Bombay High Court
Dr. Zishan Hussain Azhar Hussain vs State Of Maharashtra, Through Its ... on 9 October, 2019
Equivalent citations: AIRONLINE 2019 BOM 1803
Author: R.K. Deshpande
Bench: R.K. Deshpande, Vinay Joshi
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
NAGPUR BENCH, NAGPUR
PUBLIC INTEREST LITIGATION NO.42 OF 2018
Dr. Zishan Hussain Azhar Hussain,
Age : 36, Occupation : Medical Profession,
PAN number AVTPK9056G,
Mobile No. 9422160580,
Residential Address :
Azhar Manzil, Sharad Bose Marg,
Khangarpura,
Akola (MS) 444 001. ... Petitioner
Versus
1. State of Maharashtra,
Through its Secretary,
Department of Urban Development,
Mantralaya,
Mumbai.
2. Akola Municipal Corporation,
through its Commissioner,
M.G. Road, Akola (M.S.) 444 001.
3. The Municipal Commissioner,
Akola Municipal Corporation,
M.G. Road, Akola (M.S.) 444 001. ... Respondents
Shri S.P. Bhandarkar, Advocate for Petitioner.
Shri Ambarish Joshi, Assistant Government Pleader for Respondent
No.1.
Shri S.V. Sohoni, Advocate for Respondent Nos.2 and 3.
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CORAM : R.K. DESHPANDE & VINAY JOSHI, JJ.
Date of Reserving the Judgment : 3rd October, 2019
Date of Pronouncing the Judgment : 9th October, 2019
JUDGMENT (Per R.K. Deshpande, J.) :
1. The challenge in this petition is to the resolution dated 3-4-2017 passed in the General Body Meeting of the Akola Municipal Corporation, as was modified by the subsequent resolution dated 19-8-2017, determining the mode and manner in which the property taxes are to be imposed for a period of five years from 2017-18 to 2021-22. This is entertained as a Public Interest Litigation, as it affects the imposition of property taxes upon the residents of the Akola town.
2. Notice for final disposal of the matter was issued by this Court on 21-3-2018 and the parties were heard finally by consent. Rule. The petition is being disposed of finally.
3. The last determination of the property taxes was done by the Akola Municipal Council prior to 1-10-2001, when the Akola Municipal Corporation came into existence. Such taxes were in force up to 2017-18. It was felt necessary to revise the taxes, as there was increase not only in the area of the Municipal Corporation, but also in ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 3 pil42.18.odt the properties. The properties were increased from 74,500, registered till 2017-18, to 1,05,000, which were found in the old municipal limits in the first stage, and out of these properties, 31,000 properties were the first time assessed.
4. Our attention is invited to Anneuxre-D to the petition, which contains the Guidelines for Fixation of Property Taxes during 2002-2017, notified to the residents of the municipal area. The entire municipal area of Akola was divided in two parts - (i) Gaothan, and
(ii) outside Gaothan. We take one example of residential property on the ground floor in the Gaothan area and outside the Gaothan having RCC construction of 'A' Class. The monthly rent for it, is shown as Rs.15/- per square meter per month, equivalent to annual letting value of Rs.180/- per square meter. So far as non-residential/commercial properties of the same type of construction and location are concerned, it is Rs.22.50 per square meter per month, equivalent to annual letting value of Rs.270/- per square meter. The area outside the Gaothan is concerned, for the same type of construction for residential purpose, it is Rs.12.50 per square meter per month, equivalent to annual letting value of Rs.150/- per square meter, whereas Rs.20/- per square meter per month, equivalent to annual letting value of Rs.240/- per square meter is for non-residential/commercial purpose for the same type of construction. ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 4
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5. It seems that in the year 2017, the task of revision of taxes was taken by the Akola Municipal Corporation and the matter was referred to the opinion of the Assistant Director of Town Planning, who divided the Akola town into four zones - A, B, C and D, and after taking into consideration the location, the purpose, the type of construction, etc., the proposal to increase in the annual rent in respect of 'A' type of construction was at Rs.24/- per square meter per month, equivalent to annual letting value of Rs.288/- per square meter, whereas for industrial/educational/dispensary purpose, it was at Rs.36/- per square meter per month, equivalent to annual letting value of Rs.432/- per square meter, and for purely commercial purpose it was at Rs.48/- per square meter per month, equivalent to annual letting value of Rs.576/- per square meter.
6. From the resolution dated 3-4-2017, as modified on 19-8-2017, impugned in this petition and relied upon by the Municipal Corporation, along with the comparative chart of the annual letting value of the properties during 2002 to 2017 and 2017 onwards, we notice the following position :
6.1 The property taxes are levied under sub-section (1) of Section 129 of the Maharashtra Municipal Corporations Act, 1949 and ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 5 pil42.18.odt also under various other laws in force.
Sr.No. Name of Tax Provision Percentage
1. General Tax Section 128A, leviable under 30%
Section 129(1)(c) of the
Maharashtra Municipal
Corporations Act, 1949.
2. Street Tax Sections 128A and 148C of the 10%
said Act.
3. Education Cess Sections 128A, 129(1)(d) and 5%
148A of the said Act.
4. Water Benefit Sections 128A and 129(1)(aa) 2%
Tax of the said Act.
5. Conservancy Tax Sections 128A and 2%
129(1)(aa) of the said Act.
6. Sewerage Sections 128A, 129(1)(bb) and 2%
Benefit Tax 131 of the said Act.
7. Employment Chapter II-A, Section 6B(a) of 5%
Guarantee Cess the Maharashtra Education and
Employment Guarantee (Cess)
Act, 1962, payable only on
non-residential premises.
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8. Maharashtra Section 4(a), Schedule A of the 6% on
Education Cess Maharashtra Education and residential
Employment Guarantee (Cess) premises
Act, 1962.
and
12% on
non-
residential
premises
9. Tree Tax Section 18 of the Maharashtra 1%
(Urban Areas) Protection and
Preservation of Trees Act,
1975.
10. Fire Service Fee Chapter IV, Section 11, 2%
Schedule II of the Maharashtra
Fire Prevention and Life Safety
Act, 2006.
The rates of taxes, namely, the Employment Guarantee Cess and the Maharashtra Education Cess, are based upon the annual letting value of the property, whereas the rates of all other taxes above are based upon the annual rateable value of the property and this we get from the submissions filed by the repsondent- Corporation on 27-9-2019 on affidavit.
6.2 The property taxes are revised for the period of five years from 2017-18 to 2021-22. It is the method of rateable value of the properties adopted as the basis for fixation of taxes and not the method of capital value.::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 7
pil42.18.odt 6.3 The resolution records that while making re-assessment during 2001-02, the rates of taxes determined in respect of the old properties were applied on the newly registered properties and the amount of the property tax levied on the old registered properties in the preceding year was increased by 60% without levying the tax on the actual area. 6.4 The area of the Municipal Corporation, Akola is divided in three zones : (a) the parts of adjoining main commercial roads,
(b) the higher and medium residential parts, and (c) the lower and slum parts.
6.5 It was decided that as per the new survey conducted for the period during 2017-18 to 2021-22, the following rates per square meter of expected annual rental value at uniform rate for all the floors on the basis of actual internal carpet area and usage and according to the details of the type of structures/classification of the properties, are prepared zone-wise as under :
Zone Expected Annual Rent -Rupees Per Square Meter as per the Number Type of Construction A B C D E Vacant plot of land 01 Rs.220/- Rs.183/- Rs.147/- Rs.59/- Rs.33/- Rs.11/- 02 Rs.196 Rs.163/- Rs.122/- Rs.49/- Rs.29/- Rs.10/- 03 Rs.163/- Rs.139/- Rs.106/- Rs.38/- Rs.24/- Rs.08/-::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 8
pil42.18.odt Particulars of Construction Type Classification Details of Property- (A) Cement Concrete Structure (RCC Framed Structure and well finished load bearing structure).
