Madras High Court
Dindigul Anna District Tax Payers ... vs Government Of Tamil Nadu Represented By ... on 21 September, 1994
Equivalent citations: (1995)2MLJ43
ORDER Somasundaram, J.
1. The petitioner in Writ Petition Nos. 1946 of 1994 and 3118 of 1994 is Dindigul Anna District Tax Payers Sangam represented by its President and they are filed for the issue of a writ of prohibition prohibiting the second respondent from enhancing the annual value of the property tax of the properties of the members of the petitioner's Sangam pursuant to the notice issued by the second respondent to the members of the petitioner sangam under Rule 9/10 of Schedule IV to the Tamil Nadu District Municipalities Act (hereinafter referred to as the Act). The petitioner in W.P. No. 2160 of 1994 is the Trichy Town Properties Owners Welfare Association represented by its President and the said writ petition is filed praying for the issue of a writ of declaration declaring that Rule 9-A of Schedule IV of the Taxation Rules hereinafter referred to as rules and the guidelines issued by the Commissioner of Municipal Administration, Madras-5, dated 21.6.1993 and the consequential revision sought to be made from the second half year of 1993-94 in respect of the properties owned by the members of the petitioner's association as ultra vires, illegal, unconstitutional and unenforceable insofar as the members of the petitioners association are concerned.
2. According to the petitioner in W.P. Nos. 1946 and 3118 of 1994 the second respondent served notice on the members of the petitioner sangam under Rule 9/10 of Schedule IV to the Tamil Nadu District Municipalities Act (hereinafter referred to as the Act) proposing to raise the annual value of the property on and from 1.10.1993, that the second respondent propose to raise the annual value arbitrarily without adopting any yard-stick and proposed to fix the annual value more than two times and in some cases it is more than three times and that it is seen from the notices that they are special notices of property tax. However, the reason given for revising the annual value is that which keeps itself may not be aground for increasing the tax is general revision of tax. The further case of the petitioner is that the basis on which the revision of property tax was effected is not at all mentioned in any one of the notices, that the second respondent issued the notices under Rule 9/10 of the Rules fixing the annual value not on the basis of the provisions of the Act and the Tamil Nadu Buildings (Lease and Rent Control) Act, but on the basis of the guidelines issued by the Commissioner of Municipal Administration, that the second respondent classified the entire town into four zones and fixed the basic value for each zone without any basis and also without taking into consideration the actual rental value of the property and therefore the proposed notices issued by the second respondent to enhance the property tax is arbitrary and without the authority of law. It is further averred in the affidavit filed in support of the writ petitions that the second respondent, for the years 1990-91 and 1991-1992 has revised the annual value without following the procedure prescribed under the act and that the second respondent has again issued the notices proposing to revise the tax from 1.10.1993 and hence, the action of the second respondent in proposing to revise the property tax for the year 1993-94 by issuing a general notice is totally without jurisdiction and contrary to the provisions of the Act. The petitioner in the writ petitions also challenge the revision of the property tax made by the 2nd respondent with effect from 1.10.1993 on the grounds that in the notices issued by the 2nd respondent the reasons for the revision of property tax and the basis on which the revision has been made have not been disclosed, that before revising the annual value of the properties, the second respondent did not give any opportunity to the members of the petitioner- sangam to put forth their objections and that the proceedings of the 2nd respondent enhancing the property tax are contrary to the provisions of the Act and the Rules made thereunder.
3. The case of the petitioner in W.P. No. 2160 of 1994 as disclosed in the affidavit filed in support of the writ petition is as follows: The power of revision of property tax and the method of assessment of property for the purpose of tax are all governed in Sections 81, 81-A and upto 84 of the District Municipalities Act, 1920. The method of assessment is embodied in Section 82 where under the actual value shall be deemed to be gross annual rent at which they may reasonably be expected to let from month to month or year to year less certain deductions for maintenance, repairs, etc. There cannot by any contrary method of assessment by any guidelines while deciding the market value of a building, the Supreme Court has categorically held the procedure allowable in the Tamil Nadu Buildings (Lease and Rent Control) Act with reference to the fixing of fair rent and assessment of market value can be safely taken as the value for the corresponding statutes. Therefore, there cannot by any different guidelines for arriving at the market value. Further, the market value of the buildings, also does not depend upon the use for which they are put. Hence, the guidelines which discriminate building to building on the basis of occupation purpose for deciding the market value is arbitrary and unreasonable and will have no rational and reasonable nexus to the object sought to be achieved. It is further submitted that as per Section 84 of the Act, the taxation should be uniform. Rule 9-A which is made for some other purpose is liable to be struck clown as it ran contrary to the provisions of the Act. So far as the members of the petitioner association are concerned, they are subject to revision before 1988. Therefore under law, the revision should be only in 1993 and this revision should be based upon the annual value of the building to be assessed either as per Section 82 or as per the provisions of the Tamil Nadu Buildings (Lease and Rent Control) Act. Therefore cannot be a further mode of assessing the value on unreasonable and arbitrary fashion. There cannot be also a discrimination on the ground of occupation or Uniform revision at a fixed percentage. The entire procedure adopted by the respondents in revising the tax to 100 percent, 200 per cent and 300 per cent of the existing tax are, therefore, contrary to law, without jurisdiction and liable to be struck down. The second respondent in W.P. No. 2160 of 1994 issued certain guidelines through the circular dated 14.5.1993 for determining the annual value of the buildings under Section 82 of the Act. Under Section 82, the annual value of the building has to be fixed on the expected return from the building. The 2nd respondent in W.P. No. 2160 of 1994 by issuing the guidelines has acted contrary to the provisions of Section 82 of the Act. Similarly Rule 9-A of the Rules inserted by the Tamil Nadu Act 35 of 1993 also runs counter to the provisions contained in Section 82 of the Act. Therefore, according to the petitioner in W.P. No. 2160 of 1994, Rule 9-A and the guidelines dated 14.6.1993 issued by the Commissioner of Municipal Administration for determining the annual rental value of the premises are invalid and unenforceable.
