Punjab-Haryana High Court
Sukdev Aggarwal And Others vs State Of Haryana And Others on 7 August, 2013
Author: Rajive Bhalla
Bench: Rajive Bhalla
CWP No.16259 of 2013 -1-
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
CWP No.16259 of 2013
Decided on: 07.08.2013
Sukdev Aggarwal and others ..... Petitioners
VERSUS
State of Haryana and others ..... Respondents
CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA
HON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON
Present: Mr.Anurag Jain, Advocate, for the petitioners.
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RAJIVE BHALLA, J.
The petitioners pray for issuance of a writ of certiorari quashing notification dated 21.06.2012 as ultra vires of the Constitution of India and the Haryana Municipal Corporation Act, 1994 (hereinafter referred to as the '1994 Act'). The petitioners also pray that the Haryana Municipal Corporation (Amending) Act, 2012 (hereinafter referred to as the 'Amending Act') and the consequential notification dated 01.10.2012 be declared ultra vires of the Constitution of India. The petitioners also pray that assessment notice-cum-bill of property tax dated 13.05.2013, may be quashed.
The petitioners, in essence, seek to challenge property tax, the mode and method of its imposition, the procedure for assessment and the entire scheme of the Amending Act.
Counsel for the petitioners submits that a Municipal CWP No.16259 of 2013 -2- Committee is a unit of local administration created initially under the Punjab Municipal Act, 1911 and after creation of the State of Haryana, under the Haryana Municipal Act, 1973. By virtue of the 74th Amendment to the Constitution of India, the word Municipalities was introduced in part IX-A, Chapter VI by adding 243P to 243ZG to Constitution of India, to provide a Constitutional basis for Municipal Councils and Corporations etc. The State of Haryana, therefore, enacted the Haryana Municipal Corporation Act, 1994 to provide for establishment of Municipal Corporations. The urban area of Hisar which was initially a Municipal Committee, has been upgraded to a Municipal Corporation w.e.f. 17.03.2010. One of the main sources of income for a municipality or a corporation is house tax which was imposed on the basis of annual value of a building, to be calculated by the Municipal Corporation. The annual value was charged to taxes ranging from 2½ % to 15%. The State of Haryana issued a notification dated 30.09.2003 increasing the tax on residential buildings and providing for tax exemptions etc. but by way of notification, dated 21.06.2012, altered the mode and manner of imposing and calculating house tax w.e.f. 01.04.2010. The system of assessing house tax on the basis of annual value was discarded, the participation of assessee was done away with and the Collector rate was notified as the foundation of calculating property tax. As the notification lacked statutory backing the State of Haryana enacted the Amending Act which came into force w.e.f. 01.10.2012. The State CWP No.16259 of 2013 -3- of Haryana issued a new notification, dated 28.01.2013, in terms of earlier notification. The petitioners have received an assessment notice-cum-bill of property tax for the respective premises demanding tax from 2011-12 to 2013-14.
Counsel for the petitioners submits that the Amending Act and notifications issued thereunder are illegal and void as they are violative of Article 265 of the Constitution. It is further submitted that broadly speaking, there are three components of a tax:
levy of tax by enacting a charging provision, a procedure for assessment, and a procedure for collection of tax. A perusal of the Amending Act, reveals that the component of assessment has been done away with. The provisions of the original Act, provide for preparing an assessment list, inviting objections etc. has been deleted, thereby rendering imposition of tax illegal and violative of rights of the petitioners. The Amending Act does not provide for an assessing authority and does not lay down any mechanism to resolve a dispute between an assessee and the corporation. The absence of an assessing authority renders provisions of the Amending Act a fait accompli, without any right to the assessee to raise objections to the proposed demand. The provision of appeal is meaningless and illusory as there are no original proceedings. It is further submitted that as the Amending Act has come into force with retrospective effect and assessees have already paid tax for this period, the Amending Act is illegal and void. It is further submitted that though CWP No.16259 of 2013 -4- the Amending Act is a taxing statute but it cannot be assigned retrospective operation, particularly, as the tax has already been imposed, paid and collected. The Amending Act as well the notifications issued thereunder are violative of Article 14 of the Constitution as equals have been treated unequally for no tenable reason whatsoever. The exemptions granted have been enacted without application of mind, particularly, with respect to widows and war widows and schemes notified by the Government. It is further submitted that owners of houses upto 500 square feet have to pay a tax of Re.1 per square yard whereas houses above 250 square yards have been burdened with a hefty tax based upon collector rate multiplied by a specified multiplier. Exemptions for educational buildings, scheduled caste and newly constructed buildings have also been done away with. Agricultural land within municipal limits which was earlier exempted has been made amenable to payment of property tax.
