Delhi District Court
M/S Golbe Commodities Ltd vs New Delhi Muncipal Council on 2 November, 2023
IN THE COURT OF SH.GAURAV RAO, ADJ-03 / NEW
DELHI DISTRICT, PATIALA HOUSE COURTS, NEW
DELHI.
HTA No. 76/17 (Old no. 39/17)
CNR No. DLND01-008376-2017
M/s Globe Commodities Limited
Having its registered office at
804 Ansal Bhawan,
16 KG Marg, Connaught Place,
New Delhi-110001.
.....Appellant
Versus
New Delhi Municipal Council
Through its Chairman,
House Tax Department
Palika Kendra,
New Delhi-110 001.
....Respondent
Date of institution : 03.07.2017
Date on which reserved for judgment : 02.11.2023
Date of decision : 02.11.2023
Decision : Appeal allowed
JUDGMENT
1. The present appeal has been filed u/s 115 of the NDMC Act 1994 challenging the assessment order dated 19.12.2016 bearing no. A.O. No. TI-14/2193 Jt. Dir. (Tax) 2016 (hereinafter referred to as the impugned order) in respect of flat HTA No. 76/17 M/s Globe Commodities Ltd. Vs. New Delhi Municipal Council 1/17 bearing no. 804 Ansal Bhawan, 16 KG Marg, Connaught Place, New Delhi-110001 (hereinafter referred to as the flat).
Appeal/appellant's version
2. It is the case of the appellant that it is a limited company duly incorporated under the Companies Act 1956 and the present appeal has been filed through Sh. Pawan Kumar Hira its representative duly authorized to sign, verify, institute and engage advocates on its behalf vide resolution dated 28.04.2017.
2.1 It is its case that the annual value of the flat was Rs.9950/- p.a. for the year 2001-02 and the respondent issued a notice allegedly u/s 72 of the NDMC Act 1994 addressed to its previous owner M/s M.A. Share & Securities Pvt. Ltd. proposing to increase the rateable value of the flat from Rs.9950/- p.a. to Rs.5,63,220/- p.a. w.e.f. 01.04.2001 for the alleged reason "Rental information not being provided and proposed annual value is based on the prevailing annual rent" which notice was duly served on its predecessor who filed objections informing the respondent that the flat was duly vacant for the assessment year 2001-02, was still vacant as on 13.03.2002 and this letter was filed at the dak counter on 15.03.2002.
2.2 It is its case that M/s M.A Share & Securities Pvt. Ltd. filed notice u/s 77 of the NDMC Act 1994 for the year 2002- 03 clearly stating that the flat was on rent with it at a monthly HTA No. 76/17 M/s Globe Commodities Ltd. Vs. New Delhi Municipal Council 2/17 rent of Rs.17,500/- as on 30.06.2002 and thus the return was filed together with the payment of Rs.1980/- being the demand for the year 2002-03 along with the return u / s 77 of the Act.
2.3 It is its case that M/s M.A. Share & Securities Pvt. Ltd. filed a certificate from it together with their covering letter dated 11.09.2003 enclosing therewith rent receipt for the month of August 2003 and and thereafter various bills were raised by the respondent initially on Col. G.B Singh and another C/o M/s MA. Share & Securities Pvt. Ltd.
2.4 It is its case that in the meantime it purchased the flat from its previous owner for a consideration of Rs.37,28,725/- vide agreement of sale dated 6.4.2000 and applied for mutation to the respondent which was granted vide Mutation order No:2008-09/585/896/Tax dated 05.03.2009 with the following condition Nos. 7 & 8:-
"7. The change is subject to decision of notice dated 4.3.2002 issued under section 72 with a proposal to revise rateable value from Rs.9950/- to Rs.5,63,220/- w.e.f. 1.4.2001.
8. The existing R.V. of the flat/property is Rs.9900/-."
2.5 It is its case that a call letter bearing No.1970/DD/Tax/2012 dated 06.02.2012 for 21.02.2012 was served on it on which date its representative appeared and it was HTA No. 76/17 M/s Globe Commodities Ltd. Vs. New Delhi Municipal Council 3/17 postponed to 14.3.2012 on which date the matter was not taken up.
2.6 It is its case that another call letter for 23.01.2015 was served on it and its representative Shri Pawan Kumar appeared on 23.01.2015, sought adjournment and the same was adjourned for 11.02.2015. It is its case that Shri Pawan Kumar and Sh. B.B. Jain, advocate again appeared on 16.02.2015 and sought details of the proposed rateable value along with evidence to enable them to submit detailed reply, however, no such details or the formula was supplied and therefore no objective objections could be formulated.