(B) Walls of cement/lime/stone/bricks, slab and slab roof of tin tiles (Load bearing structure).
(C) Walls of cement/lime/bricks and roof of tin sheets/tiles (Manglor tiles).
(D) Walls of earth and roof of tin sheets and tiles (Mud Mortar construction CI/TI roofing).
(E) Hut of Kud (Wattle and daubs). 6.6 The above-mentioned rates of annual rent are fixed for the
self-occupied properties for residential use and it is decided that if the property is actually given on rent for residential use, then the tax assessment be done at 1¼ times (i.e. 25%) of the above-mentioned rates, and at 1½ times (i.e. 50%) of the above-mentioned rates, in the case of industrial/non-residential properties actually rented. A decision has been taken in respect of maintaining all other criteria as regards assessment, as mentioned in Resolution No.5, passed in the General Body Meeting of Akola Municipal Corporation held on 3-4-2017. ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 9
pil42.18.odt 6.7 It is the decision taken that the tax shall be levied in respect of the old properties by implementing the depreciation chart according to the age of the construction as under :
Age of Depreciation Percentage in Expected Annual Letting Value construction as per the Type of Construction in Years A B C D E 11-21 yrs 5% 10% 15% 20% 20% 31 yrs. and 10% 15% 20% 25% 25% onwards 51 yrs and 15% 20% 25% 30% 30% onwards 6.8 As per the provision of sub-rule (2) of Rule 21 in Chapter VIII of the Taxation Rules under the Maharashtra Municipal Corporations Act, a decision has been taken that the above-mentioned rates shall be in force for the period from the year 2017-18 to 2021-22 or till the revision thereafter.
6.9 It was decided that the revised valuation of the tax on the old and new properties in the municipal area shall be in accordance with the provisions of Chapter XI of the Municipal Taxation read with Rules 7 and 20 in Chapter VIII of the Taxation Rules in Schedule D, framed under Section 453 of the Maharashtra Municipal Corporations Act.::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 10
pil42.18.odt 6.10 In the General Body Meetings held on 3-4-2017 and 19-8-2017, the issue regarding non-availability of documents, like actual annual rent agreement in case of the buildings in general residential and non-residential user in actual possession of the tenant, and the difficulty arising out of the discrepancy in assessment of tax on the actual rent and the expected annual rent, is discussed. It was expressed that half of the amount of actual annual rent is available in the form of tax to the Municipal Corporation in respect of Government and semi-Government undertakings, Banks, Insurance Companies, Petrol Pumps, Show Rooms, Multiplexes, etc., and such tax assessment is unfair and unjust for owners of such properties. As a result, the property-owners are showing less amount of rent in the agreement and trying to show other expenses more. In such cases, it is decided that the assessment shall be done on the actual annual rent or expected annual rateable value, whichever is more.
7. In Para 16 of the reply, it is the stand taken in categorical terms that in the town like Akola, many residential or commercial properties are given on rent without executing rent agreements. Hence, it becomes difficult to ascertain the actual rent and accordingly the letting value of the properties. It is the further stand taken that the issue was discussed in the General Body Meetings held on 3-4-2017 ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 11 pil42.18.odt and 19-8-2017 at length and to bring parity in the assessment of all the rented properties, it was resolved that the rateable value for the residential property will be 1.25 times of the self-occupied property, and for rented commercial property, it will be 1.5 times of the self-occupied property.
8. Since this was treated as a Public Interest Litigation and the challenge to the imposition of taxes is on the ground of violation of the mandatory provisions of Section 129, more particularly the second proviso below it, of the Maharashtra Municipal Corporations Act, 1949 read with Rule 7 in Chapter VIII of the Taxation Rules, we did not want the respondents to be taken by surprise on certain aspects of the matter. Hence, on 26-8-2019, after hearing the learned counsels appearing for the parties at length, we passed a detailed order. Paras 10 to 13 of the said order being relevant, are reproduced below :
"10. We wanted the respondents to furnish the justification for fixation of annual letting value of the property on illustrative basis in respect of the property having 'A' Class construction on the ground floor for residential purpose outside Gaothan area at Rs.180/- per square meter and for commercial purpose at Rs.270/- prevailing during the year 2002 to 2017. Similarly, we wanted to know the basis for enhancing this letting value to Rs.220/- for residential purpose, and Rs.330/- for commercial purpose from the year 2017 onwards, particularly in the ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 12 pil42.18.odt absence of there being any data collected in respect of leave and licence agreement, etc., as are referred to in the First Proviso below Section 129(2) of the Maharashtra Municipal Corporations Act, as has been admitted in Para 16 of their reply referred to earlier. We further wanted to know from the respondents as to what steps they have taken to exercise their power under Rules 7, 8 and 9 to 14 of the Taxation Rules, to collect the necessary information. We wanted the justification from the respondents for enhancement of the rateable value by 1.25 times and by 1.50 times of the self-occupied property for residential and commercial purposes respectively, as has been stated in Para 16 of the reply. We also wanted the justification for adding 25% in the residential annual letting value and 50% in the commercial annual letting value in the cases of properties which are actually given on rent.
11. We also wanted to know from the respondents as to whether the assessment book is maintained in respect of the property taxes, and if the same is maintained, it be produced for the perusal of this Court, if the copies of it cannot be taken out. We may not re-open the assessment, which was made during the year 2002-17, but surely the assessment book would be relevant to ascertain the basis for further fixation of annual letting rent in respect of residential or non-residential/commercial purpose, during the said period. We wanted to verify whether the assessment book is properly maintained as per the rules or not, so as to fasten the liability of payment of property tax upon the residents.
12. We have consciously passed the order, as above, for the reason that this is a Public Interest Litigation and what is ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 13 pil42.18.odt passing in our mind should be made clear to the other side so that they get an opportunity to file a reply and justify the stand already taken or to take the additional stand, if it is so advised.
13. Put up this matter on 9-9-2019 so that the respondents would come forward with the definite stand on affidavit explaining the position and placing on record the relevant material, if any, available with them to justify the action of enhancement of taxes."
9. In response to the aforesaid order, the only stand taken by the respondent Nos.2 and 3 is that one Pradipkumar Popatlal Vakharia had filed Writ Petition No.1115 of 2018 before this Court raising almost the similar contentions and claiming the reliefs as under :
"A) Allow the petition and by appropriate writ, order and directions direct the respondent no.1 to decide the representation of petitioner and others in respect of impugned resolution (Annexure 1) within specified time period. With further directions to Respondent no.2 not to take coercive steps towards the recovery of taxes on basis of enhanced tax rate, vide impugned resolution (Annexure 1) during pendency of petition with Respondent No.1.
B) During the pendency of present petition grant stay to the effect, execution & implementation, of impugned resolution (Annexure 1) by directing respondents not to take any coercive measures towards recovery of taxes on enhanced rate in the ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 14 pil42.18.odt interest of justice.
C) Grant any other appropriate relief which is deemed fit and proper in the facts and circumstances of the case in favour of the petitioner."
9.1 The aforesaid writ petition was dismissed by the Division Bench of this Court on 26-2-2018 and the said order is reproduced below :
"1. Heard.
2. Admittedly, the Municipal Council, Akola- Municipal Corporation Akola has not revised property tax after 2000-01. Hence, grievance that revision proposed on 3/4/2017 exceeds by 60% and therefore violates statutory provision, is misconceived.
3. Learned Government Pleader has pointed out that Municipal Corporation has specifically looked into this facet in Resolution dated 3/4/2017 and has noted that since 2001-02 there is no regular revision.
