TaxTMI 
TaxTMI 
2003 (8) TMI 572
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....her challenge is to the certain provisions of M.P. Municipalities Act, 1961 (in short the Municipalities Act) and the rules framed for carrying out the purposes of the said statute. As the assail and attack is to the constitutional validity of such provisions in both the enactments relating to the imposition of property tax, the jurisdiction, the manner, the mode and the method, we are inclined to deal with the same in a composite order though we will be adverting to the pertinent provisions in both the statutes separately wherever it is necessitous. We may also hasten to state here that in addition to the challenge of the provisions in issue, there is also a prayer for quashment of the resolutions passed by the various Municipalities and Municipal Corporations, and the directions issued by the State Government and notices issued to the owners for levy of property tax and in some cases water tax and other taxes. It is condign to mention here that the centrum issue being relatable to the questioning of the constitutional validity of the provisions pertaining to property tax. we would be dealing with the said aspect and thereafter would address ourselves in relation to other facets d....
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....etitioners to me any reply inasmuch as when notice was issued, adequate time was not granted to file the reply. It is pertinent to state here that various averments have been made relating to imposition of fire tax, water tax and property tax but we would be addressing to the basic averments which have the connectivity with the constitutional validity of the provisions. 5. In W.P. No. 2431/98 which relates to the imposition of property tax and other taxes under the Corporation Act. the factual score as has been exposited is that the petitioner No. 1 is a registered society working for the benefit of all the persons who are engaged in business. The petitioner No. 2 is a Public Trust having a 'Dharamshala' meant for charitable purposes. The Municipal Xorporation, Jabalpur in its meetings dated 11-3-1998 and 24-4-1998 discussed the resolution in regard to imposition of property tax but the passing of the resolution was opposed to by many a member. The matter was then referred to the prescribed authority as provided under Rule 7 of the Rules and a date was fixed in July, 1998 for the purpose of giving of self assessment by all the owners of the houses. In view of the aforesa....
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....f cases have propounded the following proponements : (a) Article 243P(e) defines 'Municipality' as an institution of self governance and under Art. 243W the Legislature has been enjoined the power to confer the authority on the Municipalities to enable them to function as, institutions of self governance. The conditions are limited only to two subjects mentioned therein. Article 243X ordains the Legislature to authorise a Municipality to levy and collect specified taxes and only the procedure for levy etc. can be fixed by the State Legislature subject to the limits which are in accordance with the concept of institution of self governance. In other words, the Legislature cannot prescribe any particular criterion on the basis of which certain zones can be created for taxing purposes. The Municipalities or the Municipal Corporation has the exclusive power to take its own decision without being constrained or governed by the rules framed by the State Governments as the rules framed by the executive cannot be binding on the Municipalities or Municipal Corporation in the matter of imposition of taxes. Differently put, the local bodies have been conferred immense power u....
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.... feet width. Both of them cannot be equally treated because of the placement in the same zone and gross annual letting value cannot be determined on that criterion. Therefore, the real reference has to be the gross annual letting value of a particular/specific building for determination of annual quantum received or even hypothetical rent receivable. Fixation of the quantum of rent in any other manner is illegal and unjustified as it invites the frown of Art. 14 of the Constitution which in its second limb encompasses avoidance of arbitrariness and unreasonableness. (f) The provisions of General Clauses Act would not apply because in a case of this nature singular would not include plural as contrary intention is clearly demonstrated by use of the words "a buildings gross annual letting value." (g) The tax has to be assessed qua each building and not on the basis of a cluster of building based on the zone basis. When the law lays a postulate that each building has to be assessed on certain definitive criteriafore the purposes of taxes the said stipulation cannot totally succumb to the zonal system or any other categorisation or compartmentalisation. (h) T....
