Chapter XIV TAXATION AND FINANCE

ENUMERATION OF TAXES AND DUTIES.—

1. (1) Every Municipality may levy-
   • (a) a property tax;
   • (b) a profession tax;
   • (c) a tax on animals and vessels;
   • (d) a show tax;
   • (e) a tax on advertisements;
   • (f) a tax on timber brought into the municipal area;
   • (g) a duty on certain transfers of immovable property in the shape of an additional stamp duty subject to the rules framed by Government.
2. (2) The Municipality may, for the purpose of providing any specific civic service or amenity levy a surcharge on any tax other than profession tax levied by the Municipality: Provided that no surcharge shall be levied if a tax or cess is already being levied for the same purpose: Provided further that such surcharge shall, in no case, exceed ten per cent, of the amount of the tax.
3. (3) The Municipality may in the manner prescribed levy a land conversion cess not exceeding rupees seventy five per are from the landholder in respect of a paddy field, marshy land, pond or watershed held by him which is converted into garden land or building site. Explanation.— Nothing in this section shall be deemed to affect any of the provisions of the Kerala Land Utilisation Order, 1967.

RESOLUTION OF COUNCIL DECIDING TO LEVY TAX.—

1. (1) Any resolution of a Council determining to levy a tax shall specify the rate at which and the date from which any such tax shall be levied.
2. (2) Before passing a resolution imposing a tax for the first time or increasing the rate of an existing tax, the Municipality shall publish a notice in the Gazette, at least in one newspaper published in the language of the locality having wide circulation in the Municipality, on the notice board of the office of the Municipality and in such other places within the municipal area as may be specified by the Council and in any other manner as it may determine, of its intention, fix a reasonable period not being less than one month for submission of objections, and consider the objection if any, received within the period specified.
3. (3) Any resolution abolishing an existing tax or reducing the rate at which a tax is levied shall immediately be reported to the Government: Provided that in the case of a Municipality which has an outstanding loan either from the Government or from the Public or any other local body, such abolition or reduction shall not have effect without the sanction of the Government.
4. (4) Where any resolution under this section has taken effect for a particular year, no proposal to alter the rate or date fixed in such resolution so far as that year is concerned shall be taken into consideration by the Council.

NOTIFICATION OF NEW TAXES.— Where a Council determines under section 231 to levy any tax for the first time or at a new rate, the Secretary shall forthwith publish in the prescribed manner the rate at which, the date from which and the period of levy, if any, for which such tax shall be levied.

METHOD OF ASSESSMENT OF PROPERTY TAX.—

1. (1) Every building shall be assessed together with its site and other adjacent premises occupied as an appurtenance thereto unless the owner of the building is a different person from the owner of such site or premises.
2. (2) Notwithstanding anything contained in the Kerala Buildings (Lease and Rent Control) Act, 1965 (2 of 1965) or any other law for the time being in force, for the purpose of assessing the property tax, it shall be assessed in the prescribed manner on the basis of the annual value of any buildings and lands adjacent to it, the importance of area where the building is situated, type of the building construction, method of use, plinth area, reasonable annual maintenance cost etc. and the tax shall be determined for the said building and land at the rate fixed by the Council under sub-section
3. (3) of Section 233: Provided that from the property tax assessed in such manner, property tax shall be fixed by allowing the deduction at the rate of ten per cent to buildings above ten years and upto twenty years old, twenty per cent to buildings above twenty years and upto fifty years old and twenty-five percent to buildings above fifty years old.
4. (3) In the case of a building given for the use of another person upon rent or on such other condition by the owner, the property tax shall be assessed by adding with it an amount equal to twenty-five per cent of the assessed tax under sub-section (2).
5. (4) The Government may make rules regarding the person by whom and the intervals at which the annual value of buildings, the deduction or addition in the tax to be made etc., is to be determined and the procedure for the realisation of tax amount.

EXEMPTION.—

1. (1) The following buildings and lands shall be exempt from the property tax:
   • (a) places set apart for public worship, and either actually so used or used for no other purpose;
   • (b) buildings used extensively for public worship;
   • (c) Choultries for the occupation of which no rent is charged and choultries where the rent charged for the occupation is used exclusively for charitable purpose;
   • (d) buildings recognised by the Government or registered with the Municipality under this Act and owned and occupied by educational institutions and used only for teaching and libraries open to public.
   • (e) ancient monuments protected under the law relating to the preservation of ancient monuments applicable to the State for the time being in force, or part thereof, as are not used as residential quarters or as public offices;
   • (f) burial and burning grounds included in the register kept at the office of the Municipality under section 486;
   • (g) buildings or lands belonging to the Municipality;
   • (j) such property of Government not being buildings, as may from time to time be notified by the Government; and
   • (l) public building and places used for charitable purposes of sheltering the destitutes or animals.
   • (j) Building with mud walls or roof thatched with leaves or light weight sheet and having a plinth area of less than twenty Sq, metres;
   • (k) Residential building constructed by a person who belongs to economically weaker section, using Government subsidy and having a plinth area of less than twenty Sq. metre. Explanation.— The exemption granted under the section shall not extend to buildings and lands for which rent is realised by the owners thereof and to residential quarters attached to schools and colleges not being hostels or residential quarters attached to hospitals, dispensaries and libraries.
2. (2) A Municipality may, with the previous sanction of the Government exempt any particular part of the Municipal area from the payment of the whole or a portion of the water and drainage tax or of the lighting tax on the ground that such area is not deriving full benefit from the water supply and drainage scheme or from the lighting system.
3. (3) A Municipality may exempt any building or land from the whole or any portion of the sanitary tax if it is satisfied that the owner or occupier has made efficient and satisfactory arrangements for the daily removal therefrom of rubbish, filth and carcasses of animals.
4. (4) [xxxx]
5. (5) Notwithstanding anything contained in this Act or any other law for the time being in force, in the case of properties exempted from property tax under sub section (1), the Municipality shall be entitled to claim the cost of services covered by the service taxes.

TAXATION TO BE UNIFORM.— The rate of any class of property tax on lands when levied on their annual value under sub-section (3) of section 233 may be lower than the rate of the same class of property tax on buildings, but either rate shall be uniform throughout the municipal area on all buildings or on lands liable to be so taxed on their annual value, as the case may be.

PROPERTY TAX, FIRST CHARGE ON PROPERTY.— The property tax on buildings and lands shall, subject to the prior payment of land revenue, if any, due to the Government thereon, be a first charge upon the said buildings or lands and upon the movable property, if any, found within or upon the same and belonging to the person liable to such tax.

