Madras High Court
M/S.Mohan Breweries And Distilleries ... vs The Commissioner on 11 August, 2022
Author: Anita Sumanth
Bench: Anita Sumanth
W.P.Nos.18361 of 2015 & 20185 of 2018
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated: 11.08.2022
CORAM
THE HONOURABLE DR. JUSTICE ANITA SUMANTH
W.P.Nos.18361 of 2015 & 20185 of 2018
&M.P.Nos.1 & 2 of 2015
&W.M.P.No.23651 of 2018
M/s.Mohan Breweries and Distilleries Ltd.,
Rep by Chief Financial Officer K. Mathisuthanan,
Registered Office at South India Film Chamber,
and Commerce (New Building),
Phase 1, 3rd Floor, No.605 & 606,
T.R.Sundaram Avenue,
Chennai – 600 006. ...Petitioner in both W.Ps.
Vs.
1.The Commissioner,
Oulgaret Municipality,
Oulgaret, Puducherry.
2.The Director
Local Administration Department,
Government of Puducherry, Puducherry.
3.The Secretary to Government
Local Administration Department
Puducherry. ...Respondents in both W.Ps.
Prayer in W.P.No.18361 of 2015: Writ Petition filed under Article 226 of the
Constitution of India praying to issue a Writ of Certiorari, calling for the
records relating to the impugned property tax demand notice dated 12.06.2015
on the file of the first respondent.
https://www.mhc.tn.gov.in/judis
W.P.Nos.18361 of 2015 & 20185 of 2018
Prayer in W.P.No.20185 of 2018: Writ Petition filed under Article 226 of the
Constitution of India praying to issue a Writ of Certiorari, calling for the
records relating to the impugned property tax demand notice dated 17.08.2017
bearing notice No.20140213 on the file of the first respondent and
consequently notice dated 05.07.2018.
In both W.Ps.
For Petitioner : Mrs.Narmadha Sampath
Standing Counsel for Mr.U.Karunakaran.
For Respondents : Mr.T.P.Manoharan
Standing Counsel for Mr.J.Kumaran
Additional Government Pleader
COMMON ORDER
These two Writ Petitions have been filed challenging demands of property/vacant land tax in terms of the Pondicherry Municipalities Act, 1973 (in short 'Act'). W.P.No.18361 of 2015 challenges demand notice dated 12.06.2015 raising a demand for the periods 2005 to 2015 and W.P.No.20185 of 2018 challenges notice dated 17.08.2017 raising a demand for the period 2016 to the first half of 2018.
2. The matter had come up for hearing on 10.08.2022 and the detailed submissions of Mrs.Narmada Sampath, learned counsel for the petitioner and Mr.T.P.Manoharan, learned Standing Counsel appearing on behalf of Mr.J.Kumaran, learned Additional Government Pleader for the Oulgaret Municipality, Puducherry were heard.
3. On 10.08.2022, the facts of the matter as well as the submissions of the party were captured in order dated 10.08.2022 to following effect:
https://www.mhc.tn.gov.in/judis W.P.Nos.18361 of 2015 & 20185 of 2018 The case of the petitioner is as follows:
(i) The petitioner is, admittedly, running a glass factory in the property admesuring 12,34,630 sq.ft., and states that it is remitting property tax regulary, up to date.
(ii) While so, a demand was made for the period 2005 to 2015 by way of demand notice 12.06.2015, and for the period 2016 to first half of 2018, vide notice dated 17.08.2017.
(iii) The provisions of section 121 of the Puducherry Municipality Act, 1973 (in short 'Act') provide for a levy of property tax and description of the property in respect of which such tax may be levied.
(iv) Section 121 (2) states that taxes may be levied at a prescribed percentage of the annual value and the buildings or lands that are occupied by, or adjacent and appurtenant to the building or both, as may be fixed by the Municipal Council.
(v) Since the property in question comprises building and land appurtenant thereto, the provisions of Section 121 are appliable in the present case and there is no doubt in my mind that the petitioner is bound to remit property tax on an on-
going basis.
(vi) The procedure set out for assessment is from Section 123 onwards. Section 123 states that every building shall be assessed together with the site and adjacent premises and the annul value of the land and building fixed in terms of https://www.mhc.tn.gov.in/judis W.P.Nos.18361 of 2015 & 20185 of 2018 the mechanism set out therein. I am not going into specifics of the mechanism, at this juncture.
(vii) Section 124 sets out the general exemptions that are available. However, no exemption is claimed in the present case.
