Punjab-Haryana High Court
The Metafold Industries (Regd.) vs State Of Punjab And Anr. on 30 May, 1997
Equivalent citations: (1997)117PLR467
Author: S.C. Malte
Bench: S.C. Malte
JUDGMENT S.C. Malte, J.
1. This judgment will also dispose of Civil Writ Petition No. 4308 of 1981 (Om Parkash Puri v. The Municipal Corporation) No. 4889 of 984 (Rameshwar Dass v. Commissioner), No. 5267 of 1984 (Mulkh Raj Wadhawan v. Commissioner), No. 426 of 1985 (M/s Nand Kishore Chaman Lal v. The Commissioner) No. 1603 of 1985 (Surjit Singh v. Commissioner) and No. 1773 of 1985 (Harbhajan Singh v. Municipal Corporation). In all these matters the question raised pertains to the fixing of annual rateable value of the properties in cases where the location of the property situated is governed by the East Punjab Urban Rent Restriction Act, 1949. Civil Writ Petition Nos. 4889 of 1984 and 1773 of 1985 are the matters in which the assessment of the rental value of the property has been ascertained under the provisions of Section 66 of the Punjab Municipal Act, 1911. Civil Writ Petition Nos. 4308 of 1981, 426 of 1985 and 5256 of 1984 are the matters in which the assessment of the annual rateable value was made under Section 93 of the Punjab Municipal Corporation Act, 1976. CWP 2884 of 1981 is also a matter falling under the Punjab Municipal Corporation Act, 1976. In all these matters annual rateable value of the building of the petitioner was fixed and notice for the recovery of the tax were accordingly issued. The petitioners had made representation to the Municipal Committee, which was turned down. Appeal to the Commissioner also did not give relief to the petitioners. Therefore, these petitioners have now rushed to the Court by filing writ petitions. In case governed by the Punjab Municipal Act, 1911, the petitioners approached the Municipal Committee, but in vain. Appeal under section 84 of the said Act was also futile. Therefore, they have filed these writ petitions challenging the correctness or otherwise of the assessment.
2. In case of CWP 2884 of 1981, the contention was that without serving a notice upon the petitioner the annual rateable value was assessed and bill was served. After service of the bill, he approached to the Municipal Corporation but in vain. According to the petitioner since his annual rateable value was fixed without any previous notice to the petitioner, there was no opportunity to him to make representation in response to service of such notice, and further to file appeal on any such decision. The Municipal Corporation in the written statement submitted that such a notice was served on the petitioner before assessment of annual ratable value was fixed.
3. In all these matters the question basically pertain to the fixation of annual rateable value of the premises at places where the East Punjab Rent Restriction Act is in force the second question raised is since when such increased tax would be deemed to have been applicable in view of provisions of Section 66 of the Punjab Municipal Act, 1911.
4. Under the Punjab Municipal Act, 1911, an assessment list is prepared as per Section 63 of the Act. Such a list gives a figure of annual value and the amount of tax assessed thereon by the Committee. Thereupon a public notice is given in respect of the preparation of such list and copy of it is kept at the Municipal office for inspection by the persons concerned. Section 65 then contemplates that when assessment list is thus published, a public notice shall also be issued at the same time fixing the date and time for consideration of the assessment list. It further provides that in case in which the property is for the first time assessed or assessment thereof is increased, it shall also give a notice to the owner or occupier of the property and inform him the date and time when he would be heard in respect of the assessment list. Section 66 provides the consideration of the objections raised by the respective persons and fixing the assessment of tax. Person aggrieved by the assessment has a remedy by way of appeal under Section 84 of the Punjab Municipal Act.
5. In cases governed by Punjab Municipal Corporation Act, 1976, such assessment list is prepared as per Section 93 of the Act. It provides that rateable value of the property assessable to tax shall be fixed in accordance with the categories in which that property falls. The properties are divided into the nature of property, such as, land or building. In case of building the gross annual rent at which such building together with its appurtenances and any furniture that may be let for use for enjoyment therewith, may reasonably be expected to let, is to be assessed. In that case certain deductions are allowed. Presently, we are not concerned with those deductions. Clause (c) of Section 93 provides that in case the gross annual rent cannot be determined under Clause (b) of that section, 5 per cent on the sum obtained by adding estimated present cost of erecting the building, less such amount as the Commissioner may deem reasonable to be deducted on account of depreciation, if any, to the estimated market value of the site, and any land attached to the building, shall be considered. There is a proviso in that section which provides that in respect of any land or building the fair rent whereof has been fixed under the law relating to the rent restriction for the time being in force, the rateable value thereof shall not be extended beyond the annual amount of the fair rent so fixed or, the actual rent for which the same has been made whichever is higher.
6. These provisions should be considered keeping in view the definition of term "rateable value" as given in Clause (46) of Section 2 of the Punjab Municipal Corporation Act, 1976. According to that provision, "rateable value" means the value of any land or building fixed in accordance with the provisions of this Act and the bye-laws made there-under for the purpose of assessment to property taxes.