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.... to delegate certain legislative powers but it cannot abdicate its basic legislative functions. Neither the Municipal Corporation nor the Municipality can themselves impose property tax as that would tantamount to creating a sovereign within a sovereign. (iii) Article 243X of the Constitution does not denude the power of the State Legislature to make enactment and such an interpretation has the support of the law. The guidance has been given in the rules itself and power has conferred and specific circumstances have only been illustrated. When such rules have been made, they are supportable in law and they do not suffer from any vice. (iv) The criteria which have been fixed in the main enactment and the rules framed have a rationale behind it and, therefore. the averments made with regard to fixation of criteria by citing hypothetical examples are sans substance. Classifications have been made on the basis of intelligible differentia and the same are permissible for the purpose of taxation. (v) When number of methods are available to assess the tax, the State has the power to choose any of them and if a particular mode is chosen no fault can be found with....
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....rate, as may be determined by the Corporation, shall be charged. (3) The variation up to ten per cent on either side in the assessment made under sub-section (2) shall be ignored. In cases where the variation is more than ten percent, the owner of land or building, as the case may be. shall be liable to pay penalty equal to five times the difference of self assessment made by him and the assessment made by the Corporation. (4) An appeal shall lie to the Mayor "in-Council against the orders passed under sub-section (3)" 13. Section 126 of the Municipalities Act reads as follows : "126. Annual letting value of land or building. (1) Notwithstanding anything contained in this Act or any other law for the time being in force, the annual letting value of any building or land, whether revenue paying or not, shall be determined as per' the resolution of the Council adopted in this behalf on the basis of per square foot of the built up area of a building or per square foot of the land, as the case may be taking into consideration the area, in which the building or land is situate, its location, situation, purpose for which it is used, its capacity for profi....
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....red to be referred to at this stage. The rules which have been referred to by the learned counsel for the petitioners to show that they are basically irrational and sensitively pregnable are Rules 4, 5, 6, 10 and 11. They read as under :- "4. Classification of buildings and lands. -The classification of buildings and lands situated in every zone shall be as follows :- (a) Quality of construction - (i) Building having roof made of R.C.C.R.B.C. or stone; (ii) Buildings having roof made of sheets of cement or iron or tiles; (iii) Other semi pakka or kuccha buildings which does not fall within sub-clause (1) or (11). (i) Buildings/lands for the purpose of commercial or industrial; (ii) Buildings/lands for the purpose of residential. (c) On the basis of location - (i) Building/land situated at main road; (ii) Buildings/land situated at main market. 5. Rate of annual letting value,- Every Municipality as per criteria described in rule 4 shall fix separate rates for each type of houses and lands situated in each zone on the basis of their quality of construction, use and location for the pur....
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....perty tax.- (1) Every owner of the building or land of the municipal area, shall himself calculate the annual letting value of his property and the amount of the property tax as per the rates of annual letting value described in resolution published by the municipality as per provisions of Rule 8 and by adding the amount of water tax and the consolidated amount of general sanitary cess, general lighting tax and general fire tax as determined under sub-sections (4) and (5) of Section 132, in case of Municipal Corporation and under sub-sections (4) and (5) of Section 127 in case of Municipal Council and Nagar Panchayats, in the amount of property tax payable and after indicating the information in the return appended to these rules, deposit the consolidated amount of the aforesaid taxes in the municipality within the prescribed time along with the return. (2) If any person is the owner of more than one house or land in the municipal area, then every such owner shall pay the amount along with the separate return for each house or land, provided that the consolidated annual letting value of all his houses or lands or both, shall be deemed to be the basis for purpose o....
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....appreciate the whole gamut of facts and the argumentative missiles that have been pierced into the marrows and the fabrics of the said provisions. 17. The first submission advanced by the learned counsel for the petitioners is that in view of the incorporation of certain Articles under Chapter-IX A of the Constitution, the Municipal Corporations and the Municipalities should have been given a free hand to take their own decision but the Legislature having prescribed the criteria, has transgressed the constitutional mandate. To appreciate the aforesaid submission, it is apposite to refer to certain provisions of the Constitution. Article 243Q deals with constitution of Municipality. By virtue of the said Article, the word 'Municipality' cover Municipal Corporation. This view has been taken by the Apex Court in the case of Cantonment Board, Secunderabad v. G. Venketram Reddy, AIR 1995 SC 1210. Article 243R deals with composition of Municipalities. Article 243S provides for constitution and composition of Wards Committees etc. Emphasis has been laid on Article 243Y which provides that the Finance Commission constituted under Article 243I shall also review the financial posi....