4. The Municipalities in question the second respondent in W.P. Nos. 1946 and 3118 of 1994 and the 3rd respondent in W.P. No. 2160 of 1994 have filed elaborate counter-affidavits contending that the present revision of property tax made in 1993 is only a quinquennial revision and not a special revision made in between two general revisions as contended by the petitioners and that the present quinquennial revision is made by the Municipalities strictly in conformity with the provisions of the Act and the Rules and also under the provisions of the Tamil Nadu Buildings (Lease and Rent Control) Act. The Municipalities further contended that the assessment of the property was undertaken on the basis of reasonable letting value as laid down in Sections 81 and 82 of the Act and the revision was strictly in conformity with the fair/standard rent. The revision was undertaken strictly in terms of Sections 81 and 82 Schedule IV of the Act and the 2nd respondent revised the annual value based on the particulars furnished and revision was made strictly in terms of Sections 81 and 82 read with Schedule IV. The State of Tamil Nadu as first respondent in W.P. No. 2160 of 1994 has filed a counter-affidavit contending that the property tax has been revised on the basis of the statements, facts and figures furnished in the returns submitted by the tax payers and wide publicity has been given through newspapers regarding the general revision, mode of revision of tax etc It is the further case of the first respondent in W.P. No. 2160 of 1994 that a general revision of the property tax assessment in various Municipalities have been made according to the provisions in the Tamil Nadu District Municipalities Act, 1920 (Tamil Nadu Act V of 1920) and the rules issued thereunder. Further Section 3 of the Tamil Nadu District Municipalities (Fourth Amendment) Act, 1990 (Tamil Nadu Act 35 of 1990) is intra vires and that the revision of property tax in Municipalities with effect from 1.10.1993 is not done under the provisions of Rule 9-A introduced by the said section.
5. Before" us Mr. G. Subramaniam, learned Senior Counsel appearing for the petitioners in W.P. Nos. 1946 and 3118 of 1994 while reiterating the contentions raised in the affidavits filed in support of the writ petitions submitted that the second respondent revised the annual value in the years 1990-1991 and 1991-1992, that again the second respondent has issued notices proposing to revise the property tax with effect from 1.10.1993, that the proposed revision is not a general revision or quinquennial re vision and it is a case of special revision made in between one general revision and another and that such revision of property tax proposed by the 2nd respondent without giving the reasons for the enhancement of tax as contemplated in the Rules is invalid and the second respondent is not entitled to enhance the annual value or the property tax pertaining to the members of the petitioner sangams. The learned Senior Counsel further contended that even assuming that the revision of property tax undertaken by the 2nd respondent in 1993 is a general revision and that the notice issued to the members of the petitioner-sangams is a special notice under Rule 9 the 2nd respondent has not followed the procedure prescribed under Rule 9 by issuing the special notices giving reasons for the enhancement of the property tax and therefore, the said notices issued by the 2nd respondent to the members of the petitioner-sangams without giving the reasons of the enhancement of the property tax is invalid and that the 2nd respondent is not entitled to proceed further to enhance the property tax and recover the same from the members of the petitioner-sangams. The learned Senior Counsel for the petitioner also contended that there is no basis for the second respondent for dividing the entire area within the jurisdiction of the municipality into four zones and for fixing different basic value for each zone and that such basic value for each zone was also fixed without taking into consideration the annual rental value of the property as contemplated under Section 82 of the Act. Again, the learned senior counsel contended that the 2nd respondent has not followed the fair rent formula provided for in Section 4 of the Tamil Nadu Buildings (Lease and Rent Control) Act in the determination of the annual value of the building and therefore, the annual value of the properties fixed by the second respondent is not correct.
6. Mr. M. Venkatachalapathy, learned Counsel for the petitioner in W.P. No. 2160 of 1994 submitted that Rule 9-A and the guidelines dated 14.5.1993, issued by the Commissioner of Municipal Administration for the determination of the annual rental value of the buildings for the purpose of the revision of the property tax are invalid as they are contrary to the provisions contained in and the procedure prescribed under Section 82 of the Act with regard to the mode of assessment and therefore, the consequential revision of property tax made by the third respondent municipality based on Rule 9-A and guidelines dated 14.5.1993 is invalid and unenforceable. According to Mr. M. Venkatachalapathy, the annual value should be fixed only in the manner provided under Section 82 of the Act and not in accordance with the procedure prescribed either under Rule 9-A or under the guidelines dated 14.5.1993.