REVISION AND TIME OF PAYMENT OF PROPERTY TAX.— Subject to the rules made by Government the property tax shall be assessed and the half-yearly tax determined [once in every four years] and the half-yearly tax shall be payable by the owner of the assessed property within thirty days of the commencement of each half-year: Provided that except in the case of substantial improvements or addition to an existing building since the last assessment, the annual value of any building shall not exceed the limit, if any, fixed by the Government from time to time.

VACANCY REMISSION VACANCY REMISSION.—

1. (1) When any building whether ordinarily let or occupied by the owner himself has been vacant and unlet for a half-year, the owner shall be entitled to a remission of tax for that half-year.
2. (2) If the owner had already paid the tax in respect of a half-year in which a remission is due, he shall be entitled to get either refund or shall be entitled to get the amount adjusted in the tax for the succeeding half-year. (3)
   • (a) No such remission shall be admissible unless the owner of the building or his agent has previously thereto delivered notice to the Secretary-
   • (k) that the building is vacant and unlet, or
     • (ii) that the building will be vacant and unlet from a specified date either in the half-year in which notice is delivered or in the succeeding half-year.
   • (b) Every notice under clause (a) shall expire with the half-year succeeding the half-year during which it is so delivered and shall have no effect thereafter.

Obligation of transferor and transferee to give notice, of transfer.—

1. (1) Whenever the title of any person primarily liable to the payment of property tax on any premises to or over such premises is transferred, the person whose title is transferred and the person to whom the same shall be transferred shall, within three months after the execution of the instrument of transfer or after its registration if it be registered or, after the transfer is effected, if no instrument be executed, give notice of such transfer to the Secretary.
2. (2) In the event of the death of any person primarily liable as aforesaid, the person to whom the title of the deceased shall devolve, as heir or otherwise, shall give written notice of such transfer to the Secretary within one year from the date of death of the deceased.
3. (3) The notice to be given under this section shall be in such form as the Secretary may specify and the transferor, and the transferee or in the case of death of a person, the person to whom the title passes, as the case may be, shall if so required, be bound to produce before the Secretary any documents evidencing the transfer or succession.
4. (4) Every person who makes a transfer as aforesaid without giving such notice to the Secretary shall, in addition to any other liability which, he may incur for such failure, be liable for the payment of property tax assessed on the premises so transferred until he gives notice or until the transfer is recorded in the registers of the Municipality, but nothing in this section shall be held to affect-
   • (a) the liability of the transferee for the payment of the said tax, or
   • (b) the prior claim of the Municipality under section 237.

OWNER’S OBLIGATION TO GIVE NOTICE OF CONSTRUCTION, RECONSTRUCTION OR DEMOLITION OF BUILDING.— (1)

1. (a) If a building is constructed or reconstructed in a Municipal area the owner shall give notice thereof to the Secretary within fifteen days from the date of completion or occupation of the building, whichever is earlier.
2. (b) If such date falls within the last two months of a half-year, the owner shall subject to notice being given under clause(a), be entitled to a remission of the whole of the tax or enhanced tax, as the case may be, payable in respect of the building only, for that half-year.
3. (c) If such date falls within the first four months of a half-year, the owner shall, subject to notice being given under clause(a), be entitled to a remission of so much not exceeding a half of the tax or enhanced tax, as the case may be, payable in respect of the building only for that half-year, as is proportionate to the number of days in that half-year preceding such date. (2)
4. (a) If any building in a municipal area is demolished or destroyed, the owner shall, until notice thereof is given to the Secretary, be liable for the payment of the property tax which would have been leviable had the building not been demolished or destroyed.
5. (b) If such notice, is given within the first two months of a half-year the owner shall be entitled to a remission of the whole of the tax payable in respect of the building only; for the half-year.
6. (c) If such notice is given within the last four months of a half-year, the owner shall be entitled to a remission of so much not exceeding a half of the tax payable in respect of the building only, for that half-year, as is proportionate to the number of days in that half-year, succeeding the demolition or destruction, as the case may be.

ASSESSMENT OF BUILDING CONSTRUCTED UNLAWFULLY.—

1. (1) Notwithstanding anything contained in this Act or the rules made thereunder, where any person has unlawfully constructed or reconstructed any building, such building shall, without prejudice to any action that may be taken against that person, be liable to tax from the date of completion or occupation whichever is earlier till the date of demolition of that building.
2. (2) Nothing contained in sub-section
3. (1) shall preclude the Secretary from proceeding against such person under section 406 of the Act and the owner shall not be entitled to any compensation or damages due to any action taken by the Secretary under this section.

Remission of tax in areas included or excluded in the middle of a half-year.—

1. (1) Where any area is included within a municipal area the owner of every building or land in such area shall -
   • (a) if the date of such inclusion falls within the last two months of a half-year, not be liable to pay property tax in respect for that half-year; and
   • (b) if such date falls within the first four months of a half-year, be entitled to a remission of so much tax not exceeding half of the property tax payable in respect thereof for that half-year, as is proportionate to the number of days in that half-year preceding such date.
2. (2) Where any area is excluded from a municipal area, the owner of every building or land in such area shall be entitled-
   • (a) if the date of such exclusion falls within the first two months of a half-year, to a remission of the whole of the property tax payable in respect thereof for that half-year; and
   • (b) if such date falls within the last four months of a half-year, to a remission of so much tax not exceeding a half of the property tax payable in respect thereof for that half-year, as is proportionate to the number of days in that half-year succeeding such date.
3. (3) No remission shall be granted under sub-section
4. (2) in respect of any building or land unless an application in writing for such remission is made to the Secretary within three months from the date of exclusion of the area in which the building or land is situated.

Secretary’s power to call for information and to enter upon premises.—

1. (1) For the purpose of assessing property tax, the Secretary may, by notice, cal 1 upon the owner or occupier of any land or building to furnish him, within thirty days after the service of the notice where the notice is served upon the Government or a company and within fourteen days after such service in other cases, with returns of the rent payable for the land or building, the cost of erecting the building and the measurements of the land and building, and with such other information as the Secretary may require; and every owner and occupier on whom such notice is served shall be bound to comply with it and to make a true return to the best of his knowledge or belief.
2. (2) For the purpose of sub-section(l), the Secretary may, alter giving twenty four hours notice to the owner or the occupier, enter, inspect, survey and measure such building or land.

