Karnataka High Court
The Agricultural Produce Market ... vs State Of Karnataka on 23 November, 2012
Author: S.Abdul Nazeer
Bench: S.Abdul Nazeer
1
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 23RD DAY OF NOVEMBER 2012
BEFORE
THE HON'BLE MR. JUSTICE S.ABDUL NAZEER
WRIT PETITION NOS.48070/2011 &
48101 TO 48105/2011 (LB-TAX)
Between:
The Agricultural Produce Market Committee,
Mandya - 571 401,
Reptd. By its Secretary,
Smt.Rajashri. .... Petitioner.
(By Sri H.K.Thimme Gowda, Adv.)
And:
1 State of Karnataka,
by its Secretay,
Department of Urban Development,
Vikasa Soudha,
Bangalore - 560 001.
2 City Municipal Council,
Mandya - 571 401,
Reptd. By its Commissioner.
2
3 The President,
City Municipal Council,
Mandya - 571 401.
4 M/s Rathanlal Jain & Sons,
reptd. By its owner,
Sri Rathanlal s/o Bastimal,
APMC Yard, Kallahalli,
Mandya - 571 401.
5 M/s Rajkamal Traders,
reptd. By its owner,
Sri Bhavarlal Banda,
s/o late Tharachandji.
APMC Yard, Kallahalli,
Mandya - 571 401.
6 M/s Geetha Traders,
C/o Ramakrishna Traders,
reptd. By its owner,
Nisar Ahmed s/o Sharid Saheb Hullur,
APMC Yard, Kallahalli,
Mandya - 571 401.
7 M/s Padam Trading Company,
reptd. By its owner,
Smt. Shantibai, w/o Motilal Dosi,
APMC Yard, Kallahalli,
Mandya - 571 401.
3
8 M/s Roopesh Trading Company,
reptd. By its owner,
Sri Manikchand Jain s/o late Nathmal,
APMC Yard, Kallahalli,
Mandya - 571 401.
9 M/s Mandya Trader,
reptd. By its owner,
Sri Ganapathraj, s/o Jugraj,
APMC Yard, Kallahalli,
Mandya - 571 401.
10 M/s Radha Chemicals,
reptd. By its owner,
Sri Babuthmalmali s/o Chamanji,
APMC Yard, Kallahalli,
Mandya - 571 401.
11 M/s Ramdev Trading Company,
reptd. By its owner,
Sri D.Namichand Jerwal,
s/o Dharmichand,
APMC Yard, Kallahalli,
Mandya - 571 401.
12 M/s Thirumal Agencies,
reptd. By its owner,
Smt.N.B.Latha
w/o N.S.Balajinagendraprasad,
APMC Yard, Kallahalli,
Mandya - 571 401.
4
13 M/s G.C.Shivaram & Co.,
reptd. By its owner,
Sri Shivaram,
s/o G.S.Channegowda,
APMC Yard, Kallahalli,
Mandya - 571 401.
14 M/s Super Jagari Suppliers,
reptd. By its owner,
Sri Misrusingh Purohith,
s/o Anakar Singh,
APMC Yard, Kallahalli,
Mandya - 571 401.
15 M/s Somanath Trading Co.,
reptd. By its owner,
Sri Ganeshmal P. Rawal,
s/o Jayanthlal B. Mali,
APMC Yard, Kallahalli,
Mandya - 571 401.
16 M/s Raj Trading Co.,
reptd. By its owner,
Sri T.Mahendrakumar,
s/o Thilakchand,
APMC Yard, Kallahalli,
Mandya - 571 401.
17 M/s Nagaraj & Co.,
reptd. By its owner,
Sri B.N. Balaji s/o late B. Nagaraj,
APMC Yard, Kallahalli,
Mandya - 571 401.
5
18 M/s Bharat Trading Co.,
reptd. By its owner,
Sri Channalal R.Govind Das,
s/o R.Govind Das,
APMC Yard, Kallahalli,
Mandya - 571 401.
19 M/s Rajadhani Traders,
reptd. By its owner,
SriM. Mangilal s/o Megharaj,
APMC Yard, Kallahalli,
Mandya - 571 401.
20 M/s Makam Enterprises,
reptd. By its owner,
Sri M.K.Aswathnarayana Shetty,
s/o M.Krishnaiah Shetty,
APMC Yard, Kallahalli,
Mandya - 571 401.