2.7 It is its case that it was served only in the second week of January 2017 with a property tax bill dated 28.12.2016 seeking payment of Rs.8,00,102/- for the period ending 31.03.2017 on the rateable value of Rs.2,92,900/- and on receipt of the same, its representative wrote to the respondent by Speed Post a letter dated 18.1.2017 seeking levy of Rs.7,77,780/- towards additional demand which was never supplied and a notice of demand bearing No: P- 3589/44/122/056/A.O.(Tax) dated 03.02.2017 claiming a sum of Rs.8,00,102/- for the period ending 31.03.2017 without issuing any bill or any assessment order on it.
2.8 It is its case that thereafter its representative approached the assessing officer on 21.02.2017 when he was HTA No. 76/17 M/s Globe Commodities Ltd. Vs. New Delhi Municipal Council 4/17 supplied with a photo copy of impugned order determining the rateable value at Rs.5,63,200/- p.a. w.ef.. 1.4.2003 to 31.3.2010.
2.9 It is its case that immediately thereafter it filed an application dated 21.2.17 with the respondent seeking certified copy of the order u/s 72 of the NDMC Act together with other documents and since then they have been approaching them day in and day out but they are avoiding to issue the same for the reasons best known to them and ultimately, it was advised illegally to obtain the same under R.T.I. Act without any rhyme or reason.
2.10 It is its case that since under sections 115 & 116 of the NDMC Act 1994 it is entitled to file an appeal on receipt of the order (duly signed/ certified copy) & since it was not supplied it could not have filed these appeals before the Court.
2.11 It is its case that since the respondent has now refused to issue the certified copy nor has served a duly attested copy of the order on it till date, it is now left with no other alternative but to file the present appeal on the basis of photocopy of the impugned order with directions to the respondent to issue a certified copy of the same to be filed before this Court.
2.12 It is its case that since no copy of the impugned assessment order on the impugned assessment was ever issued to HTA No. 76/17 M/s Globe Commodities Ltd. Vs. New Delhi Municipal Council 5/17 or served upon it till date, it could not know of the contents of the impugned order till 21.02.2017 when it was supplied with only a photo copy of the impugned order.
2.13 It is its case that since it came to know of the impugned order on 21.2.2017 and applied for certified copy of the same on 21.2.2017 which has not yet been granted, this appeal is well within time and the delay, if any, is on account of the respondent not supplying the certified copy in spite of the demand which is beyond its control. It is its case that the Courts were closed for summer vacation for the period 11.6.17 to 30.6.17 and this appeal is being filed on the re-opening day and the delay, if any, in the circumstances is liable to be condoned.
2.14 It is its case that since there is no base year in the present appeal in as much as the notice u/s 72 of the NDMC Act 1994 was issued for the year 2001-02 and the said notice is alleged to have been decided by the impugned order dated 19.12.2016 for the period 1.4.2003 to 31.3.2010 only, therefore, as admittedly there was no notice for the year 2003-04 there can be no base year as held by the Supreme Court and therefore, the present appeal is liable to be heard without any further deposit in as much as the notice given for the base year i.e. the year for which the notice was given i.e. 2001 - 02 the taxes stands paid by it as demanded by the respondent and even today there is no increase in taxes for the year 2001-02 and therefore, the present HTA No. 76/17 M/s Globe Commodities Ltd. Vs. New Delhi Municipal Council 6/17 appeal is liable to be heard without any further deposit in accordance with law.
2.15 It is its case that as per the judgment of the Hon'ble Delhi High Court, the appeal is filed for the assessment years 2003-04 to 2009-10 i.e. 7 appeals (paying court fee of seven appeals) & the demand for all the years 2003-04 to 2009-10 is liable to be stayed by this Court.
2.16 It is its case that the impugned order is barred by time, against the facts and law placed on record.
2.17 It is its case that the impugned order containing the assessment list for the year under consideration cannot be sustained and is liable to be quashed.
2.18 It is its case that the impugned order containing the assessment list for the year under consideration is capricious, vindictive and is based on surmises and conjectures.
2.19 It is its case that the respondent has erred in not properly exercising the jurisdiction vested in it under the Act.
2.20 It is its case that the respondent failed to appreciate that even otherwise the notice under section 72 of the NDMC Act, 1994 for the years 2001-02 is quoram non judice and incapable of being acted upon for the reason that it did not HTA No. 76/17 M/s Globe Commodities Ltd. Vs. New Delhi Municipal Council 7/17 disclose the formula on the basis of which the proposed rateable value was sought to be arrived at & had become barred by time as on 31.3.2003 &/or 31.3.2005 respectively and it cannot be used to fix rateable value w.e.f. 1.4.2003 when no rateable value is fixed for the year 2001-02.
