Madras High Court
Raja D.V. Appa Rao Bahadur And Ors. vs The Government Of Tamil Nadu By ... on 5 February, 1993
Equivalent citations: (1993)1MLJ455
Author: D. Raju
Bench: D. Raju
ORDER D. Raju, J.
1. The petitioners in the above, writ petitions have filed petitions, W.M.P. Nos. 2213 to 2216 of 1993 for stay of all further proceedings for the levy and assessment of property tax under the provisions of Schedule IV of the Madras City Municipal Corporation Act, 1919, hereinafter referred to as the Act, as amended by the Rules in Schedule IV of the Act, hereinafter referred to as the Rules, in G.O.Ms. No. 1178, Municipal Administration and Water Supply, dated 10.12.1987 on and from 1.4.1993 relating to the respective petitioner's property mentioned therein. Having regard to the nature of the issues raised and by consent of parties the main writ petitions themselves were heard at Considerable length. Since the issues are also identical and common, they are disposed of together by this judgment.
2. Though different writ petitioners in respect of different items of property have filed the above writ petitions, the respective contentions are identical and similar and it would suffice to refer to the pleadings from one such writ petition. W.P. No. 1421 of 1993 has been filed for a writ of declaration, declaring the provisions of the Amendment to Schedule IV of the Madras City Municipal Corporation Act IV of 1919 undo by the issuance of G.O.Ms. No. 1178, dated 10.12.1987 relating to the levy and assessment of property lax in respect of property in the City of Madras on and from 1.4.1993 illegal, ultra vires the Rule making powers and violative of Articles 14 and 265 of the Constitution of India, in so far as it relates to the petitioner's property.... "The petitioners have given the half-yearly property tax and cess hitherto paid on the annual value, which admittedly has been devoid under Section 100 of the Act and the rules found in Schedule IV of the Act. Thereafter reference is also made to Sections 99 and 100 of the Act and Taxation rules contained in Schedule IV, with particular reference to Part I-A, which existed prior to the impugned amendment. While referring to the Notification issued by the second respondent and published in the daily newspapers The Hindu and The Indian Express under the caption revision of property tax 'proposing revision with effect from 1.4.1993 of the property tax in Madras City based on returns to be furnished by the owners/occupiers, calling upon them to file the pro forma return to reach the office of the second respondent on or before 1.2.1993. Reference next has been made to G.O.Ms. No. 1178, MAWS, dated 10.12.1987. The amended rules substitute Part I-A and Part V with a fresh set of rules for assessment of property tax and revision of assessment respectively as originally contained in the Act.
3. Rule 1-C in Part I-A enables the Commissioner to give publicity in local newspapers and otherwise require the owner or the occupier of any land or building, or a portion there of to file a return within a period not exceeding one month from the date notified by the Commissioner in this behalf, containing the following particulars with regard to each assessable item, namely:
(i) the name of the division and the street in which it is situated and the door number;
(ii) description of the assessable item like number of storeys, plinth are in each storey and the extent of vacant land;
(iii) the name of the owner;
(iv) the name of the occupier;
(v) the year in which the assessable item was last assessed and the amount of annual value fixed by the Commissioner;
(vi) the amount of tax now being paid per half-year;
(vii) whether the assessable item is used for residential or non-residential purpose;
(viii) whether the assessable item is wholly rented or partly occupied by the owner and partly rented; and
(ix) the amount received as rent or lease amount per year.
The rules also provide that if any person fails to file a return within the notified time, the Commissioner may authorise any person not below the rank of a Bill Collector to enter upon and make an inspection of the assessable item and prepare the return.
4. The Rules also empower the Commissioner to assess the property tax having regard to:
(a) the annual value of the assessable item as on the 1st October, 1978;
(b) the property tax payable by the owner or the occupier on the basis of the particulars filed in the return; and
(c) the property tax payable by the owner or the occupier with reference to the guidelines, if any, issued by the Council.
Thereafter a property tax card, which shall contain all details relating to the assessable item and the amount of property tax payable shall be supplied to every owner or occupier, who has filed the return and that the Commissioner shall receive the property tax specified in the said property lax card and make necessary entry in the said card as well as in the assessment book maintained by the Corporation. Provisions have also been made for correction if any to be made in the property tax card either in pursuance of any revision in the property lax or an order passed in appeal against the order of the Commissioner and authenticated by the Commissioner or any officer authorised by him both in the property tax card as well as in the assessment book. The rules declare that the property tax card shall be valid until the assessment is revised daring a general revision or earlier as the Government may direct in this behalf. The Commissioner is also empowered to make arrangements for the verification of the particulars furnished in the return filed by the owner occupier of every assessable item immediately after a general revision and before the next general revision and if any discrepancy is noticed in the particulars furnished in the return filed by the owner or occupier, the Commissioner is empowered after giving a reasonable opportunity of being heard of the person concerned and after considering the objections, if any, to modify the assessment from the date, on which the assessment was made and collect the arrears of tax.
