Madras High Court
Haringtons, Owned By Madanlal Sales ... vs The Commissioner And Secretary, Rural ... on 3 February, 2007
ORDER M.E.N. Patrudu, J.
1. Can the water authority of the State demand 'taxes' and 'charges' without rendering any services and providing the necessary service connections?
2. One might expect the answer to the question to be 'No', but it is not so simple as that.
3. Urban Development in the recent days is unimaginable. The present Society is attracted and adicted more and more to the city life. Due to the increased craze for city living, the departments of Municipal Administration is undoubtedly facing uphill task to meet the minimum requirements and basic necessities of the citizens. Result is enacting various Municipal laws regulating water, drainage, sewerage, few to name. It is the duty of the municipality to provide drinking water to public. So also, they have power to levy necessary taxes and collect the charges.
4. But from whom is the core question.
5. Whether the authority empowered under the water Act has power to demand payment in respect of water and sewerage from a house holder or flat owner or a business man whose premises are not connected to its services?
6. If, as the respondents contend the answer is 'YES', then the water authority has power to collect such payments from each and every house holder in this world whose premises are no way near the water or the sewer facility, and that there is no practical possibility of their ever being connected to such services due to remoteness and poverty. A house holder in remotest areas of Chennai would be liable to make a payment in respect of such services as much as the one residing in the centre of the city either at Mylapore or T.Nagar. So also can a flat owner residing in the heart of the city avoid the service connection by using the facility with neighbour and then claim total relief from payment?
7. Hence a decision is required from a Court of law.
8. The decision must be a legal decision with human touch.
9. Facts:
(i) In this case, the petitioner is the owner of the premises known as Haringtons situated at 88, 33 Harringtons Road, Chennai. It is known as Madanlal Sales Private Limited. The admitted case is that the premises is not connected either with the water facility or the sewerage. But it is located in a prime locality of the city and water and sewerage services are provided all around the premises and though the premises is not connected with the connection the complex where the premises is connected with services and the petitioner and the others using the premises are bound to utilise the services as there is no other alteration.
(ii) The first respondent is the Commissioner and Secretary of the Local Administration Department of the State.
(iii) The second respondent is the Chairman and Managing Director of the Chennai Metropolitan Water Supply and Sewerage Board (hereinafter referred to as "Board").
(iv) The third respondent is the Area Manager of the Board who is the rating authority and the fourth respondent is the Special Tahsildar who is the recovering authority.
(v) The second and third respondents, the rating authorities have served notice on the petitioner in Reference No. 5/078/0110/000 dated 26.07.1999 demanding to pay water and sewerage tax to the tune of Rs. 13,942.60 and water and sewerage charges amounting to Rs. 12,630/- totalling Rs. 26,572.60.
(vi) The petitioner has refused to pay the said charges and claims that the demand were made without any authority and is unlawful and in this connection he seeks declaration that the provision of Act XXVIII of 1978 known as Madras Metropolitan Water Supply and Sewerage Act (hereinafter referred to as "Act") does not apply to the owner who does not apply for sewerage system and declare that the demand notice, is illegal and arbitrary.
10. The respondents filed counter.
(i) The first respondent has adopted the counter of the second respondent Board, the rating authority. In the counter of the second respondent it is stated that the respondent has every responsibility of supply of water and maintaining drainage and removal of garbage in the Metropolitan city of Chennai and every consumer owes a duty to pay the dues towards water and drainage by way of taxes and charges to the Board as fixed and levied by the respondent in accordance with the provisions of the Act.
(ii) In para 3, it is stated that the petitioner premises No. 99/33, in Harrington Road is occupied with a shop in a building complex. It is specifically stated that it is neither independent nor individual hereditament, but it is in the complex of a big buildingand the annual value of the above premises is fixed by the Taxing Authority as Rs. 27,737/- and the tax of Rs. 970.80 is fixed.
(iii) Therefore, the consumer has to pay water and sewerage tax so also the water supply charges.
(iv) According to the rating authority, the complex is provided with common water and sewerage connection and the petitioner premises is not connected with any separate water supply connection or sewerage connection.