7. Per contra, Mr. E. Padmanabhan, learned Counsel appearing for the Municipalities in all these cases submitted that the last general revision of property tax was undertaken during the year 1987-88, that the revision undertaken by the Municipalities in 1993 is only a general revision and not a revision of property tax in between two general revisions and that the annual value was not revised in 1990-91 and 1991-92 as contended on behalf of the petitioners. The learned Counsel further submitted that the present general revision made by the second respondent in is conformity with the provisions of the Act and the Rules and Section 4 of the Tamil Nadu Buildings (Lease and Rent Control) Act, and therefore, the revision of property tax undertaken by the municipalities in the year 1993 is proper and valid.
8. Mr. P. Sathasivam, learned Special Government Pleader appearing for the first respondent in W.P. No. 2160 of 1994 submitted that the guidelines dated 14.5.1993 issued by the Commissioner of Municipal Administration are valid because they are issued only to ensure the objectivity in the levy of property tax on the basis of the annual rental value and that the guidelines only incorporate the provisions of Sections 82 to 84 of the Act. The learned Special Government Pleader also submitted that Rule 9-A inserted by Tamil Nadu Act 35 of 1990 was applicable only to the last general revision of property tax made with effect from 1.10.1987 and the said Rule 9-A is not applied to the general revision made with effect from 1.10.1993.
9. In the light of the rival contentions of the learned Counsel for the parties, the following points arise for consideration in these writ petitions:
1. Whether the revision of property tax made by the municipalities in these cases with effect from 1.10.1993 is a general revision of whether it is special revision in between two general revisions?
2. Whether Rule 9-A of the Rules and the guidelines issued by the Commissioner of Municipal Administration in his circular dated 14.5.1993 are liable to be declared as illegal and unconstitutional and whether the municipal authorities are correct in following the guidelines in determining the annual value of the buildings for the purpose of the revision of the property tax?
3. Whether the fair rent formula and the provisions of the Act have been followed by the municipal authorities in determining the annual value of the properties while revising property tax?
4. In case, it is found on point No. 1 that the revision undertaken by the municipal authorities in 1993 is general revision, whether the municipal authorities have followed the procedure prescribed under Rule 9 by giving special notices to tax payers, stating the reasons for enhancement of property tax?
5. Whether the reason as to why and how the revision of assessment has taken place in a particular case should be set out in the special notices issued under Rule 9 and whether the special notices issued by the Municipal authorities under Rule 9 to the members of the petitioner association in these cases are valid?
6. To what relief if any the petitioners are entitled to in these writ petitions?
10. Point No. 1: On the question whether the revision of property tax undertaken by the municipal authorities in the present cases in the year 1993 is a general revision or a special revision, the specific case of the respondents is that the last general revision of property tax was undertaken in the year 1987-88 and the present revision undertaken in 1993 is only a general revision. In para.27 of the counter-affidavit filed in W P. No. 1946 of 1994 the second respondent has categorically averred as follows:
This respondent reiterates that the quinquennial revision has been undertaken on the 6th year only and revision of annual value has not been undertaken every year as suggested by the petitioner. It is incorrect to suggest that this respondent has revised the annual value during the years 1990-91 and 1991-92.
Again, in paras 5 and 6 of the counter-affidavit the second respondent has asserted as follows:
The next revision was due on 1.10.1992. But after a lapse of 6 years, this respondent resolved to revise the annual value in terms of Part III, Chapter VI, Sections 81 and 82 read with Schedule IV of the Tamil Nadu District Municipalities Act, 1920.
This respondent called for relevant particulars from the owners of properties with a view to rationalise the assessment according to the provisions of the Act and the Rules. In the circumstances this respondent caused a public notice on 20.1.1993 and on 25.6.1993 requiring the owners of properties to fill in the Formats, which were served on them and readily available at 2nd respondent's office. This respondent has included a copy of the proforma in a type set of papers. This respondent states that innumerable owners of properties have submitted particulars in the prescribed format after duly filling up the columns. Wherever the individual assessee failed to fill up and return the formats, this respondent collected particulars through its field staff in respect of each premises. On the basis of the particulars so furnished or collected, this respondent proceeded further and revised the annual rental value by following the procedure viz., issue of special notice under Rule.
The learned Counsel for the Municipalities placed reliance on the public notices issued in the Tamil dailies on 20.1.1993 and 25.6.1993 which are produced in the typed set of papers filed by the second respondent in support of the contention that the revision undertaken by the municipalities in the year 1993 is only a general revision. Learned Counsel for the petitioners filed a reply affidavit stating that the property tax has been revised by the second respondent in W.P. Nos. 1946 and 3118 of 1994 in the years 1991-92 and 1992-93 and there cannot be a general revision again in 1993 with effect from 1.10.1993 and in support of their case, the petitioner annexed a statement showing the revision made in the years 1991-1992 and 1992-1993. Mr. E. Padmanabhan, learned Counsel for the Municipalities submitted that the increase of the property tax for the the years 1991-1992 and 1992-1993 is only due to the increase of library cess for the relevant period and not due to any general revision of the annual value of the properties. In support of his contention, Mr. E. Padmanabhan relied on G.O.Ms. No. 492, Education (K1) Department, dated 19.5.1992 and G.O.Ms. No. 367, Education Department, dated 7.4.1993. The G.Os. referred to above clearly support the contention of the learned Counsel for the Municipalities. In view of the categorical averments of the municipal authorities in the counter-affidavits filed in the respective writ petitions and the materials available on record, we have no hesitation in holding that the revision of property tax made by the municipal authorities with effect from 1.10.1993 is only a general revision and not a special revision as contended by the learned Counsel for the petitioners. Point No. 1 is answered accordingly.