PROFESSION TAX.—

1. (1) Where the Council by a resolution determines that a profession tax shall be levied- A.every company which after the date specified in the notification published under section 232-
2. (1) transacts business in the municipal area for not less than sixty days in the aggregate to any half-year; or
   • (ii) transacts business outside the limit of the municipal area but has its head office or place from which its business is controlled within the municipal area for not less than sixty days in the aggregate in any half-year; and B.every person, who after the said date in any half-year,—
   • (a) exercises a profession, art or calling or transacts business or holds any appointment, public or private-
     • (i) within the municipal area for not less than sixty days in the aggregate; or
     • (ii) outside the municipal area, but who resides within the municipal area for not less than sixty days in the aggregate; or
   • (b) transacts business outside the municipal area but has his head office or place from which his business is controlled within the municipal area for not less than sixty days in the aggregate; or
   • (c) resides in the municipal area for not less than sixty days in the aggregate and is in receipt of any income from investments, shall pay a half-yearly tax assessed in accordance with the rules as may be made.
3. (2) A person shall be chargeable under the class appropriate to his aggregate income from all the sources specified in sub-section(l)as being liable to tax.
4. (3) Where a company or person proves that it or he has paid the sum due on account of the profession tax levied under this or any other Act for the same half-year to any local authority in theState, such company or person shall not be liable, by reasonsmerely of change ofplaceof business, exerciseof profession, art or calling appointment orresidence, to pay toany other local authoritymore than the difference between such sum and the amount towhichit or he is otherwiseliable for the profession tax for the half yearunder this or such other Act.
5. (4) Nothing contained in this section shall be deemed to render a person who resides within the local limit of one local authority and exercises his profession, art or calling, or transacts business, holds any appointment within the local limits of any other local authority or local authorities liable to profession tax for more than the higher of the amounts of the tax leviable by any of the local authorities and in such cases, the Government shall apportion the tax between the local authorities in such manner as they may deem fit and the decision of the Government thereon shall be final. Explanation.— For the purpose of this section "aggregate income" shall not include local allowance or allowances for house rent, 60 [x x], carriage hire or travelling expenses.

Liability of members of firms, associations etc., to profession tax.— The profession tax leviable from a firm or association may be levied from the agent of the firm or association, as the case may be.

LIABILITY OF SERVANTS OF AGENTS TO PROFESSION TAX.—

1. (1) Where a company or person employs a servant or agent to represent it or him for the purpose of transacting business in a municipal area, such company or person shall be deemed to transact business in the muncipal area and such servant or agent shall be liable for profession tax in respect of the business of such company or person, whether or not such servant or agent has power to make binding contracts on behalf of such company or person.
2. (2) Where one company or person is the agent of another company or person, the former company or person shall not be liable separately to the profession tax, on the same income as that of the principal,

STATEMENTS, RETURNS ETC., TO BE CONFIDENTIAL.— All statements made, returns furnished or accounts or documents produced, in connection with the assesment of profession tax by any company or person shall be treated as confidential and copies thereof shall not be issued to public.

Requisition on owner or occupier to furnish list of persons liable to tax.— The Secretary may, by notice, require the owner or the occupier of any building or land and every Secretary or manager of a hotel, boarding or lodging house, club or residential chambers to furnish within a specified time a list in writing containing the names of all persons occupying such building, land, hotel, boarding or lodging house, club or residential chambers and specifying the profession, art or appointment of every such person and the rent if any, paid by them and the period of such occupation.

Requisition on employees or their representatives to furnish list.— The Secretary may, by notice, require any employer or the head or the Secretary or the manager of any public or private office, hotel, boarding or lodging house or club or of a firm or a company-

1. (a) to furnish, within a specified time, a list in writing of the names of all persons employed by such employer or in such office, hotel, boarding or lodging house, club, firm or company as officers, servants, interpreters, agents, suppliers or contractors, with a statement of the salary or income of such employed persons; and
2. (b) to furnish particulars in regard to any company of which such employer or head, Secretary or manager, as the case may be, is the agent.

MEANING OF THE EXPRESSION 'TRANSACTS BUSINESS’.—

1. (1) The expression "transacts business" in section 245 shall be deemed to include the doing of acts or business of whatever nature, whether isolated or not, such as soliciting, obtaining or transmitting orders or buying, making, manufacturing, exporting, importing, receiving, transmitting or otherwise dealing in goods.
2. (2) Where for the purpose of transacting business within the municipal area, a company or a person has an office or an agent or a firm to represent it or him, the company or the person shall be deemed to transact business within the municipal area, whether or not such office, agent or firm has power to make binding contracts on behalf of the company or the person; and the person in charge of such office or the agent or firm, as the case may be, shall be liable for the tax payable by the company or person.
3. (3) A company or a person otherwise liable to profession tax under section 245 shall not cease to be liable to such tax by reason only of its or his head office or the place from which its or his business is controlled being situated outside the municipal area, or by reason only of the fact, that its or his transactions are finalised outside the municipal area.

ISSUE OF RECEIPT FOR REMITTANCE.—

1. (1) The Secretary shall, on receipt of the payment, issue an official receipt in the name of the head of office for the amount remitted.
2. (2) Every head of office shall in turn grant to each tax payer a certificate of recovery and payment of tax to the Municipality for the half-year in question.

PAYMENT OF TAX BY SELF DRAWING OFFICER.—

1. (I) Every self drawing officer shall, before the end of August and February every year, remit or cause to be remitted the profession tax due from him in respect of each half-year in accordance with the schedule of tax in force along with a statement showing the details of half-yearly income.

1. (2) On receipt of payment under sub-section(l), the Secretary shall issue official receipt therefor.

MAINTENANCE OF DEMAND REGISTER.— The Secretary shall maintain a ward-wise Demand Register by providing independent pages for every institution specified in sub-section (2) of section 253, and in such case the head of office and the self-drawing officers, if any, shall be the assesses and the remittance shall be entered against their names.

Certificate of drawing and disbursing officers and self-drawing officers Certificate of drawing and disbursing officers and self-drawing officers.— A certificate shall be furnished in the salary bill of the drawing and disbursing officer and the self drawing officer relating to the month of February and August every year to the effect that profession tax due in respect of all employees and himself, as the case may be, has been paid and the details furnished to Secretary and in the absence of such certificate the passing officer shall not honour the bill.