5. The provisions contained in Part V relating to revision of assessment, as substituted under the impugned amendment, proclaims the existence of one or more Taxation Appeal Tribunal for hearing and disposing of appeal preferred by any person, who is not satisfied with the assessment order made by the Commissioner and that the Tribunal shall consist of a judicial officer not below the rank of a Sub Judge. Rule 13 as contained in the said Part V requires to be set out in detail since a substantial grievance has been made out against the provisions contained therein. It reads thus: "No person who fails to file the return within the notified time under rule 1-C in Part I-A shall be entitled to appeal against any assessment order made by Commissioner." Rule 14 provides that no appeal shall be entertained by the Tribunal unless the appellant deposits in the Corporation the existing tax and also fifty per cent of the difference between the existing tax and the tax as assessed by the Commissioner in the revision, and enables further that an appeal against the said decision of the Tribunal may also be filed within thirty days from the date of the order to the Principal Judge, City Civil Court. The procedure to be followed by the Tribunal is also set out in the other rules. So far as Part VI of the Schedule is concerned relating to the collection of taxes a new Rule 21-A has been inserted after Rule 21, which reads as hereunder:
Notwithstanding anything contained in any rule in this part, it shall not be necessary for the Commissioner to serve any notice for the levy and collection of property tax under Section 98.
6. The rules and the consequent Notification published by the second respondent are challenged as ex facie illegal and ultra vires the jurisdiction as well as the mandate contained in Articles 14 and 265 of the Constitution of India on the following grounds:
(a) The rules and the notification which compels the owner or occupier to file returns on or before 1.2.1993 even before the date of commencement of the revision with effect from 1.4.1993 and the insufficiency of the time granted renders them arbitrary, unreasonable and opposed to the spirit of Section 100(2) of the Act.
(b) Under the provisions contained in Sections 99 and 100 of the Act, the levy of property tax could be on the annual value of the land and building as one unit and that judicial pronouncements of this Court as well as the Apex Court have firmly settled the principles relating to the determination of the annual value with reference to the reasonable or standard rate which a building may fetch under the Rent Control law and an open market rate than the standard or fair rent envisaged under the Rent Control law cannot be assumed as the basis. In substance, the plea is that the hypothetical rent cannot exceed the standard rent as per the Rent Control laws. Provisions of Rule 3 in Part I-A is said to be inconsistent with Section 100(2) of the Act.
(c) The absence of any provision in the Amended Rules neither to make known to the assessee or providing for the assessee to object and to consider such objections is also said to be violative of Section 100(2) of the Act and the principles of natural justice. In substance, the absence of a pre-decisional hearing of the assessee is said to confer an arbitrary and unguided power to assess in any manner or method without disclosing the same to the assessee.
(d) The absence of guidelines as contemplated under Rule 3(iii) as also the provision for issuing such guidelines is said to be bad in law for the reason that the rent reasonably expected is a matter for adjudication independently and cannot be fettered by any guidelines whatsoever.
(e) The provisions contained in Rule 13 depriving an assessee who failed to file, a return, to file an appeal against the assessment made by the Commissioner is challenged as an arbitrary one and the absence or denial of appeal in such cases would constitute conferment of arbitrary and uncanalized power to make assessment on the Authority concerned. Rule 13 is also challenged as in excess of the rule making power and violative of Article 14 of the Constitution of India.
(f) The pro forma framed by the Commissioner and published in the notifications in the Press is not one framed under the Rules, and as a matter of fact, is without reference to and opposed to the rules themselves.
It is contended that in not providing for giving all relevant details and seeking for irrelevant details, the procedure including the form envisaged to be filed and observed for assessment is said to be arbitrary and whimsical.
7. The modality of assessing the appurtenant land as disclosed is also challenged and it is pleaded that an opportunity should be given to enable the assessee to give a computation of his own for determining the annual value of his building. The move of the second respondent to compel disclosure of materials, which are already available with the second respondent himself is challenged to be arbitrary, besides expressing an apprehension with reference to the details sought for in the pro forma as leading to a reasonable presumption that the assessment is going to be on the plinth area in derogation of the Scheme of taxation underlying Section 100, which should be only on the annual value.
8. The second respondent has filed a detailed counter-affidavit. It is contended therein that the writ petitions are premature as well as misconceived. It is contended that the rules have come into force as early as on 1.4.1988 and the challenge at this stage is belated. While pleading that the population of the Madras city is 40 lakhs as per the latest census and comparatively the per capita property tax collection is the lowest among Bombay, Delhi, Bangalore and Hyderabad City Corporations. It is contended that there is every need to augment the revenue from this source of properly tax to keep pace and also meet the alarming increase in the demand for provision of basic amenities to cope up with the increase in population and it is said to be Causing considerable financial strain to the Corporation. It is also staled that the last revision of the property tax was during the years 1978-79 and there is every justification and need for revision as visualised and the challenge now made is unjust and unsustainable. While denying the assumption of the petitioners that the revision of the tax is not going to be on the annual value principle, it is declared that the second respondent is going to determine the annual value only as per Section 100 of the Act and bearing in mind the principles laid down by the various decision of this Court and that of the Apex Court and the details called for in the pro forma are relevant for the purpose of ascertaining the reasonably expected rent and that the apprehension to the contrary has no basis either on facts or in law.
