half yearly income of
such person as estimated by it.
(4) If any person fails to make a return in response to any
notice under sub-section (1) of section 6 or fails to comply with the
terms of any notice issued under sub-section (2) of this section, the
assessing authority shall, by order m writing, assign to the person
concerned the class in "the scale appropriate to the half yearly
income of such person as estimated by it
(5)The assessing authority may, when classifying any person under sub-
section (3) or sub-section (4), do so on genet al considerations with
reference to the nature and reputed value of the business transacted, the
she and rental of residential and business premises, the quantity and
number of articles dealt with, the number of persons employed and the
income tax paid by such persons.
(6)The assessing authority shall not be entitled to call for the accounts of
any person.
9 Power to assess in case of escape from assessment.— If for
any reason any person liable to pay the tax on employment has
escaped assessment in any half-year, the assessing authority may, at
any time within three years from the date on which such person
should have been assessed, serve on such person a notice assessing
him to such tax and demanding payment thereof within thirty days
from the date of such service, and the provisions of this Act shall, so
far as may be, apply as if the assessment was made in the half-year
to which such tax relates.
10 Notice of demand.—When any tax on employment is due
in consequence of any order passed under this Act, the assessing
authority shall serve upon the assessee or other person liable to pay
such tax a notice of demand in the prescribed form specifying the
sum so payable and the time within which it shall be paid.
11 Recovery of tax.—Any amount specified as payable in a
notice of demand under section 10 shall be paid within the time, at
the place and to the person mentioned in the notice, or if no time is
so mentioned, then on or before the 1st day of the second month
following the day of service of the notice, and any assessee failing so
to pay shall be deemed to be m default
12 Mode of recovery.—Without prejudice to any other mode
of recovery, arrears of the tax on employment may be recovered
under the provisions of the Revenue Recovery Act for the time being
in force as if it were an arrear of public revenue due on land
13 Appeals.—(1) Any person objecting to the amount of the
tax on employment specified in the notice of demand served under
section 10 or denying his liability to be assessed under this Act or
objecting to any order of the assessing authority under this Act* may
appeal to the appellate authority against the assessment or against
such order:
Provided that no such appeal shall lie unless the tax on
employment has been paid
(2) An appeal under sub-section (1) shall be in the prescribed
form and shall be verified in the prescribed manner.
I
54
(3) The appeal shall be presented within a period of sixty
days from the date of service of the notice of demand relating to the
assessment or the date of service of the order, as the case may be,
but the appellate authority may admit an appeal presented after the
expiration of the said period, if it is satisfied that the appellant had
sufficient cause for not presenting it within the said period *
Provided, however, that no such appeal shall be admitted
after a period of six months from the date of service of the notice of
demand relating to the assessment or the date of service of the order,
as the case may be
(4) The appellate authority shall fix a day and place for the
hearing of the appeal and may, from time to time, adjourn the
hearing and make or cause to be made such further inquiry as it
thinks fit
(5) At the hearing of the appeal, the assessing authority
shall also have a right to be heard
(6) In disposing of an appeal, the appellate authority
may,— * .
(a) in the case of an order of assessment,—
(i) confirm, reduce, enhance or annul the assess
ment , or
(ii) set aside the assessment and direct the assessing
authority to make a fresh assessment after such
further inquiry as may be directed;
(b) in the case of any other order, confirm, cancel or vary
such order
(7) The appellate authority shall, on the conclusion of the
appeal, communicate the orders passed by it to the appel lant and the
assessing authority
(8) The orders passed by the appellate authority shall,
subject to the provisions of section 15, be final and shall not be
liable to be questioned m a court of law
1
\
l
I
14, Reference to District Court. —(1) The appellate autho rity
may, if it is satisfied either suo motu or on application by any party
to an appeal under section 13 that the decision on
the appeal involves a question of law, draw up a statement of the case
and refer it to the District Court.
(2) If the District Court is not satisfied that the state ment in
a case referred under this section is sufficient to enable it to
determine the question raised thereby, the court may refer the case
back to the appellate authority to make such additions thereto or
alterations therein as the court may direct in that behalf.
(3) The District Court upon the hearing of any such case
shall decide the questions of law raised thereby and shall deliver its
judgment thereon containing the grounds on which such decision is
founded and shall send a copy of such judg ment under the seal of the
court to the appellate authority which shall pass orders on the appeal
in conformity with such judgment
(4) For the purposes of this section, "District Court” means
the District Court having jurisdiction over the area in which the
assessee exercises his profession, art or calling or transacts business
or holds appointment.
15 Powers of revision of the District Collector.—The
District Collector may at any time call for and examine the record of
any proceeding pending before or disposed of by the appellate
authority or the assessing authority and may pass such order in
reference thereto as thinks fit *
Provided that no such order shall be passed under this section
without notice to the party who may be affected by the order
Provided fuither that no order passed on the basis of a reference
under section 14 to the extent covered by the answer to such
reference shall be subject to revision by the District Collector.