2.21 It is its case that impugned order being vague, non- descriptive, against the principles of natural justice, equity & fair play is incapable of being acted upon and even the impugned order has not considered all the lettings of the property and adjoining localities and has not stated as to how the alleged 2 premises are similar and comparable without which the findings are bad ab-initio.
2.22 It is its case that the contentions raised in the objections dated 13.3.2002 to the notice for the year 2001-02 have not been dealt with, more particularly, when the property in the year 2001-02 lay vacant and unoccupied, vacancy remission ought to have been allowed.
2.23 It is its case that the impugned order allegedly fixes the rateable value w.e.f. 1.4.2003 to 31.3.2010 when there was no notice u/s 72 of the NDMC Act for the year 2002-03 or thereafter and the only notice dated 4.3.2002 for the year 2001-02 had become barred by time.
HTA No. 76/17 M/s Globe Commodities Ltd. Vs. New Delhi Municipal Council 8/17 2.24 It is its case that it had filed the information u/s 77 of the NDMC Act along with the payment for the year 2009-10 but yet the rateable value has been increased without any rhyme or reason for the period 1.4.2003 to 31.3.2010. It is its case that no hearing for the years 2003-04 to 2009-10 was ever given to it.
2.25 It is its case that since no rateable value for the year for which notice u/s 72 was given has been enhanced by any order whatsoever, the said notice and its decision cannot be adopted for years subsequent to 2001-02 onwards in accordance with law.
Reply/respondent's version
3. It was pleaded that the appeal is not maintainable in the present form and deserves dismissal with exemplary costs.
3.1 It was pleaded that the property of the appellant is in the NDMC area, is subject to the property tax and not liable to any exemption of payment of property tax Under Sections 62 and 65 of the NDMC Act and has been assessed under NDMC Act in terms of the directions of determination of Tax as such the present appeal is not maintainable. It was pleaded that the appeal is hopelessly time barred.
HTA No. 76/17 M/s Globe Commodities Ltd. Vs. New Delhi Municipal Council 9/17 3.2 It was pleaded that the proposed RV was based on prevalent market rent of Rs. 50 per Sq Ft per month only as per Section 63 (1) of NDMC Act, however, the appellant had not filed any alleged notice for vacancy remission of the property in question for the relevant year.
3.3 It was pleaded that the rate of rent as disclosed i.e. Rs. 17,500/- was not found comparable with the prevailing market rent and as such was not considered at the time of deciding the notice dated 04.03.2001 given under section 72 of NDMC Act.
3.4 It was pleaded that M/s M.A Shares & Securities Private Limited who represented themselves at the relevant time to be the owner of the flat neither applied for mutation nor submitted any documents relating to the ownership of the flat as per section 74 of NDMC Act and as such in the absence of any documents to that effect it was difficult for the respondent to ascertain the claim of M/s M.A Shares & Securities Private Limited.
3.5 It was pleaded that the appellant was duly served with the copy of the assessment order and the property tax bill in time and it was denied that being not served with the copy of the same, the appellant could not file the appeal.
HTA No. 76/17 M/s Globe Commodities Ltd. Vs. New Delhi Municipal Council 10/17 3.6 It was pleaded that the appellant is mis interpretating the law and the sections with no basis and the assessment under section 63 (1) of NDMC Act has been finalized w.e.f 01.04.2003 keeping in view the facts that the flat was vacant prior to 01.04.2003 and the revision of RV was finalized w.e.f the date of actual letting i.e 01.04.2003.
3.7 It was denied that the assessment was time barred or that the impugned order cannot be sustained and it was pleaded that the order is a self speaking order and was passed after considering the documents on record and Sh Pawan Kumar and Sh. B.B Jain advocate appeared before the assessing authority but intentionally did not submit any reply or objections and as such the order was passed accordingly. It was denied that no hearing was given to the appellant.
Findings
4. I have heard the Ld. Counsels for the parties, considered the record carefully and given due consideration to the rival contentions raised at bar.
4.1 Though several grounds were raised in the appeal to challenge the impugned order, however, during the course of arguments Ld. Counsel for the appellant while relying upon Ved Marwah & Ors. Vs. New Delhi Municipal Council & Ors. 248 (2008) DLT 781 confined the grounds of appeal, the arguments HTA No. 76/17 M/s Globe Commodities Ltd. Vs. New Delhi Municipal Council 11/17 only on the aspect of limitation. It was argued by Ld. Counsel for the appellant that similar to the facts of the above case, there is inordinate delay in finalizing assessment list viz-a-viz the notice. Ld. Counsel argued that the notice, on the basis of which the impugned order is based was issued on 31.03.2002 whereas the impugned order was passed only on 19.12.2016 i.e. after a gap of more than 14 years fixing the ratable value of the flat at Rs. 5,63,200/- w.e.f. 01.04.2003 to 31.03.2010. It was argued by Ld. Counsel for the appellant that in view of law laid down in Ved Marwah (supra) the impugned order is liable to be set aside.