9. The second respondent also states that the time granted is sufficient in law and that the demand to file returns before 1.2.1993 does not offend either Section 100(2) or Section 104 of the Act, and that as a matter of fact the liability to pay tax arises in terms of Section 104 within 15 days after the commencement of the half year and there is nothing wrong in the Corporation in trying to get the relevant details in advance to make the assessment on the commencement of the half year on 1.4.1993. It is contended that the rules made do not provide for a pre-decisional hearing before assessing the annual value and the grievance in this regard has no legal basis. It is stated that even before the amendment effected by the impugned rules, there was no scope for any such hearing and at any rate the Act does not provide for any pre-decisional hearing. While denying that the rules confer any arbitrary or uncanalized or unguided power, it is stated that there is sufficient safeguard in the form of an appeal and also by a further appeal to the Principal Judge, City Civil Court.
10. The second respondent also stales that guidelines contemplated under Rule 3(iii) is not a must and that as it is there are no such guidelines issued by the Council and that the tax will be assessed on the basis of the principles enshrined in Section 100 of the Act. The plea that the assessment procedure is a quasi judicial one is denied. The second respondent also seeks to justify the denial of a right of appeal to a person, who has not submitted a return in time on the ground that no one has an inherent or a fundamental right of appeal and that no exception could be taken to the said provision. It is also contended that the particulars called for in the proforma are relevant and necessary for properly assessing the annual rental value as laid down in Section 100 of the Act and that the assessment is going to be really on the basis of reasonable letting value as visualised under Sections 99 and 100 of the Act by limiting the same to the standard fair rent. While stating that the second respondent will be guided by the particulars furnished in assessing the property tax in terms of Sections 99 and 100 of the Act, it is pleaded that there is an opportunity to be heard by the Commissioner or his representative though it is not clearly spelt out in what form and what stage and it is also open to the assessee to file an appeal to the Tribunal and thereafter to the court as envisaged and that the calling for the particulars under the impugned notification in the pro forma cannot be said to be either unreasonable or arbitrary. While contending that the main source of revenue of the Corporation is the property tax, it is pleaded that any stay of assessment or recovery would dislocate the execution of several works of public importance, besides creating a stalemate in the administration of the affairs of the Local Body. It is also assured that the statement of the assessee given in the pro forma would be got verified with the available records maintained by the Corporation and that no exception could be taken to the notification calling upon the filing of the pro forma return.
11. The learned Special Government Pleader appearing for the first respondent while adopting the submissions of the learned Counsel for the second respondent, contended that the impugned rules have been made by the state in exercise of the powers conferred under Section 347(3) of the Act, that the draft of the amended rules has been approved by the Tamil Nadu Legislative Assembly as required by Sub-section (5) of Section 347 and consequently the plea of arbitrariness or unreasonableness or want of jurisdiction is only misconceived and without basis. Argued the learned Special Government Pleader further that the amendments have been devised to keep in conformity with the current requirements and that the Scheme underlying the rules would, on an overall consideration, would prove to be not only just and reasonable but help effectively to ensure a proper implementation of the provisions contained in the chapter relating to the assessment and recovery of property tax under the Act. It has also been contended that the notification issued by the second respondent is quite in conformity with the procedure envisaged by the amended rules and that no exception whatsoever could be taken to the legality or the propriety of the amendments made.
12. Mr. K.C. Rajappa, learned Counsel appearing for the petitioners, while Mr. N.R. Chandran, Senior Counsel assisted by Mr. N. Kannadasan appeared for the second respondent and Mr. P. Sathasivam, learned Special Government Pleader appeared for the State (1st respondent). The learned Counsel reiterated their respective submissions made in the pleadings as referred to supra. Reference to some of the decisions of courts, both of this Court and the Apex Court, relied upon by the learned Counsel, may be made at this stage, before considering their respective tenability of their respective submissions.