11. Points Nos. 2 and 3: For the sake of convenience, these two points can be considered together. The contention of the learned Counsel for the petitioners is that the annual value of the buildings has to be determined only with reference to the fair rent formula provided under Section 4 of the Tamil Nadu Buildings (Lease and Rent Control) Act and in accordance with the provisions contained in Section 82 of the Act In support of their contention, the learned Counsel for the petitioners relied on the decision in Guntur Municipal Council v. Guntur Rate Payers' Association A.I.R. 1972 S.C. 353. The further submission of the learned Counsel for the petitioners is that the fair rent formula and the provisions contained in Section 82 of the Act have not been followed by the municipal authorities in the present cases in determining the annual value of the buildings of the members of the petitioner sangams. To appreciate the contentions of the learned senior counsel for the petitioners, it is necessary to refer to the relevant provisions of the Act and Rules dealing with the assessment and levying of property tax. Section 78(1)(a) of the District Municipalities Act empowers this respondent municipal council to levy property tax among other taxes. Section 81 of the Act empowers the municipal council to levy property tax on all buildings and lands within Municipal limits. Section 81 of the Act also provides elaborate procedure relating to levy of tax at such percentage of the annual value of lands and buildings as fixed by the municipal council subject to the provisions of Section 78. Section 81-A enables the State Government to direct any Municipal Council to levy property tax referred in Sub-section (1) of Section 78 or any other class of such tax and with effect from such date as may be specified in the order. Section 82 provides the method of assessment of property. Section 82 provides that every building shall be assessed together with its site and other adjacent premises occupied as appurtenance thereto. Section 82(2) directs that the annual value of lands and buildings shall be deemed to be the gross annual rent at which they may reasonably be expected to let from month to month, less the standard deductions as provided therein. Elaborate procedure has been prescribed for in Section 82. Section 84 of the Act directs that taxation be uniform. Section 87 provides for remission in cases where a building ordinarily let out falls vacant. Schedule IV Taxation and Finance Rules in terms of Section 124 has to be read as part of Chapter 6 of the Act. Schedule IV, Part I Taxation Rules, Rules 6 to 10 provides for the levy of assessment of property tax, procedure to be followed and other relevant material particulars. Rule 6 provides that the value of any land or building for the purpose of property tax shall be determined by the executive authority. Rule 7 provides that the executive authority shall enter the annual or capital value of all buildings determined by him and the tax payable thereon in the assessment books to be kept for the purposes at the municipal office. Rule 8(1) stipulates that the assessment books shall be completely revised by the executive authority once in every 5 years. Rule 8(2) of the Rules provides that the executive authority may amend the assessment books at any time between one general revision and another under certain contingencies. Rule 9 lays down that when the assessment books have been prepared for the first time and whenever a general revision of such books has been completed, the executive authority shall give a public notice stating that the revision petitions will be considered if submitted within the period prescribed therein. The first proviso to the said rule provides that such public notice shall be affixed to the Notice Board and by beat of Tom Tom, that in every case where there is enhancement in the assessment, the executive authority shall also cause intimation thereof by a special notice to be served on the owner or occupier of the property concerned.
12. In para 3 of the counter-affidavit filed on behalf of the State of Tamil Nadu in W.P. No. 2160 of 1994, the first respondent explains the circumstances under which the guidelines were issued by the Government in G.O.Ms. No. 1137, Municipal Administration and Water Supplies, dated 27.11.1987 and Rule 9-A was inserted by Tamil Nadu Act 35 of 1980. The said para.3 reads thus:
It is respectfully submitted that revision of property tax assessments in all the Municipalities and Municipal townships was not made from the years 1970-71 to 1985-86. The revision of property tax assessment in all the Municipalities and Municipal townships was taken up and special revisions officers were appointed for the purpose with effect from 1st April, 1987. Representations were received by the Government on steep rise of property tax assessees by the special revision officers. Hence, the Government issued order withdrawing all the previous orders issued in regard to the revision of property tax assessments in municipalities and Municipal Townships and the special revision officers appointed for the said purpose were also recalled. Thereafter, the executive authorities themselves undertook the revision of property tax assessments. Representations were also received that the property tax fixed by the executive authorities was still on the high side. Having considered all the representations, the Government have issued guidelines in G.O.Ms. No. 1137, M.A. & W.S., dated 27.11.1987 laying down certain limits on property tax assessments and to dispose of the revision petitions filed by tax-payers accordingly and such guidelines are applicable only to the general revision of property tax assessments with effect from the 1st October; 1987. Those who have failed to file revision petitions in time could not avail of the concession granted in the said Government orders. Therefore, the Government have also instructed the executive authorities to allow the revision petitions of tax payers upto the 31st March, 1988 in respect of the revised property tax assessments for the half-year beginning from the 1st October, 1987. To give a statutory effect to the above guidelines, Schedule IV to the Tamil Nadu District Municipalities Act, 1920 (Tamil Nadu Act V of 1920) was amended by incorporating Rule 9-A by the Tamil Nadu Act 35 of 1990. This Rule was applicable only to the revision of Property tax made with effect from 1.10.1987 and it is not applied to the revision made with effect from 1.10.1993.
