Bangalore District Court
Silverline Business And Tech Park ... vs Bruhat Bangalore Mahanagara Palike on 4 July, 2016
IN THE COURT OF THE XIX ADDL. CITY CIVIL &
SESSIONS JUDGE AT BANGALORE CITY: (CCH.18)
Dated this 4th day of July, 2016.
Present
SMT.K.B.GEETHA, M.A., LL.B.,
XIX ADDL. CITY CIVIL & SESSIONS JUDGE,
BANGALORE CITY.
M.A.No.29/2010
APPELLANT : Silverline Business and Tech Park Limited,
A Company registered under the Companies
Act, 1956, having its registered office at
#201, Barton Centre, 84, Mahatma Gandhi
Road, Bangalore-560 001.
Represented herein by its Director
Mr.Zhed Mahamood.
(By Sri R.V.S.Naik,Advocate)
-VS-
RESPONDENTS: 1. Bruhat Bangalore Mahanagara Palike,
N.R.Square, J.C.Road,
Bangalore-560 002.
Represented by its Commissioner.
2. The Joint Commissioner,
Mahadevapura Zone,
Bruhat Bangalore Mahanagara Palike,
Mahadevapura,
Bangalore.
3. The Assistant Revenue Officer,
Hoodi Sub-Division,
1st Floor, Commercial Complex,
Whitefield Road,
Bangalore-560 048.
( R.1 to R.3 - By Sri.KVN, Advocate)
2 M.A.No.29/2010
JUDGMENT
The appellant has filed the present appeal under S.113 R/W Rule 19 of Part II of Schedule III to the Karnataka Municipal Corporation Act, 1976 praying for setting aside the impugned order relating to levy of tax on the appellant's property for the years 2004-05 to 2006-07, 2008-09 and levy of penalty for the year 2007-08 and for such other reliefs.
2. The case of appellant in nutshell is that the appellant is the owner of the property bearing No.180, situated in Export Promotion Industrial Park, Industrial Area, II Phase, Whitefield, Bangalore, measuring 8090 sq.m. was initially allotted by KIADB on lease-cum-sale basis for establishing a Software Technology Park and Incubation Facility for IT Enabled Services through registered instrument dtd:22/3/2004. Thereafter, appellant constructed building thereon and KIADB has issued an occupancy certificate to the appellant on 15/7/2005. On 28/8/2008 KIADB conveyed absolute title of the land by executing registered sale deed before Sub-Registrar, Mahadevapura as 3 M.A.No.29/2010 document No.2368/2008-09. The said property was within the local limits of Mahadevapura CMC up to 16/1/2007 and as such, the appellant was liable to pay property tax, cess and other rates thereon to said local authority. The Mahadevapura CMC assessed the property with effect from 1/3/2004 and by its demand under Section 142(1)(v) of the Karnataka Municipalities Act, 1964 as per the assessment order bearing No.1546 dtd:30/10/2006 raised a demand for payment of property tax amounting to Rs.16,15,803/- from 1/4/2004 to 30/3/2007. The appellant accepted the assessment made by Mahadevapura CMC and on 13/11/2006, under 3 different receipts made part payment of the arrears of tax of Rs.16,15,803/-. As per the order of Governor of Karnataka in exercise of powers conferred under the Karnataka Municipal Corporations Act, 1976, vide Notification No.UDD 92 MNY 2006 published in Karnataka Gazette Extraordinary No.104 dtd:16/1/2007 included the area of BMP the local areas specified in Schedule 'A' to the Notification and specified it to be called as BBMP i.e., 4 M.A.No.29/2010 Bruhat Bangalore Mahanagara Palike - respondent No.1 w.e.f. 16/1/2007 and in the said inclusion, the existing area of Mahadevapura CMC is also included within BBMP. As per Section 4 of the Karnataka Municipal Corporation Act, if any area is included in the urban area, then the tax will be leviable from the date of said inclusion and not earlier to it. On 11/12/2008 and 23/3/2009, the appellant paid a sum of Rs.6,15,642/- being the arrears of tax to Mahadevapura CMC under 2 separate receipts and he had also paid Rs.7,09,560/- for the year 2007-08 assessed by Mahadevapura CMC. On 13/1/2009, the BBMP Property Tax Rules, 2009 came into force. S.112(A) requires every owner to submit every year to the Commissioner a return in the prescribed form and to pay in advance the full amount of the property tax payable by him as per the return. Accordingly, appellant submitted to the Commissioner a return of tax for the year 2008-09 in the prescribed form amounting to Rs.19,24,844/- on 23/3/2009 and it was received by respondent No.3. For the first time, on 28/4/2009, appellant received 5 M.A.No.29/2010 communication from respondents purportedly under