Allahabad High Court
M/S G.B.Lawns P Ltd. vs State Of U.P. Through Its Secy.And 2 ... on 21 February, 2023
Bench: Sangeeta Chandra, Manish Kumar
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
(A.F.R.)
Court No. - 3
Case:- WRIT - C No. - 5797 of 2008
Petitioner :- M/S G.B.Lawns P Ltd.
Respondent :- State Of U.P. Through Its Secy.And 2 Others
Counsel for Petitioner :- Deepak Seth
Counsel for Respondent :- C.S.C.,I.B.Singh,Manish Jauhari
Hon'ble Mrs. Sangeeta Chandra,J.
Hon'ble Manish Kumar,J.
(Oral)
1. Heard Shri Deepak Seth, learned counsel for the petitioner, Sri Manish Jauhari, learned counsel appearing for the respondent Nos. 2 and 3 and learned Standing Counsel appearing for the State respondents.
2. This writ petition has been filed praying for quashing of the orders dated 16.05.2008 and 15.04.2004 passed by the respondent nos. 2 and 3 filed as annexure nos. 1 and 2 to the writ petition respectively. A Direction has also been sought to the respondents not to realize or demand any mutation fee from the petitioner in pursuance to the impugned orders dated 16.05.2008 and 15.04.2004.
3. It has been argued by the learned counsel for the petitioner that the petitioner is a Company incorporated under the Companies Act. The present petition has been filed through its Managing Director. The Company purchased a commercial Plot No. 5/C.P.-105 Indira Nagar, Lucknow admeasuring 3722.10 Sq. Mtrs for a total consideration of Rs. 10,42,80,800/- through registered deed of assignment dated 06.12.2008 registered in the office of Sub Registrar-3 Lucknow from Mansarovar Urban Cooperative Bank Limited (hereinafter referred to as, the Bank) which in turn had purchased the same from U.P. Awas Evam Vikas Parishad, Lucknow (hereinafter referred to as, the Parishad) through registered lease deed dated 25.08.1995 for a total premium of Rs. 68,52,258/-.
4. Immediately after the execution of the deed of assignment dated 06.12.2006 in favour of the petitioner, the petitioner started paying House Tax, Water Tax and the Sewer Tax etc to the Nagar Nigam, Lucknow after due assessment. As the land was purchased for raising a commercial building, the petitioner submitted a building plan to the Parishad, which was approved by the Parishad and thereafter the petitioner raised construction over the land in question. All of a sudden, the Parishad vide its order impugned dated 15.04.2004 decided to levy mutation fee from subsequent purchaser of a property, which had initially been alloted by the Parishad to some other person. It demanded a fee of 5% of the total consideration of the deed of assignment towards Mutation Fee. A demand was raised by the Parishad and the petitioner represented to the respondent no. 3 on 12.04.2007 stating therein that there was no justification for imposition of 5% mutation fee ad valorem as it was very excessive, as compared to the mutation fee charged by the other local authorities including the L.D.A., which was at that time only 1% charging of the sale consideration.
5. Moreover, the L.D.A. may levy mutation fee on deriving power from the Uttar Pradesh Urban Planning & Development Act, 1973 but no such power could be usurped by the Parishad as the U.P. Avas Evam Vikas Parishad Adhiniyam, 1965 does not give such power to the Parishad to charge mutation fee, as aforesaid.
6. In pursuance of the representation of the petitioner, the Parishad ordered mutation of the name of the petitioner in its record subject to the condition that petitioner would pay the requisite fee within fifteen days, if any, after finalization of the matter and the petitioner was required to furnish an Indemnity Bond in the said circumstances. The Indemnity Bond was submitted by the petitioner on 25.04.2007. No further action was taken by the Parishad till April, 2008 but on 16.05.2008, the Parishad served a notice upon the petitioner to deposit Rs. 52,10,940/- as a mutation fee within a fortnight or else recovery proceedings would be initiated against the petitioner for recovery of same, as arrears of the land revenue.