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....ture of the State has been authorised by the Constitution only to authorise the Municipalities for the purpose of levy. collection and appropriation of certain taxes but there is no other power bestowed on the Legislature. The Legislation has to be in accordance with concept of institution of self-governance but the Legislature by ordaining the procedure has transgressed its limits. 21. On a bare reading of the aforesaid Article, it is perceptible that Article 243W clearly stipulates that subject to provisions of the Constitution, the Legislature of a State may, by law, endow the Municipalities with such powers. Thus the source of power rests within the State Legislature. True it is, there is some concept of self-governance but the Constitution has not empowered the Municipalities to impose taxes on its own as if it has the power to impose taxes by itself as that would have defeated and destroyed many a provision of the Constitution. Article 243X also postulates that the Legislature of a State may. by law, authorise a Municipality to collect and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such limits. The aforesaid provision is....
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....plemented or backed by the rules. It is contended with vehemence that by such prescription not only there is violation of the provisions of the Constitution but there is abdication of the essential power of the legislative functions of the State Legislature. As far as the first facet of this contention is concerned, we are not at all impressed as the provisions in the Constitution use the word "law" made by the legislature. Legislature itself has authorised under the statute the State Government to made rules. The second question that forms a part of this submission is whether such a power could have been delegated. It is well settled in law that the Legislature cannot visualize all circumstances. Some power has to be conferred on the rule making authority for carrying out the purposes of the Act. There are certain parameters and guidelines to which we shall advert to at a later stage. The decisions rendered in the cases of In re Art. 143. Constitution of India and Delhi Laws Act (1912). AIR 1951 332; Western-India Theatres Ltd. v. Municipal Corporation of the City of Poona, AIR 1959 SC 586; Banarsi Das v. State of M. P., AIR 1958 SC 909; D. S. Garewal v. The State of Punjab, AIR 1....
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....legislature may make during the session they are so laid. In the view we have taken, we are supported by the judgments of this Court, in Gopal Narain v. State of U.P. (1964) 4 SCR 869 : AIR 1964 SC 370 and Western India Theatres Limited v. Municipal Corporation of the City of Poona, (1959) Supp (2) SCR 71 : AIR 1959 SC 586. We, therefore. reject the contention raised by the learned counsel for the petitioners." 23. In this regard, we may also refer with profit to the Division Bench judgment of this Court rendered in the case of Shahid Hussain Zahid Hussain v. Municipal Council, Bewda, 1995 MPLJ 581 : (1995 AIHC 4213) wherein the Court was dealing with the procedure for imposition of tax and the role ascribed to the Municipality. In that context, the Division Bench held as under 'The procedure for imposition of tax is contemplated in Section 129 of the M. P. Municipalities Act and the Legislature has specially left it to the discretion of the State to frame rules to effectuate the purpose of the Act i.e. collection under the M.P. Municipalities Act. Section 160 though it does not refer to collection of tax clearly authorises the Municipal Council to collect the levy of tolls,....
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....read with Section 138 of the Corporation Act authorises the Municipal Corporation to impose tax. There are provisions occurring therein that confer special or general power on the State Government to pass a general or special order and such power has been conferred in flagrant voilation of the Constitution of India after 73rd Amendment. In this context, we may refer with profit to a Division Bench decision of this Court rendered in the case of Meera Khandelwal v. State of M. P. (1997) 2 MPLJ 333 : (AIR 1997 Madh Pra 163). In the aforesaid case, the Division Bench after referring to the scheme of the Act, held as under (at p. 170 of AIR) : "In this connection, learned counsel invited our attention to the case of A.N. Parasuraman v. State of Tamil Nadu, AIR 1990 SC 40. In this case, it was held : "It is well established that determination of legislative policy and formulation of rule of conduct are essential legislative functions which cannot be delegated. What is permissible is to leave to the delegated authority the task of implementing the object of the Act after the Legislature lays down adequate guidelines for the exercise of power." In the instant case, the....
