Karnataka High Court
General Library vs The Commissioner on 23 January, 2025
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NC: 2025:KHC-K:427
WP No. 203031 of 2023
IN THE HIGH COURT OF KARNATAKA
KALABURAGI BENCH
DATED THIS THE 23RD DAY OF JANUARY, 2025
BEFORE
THE HON'BLE MR JUSTICE R.NATARAJ
WRIT PETITION NO.203031 OF 2023 (LB-RES)
BETWEEN:
GENERAL LIBRARY, MUDDEBIHAL,
REGISTERED UNDER SOCIETIES REGISTRATION ACT,
OPP. TO SOCIAL CLUB,
NEAR OLD JMFC COURT,
OLD BUILDING MUDDEBIHAL,
REP. BY ITS PRESIDENT,
SRI MURIGEPPA VEERAPPA MOTAGI,
AGED ABOUT 60 YEARS, OCC: PRESIDENT,
GENERAL LIBRARY, MUDDEBIHAL,
RESIDENT OF MUDDEBIHAL,
DISTRICT VIJAYAPURA-586212.
...PETITIONER
(BY SRI. R. J. BHUSARE, ADVOCATE)
AND:
Digitally signed
by SACHIN THE COMMISSIONER
Location: High TOWN MUNICIPAL COUNCIL,
Court Of MUDDEBIHAL, DIST. VIJAYAPURA-586212.
Karnataka ...RESPONDENT
(BY SRI. HARSHAVARDHAN MALIPATIL, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE NOTICE
ISSUED U/S 142(1)(V) BY THE RESPONDENT PRODUCED AT
ANNEXURE-A OF KARNATAKA MUNICIPALITIES ACT, 1964 AND ETC.,
THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER
WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE R.NATARAJ
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WP No. 203031 of 2023
ORAL ORDER
The petitioner has challenged a notice issued by the respondent under Section 142(1)(v) of the Karnataka Municipalities Act, 1964 (henceforth referred to as 'Act of 1964') demanding arrears of property tax along with interest for the period 2005-06 to 2023-24.
2. The petitioner contends that it is a society registered under the Karnataka Societies Registration Act, 1960 and is involved in philanthropic activities by running a library for the use of the general public apart from other business. The respondent issued a notice to the petitioner under Section 142(1)(v) of the Act of 1964 demanding arrears of property tax for the period 2005-06 to 2023-24 amounting to a sum of Rs.19,71,821/-. The petitioner contends that the respondent had threatened to lockdown the library, if it did not pay the tax demanded. The petitioner is therefore, before this Court challenging the notice issued by the respondent.
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3. The learned counsel for the petitioner contends that a notice under Section 142(1)(v) of the Act of 1964 can be issued only after compliance of the procedure contemplated under Section 105 of the Act of 1964. He contends that the respondent was bound to first issue a notice demanding tax granting 30 days time to the petitioner to respond and thereafter, consider the objections filed by the petitioner and pass appropriate orders within 60 days. The respondent, without complying the aforesaid procedure, has straight away laid a demand for a sum of Rs.19,71,821/-, without conducting a spot inspection. The petitioner is therefore, before this Court challenging the said notice.
4. Per contra, the respondent has filed its statement of objections contending that the petitioner has the remedy of an appeal under Section 150 of the Act of 1964 and therefore, it cannot approach this Court. It is also contended that the petitioner is running commercial shops and a public library and therefore, the activity of the -4- NC: 2025:KHC-K:427 WP No. 203031 of 2023 petitioner is not fully philanthropic. It denied that the liability to pay tax was determined without conducting a spot inspection. It claimed that after the demand notice was issued, full opportunity was provided to pay the tax. It claimed that the petitioner has paid part of the amount demanded and therefore, cannot now challenge the demand.
5. The learned counsel for the respondent reiterated the above contentions.
6. I have considered the submissions made by the learned counsel for the petitioner and the learned counsel for the respondent.
7. A perusal of Section 142(1)(v) of the Act of 1964 shows that the respondent is entitled to make a demand of the property tax along with interest. However, the procedure of determining the property tax payable is contained in Section 105 of the Act of 1964 and for ready reference, the same is extracted below:- -5-
NC: 2025:KHC-K:427 WP No. 203031 of 2023 "105. Assessment of property tax. - (1) Every owner or occupier who is liable to pay property tax under this Act shall submit every year to the Municipal Commissioner or the Chief Officer, as the case may be or the officer authorised by the Municipal Commissioner or the Chief Officer in this behalf (hereinafter referred to as authorised officer), a return in such form, within such period and in such manner as may be prescribed:
Provided that, if the owner or occupier who is liable to pay tax files his returns and also pays the property tax which is due within one month from the date of commencement of the financial year he shall be allowed a rebate of five percent on the tax payable by him.