16 Rectification of mistakes.—(1) The appellate authority or
the revisional authority may at any time within three years from the
date of an order passed by it on appeal or revision, as the case may
be, and the assessing authority may at any time within three years
from the date of any assessment or order passed by it, of its own
motion, rectify any mistake apparent from the record of the appeal,
revision, assessment or
5/97 - 5
I
56 1
order, as the case may be, and shall, within the like period, rectify
any such mistake which has been brought to its notice by an
assessee
Provided that no such rectification shall be made which has
the effect of enhancing an assessment or reducing a refund unless
the assessee has been given reasonable opportunity of being heard
in the matter
(2) Where any such rectification has the effect of reduc ing
an assessment, the assessing authority shall make any refund which
may be due to such assessee
(3) Where any such rectification has the effect of enhancing
an assessment or reducing a lefund, the assessing authority shall
serve on the assessee a notice of demand in the prescribed form
specifying the sum payable, and such notice of demand shall be
deemed to be issued under section 10 and the provisions of this Act
shall apply accordingly
17 Power to take evidence on oath, etc.—The appellate
authority, the assessing authority and the revisional authority shall,
for the purposes of this Act, have the same powers as are vested in a
civil court under the Code of Civil Procedure, 1908 (Central Act *5
of 1908), when trving a suit m respect of the following matteis,
namely —
(a) enforcing the attendance of any person and examin mg
him on oath or affirmation ,
(b) requiring the chscoveiy and pioduction of documents
(c) receiving evidence on affidavit.
(d) issuing commissions for the examination of witnesses
18 Refunds.—(1) If any person satisfies the assessing
authority that the amount of the tax on employment paid by him
exceeds the amount with which such person is propel ly assessable
under this Act. he shall be entitled to a refund of such excess
(2) The appellate authority in the exercise of its appellate
powers or the revisional authority in the exercise of its revisional
powers, if satisfied to the like effect, shall cause a refund to be made
by the assessing authority of any amount found to have been
wrongly paid or paid in excess.
J
V
—V
57
19. Limitation of claims for refund.— No claim to any refund
of the tax on employment under section 18 shall be admitted unless it
is made within three years from the date of the order of assessment
or, where an appeal has been pre ferred or where there has been a
revision, within three years from the order in appeal or revision, as
the case may be
20 Prosecutions.—(1) If any person fails without
reasonable cause—
(a) to furnish within the specified time a list and statement
or particulars which such person is bound to furnish to the assessing
authority under section 5, or
(b) to furnish a return on or before the date specified in any
notice under sub-section (1) of section 6,
he shall, on conviction before a Magistrate, be punishable with fine
which may extend to ten rupees for every day during which the
default continues
(2) A person shall not be proceeded against for an offence
under this section except at the instance of the assessing authority
(3) The District Collector may, either before or after the
institution of proceedings, compound any such offence
Explanation.—For the purposes of this section, "Magistrate”
means a Judicial Magistrate of the First Class or a Judicial
Magistrate of the Second Class specially empowered by the
Government to try offences under this Act
21 Offences by companies.—(1) Where an offence under this
Act has been committed by a company, every person who at the time
the offence was committed was in charge of, and was responsible to,
the company for the conduct of the business of the company, as well
as the company, shall be deemed to be guilty ol the offence and shall
be liable to be proceeded against and punished accordingly
Provided that nothing contained in this sub-section shall
render any such person liable to any punishment, if he proves that the
offence was committed without his knowledge or that he had
exercised all due diligence to prevent the commission of such
offence
3/97—5a
(2) Notwithstanding anything contained in sub-section (i)
where any offence under this Act has been committed by a company
and it is proved that the offence has been committed with the
consent or connivance of, or is attributable to any neglect on the
part of, any director, manager, secretary or other officer of the
company, such director, manager, secretary or other officer shall be
deemed to be guilty of that offence and shall be liable to be
proceeded against and punished accordingly
Explanation.—For the purposes of this section,—
(a) "company’’ means any body corporate and includes a
firm or other association of individuals; and
(b) "director", in relation to a firm, means a partner in the
firm.
