Gujarat High Court
Magsil Pharma vs State Of Gujarat on 17 September, 2020
Equivalent citations: AIRONLINE 2020 GUJ 2093
Author: J.B.Pardiwala
Bench: Vikram Nath, J.B.Pardiwala
C/SCA/2448/2016 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 2448 of 2016
With
CIVIL APPLICATION (FOR INTERIM RELIEF) NO. 1 of 2020
In R/SPECIAL CIVIL APPLICATION NO. 2448 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE THE CHIEF JUSTICE MR. VIKRAM NATH Sd/-
and
HONOURABLE MR. JUSTICE J.B.PARDIWALA Sd/-
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1 Whether Reporters of Local Papers may be allowed No
to see the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy No
of the judgment ?
4 Whether this case involves a substantial question No
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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MAGSIL PHARMA
Versus
STATE OF GUJARAT & 1 other(s)
==========================================================
Appearance:
MS MEGHA JANI(1028) for the Petitioner(s) No. 1
ADVANCE COPY SERVED TO GOVERNMENT PLEADER/PP(99) for the
Respondent(s) No. 1
MR HS MUNSHAW(495) for the Respondent(s) No. 2
MS MANISHA LAVKUMAR(1010) for the Respondent(s) No. 2
UNSERVED REFUSED (R)(70) for the Respondent(s) No. 1
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CORAM: HONOURABLE THE CHIEF JUSTICE MR. VIKRAM NATH
and
HONOURABLE MR. JUSTICE J.B.PARDIWALA
Date : 17/09/2020
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C/SCA/2448/2016 JUDGMENT
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)
1. Instead of deciding the civil application filed by the applicant, original petitioner, we have decided to hear the main matter itself, i.e. the Special Civil Application No.2448 of 2016 with the consent of the learned counsel appearing for the parties.
2. By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs:
"(A) that the Hon'ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction (i) Commanding the Respondent Bhavnagar Municipal Corporation to levy tax on the petitioner only after following the procedure laid down under Gujarat Municipal Corporation Act, 1949 and the Taxation Rules, (ii) quashing and setting aside bills dated 06.08.2015 raised on the Petitioner for Asssessee Key No.16136010631 and 16136010661 (iii) notice of attachment dated 21.05.2015 and be pleased to declare that the Corporation is not authorized to levy any tax on the Petitioner for the period to 01.04.2013;
(A) that pending the hearing and final disposal of the petition, the Hon'ble Court be pleased to restrain Bhavnagar Municipal Corporation from enforcing recovery of bills dated 06.08.2015 raised on the Petitioner for Assessee Key No.16136010631 and 16136010661;
(B ) that pending the hearing and final disposal of this petition, the Hon'ble Court be pleased to stay notice of attachment dated 21.05.2015;
(C) for costs;
(D) for such other and further orders as the nature and
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C/SCA/2448/2016 JUDGMENT
circumstances of the case may require in the interest of justice."
3. The facts giving rise to this writ application may be summarized as under;
3.1 The writ applicant seeks to challenge the levy of property tax upon him for the period prior to 1st April, 2013 in respect of the land bearing Plot Nos.223 and 224 respectively, totally admeasuring 5929.94 square meters, situated at Chitra GIDC, Bhavnagar. Both the plots, referred to above, are the open plots.
3.2 It appears from the materials on record that the writ applicant is not disputing the levy of property tax after 1st April, 2013. Indisputably, all the taxes for the period after 1st April, 2013 have been paid.
3.3 It appears that the Bhavnagar Municipal Corporation (for short "the Corporation") had no policy to levy tax on the open plot of land till 31st March, 1997. The policy to tax the open plots came to be introduced, for the first time, by an order dated 31 st March, 1997 issued by the Municipal Commissioner. What is relevant for our purpose is Clause 3 of the order passed by the Municipal Commissioner, referred to above. The free English translation of Clause 3 reads thus:
" There is mandatory provision to levy tax on all properties and open land within Corporation area as per BPCM Act, 1949. However, all properties could not be assessed as there is no policy to determine rent of open land without construction within the Corporation area. In the circumstances, the following arrangement is made to decide rent that can be expected on open plot.
Open land on which there is no construction is divided in Page 3 of 12 Downloaded on : Thu Feb 25 04:51:38 IST 2021 C/SCA/2448/2016 JUDGMENT the following four parts:
(I) Non-agricultural open land for residential use. (II) Non-agricultural open land for commercial use (III) Non-agricultural open land for industrial use and (IV) Open land for agricultural use."
