Calcutta High Court
Veena Kejriwal vs Kolkata Municipal Corporation & Ors on 18 March, 2008
Author: Dipankar Datta
Bench: Dipankar Datta
1
W.P. No. 1751 of 2004
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
ORIGINAL SIDE
Veena Kejriwal
.....Petitioner
Vs.
Kolkata Municipal Corporation & ors.
....Respondents
Present : The Hon'ble Justice Dipankar Datta Mr. Kishore Dutta Mr. Aniruddha Ray Ms. Sumita Shaw ... for the petitioner Mr. Ashok Kumar Das Adhikari Mr. Sandip Kumar De ... for the K.M.C. Heard on : 27.11.2007 Judgment on : 18.3.2008 Valuation of the premises of the petitioner had been enhanced from Rs.13,662/- to Rs.1,65,780/- with effect from 4th quarter of 1989-90 pursuant to 2 an order dated 16.11.1998 passed by the Hearing Officer-VIII appointed under the Kolkata Municipal Corporation Act (hereafter the Act). Similar order passed by the said Hearing Officer for the period effective from 4th quarter of 1995-96. These orders were subjected to challenge by the petitioner in appeals under Section 189 of the Act before the Municipal Assessment Tribunal (hereafter the Tribunal). By order dated 2.12.2003, the appeals were allowed in part and the annual valuation of the said premises was reduced to Rs. 43,120/- with effect from 4th quarter of 1989-90 and again from 4th quarter of 1995-96.
While preferring appeals, as aforesaid, the petitioners in terms of Section 189(6) of the Act had deposited an aggregate sum of Rs. 12,49,922/- being the entire amount of property tax payable on the basis of the impugned orders passed by the Hearing Officer. Since the Tribunal had interfered with the assessment made by the Hearing Officer and had reduced the valuation, the petitioner by a letter dated 6.2.2004 called upon the Assessor Collector (North) of the Corporation to refund the excess amount of property tax which had been deposited by her. There being no response, the petitioner sent a reminder on 9.3.2004. Since this attempt too proved abortive, the petitioner addressed a letter dated 13.7.2004 to the Mayor of the Corporation seeking refund. Such prayer not having yielded result, final reminder was sent on 9.12.2004 claiming an amount of Rs. 9,74,508/- as the amount refundable to her together with interest @ 18% p.a. Without refunding the amount claimed by the petitioner together with interest, the Corporation by its letter dated 15.9.2004 claimed an amount of Rs. 3 11,27,977/- based on the order passed by the Hearing Officer. This was despite the fact that the order of the Hearing Officer stood modified by the appellate order dated 2.12.2003. It is at this stage that the petitioner approached this Court with the present petition in September, 2004 being aggrieved by and dissatisfied with the actions of the respondents seeking, inter alia, the following relief:
a) A writ of and/or an order or a direction in the nature of mandamus do issue commanding the respondent authorities and each of them, their servants, agents and assigns to forthwith refund to the petitioner the said sum of Rs.9,74,508/- together with interest thereon @ 18% per annum from the date of deposit until the date of payment within such time as this Hon'ble Court may deem fit and proper.
b) A writ of and/or an order or a direction in the nature of prohibition do issue restraining the respondent authorities and each of them, their servants, agents and assigns from demanding any property tax from the petitioner in respect of premises No.113/2, Raja Ram Mohan Sarani, Kolkata 700 003 until making the refund as mentioned in prayer (a) above and/or from giving any effect or further effect to the said notice dated 15th September, 2004 included in Annexure "P-10";
c) A writ of and/or an order or a direction in the nature of certiorari do issue directing the respondent authorities to certify and transmit all records pertaining to the instant case to this Hon'ble Court so that upon due consideration of the same, this Hon'ble Court may do conscionable justice by quashing the impugned notice dated 15th September, 2004 included in Annexure "P-10";
d) Mandatory injunction or a direction do issue directing the respondents to forthwith refund the said sum of Rs. 9,74,508/- together with interest thereon @ 18% per annum from the date of deposit until the date of payment within such time as this Hon'ble Court may deem fit and proper;
*****"
The writ petition was admitted and affidavits were directed to be exchanged. However, the respondents did not contest the writ petition by filing counter-affidavit. The writ petition came up for consideration before this Court on 4 2.8.2007 when an order was passed directing the Corporation to refund the sum of Rs. 9,74,508/- positively within a month from date of communication of the order. However, such refund was directed to abide by the result of a review application, stated to have filed by the Corporation before the Tribunal and which was pending on that date. It was also recorded in the said order that claim of the petitioner for interest @ 18 % per annum would be considered on 21.8.2007.
