Andhra HC (Pre-Telangana)
Dr. Alluri Venkatapathi Raju And Anr. vs Amalapuram Municipality on 18 July, 2007
Equivalent citations: 2008(1)ALD96, AIR 2008 (NOC) 520 (A. P.)
JUDGMENT P.S. Narayana, J.
1. Heard Sri T.V. Jiggi Reddy representing Sri D. Sudershan Reddy, the Counsel for the appellants and Sri S. Nageswar Reddy, the learned Standing Counsel representing the respondent.
This Court on 8.11.1996 made the following order:
Admit, in view of the substantial questions of law raised in ground Nos. 5 to 7 of the memorandum of second appeal.
2. The said grounds 5 to 7, which reads as hereunder:
(5) Whether the procedure adopted by the tax revision authority to levy the tax on hypothetical rental basis is in accordance with Section 87 of the A.P. Municipalities Act ?
(6) Whether the appellate Court did not commit an error in holding that the tax revision authority followed the procedure in enhancing the tax though there is no material to show that the authority concerned followed the procedure in fixing the rental value and assessing the tax?
(7) Whether the tax revision authority followed the procedure prescribed under the AP Municipalities Act in arriving the rental value and levied tax in respect of premises bearing Assessment No. 1839 and the appellate Court justified in confirming the enhancement of tax in respect of the said premises?
3. The Counsel for the appellants had taken this Court through the findings, which had been recorded by the Court of first instance and also the findings recorded by the appellate Court and would maintain that in the facts and circumstances of the cases since the Court of first instance made a just and equitable order, the appellate Court erred in disturbing such well-considered findings. The Counsel also pointed out to the cross-objections and would maintain that in the light of the facts and circumstances, the decree and judgment of the appellate Court to be set aside and the decree and judgment of the Court of first instance to be restored.
4. Per contra, Sri S. Nageswar Reddy, the learned Standing Counsel representing the respondent-Amalapuram Municipality would contend that the suit itself questioning the assessment cannot be maintained in a civil Court. The Counsel also pointed out to the relevant provisions of the A.P. Municipalities Act, 1965 hereinafter referred to for short "the Act", for the purpose of convenience and also placed strong reliance on the decision of the Division Bench of this Court in Parvathi Combines v. Visakhapatnam Municipal Council, Visakhapatnam 1996 (3) ALD 540 (DB). The learned Standing Counsel would maintain that certain steps had been taken by the parties in the decision reported in 1996 (3) ALD 540 and no such steps had been invoked in the present suit, would not seriously alter the situation, as far as the entertainment of the suit of this nature is concerned. Hence, the learned Counsel would conclude that in any view of the matter, the second appeal being devoid of merit and the same is liable to be dismissed.
Heard the Counsel on record.
5. The substantial questions of law, which had been pointed out and on the strength of which the second appeal had been admitted already, had been specified supra.
6. For the purpose of convenience, the parties hereinafter would be referred to as "plaintiffs" and "defendant". The plaintiff instituted the said suit for declaration that the demand notice issued to the plaintiffs are for Rs. 643-80 paise for the half year under Assessment No. 1841 and for Rs. 310-24 paise for Assessment No. 1841-A are illegal, invalid, capricious insofar as the enhanced tax of Rs. 567-85 paise is concerned and for consequential injunction directing the defendant not to collect not more than Rs. 386-19 paise for both the Assessment Nos. 1841 and 1841-A and to declare half yearly tax of Rs. 2,575-20 paise for Assessment No. 1839 is arbitrary, illegal, invalid, capricious without any basis and jurisdiction insofar as the enhanced tax of Rs. 2,462-53 paise is concerned and to pass a consequential injunction direction the defendant to collect more than Rs. 112-67 paise and for costs of the suit.