Thereafter, the Commissioner of Municipal Administration, Madras issued the circular ROC. No. 4314/Rs/92, dated 14.5.1993 to all the Regional Directors of Municipal Administration and all executive authorities containing the guidelines for determination of annual value of properties for the purpose of the revision of the property tax with effect from 1.10.1993. The reason for issuing the guidelines is stated in the preamble portions of the guidelines as follows:
As per Section 82(2) of Tamil Nadu District Municipalities Act, 1920, the annual value of lands and buildings is deemed to be the gross annual rent at which they may reasonably be expected to be let from month to month or from year to year less a deduction from the cost of buildings of 10%. In respect of any building not ordinarily let out, the annual value of the premises shall be deemed to be 6% of the estimated value of the land and the estimated present cost of erecting the building after deduction for depreciation of not less than 10 per centum of such cost. (Section 82(2)(ii). In the case of any building in the industrial estate, the annual value of the said building shall be deemed to be 4% of its capital value Section 82(a). To ensure objectivity in the levy of property tax, the necessity for issuing detailed guidelines for fixation of annual value of buildings and lands has been felt keenly, especially when the volume of such work will be large in quinquennial revision.
13. The relevant portion of the guidelines issued in the circular dated 14.5.1993 reads thus:
The following guidelines are laid down for adoption by the executive authorities of municipal councils and townships committees for quinquennial revision of property tax with effect from 1.10.1993.
1. Basic value: Basic value has been fixed in all the Municipalities and Township committees for different Zones for purpose of fixation of annual rental value of buildings and lands. The basic value is the probable rental yield per sq.ft. per month of residential properties. For fixing the basic value, instructions have been issued to adopt the rent obtained per month for newly constructed residential R.C.C. Buildings measuring 1,000 sq.ft. and to convert it into rental value per sq.ft.
The basic value has already been fixed in all the Municipalities on a Zonal basis depending on the property value of different locations. A clear demarcation of the zones adopted for purpose of assessment of property tax should be made. A map should be kept in Municipal office showing different Zones, streets and lanes within the Zones and reference should be kept indicating the door numbers covered under all streets and lanes in each Zone. There should not be any omission or overlapping of building between Zones.
2. Depreciations: The following discount depending on the age of building should be given towards depreciation:
Upto 5 years, no discount. From 5 to 15 years 10% from 15 to 25 years 15%, above 25 years 20%
3. Occupation: It has been decided to provide discount of 30% in respect of buildings occupied by the owners themselves.
4. Nature of building: Buildings are broadly classified as thatched, tiled and R.C.C. ones. Since the basic value has been arrived at taking a R.C.C. Building as the standard the rental proceeds from other types of buildings like thatched and tiled, A.C. Sheet or G.A. sheet roofings etc., may be less. Therefore, discount has to be given for other type of buildings as follows:
For R.C.C. buildings .... No allowance For tiled A.C. Sheet and G.A. Sheet .... 25% For thatched roof buildings .... 50%
5. Use of buildings: As explained above, the unit of basic value is a newly constructed R.C.C. residential building. Therefore, it is necessary that in case of buildings used for industrial purpose or commercial purposes (including nursing homes, Kalyanamandapam) the computed basic value has to be raised suitably as stipulated below:
Building for industrial use : Double the basic value.
Nursing Homes etc., Kalyanamandapam etc. : Thrice the basic value.
6. Ceiling: The overall enhancement of tax in quinquennial revision should not be exorbitant as to cause severe hardship to the assessees. Therefore, the following ceiling is fixed for the enhancement of taxes consequent on the quinquennial revision of property tax.
Residential buildings (owner occupied) : Enhancement should not exceed 50% of the re-revision tax.
Residential buildings
(Rented) : Enhancement should
not exceed 100% of
the re-revision tax.
For commercial buildings : Enhancement should not
exceed 200% of
re-revision tax.
In no case revised tax should be less than the existing tax.
14. In Guntur Municipal Council v. Guntur Rate Payers' Association , the Apex Court while dealing with the method of assessment of annual value of the lands and buildings under Section 82(2) of the Act has held as follows:
The test essentially is what rent the premises can lawfully fetch if let out to a hypothetical tenant. The municipality is thus not free to assess any arbitrary annual value and has to look to and is bound by the fair or the standard rent which would be payable for a particular premises under the Rent Act in force during the year of assessment. In Corporation of Calcutta v. Smt. Padma Debi , it was held that on a fair reading of the express provisions of Section 127(a) of the Calcutta Municipal Act, 1923 the annual rent could not be fixed higher than the standard rent under the Rent Control Act. There the Rent Control Act of 1950 came into force before the assessment was finally determined and it was observed that the corporation has no power to fix the annual valuation of the premises higher than the standard rent under the Act. The learned Counsel for the appellant has not made any attempt nor indeed he could do so to contest the above view. What has been stressed by him is that Section 7 of the Act makes it clear that it is only after the fixation of the fair rent of a building that the landlord is debarred from claiming or receiving the payment of any amount in excess of such fair rent. It is urged that so long as the fair rent of a building or premises is not fixed the assessment of valuation by a municipality need not be limited or governed by the measure provided by the provisions of the Act for determination of fair rent. Logically such buildings or premises as are not let out to a tenant and are in the self occupation of the landlords would also fall within the same principle if no fair rent has even been fixed in respect of them. We are unable to agree that on the language of Section 82(2) of the Municipalities Act any distinction can be made between buildings the fair rent of which has been actually fixed by the controller and those in respect of which no such rent has been fixed. It is perfectly clear that the landlord cannot lawfully expect to get more rent than the fair rent which is payable in accordance with the principles laid down in the Act. The assessment of valuation must take into account the measure of fair rent as determinable under the Act. It may be that where the controller has not fixed the fair rent the municipal authorities will have to arrive at their own figure of fair rent but that can be done without any difficulty by keeping in view the principles laid down in Section 4 of the Act for determination, of fair rent.