The order dated 2.8.2007 was questioned by the Corporation in an intra- court appeal. Since the operation of the order dated 2.8.07 had not been stayed by the Court of Appeal, this Court proceeded to hear respective counsel for the parties on the question as to whether interest is awardable to the petitioner on the sum for which refund had been claimed and directed.
Mr. Dutta, learned Counsel appearing for the writ petitioner invited the attention of this Court to the decision of a learned Single Judge reported in 1999 WBLR (Cal) 527 : Larsen & Toubro Limited & Ors. vs. Kolkata Municipal Corporation & Ors. In the said decision, it was held that deposit under Section 189(6) of the Act was a deposit as security for the purpose of an obligation imposed by law to pay consolidated rate and in such circumstances the Interest Act, 1978, would have application and therefore the assessee was entitled to interest on the refundable amount under Section 197 of the Act in accordance with Section 4(2)(a) of the Interest Act. He also referred to the judgment of the Division Bench dated 7.4.2000 (unreported) confirming the decision of the learned Judge in Larsen & Toubro (supra). That the Special Leave Petition filed 5 by the Corporation challenging the judgment dated 7.4.2000 was dismissed by the Apex Court was also brought to the notice of the Court.
Mr. Das Adhikary, learned Senior Counsel appearing for the Corporation, however, placed reliance on the decision of a learned Single Judge reported in 2002 (4) CHN 569 : Amal Kumar Roy Chowdhury vs. Kolkata Municipal Corporation & ors. and submitted that no interest can be awarded on the refundable sum since an assessee cannot claim refund as of right in terms of Section 197(2) of the Act.
By relying on the said decision, Mr. Das Adhikary submitted that the decision given by the learned Single Judge in Larsen & Toubro (supra) as well as the Division Bench judgment confirming it, if at all they lay down any law, cannot be cited as a precedent since the writ petition itself filed by Larsen & Toubro Limited & Ors was not maintainable having regard to the proposition of law laid down in the decisions of the Apex Court referred to therein.
His interpretation of provisions contained in Section 197(2) of the said Act is that it is entirely the discretion of the Corporation as to whether on modification of an order passed by the Hearing Officer in appeal, any sum paid as property tax in excess shall be refunded or not.
He also submitted by referring to various other authorities of the Apex Court that taxing provisions have to be construed strictly and since an assessee cannot claim refund as a matter of right, question of awarding interest does not arise.6
This Court having directed refund by order dated 2.8.2007 (since challenged in appeal which is pending), the issue as to whether the petitioner herein is entitled to claim refund as of right is no longer res integra. However, being of the view that interest may be awarded on a sum to which a citizen can lay claim as of right, it has become necessary for this Court to re-examine the issue particularly in the light of the decision of the learned Single Judge in Amal Kumar Roy Chowdhury (supra) which was not considered at the time the order dated 2.8.07 was passed.
The learned Judge in paragraphs 7 and 8 thereof ruled as follows:
"7. Thus, the aforesaid provisions of the Act direct the Corporation either to refund the excess amount or to allow the same to be set-off against any present or future demand of the Corporation under this Act. It is therefore for the Corporation to decide whether it will refund the excess amount or will claim set-off against any present or future demand. The Act has not conferred any right upon the person liable to pay tax to insist on refund and not to allow the excess to be set off against present or future demand. The Act has not even restricted any time limit within which the right of set-off against the future demand must be exercised. Therefore, only right, a tax payer is bestowed under the said section is that he has the right to refuse any demand towards tax present or future so long the excess amount is not adjusted and the Corporation has no right to realize further tax if the excess is not refunded and/or adjusted.
8. Even if the Corporation decides to refund the excess amount, the Act has not authorised it to pay any interest. The Corporation being a creature of statute has no right to pay any interest unless the Act permits and the rate of interest is specified. Therefore a tax payer has no existing legal right to refund of excess with interest. However, if the Corporation does not pay back the excess and at the same time demands the current or future tax, the assessee has the right to claim set-off as the Act has recognised such right of the tax payer".7
It also appears therefrom that the decision of the learned Single Judge in Larsen & Toubro (supra) as well as the Division Bench decision confirming it have been held to be law laid down on a writ petition which was not maintainable and, therefore, cannot be cited as precedent.
