Property tax liability on tenant-built structures on leased land falls on the lessee under the special statutory rule.

Where land is let for more than one year and the tenant or a person deriving title from the tenant erects a building on it, section 112(2) of the Karnataka Municipal Corporations Act fastens primary property tax liability on that tenant or person. The general rule under section 112(1), which places liability on the lessor in ordinary lettings, does not govern such tenant-built structures on leased land. On the facts described, the lease permitted construction on vacant land, the demand related to buildings raised by the lessee and later sub-let, and the reimbursement question under section 112(6) was left for separate proceedings.

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Issues: Whether, on the facts, the primary liability to pay property tax fell on the lessee or on the lessor under section 112 of the Karnataka Municipal Corporations Act, 1976.

Analysis: The lease covered both an existing building and vacant land, and the lessee was expressly permitted to put up new structures on the vacant land. The tax demand related to buildings constructed by the lessee on that leased land and thereafter sub-let. In such a situation, the case attracted section 112(2), which makes the tenant or any person deriving title from the tenant primarily liable where land has been let for more than one year and construction is made upon it. The rule in section 112(1) regarding liability of the lessor in the case of ordinary letting did not govern the dispute. The decision relied on the statutory scheme and distinguished the Supreme Court precedent because the present facts squarely fell within the special provision dealing with tenant-built structures on leased land.

Conclusion: The primary liability to pay property tax was on the appellant lessee, not on the lessor.

Final Conclusion: The challenge to the tax demand failed, and the appeals were dismissed, while the question of reimbursement under section 112(6) was left open for separate proceedings.

Ratio Decidendi: Where land is let for more than one year and the tenant or a person deriving title from the tenant erects a building on it, section 112(2) fastens primary liability for property tax on that tenant or person, notwithstanding the general rule applicable to ordinary lettings.

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