Punjab-Haryana High Court
Indian Oil Corporation Ltd. vs Commissioner, Jalandhar Division And ... on 13 December, 1996
Equivalent citations: (1997)115PLR545
Author: R.L. Anand
Bench: R.L. Anand
JUDGMENT R.L. Anand, J.
1. By this judgment I dispose of three writ petitions No. 5923 of 1988 titled 'Indian Oil Corporation Ltd. v. Commissioner, Jalandhar Division's No. 5926 of 1988 titled 'Indian Oil Corporation Ltd. v. Commissioner, Jalandhar Division' and bearing No. 5914 of 1988 titled 'Indian Oil Corporation Ltd. v. Commissioner, Jalandhar Division' as in the opinion of this Court all the three writ petitions can be disposed of by one judgment.
2. In writ petition No. 5923 of 1988, filed by the Indian Oil Corporation Ltd. (Hereinafter called the Corporation), it has been prayed for the issuance of necessary directions to the respondents by quashing the impugned orders contained in Annexures P.3 and P.4
3. The case set up by the Corporation is that it has its depot in Suchi Pind Area now falling within the municipal limits of corporation, Jalandhar. The Municipal Corporation owned and possessed property denoted as house No. B-17-38 which consists of some residential house. Oil Storage Tanks. Non-residential building and sheds. The Municipal Corporation, respondent No. 2 issued a notice under section 103 of the Punjab Municipal Act, 1976 proposing to impose house-tax at the rateable value to Rs. 9,82,800/-. Objections were filed to the proposed amendment. Inspite of objections, the Executive Engineer of the respondent No. 2 rejected the objections and assessed the rateable value; w.e.f. 25.8.83 at Rs. 16,26,647/- vide orders dated 13.11.84, Annexure P.3. The petitioner filed an appeal before the Commissioner against the said assessment order, but the Commissioner, Jalandhar Division Jalandhar, dismissed the appeal vide Annexure P.4. Now challenge has been given in this writ petition to Annexure P.3 and P.4 on the ground that no tax can be levied on the tanks of the corporation. No tax can be levied on the tanks which are placed on the land without being attached to the land or fixed with the land. Such tanks do not fall within the definition of building as contained in Section 2(3) of the Punjab Municipal Corporation Act, 1973. The respondent-authorities failed to formulate the correct legal principles governing the facts of the case and committed a grave error in not relying upon a judgment of Bombay High Court reported as 1974 Bombay Law Reporter 314, wherein a similar storage tanks belonging to the petitioner Corporation situated within the Municipal Corporation limits, Bombay were held not to be building. It was also pleaded that property in dispute is situated within the municipal limits of Jalandhar, Municipal Corporation and that the provisions of East Punjab Urban Rent Restriction Act are applicable in the locality and, therefore, the annual rental value would not be determined at a rate more than the standard rent payable for the building. The determination of rental value in total disregard to the said provision, is illegal. The rateable annual value has been determined arbitrarily, without disclosing any basis and, therefore, cannot be assessed in law. No additions or alterations have been effected after 24.4.84, the date on which the house-tax assessment was framed in the year 1983-84.
4. In writ petition No. 5926 of 1988, the challenge is to the documents Annexures P.3 and P.4 the orders passed by the Executive Engineer on 24.4.84 and by the Commissioner, Jalandhar Division, on 24.11.1987. In this case, the rateable value of the building has been assessed w.e.f. 25.8.83 at Rs. 9,36,351/- vide impugned orders Annexure P.3 dated 24.4.84 and the ground of attack to the orders Annexure P.3 and P.4 are the same which are contained in writ petition No. 5923 of 1988.
5. In writ petition No. 5914 of 1988, the challenge has been given to the documents Annexures P. 2 and P.4 and it has been alleged by the petitioner Corporation that it is a licencee of land from Union of India and has installed underground tanks for storage of petroleum product. The Municipal Corporation with a view to assess and impose house-tax initiated proceedings under the Punjab Municipal Act, 1911 and the Executive Officer passed an order on 17.3.1976 fixing the annual rental value for the purpose of levying house-tax at Rs. 1,05,521/-. The petitioner corporation filed civil writ petition No. 213 of 1981 wherein the said assessment was impugned. Said writ petition was dismissed in limine on 1.4.1981. The Corporation filed a Special Leave Petition in the Hon'ble Supreme Court, which was dismissed by reserving opportunity to the petitioner to raise all points available to it in respect of taxes due from 1.4.1983 onwards. In pursuance to the notification inviting objections to the assessment, and adoption of rateable value for the year 1984-85, the petitioner submitted objections as per judgment of the Supreme Court and those objections were rejected by the Assistant Commissioner Municipal Corporation vide orders dated 10.10.1984 Annexure P.2. The appeal of the Corporation was also declined vide Annexure P.4 on 24.11.1987. The challenge has been given to both these orders, by agitating the same reasons which have been advanced in the earlier two writ petitions with one additional ground that the authorities could not assess the house-tax by applying the principles that the Corporation is to be assessed as per the provisions of Public Premises Act. Rather, in the opinion of the petitioner it could only be assessed as per provisions of East Punjab Rent Restriction Act.