S.143 of the Act whereby appellant was informed that the khatha of the above property had been registered in its name and demanding tax of Rs.2,17,20,500/- as arrears of tax from 2002-03 to 2008-09 calling upon the appellant to file his objections within 30 days. Accordingly, appellant submitted its objections wherein it contended that the property was assessed up to 31/3/2007 by Mahadevapura CMC and it had already paid tax up to said period to Mahadevapura CMC and he has paid tax under S.112-A for the year 2008-09 for which he had not received any objections whatsoever. Afterwards, again respondent sent another communication dtd:8/6/2009 to the appellant purportedly under S.143 of the Act demanding Rs.1,37,01,787/- being the tax from 2004-04 to 2008-09 and again called upon the appellant to submit its objections for the new demand. Again, appellant filed its objections to respondent No.2 on 18/6/2009. There was no response from respondent No.2 for about a month. The appellant was desirous of putting at rest the 6 M.A.No.29/2010 controversy relating to tax assessment and required a khatha certificate for various transaction. Hence, wrote another letter dtd:17/7/2009 reiterating the earlier objections regarding jurisdiction of the respondents from the year 2004-05 to 2006-07 and requested an opportunity of being heard personally. Eventually, 2nd respondent called appellant for personal hearing on 14/8/2009 wherein appellant is represented by its counsel. After hearing parties, 2nd respondent directed the BBMP to supply to the appellant the documents on the basis which the demand for tax was made by it. In response to said directions of 2nd respondent, BBMP supplied certain documents to appellant on 18/8/2009. Those documents were assessment tax declaration forms filled by themselves and which had were not furnished to appellant at any time and were only contained arithmetical calculations of tax allegedly due from appellant. Then, after hearing appellant's counsel, 2nd respondent passed an order on 7/11/2009 wherein, he made the assessment of tax of Rs.8,717/- for the year 2004-05, Rs.65,917/- for 7 M.A.No.29/2010 the year 2005-06, Rs.6,46,244/- for the year 2006-07, Rs.22,54,603/- and penalty of Rs.4,36,363/- for the year 2007-08 and Rs.27,35,968/- for the year 2008-09. The respondents have no jurisdiction to assess the property from 2004-05 to 2006-07 and demand of penalty of Rs.4,36,373/- for 2007-08 is also illegal. Respondents have not followed the mandatory provisions of S.112-A in making the assessment for 2008-09. Hence, the appellant was forced to pay Rs.43,40,207 tax to 1st respondent including Rs.26,90,978/- for 2007-08 which includes even penalty. Appellant had no grievances with regard to tax assessment of the year 2007-08 except penalty levied thereon. Hence, appellant restricts this appeal pertaining to the tax levied for 2004-05 to 2006-07, 2008-09 and penalty for 2007-08. Appellant had preferred W.P.No.6116-6230/2010 before Hon'ble High Court of Karnataka against the impugned order dtd:8/6/2009. The Hon'ble High Court of Karnataka allowed the writ petition partly on 14/4/2010 directing respondents to issue khatha extract to appellant as prayed for in the writ petition and 8 M.A.No.29/2010 dismissed the prayer to quash the impugned order on the ground of availability of alternate remedy, with liberty to approach this Hon'ble Court in appeal. Hence, appellant has filed the present appeal on the ground that the impugned order passed by respondent is opposed to law, respondent No.2 has not furnished any reasons to reach the conclusion that respondent No.1 has jurisdiction over appellant's property to levy tax even for 2004-05 to 2006- 07 and why appellant has to pay penalty for 2007-08. The appellant had paid the taxes under S.112-A. Said order was passed mechanically without application of mind. It has not answered the questions raised by the appellant; penalty levied for 2007 is contrary to the S.112 of the Act when he has already paid the taxes for that year and there is no basis for difference of amount of tax amount for 2008-09. As per tax demand notice dtd:8/6/2009, demand was Rs.32,45,869/- and respondent No.2 reduced the same to Rs.27,35,968/- without giving any reason. Hence, the appeal for appropriate reliefs. 9 M.A.No.29/2010