(viii) An inspection of the property reveals that an assessment list is to be prepared under Section 126. This assessment list is to comprise of lands and buildings in the Municipality and should be prepared in the prescribed form.
(ix) Assessment list is to be checked by an authorised valuation officer in terms of Section 127. Under Section 128, the assessment is to be published and assessees are given liberty to take extracts therefrom without payment of charge.
(x) Section 129 provides for the fixing of the period for lodging of objections. Section 130 states that the valuation officer shall receive the objections as well as the details of assessment and shall investigate and dispose the objections after hearing the objector.
(xi) The result of such enquiry is to be noted in a register to be maintained by the authorities. This list, therefore, is taken to be the list of assessments made in the case of all assessees in that area.
(xii) Section 131 talks of the veracity of the assessment list. Section 132 deals with an amendment to the assessment list and the procedure to be followed and Section 133 states that such an assessment is to be made once every five years.
https://www.mhc.tn.gov.in/judis W.P.Nos.18361 of 2015 & 20185 of 2018
2. In the present case, there is absolutely nothing to indicate that the procedure as above has been followed. The counter also does not refer to any such procedure having been followed.
3. That apart, my attention is drawn to letter sent on 21.10.2013 by the respondent to the petitioner. This letter encloses a property tax assessment form to be filled in, and sent by the petitioner. Learned Senior Counsel for respondent counsel confirms that the assessment form has, admittedly, not been received back. This very fact indicates to me, prima facie, that no assessment has been made in this case.
4. In the absence of an assessment, I am of the view that, prima faice, that there can be no demand that may be raised upon the petitioner as any demand would have to be preceded by a valid assessment.
5. Section 480, as relied upon by the petitioner reads as follows:
480. Limitation for recovery of dues- No distraint shall be made, no suit shall be instituted and no prosecution shall be commenced in respect of any sum due to the municipal council under this Act after the expiration of a period of three years from the last day of the period in respect of which such sum is claimed, or in case the same is not claimed in respect of any specfic period, from the last day of the year in which the claim arose.
6. Learned Senior Counsel appearing for the learned counsel on record for the respondents states that limitation set out under Section 480 is only in respect of distraint/prosecution/institution of suits and in the present case none of the https://www.mhc.tn.gov.in/judis W.P.Nos.18361 of 2015 & 20185 of 2018 aforesaid situations arise. Thus, the limitation as referred to therein is unapplicable to the present case.
7. This may well be right. However, and even assuming that Section 480 is not applicable to this case, the respondents are still to establish that that an assessment was made at the first instance which is a pre-condition for raising of any demand.
8. Faced with this position, learned Senior Counsel seeks a days' time to obtain instructions.
9. List on 11.08.2022 as item no.1 in the second list.
4. The matter was listed today for the response of the Commissioner and for production of material as directed on 10.08.2022 in support of the impugned demands.
5. An additional typed set comprising 5 documents and a Gazette Notification dated 14.03.2000 notifying the Pondicherry Municipalities (Assessment of Annual Rental Value of Buildings/Houses) Rules, 2000 (in short 'Rules') are circulated.
6. In typed set dated 11.08.2022, the following documents are placed for my appreciation. Identity Document Note (ID Note) dated 09.12.2004 is the first document. According to the respondents, a combined reading of the ID Note, that constitutes internal instructions issued by the Government of Puducherry, Local Administration Department to all Municipalities and the Rules would make it clear https://www.mhc.tn.gov.in/judis W.P.Nos.18361 of 2015 & 20185 of 2018 that from 2000 onwards, a scheme of self-assessment had been put in place for assessment of property/land tax in Puducherry.
7. Some clauses in the ID Note dated 09.12.2004 are relevant to understand the context in which the demands have been raised, and the same are extracted below:
'A uniform rate of 9% shall be levied on the net annual rental value arrived at on the basis of Matrix of Rates subject to the modifications as stipulated in the G.O.Cited. The method of self assessment is to be adopted henceforth for the purpose of assessment of property tax/house tax. For this purpose the self assessment form prescribed under Rule 8 of the Assessment of Annual Rental Value of Building/Houses Rules, 2000 for Municipalities and Commune Panchayats shall be adopted. For the purpose of calculating the annual rental value of a building, the constructed plinth area of the building may be taken into account and the explanations given in the above mentioned Rules for plinth area shall be followed while measuring the plinth area of the building.
Open, area, adjacent to the building/houses, if any has an appurtenance within the compound as long as it does not exceed the measured plinth area of the building/house may be left when levying any tax. But if it exceeds the total plinth area of the building/house the tax as applicable to the vacant land may be charged for such excess portion of the open area beyond the total plinth area of the said building/house.'