4. The petitioner did not come to this Court to enforce obligation of Municipal Council - Municipal Corporation to revise property tax after every five years. He has chosen to approach Government or this Court only after the Municipal Corporation started efforts to revise the property tax.::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 15
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5. It is apparent that the Municipal Corporation has to revise property tax from 2001-02 and recover the same as per law from the residents.
6. We, therefore, find present writ petition erroneous. It is dismissed. No costs."
9.2 It is, therefore, the contention that there is a bar of res judicata, which operates in entertaining and deciding this writ petition on its own merits. As the subject-matter of both the petitions is the same and the decision in earlier writ petition operates as a judgment in rem, which binds the present petitioner also, who is a sitting Corporator and belongs to the same political party, it is urged that in order to gain political mileage for contesting the forthcoming elections of Vidhan Sabha, this petition has been filed.
10. Before we proceed further on merits of the matter, we would like to decide the preliminary objection of res judicata and the another objection regarding lack of bona fides on the part of the petitioner. It is stated in the affidavit dated 3-9-2019 filed by the Corporation that the petitioner is a Municipal Councillor and wanted to contest the forthcoming Assembly elections. The filing of the present petition is to gain the political mileage. It is further stated in the same affidavit that the petitioner and his wife are paying the rent for the commercial ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 16 pil42.18.odt properties of Class 'A' construction in Zone-II at a very higher rate to their landlords since the year 2013. The copies of the rent agreements are placed on record to point out that the annual letting value of these properties is Rs.441/- per square meter, whereas the petitioner is paying the rent at the rate of Rs.689/- per square meter, and his wife is paying the rent at the rate of Rs.510/- per square meter.
11. The petitioner has filed an affidavit, as contemplated under Rule 7 of the Bombay High Court Public Interest Litigation Rules, 2010. It is stated that he is a social worker and there is no personal gain or ulterior motive in filing the Public Interest Litigation. He undertakes to pay the costs, as ordered by this Court, if it is ultimately held that the petition is frivolous or has been filed for extraneous consideration or it lacks bona fides. It is further stated that there is no civil or criminal case pending against him. The petitioner is a practising doctor, having M.D. (Medicine) Degree, and is a social worker and a Corporator of the Akola Municipal Corporation.
12. We have gone through the contents of Writ Petition No.1115 of 2018, earlier filed by one Pradipkumar Popatlal Vakharia. The main relief was in fact to seek direction to the respondent No.1- the State Government to decide the representation of the petitioner against the ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 17 pil42.18.odt enhancement of the municipal taxes. The petitioner in the said writ petition did not call upon this Court to decide the validity of the resolution dated 3-4-2017 and that was not the relief claim in the petition. The Court dismissed the writ petition in motion-hearing on 26-2-2018. We invited the attention of Shri Sohoni, the learned counsel for the Corporation, to the following portion appearing in Para 2 in the said decision :
"Hence, grievance that revision proposed on 3-4-2017 exceeds by 60% and therefore violates statutory provision, is misconceived."
We asked Shri Sohoni as to whether this was the ultimate decision of the Court to uphold the validity of the resolution dated 3-4-2017? He answers that this was the contention of the petitioner and not the adjudication by the Court. However, he submits that this Court has refused to entertain the challenge to the resolution dated 3-4-2017 on the ground that there was no enhancement of tax since 2001-02 and, therefore, no interference was called for by this Court. He does not dispute that there is no adjudication as such on the validity of the resolution.
13. In the Constitution Bench decision of the Apex Court in the case of Gulabchand Chhotalal Parikh v. State of Gujarat, reported in ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 18 pil42.18.odt AIR 1965 SC 1153, the Apex Court was dealing with the question of applicability of the principles of res judicata under Section 11 of the Code of Civil Procedure to the writ proceedings under Article 226 of the Constitution of India. In Para 53, the principles are laid down as under :
"53. In Daryao case this Court had again dealt with the question of the applicability of the principle of res judicata in writ proceedings. The matter was going through very exhaustively and the final conclusions are to be found at p. 592. We may summarise them thus:
1. If a petition under Article 226 is considered on the merits as a contested matter and is dismissed, the decision would continue to bind the parties unless it is otherwise modified or reversed by appeal or other appropriate proceedings permissible under the Constitution.
2. It would not be open to a party to ignore the said judgment and move this Court under Article 32 by an original petition made on the same facts and for obtaining the same or similar orders or writs.
3. If the petition under Article 226 in a High Court is dismissed not on the merits but because of the laches of the party applying for the writ or because it is held that the party had an alternative remedy available to it, the dismissal of the writ petition would not constitute a bar to ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 19 pil42.18.odt a subsequent petition under Article 32.
4. Such a dismissal may however constitute a bar to a subsequent application under Article 32 where and if the facts thus found by the High Court be themselves relevant even under Article 32.
5. If a writ petition is dismissed in limine and an order is pronounced in that behalf, whether or not the dismissal would constitute a bar would depend on the nature of the order. If the order is on the merits, it would be a bar.
6. If the petition is dismissed in limine without a speaking order, such dismissal cannot be treated as creating a bar of res judicata.
7. If the petition is dismissed as withdrawn, it cannot be a bar to a subsequent petition under Article 32 because, in such a case, there had been no decision on the merits by the Court."
14. In our view, the issue of res judicata raised would be guided by the principles laid down in Clauses 5 and 6 in Para 53 above and the reasons being; - (i) that the earlier decision was not inter-party judgment and the petitioner in this petition would not be found by it,
(ii) that the earlier writ petition was dismissed in limine and there was no adjudication on the validity of the resolution dated 3-4-2017, (iii) that in fact the observations of this Court in earlier ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 20 pil42.18.odt writ petition in respect of the resolution dated 3-4-2017 were uncalled for, as the petitioner did not call upon this Court to adjudicate its validity, but the relief claimed was only to direct the State Government to decide the representation of the petitioner challenging the validity, and (iv) that at any rate, the earlier decision cannot be said to be on the merits of the controversy and hence the bar of res judicata shall not apply in the present case.
15. We have no doubt about the bona fides of the petitioner. The petitioner may be a Corporator and might have attended the proceedings on 3-4-2017 and 19-8-2017, in which the decisions impugned were taken. If the petitioner and his wife are paying the rent more than the hypothetical rent assessed by the Corporation, then it was open for the Corporation to have taxed the premises accordingly, and this is what exactly the grievance raised in this petition. The petitioner volunteered to abide by all such terms and conditions which may be imposed by this Court for entertaining this petition as a Public Interest Litigation. If not the petitioner, who else can be the better person to raise voice against the decision of the Corporation with all relevant data, to the arbitrary and unreasonable levy of the property taxes upon the residents of the town, to whom he represents? Keeping in view all the facts and circumstances of this case, we do not find any mala fides or ulterior motive. The petitioner's ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 21 pil42.18.odt interest is to protect the rights of the persons to whom he represents. We, therefore, reject the preliminary objection regarding lack of bona fides on the part of the petitioner.
16. We now turn to the relevant provisions, to consider the controversy on merits. The provision of Section 129 of the Maharashtra Municipal Corporations Act dealing with the rateable value being relevant, is reproduced below :
"129. Property taxes leviable on rateable value, or on capital value, as the case may be, and at what rate.