3. After appearance of respondents, LCR was called and received by this court. Heard arguments of both sides.
4. From the above facts, the points that arise for consideration of the court are:-
1. Whether the appellant proves that the impugned order passed by 2nd respondent is without jurisdiction in respect of assessment made for the years 2004-05 to 2006-07?
2. Whether the appellant proves that the penalty imposed by respondent No.2 for 2007-08 is improper and without any basis?
3. Whether the appellant further proves that tax assessment made by 2nd respondent pertaining to 2008-09 is improper and without any basis?
4. What order?
5. Findings of this court on the above points are:-
Point No.1:- Partly in Affirmative; Point No.2:- Partly in Affirmative; Point No.3:- Partly in Affirmative; Point No.4:- As per the final order for the following:-10 M.A.No.29/2010
REASONS
6. Point No.1:- The appellant has filed the appeal under S.113 R/W Rule 19 of Part II of Schedule III to the Karnataka Municipal Corporation Act, 1976.
7. The admitted facts of the case are that earlier, the property belonged to appellant is bearing No.180, situated in Export Promotion Industrial Park, Industrial Area, II Phase, Whitefield, Bangalore, measuring 8090 sq.m. was initially allotted to it by KIADB as per lease-cum-sale deed dtd:22/3/2004 and then, regular sale deed was executed by KIADB in favour of appellant on 28/8/2008. The appellant constructed the building and obtained occupancy certificate from KIADB from July 2010. Earlier, this property was situated within the jurisdiction of Mahadevapura CMC and the property was assessed by Mahadevapura CMC w.e.f. 1/3/2004 and by its demand notice under Section 142(1)(v) of the Karnataka Municipalities Act, 1964 vide assessment order bearing No.1546 dtd:30/10/2006, Mahadevapura CMC raised a demand for property tax amounting to Rs.16,15,803/- 11 M.A.No.29/2010
from 1/4/2004 to 30/3/2007. Later, as per Notification No.UDD 92 MNY 2006 published in Karnataka Gazette Extraordinary No.104 dtd:16/1/2007 Mahadevapura CMC included the area of BBMP and several local areas specified in Schedule 'A' to the Notification were included in BBMP and accordingly, Mahadevapura CMC was also included in BBMP and thus, the suit schedule property comes within the jurisdiction of BBMP - 1st respondent only from 2007 onwards and not earlier to it.
8. The appellant has produced the copies of demand notice issued by Mahadevapura CMC as per assessment order bearing No.1546 dtd:30/10/2006. It reveals that Mahadevapura CMC has demanded tax including penalty, etc. from appellant from 2004-05 to 2006-07 totally amounting to 16,15,803/-. The appellant contended that it paid the said tax under 3 receipts dtd:13/11/2006 amounting to Rs.5,040/-, Rs.4,98,429/-, Rs.4,96,692/- to CMC, Mahadevapura.
9. The appellant has further contended that on 11/12/2008 and 23/3/2009 it had paid a sum of 12 M.A.No.29/2010 Rs.6,15,642/- being the arrears of tax assessed by Mahadevapura CMC to respondent No.1 under 2 separate receipts. Though appellant contended that it has produced those receipts, on perusal of those receipts carefully, this court noticed that the 1st receipt dtd:11/1/2008 for Rs.4,28,640/- is produced by appellant.
10. 2nd receipt produced by appellant is dtd:23/3/2009. On careful perusal of this second receipt, this court noticed that the receipt is for payment of Rs.19,24,844/- pertaining to self-assessment for 2008-09 and not the balance amount payable as per the demand notice issued by Mahadevapura CMC. Hence, if appellant has not paid the said balance amount of Rs.1,87,002/-, then 1st respondent is at liberty to collect the same with up-to-date interest or penalty as per law from the appellant.