15. it is clear from the above decision of the Apex Court that when the Rent Controller has not fixed the fair rent for a building 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. It is also clear from the preamble portion of the guidelines dated 14.5.1993 that the said guidelines were issued only to enable the municipal authorities to arrive at their own figure of fair rent of the buildings in accordance with the principles laid down under Section 4 of the Tamil Nadu Buildings (Lease and Rent Control) Act and Section 82(2) of the Act and to ensure objectivity and avoid arbitrariness in the determination of the annual value of the buildings for the purpose of revision of property tax. It is seen from the counter affidavits filed on behalf of the municipal authorities, in these three writ petitions that after a study of the property tax pattern, the increase in the price of land, cost of construction and depreciations to be allowed in terms of the provisions of the Rent Control Act, a standard process was evolved and the guidelines referred to above were issued with a view to avoid hardship to individual assessees. It is further pointed out in the counter-affidavit filed by the municipal authorities that in that view a committee was constituted and standard/fair rent was arrived at in respect of similarly situated areas depending upon the locality, its importance, the market rate of the land and other amenities which is called 'basic value'. The basic value was arrived at after taking into consideration of the relevant materials. From the basic value further deduction is being allowed depending upon the nature of construction, age of the construction and other materials as seen from the assessment work sheets produced by the municipal authorities in the typed set of papers. A perusal of the assessment work sheets produced in the typed set of papers will go to show that but for the standardised process and the determination of the annual value on the basis of guidelines issued the revision made on the basis of fair rent formula alone might have resulted in ten-fold increase of tax in respect of almost all the premises either residential or non-residential or factory premises. Further, under the guidelines a ceiling is fixed for enhancement of property tax consequent on the general revision of the property tax as follows:
Residential Buildings (owner occupied) enhancement should not exceed 50% of pre-revision tax.
Residential buildings (rented) enhancement should not exceed 100% of the pre-revision tax.
For commercial buildings, enhancement should not exceed 200% of pre-revision tax.
again, in the said guidelines standard deductions as permissible under the Act were also allowed in conformity with Section 82(2) of the Act.
16. On a careful examination of the guidelines dated 14.5.1993 issued by the Commissioner of Municipal Administration to the municipal authorities extracted above we are of the view that the said guidelines have been issued only in conformity with the provisions contained in Section 82 of the Act and Section 4 of the Tamil Nadu Buildings (Lease and Rent Control) Act. Further there is nothing wrong in the municipal authorities fixing different basic value for different zones depending upon the importance of the locality, the market rate of the land and the other amenities available in that zone, for the purpose of the fixation of the annual rental value of the buildings provided they are in conformity with the fair rent formulated the provisions of the Act. We are inclined to hold that the said guidelines issued by the Government will certainly avoid arbitrariness and ensure uniformity and objectivity in the determination of the annual rental value of the buildings. On a consideration of the assessment worksheets produced by the municipal authorities and the other materials available on record, we are clearly of the view that the annual value of the premises have been arrived at by the Municipal authorities in these cases on the basis of the principles laid down in Section 4 of the Tamil Nadu Buildings (Lease and Rent Control) Act and Section 82 of the Act. For all the reasons stated above, it has to be held that the guidelines dated 14.5.1993 issued by the Commissioner of Municipal Administration to the various municipal authorities are not liable to be declared as illegal and unenforceable and that the municipal authorities are justified in following the said guidelines in determining the annual value of the buildings.
17. In view of the categorical statement in para.3 of the counter-affidavit filed on behalf of the Goverment, that Rule 9-A challenged in W.P. No. 2160 of 1994 is not applied to the revision of property tax made with effect from 1.10.1993, it is not at all necessary to examine the validity of the said Rule 9-A. Accordingly we are not expressing any opinion on the validity of Rule 9-A. Point Nos. 2 and 3 are answered accordingly.
18. Points Nos. 4, 5 and 6: On point No. 1, we have recorded a finding that the revision of property tax made by the Municipalities in these cases with effect from 1.10.1993 are only general revision. The contention of the learned Counsel for the petitioners is that even in the case of general revision Special notices issued by the municipal authorities under Rule 9 enhancing the property tax, they must contain reasons for the enhancement that is the reason as to why and how the revision of assessment has taken place in a particular case should be set out in the special notices issued under Rule 9. According to the learned Counsel for the petitioners, since the special notices issued by the municipal authorities to the tax payers under Rule 9 in these cases, do not contain the reasons for enhancement such notices issued by the municipal authorities to the tax payers are invalid and unenforceable. There is substance in the above contentions of the learned Counsel for the petitioners. The relevant portion of Rule 9 to Schedule IV of the Act reads thus:
9. When assessment books have been prepared for the first time and when ever a general revision of such books has been completed, the executive authority shall give public notice stating that revision petitions will be considered if they reach the municipal office within a period of sixty days from the date of such notice in the case of the Government, a railway administration or a company and of thirty days from the said date in other cases. The notice shall be affixed to the notice board of the municipal office and on the same day be published in the municipality by beat of drum. Provided that in every case where there is an enhancement in the assessment, the executive authority shall also cause intimation thereof to be given by a special notice to be served on the owner of occupier of the property concerned.