21 M/s Dhananjaya Traders,
reptd. By its owner,
Sri K.Siddegowda,
s/o Kariputtegowda,
APMC Yard, Kallahalli,
Mandya - 571 401.
22 M/s Ganesh Traders,
reptd. By its owner,
Sri Harshad Ray Chaturdas Patel,
s/o Chaturdas Patel Motiram Patel,
APMC Yard, Kallahalli,
Mandya - 571 401.
6
23 M/s Kamal Trading Co.,
reptd. By its owner,
Sri S.L.Raju,
s/o Kalegowda @ Sannegowda,
APMC Yard, Kallahalli,
Mandya - 571 401.
24 M/s Sapthagiri Traders,
reptd. By its owner,
Sri M.Ramakrishna
s/o V. Chowdappa,
APMC Yard, Kallahalli,
Mandya - 571 401.
25 M/s Vijay & Co.,
reptd. By its owner,
Sri S.M.Rangaswami,
s/o R.Nanjegowda,
APMC Yard, Kallahalli,
Mandya - 571 401.
26 M/s Rajesh Chemicals,
reptd. By its owner,
Sri Shulchand S/o Tejmal,
APMC Yard, Kallahalli,
Mandya - 571 401.
27 M/s Raghuveer Traders,
reptd. By its owner,
Sri C.V.Raghunath
s/o N.C.Veerappa,
APMC Yard, Kallahalli,
Mandya - 571 401.
7
28 M/s Someshwara Traders,
reptd. By its owner,
Sri N.Ramalingaiah,
APMC Yard, Kallahalli,
Mandya - 571 401.
29 M/s Star Agencies,
reptd. By its owner,
Smt.Mamtaj Begam,
s/o Mukthar Ahmed,
APMC Yard, Kallahalli,
Mandya - 571 401.
30 M/s Rajgopal Enterprises,
reptd. By its owner,
Sri R.Narayana
s/o M.V.Ramashetty,
APMC Yard, Kallahalli,
Mandya - 571 401.
31 M/s Sreeshaila Traders,
reptd. By its owner,
Sri K.Athmananda,
s/o Kalegowda,
APMC Yard, Kallahalli,
Mandya - 571 401.
8
32 M/s Krishna Jagary Merchants,
reptd. By its owner,
Smt. K.Nagalakshmi,
w/o Balakrishnamurthy,
APMC Yard, Kallahalli,
Mandya - 571 401. .... Respondents.
(By Sri Vijayakumar A. Patil, HCGP for R1
Sri A. Nagarajappa, Adv. For R2
R3 to R32 served)
---
These Writ Petitions are filed under Articles 226 & 227 of
the Constitution of India praying to quash the demand notice dated
20.12.2010 issued by the Commissioner, City Municipal Council,
Mandya, etc.
These Writ Petitions coming on for Further Hearing this day,
the Court passed the following:
ORDER
The Agricultural Produce Market Committee ('APMC' for short), Mandya, has presented these writ petitions challenging the demand notice at Annexure 'A' dated 20.12.2010 and at Annexure 'B' dated 21.6.2011 issued by the City Municipal Council ('CMC' for short), Mandya and for a mandamus directing the CMC, 9 Mandya, to return the amount in a sum of Rs.12 lakhs which has been collected on 26.5.2011 and for a further direction to the second respondent to collect the building tax from the allottees of 29 shops under Section 110 of the Karnataka Municipalities Act, 1964 ('Act' for short).
2. The petitioner had allotted different shops to respondent Nos.4 to 32 on different dates in the year 1996 on lease-cum-sale basis. One such lease-cum-sale deed is produced by the petitioner at Annexure 'G'. As per Clause 10 of the lease-cum-sale deed, the allottees have to pay the building tax to the CMC, Mandya. In the year 2008, the petitioner executed the sale deeds in respect of the said shops in favour of respondent Nos.4 to 32. The petitioner has produced one such sale deed at Annexure 'H'. As per clause (I) of the sale deed, the purchaser has to pay the property tax in respect of the said property to the local authority.
