Andhra HC (Pre-Telangana)
Shan Zahoor vs Vijayawada Municipal Corporation on 22 April, 2004
Equivalent citations: 2004(4)ALD245, 2004(4)ALT781
Author: L. Narasimha Reddy
Bench: L. Narasimha Reddy
JUDGMENT L. Narasimha Reddy, J.
1. This batch of Civil Miscellaneous Second Appeals is filed under Section 287 of the Hyderabad Municipal Corporation Act (for short 'the Act') as extended to the Vijayawada Municipal Corporation (hereinafter referred to as 'the Corporation'). While some of the appeals are filed by the Corporation, the others are filed by the assessees of property tax, who are either occupiers or owners of the premises within the limits of the Corporation.
Facts :
2. The Corporation intended to revise the property tax for the premises within its jurisdiction, way back in the year 1993. A draft notification was issued by it on 17-2-1993. It became the subject-matter of proceedings before this Court and the Hon'ble Supreme Court. After the proceedings reached finality, with the order of the Supreme Court dated 23-4-2001, it resumed the steps. Another draft notification was issued on 16-4-2001. Representations were received from individuals and associations. The Corporation passed resolution dated 11-5-2001 and thereafter a final notification, contemplated under Section 212 of the Act read with Hyderabad Municipal Corporations (Assessment of Property Tax) Rules, 1990 (in short 'the Rules'), was issued on 22-9-2001.
3. The General Body of the Municipal Corporation considered the matter once again and passed resolution dated 3-10-2001 requiring the Commissioner to reduce the rates of tax notified under Notification dated 22-9-2001. A revised Notification was issued on 20-10-2001, making certain amendments to the final notification dated 22-9-2001. The Corporation issued individual notices dated 24-9-2001 intimating the assessees, the rates of the revised tax. Some of the assessees filed objections to the revised rates, and final orders were passed on consideration of the same. Aggrieved by such orders, fairly large number of assessees filed appeals in the Court of Senior Civil Judge at Vijayawada under Section 282 of the Act.
4. Since the number of appeals was large, they were distributed among various Courts of the similar jurisdiction. Some Courts took the view that the Corporation did not follow the procedure prescribed under the Act, particularly, the one prescribed under Sections 218 to 220 of the Act and thereby, the entire assessment is vitiated. Having set aside the demands made by the Corporation, the Courts gave liberty to the Corporation to take steps in accordance with the relevant provisions. Against such orders, the Corporation filed Civil Miscellaneous Second Appeals.
5. Certain other Courts, to which similar matters were allotted, took the view that non-compliance with the provisions such as Sections 218, 219 and 220 is a mere irregularity and that it can be cured under Section 684 of the Act. On this basis, the orders of assessment as well as demand were upheld, permitting the Corporation to rectify the irregularity in exercise of its powers under Section 684 of the Act. Aggrieved by such orders, the assessees have preferred similar appeals.
Contentions:
6. The learned Additional Advocate General, Sri B. Prakash Reddy, appearing for the Corporation submits that the Corporation had scrupulously followed the procedure prescribed under the Act and the Rules in the matter of division of the entire area into Zones, classifying the buildings depending on the type of construction and the use to which the buildings are put, and in fixing the annual rental value (ARV). He submits that the purpose underlying the various sections and the rules is to require the Corporation to put the assessees on notice before the ARV is fixed, or revised, and the same has been achieved to its full complement, with the publication of draft and final notifications as provided under Section 212 and the Rules, and by issuance of the individual notices to the assessees as contemplated under Sub-section (2) of Section 220 of the Act.
7. It is his case that the only non-compliance, if at all, is as regards publication of notification under Section 218 and Sub-section (1) of Section 220 of the Act. According to him, since the relevant notifications were published more than once, the objections raised by individual assessees and associations and the resolutions passed by the Corporation were taken into account, before fixation of the ARV, publication of further notifications under Section 218 or Sub-section (1) of Section 220 of the Act is not imperative. He also pleads that the assessees have ventilated their grievances in response to the notice issued to them under Sub-section (2) of Section 220 and that the same were taken into account before the demand notices were issued.
8. Placing reliance upon the judgments rendered by this Court and the Hon'ble Supreme Court, the learned Additional Advocate General submits that omission to publish Notification under Section 218 does not have the effect of annulling the entire process and proceedings. He contends that the irregularity, if any, resulting out of non-compliance of the said provisions, can be rectified by taking recourse to Section 684 of the Act. He made extensive arguments on the facts, by making reference to various documents, which form part of the record; to demonstrate that the Corporation has taken an objective and dispassionate view, in the matter of fixation of ARV, categorization of buildings, and making individual assessments.
9. Sri S.R. Ashok, learned Senior Counsel advanced the arguments on behalf of the assessees. Sri V.S.R. Anjaneyulu, learned Counsel had supplemented the same. They submit that the procedure and steps prescribed under Sections 218 to 220 are mandatory and non-compliance with the same, would vitiate the entire proceedings. They urge that the publication of notifications under Rule 3 or 7 of the Rules does not respondents of their obligation to publish notices under Sections 218 and 220. According to them, publication of notifications under Sections 218 and 220(1) is a sine qua non, to attach any finality to assessment book, prepared under Section 214 of the Act.