(1) The following property taxes shall, subject to the exceptions, limitations and conditions hereinafter provided, be levied on buildings and lands in the City:--
(a) a water tax at such percentage of their rateable value or their capital value as the case may be as the Corporation shall deem reasonable, for providing a water supply for the City;
(aa) an additional water tax which shall be called "the water benefit tax" at such percentage of their rateable value or their capital value as the case may be as the Corporation may consider necessary for meeting the whole or part of the expenditure incurred or to be incurred on capital works for making and improving the facilities of water supply;::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 22
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(b) conservancy tax or the sewerage tax at such percentage of their rateable value, or their capital value, as the case may be as the Corporation may consider necessary for the collection, removal and disposal of human waste and other wastes;
(bb) an additional conservancy or sewerage tax which shall be called "the sewerage benefit tax" at such percentage of their rateable value or their capital value, as the case may be as the Corporation may consider necessary for meeting the whole or part of their expenditure incurred or to be incurred on capital works for making and improving the facilities for the collection, removal and disposal of huamn waste and other wastes.
(c) a general tax of not less than twelve per cent of their, rateable value, or of not less than 0.1 and more than 1 per centum of their capital value, as the case may be which may be levied, if the Corporation so determines together with not less than one-eight and not more than two per centum of their rateable value or of not less than 0.01 and not more than 0.2 per centum of their capital value as the case may be added to the general tax in order to provide for the expenses necessary for fulfilling duties of the Corporation imposed or arising by or under clause (5) of section 63 and Chapter XVII;
(d) the education cess, leviable under section 148A;
(e) the street tax, leviable under section 148C.
::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 23 pil42.18.odt (f) the betterment charges leviable under Chapter XVI;
Provided that the Corporation may, when fixing under section 99 or section 150 the rate at which general tax shall be levied for any official year or part of an official year, determine that the rate leviable in respect of buildings and lands or portions of buildings and lands in which any particular class of trade or business is carried on shall be higher than the rate fixed in respect of other buildings and lands or portions of buildings and lands by an amount not exceeding one-half of the rate so fixed. Explanation.-- Where any portion of a building or land is liable to a higher rate of the general tax such portion shall be deemed to be a separate property for the purpose of municipal taxation.
(2) Notwithstanding anything contained in any other provisions of this Act, but save as otherwise provided in the proviso and the Explanation to sub-section (1), the Corporation may pass a resolution to adopt levy of property tax on buildings and lands in the City on the basis of capital value of the buildings and lands on and from such date, and at such rates, as the Corporation may determine in accordance with the provisions of section 99:
Provided that, for the period of five years from the date on which such property tax is levied on capital value, the tax shall not exceed,--
::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 24 pil42.18.odt (i) in respect of building used for residential purposes, two times, and (ii) in respect of building or land used for non-residential purposes, three times,
the amount of the property tax leviable in respect thereof in the year immediately preceding such date:
Provided further that, where the property taxes levied in respect of any residential or non-residential building or portion thereof were on the basis of annual letting value arrived at considering leave and licence charges, by whatever name called, then for the purposes of the first proviso, it shall be lawful for the Commissioner to ascertain such tax leviable during such immediately proceeding year, as if such building or portion thereof were self-occupied and had been so entered in the assessment book.
Provided also that, the Corporation may determine different rates of property tax for different categories of user of a building or land or a part thereof:
Provided also that, the property tax levied on the basis of capital value of any buildings or lands, on revision made under sub-rule (3) of rule 7A of the Taxation Rules in Chapter VIII of Schedule 'D', shall not in any case exceed 40 per centum of the amount of the ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 25 pil42.18.odt property tax payable in the year immediately preceding the year of such revision.
Provided also that, for the period of five years commencing from the year of adoption of capital value as the base, for levy of property tax under this sub-section, the amount of property tax leviable in respect of a residential building or residential tenement, having carpet area of 46.45 sq. metres (500 sq. feet) or less, shall not exceed the amount of property tax levied and payable in the year immediately preceding the year of such adoption of capital value as the basis.
Explanation.--For the purposes of this section, after the Corporation adopts the capital value as the basis of levy of property tax, the property tax in respect of any taxable building shall be revised after every five years and on each such revision, such amount of property tax, shall not in any case exceed the forty per cent. of the amount of the property tax levied and payable in the year immediately preceding the year of the revision."
16.1 Sub-section (54) of Section 2 of the said Act defines "rateable value" as under:
"(54) "rateable value" means the value of any building or land fixed in accordance with the provisions of this Act and the ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 26 pil42.18.odt rules for the purpose of assessment to property taxes."
16.2 How the rateable value is to be determined, has been prescribed under Rule 7 in Chapter VIII of the Taxation Rules, and sub-rules (1) and (2) therein, being relevant, are reproduced below :
"7. Rateable value how to be determined.
(1) In order to fix the rateable value of any building or land assessable to a property-tax, there shall be deducted from the amount of the annual rent for which such land or building might reasonably be expected to let from year to year a sum equal to ten per cent of the said annual rent, and the said deduction shall be in lieu of all allowances for repairs or on any other account whatever.
(2) All plant and machinery contained or situate in or upon any building or land and belonging to any of the classes specified from time to time by public notice by the Commissioner, with the approval of the Corporation, shall be deemed to form part of such building or land for the purpose of fixing the rateable value thereof under sub-rule (1) but, save as aforesaid, no account shall be taken of the value of any plant or machinery contained or situated in or upon any such building or land."
The provision of sub-rule (1) of Rule 7 is mandatory, and in order to fix the rateable value of any building or land, the amount of ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 27 pil42.18.odt the annual rent for which such land or building might reasonably be expected to let from year to year, needs to be determined on the basis of the material collected for that purpose.
16.3 Rule 8 empowers the Commissioner to call for information or return from owner or occupier or enter and inspect assessable premises and it is reproduced below :
"8. Commissioner may call for information or return from owner or occupier or enter and inspect assessable premises.
(1) To enable him to determine the rateable value or the capital value as the case may be of any building or land and the person primarily liable for the payment of any property tax leviable in respect thereof, the Commissioner may require the owner or occupier of such building or land, or of any portion thereof, to furnish him, within such reasonable period as the Commissioner prescribes in this behalf, with information or with a written return signed by such owner or occupier,--
(a) as to the name and place of abode of the owner or occupier, or of both the owner and occupier of such building or land;
(b) as to the dimensions of such building or land, or of any portion thereof and the rent, if any, obtained for such building or land, or any portion thereof; and ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 28 pil42.18.odt
(c) as to the actual cost or other specified details connected with the determination of the rateable value or the capital value as the case may be of such building or land.
(d) as to the details in respect of any or all the items as enumerated in clauses (a) to (e) of sub-rule (1) of rule 7A, in relation to such building or land or of any portion thereof.
(2) Every owner or occupier on whom any such requisition is made shall be bound to comply with the same and to give true information or to make a true return to the best of his knowledge or belief.
(3) Whoever omits to comply with any such requisition or fails to give true information or to make a true return to the best of his knowledge or belief shall, in addition to any penalty to which he may be liable, be precluded from objecting to any assessment made by the Commissioner in respect of such building or land of which he is the owner or occupier.
(4) The Commissioner may also, for the purposes aforesaid, make an inspection of any such building or land."
17. From the aforesaid provisions, it is clear that the rates of taxes leviable under sub-section (1) of Section 129 of the Maharashtra Municipal Corporations Act are based upon the rateable value or ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 29 pil42.18.odt capital value of the property fixed in accordance with the provisions of the Act and the Rules for the purposes of assessment to property taxes. We are not concerned here in this petition with the determination of property taxes by the method of capital value, as it is not the case of the respondents. The rates of taxes fixed in the present case on the rateable value of the property for residential and non-residential use are to be determined in accordance with the method prescribed under Rule 7, reproduced above.