PENALTY FOR NON-PAYMENT OF TAX.— Where at any time it appears to the Secretary that any head of office or employer or self drawing officer under a duty to furnish the particulars and remit the tax due as specified under section 253,254 and 256 has failed to furnish such details or to remit the tax due within the specified time the Secretary shall immediately thereafter prosecute such defaulter or defaulters. Explanation.— For the purpose of this section and sections 252 to 258 (both inclusive) the expression Head of office or employer in relation to an office, institution, undertaking, establishment etc., shall mean the person authorised to draw and disburse the salary or wages of the employees in such office, institution, undertaking or establishment.

LEVY OF TAX ON ANIMALS AND VESSELS.— The Council may, by resolution, levy a tax on such animals and vessels of the kind specified in the rules and kept or used within the municipal area.

TAX LIABILITY TO BE IN ACCORDANCE WITH PERIOD FOR WHICH THE ANIMALS OR VESSELS HAVE BEEN KEPT.—

1. (1) Every person having possession, custody or control of any taxable animal or vessel shall be liable for the full half-yearly tax if the animal or vessel has been kept or used within the municipal area for an aggregate period of not less than sixty days in a half-year.
2. (2) If such aggregate period exceeds fifteen days, but is less than sixty days, one half of the half-yearly tax alone shall be leviable.
3. (3) If such aggregate period does not exceed fifteen days, no tax shall be leviable for the half-year.
4. (4) Every person having possession, custody or control of any taxable animal or vessel within a municipal area shall, until the contrary is shown, be presumed to have kept the same within the municipal area for sixty days in the half-year.
5. (5) Notwithstanding anything contained in sub-sections (1) and (2) no person shall be liable-
   • (a) to pay tax to the Municipality during any half-year on account of any animal or vessel in respect of which the full tax for the same half-year has already been paid to the Municipality by some other person; or
   • (b) to pay to the Municipality on account of any animal or vessel in respect of which tax has already been paid to any other local authority whether under this Act, or any other Act in force, more than the excess, if any, of the tax payable in the Municipality in respect of such animal or vessel over the tax already paid to the other local authority.

EXEMPTIONS,— No tax shall be levied on-

1. (a) animals and vessels belonging to the Government;
2. (b) animals and vessels kept solely for sale by dealers;
3. (c) animals and vessels belonging to the Municipality;
4. (d) animals, which during the whole of a half-year have been kept in any institution for the reception of infirm or disabled animals or which are certified by a veterinary surgeon to have been unfit for use during the whole of the half-year; and
5. (e) vessels which during the whole of a half-year have been kept in a place for repairs.

TAX ON ADVERTISEMENTS.— Every person who erects, exhibits, fixes or retains upon or over any land, building, wall, hoarding or structure in a municipal area any advertisement or who displays any advertisement to public view in any manner whatsoever in any place in such area, whether public or private, shall pay on every such advertisement a tax calculated at such rates and in such manner and subject to such exemptions as the Council with the approval of the Government, by resolution determine: Provided that the rates shall not be less than the rate specified by the Government for this purpose. Provided further that the tax under this section in any advertisement displayed in a public service vehicle as defined in the Motor Vehicles Act, 1988 (Central Act 59 of 1988) passing through the local limits of more than one local authority shall be levied by a Municipality only if such vehicle-

1. (a) commences its operation from the municipal area of that Municipality; or
2. (b) commences its operation from a place other than a municipal area and passes through that municipal area before it passes through the local limits of any other local authority: Provided also that no tax shall be leived under this section on any advertisement or a notice:-
3. (a) of a public meeting; or
4. (b) of an election to any legislative body or a Municipality, or a Panchayat; or
5. (c) of a candidature in respect of such an election: Provided also that no such tax shall be levied on any advertisement which is not a sky sign and which-
6. (a) is exhibited within the window of any building which is not a public place; or
7. (b) relates to the trade or business carried on within the land or building upon or over which such advertisement is exhibited, or to any sale or letting of such land or building or any effects therein or to any sale, entertainment or meeting to be held upon or in the same; or
8. (c) relates to the name of the land or building upon or over which the advertisement is exhibited, or to the name of the owner or occupier of such land or building; or
9. (d) relates to the business of any railway administration; or
10. (e) is exhibited within any railway station or upon any wall or other property of a railway administration except any portion of the surface of such wall or property fronting any street. Explanation 1.— The word "structure" in this section shall include any movable board on wheels used as an advertisement or an advertisement medium. Explanation 2.— The expression "sky-sign", in this section, means any advertisement supported on or attached to any post, pole, standard, frame work or other support wholly or in part upon or over any land, building, wall or structure which, or any part of which, sky-sign shall be visible against the sky from some point in any public place and includes all and every part of any such post, pole, standard, frame work or other support. The expression "sky-sign" shall also include any balloon, parachute or other similar device employed wholly or in part for the purposes of any advertisement upon or over any land, building or structure or upon over any public place, but shall not include-
11. (a) any flagstaff, pole, vane, or weather-cock, unless adapted or used wholly or in part for the purpose of any advertisement; or
12. (b) any sign, or any board, frame or other contrivance securely fixed to or on the top of the wall or parapet of any building, or on the cornice or blocking course of any wall, or to the ridge of a roof: Provided that such board, frame or other contrivance be of one continguous face and not open work, and do not extend in the height more than one metre above any part of the wall, or parapet or ridge to, against or on which it is fixed or supported; or
13. (c) any advertisement relating to the name of the land or building, upon or which the advertisement is exhibited, or to the name of the owner or occupier of such land or building; or
14. (d) any advertisement relating exclusively to the business of a railway administration and place wholly upon or over any railway, railway station, yard, platform or station approach belonging to a railway administration and so placed that it cannot fall into any street or public place; or
15. (e) any notice of land or buildings to be sold or let, placed upon such land or building. Explanation 3.— Public place shall for the purpose of this section means any place which is open to the use and enjoyment of the public whether it is actually used or enjoyed by the public or not.

Prohibition of advertisement without written permission of the Secretary.—

1. (1) No advertisement shall, after the levy of the tax under section 271 has been determined upon by the Council, be erected, exhibited, fixed or retained upon or over any land, building, wall, hoarding or structure within the muncipal area or shall be displayed in any manner whatsoever in any place in that area without the written permission of the Secretary.
2. (2) The Secretary shall not grant such permission if-
   • (i) the advertisement contravenes any bye-law made by the Council under clause (32) of section 567; or
   • (ii) the tax, if any, due in respect of the advertisement has not been paid.
3. (3) Subject to the provisions of sub-section(2), in the case of an advertisement liable to advertisement tax the Secretary shall grant permission for the period to which the payment of tax relates and no fee shall be charged in respect of such permission: Provided that the provisions of this section shall not apply to any advertisement erected, exhibited, fixed or retained on the premises of a railway administration relating to the business of a railway administration.