10. Learned Counsel submit that the total non-compliance with the steps contemplated under Sections 218 to 220 constitutes a clear illegality and cannot be treated as mere irregularity and such a glaring non-compliance is incapable of being rectified or cured under Section 684 of the Act. It is also urged by them that in the matter of taxation, each and every step has its own significance and, is required to be followed scrupulously and any non-compliance with the same would vitiate the assessment. Lastly, it is urged that the view taken by the lower appellate Court, that the notifications contemplated under Section 218 can be published even at a subsequent stage, to sustain the orders of assessment, cannot be supported in law. The learned Counsel have relied upon several judgments rendered by this Court as well as the Hon'ble Supreme Court in support of their contention.
The Provisions and Principles:
11. Chapter-VIII of the Act commencing with Section 197 deals with Municipal taxation. It provides for levy of different types of taxes, such as the one on lands and buildings (property tax), octroi, taxes on vehicles, tax on transfers taxes, tax on entertainments etc. Levy of property tax is dealt with from Sections 212 to 226. The Act provides for the ARV as the basis for levy of this tax. Section 212 defines the ARV as well as the percentage of the tax that can be imposed on lands and buildings depending on the age, use and location. The procedure for evaluation of ARV under Section 212 as it stood before 1990, did not provide any public participation. Through Act 20 of 1989, the Section was amended with effect from 1-11-1990, providing for fixation of ARV in accordance with the procedure prescribed, which in turn is contained in the Rules, specifically framed in the light of this amendment.
12. A combined reading of Section 212 and the Rules discloses that the Corporation shall divide the entire area within its jurisdiction into various Zones, on the basis of factors such as civil amenities like water, street lighting, roads, drains, existence of educational institutions, banks, post offices, factories etc. Rule 5 mandates that the buildings in each Zone shall be classified into six categories, depending on the type of construction; viz., (a) RCC posh buildings (b) RCC ordinary buildings (c) Madras terraced or Jack arch roofed buildings (d) Mangalore tiled roof buildings (e) Country tiled buildings and (f) huts. A further classification of the building into six categories, depending on the uses to which they are put, is provided for under Rule-6. These uses are, (a) residential, (b) shops, (c) shopping complexes, (d) public or private offices, (e) commercial or industrial uses, (f) cinema theatres or places of public entertainment etc. Thereby 36 categories of buildings emerge for the purpose of fixation of ARV. During the course of this exercise, 2 sets of draft and final notifications are required to be published, one under Rule-3 and the other under Rule-7. It is necessary to extract the same for better understanding of the Scheme under the Rules:
"Rule 3: Annual Rental Value:--(1) 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 specified.
(2) The Commissioner, shall gather the information relating to the prevailing rental value as specified in Rules 4 to 6 so as to arrive at the rate of rent per month or per year per square meter of plinth area; and then issue a draft notification in a daily newspaper having circulation in the district and in the District Gazette calling for objections and suggestions from the public so as to reach the Commissioner within 15 days from the date of publication of the draft notification, regarding the division of the Corporation into Zones and monthly or yearly rental values per square meter of plinth area in each Zone.
The Commissioner should consider the objections and suggestions if any, received in response to the said notification and revise the Zones and the monthly and yearly rents whereever necessary. He shall place the proposals before the Committee constituted by the Government for its final recommendation.
On the basis of the recommendations of the Committee, the Commissioner shall issue a final notification in Form-A and publish it in a local newspaper having circulation in the district and in the District Gazette for information of the public.
Rule 7: Fixation of monthly or yearly rent:--
(1) All buildings located in a zone shall be classified based on the types of construction and nature of use, 36 categories of buildings can be identified in each zone based on the above criteria. The Commissioner shall gather the information relating to the prevailing rental value of the buildings of various categories in a Zone and arrive at average monthly or early rent fixable for each category of building per sq. mt. of plinth area.
(2) The Commissioner shall then provisionally fix monthly or yearly rent for each category in a Zone per square metre of plinth area and notify the rate of monthly or yearly rental so fixed in Form-A for adopting the said rates for fixation of monthly or yearly rental of the buildings in a zone and publish the same in the District Gazette and in a local newspaper having circulation in the district calling for objections or suggestions from the public for such adoption regarding the division of Municipality into Zones. The notification shall contain the monthly or yearly rental value of the buildings in a Zone together with the localities/areas with particulars of door numbers included in the Zone. The objections or suggestions, if any, on the said notification shall have to be sent to the Commissioner within 15 days from the date of its publication. The Commissioner shall consider the objections and suggestions, if any, received in response to the said notification and revise the Zones and the monthly or yearly rental values wherever necessary. He shall then place all the proposals before the District bevel Advisory Committee constituted by the Government for its final recommendations. Thereupon the Commissioner shall publish a final notification in Form-A in the District Gazette and local newspaper having circulation in the district for information of the public, (the other paragraphs of the Rule omitted as not necessary)"
13. Rule 3(2) provides for publication of a draft notification in a daily newspaper and in the District Gazette, calling for objections and suggestions to be submitted within 15 days from the date of publication of the proposals to fix the rate of rent for the plinth area. After publication of this draft notification, the Commissioner is required to take the suggestions and objections into account and publish a final notification in Form-A in the local newspaper as well as District Gazette. With the publications of these notifications, the steps contemplated under Section 212, viz., determination of ARV stands complied with. While the emphasis on the notification under Rule 3 appears to be as regards the classification of the buildings for the purpose of arriving at the rate of rent, per month or per year, per square metre of plinth area, the purpose underlying the notification under Rule-7 is to adopt broader classification of the buildings in each Zone, as provided for in Rules 5 and 6. Though the purport and purpose of the draft notifications under Rules 3 and 7 are different, the final notifications under both the Rules are required to be issued in Form-A. The Rule making authority left some scope for confusion in this regard. The same however does not matter much, for the cases on hand.