Before this Court proceeds further, it would be worthwhile to note what Section 197(2) of the Act ordains:
"197(2) - If, after the objection has been determined under section 188, the previous valuation is altered, or after the appeal has been disposed of under section 189, the valuation decided under section 188 is altered, then-
(a) any sum paid or deposited under section 189 in excess shall be refunded or allowed to be set-off against any present or future demand of the Corporation under this Act, and
(b) any deficiency shall be deemed to be an arrears of the [property tax] and shall be payable and recoverable as such:
Provided that -
(i) if any premises have, for the purposes of valuation under section 179 or section 180, been for the first time valued or sub-
divided or amalgamated with any other premises and an objection to the valuation thereof has been made under section 186, then the [property tax] shall, pending the final determination of the objection, be paid on such valuation; and
(ii) if, when such objection has been finally determined, such valuation is reduced, and if the [property tax] has already been paid thereon, then the sum paid in excess shall be refunded or allowed to be set-off against any present or future demand of the Corporation under this Act."
Proviso to Section 197(2) of the Act is not applicable in the present case. However, the substantive provision would guide the concerned parties, i.e. the Corporation and an assessee in case a valuation is altered (i) on an objection being determined under Section 188 or (ii) on disposal of an appeal under Section 8
189. While clause (a) provides that any sum paid or deposited under Section 189 of the Act in excess shall be refunded or allowed to be set-off against any present or future demand of the Corporation if valuation determined under Section 188 is altered under Section 189, clause (b) provides that any deficiency shall be deemed to be arrears of the consolidated rate and shall be payable and recoverable as such, subject to the proviso contained therein.
Authorities are in abundance that mere use of the word "shall" not make a provision mandatory. It is ordinarily mandatory but it is sometimes not so interpreted if the context or the intention otherwise demands and the Court may ascertain the real intention of the legislature by carefully attending to the whole scope of the statute.
It is also the cardinal principle of interpretation that to read the provisions of the statute harmoniously, the entire statute has to be read first as a whole, then section by section, clause by clause, phrase by phrase and word by word. Reference in this connection may be made to the decision of the Apex Court reported in AIR 2007 SC 767 : Deewan Singh vs. Rajendra Pd. Ardevi.
The word "shall" in appropriate cases can be read as "may" but in the present case there is no just reason to read the word "shall" as "may", since its literal interpretation would not lead to any absurdity or anomaly.
Although clause (a) of Section 197(2) is relevant for the present case, this Court would take note of clause (b) thereof first. It cannot be lost sight of that a substantial portion of the Corporation's revenue is generated by property tax. If there be any shortfall in payment of property tax by an assessee, the provisions 9 regarding recovery are to be strictly enforced. Having regard thereto, there is no room to hold that any deficiency in payment of tax that might arise due to alteration of valuation may be held to be arrears and may be paid or recovered. Power conferred on the Corporation thereby is absolute and not discretionary and having been conferred with absolute power, it would be its duty to recover any sum due and payable by an assessee to it as arrears of tax. There is, therefore, no justification to hold that the word "shall" in clause (b) is not to be read as mandatory.
The word "shall" used in clause (a) of Section 197(2) has to be viewed in the perspective of interpretation of clause (b), for, the word "shall" in clauses (a) and
(b) cannot have different meanings. Read accordingly, the conclusion, thus, is irresistible that the word "shall" in clause (a) is imperative.
This Court is of the further considered view that in the event valuation fixed by the Hearing Officer is reduced by an order of the Tribunal and it results in the Corporation having money in excess of its legitimate dues, it would be the option of the assessee either to claim refund or to claim set-off against any present/future demand, and if a prayer for refund is made, the Corporation would have no option but to accede to the prayer of the assessee and allow the refund. Any other interpretation would lead to anomalous results.
In AIR 1961 SC 849 : Banwarilal Agarwalla vs. State of Bihar, the Apex Court ruled that no general rule can be laid down for ascertaining whether a provision is mandatory or directory and the Court has to consider not only the actual words used in the scheme of the statute but also the intended benefit to 10 the public by following the provisions, and the material danger to the public by contravention of the same.
If it is held to be a discretion conferred on the Corporation whether to allow refund or not, there are no parameters fixed for exercise of discretion and misuse of discretion, thereby leading to material danger to the public, cannot be ruled out. It would then be dependant on the whims of an officer of the Corporation, in the absence of parameters. Legislature is presumed not to legislate contrary to the rule of law which enforces minimum standard of fairness, both substantive and procedural, so that exercise of statutory power conforms to the principle of good administration. Provisions contained in Section 197(2) of the Act read in the manner as above would obviate arbitrariness and favouritism which no doubt would benefit the public at large and keep executive highhandedness at bay.