19. Ramanujam, J., in Dalavai v. Government of Tamil Nadu (1978) 1 M.L.J. 93, had occasion to consider a similar question while interpreting proviso to Rule 2 of Schedule IV of the Tamil Nadu City Municipal Corporation Act, 1919 as it stood then. The said Rule 2 of Schedule IV to the Tamil Nadu City Municipal Corporation Act which is in pari materia with Rule 9 of Schedule IV of the Act 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. Proviso to the said 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 of occupier of the property concerned. Ramanujam, J., while holding that the special notices issued under Rule 2 of Schedule IV to the City Municipal Corporation Act should give reasons for enhancement observed as follows:
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 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.
13. The petitioner has produced a bundle of photostat copies of the special notices served on some of the assessees in some of the Corporation Divisions. In all these special notices, the old annual value after the revision have alone been mentioned and the reason for enhancement has not been given. The assessee on receipt of such special notice cannot be expected to know as to why the enhancement may be due to: (1) rental difference noticed during the course of the inspection of the property by the assessing officers, (2) due to additions or alterations in the existing building, and (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. The above decision in Dalavai v. Government of Tamil Nadu (1978) 1 M.L.J. 93 was approved by the Division Bench of this Court by its judgment in Writ Appeal No. 222 of 1989 dated 15.3.1989. The Division Bench of this Court by its judgment in Nemili Town Panchayat represented by Executive Officer, Nemili North Arcot District v. Nemili Town Panchayat Tax Payers Welfare Association represented by President Somasundaram and 2 Ors. W.A. No. 222 of 1989 dated 15.3.1989, while approving the principles laid down in Dalavai v. Government of Tamil Nadu (1978) 1 M.L.J. 93, has held as follows:
The limited point taken is that the revision notices issued by the appellant, do not comply with the requirements of the relevant rules, because except to use the word (general revision) the reasons for increase , if any, have not been furnished. This Court, following the decision in Dalavai v. Government of Tamil Nadu (1978) 1 M.L.J. 93, has held in Jayaprakash v. Executive. Authority, Thiruthangal Panchayat , that when special notices of enhancement are given under Rule 10(3) of the Tamil Nadu Act 35 of 1988, it is incumbent upon the assessing authority while serving the notices to state the grounds which prevailed upon him to revise the tax demand.
20. In the Keelakarai Tax Payers Association v. Keelakarai Town Panchayat (1990) 1 M.L.J. 384, Srinivasan, J. while dealing with proviso to Rule 10(4) of the Tamil Nadu Panchayat Rules, which is similar to the first proviso to Rule 9 of Schedule IV of the Act, following the ratio of the judgment in W.A. No. 222 of 1989 dated 15.3.1989 held as follows:
4. Learned Counsel for the respondent contends that a special notice is necessary only when Rule 10(3) is invoked the case of a revision of assessment in between two general revisions. According to him, such a notice is not necessary if there is a revision of assessment pursuant to a general revision. This contention cannot be accepted in view of the express language used in Rule 10(4) of the Rules for assessments and collection of tax framed under the Tamil Nadu Panchayats Act, 1958. It will be advantageous to extract Rule 10(3) also. That Rule reads as follows:
In every case in which, between one general revision and another, the executive authority assesses any house for the first time or increases the assessment on any house otherwise then in consequence of a general enhancement of the rates at which the house-tax is leviable, the executive authority shall intimate by a special notice to the owner or occupier of such house that a petition for revising the assessment will be considered if it reaches the panchayat office within sixty days from the date of such notice in the case of the Government, a railway administration or a company and within thirty days from the date of service of such notice in other cases.
Rule 10(4) is in the following terms:
When assessment books have been prepared for the first time and whenever a general revision of such books has been completed, the executive authority shall give public notice stating that revision petitions will be considered if they reach the panchayat office within a period of sixty days from the date of such notice in the case of the Government, a railway administration or a company and of thirty days from the said date in other cases. The notice shall be affixed to the notice board of the panchayat office and on the same day be published in the town by beat of drum:
Provided that in every case where there is an enhancement in the assessment, the executive authority shall also cause intimation thereof to be given by a special notice to be served on the owner or occupier of the house concerned: provided further that, in every case where a special notice is required to be served on the owner or occupier under the first proviso, the period of sixty days and thirty days referred to in the rule shall be calculated from the date of service of such special notice.
5. Learned Counsel for the respondent contends that the first proviso to the Sub-rule (4) of Rule 10 will apply to a situation contemplated in Sub-rule (3) of Rule 10 and not in the main part of Sub-rule (4). I cannot agree with this contention. Sub-rule (3) is a self-contained rule. That itself enjoins the authority to issue a special notice whenever there is a revision between one general revision and another. Sub-rule (4) speaks of general revision or preparation of assessment books for the first time. The first proviso applies to a case where there is an enhancement in the assessment. Even in the cases of general revision, if there is no enhancement of assessment, there is no necessity to invoke the proviso. But whenever there is an enhancement in the assessment it is the duty of the executive authority to issue a special notice as provided under the proviso.