14. Sections 214 to 227 of the Act occur under the heading "Assessment Book", Section 214 contemplates preparation of the Assessment Book for every financial year with the following principal requirements and, comprising of the following entries:
"(a) a list of all buildings and lands in the Cit distinguishing each either by name or number, as he shall think fit;
(b) the rateable value of each such building and land, determined in accordance with the foregoing provisions of this Act;
(c) the name if ascertained of the person primarily liable for the payment of the property taxes, in respect of each such building or land; and
(d) if any such building or land is not liable to be assessed to the general tax, the reason of such non-liability" (other part of the section is omitted, as not necessary)
15. Once the book is prepared, further steps are contemplated under Section 218 to 220. They read as under:
"Section 218: Public notice to be given when valuation of property in any ward has been completed:--(1) When the entries required by Clauses (a), (b), (c) and (d) of Section 214 have been completed, as far as practicable, in a ward assessment book, the Commissioner shall give public notice thereof and of the place where the ward assessment book or copy of it, may be inspected.
(2) Such public notice shall be published in the Andhra Pradesh Gazette and in the local daily newspapers and also by posting placards in conspicuous places throughout the ward.
Section 219: Assessment book to be open to inspection:--(1) Every person who reasonably claims to be the owner or occupier of some premises entered in the assessment book or the agent of any such owner or occupier shall be permitted free of charge, to inspect and to take extracts from any portion of the said book which relates to the said premises;
(2) Any person not entitled under Sub-section (1) to inspect and take extracts from an portion of the assessment book free of charge shall be permitted to do so on payment of such fee as shall from time to time be determined in this behalf by the Commissioner, with the approval of the Standing Committee;
Section 220: Time for filing complaints against valuations to be publicly announced:--(1) The Commissioner shall, at the time and in the manner provided in Section 218, given public notice of a day, not being less than twenty one days from the publication of such notice, on or before which complaints against the amount of rateable value in the ward assessment book will be received in his office.
(2) In every case in which any premises have for the first time been entered in the assessment book as liable to the payment of property taxes, or in which the rateable value of any premises liable to such payment has been increased, the Commissioner shall, as soon as conveniently may be after the issue of the public notice under Sub-section (1), give a special written notice to the owner or occupier of the said premises specifying the nature of such entry and informing him that a complaint against the same will be received in his office at a time within fifteen days from the service of the special notice" (Sub-section (3) omitted as not necessary)
16. Before 1969, there was no necessity to publish the notice in the A.P. Gazette. Through Act 5 of 1969, publication in such Gazette was made mandatory. The other two modes of publication are; publication in local daily newspaper, and by posting placards at conspicuous places. Section 219 enables the assessees or other interested persons, to peruse and inspect the assessment book and to obtain extracts thereof. Sub-section (1) of Section 220 provides for publication of a notification as the next step, enabling the affected or interested persons to submit complaints or objections for the entries in the assessment book within a period of not less than 21 days. The manner of publication of this notice in turn, is the same as the one prescribed for the notices under Section 218. A further step contemplated under this Section is that if any premises are entered in the Assessment Book for the first time, or the ARV for any building is enhanced, the Commissioner shall issue a special notice to the owner or occupier of such building. The stage at which the special notice is to be issued is clearly stipulated, viz., subsequent to the publication of the notice under Sub-section (1). An assessee is entitled to submit complaints or objections within 15 days of receipt of the special notice.
17. The Commissioner is empowered to entertain and adjudicate upon the complaints or objections received in response to the public notice issued under Sub-section (1) or special notice, issued under Sub-section (2) of Section 220; and pass appropriate orders as provided under Section 223. It is only after the Commissioner attends to the complaints and objections, that the Assessment Book gets authenticity under Section 224. Section 226 exempts preparation of the Assessment Book afresh subject to certain conditions. This, broadly, is the scheme for preparation of assessment and levy of property tax.
18. Social scientists recognize levy of taxes as one of the four important attributes of sovereignty. Levy of taxes, therefore, partakes the character of sovereign power. Once absolute power is conceded to the State to levy taxes, hardly there exists any scope for a citizen to question the basis for such tax. The principle of Quid Pro Quo Seldom applies to the field of taxation, though it applies to the realm of levy of fee in a limited scale. The protection to a citizen in this regard is limited mostly to scrutinizing of legislative competence and insistence, on adherence to the procedure prescribed in law. In fact, Article 265 of the Constitution of India mandates that no tax shall be levied or collected except on authority of law. The requirement under this Article applies equally to substantive and procedural aspects. It takes in its fold, not only existence of law enacted by a competent Legislature, but also the strict adherence to such provisions.
19. It is age old, and time tested principle of law that a subject cannot be taxed in the absence of a clear provision of law, and that the statutory provisions providing for levy of tax are to be construed strictly. The considerations such as hardship and equity, hardly have any place in the field of taxation. More than one and half centuries ago, LORD CAIRNS enunciated the principle as under:
"If the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. Once the other hand, if the Crown seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of law the case might otherwise appear to be. In other words, if there be admissible in any statute, what is called an equitable, construction, certainly, such a construction is not admissible in a taxing statute where you can simply adhere to the words of the statute (Partington v. A.G., (1869) LR 4 HL 100)"
20. It is around this principle that several other subsidiary principles emerged over the time; from the English and Indian Courts. In A.V. Fernandes v. State of Kerala, , the Supreme Court observed as under:
"In construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law. If the revenue satisfied the Court that the case falls strictly within the provisions of the law, the subject can be taxed. If on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter."