6. Notice of the three writ petitions was given to the respondents. No written statement was filed but the three writ petitions have been contested during the course of arguments.
7. I have heard Shri S.C. Kapoor, Advocate, on behalf of the petitioner and Shri I.P.S. Doabia, Advocate, on behalf of respondent No. 2 and with their assistance have gone through the record of this case.
8. Section 93 of the Punjab Municipal Act, 1976 lays down as follows:-
Determination of rateable value of lands and buildings assessable to taxes: Subject to the rules, if any, made by the State Government in this behalf, the rateable value of any land or building assessable to taxes specified in Section 91 shall be:
(a) in the case of land, the gross annual rent at which it may reasonably by expected to let:
(b) in the case of any building, the gross annual rent at which such building, together with its appurtenances and any furniture that may be let for use for enjoyment therewith, may reasonably be expected to let, subject to the following deductions:-
(i) such deduction not exceeding 20 per cent of the gross annual rent as the Commissioner in each particular case may consider a reasonable allowance on account of the furniture let therewith:
(ii) a deduction of 10 per cent for the cost of repairs and for all other expenses necessary to maintain the building in a state to command such gross annual rent. The deduction under this sub-clause shall be calculated on the balance of the gross annual rent after the deduction (if any) under sub-clause (i):
(iii) where land is let with a building, such deduction, not exceeding 20 per cent, of the gross annual rent, as the Commissioner in each particular case may consider reasonable on account of the actual expenditure, if any, annually incurred by the owner on the upkeep of the land in a state to command such annual rent.
Explanation I. For the purposes of this clause it is immaterial whether the house or building, and the furniture and the land let for use or enjoyment therewith, are let by the same contract or by different contracts, and if by different contracts whether such contracts arc made simultaneously or at different times.
Explanation II. The terms "gross annual rent" shall not include any tax payable by the owner in respect of which the owner and tenant have agreed that it shall be paid by the tenant.
(c) In the case of any building, the gross annual rent of which cannot be determined under clause (b), 5 per cent on the sum obtained, by adding the estimated present cost of erecting the building less such amount as the Commissioner may deem reasonable to be deducted on account of depreciation (if any) to the estimated market value of the site and any land attached to the building:
Provided that:
(i) in the calculation of the rateable value of any premises no account shall be taken of any machinery thereon:
(ii) when a residential building is occupied by the owner or is not let the rateable value shall be fifty percentum of the annual market rent prevalent at the time of assessment in the locality for similar accommodation:
Provided further that in respect of any land or building the fair rent, whereof has been fixed under the law relating to rent restriction for the time being in force, the rateable value thereof shall not exceed the annual amount of the fair rent so fixed or the actual rent for which the same has been let, whichever is higher."
9. The next we have to see the definition of building which has been defined in Section 2(3) of the Act, which runs as follows: -
"building" means a shop, house, out-house, stable, latrine, urinal, shed, hut, wall or any other structure, whether of masonry, bricks, wood, mud, metal or other material and includes a well but does not include any portable shelter:
10. From the combined reading of the above provisions, the first point for determination would be as to whether placement of the tanks by the petitioner Corporation would be covered within definition of building as defined in Section 2(3) of the Act or not. The learned counsel for the petitioner has placed reliance on AIR 1985 Bombay 242, Bharat Petroleum v. Municipal Corporation, wherein it was held that metal containers and receptacles meant for storing petrol are tanks and nothing else. They would be tanks if placed on the ground and they do not cease to be tanks because they are embedded under the ground. The fact that the tanks were capable of being shifted showed that they are not building. Structure cannot be shifted. This contention of the learned counsel for the petitioner cannot be accepted in view of the judgment of the Hon'ble Supreme Court reported as 1992(12) Punjab Legal Reports 641 Municipal Corporation of Greater Bombay v. Indian Oil Corporation Ltd., in which it was held that petroleum storage tanks are building because they are structures within the definition of term building and can be subjected to property tax. In view of the citation of the Hon'ble Supreme Court, it has to be held that storage tank meant for petroleum though embedded inside the ground will fall within the definition of structure and thus would be building within the meaning of Section 2(3) of the Punjab Municipal Corporation Act, 1976.