PERMISSION OF THE SECRETARY TO BECOME VOID IN CERTAIN CASES.— The permission granted under section 272 shall become void in the following cases, namely;-

1. (a) if the advertisement contravenes any bye-law made by the Council under clasuse

1. (32) of section 567; or
   • (b) if any addition to the advertisement be made except for the purpose of making it secure under the direction of the municipal engineer; or
   • (c) if any material change be made in the advertisement or any part thereof; or
   • (d) if the advertisement or any part thereof falls otherwise than through accident; or
   • (e) if any addition or alteration be made to, or in the building, wall or structure upon or over which the advertisement is erected, exhibited, fixed or retained, if such addition or alteration involves the disturbance of the advertisement or any part thereof; or
   • (f) if the building, wall or structure upon or over which the advertisement is erected, exhibited, fixed or retained be demolished or destroyed.
   • (g) OWNER OR PERSON IN OCCUPATION TO BE DEEMED RESPONSIBLE.— Where any advertisement is erected, exhibited, fixed or retained upon or over any land, building, wall, hoarding or structure in contravention of the provisions of section 271 or section 272 or after the written permission for the erection, exhibition, fixation or retention thereof for any period shall have expired or becomes void, the owner or person in occupation of such land, building, wall, hoarding or structure shall be deemed to be the person who has erected, exhibited, fixed or retained the advertisement in contravention unless he proves that such contravention was committed by a person not in his employment or under his control or was committed without his connivance.
   • (h) REMOVAL OF UNAUTHORISED ADVERTISEMENT,—
     • (I) Where any advertisement is erected, fixed or retained contrary to the provisions of sections 271 or section 272 or after the written permission for the erection, exhibition, fixation or retention thereof for any period shall have expired or becomes void, the Secretary may, by notice in writing require the owner or occupier of the land, building, wall, hoarding or structure upon or over which the same is erected, exhibited, fixed or retained to take down or remove such advertisement or may enter any building, land or property and have the advertisement removed.
     • (i) any person exhibiting or responsible for exhibiting any advertisement otherwise than in accordance with the provisions of this Act shall be liable, in addition to the penalty prescribed in the Fourth Schedule and the Fifth Schedule to pay the Municipality the charges of the removal of the unauthorised advertisement.
   • (j) COLLECTION OF TAX ON ADVERTISEMENT.— The Secretary may farm out the collection of any tax on advertisement leviable under section 271 for any period not exceeding one year at a time on such terms and conditions as may be provided for by bye-laws made under section 567.

TAX ON TIMBER 277. TAX ON TIMBER.—

1. (1) Where a Council, by a resolution determines that a tax shall be levied on timber brought into the municipal area, such tax at such rates, not exceeding twenty-four rupees per tonne shall be levied in such manner as may be determined by the Council: Provided that no tax shall be levied on any timber brought into a municipal area in the course of transit to any place outside that area and directly removed out of a Muncipal area by rail, road or water.
2. (2) No timber shall, except in the case referred to in the proviso to sub-section(l), be brought into a municipal area unless the tax due thereon has been paid.
3. (3) The tax shall be levied on timber kept within a Municipal area for sale if the Secretary has reason to believe that the tax, if any, due thereon has not been paid: Provided that the tax shall not be levied if the person keeping timber for sale produces satisfactory proof of the previous payment of the tax thereon.
4. (4) The Secretary may call for the accounts of any person keeping timber for sale for the purpose of levying the tax under sub-section (3).
5. (5) Where the Secretary is satisfied that any person has wilfully evaded the payment of any tax leviable under this section, the Secretary may direct that such person shall, in addition to such tax, pay by way of penalty a sum not exceeding the amount of such tax and the penalty shall be recoverable in the same manner as tax.
6. (6) The Council may make bye-laws for the seizure and sale of timber in respect of which the tax due is not paid and otherwise for carrying out all or any of the provisions relating to the levy of tax on timber.

COLLECTION OF TAX ON TIMBER.— The Secretary may, with the sanction of the Council, farm out the collection of tax under section 277 for a period not exceeding one year.

LEVY OF TAX ON DIRECTION BY GOVERNMENT.—

1. (1) Notwithstanding anything contained in this Act the Government may, by order published in the Gazette-
   • (i) direct a Municipality to levy either retrospectively or prospectively the property tax or any class of property tax, or any other tax leviable under this Act or any other law, at such rate and with effect from such date, as may be specified in the order; and
   • (ii) authorise a Municipality to levy, collect and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such limits as may be specified in the order.
2. (2) When an order under sub-section (1) has been published, the provisions of this Act relating to tax shall apply as if the Council had on the date of publication of such order by resolution determined to levy the tax at the rate and with effect from the date specified in the order and as if no other resolution of the Council under section 231 determining the rate at which and the date from which such tax shall be levied had taken effect.
3. (3) The Council shall not alter the rate at which the tax or any class of such tax is levied in persuance of an order under sub-section (1) or abolish such tax except with the previous sanction of the Government.

ASSIGNMENT OF TAX BY GOVERNMENT.— The Government may, by order published in the Gazette, assign to a Municipality such taxes, duties, tolls and fees levied by the Government for such purposes and subject to such conditions and limits as may be specified in the order.

EXEMPTION.—

1. (1) Nothing contained in this Chapter shall be construed to make the Government liable to pay any profession tax in respect of any commercial, industrial or other like undertakings which are owned or managed by or on behalf of the Government.
2. (2) The Government, or with the sanction of the Government the Municipality may exempt any person or class of persons wholly or in part from the payment of any tax.

POWER TO assess IN CASE OF ESCAPE FROM ASSESSMENT POWER TO assess IN CASE OF ESCAPE FROM ASSESSMENT.— Notwithstanding anything to the contrary contained in this Act or the rules made thereunder, where for any reason a person liable to pay any tax or fees leviable under this Chapter has escaped assessment in any half- year, the Secretary may at any time within four years from the date on which such person should have been assessed, serve on him a notice asseessing to the tax or fee due and demanding payment thereof within fifteen days from the date of such service and thereupon the provisions of this Act and the rules made thereunder shall, so far as may be, apply as if the assessment was made in the half-year to which the tax or fee relates.