18. In order to fix the rateable value of any building or land assessable to a property tax, it is the amount of the annual rent in respect of such property which is required to be determined under Rule 7. The "annual rent" means the amount which such land or building might reasonably be expected to let from year to year and this is how it is defined under Rule 7 itself. Thus, unless the annual rent is determined, there cannot be fixation of rateable value. From the annual rent so determined for a year, the sum equal to 10% of it, has to be deducted in lieu of all allowances for repairs or on any other account whatever to arrive at the rateable value of any land or building assessable to a property tax.
19. Rule 9 under Chapter VIII of the Taxation Rules deals with the "assessment book what to contain", and it is reproduced below : ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 30
pil42.18.odt "9. Assessment book what to contain.
The Commissioner shall keep book, to be called "the assessment book", in such form and manner as he may with the approval of the Standing Committee, decide in which shall be entered every official year--
(a) a list of all buildings and lands in the City, distinguishing each either by name or number as he shall think fit, and containing such particulars regarding the location or nature of each as will, in his opinion, be sufficient for identification;
(b) the rateable value or the capital value, as the case may be of each such building and land determined in accordance with the provisions of this Act and the rules;
(c) the name of the persons primarily liable for the payment of the property taxes, if any, leviable on each such building or land;
(d) if any such building or land is not liable to be assessed to the general tax or is exempted form payment of property tax either in whole or in part, the reason of such non-liability or exemption, as the case may be;
(e) when the rates of the property-taxes to be levied for the year have been duly fixed by the Corporation and the period fixed by public notice as hereinafter provided, or the receipt of complaints against the amount of rateable ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 31 pil42.18.odt value or the capital value, as the case may be entered in any portion of the assessment book has expired, and in the case of any such entry which is complained against, when such complaint has been disposed of in accordance with the provisions hereinafter contained, the amount at which each building or land entered in such portion of the assessment- book is assessed to each of the property taxes, if any, leviable thereon;
(f) if, under section 134 or 135, a charge is made for water supplied to any building or land by measurement or the water-tax or charge for water by measurement is compounded for, or if, under section 137, the conservancy tax for any building or land is fixed at a special rate, the particulars and amount of such charges, composition or rate;
(g) such other details, if any, as the Commissioner from time to time thinks fit to direct."
19.1 Rule 10 requires maintenance of separate assessment-book for each ward and in parts, called as the "ward assessment-book" and all parts together constitute assessment-book. 19.2 Rule 13 under the same Chapter deals with the public notice to be given when valuation of property in any ward has been completed, and it runs as under :
::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 32
pil42.18.odt "13. Public notice to be given when valuation of property in any ward has been completed.
(1) When the entries required by clauses (a), (b),
(c) and (d) of rule 9 have been completed, as far as practicable, in any ward assessment-book, the Commissioner shall give public notice thereof and of the place where the ward assessment book, or a copy of it, may be inspected.
(2) Such public notice shall be given by advertisement in the local newspapers and also by posting playcards in conspicuous places throughout the ward or by any other mode including electronic media as the Commissioner may think fit."
19.3 In terms of Rule 14, the assessment book has to be kept open to inspection. Rule 16 deals with the time and manner of filing complaints against the amount of any rateable value, and it is required to be entered in the assessment book. Rules 17 and 18 deals with the investigation and hearing of such complaints. Rule 19 requires authentication of ward assessment-books, when all complaints are disposed of.
19.4 Rule 20 deals with the assessment-book, which may be amended by the Commissioner during the official year, and it runs as under :
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"20. Assessment-book may be amended by the Commissioner during the official year.
(1) Subject to the provisions of sub-rule (2), the Commissioner may upon representation of any person concerned or upon any other information at any time during the official year to which the assessment-book relates amend the same,--
(a) by inserting therein the name of any person whose name ought to be so inserted or any premises previously omitted;
(b) by striking out the name of any person not liable to the property tax;
(c) by increasing or reducing the amount of any rateable value or the capital value, as the case may be and of the assessment based thereupon.
(d) by altering the assessment on any land or building which has been erroneously valued or assessed through fraud, accident or mistake;
(e) by inserting or altering an entry in respect of any building erected, re-erected, altered, added to or reconstructed in whole or in part after the preparation of the assessment-book;
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(f) by making or cancelling any entry exempting any premises from liability to any property tax.
(2) Where any amendment is made under sub-rule (1) which has the effect of imposing on any person any liability for the payment of property taxes which would not be incurred but for such amendment or which has the effect of increasing the rateable value or the capital value, as the case may be of premises as stated in the assessment-book, a special written notice as provided in sub-rule (2) of rule 15 shall be given by the Commissioner and, as far as may be, the procedure laid down in rules 16, 17 and 18 shall be followed.
(3) Every such amendment shall be deemed to have been made, for the purpose of determining the liability or exemption of the person concerned in accordance with the altered entry, from the earliest day in the current official year when the circumstances justifying the amendment existed."
19.5 Sub-rule (1) of Rule 21 states that it shall not be necessary to prepare a new assessment book every official year, and sub-rule (2) requires that a new assessment book shall be prepared atleast once in every five years.
19.6 The assessment book is supposed to be an encyclopedia of the buildings and lands in the area of the Municipal Corporation and ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 35 pil42.18.odt the property taxes levied thereon. It is required to be maintained in a specific form and manner. It consists of - (i) a list of buildings and lands in the Municipal area, distinguishing each either by name or number along with the area and such other particulars regarding location or nature of each, as will be sufficient for identification, (ii) the mode and manner of determination of taxes either by a method of rateable or capital value, (iii) the actual determination of taxes for residential or non-residential use and the rates at which the taxes are levied, (iv) the names of persons or occupiers liable to pay the tax so determined, (v) the complaints and objections in respect of such determination and the decision thereon, (vi) the exemption from payment of property taxes, if granted, in full or in part with the reasons for grant of such exemption, (vii) the changes or alterations or modifications in respect of tax entries, if any, either on account of changes or alterations or modifications of structures, uses or as a result of withdrawal of exemption, and (viii) the assessment or re-assessment or revision of taxes, etc. Thus, the significance of maintaining the assessment book is apparent and in the absence of entry in it, the changes or alterations or modifications, if any, in the taxes, is made evident by such entry in the assessment-book, no demand for such taxes can be made. The requirement of maintaining such assessment-book is mandatory.
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pil42.18.odt 19.7 The Commissioner, Municipal Corporation, is armed with the power under Rule 8 to call for the necessary information or return from the owner or the occupier or to enter and inspect the assessable premises. Every owner or occupier on whom any such requisition is made is bound to comply with the same and to give true information or to make a true return to the best of his knowledge or belief. Whoever omits to comply with any such requisition or fails to give true information or to make a true return to the best of his knowledge or belief, he becomes liable to pay the penalty and can also be precluded from objecting to any assessment made by the Commissioner in respect of building or land of which he is the owner or the occupier.
20. After taking survey of the relevant provisions of the Act and the Rules on the aspect of determination of annual rent/annual letting value and the annual rateable value of the property, we proceed to consider the position of law to understand what does the expression "the amount of annual rent for which such land or building might reasonably be expected to let from year to year" used under sub-rule (1) of Rule 7 mean, in relation to the determination of the rateable value of the property.