3.4 The order of the Commissioner dated 31 st March, 1997 was made a subject matter of challenge by filing the Special Civil Application No.16864 of 2011 and other allied matters. A Division Bench of this Court, vide its judgment and order dated 30th August, 2013, quashed and set aside the order dated 31 st March, 1997 issued by the Commissioner and the consequential assessment/tax bills issued to the respective occupants/owners. We quote Para-8 of the said judgment, which is relevant for our purpose as under:
"8. In view of the above and for the reasons stated above, all these petitions succeed. The impugned order dated 31.03.1997 issued by the Commissioner, Bhavnagar Municipal Corporation and the consequential assessment/tax ills issued to the respective occupants/owners are hereby quashed and set aside and consequently the corporation to make a fresh assessment and levy the municipal taxes on the respective properties/lands as per the taxes/rates/provisions/procedures prevailing prior to 31.03.1997 and as per the rates/taxes determined on the basis of the amendment made from time to time and considering the provisions of BPMC Act and concerned occupants/occupiers to pay the same as there cannot be any zero liability. The aforesaid procedure shall be completed within a period of six months from today. However, it is clarified at the cost of repetition that the aforesaid exercise shall be done and the present judgment and order shall not be applicable with respect to those occupants/owners who have already paid the municipal Page 4 of 12 Downloaded on : Thu Feb 25 04:51:38 IST 2021 C/SCA/2448/2016 JUDGMENT taxes on the basis of the impugned order dated 31.03.1997 without protect, meaning thereby their cases are not required to be reopened and they are not required to be reassessed again as per the judgment and order. Consequently, the concerned District Court to decide and dispose of the pending appeals in accordance with law and on merits as the impugned order dated 31.03.1997 which provides that the appeals pending before the District Court shall be disposed of as per clause 9 of the order dated 31.03.1997 is also quashed and set aside. Rule is made absolute to the aforesaid extent in each of the petitions."
2.5 Thus, this Court directed the Corporation to undertake fresh assessment and levy the municipal tax on the respective properties/lands in accordance with the taxes/rates/provisions/procedures prevailing prior to 31 st March, 1997 and also in accordance with the rates/taxes determined on the basis of the amendments made from time to time and also consider the provisions of the BPMC Act. This Court clarified that the concerned occupant/occupier shall pay the same as there cannot be any Zero liability. We also take notice of the fact that such exercise was required to be completed within six months from the date of the judgment. It appears that one MCA No.1012 of 2014 was filed, praying for extension of time. The MCA was disposed of vide order dated 25th July, 2014 extending the time granted earlier for compliance of the order upto 31st October, 2014.
3.6 It appears that the Corporation, in the meantime, issued notice of final assessment dated 3rd February, 2014 on the writ applicant with respect to the Plot No.224. So far as the Plot No.223 is concerned, no such notice was received by the writ applicant. The writ applicant objected to the said notice vide letter dated 18th February, 2012. The writ applicant pointed out Page 5 of 12 Downloaded on : Thu Feb 25 04:51:38 IST 2021 C/SCA/2448/2016 JUDGMENT to the Corporation that the said notice was not preceded by any notice under Rule 15(2) of the Taxation Rules or entry in the assessment book.
3.7 The Corporation, thereafter, issued bills dated 1 st April, 2012 with respect to the Plot Nos.223 and 224 respectively demanding tax of Rs.25,12,111.25 and Rs.24,12,175.22 respectively. The said bills were followed by demand notice dated 4th January, 2013 for the Plot No.223 and dated 11 th June, 2013 for the Plot No.224.
3.8 It also appears that the Corporation, thereafter, attached both the plots vide warrant of attachment dated 10 th July, 2014.
3.9 It appears that as the order of the Commissioner dated 31 st March, 1997 got quashed and set aside vide the judgment of this Court dated 30th August, 2013 with respect to the Plot Nos.223 and 224, both being the open plots, there existed no liability to pay any tax. With respect to the construction admeasuring 33.44 square meters on the plot No.224/1, the writ applicant paid an amount of Rs.6016 against the bill dated 1 st April, 2013 and requested that the attachment be removed. The Corporation, thereafter, removed the attachment.