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....bly at the time of assessment be expected to be left from year to year less an allowance of ten per cent for the cost of repairs and for all other expenses necessary to maintain the building in a state to command such gross annual rent. Explanation I. For the purpose of this clause it is immaterial whether the building and the land let for use or enjoyment therewith are let by the same contract or by different contracts, and if by different contracts, whether such contracts are made simultaneously or at different times. Explanation II. The term "gross annual rent" shall not include any tax payable by the owner in respect of which the owner and tenant have agreed that it shall be paid by tenant. (c) the annual value of any building, the gross annual rent of which cannot be determined under clause (b), shall be deemed to be five per cent on the sum obtained by adding the estimated present cost of erecting the building, less any amount which the Commissioner may deem it reasonable to deduct for depreciation, to the estimated market value of the land valued with building as part of the same premises : Provided that - (i) in calculating the a....
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....could not do. The view taken by the Division Bench of the High Court in 1989 MPLJ 20 proceeds on a total misunderstanding of the law of precedents and Article 141 of the Constitution of India, to which it referred. But for the fact that the view of the Division Bench of the High Court proceeds on a misapprehension of the law of precedents and Article 141 of the Constitution, it would be exposed to the criticism of an aberration in judicial discipline. The decision of the Division Bench of the High Court was, therefore, rightly overruled by the Full Bench in the impugned judgment." 29. Submission of the learned counsel for the petitioners is that though there is total substitution of provision in both the Acts, namely, Municipal Corporation Act and Municipality Act, the said amendment does not take away the effect of the decision rendered in the case or Ratnaprabha (supra). On the contrary Mr. Jha has argued with vehemence that by way of amending the provisions the basic concept which was in" trinsically woven to the fabric of Ratnaprabha (supra) has been wiped out. In this context, before we enter into the discussion whether the effect and impact of Ratnaprabha (supra) has been ....
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....n or any other provision of the Act in question retrospectively. In this process it cannot be said that there has been an encroachment by the legislature over the power of the judiciary. A Court's directive must always bind unless the conditions on which it is based are so fundamentally altered that under altered circumstances such decisions could not have been given. This will include removal of the defect in a statute pointed out in the judgment in question, all well as alteration or substitution of provisions of the enactment on which such judgment is based, with retrospective effect." 31. This being the position of law the decisions at hand are to be seen whether by incorporating of amendments of provisions contained in Section 138 the position has so fundamentally altered that the decision rendered in the case of Ratnaprabha (AIR 1977 SC 308) (supra) has lost its binding force. To put it differently, decision in the case of Ratnaprabha (supra) could not have been rendered in the manner as it has been done had the present provisions been in existence on the statute book. This being the heart of the matter, we have reproduced both the provisions and the relevant paragraph....
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....s had expressed the view in Ratnaprabha (AIR 1977 SC 308) (supra) by further adding as under : "5. As has been stated, clause (b) of Section 138 of the Act provides that the annual value of any building shall "notwithstanding anything contained in any other law for the time being in force" be deemed to be gross annual rent for which the building might "reasonably at the time of the assessment be expected to be let from year to year." While therefore, the requirement of the law is that the reasonable letting value should determine the annual value of the building. It has also been specifically provided that this would be so "notwithstanding anything contained in any other law for the time being in force." It appears to us that it would be a proper interpretation of the provisions of clause (b) of Section 138 of the Act to hold that in a case where the standard rent of a building has been fixed under Section 7 of the Madhya Pradesh Accommodation Control Act, and there is nothing to show that there has been fraud or collusion, that would be its reasonable letting value, but, where this is not so, and the building has never been let out and is being used in a manner where the ....