7. It was pleaded in the plaint as hereunder:
The second plaintiff is the wife of the first plaintiff and both of them purchased the upstair building in K.N.F. Road, Amalapuram by means of two sale deeds dated 3.10.1977 and 11.10.1977. The whole building was being assessed under Assessment No. 1841. The building was constructed prior to 1940 and thus the Andhra Pradesh Rent Control Act applies to the building in question and the defendant Municipality should assess the building accordingly. In 1972-73 the building should assess at the half yearly tax of Rs. 386-19 paise. In 1975, the first plaintiff alone took the building on rent and used it for residential and non-residential purpose and while so continuing purchased the building by both the plaintiffs in 1977. Later it was assessed under Assessment No. 1841 ground floor at a half yearly tax of Rs. 643-80 paise and the first floor residential portion under Assessment No. 1841-A at a half yearly tax of Rs. 344-65 paise. On the revision preferred by the plaintiff the half yearly tax of Rs. 643-80 paise was confirmed and the other half yearly tax of Rs. 344-65 paise was reduced to Rs. 310-24 paise under Assessment No. 1841-A. The present enhancement as mentioned above is quite arbitrary, illegal, invalid and void and the defendant Municipality has no right to impose the enahcned tax. The Commissioner while fixing the annual rental values for the purpose of assessing the buildings did not follow the provisions of A.P. Rent Control Act. The entire building cannot be assessed under two assessment numbers. The rents that are being received by the plaintiffs cannot be taken into account for fixing the annual rental values of the buildings. It is the fair rent so the standard rent will be the basis for the determination of the annual rental values of the building. The Commissioner did not follow the procedure laid down under AP Municipalities Act while calculating the annual rental value for the buildings and sites appurtenant thereto. The plaintiffs removed a portion of the old building lying to the north of the building under Assessment Nos. 1841 and 1841-A and constructed three godowns, out of which, one is being used as a 'car shed'. These constructions have been effected in or about 1979. At preset only for tenants are there in the shops. The enhancement at a half yearly tax of Rs. 2,575-20 paise is quite arbitrary and illegal. The Commissioner did not take into account the actual rents paid by the tenants and the Commissioner assessed the car shed also as if on the rental basis. The method and manner of assessment as effected is quite arbitrary, illegal and invalid and the defendant Municipality issued demand notice directing the plaintiffs to pay Rs. 2,575-20 paise per each half year. Hence, the plaintiffs filed the suit for a declaration that the half yearly tax of Rs. 2,575-20 paise as imposed under Assessment No. 1839 is quite arbitrary, illegal, invalid and void.
8. The respondent in the second appeal, the defendant-Amalapuram Municipality filed written statement denying the allegations contained in the plaint. It was pleaded in the written statement, as hereunder:
The building that was constructed is situate in an important locality of the town. It is true that the State Bank of India used to be a tenant till 1975 and the half yearly tax was Rs. 386-19 paise. The assessments were divided to non-residential and residential and a half yearly tax of Rs. 643-80 paise for the ground floor and a half yearly tax of Rs. 344-65 paise for first floor, which is being used as a residence. The Valuation Officer of Amalapuram Municipality correctly revised the tax after personal inspection after fully satisfying about the rental values of the building in question. He has followed the procedure prescribed in the rules made thereunder and there are no legal valid grounds for reducing the tax or setting aside the assessment made. The plaintiffs constructed a new building abutting the KNG Road on one side and K. Agraharam road on the other side. The said building was first out by way of number of rooms and the building is fetching good and valuable rent. It is not true that the plaintiffs are getting only a rent of Rs. 75/- per month for the shops. The Municipality served a special notice directing the plaintiffs to pay half yearly tax of Rs. 2,575-20 paise. The plaintiffs preferred a revision. The tax imposed by the Municipality is just and legal and it is not arbitrary, capricious or illegal and the plaintiffs are bound to pay the said tax.
9. On the strength of these pleadings, the following issues were settled:
(1) Whether the plaintiffs are entitled for declaration that the demand notices issued to the plaintiffs by the defendant are illegal, invalid and void insofar as the enhanced tax under both the Assessments 1841 and 1841-A?
(2) Whether the plaintiffs are entitled for an injunction restraining the defendant Municipality not to collect more than Rs. 386-19 paise for both the Assessment Nos. 1841 and 1841-A as prayed for?
(3) Whether the plaintiffs are entitled that the half yearly tax of Rs. 2,575-20 paise for the Assessment No. 1839 is illegal, invalid or void so far as the enhanced tax and for an injunction directing the defendant not to collect more than Rs. 112-26 paise.
(4) To what relief ?