(v) According to the respondents they are authorised to demand water and sewerage tax at 7% per annum of the annual value as already fixed by Chennai Corporation is correct and as contemplated under Section34 of the Madras Metropolitan Water Supply and Sewerage Board Act 1978. According to the rating authority, Section 34 of the Act authorised them to collect the taxes eventhough there is no water or sewerage connection and the tax is leviable and the petitioner is liable to pay the taxes based on the annual rental value to the premises.
(vi) It is stated that this Court in W.P.No.8229 of 1992 held that both taxes and water charges must be payable by the owner of the flat in a multi storied building irrespective of the fact whether he draws water or not and whether there is water connection to his flat or not.
(vii) The contention of the respondents is that the petitioner shop is situated in the complex with residential flats and the flats have been provided with a common drainage and water supply connection and it is not possible to provide individual connection to the flat owners by the rating authority as such the complex is provided with common water and sewerage amenities and there is internal arrangements to have connection with each other. Hence, the petitioner is liable to pay tax arrears amounting to Rs. 22,176.20 and water charges amounting to Rs. 22,573/- with surcharge applicable.
(viii) Now we can understand that the issue though appears to be just normal and simple it is not so and it require deep discussion and definite decision in accordance with law.
11. Discussion:
11.1 Water authority known as board is established through Act 1978 known as Act 28 of 1978. It is communicated by the legislation of the State of Tamil Nadu on 08.06.1978 and published in Tamil Nadu Government Gazette on 14.06.1978 and came in to force from the date of communication.
11.2 Section 2 of the act tells us, what is the authorised authority; What is Board; What is local authority; Who is the occupier; Who is the owner; What is meant by Sewerage; and What do we mean by water supply? Accordingly, Sewerage means a system of sewers for collection treatment or disposal of sewage and includes sewerage works.
Section 2(q) defines sewerage works as follows:
Sewerage works includes any sewer channel, duct, collection or treatment or disposal units, pumping station,engine mobile collecting unit, and other machinery and any adjacent land not being private property and any land, building or other things for collection or treatment or disposal of sewage.
While so, Section 2(t) defines water supply as:
Water Supply means a system of providing water to, a community for meeting tis requirement for drinking and other domestic uses, industrial, recreational and other public uses except for purposes of irrigation and generation of hydel power. 11.3 Thus water supply means a system providing water to community for its requirements like drinking and other domestic uses. 11.4 Interestingly neither the word premises nor the water connection or sewerage connection are defined and they are omitted. 11.5 The financial provisions relating to the Board are dealt in Chapter V under the heading of Finance, Accounts and Audit. Section 34 and 35 falls are under this Chapter. The rating authority, the respondents are heavily relying on section 34.
Section 34 of the Act is as follows:
Taxes leviable by the Board (1) For the purposes of the is act, the Board shall levy on premises situated within its area;
(a) a water tax; and
(b) a sewerage tax (2) The taxes mentioned in Sub-section (1) shall be levied at such rates as may be prescribed which in the case of water tax (shall not be more than thirty-five percent and in the case of sewerage tax shall not be more than fifteen percent of the property tax) (3) The Board may exempt any local area from the whole or portion of the water tax and sewerage tax on the ground that such area is not deriving any or the full benefit from the water supply or sewerage system, or the Board may remit a portion of such taxes not exceeding one half on the ground that the premises concerned has remained vacant.
Explanation : For the purposes of this chapter the expression "premises" shall mean any land or building.
(4) Where water tax or drainage tax is comprised in the (property tax) levied and collected by the existing authority such as existing authority shall reduce the (property tax) by an amount equal to the amount attributable to water tax and drainage tax.
11.6 Plain reading of Section 34 clarifies that the Board shall levy on premises situated in its area both water tax and sewerage tax. It may exempt any local area from taxing on the ground of non supply of service benefits. It is important to note that a premises is not exempted under the act from collecting tax.
11.7 Therefore, it is clear that water tax and sewerage tax shall be collected from the premises situated in the area and the percentage of the tax to be collected is spoken through Sub section (2) of section 34. However, the discretion is given to the Board under Sub section (3) to exempt any local area from levying the water tax and sewerage tax. The explanation to Section 34 clarifies the meaning of premises.