6. What exactly such a special notice should contain has been prescribed by the Bench of this Court in the judgment referred to already. Hence, the special notices issued by the respondent in these cases which are not in accordance with the judgment of the Bench, cannot be sustained. Consequently, the notices are quashed on the only ground that the reasons for the enhancement are not set out in the notices.
The ratio of the decisions of this Court referred above is directly applicable to the facts of the present cases. Rule 9 deals with general revision or preparation of assessment books for the first time. The first proviso to Rule 9 applies to a case, where there is an enhancement in the assessment. Even in the case of general revision if there is no enhancement of assessment, there is no necessity to invoke the proviso. However, whenever there is an enhancement in the assessment pursuant to a general revision, it is the duty of the executive authority to issue a special notice to the taxpayer as provided under the proviso. As already pointed out in W.A. No. 222 of 1989, judgment dated 15.3.1989 the Division Bench of this Court has held that notice informing the assessee of the enhancement of tax shall contain reasons for increase and unless the reasons are set out in the notice, it cannot be said that proper opportunity is given to the assessee to state his objections against the enhancement of assessment. In view of the above legal position, we are of the view that the special notices issued by the executive authorities under Rule 9 informing the assessees about the enhancement in the assessment shall contain reasons for the increase and if the reasons for the increase in the assessment are not given in the special notice, the assessee may not know on what ground the enhancement has been made and consequently he cannot be able to put forward his objections specifically and effectively.
21. In the present case, the municipal authorities have produced in the typed set of papers filed on behalf of the different Municipalities certain special notices issued under Rule 9 of Schedule IV to the Act. The said notices issued under Rule 9 contain a column mentioning annual rental value. In that column the rental value as it existed prior to the issue of the notices is mentioned and the increased value is mentioned in the same column. The other columns in the special notices contained the existing tax and the increased tax. The reason for the increase is given as "meaning the general revision of property tax. The general revision of property tax given as the only reason for the enhancement of the property tax cannot be considered as a reason at all for enhancement of the property tax and it does not satisfy the requirement of law as laid down in the decisions of this Court referred above. The special notices produced on behalf of the Municipalities in the typed set of papers in these cases, do not contain any reason for increasing the existing property tax. No doubt, the respondents- Municipalities have produced in the typed set of papers the assessment work-sheet showing how the executive authorities arrived at the enhanced tax. If the municipal authorities have served copies of the assessment work-sheets showing the basis and how they arrived at the enhanced property tax, on the tax payers, along with the special notices issued under Rule 9 that would have satisfied the requirements of law and in such cases, it can be held that the special notices contained the reasons for enhancement in the assessment. However, admittedly copies of the assessment work-sheets prepared by the respondents- Municipalities showing how they arrived at the enhanced property tax were not served on the tax payers along with the special notices issued under Rule 9. In these circumstances, it has to be held that the special notices served by the executive authorities of Municipalities under Rule 9 in these cases on the owners and occupiers of properties are not in accordance with the principles laid down by the decisions of this Court referred above inasmuch as no reason is stated in the special notices for enhancement of property tax, and they cannot be sustained. Consequently, the special notices served under Rule 9 by the municipal authorities on the members of petitioner- Sangam in these cases are quashed on the only ground that the reasons for enhancement of property tax are not set out in the special notices. Points 4, 5 and 6 are answered accordingly.
22. The next question we have to examine is what are the other directions which should issue on the facts and circumstances of these cases and in the light of Rule 14(2) of the Rules. No doubt Rule 14(2) of Schedule IV of the Act says that in a case where a special notice is required to be served on the owner or occupier of the property under first proviso to Rule 9, the general revision shall be deemed to have taken effect on the 1st day of the half year following that in which such special notice is served on the owner or occupier of the property. The executive authorities of the Municipalities have served the special notices under Rule 9 enhancing the assessment on the owner or occupier, in these cases, long prior to 1.10.1993 stating, that the assessments in respect of their properties have been increased with effect from the half year commencing from 1.10.1993. As we are setting aside the said special notices issued under Rule 9 on the technical ground that the reason for enhancement is not given therein, we are inclined to direct the executive authorities of Municipalities in question to issue fresh special notices containing the reasons for enhancement of the property tax, giving liberty to the owners or occupiers to apply for revision of the proposed enhancement. In these circumstances, we are also of the view that such special notices served on the owners or occupiers of the properties pursuant to our order in these writ petitions and the general revision can be very well be directed to take effect from 1.10.1993, because the municipalities in question have as a matter of fact served special notices though without giving reasons, under first proviso to Rule 9 long prior to 1.10.1993. The mere fact that the special notices under Rule 9 served on the owners or occupiers of the properties are invalid as they did not contain reasons for enhancement of property tax and are quashed for the reason stated above, does not preclude this Court from issuing directions to the executive authorities of Municipalities in question to issue fresh notices under Rule 9 to the assessees giving reasons for enhancement of property tax, for the half year commencing from 1.10.1993.
23. Accordingly, we direct the executive authorities of municipalities in question to issue fresh special notices under Rule 9 to the assessees giving reasons for the enhancement of the property tax, for the year commencing from 1.10.1993. On receipt of such notices, it is open to the members of the petitioner-Sangams to file their objections or apply for revision of the proposed enhancements. As and when revisions are filed by the owners or occupiers of properties within the prescribed time, the municipal authorities shall consider the same and pass appropriate orders on merits. With the above directions, these writ petitions are allowed. However, there will be no order as to costs.