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....C 1417), Guntur Municipal Council (AIR 1971 SC 353) and M. N. Soi (AIR 1977 SC 302) because the peculiar language of Section 138 (b) of the M.P. Municipal Corporation Act. 1956 which was differently worded as it contained a non obstante clause. The said clause read as under:- "138. (b) the annual value of any building shall notwithstanding anything, contained in any other law for the time being in force be deemed to be the gross annual rent at which such building, together with its appurtenances and any furniture that may be let for use or enjoyment therewith might reasonably at the time of assessment be expected to be let from year to year, less an allowance of ten per cent for the cost of repairs and for all other expenses necessary to maintain the building in a state to command such gross annual rent." It is for this reason, namely, the existence of non-obstante clause in Section 138(b) of the said Act, that Ratnaprabha case was distinguished and was held to be non-applicable in Dewan Daulat Rai case (AIR 1980 SC 541) because the Delhi Act did not contain any non-obstante clause like the one with which this Court was concerned in Ratnaprabha case (AIR 1977 SC 3....
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....ation Ltd. (AIR 1995 SC 1480) (supra). Later on there was reference to the cases of Padma Devi (AIR 1962 SC 151) (supra) and Guntur Municipal Council (AIR 1971 SC 353) (supra). In paragraph 31 their Lordships observed that the case of Ratnaprabha (supra) was distinguished in many cases by the Apex Court by saying that it is based wholly and exclusively upon the non-obstante clause found in the Madhya Pradesh Act. It is relevant to state here that in the case of Indian Oil Corporation Ltd. (supra) a plea to reconsider the correctness of the ratio in Ratnaprabha (supra) was rejected on the ground that the view taken by the Apex Court in the case of Ratnaprabha (supra) was a reasonably permissible construction of Section 138(b) of the M.P. Act. It was also observed that in later decisions the Apex Court invariably distinguished the case of Ratnaprabha (supra) and not referred for reconsideration by a larger Bench. We have referred to the aforesaid decisions only to show how the case of Ratnaprabha (supra) was dealt with in the aforesaid cases. In this regard a derision rendered by the three-Judge Bench of the Apex Court in the case of Commissioner v. GrijhaYajamanula Samkhya (2001) 5 ....
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.... After so stating their Lordships in paragraph 36 expressed the view as under : "35. From the statutory provisions noted above, it is clear that the Act provides that the tax shall be levied at such percentages of the rateable value as may be fixed by the Corporation. It further provides the method and manner of determination of the rateable value. The determination of the annual rental value which is the basis for calculation of the rateable value is also provided in the Act and the Rules. The Act mandates that the Commissioner shall determine the tax to be paid by the person concerned in the manner prescribed under the statute and the Rules. It is our view that the Act and the Rules provide a complete code for assessment of the property tax to be levied for the buildings and lands within the municipal Corporation. There is no provision in the statute that the fair rent determined under the Rent Control Act in respect of a property is binding on the Commissioner. The legislature has wisely not made such a provisions because determination of annual rent value under the Act depends on several criteria. The criteria for such determination provided under the Act may n....
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.... been excluded, the determination of annual value of the building or rental method is referable to the method provided under the Municipal Act. Whereas Padma Debt case (AIR 1962 SC 151). L1C case (AIR 1970 SC 1417), Guntur Town Rate Payers' case (AIR 1971 SC 353) and Dewan Daulat Rai case (AIR 1980 SC 541) deal with the first group of municipal laws, the cases in Ratnaprabha case (AIR 1977 SC 308), AGM (1975 (4) SCC 696), Central Bank of India case (1995 (4) SCC 696), East India Commercial Co. case (AIR 1998 SC 1789) Balbir Singh case (AIR 1985 SC 339), Indian Oil Corpn. case (AIR 1995 SC 1480) and Srikant case (AIR 1985 SC 288) deal with the second group. As already noticed, this Court in L1C case dealt with the first category as in Section 168 of the Calcutta Municipal Corporation Act, there existed no non-obstante clause. The observations of the Bench of this Court which dealt with the case on 10-10-2001 cannot be taken in isolation." 36. In this context, we may refer with profit to the decision recently rendered by the Apex Court in the case of Municipal Corporation of Greater Mumbai v. Kamla Mills Ltd. (2003) 5 JT (SC) 462 : (AIR 2003 SCC 2998). Their Lordships in parag....