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3. The contention of the petitioner is that though it had executed the lease-cum-sale deeds in respect of different shops in favour of respondent Nos.4 to 32, it had paid tax from the year 1996-1997 to 2003-2004. A demand notice was issued as per Annexure 'B' dated 21.6.2011 calling upon the petitioner to pay the tax in respect of the shops in question in a sum of Rs.20,00,742/- from the year 2004-2005 to 2010-2011. Since the petitioner did not pay the tax in terms of the demand notice, the second respondent has taken coercive steps to recover the tax demanded in the impugned notice. It is further contended that the petitioner has paid a sum of Rs.12 lakhs in order to avoid any steps being taken for seizure of its property. Thereafter, it has issued notice as per Annexure 'L' calling upon the second respondent to refund the said sum of Rs.12 lakhs paid by it towards building tax even though it is not liable to pay the same. Since the second respondent has failed to comply with the demand made in the notice at Annexure 'L', the petitioner has filed these writ petitions seeking the reliefs 11 mentioned above.
4. Respondent No.2 has filed statement of objections contending that the Act provides for filing of an appeal challenging the demand notices impugned herein. These writ petitions are liable to be dismissed on the ground of availability of alternative remedy. It is further contended that the petitioner is the owner of the property in question and it is primarily liable to pay the tax. If the property has been transferred to respondent Nos.4 to 32, the petitioner ought to have informed the second respondent in the prescribed form the particulars of transfer. Since the petitioner has failed to do so, it has to pay the tax having regard to Section 114 of the Act. The petitioner paid the tax when the second respondent took coercive steps under Section 143 of the Act. Though it has undertaken to pay the balance of the amount, it has failed to do so in utter disregard of their undertaking.
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5. Learned Counsel for the petitioner would contend that the APMC has transferred different shops constructed within the market yard at Vishweswariahnagar, Kallahalli Extension, Mandya to respondent Nos.4 to 32 on lease-cum-sale basis. They were also put in possession of the said shop-cum-godowns. After expiry of 10 years from the date of execution of the lease-cum-sale deeds, sale deeds have been executed and registered in favour of respondent Nos.4 to 32. As per the clauses contained in the lease-cum-sale deeds, respondent Nos.4 to 32 were liable to pay the property tax to the second respondent. However, petitioner had erroneously paid property tax from the year 2001-2002 to 2003-2004. The second respondent has again demanded the tax from 2004-2005 to 2010- 2011 as per Annexure 'B'. As per Section 94(1-A) as amended by Karnataka Act No.31/2003 dated 20.8.2003, which has come into force w.e.f. 16.6.2003, petitioner is exempted from payment of tax in respect of its properties. With effect from the said date, the actual 13 occupier is liable to pay the tax. That is why the petitioner has informed the second respondent by its letter dated 13.2.2004 the transfer of the shop-cum-godowns in question to respondent Nos.4 to 32. The second respondent ought to have collected tax from respondent Nos.4 to 32. It is further submitted that since the petitioner has paid property tax from the year 1996-1997 till 2002- 2003, respondent Nos.4 to 32 are liable to return the said amount to the petitioner. The second respondent has to collect tax in respect of the shop-cum-godowns from respondent Nos.4 to 32. Since the petitioner is not liable to pay any tax after 2003-2004, the second respondent has to refund the amount in a sum of Rs.12 lakhs collected by it towards tax.
6. On the other hand, learned Counsel appearing for the second respondent submits that the impugned notices have been issued under sub-section (2) of Section 142 of the Act. An alternative remedy of filing an appeal for challenging the notices is 14 available to the petitioner under Section 150 of the Act. The writ petitions are liable to be dismissed on this ground alone.
7. It is further submitted that petitioner was the owner of shop-cum-godowns. It is primarily liable to pay tax under Section 94 of the Act. The petitioner has not informed the second respondent the transfer of the shop-cum-godowns by way of lease- cum-sale deeds in favour of respondent Nos.4 to 32 in the year 1996. Therefore, it is liable to pay tax under Section 114 of the Act. Even if it is exempted from payment of tax under Section 94(1-A) of the Act, still it has to inform the transfer of shop-cum-godowns under Section 114 of the Act in the prescribed form. Even if there is a transfer of shop-cum-godowns, still the petitioner has to pay tax as it has failed to discharge its obligation under this provision. Since the petitioner failed to pay the tax, the second respondent had no other option but to take coercive steps for recovery of tax under Section 143 of the Act. In response to the proceedings initiated 15 under this provision, a sum of Rs.12 lakhs has been paid by the petitioner and has undertaken to pay the balance of amount. Instead of complying with its undertaking, it has filed these writ petitions challenging the impugned notices.
8. I have carefully considered the arguments made by the learned Counsel at the Bar and perused the materials placed on record.