11.8 In the instant case, we are concerned with building as admittedly the petitioner is having his own premises and it is a shop in a building complex.
11.9 Thus if the provisions of Section 34 are applicable, the petitioner is liable to pay water tax and sewerage tax as he own a premises and he is doing business in the said premises.
11.10 He cannot claim exemption. The legislature in its wisdom has exempted only the agricultural purposes from levying water tax.
11.11 Section 36 reads as follows:
Restriction on the levy of taxes: The taxes mentioned in Section 34 shall not be levied on any land exclusively used for agricultural purposes unless water is supplied by the Board for such purpose to that land.
11.12 Thus the tax mentioned in Section 34 shall not be levied on any land exclusively used for agricultural purposes.
11.13 Therefore, it is clear that the legislation has not excluded any premises whether it is land or building situated in the local area of the board from levying tax.
11.14 There is no ambiguity in this regard.
11.15 It is to be borne in mind that this Act with which at present I am concerned is as Act imposing liability for collecting taxes. The chapter which I am dealing is fiscal in nature. Therefore, it must not only literally construed but must be strictly construed in order to find out whether a liability is fastened on a particular premises. The subject is to be taxed or not to be taxed and for that purpose and also that every Act of parliament or legislation must be read a wording to its natural construction of words.
11.16 Justice Rowlatt of England said long time ago, "that in a taxing act one has to look merely and fairly what is clearly said. There is no room for any intendment. There is no equities about a tax. There is no presumption as to tax. Nothing is to be read in. Nothing is to be implied. One has to look fairly at the language used. The question as to what is covered must be found out from the language, according to its natural meaning fairly and squarely read".
11.17 Justice Krishna Iyer in Martand Dairy and Farm v. Union of India has observed that 'taxing consideration may stem from administrative experience and other factors of life and not artistic visualisation or neat logic and so the literal, though pedestrian, interpretation must prevail'.
11.18 Therefore, to find out the intention of legislature if possible it should be found out from the language employed and in case of doubt, the purpose of legislation should be sought for to clarify the ambiguity only if any.
11.19 The purpose of the provision is to levy the taxes that the board shall levy the tax on the premises situated within its area and the tax is whether water tax or sewerage tax. It is fiscal provision and must therefore not only be literal but also be strictly construed and must bear the expenses, maintenance and running the services for providing water and sewerage facility through out the city by the Board.
11.20 So the provision permits to charge the occupier of the premises of ratable hereditaments irrespective of facts that whether those premises are connected to the water services, water connection and sewerage connection or not. It is authorised by the provision of section 34. It is only the tax and tax alone 11.21 Section 34 of the Act expressly provided that whom may be charged for water tax and sewerage taxes. Hence, to confer an unlimited power, as the water authority to levy water tax and sewerage tax from the occupier to the premises situated in the area of the board and how to collect tax and levy of tax is also clarified.
11.22 The usual scheme of statue imposing liability to collect charges is to prescribe the three stages. They are:
(i) liability
(ii) assessment
(iii)collection.
11.23 Now power is given to the Board to collect tax that since the occupier of the premises are liable to pay tax and how the assessment is to be made is clarified in Sub section 2 and 3 of Section 34 and the collection thereafter.
11.24 The respondents says that the payment of water tax, sewerage tax is to be collected. There is no doubt that the procedure prescribed has been followed. Thus the demand order is intra vires and thus demands are justified. The Board has to spend money to lay pipe lines to supply to the heridments and merely because one man is not utilising service, he cannot escape payment of Tax. The petitioner also says that the demand as far as water tax and sewerage tax is not ultra vires and in fact it is intra vires. It is to be borne in mind that there are many public water taps provided to the poor to fetch water and without water line even the poor cannot enjoy the water to meet the said expenditure levying tax is legal.
11.25 Therefore, I have come to the conclusion that this submission of the learned Counsel for the petitioner and the respondents are correct and I am satisfied that the Board is authorised to levy water tax and sewerage tax from the owner or occupier of the premises located in the area.
12. But the present case is little different on other point. We are also dealing here with an Act which ultimately impose charges.