21. In Sales Tax Commissioner v. Modi Sugar Mills, , the Supreme Court held as under:
"In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The Court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed, it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any assumed deficiency,"
22. The time tested principle that where the law requires a thing to be done in a particular manner, it shall be done in that manner or not at all, enunciated by the Privy Council in Nazir Ahmad v. Kind Emperor, AIR 1936 PC 253, and reiterated by the Supreme Court from time to time (see Gujarat Electricity Board v. Girdharlal Motilal, , applies with greater vigor to the field of taxation.
The Consideration:
23. Reverting to the cases on hand, the undisputed facts are that initially a draft notification was issued under the Rules in the year 1993. On account of pendency of various proceedings in different Courts, further steps could not be taken. It is not known as to whether a draft notification issued in 1993 was the one under Rule 3 and whether a final notification under that Rule was issued. However, a draft notification under Sub-rule (2) of Rule 7 was issued on 23-4-2001. Objections were received and on consideration of the same, the Corporation issued a final notification on 22-9-2001 in Form-A under Sub-rule (3) of Rule 7. The General Body of the Corporation at its meeting held on 3-10-2001 took exception to the rates of ARV fixed under the notification dated 22-9-2001. Taking the same into account, the Commissioner made some amendments to the notification dated 22-9-2001, and it was republished on 20-10-2001.
24. The Corporation has not published any notifications provided for under Section 218 or Sub-section (1) of Section 220. On the basis of the final notification issued in Form -A under Rule 7(3), it issued special notices to all the assessees irrespective of the fact whether the buildings were entered in the book for the first time or whether there was any enhancement. These notices were issued before the Commissioner amended notification dated 22-9-2001 through another notification dated 20-10-2001.
25. In response to the special notices representations and objections were received. The Commissioner delegated his powers to some of the officers of the Corporation. They in turn dealt with the objections raised by the assessees and passed orders of demand. Therefore, it needs to be seen as to whether the steps taken by the Corporation are in conformity with the provisions of the Act and Rules. The assessees do not raise any objection as to the procedure adopted by the Corporation under the Rules in the matter of issuance of a final notifications in Form-A. Their complaint is only about non-compliance with the provisions of Sections 214 to 220.
The Discussion:
26. There is no dispute that the Corporation has not published any notification under Section 218 and Sub-section (1) of Section 220. The justification pleaded by the learned Additional Advocate General is that the steps taken under Section 212 and Rules would sub-serve the purpose of the above referred provisions.
27. A perusal of the scheme of the Act discloses that the steps under Section 212 and the Rules are confined to the stages division of the Corporation into various Zones, classification of the buildings with reference to the type of construction and use to which they are put and determination of annual rental value. This exercise is general in nature, and not with reference to the individual buildings. The assessment of tax on the basis of the classification of the buildings and determination of ARV begins with the preparation of Assessment Book under Section 214. It provides for entering of four independent aspects, with reference to each and every building. They are referred to in the preceding paragraphs. A reading of the said entries discloses that preparation of assessment book is not a mechanical process of applying the criteria, evolved under Section 212 and the Rules, to each and every building. Though the same may constitute a valid basis, it is not the absolute consideration for assessing a building to tax. For example, Clause (d) of Section 214 directs the following information be entered:
"if any such building or land is not liable to be assessed to the general tax, the reasons of such non-liability."
28. From this it is evident that the Corporation is vested the discretion to exempt a building or land from levy of the general tax, but after furnishing the reasons in support of such a decision.
29. Section 218 mandates that once the Assessment Book under Section 214 is ready, the Commissioner shall give public notice thereof and the place where the Assessment Book or a copy of it can be inspected. The mode of publication is also stipulated. Section 219 enables the assessees not only to inspect the Assessment Book, but also to take extract of it, free of cost, if it relates to his own premises or on payment of costs, if it relates to some other premises. The purpose underlying this section is to enable the assessee to make out a point by way of comparison of his premises with those of any others in the area. The starting point for submission of the complaints or objections for such assessment is the publication of notification under Sub-section (1) of Section 220. While it is not known as to whether the Assessment Book as provided for under Section 214 is prepared at all, there is no dispute that Steps, Sections 218, 219 and Sub-section (1) of Section 220, were not taken at all. The non-compliance with the above said provisions is sought to be explained away, by stating that it is only an infirmity or irregularity and cannot constitute any illegality.
30. It is not as if the publication of notification under Sections 218 and 221 has no definite purpose to serve. Notification under Section 218 signifies the preparation of the assessment book and its being available to be examined. After making necessary inspection as provided under Section 219, an owner or occupier of a building is entitled to gather necessary information, to support his case while taking objection for the assessment. One of the important ways of making out a case is by way of comparison of the similarly obtaining situations. In a given case, an owner or occupier may point out the discrepancy, or the illegality, by way of comparison. That opportunity is totally denied on account of failure to comply with Sections 218 and 219 and Sub-section (1) of Section 220. In this regard it is apt to refer to Section 224, which reads as under:
'Section 224: Authentication of Ward Assessment Books when all complaints have been disposed of:--(1) When the complaints, if any, have been disposed of and the entries required by Clause (c) of Section 214 have been completed in the ward assessment book, the said book shall be authenticated by the Commissioner, who shall certify, under his signature, that except in the cases, if any, in which amendments have been made as shown therein, no valid objection has been made to rateable values entered in the said book.