13. The decision in State of Andhra Pradesh v. Raja Reddy , has been relied upon to contend that absolute discretion cannot be arbitrarily left to the officers and the absence of proper machinery, opportunity and right of appeal renders the very levy unconstitutional. That was a case involving the constitutional validity of Andhra Pradesh Land Revenue (Additional Assessment) and Cess Revision Act as amended by the Amending Act 23 of 1962. The Apex Court was of the view, on the provisions contained therein that the whole imposition of assessment was left to the arbitrary discretion of the officers not even named in the Act and that too without giving any remedy whatsoever to the assessee for questioning the correctness of any of the important stages in the matter of assessment, and that therefore the levy was held to be violative of Article 14 of the Constitution of India. In coming to such a conclusion, the Apex Court applied their earlier decisions, holding that taxation law is not an exception to the doctrine of equality enshrined in Article 14 of the Constitution of India, though in the application of the principles underlying the same the courts, in view of the inherent complexity of fiscal adjustment of diverse elements, permit a larger discretion to the Legislature so that it can adjust its system of taxation in all proper and reasonable ways. The learned Counsel next relied upon a decision of this Court in Dalavai v. Government of Tamil Nadu (1978)1 M.L.J. 93 : 91 L.W. 110. The said decision directly concerned the determination of valuation of properly, the principles governing such determination and the procedural safeguards to be secured to an assessee to make the assessment and levy in conformity with law. The learned Judge (Ramanujam, J.), while declaring after noticing the decisions of the Apex Court that the property tax cannot be levied under Section 100 of the Act on the plinth area basis, but has got to be determined on the annual valuation of property, with particular reference to the rent the premises can lawfully fetch if the premises is let out to hypothetical tenant for a fair rent that may be payable under the Rent Control Act in force during the year of assessment, categorically held that the Assessing Authority is not free to assess the tax on any arbitrary annual value. It has been reiterated that even in cases where the rent actually collected by the landlords are higher than the standard/fair rent permissible under the Rent Control Act, the assessment could not be made on the basis of the actual rent received by the landlord, but on the other hand, has to be only by the fair rent, which alone the landlord is entitled to collect legally from the tenants. While analysing the Scheme underlying the assessment and revision rules, which have been substituted by the impugned amendment, it has been held in the said decision as hereunder:
This leads us to the fourth contention set out above. It has been pointed out that before finalising the assessment list an opportunity must be given to the assessment to object to the enhanced valuation. The petitioner's complaint is that in all the special notices issued before finalising the assessment list, how the annual value has been ascertained has not been stated and that, therefore the assessees are handicapped in putting forward their objections to the basis and the mode of fixing the annual value. I am inclined to agree with the contention of the petitioner that the mere mention of the annual value, as determined by the assessor in the special notice, is not sufficient and that the details as to how that valuation was arrived at are necessary to put the assessee on notice of the basis, and the mode of fixing the annual value so as to enable him to file objections to the proposed increase. Section 100 of the Madras City Municipal Corporation Act, 1919, enables the property tax being levied on the gross annual rent at which they may reasonably be expected to let at the time of assessment less a deduction, in the case of buildings, of ten per cent of such annual rent which is attributable to the buildings alone, in lieu of all allowance for repairs, etc. Schedule IV of the Act sets out the rules governing the levy and assessment of property tax. Rule 1-C directs the Commissioner to enter the annual value of all lands and buildings and the tax payable thereon in the assessment books. Rule 1-D enables a general revision of the assessment books by the Commissioner once in every five years. Rule 1-E says that an assessment once made shall continue in force until it is revised and until the revised assessment takes effect. Rule 2 says that when assessment books have been prepared for the first time and whenever a general revision of such books has been completed, the Commissioner shall give public notice specifying the time when and the place where the books may be inspected and stating that revision petitions will be considered if they are preferred within 15 days from the date of such notice. The proviso to rule 2 specifically says that in every case where there is an enhancement in the assessment the Commissioner shall also cause intimation thereof to be given by a special notice to be served on the owner or occupier of the property concerned. Rule 3 says that the Commissioner may after giving notice to the parties concerned and after hearing their objections, if any, amend the properly tax assessment books at any time between one general revision and another, by altering the valuation of any property or the amount of tax. The proviso to Rule 2 clearly indicates that wherever there is an enhancement in the assessment, a special notice is to be served on the owner or occupier of the property concerned. The special notice contemplated by the proviso is intended to give on opportunity to the owner or occupier of the property to put forward his objections to the enhancement in the assessment. The owner or occupier can put forward his objections only if he knows why there has been enhancement in the assessment. Therefore, the special notice should necessarily contain the basis for enhancement of the assessment so that the assessee may be able to object to the enhancement of the assessment. Thus, there is considerable force in the contention of the petitioner that the special notices issued by the second respondent should contain the reasons for the enhancement of the assessment and unless the reasons are given, the assessees may not be able to put forward any effective objections to the said enhancement.
The petitioner has produced a bundle of photostat copies of the special notices served on some of the assessment in some of the Corporation Divisions. In all these special notices, the old annual value before the revision and the new annual value after the revisions have alone been mentioned and the reason for enhancement has not been given. The assessee on receipt of such special notices cannot be expected to know as to whether the enhancement may be due to (1) rental difference noticed during the course of inspection of the properly by the assessing officers, (2) additions of alterations in the existing building, or (3) construction of a new building. Unless the assessee is told as to what is the reason for the enhancement in the assessment, he may not know on what ground the enhancement has been made. In such cases, he may not be able to put forward his objections specifically and effectively. It is, therefore, clear that the special notices should give reasons for enhancement.
While referring to the decision in Commissioner of Income-tax v. Balakrishna Malhotra 81 I.T.R. 759, the learned Counsel submitted that the word 'assessment' takes within it not only the mere computation of the income, but also the determination of the tax and consequently there should be a pre-decisional hearing. While relying upon Sales Tax Officer v. Abraham (1967)20 S.T.C. 367. a case arising under the Central Sales Tax, the learned Counsel for the petitioners submitted that the expression 'in the prescribed manner' cannot confer on the rule making authority the power to prescribe a rule of limitation. The decision in Bharat Barrel Company v. Employees' State Insurance Corporation , was also relied upon for the same purpose. While adverting to the phraseology employed in Rule 1(C)(1) and comparing the same with Section 22(1) of the Income Tax Act, 1922, the learned Counsel submitted that individual notices also are necessary in addition to the public notification.