12.1 The question is whether the charge is to be imposed and on to whom it should be imposed. It require clear words to justify the conclusion that the provision to the basic principles on which the scheme is construed.
12.2 Taking the language of the Act as it is, I am satisfied that the respondents entitled to levy the tax both on water and sewerage from the occupier or owner of the premises, but not the charges on water without the necessary connection.
12.3 It is the next vital question that "whether the rating authority can demand the charges for water and sewerage without providing connection or not".
12.4 Whether a house holder or the premise's occupier whose heridment was not connected to the water and sewers can be made to pay the charges for the water and sewerage. The provisions of the Act clarifies that laying water lines and disposal of sewerage is the responsibility of the local authority and the expenses incurred by them is to be treated as part of the general expenses recoverable from the general tax i.e. by way of tax to the whole body and not from the actual consumption charges. Therefore, it is necessary to look into the provisions of the Act.
12.5 Chapter V deals with water supply and sewerage. under Section 42 of the Act, the board shall provide or arrange for provision of sufficient supply of drinking water for consumption of the citizens of Chennai. Section 42 to 54 deals with water supply and water charges. Whereas Sections 55 to 69 deals with sewerage. The relevant section with regard to providing connection of water supply and demanding for water charges are 44, 45, 46, 47 and 49.
12.6 Section 44, the board has to fix different rates for different areas as far as water supply is concerned.
While so, section 45 Sub section (1) reads as " the authorized authority shall, on the application by the owner or occupier of any building or premises, arrange to supply water thereto for domestic consumption and use."
12.7 Therefore, the plain reading of the same clarifies that the water authority shall have to arrange the supply of water on an application by the owner or occupier of any building or premises. Therefore, the owner or the occupier of the premises have to make an application for connection and the water authority has to provide water through the said connection. This is very clear. There is no ambiguity in this regard. Sub section 4 and 5 deals with providing water means laying the main line at the owners cost.
12.8 While so, Section 47 is most important section in this case and it deals with calculation of charges for water supply. Sub section (1) of Section 47 reads as "for calculating the amount payable by the owner for consumption of water supplied by the Board, the Board may determine the quantity consumed on the basis of reading recorded by a meter installed in the premises." Sub Section (2) says "Where so required by the Board, meters shall be installed by the owner of the premies concerned at his cost and for this purpose, the Board shall arrange to supply the meters.
Sub section (3) reads as " The reading of the meter indicating the quantity of consumption of water shall be presumed to be correct unless the contrary is provided."
Sub section (5) says "If the owner of any premises having independent and private source of water supply is allowed by the Board to take sewerage service he shall be liable to pay for such service, such amount and on such basis as may be prescribed. "
12.9 Thus, the plain reading of the various provisions of section 47 clarifies that after calculating the amount payable by the owner for consumption of water, the board can determine the same by reading the record meter installed in the premises and it is the duty of the owner to install such meter in the premises. If whether connection is provided under Sub section 3 of Section 47 it clarifies that the amount is to be calculated on the basis of the meater reading and Sub section (5) says that if the owner of any premises having any independent and private source of the water supply is allowed by the board to take sewerage service, he shall be liable to pay for such service, such amount and on such basis as may be prescribed but not water charges.
12.10 Section 55 deals with sewerage system and section 56 deals with sewer connections and it says that the authorized authority shall on the applications of the owner or occupier of any premises arrange for the applicant's house sewer or other sewer.
12.11 However, Section 59 (2) reads as "where the owner or occupier has failed to pay any tax rate or charge for sewerage or to pay any sums due under Sub section (5) of Section 47 or under Section 56 or 57, the authorized authority may, after giving written notice of fifteen days to such owner or occupier disconnect any sewer so as not to permit such sewer to empty into the Board's sewer.
Thus the plain reading of section 47 (5) and sections 56 and 57 clarified that the board has to provide sewer service on an application of the owner of the premises and they can make payment for the charges.
12.12 In the instant case, the premises of the petitioner is not connected to the public water or public sewers.
The provisions of the Act are clear and the water charges and sewer charges can be levied only when there is water connection and sewerage connection. Whenever there is water connection and sewerage connection, then depending upon the reading the charges will be levied.