7. The question is, that what should be the assessment of annual rateable value in case where the rent is restricted under the provisions of the Act applicable to that area. In that respect, my attention was invited to a Full Bench ruling of this Court in case of Banarsi Dass Mahajan v. The State of Punjab, (1990-1)97 P.L.R.l (F.B.). In that case their Lordships were considering the case in which Clauses (a), (b) and (c) of section 93 of the Punjab Municipal Corporation Act would be attracted. Their Lordships observed that the initial exercise should be under Clause (b) to determine at what figure the building may reasonably expected to let in accordance with the principles of the Rent Laws, and thereupon permissible deduction in the light of the explanation. It is only in those cases where it is not possible to fix the annual rateable value under Clause (b) then the provision of Clause (c) would come into play. However, at the same time, the procedure to be adopted while fixing the annual rateable value under Clause (b) cannot be totally forgotten. Under Clause (c) estimated cost of deduction of the building minus depreciation is to be considered for arriving at the figure of annual rateable value. Their Lordships have also quoted the provisions of the Punjab Municipal Act and the Punjab Municipal Corporation Act alongwith the provisions of the Delhi Corporation Act to indicate the difference, if any, in method adopted in arriving at the annual rateable value. In para 21 of this report, their Lordships observed as follows :-
"Repeatingly and summingly, we hold that the Commissioner must first do the exercise under Clause (b) to determine at what figure the building may reasonably be expected to let in accordance with the principles of the Rent Laws, give permissible deductions in the light of the Explanations, deviate to Sub-clause (ii) of the first proviso if he can but keep foothold on his deliberations under Clause (b), apply both the provisions in the above manner and then determine the annual rateable value. If he is unable to do so for any substantive reason, then he may take resort to Clause (c) again keeping a foothold thereon and applying the provisos when applicable so as to arrive at a just figure. In so far as Clause (c) is concerned, it provides determining the estimated present cost of erection of the building minus depreciation and adding to it estimated market value of the site and of any land attached to the building, from which 5 per cent of the sum total represents the gross annual amount. Now it is known that the cost of erection of buildings keeps rapidly changing the rates of depreciation are minimal and the estimated market value of the site and any land attached to the building goes sky rocketing. The whole thing is inchoate in Clause (c). The employment of this clause, as ' preferred by learned counsel for the Corporation on the prospect of legitimate expectancies of a higher revenue dividend, and a justified measure to meet the cost of running day to day affairs of the bordering on bankruptcy, cannot be permitted. The Legislature designedly made Clause (c) apply only in the situation when the gross annual value of a building cannot be determined under Clause (b). As stated before, to both the clauses do the provisos apply but as an integral part of the said two clauses, and that too as safe-guards, so that neither the Corporation nor the tax-payer is dealt with unjustlfy. In the event of conflict between two successful determinations, the determination which is favourable to the tax-payer would normally have to govern the field, and we hold it so, well settled as it is as a principle."
8. In the light of these observations, their Lordships further in para 24 observed that Clause (b) of Section 93 would be applicable even in case the building is self-occupied.
9. My attention was also invited to a case of Guntur Municipal Council v. Guntur Town Rate Payers' Association, A.I R. 1971 Supreme Court 353. In that case the provisions of the Madras District Municipalities Act were under consideration. In that case there Lordships observed that while fixing the annual value, the test to be applied is what rent the premises can lawfully fetch if let out to hypothetical tenant. It was observed that the municipality is not free to assess any arbitrary annual value, and has to look to and is bound by the fair or standard rent which would be payable for a particular premises under the Rent Control Act in force during the year of assessment. It was further observed that when the Controller has not fixed the fair rent, the Municipal authorities will have to arrive at their own figure of fair rent in accordance with the principles laid down in the Rent Control Act.
10. My attention was also invited to a case of Lt. Col. Micheal A.R. Skinner v. The Municipal Committee, (1969)71 P.L.R. 205. It was a case under the Punjab Municipal Act, 1911. It is observed by their Lordships that gross annual rent of a house or building has to be fixed in accordance with principles laid down in Clause (c) of Sub-section (1) of Section 3 of the Act. In cases where the quantum of rent is governed by the East Punjab Urban Rent Restriction Act. The provisions of Section 3(l)(b) of the Punjab Municipal Act, 1911, were considered in case of Bhagwant Rai and Ors. v. The State of Punjab etc., (1995-3)111 P.L.R. 745 (S.C.). It was observed by their Lordships in para 6 as follows :-
"Thus, it is settled law that the actual rent received from a tenant is not the measure for determination of the annual rateable value, but the reasonable standard rent expected to be received under the relevant Rent Act. The view taken by the authorities is, therefore, clearly illegal."
11. On perusal of the assessment order passed in these various cases, I find that there is lack of exercise of fixation of annual rateable value keeping in view the provisions of the East Punjab Rent Restriction Act. It is not disputed that at all these places the East Punjab Rent Restriction Act is applicable.
12. In Civil Writ Petition No. 2884 of 1981, the other contention was that the petitioner has not preferred the appeal under the Act; and has straightaway filed the writ challenging the assessment. The contention by the petitioner is that no notice was ever served on him as per section 65 of the Punjab Municipal Act while preparing the assessment list. The respondents' counsel contended that such a notice had been received by the petitioner on 6.1.1979 and he appeared before the assessing authority on 13.2.1979 and raised certain objections. Thus, there is a word against word. As such it was within the power and 'possession of the Municipal Committee to place before the Court material to show' that such notice was served on the petitioner, and he has also submitted his objections in response to that notice. Since that is not forthcoming, I find that the contention by the petitioner deserves to be accepted.
13. In view of the observations made above, I allow all these writ petitions and remand the cases back to the respective Municipal Committee/Corporation with a direction to re-assess the annual rateable value in the light of the observations made above.