(2) Thereupon, the said ward assessment book subject to such alterations as may thereafter be made therein under the provisions of the next following section shall be accepted as conclusive evidence of the amount of each property tax leviable on each building and land, in the ward, in the financial year to which the books relates."
31. The disposal of complaints as provided for under Clause (e) of Section 214 is in turn traceable to a combined exercise of issuance of publication of notification under Section 218, making the books available for inspection under Section 219 and publication of notification under Sub-section (1) of Section 220 enabling the assessees to complain and disposal of the same under Section 223. Till such a procedure is not adopted, there is no way that the assessment book can become authenticated. Conversely, unless the book is authenticated, the question of issuance of any notice of demand on the basis of it does not arise.
32. The significance of notifications issued under the statutes imposing taxes was recognized and emphasized by the Supreme Court in most unambiguous terms. In Atlas Cycles Ltd. v. Haryana State, , the Supreme Court observed as follows:
"...... a taxing provision always receives a strict interpretation for the obvious reason that there must be clear and express language imposing a tax and the date from which such tax shall come into effect. Notifications under the Act are the only authority and mandate for imposition and charge of tax."
33. An important argument on behalf of the Corporation is that though the notifications under Sections 218 and 220(1) were not published, the special notices issued under Sub-section (2) of Section 220 of the Act would salvage the situation. Sub-section (2) of Section 220 itself mandates that the special notice issued under it, is to be preceded by publication of notification under Sub-section (1) thereof. Sub-section (1) in turn indicates that the notification contemplated under it can be issued after the notification under Section 218 is issued. Thus, an unbreakable chain exists from the stage of Section 218 to Sub-section (2) of Section 220. Absence of one link would render the other links ineffective to form the chain. M.S.C. Construction Company Pvt. Limited v. Municipal Corporation of Hyderabad, , a Division Bench of this Court held that the notice under Sub-section (2) of Section 220 is in addition to the public notice contemplated under Section 218 of the Act.
34. Thus, a combined reading of the provisions of the Act and the decided cases hardly leaves any doubt for the proposition that the provisions of a statute imposing tax have to be construed strictly, that a citizen cannot be levied tax except under the authority of law, and that strictly compliance with such law shall be ensured.
35. Corporation relies upon a recent judgment of this Court dated 26-2-2004 rendered by a learned Single Judge of this Court in relation to Vijayawada Municipality itself in CMSA Nos. 47 of 2003 and Batch in support of its contentions. It must be stated that the subject-matter of the said batch of appeals is similar in all respects.
36. It was argued therein, as here, that publication of notice under Section 218 or Section 220 is not mandatory and that non-compliance in that regard can be taken care of, under Section 684. Two judgments rendered by Division Benches were considered, namely, Himayatnagar Rate Payers Association v. Municipal Corporation of Hyderabad, 1970 (1) ALT 134 and S.B.H. Co-operative Bank Officers Welfare Association v. Government of A.P., .
37. In Himayatnagar Rate Payers Association case (supra), the complaint was about non-compliance with Section 218 of the Act, insofar it relates to display of notice through placards. In that case, out of the three modes of publication viz., (a) publication in the A.P. State Gazette, (b) publication in daily newspaper having circulation in the locality, and (c) publication through display of placards, the first two were complied with. Dealing with the non-compliance with the publication through placards, the Division Bench held that there is no substance in the contention. Reference was made to the factum of issuance of special notice under Sub-section (2) of Section 220 and existence of Section 684 of the Act. The cases on hand are in no way comparable to that. Publication in the Gazette, which was mandatory from 1969 onwards as well as publication in the local newspapers were made therein, whereas no such compliance is present in the cases on hand.
38. Though it is doubtful whether the doctrine of substantial compliance has any place in the field of taxation, it can be said that the judgment in Himayatnagar Rate Payers Association (supra) was rendered on such a principle. The situation obtaining in the present case is of an absolute non-compliance.
39. In SBH Co-operative Bank Officers Welfare Assocation case (supra), a Division Bench of this Court had analyzed the entire scheme of taxation by the Municipalities in the State of Andhra Pradesh. The provisions of the Act were interpreted. It ultimately enlisted nine requirements to be scrupulously followed before any tax is levied. On an appeal to the Supreme Court, requirements 3 and 5 were set aside. Requirement No. 9 is important for the purpose of theses cases. It reads as under:
"Before Form-B is issued in respect of the buildings and lands, the Commissioner shall afford opportunity to the assessee to object to the determinations made and shall decide the objections on considerations as directed above and provisions of Sections 214 to 225 of the Corporation Act shall be scrupulously followed, subject to the provisions of appeal."
40. It was held beyond any pale of doubt that the provisions of Sections 214 to 225 of the Act shall scrupulously be followed and this aspect was upheld by the Supreme Court. In view of this development, it is doubtful as to whether observation in Himayatnagar Rate Payers Association (supra), as regards condonation of lapse even as regards the third mode of publication, still holds good. After discussing these two judgments, the learned Single Judge, in a way summed up his conclusions as under, in the judgment in C.M.S.A.No. 47 of 2003 and Batch;
"It cannot be said that Section 218 of the Act need not be followed at all and if such an interpretation is given, the very purpose of the provision would be rendered otiose."