12.13 There is no provision under the Act that the water charges and Sewerage charges can be collected even though there is no water connection or sewerage connection to the premises. In the absence of any express provision that even then if the service connection are not provided or the owner of the premises liable to be charged, the natural inferences to be drawn from the provisions of the Act is that the water authority was not empowered to charge from those persons who have actually not availed the services and it is clear that the water authority is empowered to charge only those persons who actually availed the services as there are service connections and meters are installed disclosing the readings to arrive for actual calculation and payment.
12.14 As observed by me, as per usual scheme the charges are leviable under three stages i.e. liability, assessment and calculation. Calculation is last stage and unless and until there is assessment, there cannot be calculation and then the collection would be depend upon the nature of liability. When there is no service connection either for the purpose of water or sewerage facility and when there is no express provision that the water charges and sewerage charges are to be collected from the owner or occupier irrespective of the fact that whether those services are connected to those dwelling house and when there is express provisions through sections 47 and 56 of the Act that those occupiers or the owners of the provision have to made an application to the authority to provide connection and on their applications the authority has to arrange the service, the natural inference is that the authority was empowered to charge from those persons who made an application for services and actually availed those services.
12.15 Learned Counsel for the respondents referred two judgments of this Court delivered in W.P.No.8223 of 1992 and 6331 of 2003.
12.16 I have minutely gone through the judgments of those two knowledgeable Judges. In the above two judgments, it is held that there is common water connection which has been given to the entire flat and since there is common water connection, the petitioner who is also residing in the same building having a small retail shop is liable to pay water charges since the common connection is given to the common sump meant for all flat owners and it is the responsibility of the owners of the flat to draw the water for the common sump and the petitioner is residing in the same building running a shop is liable to pay the charges. I beg to defer for the reasons already explained in my order.
12.17 The rate buyer in this case is the owner or the occupier of the hereditament in the heart of the city of Chennai from the nearest public water and public sewers. So that this case is of general importance. The consequence of my order must be if the the petitioner's contention is right that the taxes and charges must be collected only from other persons in the locality, the occupiers of the service connected houses, there will be great relief to those who are not having connection.
12.18 Sections 45, 47, 49, 55 and 56 are quiet clear and they are not acceptable of using in different ways.
Plain reading of the provision clarifies that the actual charges on the rate payers who have service connection and payment has to be made by them under the statue. The provisions are silent with those who are not having service connection.
12.19 The general service charge under the head of tax provided under Section 34 of the Act was to cover all services. It was to be collected in the form of poundage on the ratable value of each hereditament in the rating area from every person liable to pay the general rate, i.e. from the occupier, and no exemption or reduction was allowable on account of the fact that the hereditament concerned might not be connected to a public service connection. I 12.20 It is interesting to note that Chapter VI of the Act deals with water service and sewerage service and Sections 45 and 56 clearly says that only on application by the owner or occupier of the premises , the board shall arrange to supply water or the supply of sewerage and all the cost incurred for provision of such supply shall be borne by the owner or the occupier. Further section 47 clarifies that a reading meter to be installed by the Board to record the quantity of water consumed by the occupier in order to pay the charges. Therefore, I must conclude that these two provisions are clear and there is no confusion in arriving at a decision.
12.21 It is the duty of the Court to understand the true meaning of Act of the parliament and a Act of legislature, especially one which affects many people, whatever the parties may have agreed or allowed this course to be taken. Legislation in its wisdom has authorized the board to fix the charges only on the consumers of the water basing on the meter reading. No flexible power is given to the board to demand water charges from all the owners of the hereditaments in Chennai city. There is difference between the consumer of the Board and the resident of Chennai. I think that one can fairly find some limitation in the words used in the statute which will bring them within the limitation of constitutional propriety. We should do so and I do not think there is much difficulty in this task.