11. It is not in dispute that Mahadevapura CMC was included to BBMP only as per notification dtd:16/1/2007 to BBMP. Hence, BBMP can claim taxes only from the date of the property included to its jurisdiction and it is not 13 M.A.No.29/2010 entitled to demand the tax for earlier period. In this regard, learned counsel for appellant relied on S.4 of the Karnataka Municipal Corporation Act. It reads as follows:-
"S.4 Inclusion and Exclusion of Areas in, or from the Larger Urban Area:
(4) When a local area is included in the larger urban area, the provisions of this Act and all taxes, notifications, rules, bye-laws, orders, directions and powers, levied issued, made or conferred under this Act or any other law applicable to the larger urban area, shall apply to the said area from the date of inclusion of such area within the larger urban area."
12. A plain reading of this Section made it very clear that when local area is included in the larger urban area, then, provisions of the Act and taxes applicable to the larger area shall apply to the said area only from the date of inclusion of said area within larger urban area.
13. In the instant case also, the property of appellant was in Mahadevapura CMC which is smaller area 14 M.A.No.29/2010 compared to Corporation. This property existing in Mahadevapura CMC area was included in BBMP i.e., Corporation from January 2007. Hence, the tax applicable to BBMP shall be levied to the property of appellant only after it was included to BBMP jurisdiction i.e., only from 2007 onwards.
14. But, the impugned order passed by 2nd respondent reveals that first respondent has assessed the taxes to the property of appellant even from 2004-05 to 2006-07 which is not permissible in law. 2nd respondent has no authority whatsoever to impose tax for said period, as the property of appellant was not included in the jurisdiction of first respondent during that period. Hence, the tax imposed by 2nd respondent is not sustainable for the above said period. The 2nd respondent has stated in his order that "the objections raised by appellant that the BBMP cannot demand taxes for the period in which the property was assessed to CMC is not correct." However, no reason was assigned by 2nd respondent to pass such an order. He has only stated that Mahadevapura CMC is merged with BBMP 15 M.A.No.29/2010 along with all its assets and liabilities and hence, BBMP is entitled to claim taxes even from 2004-05. However, it has not stated that BBMP is claiming taxes which were not paid by the appellant for the above said period. If really, BBMP is claiming taxes which was not paid by the appellant during the period of Mahadevapura CMC, then BBMP is having right to demand it. However, there is no such specific order passed by the 2nd respondent. Hence, this court holds that the amount claimed by 2nd respondent as tax from 2004-05 to 2006-07 by 1st respondent - BBMP is incorrect. But for the above reasons, this court holds that if appellant has not paid the said balance amount of Rs.1,87,002/-, then 1st respondent is at liberty to collect the same with up-to-date interest or penalty as per law from the appellant. Accordingly, point No.1 is answered partly in affirmative.
15. Point Nos.2 & 3:-These two points are considered together, as they require common discussion. 16 M.A.No.29/2010
16. In the impugned order passed by 2nd respondent dtd:7/11/2009, the tax was levied for 2007-08 as per Market rate of Rs.1,000 + 50/2 and by deducting depreciation, total tax including Cess of 24%, it was mentioned as Rs.22,54,603/- and imposed 2% penalty of Rs.4,36,375/- and the total tax including penalty payable was Rs.26,90,978/-.
17. For the year 2008-09, the respondent No.2 fixed the market rate at Rs.4/- per sq.ft. and including Cess, the tax payable was Rs.27,35,968/-. This tax for 2008-09 is more than the tax + penalty for 2007-08. No reason is assigned by 2nd respondent for imposing such amount as tax in the subsequent year while passing the above said order.
18. It is not in dispute that appellant has filed self- assessment return as per S.112-A of the Karnataka Municipal Corporations Act for the year 2008-09 and paid the entire tax assessed by it by deducting 5% rebate.
19. Respondent No.2 has not mentioned about the submission of self-assessment returns while passing orders.
17 M.A.No.29/2010
20. As per S.112-A of the Karnataka Municipal Corporations Act, every owner or occupier who is liable to pay the property tax under this Act, shall every year submit to the Commissioner a return in such form within such period and in such a manner as specified in the schedule III. Appellant has produced the copy of self- assessment returns submitted by it in Schedule III.