22 Manner of service of notice —(1) A notice or requi sition
under this Act may be served on the person therein named either by
post or as if it were a summons issued by a civil court under the
Code of Civil Procedure, 1908 (Central Act 5 of 1908)
(2) Any such notice or requisition may be addressed,—
(a) in the case of a firm or a Hindu undivided family or an
Ahyasanthana family or branch or a Marumakkathayam tarwad or
tavazhi or a family to which the provisions of the Kerala
Namboodiri Act, 1958, apply, to any member of the firm or to the
Manager. Yajaman or Karanavan, as the case may be, or any adult
member of the family, branch, tarwad or tavazhi,
(b) in the case of a local authority or company, to the
principal officer thereof ,
(c) m the case of any other association or body of
individuals, to the principal officer or any member thereof ,
(d) in the case of any other person (not being an
individual), to the person who manages or controls his affairs
23 Liability of agents of companies, firm, associations, etc , to
tax on employment.—The tax on employmeri leviable from a
company, firm, association, Hindu undevided family, Ahyasanthana
family or branch, Marumakkathayam tarwad or tavazhi or a family to
which the provisions of the Kerala
5$
-r
Namboodiri Act, 1958, apply, may be levied from the agent of the
company, firm or association or the Manager, Yajaman or Karanavan
of the family, branch, tarwad or tavazhi, as the case ma> be
24 Statements,
returns etc., to be confidential.—All'
statements made, returns furnished or accounts or documents
produced in connection with the assessment of the tax on
employment under this Act shall be treated as confidential end shall
not be granted to the public
25 Computation of periods of limitation.—In computing the
period of limitation prescribed for an appeal under this Act, the time
required for obtaining a copy of the order com plained of shall he
excluded
2G Bar of jurisdiction.—No suit shall lie in any civil court to set
aside or modify any assessment made under this Act and no
prosecution, suit or other legal proceeding shall lie against the
Government or any authority or officer for any thing in good faith
done or intended to be done under this Act
27 Power of assessing authority, etc., to call for informa tion
from local authorities.—The assessing authority or the appellate
authority or the District Court or the revisional autho rity may, for the
purposes of this Act, call for any infomation legarding an assessee
from the local authority to which that assessee is liable to pay the
profession tax payable under the law governing that local authority,
and such local authority shall be bound to furnish the information
28 Removal of difficulties.—If any difficulty arises in giving
effect to the provisions of this Act, the Government may, by general
or special order published in the Gazette, make such provisions not
inconsistent with the provisions of this> Act, as appear to them to be
necessary or expedient for the purpose of removing the difficulty :
Provided that no such order shall be made under this section
alter the expiry of three years from the commencement of this Act
29 Power to make rules.—(1) The Government may, by
notification in the Gazette, make rules for carrying out the purposes
of this Act
60
(2) In particular, and without prejudice to the generality of
the foregoing power such rules may provide for—
(a) the procedure for the assessment, levy and collection of
the tax on employment;
(b) the form of the notice of demand mentioned m section
10,
(c) the mode and manner of payment of the tax on
employment;
(d) the powers and duties of authonties and officers under
this Act,
(e) the conditions of service of the assessing authorities
and appellate authorities,
(f) the form in which appeals undei this Act shall be
presented and the manner in which they shall be verified,
(g) the manner m which and the authority to which
applications for refund shall be made and the procedure to be
followed in respect of such applications , and
(h) any other matter which has to be, or may be, prescribed
(3) Every rule made under this Act shall be laid as soon as
may be after it is made before the Legislative Assembly while it is in
session for a total period of fourteen days which may be comprised
in one session or in two successive sessions, and if, before the expiry
of the session in which it is so laid, or the session immediately
following, the Legislative Assembly makes any modification in the
rule or decides that the rule should not be made, the rule shall
thereafter have effect only in such modified form or be of no effect,
as the case may be , so however that any such modification or
annulment shall be without prejudice to the validity of anything
previously done under that rule.
30 Establishment of Housing Fund and its utilisation.—
(1) On the commencement of this Act, there shall be established a
fund to be called the Kerala .State Poor Housing Fund {hereinafter
in this section referred to as 'the Housing Fund’).
(2) The proceeds of the tax on employment levied and
collected under this Act, together with the fines, interest and fees
recovered thereunder, shall first be credited to the Consolidated Fund
of the State and, after deducting the expenses
61
*
A;
of collection and recovery as determined by the Government,
the remaining amount shall, under appropriation duly made
by law in this behalf, be entered into, and transferred to the
Housing Fund
(3) Any amount transferied to the Housing Fund shall
be charged on the Consolidated Fund of the State
(4) No sum shall be paid or applied from and out of
the Housing Fund except in the manner and for the purpose
provided in sub-sections (5) and (6)
(5) The amount standing to the credit of the Housing
Fund shall be expended in such manner and subject to such
conditions as may be pi escribed for the purpose of pioviding
house sites for landless poor persons
Explanation.—Foi the puruposes of this sub-section,
''landless poor person ’ means a person who does not hold any
land which is fit for construction of a dwelling house, either
as owner or as tenant having fixity of tenure, and whos^
annual income is not more than six hundred rupees
(6) The Housing Fund shall be held and administered
on behalf of the Government by an officer not below the rank
of Secretary to the Government, subject to such general or
special directions as may be given by the Government from
time to lime (
31 Repeal.—The Kerala Tax on Employment Ordinance,
1975 (16 of 1975), is hereby repealed
THE SCHEDULE
(Sec section 4)
Rates of tax on employment
Class Half-yearly income Rs.
I Not more than Rs 1,800 Nil.
II More than Rs. 1,800 but not more than Rs 3,000 6
00
III More than Rs 3,000 but not more than Rs 4,800 18
00
IV More than Rs 4,800 hut not more than Rs 6,000 37
50
V
More than Rs 6,000 but not more than Rs 9,000 50
00