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pil42.18.odt 20.1 In the matter of The Guntur Municipal Council v. The Guntur Town Rate Payers' Association etc, reported in (1970) 2 SCC 803, the Apex Court considered Section 82 of the Madras District Municipalities Act, 1920 dealing with the method of assessment and it provided under sub-section (2) that the annual value of lands and buildings shall be deemed to be the gross annual rent at which they may reasonably be expected to let from month to month or for year to year lease less certain deductions. The Court held that test essentially is what rent the premises can lawfully fetch if let out to a hypothetical tenant. The Municipality is thus not free to assess any arbitrary annual value and has to look to and is bound by the fair or the standard rent which would be payable for a particular premises under the Rent Act in force during the year of assessment. 20.2 In the case of Dewan Daulat Rai Kapoor v. New Delhi Municipal Council and others, reported in (1980) 1 SCC 685, the Apex Court held that the word "reasonably" in the definition is very important. What the landlord might reasonably expect to get from a hypothetical tenant, if the building were let from year to year, affords the statutory yardstick for determining the annual value. It is further held that what is reasonable is a question of fact and it would depend on the facts and circumstances of a given situation. ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 38
pil42.18.odt 20.3 In the decision of the Apex Court in the case of New Delhi Municipal Council v. Association of Concerned Citizens of New Delhi and others, delivered in Civil Appeals No(s).903-930 of 2019, it is held in Paras 77 and 79 as under :
"77. The aforesaid judgments give a clear message that annual rent is to be the one which the landlord might realize if the house was let. The criteria, thus, is the rent realizable by the landlord and not the value of the holding. The test essentially is what rent the premises can lawfully fetch if let out to a hypothetical tenant. In the Guntur Municipal Council case, this Court made it clear that having regard to the provision in the Act, the municipality was not free to assess any arbitrary annual value and has to look to and is bound by the fair or standard rent which would be payable for a particular premises under the Rent Act in force during the assessment."
"79. Even in common parlance, simple language of Section 63(1) clearly conveys that the rateable value is the annual rent which the property is likely to fetch. The yardstick is the 'letting'. Two words used in this Section convey this meaning very clearly, namely, the word 'rent' in the phrase 'annual rent' and the word 'let'. Therefore, annual rent is to be determined on the basis of the letting value which is expected reasonably. In cases where the property is already let out, actual rate at which the property is let out becomes the amount at which the land or building is reasonably expected to fetch. Exception may be those ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 39 pil42.18.odt case where the property is let out actually at a rent which is lesser than the rent it would be fetched otherwise. This is the ratio of Mehrasons Jewellers Private Limited. It was a case in respect of premises not controlled by Delhi Rent Control Act. This Court held that the annual rent received by the landlord is what willing lessee uninfluenced by other circumstances would pay to the willing lessor; actual annual rent in these circumstances can be taken as the annual rateable value of the property for assessment of property tax."
20.4 In Para 81 of the said decision, it is held that in case there is a proof and/or material to find out that the reasonable rent could have been more than at which it is actually let out, the actual rent receipt can be discarded by adopting the expected rent which, on the basis of material, can be said to be reasonable. In those cases where the property is self-occupied or is vacant and not let out, it can be gathered from the rent at which a comparable property is let out. However, in such case, there would be two situations. Going by the dicta laid down in Dewan Daulat Rai Kapoor and other cases, the reasonable rent would be the standard rent which can be determined under the provisions of the Delhi Rent Control Act. In other cases, the yardstick would be letting value of the comparable properties, i.e., the rent at which comparable properties are let out, and in such case, the criteria of fixation of standard rent has lost its relevance. ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 40
pil42.18.odt 20.5 In the decision of the Gujarat High Court in the case of Municipal Corporation of Ahmedabad v. Moti Apartment Owners Association, reported in 1994 2 GLR 1662, the question of gross rateable value in respect of self-occupied premises was considered. In Para 6 of the said decision, it is held as under :
"(6) One point however, needs to be reiterated, whether the rateable value so fixed in the case of self-occupied property can be revised at different intervals. The answer to this question is very obvious and is in the negative. The reason for this is very simple. The rateable value of self-
occupied premises has to be fixed either by determining hypothetical rent on the basis of the reasonable return of the cost of construction and the cost of land or on the basis of properties which are let and which are similar in nature. Once determination takes place by applying the said principle, the said rateable value cannot possibly undergo any change. As long as the premises remain in self-occupation, the rateable value for the succeeding years will have to be that which was determined in accordance with law for the first year. The only occasion when the Corporation or the municipality will get a right to revise the rateable value will be, if the owner occupant makes additions or alterations or incurs any capital expenditure on that property itself. It has to be clearly understood that carrying out minor repairs or white-washing cannot be regarded as a capital expenditure so as to permit ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 41 pil42.18.odt enhancement of rateable value. A question may also arise whether a rateable value can be increased in case of change of ownership. Here again the rateable value is relatable to the property in question and if the premises continued to be the self-occupied property by the new owner, change in the ownership would not and should not ipso-facto result in the increase of the rateable value. It is only if further additions or alterations are undertaken and capital expenditure incurred by the new owner, can there be any change in the rateable value of selfoccupied premises."
21. The principles laid down in all the aforesaid decisions in respect of fixation of annual rent or annual letting value of the property, as we have understood, can be summarized as under :
(a) The expression similar or identical to one that "the annual rent for which such land or building might reasonably be expected to let from year to year" has been construed by the Apex Court to mean "the rent which the premises can lawfully fetch, if let out to a hypothetical tenant, from year to year" and the reasonable rent is construed to mean a fair or standard rent determinable under the provisions of the Rent Control legislation, if any, prevailing in the area.::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 42
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(b) In the area where no such Rent Control legislation is in force, it would be the annual rent which the willing lessee, uninfluenced by the other circumstances, would pay to the willing lessor, shall be understood by the expression "the annual rent for which such land or building might reasonably be expected to let from year to year." It is held that what is reasonable is a question of fact to be determined in the facts and circumstances of a given situation. In other words, the yardstick would be letting value of the comparable properties, i.e. the rent at which the comparable properties are let out, and in such case, the criteria of fixation of standard rent loses its significance.
(c) It is held that the Corporation or Municipality is bound by the fair or standard rent, in case where it is determinable as per the provisions of the Rent Control legislation, if any, in force or to determine a reasonable rent where such legislation is not in force. It is made clear that it is the rent realizable by the landlord which cannot be confused with the value of the property.
(d) The rateable value of self-occupied premises has to be fixed either by determining hypothetical rent on the basis ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 43 pil42.18.odt of the reasonable return of the cost of construction and the cost of land or on the basis of the properties which are let and similar in nature.
(e) Once the rateable value of the self-occupied property is fixed, it cannot possibly undergo any change or revision at different intervals as long as the premises remain in self occupation. The rateable value for the succeeding years will have to be that which was determined in accordance with law for the first year.
(f) The occasion when the Corporation or the Municipality will get a right to revise the rateable value of the self-occupied property will be if the owner or the occupant makes additions or alterations or incurs any capital expenditure on that property itself, but carrying out the minor repairs or whitewashing cannot be regarded as the capital expenditure so as to permit the enhancement of the rateable value. The change in the ownership would not and should not ipso facto result in the increase of the rateable value.
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(g) In the cases where the property is actually let out, the actual rate at which the property is let out becomes the amount at which the land or building is reasonably expected to fetch. However, the exception may be the cases where the property is let out actually at a rent which is lesser than the rent it would be fetched otherwise.
22. Now we proceed to consider the facts of this case. The assessment-book in respect of re-assessment of property tax in the Akola municipal area prior to 2001-02 is not available. The Corporation is also unable to state before us the mode and manner in which the taxes were levied during the said period. 22.1 There was enhancement in the property taxes by 60% levied on the old properties in the preceding year of 2001-02, without ascertaining the actual area, and this is noted in the resolutions impugned in the petition. In the affidavit dated 3-9-2019, it is stated that the guidelines were prescribed on 28-8-1991 by the Director of Town Planning, Maharashtra State, Pune, to fix the rateable value of the properties used for residential and commercial purposes on the higher side than the properties used for residential purposes. These guidelines are followed by the Akola Nagar Parishad and also by the Akola Municipal Corporation after its formation in the year 2001. ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 45
pil42.18.odt 22.2 Our attention is invited to Annexure D, containing the guidelines for the knowledge of the residents, in respect of the taxes to be levied on the properties in the Municipal Corporation area during 2001-02. The area is divided in two parts, namely, (i) Gaothan area, and (ii) the area outside Gaothan. It contains the municipal rent per square meter in respect of the residential and non-residential/commercial properties in the aforesaid areas. The formula applied for arriving at the annual rateable value is given as under :
[I] Carpet area in sq.mtr. x monthly rent = Monthly rent x 12 = Annual letting value.