21. According to this provision, if the entire tax is paid in advance within one month from the date of commencement of the year, then, he shall be entitled for rebate of 5%. Appellant has calculated the tax and rebate of 5% and paid the balance amount.
22. According to S.112-A(4), if the return submitted by the owner is incorrect return, then the Commissioner or authorized officer shall cause an inspection of the land and building and also cause such local enquiry as may be considered necessary and based on such inspection and information collected, he shall assess the property tax and send the copy of the same to the owner.
18 M.A.No.29/2010
23. In the instant case, as already discussed above, 2nd respondent has not considered the self-assessment returns submitted by appellant under S.112-A of the Karnataka Municipal Corporations Act and 2nd respondent calculated the tax ignoring this return and imposed the tax. There is no mention in the order of 2nd respondent that the return submitted by appellant was incorrect and accordingly, it conducted spot inspection and then, made enquiry and based on such inspection and information collected, he assessed the tax. Thus, apparently, the order passed by 2nd respondent in respect of imposing tax for 2008-09 is incorrect. Hence, this court holds that the order passed by the 2nd respondent pertaining the year 2008-09 is not proper and it is liable to be set-aside. Likewise, no reason is assigned for imposing penalty for the year 2007-08. Hence, imposing penalty for 2007-08 is also liable to be set-aside.
24. For the above reasons, this court holds that 2nd respondent is to be directed to re-hear the parties and reassess for the year 2008-09 and penalty imposed for 19 M.A.No.29/2010 2007-08 and to give suitable reasons and to consider the self-assessment return submitted by the appellant and to pass orders by following the procedures required under S.112-A(4) of Karnataka Municipal Corporations Act. Accordingly, point Nos.2 & 3 are answered partly in affirmative.
25. Point No.4:- In view of findings on point Nos.1 to 3, this court proceeds to pass the following:-
ORDER Appeal filed by the appellant under S.113 R/W Rule 19 of Part II of Schedule III to the Karnataka Municipal Corporation Act, 1976 is partly allowed.
The impugned order passed by respondent No.2 pertaining to assessment of the year 2004-05 to 2006- 2007 is set-aside. However, respondents are authorized to collect the tax imposed by CMC, Mahadevapura for said period, if appellant has not deposited the same. The assessment order passed by 2nd respondent imposing penalty of Rs.4,36,375/- for the year 2007-08 and assessment for 2008-09 levying tax of Rs.27,35,968/- is set-aside; matter is remitted back to 2nd respondent to re-hear the parties before passing orders on imposing penalty for 2007-08 and for re-assessing tax for the year 2008-09.
20 M.A.No.29/2010Respondent No.2 is hereby directed to consider the self- assessment returns submitted by appellant for 2008-09 while passing orders and also directed to give suitable reasons if 2nd respondent intends to impose penalty for 2007-08.
(Dictated to the Judgment Writer, transcribed and computerized by her, corrected and then pronounced by me in the open Court on this the 4th day of July, 2016).
(K.B.GEETHA) XIX ADDL.CITY CIVIL & SESSIONS JUDGE, BANGALORE CITY GVU/-
21 M.A.No.29/20104/7/2016 Judgment pronounced in open court vide separate detailed judgment with the following operative portion:-
ORDER Appeal filed by the appellant under S.113 R/W Rule 19 of Part II of Schedule III to the Karnataka Municipal Corporation Act, 1976 is partly allowed.
The impugned order passed by respondent No.2 pertaining to assessment of the year 2004- 05 to 2006-2007 is set-aside. However, respondents are authorized to collect the tax imposed by CMC, Mahadevapura for said period, if appellant has not deposited the same.
The assessment order passed by 2nd respondent imposing penalty of Rs.4,36,375/- for the year 2007-08 and assessment for 2008- 09 levying tax of Rs.27,35,968/- is set-aside;
matter is remitted back to 2nd respondent to re- hear the parties before passing orders on imposing penalty for 2007-08 and for re-
assessing tax for the year 2008-09.
Respondent No.2 is hereby directed to consider the self-assessment returns submitted by appellant for 2008-09 while passing orders and also directed to give suitable reasons if 2nd respondent intends to impose penalty for 2007-
08. (K.B.GEETHA) XIX ADDL.CITY CIVIL & SESSIONS JUDGE, BANGALORE CITY.