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....ule provides further four classifications, namely, purely residential; purely commercial or industrial (whether self owned or otherwise); partly residential and partly commercial/industrial and all other holdings other than the aforesaid three. In the heading 'Type of construction', there are three categories, namely, Pucca building with R.C.C. roof, Pucca building with asbestos/corrugated sheet roof and in the third all other buildings not covered by the aforesaid two. Rule 6 therein provide rate of tax. Rule 7 empowers the Corporation to revise the rate of tax on Annual Rental value. The Apex Court referred to various decisions in the field, namely, Twyford Tea Co. Ltd. v. State of Kerala, AIR 1970 SC 1133: State of Maharashtra v. M. B. Badiya, AIR 1988 SC 2062 and P. M. Ashwathanarayana Setty v. State of Karnataka. 1989 Suppl (1) SCC 696: (AIR 1989 SC 100) and eventually in paragraph 16 came to hold that the grounds upon which the Rules have been invalidated are unsupportable in law. Their Lordships also in para 17 held that grounds upon which the notifications have been invalidated area also unsustainable in law. 38. Recently in the case of Rai Vimal Krishna v. State....
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..... Finally, Section 149, subsection (1) itself shows that assessment lists may be made in respect of "any part of Patna". 39. We have referred to the aforesaid decision in extenso to highlight that the criteria prescribed by Rules in the State of Bihar are almost pari materia to the provisions and the rules which are subject-matter of assail in the cases at hand. 40. At this juncture, we may hasten to state that while dealing with the effect and impact of the decision rendered in the case of Ratnaprabha (AIR 1977 SC 308) (supra) and Indian Oil Corpn. Ltd. (AIR 1995 SC 1480} (supra), we have referred to the various decisions dealing with the imposition of property tax in various States and how they have been dealt with by the Apex Court. We have already referred to few citations to show that by legislative process the base of a decision can be taken away. We have referred to the earlier provisions which were considered in the case of Ratnaprabha (supra) and Indian Oil Corporation (supra). The moot question that arises for consideration whether by virtue of the present amendment, the effect and impact of both the decisions have been taken away. It is worth noting here that Ratna....
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....d fabric of the provision has been amended. The grammar of synthesis in a way has become non-existent. In this backdrop, if we hold that there are guidelines in the provision itself and the rules have been made to supplement the guidelines and there is immense guidance in the provision not to invite the from of Article 14, it has to be held that the effect of the decision rendered in the case of Ratnaprabha (supra) and Indian Oil Corporation (supra) has been wiped away on to put it differently the ratio laid down therein is no more applicable to the State of Madhya Pradesh. To say so we have to proceed to test the aforesaid provisions on the anvil and touchstone of Article 14 of the Constitution of India. We have already reproduced the provisions and they need not be re-stated. Before we consider the provisions, we think it proper to quote a passage from the decision rendered in the case of R. K. Garg v. Union of India, (1981) 4SCC 675 : (AIR 1981 SC 2138) wherein the Constitution Bench expressed thus : "Now while considering the constitutional validity of a statute said to be violative of Article 14, it is necessary to bear in mind certain well established principles whic....
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....itself be a ground for invalidating the legislation, because it is not possible for any legislature to anticipate as if by some divine prescience distortions and abuses of its legislation which may be made by those subject to its provisions and to provide against such distortions and abuses. Indeed, howsoever great may be the care bestowed on its framing. it is difficult to conceive of a legislation which is not capable of being abused by .perverted human ingenuity. The Court must therefore adjudge the Constitutionality of such legislation by the generality of its provisions and not by its crudities or inequities or by the possibilities of abuse of any of its provisions. If any crudities, inequities or possibilities of abuse come to light, the legislature can always step in and enact suitable mandatory legislation. That is the essence of pragmatic approach which must guide and inspire the legislature in dealing with complex economic issues." 41. In this context, it is also profitable to refer to the observation of the Apex Court in the case of State of J&K v. Triloki Nath Khosa, (1974) 1 SCC 19 : (AIR 1974 SC 1). "Let us not evolve, through imperceptiable extensions, a ....