41. However, in the next sentence itself, he proceeded to observe as under:
"In my considered view, the real meaning and object of Section 218(2) of the Act is to be read and construed along with Section 220 of the Act, particularly with Sub-section (2) of the said section."
42. It was opined that non-publication of notices under Sections 218 and 220(1) is curable under Section 684 of the Act. Ultimately, it was held as under:
Coming to the facts of the present case, the Corporation failed to publish the notice for inspection of assessment book, which is a mandatory procedure under Sub-section (2) of Section 218 of the Act and it amounts to either informalities or omission. But, admittedly, the special notice as envisaged under Sub-section (2) of Section 220 with regard to inspection of assessment book and filing of objections, has been issued and the owners have filed their objections and the same were considered and disposed of by the Commissioner under Section 223 of the Act. This indicates that the provisions of the Act have, in substance, been complied with and in such a case, the non-compliance of Sub-section (2) of Section 218 of the Act, though is a defect, need not be attached with much significance, since no special damage is caused to the owners by the so-called defect. Therefore, taking the clue from the expression used in Sub-section (1) of Section 684 that "may at any time as far as possible, be rectified, the said defect can be ignored."
43. With great respect I am of the view that, it is difficult to reconcile the opinions expressed in the passages extracted above. Once it is observed that Section 218 is mandatory, its non-compliance could not have been treated as an informality or omission. In a way, it leads to a contradiction in terms. A provision of law, once recognized as mandatory, does not permit of any deviation from it. Conversely, if any deviation or omission as regards a provision is permitted, it ceases to be mandatory; and tends to become directory. When a Division Bench of this Court, as late as in 1987 categorically held that provisions of Sections 218 to 225 of the Act shall be scrupulously followed and the same was confirmed by the Supreme Court, hardly there exists any scope for a total condonation of a complete non-compliance with Section 218 under any pretext.
44. An effort was made to rescue the situation by taking recourse to Section 684 of the Act, which reads as under:
"Section 684: Informalities and errors in assessments, etc., not to be deemed to invalidate such assessment, etc.:--(1) Any informality, clerical error, omission or other defects in any assessment made or in any distress levied or in any notice, bill, schedule, summons or other documents issued under this Act, or under any rule or bye-law made thereunder, may at any time as far as possible, be rectified.
(2) No such informality, clerical error, omission or other defect shall be deemed to render the assessment, distress, notice, bill, schedule, summons or other document invalid or illegal, if the provisions of this Act and of the Rules and bye-laws made thereunder have in substance and effect been complied with; but any person who sustains any special damage by reason of any such informality, clerical error, omission or other defect shall be entitled to recover compensation for the same by suit in a Court of competent jurisdiction."
45. A reading of this Section discloses that it is meant to save situations arising out of trivial mistakes, informalities or errors in assessments. It is comparable to Section 465 of Cr.P.C., and 152 of CPC. The various instances referred to therein, namely, infirmity, clerical error, omission in the notice, bills, schedules, summons; do not permit inclusion of publication of notifications under Official Gazettes, that too in the process of general revision of tax as contemplated under Sections 218, 220 etc. The rule of Ejusdem Generis and the limited purpose for which Section 684 was enacted, would thwart any attempt to put the absolute non-compliance with mandatory provisions such as Sections 218 and 220, in the company of the situations provided for under Section 684. In Municipal Council, Khurai v. Kamal Kumar, , the Supreme Court observed as under:
"Under Article 265 of the Constitution no tax shall be levied or collected except by authority of law. This clearly implies that the procedure for imposing the liability to pay a tax has to be strictly complied with."
46. In that case, an attempt to treat the objections raised in response to a notification under Section 136 of Madhya Pradesh Municipalities Act, as the one, for the purpose of notification under Section 137 thereof, was repelled by the Supreme Court.
47. Reliance is placed on the judgment of the Supreme Court in Municipal Board, Sitapur v. Prayag Narain Saigal and Firm Moosaram Bhagwan Das, , for the proposition that minor irregularities can be taken care of under the provisions analogous to Section 684. Firstly, the total non-compliance with the mandatory provisions such as Sections 218 and 220(1) cannot be treated as an irregularity. Secondly, the complaint before the, Supreme Court was not about the non-publication, but publication of the draft rules, and the notice, separately. Thirdly, no prejudice was caused to the assessees in that case, since the entire exercise has resulted in reduction of tax by 10%.
48. My learned brother who decided the CMSA Nos. 47 and 2003 and batch treated the observations of the Division Bench in Himayatnagar Rate Payers Association case (supra) as almost an exemption granted in favour of the Corporation from complying with Sections 218, 219 and Sub-section (1) of Section 220. As pointed out in the preceding paragraphs, the only non-compliance in that case was about publication through placards. Publications in the Official Gazette and the local newspapers were made. After elaborately discussing the scheme under the Act extensively, with reference to each and every provision from Sections 197 to 226, their Lordships held as under:
"The second stage consists of determination of rateable value and the quantification of tax.