[II] Annual letting value - 10% on account of all allowances for repairs = Annual rateable value.
[III] Annual rateable value x percentage of tax (for residential purpose: 44 to 48%, and for non-residential/commercial use:
47 to 57%).
Note :
1. The carpet area does not include the areas of toilet, bath-room, open gallery, open porch, and staircase, which are exempted from tax.
2. The aforesaid annual letting value is in respect of the property, which is self-occupied. However, if the property is actually let out, then the taxes would be either on the basis of the annual letting value or the annual rateable value, as determined aforesaid, whichever shall be higher.::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 46
pil42.18.odt 22.3 We have also gone through the chart on Page No.363 (Annexure R2-17) filed along with the affidavit dated 7-8-2019 by the Corporation, which contains the Rate Table No.1 - 1A for the period 2002 to 2017 in respect of the residential and non-residential properties in two parts of the municipal area, i.e. - (i) Gaothan area, and (ii) the area outside Gaothan. The annual rateable value in respect of such properties is determined on the basis of the nature and type of construction, divided in four parts, i.e. ground, first, second and third floors. Illustratively, we may note the annual rateable value of Rs.180/- per square meter for Class 'A' construction on the ground floor outside the Gaothan area for residential purposes, and Rs.270/- per square meter for the same class of construction and area for non-residential purposes.
22.4 What we find from the resolutions impugned in this petition is that the division of the municipal area in two parts, i.e.
(i) Gaothan, and (ii) outside Gaothan, and the division of building in parts, like ground, first, second and third floors, for fixing different annual letting value during 2002 to 2017, was done away with. The municipal area is divided in three zones, namely, (I) the parts adjoining the main commercial roads, (II) the higher and medium residential parts, and (III) the lower and slum parts, which are classified in the type and nature of structures/constructions in six categories, including ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 47 pil42.18.odt the vacant plots, which are already stated. Thus, there is change in the division of the municipal area and uniformity in rates of all the floors of building, which is different in 2017 from the division in 2001-02.
22.5 The comparative statement on Page No.362 (Annexure R2-17) also contains the Tax Table No.3, finalized as per Resolution No.6 in the meeting dated 19-8-2017. It determines the annual letting value of the properties in Zone-I for Class 'A' construction at Rs.220/- per square meter for self-occupied residential premises, whereas for self-occupied non-residential/commercial premises, it is enhanced by 50% above Rs.220/- and determined at Rs.330/- per square meter. There is an increase in the annual rent of the residential self-occupied property from Rs.180/- per square meter in 2001-02 to Rs.220/- per square meter in 2017-18, and for non- residential self-occupied property, it is from Rs.270/- per square meter in 2001-02 to Rs.330/- per square meter for the same type of construction in the same area.
22.6 Our attention is invited to Annexure-C, which contains the guiding principles for the knowledge of the residents for determination of annual letting value of the property in the municipal area in the year 2017-18 onwards. It contains the formula adopted as under : ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 48
pil42.18.odt [I] Carpet area in sq.mtr. x Annual rent = Expected annual letting value.
[II] Annual letting value - depreciation on account of allowances for repairs = Rateable value.
This does not contain the note for exemption from carpet area for depreciation, namely, the areas of toilet, bath-room, open gallery, open porch, and staircase. It is not disputed that the rates fixed are in respect of the self-occupied properties and the decision is to enhance the rateable value by 1.25 times if the residential premises are actually let out, and by 1.50 times if the non-residential/commercial premises are actually let out.
22.7 It is also the decision taken on 19-8-2017 that after arriving at the annual letting value in 2017-18, there shall be deduction in respect of the old properties on account of depreciation as per the rates determined, keeping in view the age of the construction.
This was not the deduction provided in previous assessment in 2001-02. The depreciation percentage in expected annual letting value for Class 'A' construction of the age of 11 to 21 years prescribed is 5% and the different percentages are prescribed for different types of constructions, looking to the age of the construction. After deducting the value of the depreciation, the amount of 10% of the annual letting value of the property is to be deducted on account of ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 49 pil42.18.odt allowances for repairs in order to arrive at the annual rateable value. 22.8 The claim of the respondent- Corporation is that there was a pressing and extreme need for setting up the efficient, qualitative and stronger tax recovery system. Therefore, a decision was taken to engage some expert agency in the larger interest of the Akola City to assist and help the officers of the Corporation. Accordingly, e-Tender notice dated 18-10-2016 was published, inviting tenders for appointment of the Technical Consultants for conducting the conventional comprehensive door-to-door survey of lands and buildings in the municipal area and capturing all details and parameters of the properties subjected to levy and collection of property tax. The selected agency was to provide the property numbers on the satellite imaginary and linking the property tax and basic information on the satellite image of the property for quick reference by providing the integrated property information on GIS Module in the software to be provided for property tax assessment. On the basis of the information so gathered from the agency, notices were issued to the property tax owners/occupiers. The objections were invited and ultimately the decision was taken to fix the annual letting value.
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pil42.18.odt 22.9 It is the stand taken on affidavit that a request was made to the Assistant Director of Town Planning, Akola, to propose the rates of the expected annual letting value and the rateable value of the properties for various categories of buildings, depending upon their age, location, type of construction, use, etc., within the limits of the Akola Municipal Corporation, and accordingly such rates were proposed on 1-1-2016 (Annexure 7). The official note at Annexure was prepared by the Municipal Commissioner for the assessment of property tax for the period from 2017-18 to 2021-22, and this was all considered in the meeting of the General Body of the Corporation on 3-4-2017. The annual letting value of the properties was finalized for residential and non-residential purposes along with the aforestated formula to be adopted. In the next General Body Meeting held on 19-8-2017, the decision taken on 3-4-2017 was modified.
23. We now propose to proceed to deal with the question as to whether the method of determination of annual letting value of the properties for residential and non-residential purposes within the Akola Municipal Corporation area for a period of five years from 2017-18 to 2021-22 on the basis of the resolutions passed in the General Body Meeting held on 3-4-2017, as modified on 19-8-2017, can be said to be legal, valid, proper and in accordance with the provisions of the Act and the Rules framed thereunder.
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pil42.18.odt 23.1 What we find from the resolution dated 3-4-2017 is that in the re-assessment done in the year 2001-02, the rates of the taxes determined in respect of the old properties were applied on the newly registered properties and the amount of the property tax levied on the old registered properties in the preceding year was increased by 60% without levying the tax on the actual area. In our view, this uniform increase in the taxes by 60% is arbitrary, unreasonable and without any basis. This is not the mode and manner prescribed for determination of the taxes under sub-rule (1) of Rule 7 in Chapter VIII of the Taxation Rules. We are of the view that in the absence of any material produced on record, i.e. (i) the actual carpet area of the property, and (ii) the actual collection of material indicating the amount of monthly rent for which such land or building/premises might reasonably be expected to let from year to year, as required by sub-rule (1) of Rule 7, the taxes levied or the annual rent of the property fixed during the year 2001-02, cannot be the basis for determination of the taxes for the period of five years from 2017-18 to 2021-22.