(2) Before any owner or occupier submits any return under sub-section (1) he shall pay in advance full amount of the property tax payable by him on the basis of such return and shall furnish along with the return satisfactory proof of payment of such tax and the tax so payable shall for the purposes of this Act be deemed to be the property tax due from such owner or occupier for the purpose of Chapter VII. After the final assessment is made the amount of property tax -6- NC: 2025:KHC-K:427 WP No. 203031 of 2023 so paid shall be deemed to have been paid towards the property tax finally assessed.
(3) If the Municipal Commissioner or the Chief Officer, as the case may be or the authorised officer is satisfied that any return submitted under sub-section (1) is correct and complete, he shall assess the property tax in accordance with the provisions of this Act and the rules made thereunder and shall send a copy of the order of assessment to the owner or occupier concerned. Assessment under this sub-section shall be concluded within one year from the date of submission of return under sub-section (1).
(4) If any owner or occupier fails to submit a return as required under sub-section (1) or fails to pay in advance full amount of property tax as required under sub-section (2) submits an incomplete or incorrect return, the Municipal Commissioner or the Chief Officer, as the case may be or the authorised officer, shall cause an inspection of the vacant land and building and may 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 a copy of the -7- NC: 2025:KHC-K:427 WP No. 203031 of 2023 order of assessment to the owner or occupier concerned.
(5) When making an assessment of tax under sub-section (3) or (4), the Municipal Commissioner or the Chief Officer, as the case may be, or the authorised officer may also direct the owner or occupier to pay in addition to the tax assessed a penalty,-
(a) at the rate of two per cent per month of the amount of property tax assessed and due in case of failure to pay amount of property tax due and to submit a return;
(b) not exceeding two times the amount of difference between the tax assessed and the tax paid along with his return in the case of submitting knowingly an incorrect or incomplete return.
(c) One hundred rupees in case of failure to submit return after payment of property tax in full.
(6) The owner or occupier may either accept the property tax assessed and the penalty if any, levied or send objections to the Municipal Commissioner or the Chief Officer, as the case may be, or the authorised officer within a period -8- NC: 2025:KHC-K:427 WP No. 203031 of 2023 of thirty days from the date of receipt of a copy of the order under sub-section (3) or (4).
(7) The Municipal Commissioner or the Chief Officer, as the case may be, or the authorised officer shall consider the objections and pass such order either confirming or revising the assessment of such tax and penalty if any, within a period of sixty days from the date of filling objections and a copy of the order shall be sent to the owner or occupier concerned.
(8) The property tax shall be paid by the person primarily liable within ninety days after the commencement of every year, if default is made in making payment the person liable to pay shall pay a penalty at the rate of two percent per month of the amount of tax remaining unpaid after the expiry of the period.
(9) In order to facilitate filing of return by an owner or occupier of any building or vacant land and assessment of property tax the Municipal Council shall from time to time issue guidelines for determining the taxable capital value and property tax payable thereon."
8. In view of Section 105 of Act of 1964, wherever tax is not paid or wrongly paid, the respondent is bound to -9- NC: 2025:KHC-K:427 WP No. 203031 of 2023 first inspect the property and make an assessment and forward it to the owner to make the payment. An opportunity should be granted to the owner to file his objections and after considering the objections, an order could be passed determining the property tax payable along with interest, if any. The impugned notice does not show that the procedure contemplated under Section 105 of the Act of 1964 was followed. Therefore, the impugned notice cannot be sustained as it is not in accordance with the provisions contained in Section 105 of the Act of 1964. In that view of the matter, this writ petition deserves to be allowed in part and the impugned notice issued by the respondent is liable to be quashed.
9. Hence, the following ORDER
(i) The writ petition is allowed in part.
(ii) The impugned notice issued by the respondent at Annexure - A is quashed.
(iii) However, liberty is reserved to the respondent to take out proceedings in
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accordance with Section 105 of the
Karnataka Municipalities Act, 1964, within three months from the date of receipt of a certified copy of this Order.
(iv) The relief sought for by the petitioner to exempt it from payment of tax under the Karnataka Municipalities Act, 1964, is kept open to be considered in an appropriate proceeding.
(v) Any amount paid by the petitioner shall be appropriated by the respondent towards the property tax payable by the petitioner.
10. In view of disposal of the petition, pending I.As., if any, do not survive for consideration and the same stand disposed off.
Sd/-
(R.NATARAJ) JUDGE PMR List No.: 1 Sl No.: 25