3.10 On 2nd May, 2015, the Corporation issued demand notice for the plot No.223, demanding sum of Rs.20,62,688.48.
3.11 On 6th August, 2015, the Corporation issued fresh bills for the Plot Nos.223 and 224 respectively amounting to Rs.34,68,832.68/- and Rs.33,17,911.75/- respectively. The bills mention that the effected date was 1st April, 1997 and that the bills were for the period till 31 st March, 2013. The Corporation Page 6 of 12 Downloaded on : Thu Feb 25 04:51:38 IST 2021 C/SCA/2448/2016 JUDGMENT admitted in its affidavit in reply dated 4 th July, 2016 (Para5, Page
157) that the bills are for the period from 1 st April, 1997 to 31st March, 2013. The Corporation in its affidavit-in-reply filed in the Civil Application No.1 of 2020 stated that subsequent to the affidavit-in-reply dated 4th July, 2016, the General Board has passed a Resolution waiving tax for the period between 1997-98 to 2008-09 and that the revised bills for the plot Nos.223 and 224 respectively come to Rs.10,12,849/- and Rs.9,18,556/- respectively.
3.12 In such circumstances, referred to above, the writ applicant came before this Court by filing the present writ application.
Submissions on behalf of the writ applicant:-
4. Ms. Megha Jani, the learned counsel appearing for the writ applicant submitted that the demand of tax has been raised without following the mandatory procedure like issuance of notices, making entries in the assessment book etc. She would argue that the demand raised is beyond the time limit fixed by the High Court and it also results in retrospective levy of tax.
5. Ms. Jani would submit that the impugned demand is ex- facie bad, illegal, arbitrary, unreasonable and is required to be quashed and set aside for the following reasons;
(i) The Corporation had no policy to raise tax on the open land for the period before 31 st March, 1997. No formula was in existence, no rates were prescribed and no assessment was made. No demands were raised for the period before 31 st March, Page 7 of 12 Downloaded on : Thu Feb 25 04:51:38 IST 2021 C/SCA/2448/2016 JUDGMENT 1997. The only enabling provision/order under which the Corporation could levy tax on open land was the order dated 31 st March, 1997 issued by the Commissioner. Since the very enabling order/provision is quashed and set aside, it is not open for the Corporation to levy any tax on land for the period prior to 1st April, 2013.
(ii) This Court, while quashing and setting aside the order dated 31st March, 1997, kept it open for the Corporation to make fresh assessment in accordance with the applicable rules and raise fresh demand on the basis of the situation that existed prior to 31st March, 1997. So far as the open land is concerned, since there were no rules which permitted the assessment and levy of tax on open land, such exempted properties cannot be taxed even as per the judgment passed by this Court.
(iii) In any case, any fresh demand which could have been raised to the Corporation pursuant to the liberty granted by this Court vide its judgment dated 30th August, 2013 was to be raised on or before 31st October, 2014. In the case of the writ applicant, the bills are raised on 6th August, 2015.
(iv) Apart from the above, it is mandatory for the Corporation before imposing tax on anyone to prepare the assessment book, issue General Notice as required under Rules 13 and 15, issue Special Notice as required under Rule 15(2) of the Taxation Rules, make entries in the assessment book and authenticate the said entries in the same official year to which the assessment book relates. In the present case, the bills are raised for the first time in August, 2015, seeking recovery of tax from 1 st April, 1997 to 31st March, 2013. The retrospective levy of the municipal tax Page 8 of 12 Downloaded on : Thu Feb 25 04:51:38 IST 2021 C/SCA/2448/2016 JUDGMENT is not permissible as is laid down by this Court in its judgment dated 15th July, 2019 passed in the Special Civil Application No.18000 of 2018 and other allied matter.
6. In such circumstances, referred to above, Ms. Jani prays that there being merit in her writ application, the same be allowed and the reliefs, prayed for, may be granted.
Submissions on behalf of the Bhavnagar Municipal Corporation:
7. Mr. Munshaw, the learned counsel appearing for the Corporation has vehemently opposed this writ application. However, Mr. Munshaw has no answer to any of the submissions canvassed by Ms. Jani on behalf of the writ applicant. In such circumstances, Mr. Munshaw had to fall back on the affidavit-in- reply filed on behalf of the Corporation, wherein the following has been stated:
"4. In this regard, it is submitted before this Hon'ble Court that the petitioner is holding three plots being plot no.223 which was assigned old key number16/1360/1066/1 and is having new key number 10/0017/0003/1, plot no.224 which was assigned old key number 16/1360/1063/1 and is having new key number 10/0017/0004/0002 and plot no.224/1 which was assigned old key number 16/1360/1082/1 and is having new key number 10/0017/0004/0001.