[283. Municipal Fund—

1. (1) All moneys received by a Municipality under this Act or the rules made there under or any other law for the time being in force, shall constitute a fund which shall be called the Municipal Fund and shall be utilised and disposed of subject to the provisions of this Act or any other laws.
2. (2) The items of income to be credited to the Municipal Fund consist of the following, namely:—
   • (a) Taxes, duties cess and surcharge levied under this Act or any other law, the rent from properties, fees from licences and permissions and its income from other miscellaneous items;
   • (b) Share of the taxes levied by the Government and transferred to the Municipality and the grants released to the Municipality by the Government;
   • (c) Grants released by the Government for the implementation of the schemes, projects and plans formulated by the Municipality;
   • (d) Grants released by the Government for the implementation of the schemes, projects and plans assigned or entrusted to the Municipality under this Act; and
   • (e) Money raised through donations and contributions from the public and non-governmental agencies.
3. (1) All fees for licences and permissions received by the Municipality under this Act or any other law shall be accounted separately and shall be utilised for the purpose for which such fees are levied.
4. (2) Grants released by the Government to the Municipality for the implementation of the schemes, projects and plans shall be utilised only for that purpose for which such grants are released.
5. (3) The share of taxes levied by the Government and transferred to the Municipality and the grants released to the Municipality shall be fixed by the Government with due regard to the recommendations of the Finance Commission and the needs of development and the cost of the Municipal administration and services. Provided that any sum due from a Municipality to the Government or any fund established or operated or administered under any rules made under, this Act or any fund borrowed from any public sector undertaking or any agency on Government guarantee may be adjusted by the Government from any grant or sum due to the Council then and thereafter,
6. (4) No expense, financial assistance or grant for a purpose not directly concerned with the function of the Municipality specified in this Act or rules made thereunder or any other law shall be made by a Municipality in excess of the annual limit that may be specified by the Government.
7. (5) All amounts accounted to the Municipal fund and of its release under this Act, shall Kin full rupee.

ANNUAL REPORT REGARDING GRANTS [283A. ANNUAL REPORT REGARDING GRANTS.—

1. (1) The Chief Secretary of the State shall submit an annual report to the Governor, immediately after the expiry of each financial year, regarding any amount of grants to be received annually by the Municipality as per any law or otherwise, and the actual amount given to the Municipality and the criterion adopted by the Government for such payment.
2. (2) Annual report under sub-section (1) shall be laid before the Legislative Assembly, within the first six months of the next financial year.]

CONSTITUTION OF POVERTY ALLEVIATION FUND.— Every Municipality shall provide in its Annual Budget two per cent of the revenue receipt of the Municipality for constituting a separate fund to be called Poverty Alleviation Fund for implementing poverty alleviation programmes in the municipal area, which shall be utilised subject to such guidelines as the Government may issue from time to time.

ESTIMATES OF RECEIPTS AND EXPENDITURE TO BE PREPARED ANNUALLY BY THE SECRETARY.— The Secretary shall, subject to such rules as may be prescribed and such instructions as may be issued by the Government, in this behalf from time to time on or before the fifteenth day of January each year prepare and submit to the Standing Committee concerned a budget containing a detailed estimate of receipts and expenditure for the ensuing year, and, if in his opinion, it is necessary or expedient to vary taxation or to raise loans, shall submit his proposals in regard thereto.

Budget estimate to be prepared by the Standing Committee.—

1. (1) The Standing Committee concerned shall by considering the estimate and proposals of the Secretary and the officials dealing with the respective subjects concerned submit their proposals to the Standing Committee for finance and after considering those proposals and all the requirements of this Act the Standing Committee for finance shall prepare budget estimate of the receipts and expenditure of the Municipality for the next year
2. (2) The budget estimate under sub-section(l) shall-
   • (a) provide for the payment, as they fall due, of all instalments of principal and interest for which the Municipality may be liable on account of loans; and
   • (b) allow for a cash balance at the end of the year of not less than five per cent of the revenue of the Municipality.

CONSIDERATION OF BUDGET ESTIMATE BY THE COUNCIL.— The budget estimate prepared by the Standing Committee for finance shall be laid by its Chairman before the Council for its approval before the end of the first-week of March at a special meeting of the Council after an introductory address of the Chairperson regarding the developmental and welfare activities intended to be undertaken and implemented by the Municipality.

PROCEDURE OF COUNCIL.— The Council may refer the budget estimate back to the Standing Committee for further consideration and resubmission within a specified time, or adopt, subject to such rules as may be prescribed, the budget estimate or any revised budget estimate submitted to it, either as it stands or subject to such alterations as it deems expedient.

OBLIGATION TO PASS BUDGET BEFORE THE BEGINNING OF THE YEAR.—

1. (1) The Council shall finally pass the budget estimate before the beginning of the year to which it relates and forthwith submit copies thereof to the Government, and the officer authorised by the Government in this behalf and to the auditors.
2. (2) Unless the council has passed the budget before 1st April, from that date onwards, no amount shall be expended from the Municipal Fund.

Consequence of failure of Standing Committee to prepare budget.— Notwithstanding anything contained in sections 286,287 and 288 [where the standing committee for finance fails] or omits or delays the preparation of the budget estimates of the Municipality within the prescribed period, the [Chairperson] shall cause the proposals prepared by the Secretary to be laid before the Council and the Council shall, before the beginning of the ensuing year, pass the budget estimates as proposed by the Secretary with or without modification.

PREPARATION OF BUDGET AND ITS APPROVAL.—

1. (1) The Budget to be prepared by the Standing Committee of each Municipality under section 286 shall be prepared and submitted before the Council in the prescribed form and manner, and got approved with modifications as it deems fit.
2. (2) The working balance shown in the budget should not be less than 5% of the current year's estimated receipts excluding the receipts from endowments Government grants, contributions and debt heads.
3. (3) The estimated receipts should be detailed and real and apparent differences, if any, from the actual receipts of the last year should be accompanied by detailed notes and explanations.
4. (4) It shall include necessary provision for all fixed charges and discharge of debts.
5. (5) The Standing Committee shall, if it is found necessary during the course of a year that the estimates relating to its receipts or the expenditure in respect of the various services undertaken by it as shown in the Budget require modifications, prepare a supplementary or revised Budget and lay it before the Council for approval.
6. (6) While incurring expenditure, no amount other than those included in the current budget estimates shall be expended except under unavoidable emergent circumstances
7. (7) No expenditure, out of the amount granted by the Government for the implementation of any Scheme, project or plan entrusted and delegated to the Municipality under this Act shall be incurred for any other purpose including the implementation of any other scheme, project or plan.