There is one other reason to hold the provision contained in Section 197(2) as imperative. Deposit of tax assessed by the Hearing Officer under Section 188 is made a precondition for filing of an appeal under Section 189. The assessee has no other choice but to pay the amount under duress if he seeks to have a consideration of his appeal against the order of assessment on merits. Once his appeal is allowed in its entirety or in part and the order of the Hearing Officer is set aside/modified and the assessee finds himself entitled to refund of money deposited, it no longer remains in the realm of discretion in the hands of the Corporation whether to allow refund or to allow a set-off against present or future demand.
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Article 265 of the Constitution prohibits levy or collection of tax save by authority of law. In the considered view of this Court, provision contained in Section 197(2) of the said Act is not intended to provide "unjust enrichment" for the Corporation. The general principle of unjust enrichment is that one should not be permitted to unjustly enrich himself at the expense of others. The concept of unjust enrichment is alien to and in derogation of the constitutional scheme and public policy [see (1996) 6 SCC 44 : Union of India vs Dhanwanti Devi). It is settled law that if there be possibility of two views, the view which satisfies the constitutional rights or requirements, must be preferred [see (2007) 6 SCC 81 :
Bharat Petroleum Corporation Ltd. vs. Maddula Ratnavalli].
Section 197(2) of the Act contemplates a mandatory obligation of the Corporation to refund excess amount paid by an assessee, for, the Corporation cannot claim to be unjustly enriched at the instance of an assessee who acted on the basis of an order of the Hearing Officer, since reversed or modified, and who under compelling circumstances was made to put in a tax which was otherwise not legally recoverable from him.
On the authority of the decisions in Dhanwanti (supra) and in Maddula (supra), this Court is inclined to hold that interpreting Section 197(2) of the Act as bestowing right on an assessee to claim refund would satisfy the constitutional requirement.12
This Court, with respect, is thus unable to agree with the view expressed by the learned Judge in Amal Kumar Roy Chowdhury (supra) on the basis of His Lordship's interpretation of Section 197(2) of the Act and for the reasons assigned above, would hold that an assessee has a right to claim refund and if a prayer made in this behalf is either refused or a set-off is allowed instead of a refund, he would be a person aggrieved entitled to maintain a writ petition for seeking a relief of refund.
The decisions of the Apex Court cited by Mr. Das Adhikary relate to interpretation of fiscal statutes and more particularly the charging section and it is trite that the same requires strict construction. This Court has failed to find the relevance of the said decisions on facts and in the circumstances of the present case.
This being the position of law in the humble view of this Court, the real question which now arises for an answer is whether the petitioner is entitled to any interest, as claimed, on the amount directed to be refunded in terms of order dated 2.8.2007.
The Court of Appeal in its unreported judgment dated 7.4.2000 had recorded its opinion that in the facts and circumstances of that case provisions of the Interest Act, 1978 had application and, therefore, the learned Single Judge 13 had not committed any illegality in passing the judgment and order under appeal.
Relying on the law laid down therein which is binding, award of interest would have been logical, proper and just.
However, the learned Judge in Amal Kumar Roy Chowdhury (supra), even on the face of recording of such satisfaction by the Division Bench on almost similar facts, proceeded to observe that the Interest Act was not applicable and that the said decision, for other reasons, cannot be treated as a precedent.
Judicial propriety and prudence demands that in case of a difference of opinion (learned Single Judge not agreeing with the view expressed by a Division Bench), the issue ought to be referred to a larger bench (see AIR 1965 SC 1767 :
Lala Shri Bhagwan vs Ram Chand). However, it is not within the province of this Court to make any observation on the correctness of the approach adopted by the learned Single Judge since it would be against all cannons of judicial propriety, being a court of co-ordinate jurisdiction.
In view of the observation of the learned Judge in Amal Kumar Roy Chowdhury (supra) that the decision of the Division Bench dated 7.4.2000 has no binding force of a precedent and since the issue as to whether the petitioner would be entitled to refund of the sum paid in excess (decided in her favour by 14 order dated 2.8.07) is already pending before the Court of Appeal, this Court considers it appropriate not to decide as to whether she is entitled to interest, at this stage, but having regard to its respectful disagreement with the decision in Amal Kumar Roy Chowdhury (supra), it is directed that the cause papers be placed before the Hon'ble the Chief Justice for passing appropriate orders.
Urgent photostat certified copy of this judgment, if applied for, be furnished to the applicant within 3 days from date of putting in requisites therefor.
(DIPANKAR DATTA, J.)