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....ere criticism has been advanced that there cannot be classification of the municipal are on zone basis. It is urged that if zone is accepted as the sole criterion it would lead to incurable anomaly as in a particular zone the buildings are not the same and the constructionis not the same. At this juncture, we may state that the learned counsel for the petitioners while urging the aforesaid submission with vehemence. In our considered opinion, had read Rule 3 in total isolation but the same is not to be read as if the singular rule governing the whole scenario. It has to be read along with Rule 4 which deals with classification of buildings and lands on three criteria, namely, quality of construction, the basis of use and the basis of location. That part, needless to emphasize the provisions in the main enactment are to be taken into consideration. Thus, classification of the municipal area on zone basis is not the sole governing formula for classification. As we have understood there will be classification of area by zone and thereafter there would be classification of building and land situated in the zone shall be done as per Rule 4 and the rates are to be determined. Thus. the s....
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....eable value. Hence, this Court observed (vide paragraph 35), "the Act mandates that the Commissioner shall determine the tax to be paid by the person concerned in the manner prescribed under the statute and the rules. It is our view that the Act and the Rules provide a complete code of assessment of the property tax to be levied upon buildings within the Municipal Corporation. There is no provision in the statute that the fair rent determined under the Rent Control Act in respect of a property is binding on the Commissioner. The legislature has wisely not made such a provision because determination of annual rent depends on several criteria". We are, therefore, unable to accept the contention of Shri Singhvi in this regard." 44. At this juncture, it is necessitous and useful to refer to decision rendered in the case of India Automobiles (1960) Ltd. (AIR 2000 SC 1089) (supra) (though we have already referred and quoted para 21 of the said judgment) wherein their Lordships in paras 23 and 24 expressed the view thus ; "23. As already noticed even without specific determination, the standard rent was held to have been statutorily determined under Section 2(10) (b) of the Re....
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....nce in submission of the learned counsel appearing for the appellant that allowing the municipal corporations to assess the annual rateable value on the basis of the income of a tenant from the property would be grossly unfair and would have the effect of rendering the rate provisions of the Act unreasonable, arbitrary and unconstitutional. The Act itself has taken care by making sufficient provision in Sections 193 and 194 regarding the liability to pay the rent and apportionment of such liability when the premises are assessed, let or sublet. On proof of creation of sub-tenancy, the owner of the building may also be entitled to seek eviction of their tenants under the relevant provisions of the Rent Acts applicable in the State where the land or property is located, We find some substance in the submission of the learned counsel for the appellant that permitting the municipal authorities to assess the annual value on the basis of the rent paid by the sub-tenant to the tenant and fixing its liability on the owner may adversely affect the owners of the buildings who have let their premises at a time when rents were meagre and who under the rent control statutes are deprived of gett....
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....nd out the gross annual rent of the building including service charges, if any, at which such land or building might, at the time of assessment, be reasonably expected to let from year to year in terms of Section 174 of the 1980 Act." 45. In view of the aforesaid, we cannot accede to the submission of the learned counsel for the petitioners that once there is provision of fixation of standard rent under the M. P. Accommodation Control Act, that must be the sole criterion as laid down in Ratnaprabha (AIR 1977 SC 308) (supra). By virtue of the amendment that has come into existence in both the statutes a complete code has come into being. In view of the aforesaid, we are of the considered opinion that the nature inasmuch as the base of the aforesaid decisions have been removed by the legislative amendment which has fundamentally altered the situation. 46. Now we shall deal with the submissions relating to Section 138(3) of the Municipal Corporation Act. It is submitted by the learned counsel for the petitioners that Section 138(3) creates a discrimination inasmuch as a person who files the return on his own and there is a variation more than ten per cent. he is compelled to pay....