4.2 It is an admitted position that the impugned assessment order dated 19.12.2016 has been passed in respect of notice dated 31.03.2002 issued under Section 72 of the Act. Although, the Act does not specify any period of limitation for finalizing the assessment but this does not imply that respondent is at liberty to sleep over the matter for a period of almost 14/15 years. It is expected that after issuance of notice, respondent should finalize the assessment within a reasonable period. There is absolutely no justification whatsoever for this inordinate delay between the issuance of notice and the passing of the impugned assessment order.
4.3 The Hon'ble High Court of Delhi in Ved Marwah (supra) has observed that the proceedings initiated pursuant to Section 72 of the NDMC Act should be concluded in a reasonable period of not more than three years. In the said matter, HTA No. 76/17 M/s Globe Commodities Ltd. Vs. New Delhi Municipal Council 12/17 notices for revising the assessment list were issued over a decade prior to passing of the final orders by the NDMC. The Hon'ble High Court observed that the inordinate delay was unreasonable and quashed the assessment orders. It was observed as under:-
"Analysis and Conclusions
13. The notices for revising the assessment list in all these cases were issued over a decade prior to the passing of final orders. In one case, it was 16 years; in others, it was 14 years. In two cases, the same property was subject to multiple notices for later periods, without finalization of rateable value, for the previous year. Clearly, the finalization of these cases after inordinate delay of 14 to 16 years was plainly unreasonable. Where such open ended power-like in the present case, in Section 72 was conferred upon a statutory authority, i.e. a sales tax authority official in Punjab, the Supreme Court had outlined the correct approach in State of Punjab & Ors. v. Bhatinda District Co-op Milk P. Union Ltd 2007 (11) SCC 363 with respect to the limitations to exercise of such power. It was held that:
"5. In respect of the assessment for the year ending 31.3.2000, the assessment proceedings were completed relying on the return filed by the appellant on 20.3.2001. Indisputably, in terms of Section 11 of the 1948 Act, a period of three years has been prescribed as a period of limitation as contained under sub- section (3) of Section 11 for completing assessment from the last date for filing of return. Sub-section (6) of Section 11 reads as under :
"_If upon information which has come into his possession, the Assessing Authority is satisfied that any dealer has been liable to pay tax under this Act in respect of any period but has failed to apply for registration, the Assessing Authority shall, within five years after the expiry of such period, after giving the dealer a reasonable opportunity of being heard, proceed to assess to the best of his judgment, the amount of tax, if any, due from the dealer in respect of such period and all subsequent periods and in case where such dealer has willfully failed to apply for registration, the Assessing Authority may direct that the dealer shall pay by way of penalty, in addition to the amount so assessed, a sum not exceeding one and a half times that amount. Section 21 of the said Act provides for revision. Section 21 of the Act with which we are concerned herein reads as under :
"21. Revision-(1) The Commissioner may of his own motion call for the record of any proceedings which are pending before, or HTA No. 76/17 M/s Globe Commodities Ltd. Vs. New Delhi Municipal Council 13/17 have been disposed of by any authority subordinate to him, for the purpose of satisfying himself as to the legality or propriety of such proceedings or order made therein and may pass such order in relation thereto as he may think fit.
(2) The State Government may by notification confer on any Officer the powers of the Commissioner under sub-section (1) to be exercised subject to such conditions and in respect of such areas as may be specified in the notification. (3) A Tribunal, on application made to it against an order of the Commissioner under sub-section (1) within ninety days from the date of communication of the order, may call for and examine the record of any such case and pass such orders thereon as it thinks just and proper.
(4) No order shall be passed under this section which adversely affects any person unless such person has been given a reasonable opportunity of being heard".
.........................
.........................
15. Sub-section (1) of Section 11 empowers the Commissioner to extend the period of three years for passing the order of assessment where for reasons are required to be recorded in writing subject, however, to the maximum period of five years. Ordinarily, therefore, a period of three years has been prescribed for completion of the assessment in terms of the provisions of the Act. We may also notice that in cases where an assessment order is to be reviewed, the same should be done within a period of one year.
16. A bare reading of Section 21 of the Act would reveal that although no period of limitation has been prescribed therefor, the same would not mean that the suo-moto power can be exercised at any time.