It consists first of the preparation of a provisional assessment book wardwise. Such a book is prepared at least once in every four years. Within these four years, however it is not necessary to prepare every financial year a new book. The Commissioner can adopt the entries made in the last preceding year's book with such alterations as he thinks fit and such adopted book is considered as a ... provisional book of assessment. Such a book may be prepared before new financial year commences or during the course of the financial year. What is material is that in every financial year, there shall be prepared an assessment book. It may be new every four years or it may be a book adopted from the previous year for the next financial year. In either case, at the initial stage it is a provisional or tentative assessment book.
When such a book is prepared, a public notice thereof has to be given notifying the place at which it will be kept open for inspection. Such a notice is to be given in the manner prescribed in Section 218. Along with the said notice or immediately afterwards in every case where rateable value of any premises has been increased, the Commissioner is bound to give a special notice to the owner or occupier calling for a complaint if any. After enquiry into such a complaint the Commissioner shall pass an order and make the necessary amendments in the Assessment book in the light of the order, ft is only then that the ward Assessment Book is authenticated by the Commissioner in the manner provided in Section 224. The book then, would be conclusive evidence of the liability of tax for the financial year to which the book relates, It is only upon authentication that the tax mentioned in the assessment book becomes due by the ratepayer against the property it shows.
It is only then that the Commissioner can proceed to collect the tax according to the provisions of the Act by first sending the bill and then the demand notice followed if necessary, by coercive processes."
49. When such is the clear pronouncement of the Division Bench, a stray observation in respect of non-compliance with an inconsequential mode of publication cannot be viewed in isolation, nor treated as a licence to the Corporation to ignore or by pass Sections 218, 219 and 220(1) as a whole. A reading of the above passage clearly discloses that the book prepared under Section 214 would assume authenticity only on compliance with the relevant provisions of Sections 218 to 224. In Union of India v. Amrit Lal Manchanda, , the Supreme Court held that the observation of a Court in judgment has to be read in the context in which it is made and not in isolation. A judgment cannot be interpreted in the same way as a statute.
50. I am conscious of the limitations, in departing from a judgment rendered by another learned Single Judge, on the same set of facts. Concept of Stare Decisis is one of the hallmarks of Indian Jurisprudence, which in turn is inherited mostly from English Law. Adherence to the same ensures uniformity and consistency. At the same time, when it is noticed that the ratio decidendi laid down by superior Courts or Benches is not reflected in a precedent emerging from a Bench of the same strength, a delicate situation arises, namely whether to follow the precedent and ensure consistency in approach, without going beyond what is stated in it; or to follow-the principles enunciated by the superior Courts, on the matter, I am of the view that in such situations, howsoever advisable it may be, to ensure consistency or to follow the precedents in question, a Judge would be failing in his duty, if the benefit of a principle laid down by a superior Court is not extended to the litigant before it.
51. A judgment of a Court operates as a precedent only for what it decides, known as ratio decidendi and not for its general or casual observations, called obiter dicta. However, discerning or culling out the ratio decidendi of judgment is by no means a simple or easy task. Many a time, it would be difficult to state, with a semblance precision as to which portion of the judgment represents the ratio decidendi and which, the obiter dicta. The angle from which a precedent is examined makes a substantial difference. In the process of answering the main issue or dealing with the core of the dispute, passing observations are bound to be made by the Court, here and there. Once the central issue involved in the case is identified, the view expressed by the Court on that issue deserves to be treated as the ratio decidendi. The observations in the process of reasoning, or disposal of inconsequential and subsidiary issues, fall into the category of obiter dicta. Where, the ultimate conclusions are summed up at the end of the precedent; the Court before, which it is cited, is relieved of the difficulty in this regard. It is beneficial to refer to the view of some jurists, in this context.
52. Sir John Salmond, in his treatise on jurisprudence, aptly explained the difficulties in identifying the ratio decidendi in a precedent. He wrote as under:
"While it is fairly simple to describe what is meant by the term ratio decidendi, it is far less easy to explain how to determine the ratio of any particular case. Though we know that it is the rule the Judge acted on, we cannot always tell for certain, what that rule was. In some cases all we are presented with is an order or judgment unsupported by reasons "of any sort. In others we are furnished with lengthy judgments in which may be embedded several different propositions, all of which support the decision. Another difficulty is that any general rule of law must ex hypothesi relate to a whole class of facts similar to those involved in the case itself: but just what this class is will depend on how widely we abstract the facts in question."
53. Edgar Bodenheimer, in his book on jurisprudence, described the significance, and method of identification of ratio decidendi as under:
"(A) case is not controlling as a precedent for the sole reason that similarities and parallels between the facts of the earlier and later cases can be discerned. The ratio decidendi must be discovered by relating the facts of the two cases to a principle of legal policy which reasonably covers both situations. In many instances, this principle of policy will not spring into existence as a finished creature the first time it is expressed by a Court. It will often have been stated by the Court in a tentative and groping fashion, and its true import and scope will not be capable of being ascertained until other Courts have had a chance to correct the inadequacies of the first formulation and to graft exceptions, qualifications, and caveats upon the principle. In this way the ratio decidendi of a case often develops its true and full meaning slowly and haltingly, and it may take a whole series of decisions involving variations of the situation presented in the first case until a full-blown rule of law, surrounded perhaps by a cluster of exceptions, replaces the tentatively and inadequately formulated generalization found in the initial decision. In short, a whole course of decisions will gradually mark out the outer limits of a legal principle left indeterminate by the first decision attempting to give form to it."