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....ls with Appeals to District Court. It is contended that Section 138(4) provides for appeal to the Mayor-in-Council though the assessment is made by the Corporation and this is a larger body and hence a smaller body cannot, stand in appeal. The aforesaid submission has to be read in the backdrop of Section 142. Section 142 reads as under : "142. Employment for the purposes-of assessment.- (1) The Corporation may. if it thinks fit, employ any person to determine the annual value of lands and buildings in accordance with the principles laid down in Section 138. (2) Any person so employed shall have power, at all reasonable times and after giving due notice, and on production, if so required of authorisation in that behalf from the Commissioner, to enter on, survey and value any land or building within the city which the Commissioner may direct him to survey and value. (3) If any person wilfully delays or obstructs any person in the exercise of any of his powers under this section, he shall be liable to a fine not exceeding one hundred rupees." 48. It is also essential to reproduce Section 135 in this context which was substituted by M.P. Act 18 o....
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....ined to read it in that manner so that both the provisions can co-exist. In view of our preceding analysis, we do not find any inconsistency in the provision. Similar is the situation in the Municipalities Act. In the Municipalities Act Section 126(4) provides that an appeal shall lie to the President-In-Council against the order passed under sub-section (3]. An appeal lies to Civil Judge under Section 139. The relevant part of the said provision reads as under: "139. Appeal to Civil Judge.- (1) If any dispute arises as to the liability of any land or building to assessment or as to the basis or principle of assessment or. as to the amount of tax assessed an appeal shall lie from the decision of the Council to the Civil Judge Class I having Jurisdiction over the Municipal area and if there be no Civil Judge Class I at the headquarter of the Municipality to the Civil Judge Class II having jurisdiction at such headquarter and if there be no Civil Judge Class II at such headquarter to the Civil Judge Class III having Jurisdiction. and in case of more than one such Civil Judges at the headquarter or having Jurisdiction as the case may be, to such one of them as the District Ju....
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....ssessment or as to the amount of tax. What is to be clarified here that this provision has to be read in harmony and in consonance or in tune with Section 138 of the Act. Section 138 confers power on the Municipal Corporation to pass resolution for determining the annual letting value of the land on the basis of per square foot of the built up area of a building or per square foot of land. Keeping certain facets in view rules have been framed by making various classifications. If a person who is affected by the imposition of property tax can assail the order under Section 149 calling in question the quantum, liability, categorization of the building and various other aspects which fall in the rule. But as far as the rate provided in the resolution square foot basis cannot be challenged in appeal before the District Court. We may hasten to clarify that while passing the resolution, it is incumbent on the part of the Municipal Corporation or the Municipality to act in accordance with the statute and the rules. The rules provide various type of classifications which include quality of construction, basis of use and basis of location. A resolution cannot be passed stipulating a flat ra....
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.... (ix) With regard to imposition on penalty as provided under Section 138(3) of the Corporation Act and 126(3) of the Municipalities Act, it is inappropriate to state that the authorities, have no discretion to reduce, it or there is an unrebuttable presumption in that regard. If the property owner can satisfactorily show that there was bona fide error or mistake on his part, the competent assessing authority can reduce the penalty. (x) The property owner who is under legal obligation to file the return in regard to self assessment but fails to do so, would be liable to pay surcharge which is irreducible. (xi) The imposition of penalty can be assailed by way of an appeal before the Mayor -in-Council inasmuch as the assessment is done by a authority so designated under the statute and the Mayor-in-Council being the microcosm of Municipal Corporation has the competence to deal with the same in appeal. i (xii) It would be incumbent on the Municipal Corporation or the Municipality to pass a resolution by fixing the rate on per square foot basis taking into consideration the concept of standard rent fixed under the M. P. Accommodation Control Act though fixation of....