ANNUAL FINANCIAL STATEMENT.—

1. (1) The Secretary of a Municipality shall publish, not later than the first week of June, an annual financial statement of the preceding year, approved by the Council, in such form as may be prescribed embodying a classified abstract of receipts and payments of the Municipality under Revenue, Capital and Debt heads, a demand, collection and balance statement and a statement of the general financial position of the Municipality.
2. (2) As soon as may be, after the publication of the financial statement under subsection (I), the Secretary shall forward a copy thereof to the auditors.

ACCOUNTS AND AUDIT.—

1. (1) The Municipality shall maintain its accounts and other books connected with the accounts in the manner and form as prescribed and shall enter the receipt and expenditure accounts forthwith in such books.
2. (2) The responsibility to maintain or cause to maintain the accounts and the connected books of the Municipality in the manner and form as prescribed and to submit or cause to submit such accounts to the Local Fund Examiner for conducting audit in the time shall west with the Secretary.
3. (3) The Examiner of Local Fund Accounts and his nominees shall be the auditors of the Municipality.
4. (4) The auditors shall maintain a continuous audit of the accounts of the Municipality and shall, after completing the audit for a year or for any shorter period or for any transaction or series of transactions, send a report to the Municipality concerned and a copy thereof to Government.
5. (4) The auditors shall specify in the report under sub-section (2) all cases of irregular, illegal or improper expenditure or of failure to recover moneys or other property due to the Municipality or any laws or waste of money, or other property thereof caused by the neglect or misconduct of the officers or authorities of the Municipality.
6. (5) The auditors shall also report to Government on any other matter relating to the accounts of the Municipality as required by the Government.
7. (6) The Municipality shall forthwith remedy any defect or irregularity pointed out by the auditors and report the action taken to Government within three months.
8. (7) The Auditors shall in the performance of their functions under this Act have all the powers of the civil court under the Code of Civil Procedure 1908, (Central Act 5 of 1908) while trying a suit in respect of the following matters, namely:-
   • (a) summoning and enforcing the attendance of any person and examining him on oath;
   • (b) requiring the discovery and production of any document;
   • (c) receiving evidence on affidavits;
   • (d) requisitioning any public record or copy thereof from any court or office and
   • (e) such other matters as may be prescribed
9. (9) The auditors shall, after giving a reasonable opportunity to the person concerned to explain his case, disallow every item of expenditure incurred contrary to law and surcharge the same on the persons incurring or authorising the incurring of such expenditure and may charge against any person responsible therefor the amount of any deficiency, loss or unprofitable outlay occasioned by the negligence or misconduct of that person or of any sum which ought to have been but is not brought into account by that person and shall, in every such case, certify the amount due from such person: Provided that no surcharge under this sub-section shall be made after a period of four years from the date on which the expenditure in question was incurred. Explanation.— It shall not be open to any person whose negligence or misconduct has caused or contributed to any such deficiency or loss to contend that notwithstanding his negligence or misconduct the deficiency or loss would not have occurred, but for the negligence or misconduct of some other person.
10. (10) The auditors shall state in writing, the reasons for their decision in respect of every disallowance, surcharge or charge and a copy of such decision shall be served on the person against whom it is made in the manner laid down for the service of summons in the Code of Civil Procedure, 1908 (Central Act 5 of 1908).
11. (11) Any person aggrieved by any disallowance, surcharge or charge may, within fourteen days after the date of service on him of the decision of the auditor, make an application to the district court to set aside such disallowance, surcharge or charge and the court, after taking such evidence as is necessary may confirm, modify or remit such disallowance, surcharge or charge with such orders as to costs as it may think proper in the circumstances.
12. (12) Where an application is made to the court under sub-section (9) the auditors shall be the sole respondents thereto and the applicant shall not make either the Government or any other person a party to the proceedings.
13. (13) From the decision of the District Court under sub-section( 10) an appeal shall lie to the High Court.
14. (14) Every sum certified by the auditors to be due from a person under this Act shall be paid by such person to the Secretary of the Municipality concerned within thirty days after the date of service on him of the decision of the auditors unless within that time such sum, if not so paid, or such sum as the court declares to be due shall be recoverable as if it were an arrear of land revenue.
15. (15) An abstract of every annual report of a Municipality as certified by the auditor showing its receipts under each head, the charges for the establishment, works undertaken, the sum expended on each work, the balance if any, remaining unexpended together with the audit report thereon shall be submitted to the officer authorised by Government, in this behalf, not later than fifteenth day of the second month of the next financial year.
16. (16) On receipt of the report referred to in sub-section (13), the said officer shall forthwith consolidate it and submit to the Government.
17. (17) The Government shall-
    • (a) cause the accounts of the Municipality together with the audit report thereon received by it under sub-section (16) to be laid before the Legislative Assembly; and
    • (b) cause the accounts of the Municipality to be published in such manner as may be prescribed.

CONTRIBUTION TO EXPENDITURE.— If the expenditure incurred by the Government or by any other Municipality or Panchayat in the State for any purpose authorised by or under this Act such as to benefit the residents of a Municipality, the Municipality may, make a contribution towards such expenditure: Provided that before incurring such expenditure, the Municipality which is liable, to pay the contribution, shall be consulted and convinced that if the said purpose is served it will benefit the residents of that Municipality.

POWER OF MUNICIPALITY TO BORROW MONEY.—

1. (1) The Municipality may in pursuance of any resolution passed at a special meeting of the Council borrow by way of debenture or otherwise on the security of all or any of the taxes, duties, fees, service charges and dues authorised by or under this Act, any sums of money which may be required,-
   • (a) for the construction of works; or
   • (b) for acquisition of lands and buildings; or
   • (c) for slum clearance and construction of tenements; or
   • (d) to pay off any debt due to the Government; or
   • (e) to repay a loan raised by the Municipality; or
   • (f) for town improvement Schemes; or
   • (g) for any public utility Schemes maintained or proposed to be maintained by the Municipality: Provided that —
     • (i) no loan shall be raised without the previous sanction of the Government or otherwise than in accordance with the provisions of the Kerala Local Authorities Loans Act, 1963 (30 of 1963) and the rules issued thereunder;
     • (ii) the amount of the loan the rate of interest and the terms including the date of floatation, the time and method or repayment and the like shall be subject to the approval of the Government.
2. (2) When any sum of money has been borrowed under sub-section (1) no portion thereof shall, without the previous sanction of the Government, be applied for any purpose, other than that for which it was borrowed.