54. The difficulty in distinguishing ratio decidendi from obiter dicta is explained by C.K. Alien, in his celebrated work "Law in the Making", in the following terms:
"One of the greatest difficulties in its conception is the distinction which is constantly drawn between ratio and dictum, the essential and the inessential. In the course of the argument and decision of a case, many incidental considerations arise which are (or should be) all part of the logical process, but which necessarily have different degrees of relevance to the central issue. Judicial opinions upon such matters, whether they be merely casual, or wholly gratuitous, or (as is far more usual) of what may be called collateral relevance, are known as obiter dicta, or simply dicta, and it is extremely difficult to establish any standard of their relative weight."
55. Even where a ratio decidendi is identified in a precedent, it is not as if it is to be imported in its entirety to the case on hand. An effort needs to be made to fit the ratio decidendi into the facts of the case under adjudication. An amount of elasticity exists in this regard, which, in turn, would depend on the variation as to facts and circumstances. Dias, an acknowledged English Jurist compared the ratio in a precedent to a pellet of clay, and observed as under:
"The ratio of a case may be likened to a pellet of clay, which a potter can stretch and shape within limits. If he wants to stretch it, he can; or he can press it back into a pellet. A ratio cannot be stretched indefinitely any more than clay, for there is a limit beyond which the generalization of the statement of specific facts cannot go."
56. This however, is a very delicate and difficult task. Neither the Judge can interpret the ratio as he likes nor can he blindly apply it unmindful of the variation of the facts and circumstances. If the ratio can be equated to a druggor medicine, the Judge can be compared to a physician. He is vested with the discretion, to decide as to whether it is the proper drug at all to be administered at all, and if so, to decide its dosage. The situation cannot be circumscribed by any hard and fast rules of principles.
57. Examined from this angle, the judgment in Himayatnagar Rate Payers Association (supra) has to be treated as authority for proposition that the liability of payment of tax is contingent upon the authenticity of the Assessment Book or its amendment and that it is only when the entire procedure set out in Sections 218 to 223 is complied with, that the assessment book assumes finality. This is evident from the paragraphs of the judgment extracted in the earlier part of this judgment. This constitutes the ratio decidendi. The stray observation that the non-publication of notification under Section 218 through placards is not fatal to the process, that too in the context of compliance with two other modes of publication, cannot be treated as a declaration of law to the effect that the Sections 218, 219 and 220(1), need not be complied with in any manner whatsoever. The said observation is nothing, but an obiter dicta. Even if there existed any doubt in this regard, it stood clarified by a subsequent Division Bench in SBH Co-operative Bank Officers Welfare Association (supra). It was held therein that the Corporation is under obligation to follow the provisions of Sections 214 to 225, scrupulously. But for the mistaking of obiter for ratio, the judgment in CMSA No. 47 of 2003 and batch would certainly have been different.
58. Law recognizes exceptions to the principle of stare decisis. In K. Srinivasa Rao v. State of A.P., , after referring to the Treatise of Sir John Salmond and C.K. Allen, this Court observed as under.
"One of the exceptions to the principle of stare decisis is where the Court gives a decision per incuriam because the provisions of a statute or the authority of a case have not been brought to their attention (Lord Goddard, CJ, in Moore v. Hewitt, 1947 (2) All.ER 270). The concept gets attracted either when an important provision of law eluded the attention of the Court or where the Court was allusive to such provisions while rendering the decision. Instances of per incuriam may also arise where the decision is rendered ignoring a binding precedent:"
59. At any rate, it is evident that the view taken in the said judgment does not accord with the principles applicable for interpretation of taxation statutes. When the requirement is that such statutes should receive strict construction, an outright failure or refusal to follow Sections 218, 219 and Sub-section (1) of Section 220, cannot be supported in law.
60. For the foregoing reasons, I regret my inability to fall in line with the judgment in C.M.S.A No. 47 of 2003 and batch, with due respect to the learned Judge, who rendered it.
61. In its wisdom, the Legislature thought it appropriate that once an assessment book is prepared under Section 214, a notice of its being ready and available for inspection has to be published. When there was some ambiguity as to the mode of publication, it amended the Act in the year 1969 and made the publication of notifications under Sub-section (1) of Section 20 in Official Gazettes, mandatory. When the Legislature thought it fit that the interests of the citizens are protected by having reposed to such a procedure, it is not for the Courts to hold that it is not necessary to publish those notices. Such a pronouncement by Courts would amount to repealing of Sections 218, 219 and Sub-section (1) of Section 220, from the Act. Enactment or repealing of a provision of law is within the prerogative of the Legislature. The Courts cannot usurp the same. The only occasion for the Courts to remove a provision from a statute book is, by striking it down as being unconstitutional when challenged and on being satisfied. Such an occasion did not arise so far, in the context of the said provisions.
The Conclusion :
62. Viewed from any angle, the action of the Corporation in issuing notices straight away under Sub-section (2) of Section 220, and thereafter the demand notices, without following the procedure under Section 218, 219 and Sub-section (1) of Section 220 cannot be sustained. It is impermissible in law to undertake an expost facto publication of notices under Section 218 of the Act. What is required to precede, cannot be permitted to succeed.
63. Hence the assessments in question are set aside and it is directed that the Corporation shall be competent to levy the tax only after it complies with the procedure prescribed under Sections 218, 219 and 220 of the Act.
64. In the result, the appeals preferred by the Corporation stand dismissed and the appeals preferred by the assessees are allowed.