14. Mr. N.R. Chandran, learned Senior Counsel, relied upon the decision in Murugesan v. Collector of North Arcot (1966)2 M.L.J. 290 and contended that the assessment would not be without jurisdiction merely because no guildelines have been prescribed by the Council. The decision relied upon was one rendered under the Tamil Nadu Panchayats Act, challenging the division of wards for the conduct of elections to the Panchayats in the State. The Division Bench held that the division of the Panchayat into wards by the Inspector under Section 16 of the Act would not be without jurisdiction merely because no rules prescribing the scales in accordance with which the division to be effected or formulated by the Government as provided by the later part of Section 16 of the Panchayats Act. The decision in R. Valliammal v. Commissioner, H.R & C.E, Madras (1975)2 M.LJ. (NRC.) 7, was rendered under the Tamil Nadu Hindu Religion and Charitable Endowments Act, 1959. While construing the expression 'subject to such conditions as may be prescribed in Section 45 of the Act, the Division Bench held that is only meant that if and when any conditions are prescribed, the power of appointment of an Executive Officer can be exercised only subject to those conditions, and the provisions cannot be construed to mean that the power is not available if no conditions have been prescribed.
15. After a careful consideration of the respective submissions of the learned Counsel appearing on either side, I am of the view that the apprehension of the petitioners that the proposed revision of the property tax is sought to be made on the basis of the plinth area and not really on the annual value has no basis in law or otherwise. Apart from the candid admissions made by the second respondent in the counter affidavit filed it is by now well settled by catena of decisions of this Court and that of the Apex Court that the rateable value of a building whether tenanted or self-occupied is limited by the measure of standard rent arrived at by the Assessing Authority by applying the principles laid down in the Rent Act and cannot exceed the figure of the standard rent so arrived at though in a given case, it may be lower than such standard rent. It has been held and the law as beyond controversy that within the upper limit of the rateable value of the premises so fixed the Assessing Authority would have to determine the reasonable rent by evaluating factors such as size, situation, locality and condition of the premises and the amenities thereon provided. Devan Daulet Rai Kapur v. New Delhi Municipality , Dr. Balbir Singh v. Municipal Corporation of Delhi , Dalavai v. Government of Tamil Nadu (1978)1 M.L.J. 93 : 91 L.W. 110. Thus it has been held that annual value cannot exceed the standard rent and even landlord actually receiving higher rent in an individual case matters very little for determination of the annual value for levying and collecting property tax.
16. The next aspect that requires to be considered is the legality of the pro forma prescribed by the second" respondent and the propriety of the demand made by filing the return within the stipulated time on threat of sufferance of certain disabilities. There is no dispute that the proforma return, as such has not been prescribed by the State Government or that any specific authorisation of the second respondent is so made to formulate any such form. But the question would be as to whether the absence of such enabling power undermines the efficacy of the form published. The rules contained l-C(1) prescribes the particulars that should be furnished by the owner/occupier and the period within which such form should be filed by those liable. In the light of such prescription made, the fact that a format has been devised by the second respondent for the convenience of an owner/occupier or docs not militate against its efficiency merely because the format of the return itself has not been so prescribed under rules. The plea on behalf of the petitioners that no time limit or period of limitation as such could have been prescribed under the rules in the absence of specific conferment of power in this regard and the reliance placed upon two decisions of the Apex Court are incorrect and inappropriate. Unlike the ordinary rule making power that was the subject matter of consideration in the decisions of the Apex Court relied upon for the petitioners, the rules in question though made by the State Government are made after two drafts of the same is moved and placed before the Legislature and specifically approved by the State Legislature as required under Section 347(5) of the Act. That apart, it is a well accepted principle of statutory construction that the rules in the Schedule to the Act are as much part and parcel of the statutes itself and the infirmity alleged cannot be said to exist in such cases so as to affect the legality and validity of the notification prescribing the time limit within which the return visualised has to be filed and the relevant particulars are furnished to facilitate a time bound finalisation of the assessment proceedings to ensure the effective collection of the tax due to the second respondent to carry out their duties and obligation under the statute.
17. The learned Counsel for the petitioners made a grievance of the notification of the second respondent and the procedure for assessment, by drawing inspiration from the meaning or purport of the 'return' and 'assessment' from the other taxation laws and contending that the provisions of the impugned rules do not conform to those well accepted concepts of definite import and object in a law of taxation. The learned Senior Counsel appearing for the second respondent contended that there can be no analogy or comparison as is sought to be made by the learned Counsel for the petitioners and that the object of calling upon the owners/occupiers to file the returns is to make the details sought in the pro-forma conveniently available for verification, processing and ultimate assessment only in terms of the statutory formula, standard and principles underlying Section 100 of the Act and already declared by this Court and the Apex Court. The notification also states that if no return was filed within the notified time, the Corporation will suo motu revise the assessment of the property and the owner of the property shall not be entitled to file an appeal against such assessment, as per the act. The legality or otherwise of the provision disabling on assessee who has not filed his return from filing an appeal will be separately dealt with and need not concern the consideration of this stage. A reading of the Rule 1-C(1) of Part 1-A would go to show that the return envisaged thereunder is not of the conventional nature as prescribed in the other taxation laws. Apart from the non-prescription of the form as such the rules contemplate a return containing certain details and information which have been stipulated by the rules themselves. Rule 2 provides also that in case of default in the filing of the return within the notified time the preparation of the return by a person authorised by the Commissioner by entering upon and making an inspection of the assessable item. As a matter of fact, the explanatory note appended to the motion of the draft rules submitted before the Legislature under Section 47(3) of the Act, also refers to the object and purpose of the return in the following terms: "The assessment of property lax is now made by inspecting the buildings and with reference to the oral information furnished by the occupants of the buildings or lands without reference to any written records. Therefore, the present method of assessment of property tax has led to public criticism. In Bombay and Calcutta Corporations, the assessment is based on the returns filed by the owners or occupiers of the buildings or lands. It has, therefore, been considered that the assessment of property tax may be made based on the returns filed by the owners or occupiers of the buildings or lands."