7. It has been argued by the learned counsel for the petitioner that a fee is levied essentially for services rendered and there is no element of quid pro quo between the petitioner and the Parishad as the Parishad is not rendering any service to the petitioner in pursuance of the payment of such mutation fee except for maintaining its record correctly. All services relating to maintaining of the colony are being provided by the Lucknow Nagar Nigam for which the petitioner is paying the fee and taxes levied by the Nagar Nigam. There are no bylaws, Rules or Regulation or any other provision in the Act, 1965 itself for imposition or realization of mutation fee. Such a mutation fee without rendering any service amounts to imposition of tax for which the Parishad has no authority delegated to it by the State Government or the State Legislature. The Act, 1965 confers power to make Rules upon the Government and the power to make Regulation subject to the provisions of the Act and the Rules by the Board of the Parishad. The impugned orders have been passed without jurisdiction and hence liable to be set aside.
8. It has also been argued by the learned counsel for the petitioner that when the petition was filed, the Court had been pleased to stay the operation and enforcement of the order dated 16.05.2008 demanding Rs. 52,10,940/- from the petitioner to be paid by it within 15 days or else to face recovery proceedings till further orders. Time was granted also to the respondents to file their counter affidavit.
9. A counter affidavit has been filed by the Parishad along with an application for vacation of interim order wherein it has been stated that the order dated 15.04.2004 has been passed in pursuance of a meeting convened by the Housing Commissioner in the interest of Parishad and taking into account power conferred upon him under Regulation 18 of Avas Evam Vikas Parishad ki Sampatti Ke Nistaran Sambandhi Viniyam, 1980, which provides that the decision of the Housing Commissioner shall be final in any case and he shall be competent to take decision in the interest of Parishad. Therefore, the Housing Commissioner has taken a decision to levy 5% mutation charges of transfer of commercial property.
10. It has been stated that initially the commercial plot in question had been allotted in favour of the Bank and the lease deed was executed in favour of the Bank by the Parishad on 16.08.1995. Although the Indira Nagar Scheme has been transferred to Lucknow Nagar Nigam, Lucknow, it is only for maintaining the services of the road, Sewer and Parks etc but the right relating to the properties has not been transferred and the Parishad continues to be the owner of the property and the allottees are lessees thereof and any lessee, who further leases out the property must do so with prior intimation to the Parishad. The allotment in respect of the Bank had been made subject to the condition that it may transfer the said land, but only for the same purpose for which it was originally allotted. Under Section 95 of the Act, 1965, the Board of the Parishad is authorized to frame Regulations and the Regulations have been framed in 1980. Power under Regulation 18 was available to the Housing Commissioner to issue the order levying 5% mutation fee.
11. It has further been stated that the petitioner had furnished Indemnity Bond on 25.04.2007 and therefore it cannot deviate from its liability of making payment and it also cannot challenge the order passed by the Housing Commissioner dated 15.04.2004. It is only after obtaining the Indemnity Bond that the name of the petitioner was mutated on the property in question by the Parishad.
12. A supplementary counter affidavit has also been filed by the respondents wherein mention has been made of the Government Order dated 06.02.1997 issued by the Principal Secretary directing all the Vice-Chairman of development authorities to determine mutation fee at their level. The aforesaid Government Order has been stated to be placed in the 198th Board meeting of Uttar Pradesh Awas Evam Vikas Parishad held on 21.07.2007 and it was decided to refer the matter relating to the Parishad to the State Government.
13. There is no mention of any decision being taken by the State Government conferring such power on Parishad.
14. It has also been stated that the order dated 15.04.2004 was amended by an another order dated 29.04.2011 in pursuance of the decision taken in the 216th Board meeting held on 14.03.2011 and it was decided that only 1% mutation charges shall be taken in future but earlier matters shall not be reopened. Copy of the order dated 29.04.2011 and the Minutes of Meeting of the Board held on 14.03.2011 are annexed as annexure no. 2 to the Supplementary Counter Affidavit.