5. It is further submitted before this Hon'ble Court that petitioner was issued notice under value based system on 3.2.2012 for key number 16/1360/1063/1 for plot no.224. It is pertinent to note her in the said notice the plot is shown as open plot. Moreover, the respondent corporation for the period 01.04.1997 to 31.03.2013 had issued bill for an amount of Rs.24,12,175/- for plot number 224 and an amount of Rs.25,12,111/- for plot no.223. Thereafter, Page 9 of 12 Downloaded on : Thu Feb 25 04:51:38 IST 2021 C/SCA/2448/2016 JUDGMENT demand notice dated 4.1.2013 was also issued for plot no.223. Hence, the submission of the petitioner that the statutory notice was never issued by the respondent corporation is a myth and incorrect statement. However, as the petitioner deliberately avoided the payment of statutory dues of property tax, the respondent corporation was compelled to attach the property of the petitioner.
6. It is further submitted before this Hon'ble Court that the other argument that had been raised in the present proceedings by the petitioner is that the respondent corporation is not having requisite power for levy taxes on open plots. In this regard, the attention of this Hon'ble Court is kindly drawn to the provisions of Section 132 of the Gujarat Provenience Municipal Corporation Act, 1949 wherein the respondent corporation is having the power for levy and collection of taxes on open plots. It is also submitted before this Hon'ble Court that the respondent corporation vide circular dated 07.02.2003 has clarified that the open plots are also exigible to levy of taxes and hence the contentions of the petitioner that the open plots cannot be taxed by the respondent corporation is devoid of any substance. Copy of the said circular is annexed herewith and marked at Annexure-R/1.
7. It is also submitted that the petitioner was provided with the statutory notices under rule 15 and 20 of the Taxation rules and the respondent corporation had also updated the assessment book before the issuance of the said bills. It is also submitted that the respondent corporation cannot function without income of property tax and the petitioner cannot claim that the petitioner is not liable to pay any tax under the Corporation Act especially when the petitioner has admittedly use the property."
ANALYSIS
8. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the Corporation could have raised the impugned bills for the Page 10 of 12 Downloaded on : Thu Feb 25 04:51:38 IST 2021 C/SCA/2448/2016 JUDGMENT purpose of levy of property tax.
9. The Corporation cannot run away from the fact that this Court, vide judgment dated 30th August, 2013 passed in the Special Civil Application No.16864 of 2011 and allied petitions, had permitted it to make a fresh assessment and levy the municipal tax on the properties/lands in accordance with the taxes/rates/provisions/procedures prevailing prior to 31 st March, 1997. The Corporation also cannot run away from the fact that prior to 31st March, 1997, it had no policy of any type or nature to levy the tax on the open plots of land. In such circumstances, we fail to understand how the Corporation could have raised the bills in the present case for the period between 1st April, 1997 and 31st March, 2013 and, more particularly, when the General Board thought fit to pass a resolution for waiver of the tax for the period between 1997-98 and 2008-09. On this ground alone, the writ applicant should succeed in the present litigation.
10. Apart from the above, we find merit in the argument of Ms. Jani that even otherwise the raising of demand by way of the impugned bills towards the levy of tax is not in accordance with the provisions of law. In this regard, Ms. Jani has rightly pointed out that no special notice under Rule 15(2) of the Taxation Rules preceded to general notices. Under Rule 15(2) of the Taxation Rules, it has been provided that, in every case in which any premises for the first time been entered in the assessment book as liable to the payment of property-taxes or in which the rateable value of any premises liable to such payment has been increased, the Commissioner shall, as soon as conveniently may be after the issue of the public notice under Page 11 of 12 Downloaded on : Thu Feb 25 04:51:38 IST 2021 C/SCA/2448/2016 JUDGMENT Sub-rule (1) give a special written notice to the owner or occupier of the said premises specifying the nature of such entry and informing him that any complaint against the same should be made within 15 days from the service of the special notice.
11. The law in the aforesaid context has been elaborately explained by a Division Bench of this Court, to which, one of us J.B. Pardiwala, J. was a party, in the case of Vijayan Rajamanicka Nadar Pagalam vs. Jamnagar Municipal Corporation & Anr., Special Civil Application No.18000 of 2018 and allied petitions, decided on 15th July, 2019.
12. In such circumstances, referred to above, we hold that the demand is not sustainable in law and deserves to be quashed and set aside.
13. In the result, this writ application succeeds and is hereby allowed. The bills dated 6th August, 2015 raised on the writ applicant are hereby quashed. It is hereby declared that the Corporation could not have determined and levied any tax on the writ applicant for the period prior to 1 st April, 2013. Rule is made absolute to the aforesaid extent.
14. In view of the order passed in the main matter, i.e, the Special Civil Application No.2448 of 2016, the connected civil application also stands disposed of.
(VIKRAM NATH, CJ) (J. B. PARDIWALA, J) Vahid Page 12 of 12 Downloaded on : Thu Feb 25 04:51:38 IST 2021