9. In the light of the rival contentions of the parties, the first question for consideration is whether the writ petitions have to be dismissed on the ground of availability of alternative remedy? The demand notice at Annexure 'B' has been issued under sub-section (2)(b) of Section 142 of the Act. Section 150 provides for an appeal to the Magistrate challenging the demand served under the said provision. It is well settled that rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and 16 not one of compulsion. In appropriate cases, inspite of availability of alternative remedy, High Court may still exercise its writ jurisdiction. In HARBANSLAL SAHNIA AND ANOTHER VS. INDIAN OIL CORPORATION LTD. & OTHERS - (2003) 2 SCC 107, the Apex Court has observed as under:
"The rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies: (I) where the writ petition seeks enforcement of any of the fundamental rights;
(ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged."
(emphasis supplied by me) 17 In the present case, the demand made in Annexure 'B' is totally without jurisdiction, which is clear from the succeeding paragraphs. Therefore, I am inclined to entertain these writ petitions.
10. Sub-section (3) of Section 9 of the Karnataka Agricultural Produce Marketing (Regulation and Development) Act, 1966 states that notwithstanding anything contained in any law for the time being in force, every market committee shall for all purposes be deemed to be a local authority. A Division Bench of this Court in AGRICULTURAL PRODUCE MARKET COMMITTEE AND OTHERS VS. STATE OF KARNATAKA, REPRESENTED BY ITS SECRETARY, DEPARTMENT OF CO-OPERATION AND MARKETING, BANGALORE AND OTHERS - ILR 2003 KAR 4225, after considering the matter in detail has held that every market committee is deemed to be a local authority.
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11. Article 243-X of the Constitution of India, has authorised the municipalities to levy, collect and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such limits. The State Legislature while enacting the Karnataka Municipalities Act, 1964 has empowered the Municipalities in the State of Karnataka to impose tax. Section 94 of the Act is a charging provision. Section 94(1-A) as inserted by Act No.31/2003 dated 20.8.2003, which has come into force w.e.f. 16.6.2003 grants exemption from payment of property tax in respect of the buildings and vacant lands belonging to Bangalore Development Authority, the Karnataka Housing Board, the Urban Development Authority constituted under the Karnataka Urban Development Authorities Act, 1987 or any local authority, the possession of which has not been delivered to any person, in pursuance of any grant, allotment or lease. Section 110(1)(a) states that every tax imposed in the form of property tax shall be leviable primarily if the property is held from Government or Municipal Council or Town Panchayat, by the 19 actual occupier. Sub-section (1) of Section 111 provides for issuance of notice to municipal council, of all transfers of title by persons primarily liable to payment of property tax. It is as under:
"Section 111. Notice to be given to municipal council, of all transfers of title by persons primarily liable to payment of property tax:
(1) Whenever the title of any person primarily liable for the payment of a tax imposed on any premises in the form of a property tax, is transferred, the person whose title is transferred and the person to whom the same is transferred shall, within three months after the execution of the instrument of transfer or after registration if it be registered or after transfer is effected, if no instrument is executed, give notice of such transfer in writing to the Municipal Commissioner or the Chief Officer."
12. The other relevant provisions are Section 112, which 20 provides for the form of notice to be given under Section 111 and Section 114, which provides for liability for payment of property tax in the absence of notice of transfer, which are as under:
"Section 112. Form of Notice: (1) The notice to be given under Section 111 shall be in the form either of Schedule VIII or Schedule IX, as the case may be, and shall state clearly and correctly all the particulars required by the said form.
Section 114. Liability for payment of property tax continue in the absence of notice of transfer: (1) Every person primarily liable for the payment of tax imposed on any premises in the form of property tax, who transfers his title to or over such premises without giving notice of such transfer to the municipal council as aforesaid, shall, in addition to any other liability which he incurs through such neglect, continue to be liable for the payment of all taxes from time to time payable in respect of the said 21 premises, until he gives such notice, or until the transfer shall have been recorded in the registers of the municipal council.
(2) Nothing in this Section shall be deemed to affect the liability of the transferee for the said taxes or to affect the prior claim of the municipal council on the premises conferred by Section 151 for the recovery of the taxes due thereon."
