2011 (1) TMI 1534 - HC - Companies Law

Court Upholds Tax Authority, Rejects Estoppel; Allows Govt Intervention

M/s. SKODA AUTO INDIA PVT. LTD. Versus The State of Maharashtra, The Principal Secretary, Rural Development, The Principal Secretary, Industrial Development, The Gram Panchayat, The Gram Sevak, The Maharashtra Industrial Development Corporation, The Block Development Officer, The Standing Committee, The Chief Executive Officer, The Deputy Chief Executive Officer, The Hon'ble Minister, Rural Development Department

M/s. SKODA AUTO INDIA PVT. LTD. Versus The State of Maharashtra, The Principal Secretary, Rural Development, The Principal Secretary, Industrial ... Issues Involved:1. Applicability of the doctrine of promissory estoppel.2. Authority of the Gram Panchayat to levy taxes.3. Proper procedure for hearing the 2nd Appeal under Section 124(5) of the BVP Act.Issue-wise Detailed Analysis:1. Applicability of the Doctrine of Promissory Estoppel:The petitioner argued that based on the MOU dated 13.01.2000 and the Lease Deed dated 03.11.2004, the doctrine of promissory estoppel should apply, preventing the Gram Panchayat from charging taxes beyond `3 lacs per annum. The petitioner relied on specific clauses in the MOU and Lease Deed to support this claim. However, the court found that there was no explicit promise in the MOU exempting the petitioner from paying property taxes. The court noted that clause 12 of the MOU merely stated that the Government of Maharashtra would assist in settling disputes with the Gram Panchayat regarding taxes, implicitly acknowledging the liability to pay taxes. Furthermore, the Lease Deed required the petitioner to pay all existing and future taxes. The court also highlighted that the petitioner had previously entered into an agreement with the Gram Panchayat to pay a lump sum contribution in lieu of taxes, which contradicted their claim of being exempt from taxes beyond `3 lacs. Therefore, the court concluded that the doctrine of promissory estoppel did not apply in this case, and the petitioner's contention was rejected.2. Authority of the Gram Panchayat to Levy Taxes:The petitioner contended that the Gram Panchayat lacked the authority to levy taxes, especially since the petitioner was already paying service charges to MIDC for common amenities. The court examined the relevant legal provisions, including Section 124 of the Bombay Village Panchayats Act (BVP Act), which authorizes Gram Panchayats to levy taxes on buildings and lands within their jurisdiction. The court also referred to the Maharashtra Village Panchayat Taxes and Fees Rules, 1960, which prescribe the manner and rates for levying taxes. The court emphasized that the levies by MIDC and the Gram Panchayat were distinct and exclusive, with MIDC charging fees for services and the Gram Panchayat levying taxes for general benefits. The court cited the Division Bench judgment in the case of Bima Office Premises Cooperative Society vs. Kalamboli Village Panchayat, which upheld the authority of Gram Panchayats to levy taxes within their jurisdiction. The court concluded that the Gram Panchayat had the legal authority to levy taxes on the petitioner, and the contention regarding double taxation was without merit.3. Proper Procedure for Hearing the 2nd Appeal under Section 124(5) of the BVP Act:The petitioner argued that the 2nd Appeal under Section 124(5) of the BVP Act should have been heard by all members of the Standing Committee, not just the CEO. The court noted that this specific contention was not raised in the application/revision before the Minister. The court also pointed out that the petitioner had titled the 2nd Appeal as being before the 'Hon'ble Chief Executive Officer (Standing Committee), Zilla Parishad,' indicating that the petitioner itself acknowledged the CEO's authority to hear the appeal. Furthermore, the court observed that the petitioner had previously requested that the appeal be heard by the CEO and not the Deputy CEO. The court found no legal provisions or rules requiring the appeal to be heard by all members of the Standing Committee. Therefore, the court rejected the petitioner's contention regarding the improper hearing of the 2nd Appeal.Conclusion:The court dismissed the petition, finding no merit in the contentions raised by the petitioner. The court upheld the authority of the Gram Panchayat to levy taxes and rejected the applicability of the doctrine of promissory estoppel. The court also found that the 2nd Appeal was properly heard by the CEO of the Zilla Parishad. The court clarified that this judgment would not preclude the Government of Maharashtra from intervening to facilitate an amicable settlement between the parties. The ad-interim order was continued for eight weeks, and the Gram Panchayat was permitted to withdraw `10 lacs deposited by the petitioner upon filing an undertaking to bring back the amount if directed.