12.22 The words 'services performed, facilities provided or rights made available' themselves point the way clearly enough so as to limit the persons liable to pay the charges to those for whom the facilities are provided, for whom the rights are available. Such a limitation is consistent with other provisions in this part of the Act. The authorised authority shall on application by owner or occupier of any premises arrange to supply water thereto for domestic consumption and use and for calculating the amount payable in the consumer for consumption of water supplied by the board. The board determine the charges on the basis of meter reading installed in the premises. If the owner of the premises having independent and private source of water supply then board is not permitted to demand water and sewerage charges saying that he should be liable to pay the charges to those for whom the service are made and whom the facilities are provided and for whom the rights are available and all are treated as consumers. Sections 45, 46, 56 which clearly points that the persons who may be liable. Therefore, it leads to the conclusion as urged by the rate payer that he is liable to pay the water charges and sewerage charges along with water tax and sewerage tax only when he consumes such services.
In my opinion, the arguments of the rate payer is correct. He is rightly claiming the exemption to pay the water charges and sewerage charges and rightly accepting the liability to pay water taxes and sewerage taxes.
12.23 The argument of the learned Counsel for the respondents is that this procedure of demanding and collecting water charges is in practice over 100 years and the authority will be the loser. The clear fallacy in the argument lies in the supposition that the services performed by the water authority though not utilised and as long as there is premises though disconnected or unconnected with the service is liable to pay, is unmeaningful.
13. However disposal is clearly regarded some thing relating to, and benefiting the whole area of the authority. The right of an individual owner or occupier of premises to have his drains discharge into a public sewer is only a part, no doubt to him an important part, of the benefit which is derived from the performance of the services. The public sewers serve also for the reception and drainage of surface water, so preventing flooding and possibly disease and by reception and disposal of tank water and make the whole area for salubrious and pleasant to live in.
Is it to suggest that the rate payer should be exempt from charges in respect of these services?
A positive answer produces a reductio ad absurdum and a negative answer, since it allows the rate payer to be within the charge, reduces his claim to one based on criterion. The water authority has power to determine criteria as provided under Sections 47 and 57 of the Act. It is for this reason such as these briefly described and subject to numerous qualifications.
Therefore, sewerage has to be charged through the rates as a public health matter and as something of general, as well as a particular, benefit or for the local purposes of a public nature. Therefore, it is for the authority to decide in accordance with Section 47 Sub section (5) that what should be the charges for sewerage.
The word local purpose of the public nature embraces of course a wide range of services, or facilities, performed or provided by local authorities as to which it is thought right that the charge for them should be borne through the rating system by rate payers and as to which an objection by an individual rate payer that he gets no personal or specific benefit from it though commonly made and understandable enough, is not consistent with the system. Therefore, one cannot object to pay rates because you are serviceless or because your street is unlit or because your area gets flooded when it rains. The present case and one think of others has the feature that side by side with benefits of general character, which all hereditaments in the area are presumed to enjoy, there also particular benefits i.e. discharge of private drains into a public sewer which enjoyed by some and not others. This may be a ground for a rebate or remission for those not so connected which the authority may grant under its powers to fix charges by criteria under Section 47(5) it cannot take the service out of the section altogether.
Therefore, as far as sewerage charges are concerned, can one sever the personal from the general element so as to say that as no services are performed for the former, no charge can be made for it. The service here is for sewerage, performed for the benefit of the area and they can be recovered from all persons in the area deemed to benefit from them. There is no difficulty as regards water supply since charge are to be made on consumers alone. Water authorities who are requested to provide connections and who are providing water for the consumption and who are able to note reading on the meters can collect the charges from the consumers of the water supply. But the water authority has no power to demand charges from the others those who have no water supply connection. But this analysis will not apply to the sewerage. Therefore, the board by giving reasonable opportunity, fix proper charges strictly in accordance with section 47 Sub section (5) of the Act, who are not having sewerage connection the consumption of public benefits and is general charge Thus I hold this under the provisions of the Act the water authority has no power to demand water charges from the petitioner whose premises not provided with water service connection. However, they have right to demand sewerage charges strictly in accordance with Section 47 Sub section (5). However the respective taxes are leviable as per section 34 of the Act.
14. In the result, the writ petition is disposed of holding that the respondent-board has authority to demand water tax and sewerage tax from the occupiers of the premises but it has no authority to demand water charges from the occupiers of the house to whom there are no water connection. No costs.