13. From the aforesaid provisions it is clear that after the insertion of Section 94(1-A), the buildings or vacant lands belonging to the APMC is exempted from payment of property tax as it is a local authority. If the property is held from the Government or Municipal Council or Town Panchayath, the actual occupier of the property is primarily liable to pay the tax. Whenever the title of any person primarily liable for payment of tax imposed on any premises in the form of a property tax, is transferred, the person whose title is transferred and the person to 22 whom the same is transferred have to issue notice within three months after the execution of the instrument of transfer and after the registration if it be registered or after transfer is effected, if no instrument is executed. If any person primarily liable for payment of tax imposed on any premises fails to inform the municipality the transfer of the property, in addition to any other liability which he incurs through such neglect continue to be liable for payment of all tax from time to time payable in respect of such premises only he gives such notice or until the transfer shall have been recorded in the registers of the municipal council.
14. In the instant case, the petitioner had transferred the shop-cum-godowns in favour of respondent Nos.4 to 32 in the year 1996 by way of lease-cum-sale basis. However, it has failed to inform the said transfer to the second respondent. It has continued to pay tax though respondent Nos.4 to 32 were liable to pay the same from the year 1996-1997 onwards. It has informed the 23 municipality the transfer of the shop-cum-godows by their letter dated 13.2.2004. It is true that notice has not been issued in the prescribed form. Despite informing the CMC by letter dated 13.2.2004 the transfer of the shop-cum-godowns, the second respondent has issued notice as per Annexure 'B', calling upon the petitioner to pay a sum of Rs.20,00,742/- from the year 2004-2005 to 2010-2011 towards tax. Since the petitioner failed to pay the amount as demanded in the notice, it has taken coercive steps under Section 143 of the Act and has collected a sum of Rs.12 lakhs.
15. Payment of tax by the petitioner from the year 1996- 1997 to 2003-2004 is just and proper because it had failed to inform the second respondent the transfer of the shop-cum- godowns in favour of respondent Nos.4 to 32. As has been noticed above, Section 94(1-A) was inserted w.e.f. 16.6.2003. This was a period of transition. Therefore, even though notice in the prescribed form has not been issued informing the second respondent of the 24 transfer of the shop-cum-godows, I am of the view that the notice dated 13.2.2004 has to be treated as a notice issued under Section 112 of the Act. The respondents should not have been excessively technical about the format of the notice instead of focussing on its essence. After keeping quiet for about six years from the receipt of notice dated 13.2.2004, the City Municipal Council has suddenly taken action to collect the tax under the impugned notices. The second respondent is not justified in demanding the tax under the notice at Annexure 'B' w.e.f. 2004-2005 to 2010-2011. It should have demanded the tax from the respective occupiers/owners of the shop-cum-godowns. Therefore, recovery of tax w.e.f. 2004-2005 in exercise of the power under Section 143 of the Act is totally uncalled for. The petitioner is not liable to pay tax having regard to the aforesaid amendment. Thus, the action to recover tax is totally without jurisdiction. The second respondent has to refund the amount collected by it from the petitioner in a sum of Rs.12 lakhs. Petitioner is also entitled for interest on the said sum. I am of the 25 view that it is just and proper to award interest at the rate of 6% per annum on the said amount of Rs.12 lakhs from the date of payment till the date of refund. This is without prejudice to the right of the second respondent to levy and collect the property tax in respect of the shop-cum-godowns from respondent Nos.4 to 32. I am also of the view that petitioner is entitled to collect the property tax paid by it from respondent Nos.4 to 32 from 1996-1997 to 2003-2004.
16. In the light of the above discussions, I pass the following:
ORDER
(i) The demand notice at Annexure 'B' dated 21.6.2011 issued by the second respondent is hereby quashed.
(ii) The second respondent is directed to refund an amount of Rs.12 lakhs to the petitioner with interest at 6% per annum from the date of payment till the date of refund.
(iii) The refund of Rs.12 lakhs with interest as above shall 26 be made by the second respondent to the petitioner within a period of eight weeks from the date of receipt of a copy of this order.
(iv) Liberty is reserved to the second respondent to levy and collect property tax from respondent Nos.4 to 32 in respect of their shop-cum-godowns from 2004-2005 onwards.
(v) Liberty is also reserved to the petitioner to collect tax paid by it in respect of the shop-cum-godowns in question from respondent Nos.4 to 32 w.e.f. 1996-1997 to 2002-2003.
(vi) Writ petitions are allowed accordingly.
17. In view of the disposal of the writ petitions as above, I.A.No.I/2012 does not survive for consideration. It is accordingly dismissed. No costs.
Sd/-
JUDGE.
BMM/-