23.2 Our attention is invited to the survey conducted in the year 2016 by appointing a private agency to collect the information only in respect of - (i) the area subjected to tax, (ii) the nature of ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 52 pil42.18.odt construction, (iii) the zone in which the property is located,
(iv) whether the property is self-occupied or actually let out; and if it is let out, the portion of the area of it, (v) whether the property used for residential or non-residential purposes, and (vi) the additions or alterations made in the existing property. The survey is conspicuously silent in respect of the amount of annual rent for which such property might reasonably be expected to let from year to year. There is no inquiry in respect of fair or standard rent of the properties. There is also no survey conducted to collect the annual letting value of the comparable properties in the municipal area, used for residential or non-residential purposes. Wherever it is found that the property is actually let out and is in possession of the tenant, no material is collected to show the actual rent paid for the area occupied by the tenant. In the absence of any such material being collected and available in support of the property taxes for a period of five years from 2017-18 to 2021-22, the determination of the properties taxes becomes invalid, as it is contrary to the mandatory provision of sub- rule (1) of Rule 7 in Chapter VIII of the Taxation Rules, and cannot be sustained.
23.3 The resolutions impugned in this petition and the stand taken in Para 16 of the reply filed by the Corporation show that many residential and non-residential/commercial properties are given on ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 53 pil42.18.odt rent without executing the rent agreements and, therefore, the difficulty arises in the assessment of the tax on the actual rent and the expected annual rent. It is for this reason that the different rates are fixed hypothetically, depending upon the nature of construction and the zone in which the properties are located. The annual rent is fixed hypothetically at Rs.220/- for self-occupied residential property. It is increased by 50% for self-occupied non-residential property, which is fixed at Rs.330/-. Wherever the properties are actually let out for residential purposes, the enhancement is at the rate of 25% in respect of the residential properties, and 50% in respect of the non-residential properties over the annual letting value, already fixed as per the table. In our view, this is not the relevant criteria for the determination of the property tax in respect of the premises, which are actually let out. Such determination, according to us, is arbitrary and unreasonable and, therefore, cannot be sustained.
23.4 It is unbelievable that during the survey conducted, the Corporation could not get even a single rent agreement either in respect of the residential or non-residential properties actually let out. On 26-8-2019, we had passed a specific order to point out to this Court the steps taken to collect the information by invoking the power under Rule 8 in Chapter VIII of the Taxation Rules. In our view, if the owner or the occupier was reluctant to furnish the copies of the rent ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 54 pil42.18.odt agreements, there was more the reason to invoke power under Rule 8, to call for such information. We cannot, therefore, accept the reasoning of non-availability of the documents to fix the annual letting value of the properties used for the residential or non-residential purposes.
23.5 In view of the law laid down by the Apex Court, if the rent agreements were not available, the method prevailing for determination of fair or standard rent under the provisions of the Maharashtra Rent Control Act, 1999 applicable in the area should have been adopted to fix the annual letting value of the properties. If the Rent Control legislation is not applicable, then the material has to be collected to demonstrate the annual rent, which the willing lessee, uninfluenced by the other circumstances, would pay to the willing lessor, or the letting value of the comparable properties to fix the annual letting value of the properties. This could have been done by invoking the power under Rule 8 in Chapter VIII of the Taxation Rules. This, having not done in the present case, the determination of the annual letting value of the properties at the uniform rate cannot be sustained.
23.6 The formula adopted for determination of the rateable value of the property indicates the carpet area in square meter to be ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 55 pil42.18.odt multiplied by the annual letting value. By way of illustration, we take the details of the property tax in respect of the residential self-acquired property of one Shubhda Prabhakarrao Pimputkar on Page No.366, which indicate that the carpet area taken into consideration, also includes the areas of washing place, toilet and, bath-room, required to be excluded from levy of taxes in accordance with the formula adopted to determine the annual rateable value of the property. The actual carpet area of this property is shown to be 47.95 square meters multiplied by the rate of Rs.220/- per square meter to arrive at the annual letting value of Rs.10,549/-. After deducting the depreciation of Rs.527/- at the rate of 5%, the annual letting value is arrived at Rs.10,022/-, from which an amount of 10% towards repair allowances of Rs.1,002/- has been deducted and the annual rateable value in respect of it, is arrived at Rs.9,020/-. This is not the end of the matter, but the statement takes into consideration 7.15 square meter area, consisting of the areas of washing place, toilet and bath-room, and it is multiplied by the annual rent of Rs.220/-, to arrive at the annual rent of Rs.1,573/-. From this amount, a sum of Rs.79/- towards 5% depreciation is deducted and the annual letting value of Rs.1,494/- is arrived at. An amount of Rs.149/- is deducted from this amount towards 10% for allowances for repairs and the annual rateable value is arrived at Rs.1,345/-, which is added in the amount of Rs.9,020/- and the actual annual rateable value is arrived at ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 56 pil42.18.odt Rs.10,365/-, on which the taxes are imposed in different rates. Such is the determination of the property taxes in respect of all similar properties in the municipal area, which, in our view, is in contravention of the formula adopted and cannot be sustained. 23.7 On over-all view of the matter, what we find is that at no point of time, whether before the constitution of the Akola Municipal Corporation or subsequent thereto, no efforts were made to collect the information by invoking the power under Rule 8 in Chapter VIII of the Taxation Rules to determine the annual rent separately for each of the premises used for residential and non-residential purposes, whether self-occupied or rented, in accordance with sub-rule (1) of Rule 7 in Chapter VIII of the Taxation Rules. No efforts are made to determine the fair or standard rent for such properties. No material is collected to determine the annual letting value on the basis of the comparable properties in the municipal area. The method adopted by the resolutions dated 3-4-2017 and 19-8-2017 is totally arbitrary, unreasonable and not based upon any valid relevant criteria. The Corporation has failed to substantiate the fixation of annual rent in respect of the properties for residential and non-residential purposes on the basis of the provisions of the Act and the Rules. We cannot, therefore, sustain such determination and it will have to be set aside. ::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 57
pil42.18.odt 23.8 Though we have decided to set aside the assessment of the property tax in respect of the properties situated in the Akola Municipal Corporation area for a period of five years from 2017-18 to 2021-22, we will not direct refund of the amount which is already collected by the Corporation and the amount received can be adjusted after the fresh determination of the taxes in accordance with the provisions of the Act and the Rules framed thereunder.
24. In the result, this petition is allowed and the following order is passed:
1. The assessment of the property tax by the Akola Municipal Corporation for a period of five years from 2017-18 to 2021-22 for residential and non-residential purposes in the entire area of the Akola Municipal Corporation and recovery made in accordance with that, is hereby quashed and set aside.
2. The Akola Municipal Corporation is at liberty to initiate fresh steps for determination of the property tax in accordance with the principles of law laid down by various decisions, as are summarized in Para 21 above.::: Uploaded on - 09/10/2019 ::: Downloaded on - 10/10/2019 04:17:56 ::: 58
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3. There was no stay granted for recovery of the property tax fixed by the Corporation for a period of five years from 2017-18 to 2021-22 and, therefore, we permit the Corporation to go ahead with the recovery of the said tax as a stop-gap arrangement, subject to adjustment of the amount, if any, recovered in excess towards the recovery of tax, which shall be levied in accordance with law. This shall be without prejudice to the rights of the parties.
4. The fresh process to be completed within a period of one year from today, failing which, the property taxes at the rates prevailing during 2002-2017, shall be collected till the fresh determination of property taxes in the Corporation area.
5. The Corporation, while adjusting the amount of tax recovered in excess, shall provide an incentive, if it is permissible in law, for payment of property tax in advance.
25. Rule is made absolute in the aforesaid terms. No order as to costs.
(Vinay Joshi, J.) (R.K. Deshpande, J.)
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