11. The second point for determination in this case would be whether the orders of assessment passed by the authorities are in accordance with the provisions of Section 93 of the Punjab Municipal Corporation Act or not? The learned counsel for the petitioner submitted that since the property in question is situated within the municipal limits of Municipal Corporation, Jalandhar and that the provisions of East Punjab Rent Restriction Act are applicable to such buildings, it was incumbent on the part of the Assessing Authority to first formulate an opinion as to what could be the fair rent of such or similar premises, and by making such foundations, it ought to have provided in making assessment of the house-tax. He further submitted that even if there was no basis before the assessing Authority to formulate an opinion with regard to the fair rent as per the provisions of Act No. 3 of 1949 still he was duty bound to make a notional fair rent assessment before finalising the assessment and by not doing so, the Assessing Authority as well as the Appellate Authority committed a patent illegality by violating the provisions of Section 93 of the Punjab Municipal Corporation Act, 1976 and therefore, the impugned assessment orders and the appellate orders are liable to be quashed. The counsel further submitted that the Assessing Authorities had assessed the costs of the land and the building while applying the principles under the Punjab Public Premises Act and this act was not warranted according to law. Therefore, all the three writ petitions should be allowed. In support of his contention, Shri S.C. Kapoor, learned counsel for the petitioner has relied upon an authority of our own High Court reported as 1976 P.L.J. 283 Charanjit Lal v. Municipal Corporation, Amritsar, . The Hon'ble Judge in para No. 5 of the judgment after relying upon a case reported as (1990-1)97 P.L.R. 1 (F.B.) Banarsi Dass v. State of Punjab, in which it was held that even though there may not be any existing assessment of the property under the East Punjab Urban Rent Restriction Act, 1949, the assessment Committee of the Municipal Corporation was duty bound to make a notional assessment of the fair rent of the property and then imposed tax on that basis and the Hon'ble Judge followed the dictum of this judgment and came to the similar conclusion. Reliance was also placed by the learned counsel upon (1985-1)87 P.L.R. 757 Punjab Concast Steel Ltd. v. Municipal Corporation Ludhiana,. In this case, the Hon'ble Division Bench was pleased to hold that when the property is in occupation of the owner the criteria laid down in clause (b) of Section 93 is to be applied and the provisions of Rent Restriction Act arc to be taken into consideration for determining the rateable value.
12. On the contrary, the learned counsel Mr. Doabia, appearing for the respondent has referred to 1986(1) Punjab Legal Reports and Statutes 638 Surinder Kumar and Ors. v. State of Punjab, and submitted that there could not be any criteria, as laid down under section 4 of the East Punjab Rent Restriction Act in the present case due to the peculiar nature of the property i.e. the present property is being used for the storage of petroleum products as well as for residential purposes. Therefore, the Corporation was justified by ignoring the provisions of Section 93 of the Punjab Municipal Corporation Act. The submission of the learned counsel for the respondents cannot be accepted for the sake of argument that there was no similar units in the city of Jalandhar on the basis of which reasonable rent of the unit could be fixed still the Assessing Authority was under duty bound to assess the house-tax by making a notional assessment of the fair rent of the property and then impose tax on that basis. The impugned orders do not show that at any point of time, the Assessing Authority formulated an opinion about the notional fair rent of the' premises in question and in these circumstances a patent illegality has been committed by the Assessing Authority in calculating the house-tax with regard to the properties in occupation of the petitioner Corporation. The citation which has been relied upon by the learned counsel for the respondent is not applicable to the facts in hand. Moreover, in view of Full Bench decision of Bansarsi Dass v. State of Punjab (supra) which has been relied upon by the Single Judge, the contention of Shri Doabia cannot be accepted.
13. In writ petition No. 5914 of 1988, the challenge has been given to the orders Annexure P. 2 on the ground that house-tax has been assessed erroneously as if it was being done under the Punjab Public Premises Act. This stand of the petitioner Corporation appears to be correct. The Assistant Commissioner Municipal Corporation Jalandhar could not proceed to assess the building by applying the yardstick of the rent under the Punjab Public Premises Act. He was supposed to proceed according to law as envisaged under Section 93 of the Act. In case, he could not lay his hand with regard to the instances of similar building in the similar locality, still he was expected to determine the rateable value of the building by applying the principles of notional assessment of fair rent of the property and then to impose the tax on that basis.
14. In view of above, all the three writ petitions are hereby allowed. Impugned Annexures of each of the writ petitions are hereby set aside and directions are given to the respondents to determine the house-tax as per the provisions Section 93 of the Punjab Municipal Corporation Act, 1976 and in the light of the observations made by this Court in this judgment. Before proceeding further in the matter, the respondent-authorities of course shall give due opportunities to the petitioner Corporation so as to allow it to put its case before the authorities. These shall be no order as to costs in each of the writ petition.