10. On behalf of the plaintiffs, PWs.1 to 4 were examined, Exs. A1 to A44 were marked on behalf of the defendant-Municipality. DW.1 was examined and Exs. B1 and B2 were marked.
11. The trial Court on appreciating the oral and documentary evidence came to the conclusion that the plaintiffs are bound to succeed and accordingly decreed the suit. But however giving liberty to the defendant Municipality to assess the tax after deducting the annual rental value of all the three buildings bearing Assessment Nos. 1841, 1841-A and 1839 keeping in mind the present rents, which those buildings can fetch and the plaintiffs shall pay the newly assessed tax with effect from 1.4.1989. Aggrieved by the same, the defendant, Amalapuram Municipality preferred the Appeal, A.S. No. 2 of 1990 on the file of the Court of Subordinate Judge, Amalapuram and the cross-objections were filed by the plaintiffs. The appellate Court at Paragraph No. 12 framed the following points for consideration:
(1) Whether the plaintiffs are entitled to declaration that the enhancement of tax for the premises under Assessment Nos. 1841 and 1841-A is illegal and void as prayed for ? and for consequential permanent injunction?
(2) Whether the levy of tax for the premises bearing Assessment Nos. 1839 for Rs. 2,575-20 paise for half year is void and illegal as prayed for and that the plaintiffs are entitled to consequential permanent injunction?
(3) Whether the direction of the trial Court to the defendant to assess annual rental value with effect from 1.4.1989 is valid as prayed for in cross-objections?
(4) Whether the plaintiffs are entitled to suit costs as prayed for?
(5) To what relief?
12. The appellate Court further proceeded to discuss with the oral and documentary evidence commencing from Para Nos. 13 to 33 and ultimately came to the conclusion that the appeal to be allowed in part setting aside the judgment and decree of the trial Court in O.S. No. 113 of 1983 on the file of the Court of Principal District Munsif, Amalapuram, in respect of assessment of tax in enhancing and levying tax at Rs. 2,575-20 paise for the premises bearing Assessment No. 1839 and hence OS No. 113 of 1983 on the file of' the Court of Principal District Munsif, Amalapuram, is, partly dismissed in respect of the reliefs of declaration and injunction as prayed for, for the premises bearing Assessment No. 1839 and the cross-objections were allowed in part setting aside the judgment and decree in respect of directions to pay tax from 1.4.1989 for all the Assessment Nos. 1841, 1841-A and 1839 and the decree and judgment of the trial Court for the reliefs of declaration and consequential injunction in respect of the premises bearing Assessment Nos. 1841 and 1841-A stand confirmed and the judgment and decree as to disallowing costs also had been confirmed and the fresh assessment if any made for the premises under Assessment Nos. 1841 and 1841-A shall come into effect from the first day of the half year in which such assessment is made and the parties were directed to bear their own costs in the appeal and also in the cross-objections as well and the rest of the appeal and the rest of the cross-objections were dismissed. Aggrieved by the same, the present second appeal is preferred.
Section 87 of the A.P. Municipalities Act, 1965 reads as hereunder:
Section 87. Method of assessment of property-tax--(1) Every building shall be assessed together with its site and other adjacent premises occupied as an appurtenance thereto unless the owner of the building is a different person from the owner of such site or premises.
(2) The annual rental value of lands and buildings shall be deemed to be the gross annual rent at which they may reasonably be expected to be let from month to month or from year to year with reference to its location, type of construction, plinth area, age of the building, nature of use to which it is put and such other criteria as may be prescribed.
(3) Notwithstanding anything in Andhra Pradesh Buildings (Lease, Rent and Eviction), Control Act, 1960, the gross annual rent at which the lands and buildings might reasonably be expected to be let from month to month or from year to year, shall be determined by the Commissioner, with reference to its location, type of construction, plinth area, age of the building, nature of use to which it is put and such other criteria as may be prescribed:
Provided that in the case of any Government or Railway building or any building or a class of buildings not ordinarily let, the gross annual rent of which cannot in the opinion to be nine per cent of the estimated value of the land and the present cost of erecting the building after deducting a reasonable amount towards depreciation which shall in no case be less than ten per cent of such cost.