18. Therefore, it could be seen that the object of the rules itself is to allow participation of the owner/occupier in the very process of assessment/revision by enabling him to disclose certain relevant details relating to the assessable item, in his own interest and even in cases of default cause such details to be ascertained by the inspection assessable item by a person authorised to facilitate assessment/revision. Even under the old rates for assessment/revision the ultimate burden to make the assessment/revision was that of the authorities and the introduction of the system of filing of a return, does not in my view make any change in this regard, except that it extends an extent of participation in the process by the owner/occupier himself of the property concerned. Consequently, the second respondent cannot also be said to be exonerated or relieved of his duties and obligations to cause a due verification of the relevant details relating to the assessable item before proceeding to assess/revise the tax liability of an assessee, in accordance with the well-settled principles relating to the levy and collection of property tax under the Act. Merely because the owner/occupier fails to file a return as envisaged, the second respondent cannot arbitrarily or whimsically assess/revise the liability in any manner he thinks. The process of assessment/revision of the liability continues to be objective and not rendered subjective merely on account of any default in filing the return, by an owner/occupier. So far as the assessment to be made is concerned, the learned Counsel for the petitioners also expressed the grievance about the provisions contained in Rule 3 of the Rules. It is a well accepted principle of law that the phraseology "having regard to" do not mean having regard to only those mentioned and that the authority could not take into account other relevant, vital or necessary materials or particulars or that such materials not specified are excluded from consideration. Likewise, the absence of guidelines issued by the council or even the existence of guidelines do not affect the exercise of power of assessment/revision objectively taking into account only the provisions in the Act, rules and the law declared by courts. The guidelines, if any, could only fill up any gaps or at any rate, serve as guidelines and cannot either override the law or have any binding effect so as to fetter or freeze the exercise of discretion and discharge of powers and duties objectively and independently. I find nothing wrong in the Commissioner being enjoined to have regard to the annual value of the assessable item as on 1st October, 1978, since that was the last of the general revisions made, for purpose of further revision now contemplated. The relevance of the existing assessment for further revision cannot totally be ruled out and no basic or legal infirmity can be said to affect the exercise made by the Commissioner, which as referred to supra, has to be only in accordance with Section 100 of the Act and the law already declared by the decisions of this Court, keeping in view to the extent possible and permissible, the rules in question,
19. The learned Counsel for the petitioners further challenges the provisions contained in Rule 13 in Part V of the IV Schedule that no person, who fails to file the return within the notified time under Rule 1-C in Part 1-A shall be entitled to appeal against any assessment order made by the Commissioner. The learned Counsel for the respondents tried to justify the provision as containing a sanction for compelling the owners/occupiers to file a return and that at any rate, there was nothing wrong in a defaulter being denied of a further right of appeal. I am unable to countenance the stand taken for the respondents in this regard. The right of appeal, no doubt, is a creature of the law and the absence of any provision for an appeal or revision against a decision, in the context of modern development of law is viewed as a serious infirmity, particularly in view of the fundamental principle of rule of law enshrined under Article 14 of the Constitution of India. So far as the case on hand, there is no controversy that a right of appeal to the Taxation Appeal Tribunal and a further appeal to the Principal Judge, City Civil Court have been provided for. The question is whether the said right of appeal could be denied to an owner/occupier merely because he failed to file the return envisaged under Rule 1 -C( 1) of Pan 1 -A of the IV Schedule. The failure on the part of the owner/occupier to file the return disclosing the details sought, as held already by me, does not absolve the second respondent of his obligation and duty to verify about those details relating to the assessable item or the obligation cast upon him to act objectively and reasonably while exercising his powers of assessment/revision. Consequently, no immunity from challenge could be afforded to an assessment/revision made by the second respondent even in such cases and there is no rhyme or reason in Rule 13. In a taxing law, normally orders passed ex parte or to the best of judgment due to the non-cooperation of the assessee in completing the assessment process, arc also made subject to a right of appeal and or revision and the stipulation contained in Rule 13 not only sounds illogical, arbitrary and unreasonable, but smacks of draconian devilry and cannot be said to be justifiable for any good reason or on sound principle of law or logic. An owner/occupier, who has failed to file a return, called for, is as much entitled to file an appeal as one who has filed a return. Consequently, Rule 13 of the Part V of the IV Schedule to the Act is struck down as arbitrary, unreasonable and violative of Article 14 of the Constitution of India and declared null and void.