15. In the rejoinder affidavit filed by the petitioner, the contents of the writ petition have been reiterated relating to lack of power in the Housing Commissioner to issue the order impugned herein dated 15.04.2004 and also to levy mutation fees on ad valorem basis, which is in the nature of tax, which requires sanction of law by the competent legislature. It has also been submitted that mere furnishing of Indemnity Bond would not mean that petitioner has agreed by the charging of such mutation fee ad valorem by the Parishad.
16. In the case of Calcutta Municipal Corporation & Others Vs. Shrey Mercantile Pvt Limited & Others reported in (2005) 4 SCC 245 where the question which arose for determination has been mentioned in paragraph 1 of the report, which has been framed as under:
" whether the imposition for the process of change in the name of the owner, in the assessment books of the Corporation is in the nature of "a fee" or "tax"?.
17. Thereafter, the facts of the particular Civil Appeal that was being considered, have been discussed, where certain property belonging to some persons was sold by a deed of conveyance to the respondents. The building was very old and was in a dilapidated condition. The developers decided to construct a new building after demolishing the existing old structure. The developers submitted the building plan for sanction which the Corporation refused to accept without the names of the developers being brought on record by way of mutation. The developers applied for mutation by deletion of names of the previous owners and substitution of their name for which the Corporation demanded mutation fee of Rs.3 lakhs under the Calcutta Municipal Corporation (Taxation) Regulations, 1989, which was challenged by filing of writ petition before the Calcutta High Court. By judgement and order dated 31.01.2000, the learned Single Judge held that mutation was the process of change of name of the owner in the books of the Corporation; that the impugned Regulations had failed to satisfy the requirement of quid pro quo; and that the Corporation was not justified in using its power to levy fees on mutation by charging large sums which partake the character of taxation. Learned Single Judge was of the considered opinion that in the garb of imposition of mutation fees, the Corporation had done nothing other than to impose the tax. Accordingly, the writ application was allowed.
18. Aggrieved by the said judgement of the learned Single Judge, the Corporation approached the Division Bench and the Division Bench rejected the appeal by observing that the essential purpose of Section 183 of the Calcutta Municipal Corporation Act was to mutate somebody's name and that no other service of any kind whatsoever was rendered to the ratepayers, and that under Section 183 (5), mutation fee was merely to be prescribed by Regulations and not to impose a tax in the garb of fees, that no such delegation was ever made in favour of the Corporation; that the rate of levy on ad valorem basis itself indicated that the levy was in the nature of a tax; that the different rates prescribed for mutation in the case of transfers vis a vis intestate succession indicated that the levy was a tax and not a fee; that the said provision was not for the benefit of the owner of the premises but it was for statutory compliance, failure to comply wherewith was to attract penal consequences; that no benefit was conferred on the ratepayers and on the contrary, the said provision was for the benefit of the Corporation; that the nature of the services rendered to the ratepayers for mutation had no connection with the quantum of fees sought to be levied; that the fee was neither regulatory nor compensatory; and that the impugned Regulations were discriminatory inasmuch as the purchasers were subjected to a higher fee than those who got the ownership of property by way of intestate succession, wholly overlooking the fact that both these groups for all practical purposes of taxation constituted one class by themselves. Accordingly, the impugned Regulations were held to be arbitrary and violative of Article 14 and 246 of the Constitution.
19. The said judgement of the Division Bench was affirmed by the Hon'ble Supreme Court and while affirming the said judgement, the Supreme Court has referred to binding precedents for example, the State of West Bengal Vs. Kesoram Industries Ltd reported in (2004) 10 SCC 201; Synthetics and Chemicals Ltd Vs. State of U.P. reported in (1990) 1 SCC 109 and CCE Vs. Chhata Sugar Company Limited reported in (2004) 3 SCC 466, wherein reference was made to distinction made between Fee and Tax and it was observed that in the garb of exercising the power to regulate, any fee or levy which has no connection with the cost or expenses of administering the Regulation, cannot be imposed and only such levy can be justified as can be treated as a part of regulatory measure. The power to regulate, develop, or control would not include within its ken, a power to levy tax or fee, except when it is only regulatory in nature.