17. It is trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors.
18. Revisional jurisdiction, in our opinion, should ordinarily be exercised within a period of three years having regard to the purport in terms of the said Act. In any event, the same should not exceed the period of five years. The view of the High Court, thus, cannot be said to be unreasonable.Reasonable period, keeping in view the discussions made hereinbefore, must be found out from the statutory scheme. As indicated hereinbefore, maximum period of limitation provided for in sub-section (6) of Section 11 of the Act is five years.
HTA No. 76/17 M/s Globe Commodities Ltd. Vs. New Delhi Municipal Council 14/17
14. Bhatinda (supra) was noticed and followed subsequently in Ram Prakash (supra). In a more recent decision Ram Karan (D) by LRs v. State of Rajasthan 2014 (8) SCC 282, it was held that:
"38. State of Punjab & Ors v Bhatinda District Co- op Milk P. Union Ltd (supra) this Court held that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. However, what shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors. In the present case, neither any objection was raised nor was any application filed by vendors for restoration of land in their favour. The suit was filed by the Tehsildar, Viratnagar after more than 31 years. No ground is shown to file such petition after long delay nor it was mentioned as to whether the vendors i.e. original landholders made any application for restoration of land in their favour.
39. In view of the matter, we hold that the suit being filed beyond the reasonable period was fit to be dismissed. The Additional Collector rightly dismissed the suit being barred by limitation."
15. In the present case, the finalization of assessment list or its revision, after over 12 years in all the cases, cannot be countenanced. It is clearly unreasonable and arbitrary and calls for interference.
17. In view of the above reasoning, it is held the impugned final orders of assessment and the demands issued are clearly unreasonable and void. They are hereby quashed. Consequently, it is held that the NDMC is at liberty to rework the assessments in respect of the properties that are the subject matter of these proceedings, by issuing fresh notices for the periods commencing from 3 years prior to the date on which the final notices were issued, and finalize the assessments within reasonable time. In the event of grievance on the part of the assessee to such fresh assessment orders, it is open to them to approach the appellate tribunal; provided they deposit the amount towards the tax liability for the base year."
4.4 While quashing the order, it granted liberty to NDMC to rework the assessment by issuing fresh notice for the period commencing from three years prior to the date on which final notices were issued. NDMC was further directed to finalize the assessment within a reasonable time.
HTA No. 76/17 M/s Globe Commodities Ltd. Vs. New Delhi Municipal Council 15/17 4.5 Though Ld. Counsel for the respondent argued that the judgment in Ved Marwah's case (supra) was passed in peculiar set of circumstances and the same has no application in the present case and that the directions issued in Ved Marwah's case (supra) cannot be uniformly applied in all the cases for setting aside the assessment order merely because of the delay between the issuance of notice and the finalization of the assessment, however, I find no merits in his arguments. The reason for setting aside of assessment order in Ved Marwah's case (supra) was the inordinate delay in passing the assessment order viz-a-viz the notice issued u/s 72 of the Act as is the case in the present matter. Furthermore the above order of the Hon'ble High Court of Delhi was assailed vide Special Leave Petition No.25403/2018 titled as New Delhi Municipal Council Vs. Pearey Lal & Sons (P) Ltd and anr but the same was dismissed by the Hon'ble Supreme Court of India vide order dated 01.08.2023. Resultantly, the findings in Ved Marwah's case (supra) have attained finality.
4.6 In the case at hand there is an inordinate delay on the part of NDMC in finalizing the assessment. The initial notice under Section 72 of the NDMC Act was issued on 31.03.2002 while the final assessment order/impugned order was passed on 19.12.2016. There was a time gap of almost 14/15 years between the issuance of notice and the finalization of the assessment. Relying on the observations made in Ved Marwah's case HTA No. 76/17 M/s Globe Commodities Ltd. Vs. New Delhi Municipal Council 16/17 (supra), the delay is certainly inordinate and arbitrary. This, in itself, is a sufficient ground for setting aside the impugned order. The impugned is bad in law. Accordingly, the appeal is allowed and the impugned order is set aside. In terms of the observations made in Ved Marwah's case (supra), respondent is at liberty to rework the assessment by issuing fresh notice for the period commencing from three years prior to the date on which final notices were issued and finalize the assessment within a reasonable time.
4.7 File be consigned to the Record Room after due compliance.
Announced in the open Court on 2nd November 2023 (Gaurav Rao) ADJ-03/New Delhi District, Patiala House Courts, Delhi HTA No. 76/17 M/s Globe Commodities Ltd. Vs. New Delhi Municipal Council 17/17