20. The further serious challenge made by the learned Counsel for the petitioners is about the absence or denial of any pre-decisional opportunity or hearing before completing the process of assessment/revision. Even under the old and substituted rules when the assessment books have been prepared for the first time and whenever a general revision of such books has been completed, the Commissioner had to give a public notice specifying the time when and the place where the books may be inspected and stating that revision petitions will be considered if preferred within 15 days from the date of such notice and the rules also provided that in cases of enhancement in the assessment, a special notice shall issue to the owner/occupier and only after hearing the said person shall amend the assessment books. This Court in the decision reported in Dalavai v. Government of Tamil Nadu (1978)1 M.L.J. 93 : 91 L.W. 110, has held that such notice of enhancement should disclose the reasons or basis for such enhancement to enable the assessee to put forward any effective objections to the same. But, the new rules, apparently for the reason that the assessment invariably would be made on the return filed provides for an assessment/revision without any such opportunity. Rule 6 provides for such an opportunity only in cases where the Commissioner, on verification made of the particulars in the return after a general revision and before the next general revision seeks to modify the assessment already made from the date on which the assessment was made, and not otherwise. No doubt, there is an appeal to the Taxation Appeal Tribunal and a further appeal to the Principal Judge, City Civil Court. A careful analysis of the rules under challenge disclose the following:
(a) After the stage of filing the return or ascertaining particulars in the absence of any such return, the Commissioner assess the property tax or revise the existing assessment of the property to tax;
(b) There is no provision for pre-decisional hearing or making representation as against the proposal of the Commissioner for revision and enhancement;
(c) No provisions exist for communicating the order passed or disclosing the reasons or basis for the enhancement of the levy or for assessment/revision;
(d) Only the supply of a property tax card, with details mentioned therein, and that too to only those who filed the return, is contemplated;
(e) Provision has been made for filing an appeal to the Taxation Appeal Committee and a further appeal to the Principal Judge, City Civil Court. The appeal to the Tribunal cannot be entertained unless the appellant deposits in the Corporation the existing tax and also fifty per cent of the difference between the existing tax and the tax as assessed by the Commissioner, in the revision.
21. The above grievances expressed by the petitioners have got to be considered in the light of those inevitable consequences flowing from the rules under challenge. It is by now well-settled that rules of natural justice or the principle of audi altoram partom are not rigid rules, but they are not only flexible, but their application depends upon the setting and background of statutory provisions, nature of the right which may be affected and the consequences which may entail its application or non-application. It is also well-settled that the application of those uncodified rules can be excluded by express provision or by implication, of course subject to the. rights of this Court and the other competent authorities to adjudicate on the constitutionality of doing so. Wherever the law contemplates by making a suitable provision for a post decisional hearing amounting to a full review of the original order on merits, it can he construed as an exclusion of the audi altoram partom principle and if the law is silent with regard to the giving of a pre-decisional hearing to the person affected and the decision taken by the authority involves civil consequences and no full review or appeal on merits against the decision is provided. Courts would hesitate to construe an exclusion of the duty to afford a hearing or opportunity unless viewed pragmatically it would paralyse the administrative process or frustrate the need for utmost promptitude. The courts of law have been enjoined to always make every effort to salvage the cardinal rule of audi altoram partom to the maximum extent possible with situation modifications and ensure as far as possible that the person affected has a reasonable opportunity of hearing or showing cause against the proposed section against him. (Vide : Swadeshi Cotton Mills v. Union of India ).
22. So far as the cases on hand are concerned, there can be no two views on the claim of the Corporation that a revision of the property tax is long overdue and imminent, having regard to the fact that the last general revision was only in 1978 and the further facts that not only there had been a steep rise in the annual value, but substantial increase in the commitments of the Corporation to provide basic amenities and that the increase in the cost of providing such amenities to the residents also warrant and justify such a revision. The justification of the end alone cannot justify the adoption of any means or procedure, ignoring completely the prejudice that may be caused to the citizen. Rule 3 obliging the Commissioner to assess the property tax and forming part of Part 1-A relating to assessment of property tax does not exclude the principles of natural justice. Unlike the earlier set of rules there was no opportunity given to make representations by means of a revision to the Commissioner before actually amending or revising or enhancing the assessment and enforcing the same. The rules are silent about giving of any reasons or disclosing the basis of enhancement either before or immediately thereafter by serving any order or proceeding except supplying a property tax card, apparently containing the details relating to property, annual value fixed and the property tax assessed to be paid. In the absence of any of those details or disclosure of the basis or reasons for enhancement, it would not hold the assessee to effectively even vindicate his rights in the appeal provided for and formulate the grounds on which the enhancement can be challenged. As a matter of fact, prior to the impugned amendments and even under the earlier rules when an occasion like this arose, this Court in the decision in Dalavai v. Government of Tamil Nadu (1978)1 M.L.J. 93 : 91 L.W. 110, pointed out all these and emphasised the need for disclosing the basis and reasons for enhancement. The Legislature has not and could not be said to have nullified or altered the said position of law by the impugned amendments, particularly in the absence of specific rule or provision to the contra. The insertion of Rule 21-A to the extent that notwithstanding anything contained in any rule "in this part', it shall not be necessary for the Commissioner to serve any notice for the levy and collection of property tax under Section 98 cannot have the effect of dispensing with the requirements of principles of natural justice at the stage of assessment/revision and enhancement of the levy by the Commissioner. This is obvious from the fact that Rule 21-A has been inserted in Part VI relating to collection of taxes and the rule is also meant to be a non obstante clause in respect of anything contained to the contra or in any rule in Part VI and not the other parts of the IV Schedule particularly Part I-A.