We have heard counsel for the petitioners, perused the Amending Act as well as the impugned notifications and find no reason to hold that either the Amending Act or the notification are ultra vires of any provision of the Constitution, violative of any fundamental right, principles of natural justice or any right vested in the petitioners. Before we deal with the arguments, it would be necessary to point out that a large number of pleas have been raised in the pleadings but arguments have been addressed on issues CWP No.16259 of 2013 -5- referred to in the preceding paragraphs.
The petitioners' first argument that "property tax" violates Article 256 of the Constitution, is as vague as it is incomprehensible. The petitioners have not advanced any clear or cogent argument for us to record a finding as to in what manner the imposition of property tax infringes Article 256 of the Constitution of India. We fail to comprehend as to how this tax is violative of Article 256 of the Constitution but in our endeavour to discern any violation of Article 256 of the Constitution, have perused the Amending Act but are unable to make out any violation of Article 256 of the Constitution or the absence of authority of law that would render imposition of property tax violative of Article 256 of the Constitution. The mere change of nomenclature from "house tax" to "property tax" does not amount to imposition of a new tax.
The Amending Act has by Section(1) of Section 87 imposed "property tax" in place of old "house tax" in the following terms: -
"(a) a property tax payable by the owner or occupier of building and land at the rates notified by the Government, from time to time depending upon the area in which the building or land is situated, its location, purpose for which it is used, its capacity for profitable use, quality of construction and other relevant factors."CWP No.16259 of 2013 -6-
A perusal of the aforementioned provision reveals that property tax is payable by the owner or occupier of building or land subject to terms and conditions set out in the said provision and at rates to be notified by the Government, from time to time. The absence of any discernible infraction of any provision of the Constitution of India, does not enable us to hold that the imposition of "property tax" violates any provision of the Constitution.
Counsel for the petitioners has correctly urged that a tax consists of three components namely; declaration of exigibility to tax, a procedure for assessment, and collection of tax but we are unable to accept his argument that the Act does not provide a procedure for assessment.
Section 87A of the Amending Act provides for self- assessment of tax and reads as follows: -
"87A.-Self assessment of tax- Notwithstanding anything contained in this Act, every person liable to pay the property tax shall himself calculate the tax of the building or land according to the procedure notified in this regard, of which he is either owner or the occupier at the rates notified under clause (a) of sub-section (1) of section 87."
The Amending Act, places an obligation upon a person liable to pay "property tax", to calculate the tax in accordance with provisions of the Act and rates notified by the Government. The old CWP No.16259 of 2013 -7- system of assessing "annual value" preparing lists, inviting multiple objections, followed by an assessment made by the local body, has been done away with replacing it with a system which requires an assessee to file a return of property tax after self-assessment. The petitioners' submission that the procedure for assessment has been done away with, in our considered opinion, is, therefore, not tenable. The archaic and convoluted process for assessment followed under the un-amended Act, has been replaced by a system of self- assessment, a procedure followed under almost all taxation statutes like the Income Tax Act etc. We are unable to accept the petitioners' submission that the amendment does not provide for a procedure for assessment or that the procedure for assessment renders imposition of property tax illegal and void.
The petitioners' contention that the system of "assessing annual value", has been discarded and replaced by a property list, which is inherently illegal, cannot be accepted. The property list prepared would form basis for considering the return of self- assessment to be filled by a person liable to pay property tax. The petitioners' contention that the Amending Act as well as notifications issued thereafter have been given retrospective operation, must also fail as it is an established principle of law that a taxing statues can be enacted retrospectively particularly to validate a tax already levied and collected. The validating clause enacted by the Amending Act, with retrospective effect, in our considered opinion is neither illegal CWP No.16259 of 2013 -8- nor void and as there is no violation of any provision of the Constitution much less the rights of the petitioners, and cannot be followed.
In view of what has been stated hereinabove, the writ petition dismissed in limine.
[ RAJIVE BHALLA ]
JUDGE
07.08.2013 [ DR. BHARAT BHUSHAN PARSOON ]
shamsher JUDGE
Singh Shemsher
2013.09.26 14:55
I attest to the accuracy and
integrity of this document
Chandigarh