Time limit of repayment of money borrowed under Section 297.— The time limit for the repayment of any money borrowed under section 297 shall in no case exceed sixty years, and the time limit for the repayment of any money borrowed for the purpose of discharging any previous loan shall not, except with the express sanction of the Government, extend beyond unexpired portion of the period for which such previous loan was sanctioned.

Limitation on borrowing power.—

1. (1) Notwithstanding anything contained in the forgoing provisions the borrowing powers of a Municipality shall be as prescribed, in relation to the total annual receipts of that Municipality. Provided that nothing contained in this section shall prevent the issuance of Revenue Bonds by the Municipality, secured by pledge of the revenue stream from the project and strengthened on the basis of escrow account or credit enhancement conditions:

Form and effect of debentures Form and effect of debentures.— All debentures issued under this chapter shall be in such form as the Municipality may, with the previous sanction of the Government, determine, and shall be transferrable in such manner as shall be therein expressed and the right to sue in respect of the money secured by any of such debentures shall vest in the holders thereof for the time being without any preference by reason of some such debentures being prior in date to others.

Payment to survivors of joint payees.— Where any debenture or security issued under this Act is payable to two or more persons jointly, and either or any of them dies, then, notwithstanding anything contained in section 45 of the Indian Contract Act 1872 (Central Act 9 of 1872), the debenture or security shall be payable to the survivor or survivors of such persons:

RECEIPT BY JOINT HOLDER FOR INTEREST OR DIVIDEND RECEIPT BY JOINT HOLDER FOR INTEREST OR DIVIDEND.— Where two or more persons are joint holders of any debenture or security issued under this Act, any one of such person may give an effectual receipt for any interest or dividend payable in respect of such debenture or security, unless notice to the contrary has been given to the Municipality by any other of such persons.

MAINTENANCE AND INVESTMENT OF SINKING FUNDS.—

1. (1) The Municipality shall maintain sinking funds for the repayment of money borrowed on debentures issued and [shall pay by quarterly instalments into such sinking funds such sum as will be sufficient for the repayment within the period fixed for the loan of all moneys borrowed on debentures issued and in the event of default in payment of quarterly instalments, the grants due from Government shall be remitted to the Sinking Fund.]
2. (2) All moneys paid into the sinking funds shall, as soon as possible, be invested by the Secretary in-
   • (a) securities of the Central or the State Government; or
   • (b) securities guaranteed by the Central or the State Government; and shall be invested in the joint names of the Secretary to the Government of Kerala Finance Department and the Secretary to the Government of Kerala in charge of Municipal Administration to be held by them as trustees for the purpose of repaying at due date the debentures issued by the Municipality. Every such investment shall be reported by the Secretary to the Council within fifteen days.
3. (3) All dividends and other sums received in respect of any such investment shall as soon as possible after receipt, be paid into the sinking funds and invested in the manner laid down in sub-section (2).
4. (4) Where any part of a sinking fund is applied in paying off any part of a loan before the period fixed for repayment the interest which would otherwise, have been payable on such part of the loan shall be paid into the sinking fund and invested in the manner laid down in sub-section (2).
5. (5) Any investment made under this section may, subject to the provisions of sub section(2), be varied or transposed,

APPLICATION OF SINKING FUND.— The trustees under sub-section (2) of section 303 may apply a sinking fund or any part thereof in or towards the discharge of the loan or part of a loan for which such fund was created and, until, such loan or part is wholly discharged shall not apply the same for any other purposes: Provided that when any loan or part there of has been consolidated under section 306, the trustees shall transfer to the sinking funds of the consolidated loan so created such part of the sinking funds of the original loans as may be proportionate to the amount of the original loans incorporated in the consolidated loan.

ANNUAL STATEMENT BY TRUSTEES.—

1. (1) The trustees under sub-section (2) of section 303 shall, at the end of every year, submit to the Municipality a statement showing -
   • (a) the amount which has been invested during the year under section 303;
   • (b) the date of the last investment made prior to the submission of the statement;
   • (c) the aggregate amount of the securities then in their hands; and
   • (d) the aggregate amount which has upto the date of the statement been applied under section 304 in or towards discharging loans.
2. (2) Every such statement shall be laid before the Council and published.

POWER OF MUNICIPALITY TO CONSOLIDATE LOANS.—

1. (1) Notwithstanding anything to the contrary contained in this Chapter the Municipality may consolidate all or any of its loans and for the purpose may invite tenders for a new loan (to be called the Municipal consolidated loan 19....) and invite the holders of Municipal debentures to exchange their debentures for scrip of such loan.
2. (2) The term of any such consolidated loan and the form of its scrip and the rates at which exchange into such consolidated loan shall be permitted shall be subject to the prior approval of the Government.
3. (3) The period for the extinction of any such consolidated loan shall not, without the sanction of the Government, extend beyond the farthest date within which any of the loans to be consolidated would be otherwise repayable.
4. (4) The Municipality shall provide for the repayment of any such consolidated loan by a sinking fund in the manner laid down in section 303 having regard to the amount transferred to such sinking fund under section 308.

PRIORITY OF PAYMENT FOR INTEREST AND REPAYMENT OF LOANS OVER OTHER PAYMENTS.—All payments due from a Municipality as interest on and for repayment of loans shall be made in priority to all other payments due from that Municipality.

Recovery of loans and advances made by the Governments.— Notwithstanding anything contained in the Local Authorities Loans Act, 1963 (30 of 1963) for the time being in force, the Government shall be entitled to recover any loan or advance made to any Municipality which is in arrears in accordance with the provisions of the Kerala Revenue Recovery Act, 1968 (15 of 1968) as if it where an arrear of public revenue due on land or by suit.

Bar of withdrawal of sum from Municipal fund.— Where the Government are satisfied that the Secretary makes persistent default in the repayment of any loan borrowed from or advance made by the Government or makes default in the remittance to any fund constituted and administered by or under the Provisions of this Act they may by written order, direct any bank or treasury where the Municipal funds are operated, to make payment to the persons or authority specified in the order and such order shall be deemed to be a payment order issued by the Secretary. The bank or treasury as the case may be shall make payment to such person or authority subject to availability of funds at the credit of the Municipality and no withdrawal from the Municipal fund of any amount by the Municipality shall be allowed until the amount as required by the Government is paid in full.