23. In the light of the above principles and context of the rules under consideration and their purport and object, it has to be considered whether there is any justification for excluding the principles of natural justice at the earlier stage. There can be no serious controversy over the position that the assessment, levy and collection of tax involve civil consequences. The rules relating to assessment are also silent on the exclusion of the principles of natural justice at the stage of assessment or revision as the case may be. While so, merely from the fact that after an assessment or revision, there is a provision for appeal, particularly when the rules do not cast an obligation on the Commissioner to write an order with reasons and communicate them to the assessed, for enabling the assessee to effectively challenge the assessment or enhancement of the tax made. The long lapse of time between the present revision proposed and the earlier general revision in 1978 or the justification or imminent need for a general revision is no ground to jettison the application of rules of fair play. Instead suitable directions may and have to be issued to adjust and harmonise the need for speed and also the obligation to set fairly and modify the measure of its application in reasonable proportion to the exigencies of the situation. The assessment and communication of the demand either in the form of a notice or the property tax card or both need not necessarily be in the beginning or the first day of the commencement of the half year and it may be either in the course of the first half year or by the close of the succeeding half year concerned (Vide Rule 20(3)). This would be in conformity with the mandate of Section 100(2) of the Act that the annual value of lands and buildings shall be deemed to be the gross annual rent at which they may 'at the time of assessment' reasonably be expected and inevitably the assessment is an event to follow the date of commencement of the half year concerned In view of the above the second respondent, in my view, would not suffer any damage or injury by being directed to adhere to the principles of natural justice to/the required possible extent. Consequently, though there is no justification to stall the assessment process set in motion by the issue of the impugned notification under the rules under challenge, it is necessary, in my view, for the second respondent to serve a provisional notice containing the proposed revision and the reasons or basis for the enhancement before passing final orders under Rule 3 and give the assessment atleast a period of 15 days time to submit the objections of the assessee and consider them before passing final orders of assessment/revision under the Rules, though not a personal hearing at that stage. This procedure shall be adopted in respect of all assessees irrespective of the fact whether they filed a return or not, as called for under the impugned notification. The adoption of the said course would be in the best interests of both parties before this Court.
24. Many of the other grievances expressed at the time of hearing appear to be hypothetical and premature and in anticipation of some untoward action being taken. In the light of the safeguard now provided by me, there would be no scope for such apprehensions and if in any case any injustice is meted out, there is sufficient safeguard in the form of an appeal to the Tribunal initially and thereafter to the Principal Judge, City Civil Court. The conclusions of mine and directions shall enure to the benefit of all assessees, irrespective of whether any one has filed any writ petition or not in this Court or filed any return within the lime stipulated or not, so far.
25. The plea raised by the respondents on the ground of laches has no merit, since the petitioners have come immediately when the rules were sought to been forced against them. The plea that the writ petitions are premature also does not merit acceptance since the very constitutional validity of the rules themselves are being challenged.
26. For all these reasons stated above, I would summarise my conclusions and directions in the matter, as hereunder:
(i) The assessment/revision of the properly tax shall be only in accordance with Section 100 of the Act on the annual value to be ascertained and determined on the principles laid down in Devon Daulet Rai Kapur v. New Delhi Municipality , Dr. Balbir Singh v. Municipal Corporation of Delhi and Dalavai v. Government of Tamil Nadu (1978)1 M.L.J. 93 : 91 L.W. 110, as also conceded by the second respondent,
(ii) The owners/occupiers liable to submit their returns shall have further time to do so till 28th February, 1993, and the returns maybe either in the same format or any other form, but must contain all the relevant details and information stipulated in the formal and rules or such further or other details relevant for the purpose.
(iii) On receipt of the said returns and even where there are no returns filed, the Commissioner shall be at liberty to proceed further with the assessment process by serving a provisional notice of enhancement whenever there is any with the reasons for the enhancement, giving atleast 15 days time to enable the assessee to file their representations against the proposal, consider the said objections and pass final orders, amending the books of assessment.
(iv) The assessment so made shall be effective from the first half year of 1993-94 (with effect from 1-4-1993) as notified, subject to the provisions governing revision and appeals.
(v) The provisions of Rule 13 is struck down as arbitrary unreasonable and violative of Article 14 of the Constitution of India and consequently null and void. The assessees shall be entitled to file an appeal or submit their representations irrespective of the fact whether they have actually filed their returns or not.
(vi) Subject to the above declaration and directions, the respondents shall be entitled to and be at liberty to proceed further with the assessment process initiated by the notification issued on 3.1.1993, and
(vii) The impugned rules issued in G.O.Ms. No. 1178, Municipal Administration and Water Supply, dated 10.12.1987, published in the Tamil Nadu Government Gazette (Extraordinary), dated 10.12.1987 are held valid, but their enforcement shall be subject to the declaration of law and directions given above in this order.
27. These writ petitions shall stand ordered in the manner and to the extent indicated above. In other respects, the relief claimed shall stand rejected. But, in the circumstances of the case, there shall be no order as to costs.