20. The Court has also observed that undisputedly the appellant-Corporation was collecting Tax from general public for water supply, street light and approach roads etc. and thus the Tax that was sought to be imposed in the garb of service charges or mutation fee could not be allowed. The Court also observed in paragraphs 19, 20, 21 and 22 as follows:
19. In the case of Nand Kishwar Bux Roy v. Gopal Bux Rai [AIR 1940 PC 93] the Court, while discussing the nature of mutation proceedings, observed: (AIR pp. 94-95) "[M]utation proceedings are merely in the nature of fiscal inquiries, instituted in the interest of the State for the purpose of ascertaining which of the several claimants for the occupation of the property may be put into occupation of it with the greater confidence that the revenue for it will be paid."
20. Therefore, it is clear that mutation enquiry is instituted in the interest of the Corporation for tax purposes and not for the benefit of the taxpayer.
21. Now coming to the question of challenge to the levy as arbitrary and discriminatory and violative of Article 14, we find that the functions of the Corporation with regard to mutation remain the same, whether the applicant is a transferee under a conveyance or a lessee or a beneficiary under a Will or an heir in the case of intestate succession. Once an application for mutation is made, the same is examined by the department and after hearing the objections, if any, the record is ordered to be changed. Ultimately, the exercise is for fiscal purpose. Similarly, the property valuation may be below Rs 50,000 or above Rs 2 lakhs, the function of the Corporation in making the mutation entry remains the same. Similarly, whatever may be the cause of mutation, whether it is a case of transfer or devolution, the activity of mutation remains constant in all the cases. The expenses incurred in all the cases also cannot vary, whatever be the value of the property or the cause of mutation. In the circumstances, there is no reason given for charging different rates depending on the value of the property and the cause of transfer. By doing so, the incidence of the levy falls differently on persons similarly situated resulting in violation of Article 14 of the Constitution. Moreover, the quantum of fees is disproportionate to the so-called "services" which is one more circumstance showing arbitrariness in the levy of such imposition. So far as Article 14 is concerned, the courts in India have always examined whether the classification was based on intelligible differentia and whether the differentia had a reasonable nexus with the object of legislation. (See Om Kumar v. Union of India [(2001) 2 SCC 386] .)
22. Applying the said tests to the impugned levy, we find that the levy is irrational, arbitrary, discriminatory and beyond Section 183(5) of the said 1980 Act."
21. It is clear from the arguments and the judgement of the Supreme Court, the purpose of mutation is to register the transfer in the records of the Parishad so as to recover taxes from such taxpayers. When no such taxes are payable to the Parishad after the transfer of the colony to the Nagar Nigam, there is no question of mutation fee to be paid to the Parishad. The function of the Parishad with regard to the mutation remains the same whether the applicant is a transferee under a conveyance or a lessee or a beneficiary under a will or in case of intestate succession. Once the application for mutation is made, the same is to be examined by the department concerned viz Parishad and after hearing objection, if any entry in the record is directed to be changed in favour of the transferee, such exercise is only for fiscal purpose to determine the liability to pay as tax.
22. Even if any fee can be charged by the Parishad to correct the entries in its record, it cannot be expropriatory in nature, and calculated ad valorem as the expenses incurred in all such cases are nominal in nature. This fact can also be ascertained from the circumstances which existed prior to the order dated 15.04.2004 as no mutation fee was being charged by the Parishad earlier.
23. This Court has found that the judgment rendered by the Hon'ble Supreme Court in the case of Calcutta Municipal Corporation (supra) squarely applies. The Parishad does not render any service to its allottees or transferees, except for correction to be made in the records that are maintained by it for its own purposes. Hence, the impugned order dated 15.04.2004 & 16.05.2008 are liable to be set aside and are hereby set aside.
24. Consequences to follow.
25. In view of the discussion made hereinabove, the present writ petition is allowed.
Order Date :- 21.02.2023 Ashish