TaxTMI 
TaxTMI 
2025 (7) TMI 573
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....t penalty waiver. (3) The petitioner being aggrieved with the same, has filed the instant writ petition to pray for the relief inter alia that the Assessor-Collector (North)/Respondent No. 3 be directed to withdraw/cancel her letter dated April 21, 2021 and raise separate bills for the period after purchase of property by the petitioner, that the respondent no. 2 be directed to allow mutation of the property in the name of the petitioner, the respondent no. 3 be directed to withdraw of claims of arrear for the period which has been adjudicated by the Official Liquidator, that for the period from April, 1989 to the date of winding up of the company in liquidation that is August 10, 1999, with regard to the demarcated portion of the unit space and open terrace on the 3rd floor of 35, Acharya Prafulla Chandra Road, Post Office-Amherst Street, Police Station - Muchipara, Kolkata-700009, measuring 2232 square feet as per built up area, that the respondent no. 4/the Official Liquidator, High Court at Calcutta be directed to pay the respondent no. 3 the demanded amount of arrear of municipal taxes and interest including penalty for the period from August 10, 1999 till March 15, 2019 in....
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....t of Rs. 59,34,806/- with S/A balance of Rs. 11191/-. Also that, by dint of a letter dated June 25, 2019, the respondent no. 4/the Official Liquidator has informed the petitioner that an amount of Rs. 19,13,000/- has been paid to the respondent no. 1 by the respondent no. 4. The petitioner says that the amount so demanded has been arrived at after adjustment of Rs. 19,12,000/- paid by the respondent no. 4 earlier. (8) On this factual backdrop, the petitioner has come up in this writ petition before this Court to plea that the demand raised by the respondent no. 3 is unsustainable in the eye of law and the petitioner is not liable for payment of the said sum of alleged arrear dues on account of property tax including interests and penalty. (9) Mr. Sakya Sen, learned Senior Advocate, has represented the writ petitioner in the instant case. He has submitted that the respondent no. 3 has transgressed its jurisdiction while raising arrear property tax bill with interest and penalty against the petitioner and, therefore, acted illegally and by exercising power which is not vested in it by law. He would say that the petitioner is in occupation of the premises only with effect from t....
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....le to the said property, as admissible in accordance with law. Therefore, Mr. Sen has submitted that arrear payment if at all, stands due and outstanding should be paid by the Official Liquidator. He says that the petitioner would only be liable for payment of property tax and other ancillary rate if any, since from the date of his purchase and occupation of the said property and for this purpose, the respondent no. 3 should raise separate bill to enable the petitioner to make immediate payment. Otherwise, it is submitted that the petitioner's property is not being mutated on some unsustainable and frivolous grounds allegedly of his non-payment of the arrear tax amount, which does not stand due as against him and on this plea, mutation of his property is being delayed, hampered and jeopardized. (14) Therefore, Mr. Sakya Sen, learned Senior Advocate insists that the writ petition may be allowed directing the respondent no. 3 to raise outstanding property tax bill if any, against the petitioner which may have stood due and outstanding only from the date of his purchasing and owning the property and not beyond. He submits further that there may be directions upon the respondent no.....
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....e mentioned about the period from the date of August 10,1999 till the date of execution of the sale-deed in favour of the petitioner that is June 13, 2017. It is submitted that even an amount of Rs. 1913000/- was paid by the Official Liquidator to the respondent KMC, as the full and final settlement of the tax with interest and penalty due and outstanding till August 10, 1999, that is the date of winding up of the company and the sale-deed was executed in favour of the petitioner on June 13, 2017, there is no one to take responsibility for payment of property tax due for the intermittent period from August 10, 1999 to June 13, 2017. In this regard the respondents have relied on the judgment of the Supreme Court reported in 1996 3 SCC 630 (Municipal Corporation of Delhi Vs. Trigon Investment and Trading Private Limited and Another). Let the refer portion be quoted as herein: "19. The Act does not contemplate a situation - it is necessary to emphasise - nor should the courts create a situation by a process of interpretation, where both the transferor and transferee escape the tax which has been duly assessed." (20) The respondents have further argued that the power of the....
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.... shall not provide any guarantee and/or warranty as to the quality, quantity or specification of the assets sold. The Officers are to satisfy themselves in this regard after physical inspection of the assets/properties as to the title, encumbrance area, boundary, measurement, description etc. of the Company (In Liquidation) and the purchasers will be deemed to offer with full knowledge as to the defects, if any in the descriptions, quality or quantity of the assets sold. The Official Liquidator shall not entertain any complaint in this regard after the sale is over. Any mistake in the notice inviting tender shall not vitiate the sale." (24) The respondent has placed much emphasis on the terms as above, mentioned in the 'sale notice', as well as, to the similar terms mentioned in the agreement for sale entered into between the Official Liquidator and the writ petitioner. Suffice is to say that the respondents have put forth a case that the petitioner had notice and knowledge of the encumbrances in the property, from a date prior to the sale, and has purchased the same along with such encumbrances. That, now the same petitioner cannot evade liability of one of such encumbr....