8. In order to familiarize residents of Puducherry with the new scheme of assessment, clause 12 of the Scheme states that local bodies are to arrange to bring out a booklet in vernacular languages containing the details of the proposed new https://www.mhc.tn.gov.in/judis W.P.Nos.18361 of 2015 & 20185 of 2018 pattern of assessment of property tax/house tax. Though a specific query was asked as to whether such a booklet was, indeed, published, nothing is brought to my attention to indicate that it has.
9. The scheme of self-assessment is to enable the citizen/assessee to compute suo motu/voluntarily, their liability to property/house tax. The method of computation is to be made transparent, clear and simple, so that such method may be easily followed by the assessee concerned to make a self-assessment.
10. In the present case, neither the ID note nor the Rules make the procedure for assessment or the computational methodology clear and there is no clarity provided on the manner of computation to be adopted by an assessee in the self-assessment scheme. Instead, what the respondent appears to be doing is to frame an assessment adhoc, fill in the relevant documents and forward the same to assessees for their signatures.
11. I am intrigued, to say the least, by this procedure which runs contrary to the concept of a self-assessment. Once an authority has filled in the form of assessment and forwarded it to an assessee for endorsement, it ceases to be a self- assessment and is, in fact, an assessment styled by the authority himself. In such a case, it is incumbent upon the authority to have issued notice to the petitioner, inspect the property(ies) in his presence, hear the petitioner on the assessment proposals, furnish sufficient opportunity to the petitioner to rebut the proposals, if it were not in agreement with the same and thereafter frame an assessment. https://www.mhc.tn.gov.in/judis W.P.Nos.18361 of 2015 & 20185 of 2018
12. This procedure has, admittedly, not been followed in this case. Thus, mere reliance on the Form that was ostensibly sent to the petitioner under cover of letter dated 21.10.2013 for endorsement is not in compliance with the self- assessment scheme, and in my view, is no assessment at all. In fact, the premises of the petitioner was inspected on 21.07.2005 and certain queries were put to the petitioner. In response to the same, on 25.07.2005, the petitioner has furnished, admittedly, particulars of the properties that it owns, details of house tax paid, the plan of the properties as well as the longitudinal section of the buildings. The cooperation extended by the petitioner thus does not appear to be in doubt.
13. When new and novel schemes are floated, it is incumbent upon the authorities to generate adequate publicity for the scheme and familiarize assessees of proposed methods for self-assessment. Simultaneous therewith, it must be ensured that measures are taken to ensure compliance with filing of self- assessment forms by assessees and thereafter, a mechanism/procedure for scrutiny of the forms, verification and issuance of orders of assessment either accepting the forms or making modifications to the tax assessed. It is an admitted position that this procedure has not been followed in the present case.
14. The authorities have been sitting tight on the matter from 2005 onwards and have issued a letter on 21.10.2013, after 8 years, enclosing some forms for endorsement by the assessee. Thus constitutes nothing but a travesty of the procedure that is expected to be followed in matters of imposition and collection of https://www.mhc.tn.gov.in/judis W.P.Nos.18361 of 2015 & 20185 of 2018 tax. Even after the Form was sent on 21.10.2013, no efforts appear to have been made by the authorities to pursue the matter and frame assessments. In the absence of any assessment have been framed in this case, the impugned demands have no force in the eyes of law and the same are quashed.
15. A specific query was put to the parties as to the procedure presently in vogue. While the petitioner confirms that the taxes are presently being remitted in time, the procedure followed now is unclear and there is no clarity provided in this regard by the respondents as well. I thus desist from making any observation in regard to the present position.
16. These Writ Petitions are allowed in the aforesaid terms. No costs. Connected Miscellaneous Petitions are closed.
11.08.2022 Index : Yes Speaking Order sl To
1.The Commissioner, Oulgaret Municipality, Oulgaret, Puducherry.
2.The Director Local Administration Department, Government of Puducherry, Puducherry.
3.The Secretary to Government Local Administration Department Puducherry.
https://www.mhc.tn.gov.in/judis W.P.Nos.18361 of 2015 & 20185 of 2018 Dr.ANITA SUMANTH,J.
Sl W.P.Nos.18361 of 2015 & 20185 of 2018 &M.P.Nos.1 & 2 of 2015 &W.M.P.No.23651 of 2018 11.08.2022 https://www.mhc.tn.gov.in/judis