(4) The annual rental 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 from year to year, less a deduction at the rate of ten per cent for buildings upto the age of 25 years and twenty per cent for buildings above the age of 25 years (and thirty per cent for buildings above the age of 40 years) of that portion of such gross annual rent which is attributable to the building apart from their sites and adjacent lands occupied as an appurtenance thereto and the said deduction shall be in lieu of all allowances for repairs or on any other account whatsoever:
Provided that a rebate of forty per cent of the annual rental value shall be allowed in respect of the residential buildings occupied by the owner inclusive of the deduction permissible under this Sub-section;
Provided further that in respect of such Municipalities on the seashore as may be specified by notification from time to time, a rebate of five per cent of the annual rental value shall be allowed in addition to the rebates allowed under the other provisions of the Act in respect of all the buildings);
Explanation:--For the purposes of this section, an area not exceeding three times the plinth area of the building including its site or a vacant land to the extent of one thousand square meters, whichever is less shall be deemed to be adjacent premises occupied as an appurtenant to the building, and assessed to tax in accordance with the provisions of this section, and the area, if any, in excess of the said limit shall be deemed to be land not occupied by or adjacent and appurtenant to such building and the tax shall be levied thereon in accordance with the provisions of Sub-section (3) of Section 85 as if it were land to which that Sub-section applied.
Section 376 of the A.P. Municipalities Act, 1965 reads as hereunder:
Section 376. Assessments etc., not to be questioned--(1) No assessment or demand made, and no charge imposed under the authority of this Act shall be questioned or affected by reason of any clerical error or by reason of any mistake (a) in respect of the name, residence, place of business or occupation of any person or (b) in the description of any property or thing, or (c) in respect of the amount assessed, demanded or charged, provided that the provisions of this Act have been in substance and effect, complied with; and no proceedings under this Act shall, merely for defect in form, be quashed or set aside by any Court:
Provided that the person or property so assessed or charged is reasonably ascertainable.
(2) No suit shall be brought in any Court to recover any sum of money collected under the authority of this Act or to recover damages on account of any assessment or collection of money made under the said authority:
Provided that the provisions of this Act have been, in effect, complied with.
(3) No distraint or sale under this Act shall be deemed unlawful, nor shall any person making the same be deemed a trespasser, on account of any error, defect or want of form in the bill, notice Schedule, form, summons, notice of demand, warrant of distraint, inventory, or other proceeding relating thereto, if the provisions of this Act, the rules and bye-laws have in substance and effect been complied with:
Provided that every person aggrieved by any irregularity may recover compensation for any special damage sustained by him:
(5) Notwithstanding anything contained in Sub-sections (1), (2) and (3) no suit shall be entertained by any Court of law unless the assessee pays fifty per cent of the tax levied and demanded.
The Division Bench of this Court in Parvathi Combines v. Visakhapatnam Municipal Council, Visakhapatnam (supra), while dealing with Section 376(2) of the Act came to the conclusion that so far as the present statute is concerned, leave apart the question of ouster of jurisdiction by necessary implication, there is an express ouster of the jurisdiction as the trial Court itself had found the provisions of the statute had been complied with in making the assessment. Thereafter, the civil Court could not have functioned as an appellate Court to go into the merits of the assessment and find fault with it only because certain other matters available to be utilized were not so utilized. The matter pertains to appreciation of evidence and of! materials on record, which is beyond the purview of the civil Court.
13. As far as certain findings are concerned, on the non-following of certain procedural formalities in a way uniform concurrent findings had been recorded but however on appreciation of evidence available on record, the Court of first instance came to a particular conclusion and the appellate Court had modified the same partly allowing the appeal and partly allowing the cross-objections and thus modifying the decree and judgment of the Court of first instance. These findings had been recorded on appreciating the evidence by both the Court of first instance and also the appellate Court. In the light of the view expressed by the Division Bench of this Court in the decision Parvathi Combines v. Visakhapatnam Municipal Council, Visakhapatnam (supra), and also in the light of the factual findings recorded by both the Courts below relating to the procedure followed and further in the light of the specific provisions, which had been relied upon by the learned Standing Counsel representing the respondent - defendant Amalapuram Municipality especially Sections 87 and 376 of the Act, this Court is well satisfied that the second appeal being devoid of merit, the same is liable to be dismissed and accordingly the second appeal shall stand dismissed. In view of the peculiar facts and circumstances, there shall be no order as to costs.