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....f the property, was not bound to presume that the taxes upon the property which he contemplates purchasing, have not been paid in ordinary course, in the absence of any special intimation by the respondent/Corporation. The Corporation has only intimated the purported tax liability of the petitioner, not before his purchase on auction, but only when the petitioner desired to mutate his name in the property, after execution of the deed of sale, bestowing ownership of the property to him. (29) Similarly, in the case of The Ahmedabad Municipal Corporation Vs. Haji Abdulgafur Haji Hussenbhai reported in (1971) 1 SCC 757, the Supreme Court has held as follows:- "3. To begin with it was contended that there is no warranty of title in an auction sale. This general contention seems to us to be well-founded because it is axiomatic that the purchaser at auction sale takes the property subject to all the defects of title and the doctrine caveat emptor (let the purchaser beware) applies to such purchaser. The case of the judgment-debtor having no saleable interest at all in the property sold such as is contemplated by Order 21 Rule 91 CPC is, however, different and is not covered by....
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....any arrears of consolidated rates were due. When he had taken the mortgage he was aware that if the rates were not paid the arrears would be first charge on the property with the result that before becoming full owner by foreclosure he should have ascertained the true state of affairs. On this reasoning he was held to have constructive notice and the purchasers from him could not claim greater protection. These circumstances clearly disclose that the reported case is not similar to the one before us and is of little assistance. ** ** ** ** ** 9. The Court then noticed the fact that the Kanpur Corporation had allowed 11 years arrears of taxes to accumulate and it was observed that no intending purchaser was bound to presume that taxes upon the property, he contemplates purchasing had not been paid in the ordinary course, in the absence of special intimation by the municipality. On this reasoning the suggestion of constructive notice was negatived. ** ** ** ** ** 11. Now the circumstances which by a deeming fiction impute notice to a party are based, on his wilful abstention to enquire or search which a person ought to make or, on his gross neglige....
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....ory Authority. The Court held as regards dues in relation to the Municipal tax in terms the Company's Act, 1956, in the following words. - "9. Indisputably the manner in which the claim of a creditor in respect of the dues of the company in liquidation is to be realised has been laid down in Sections 529 and 529-A of the Companies Act, 1956. 10. Dues in relation to the municipal tax in terms of the provisions of the said Act do not create any encumbrance on the property. It does not create any charge. It is considered to be a personal liability. On the aforementioned premise, we have to construe the terms and conditions of the sale. It reads as under: "1. The sale will be held as per the inventory made by the valuer on 'as-is-where-is and whatever-there-is' basis and subject to confirmation by the Hon'ble High Court at Calcutta. The Official Liquidator shall not provide any guarantee and/or warranty as to the quality, quantity or specification of the assets sold. The offerers/bidders are to satisfy themselves in this regard after physical inspection of the assets/properties as to the title, encumbrance, area, boundary, measurement, description, et....
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....tated by the Official Liquidator, in his own affidavit. It appears from the affidavit submitted by the respondents that upon being invited by the Official Liquidator to place its claim as against the company (In Liquidation), the respondents have placed the demand of the amount, which has been paid to them by the Official Liquidator upon adjudication. Record has revealed that such acceptance of the adjudicated amount paid to the respondents, as mentioned above, has been only unconditionally, without any protest lodged by the respondents. It is also an admitted position that the respondents have not preferred any statutory appeal as against such order of the Official Liquidator. Hence, it can be well construed that the amount of claim of the respondents as adjudicated by the Official Liquidator to the tune of Rs. 19,13,000/- has reached finality in view of acceptance of the same by the respondents with regard to the pending property tax due and payable by the Company (In Liquidation) to the said respondents. Therefore, in view of the settle provision of law, as discussed above, there should be no scope available for the respondents to issue the impugned letters as against the petiti....
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....ount as the creditor (unsecured) of the Company (In Liquidation) for the outstanding property tax of the property of the Company has reached its finality being accepted by the respondent and not challenged ever since thereafter. Does this really affect the rights of the respondent/Corporation to realise any property tax which is said to be outstanding, though unclaimed and undeclared till the relevant date? That is, however not a question relevant in this writ petition. What this case is concerned with is whether any other dues are also payable by the Company (In Liquidation) to the respondent/Corporation on account of unclaimed and unpaid property tax of the property of the Company (In Liquidation) for a period prior to the date of purchase by the petitioner, the petitioner would be liable for payment of the same. (35) The entire discussion as made above, which has dealt with the settled legal provisions with regard to the particular question and issue involved in this writ petition as mentioned above, the Court is constrained to find that there would not be any scope before respondent authority to raise any so-called outstanding property tax bill against the petitioner for a p....