Andhra Pradesh High Court - Amravati
B.Prabhakar Rao vs Government Of Andhra Pradesh, Rep.By ... on 25 January, 2024
IN THE HIGH COURT OF ANDHRA PRADESH: AMARAVATI
HONOURABLE SRI JUSTICE SUBBA REDDY SATTI
WRIT PETITION No.9096 of 2011
B.Prabhakar Rao, S/o Sivaiah, aged about 53
years, residing at Guntur, Guntur District and
another.
... Petitioners.
Versus
Government of Andhra Pradesh, represented
by its Principal Secretary, Municipal
Administration & Urban Development
Department, Secretariat, Hyderabad and
another.
... Respondents.
Counsel for the petitioners : Sri C.Ramachandra Raju
Counsel for respondent No.1 : GP for Municipal Administration &
Urban Development
Counsel for respondent No.2 : Sri M.Manohar Reddy
ORDER
The Writ Petition is filed seeking the following relief:
"... to issue an appropriate Writ, Order or direction more particularly one in the nature of Writ of Mandamus declaring the action of 1st respondent vide G.O.Rt.No.128 Municipal Administration and Urban Development Department dated 02.02.2011 cancelling the resolution of Guntur Municipal Corporation, is contrary to Section 679-A of Hyderabad Municipal Corporation Act, 1955 and the rules made therein suffers Page 2 of 13 SRSJ WP No.9096 of 2011 from non-application of mind, violative of principles of natural justice, highly arbitrary, unwarranted, violative of Articles 14 and 21 of the Constitution of India, as illegal and unsustainable and consequently declare that the demand notice dated 09.02.2011 issued by the 2nd respondent for collection of property tax is highly unwarranted without any basis contrary to the provisions of A.P. Municipal Corporation Act, 1994 is highly arbitrary, illegal and unsustainable ... ..."
2. a) Averments in the affidavit, in brief, are that the petitioners own a non-residential building bearing Door No.4- 8-1, Ward No.6 of Guntur Municipal Corporation. Prior to the year 2008, 2nd respondent used to collect property tax at the rate of Rs.3/- per square feet. 2nd respondent revised the property tax in the year 2007 and increased abnormally by 12 times, ignoring the actual rental value of the buildings by way of Notification No.77 dated 13.09.2007. 2nd respondent passed resolution No.487 dated 29.09.2008 restricting the enhancement of tax to 50% over the existing tariff. As against the resolution of the Corporation, the Commissioner made a representation to the Government. Initially, the Government suspended the resolution of council for a period of six months and ultimately cancelled the resolution by G.O.Rt.No.128 Page 3 of 13 SRSJ WP No.9096 of 2011 Municipal Administration dated 02.02.2011, without giving any opportunity to the Municipal Corporation. The Government had given a show cause notice to Mayor instead of Municipal Council. Therefore, cancelling the resolution of Municipal Council is bad and illegal. The Government did not even advert to the explanation submitted by mayor. No reasons were assigned for not accepting the explanation of Mayor.
b) As per Rule 10 of Hyderabad Municipal Corporation (Assessment of Property Tax) Rules, 1990 (for short "Rules 1990"), the tariff shall not be exceeded more than 100% or 150% over the existing tariff. The tax demanded by 2nd respondent is 1200% over the existing tariff. Previously the tariff of house property was at the rate of Rs.3/- per square feet, which was enhanced to Rs.36/- per square feet. Because of highly unreasonable enhancement of tariff, Guntur Municipal Corporation passed resolution No.487 dated 29.09.2008 restricting the enhancement of tariff to 50% over the existing rate.
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c) Petitioners expressed their willingness to pay property tax at the rate of 100% enhancement, however, the 2nd respondent refused to receive the tax saying that the Corporation will collect tariff at a time after the orders of the Government. A demand notice dated 09.2.2011 for the 2nd half year of 2007-2008 for Rs.10,95,640/- was issued. The employees of 2nd respondent are threatening to seize the building. With these averments, the above writ petition is filed.
3. a) Counter affidavit was filed on behalf of 2nd respondent. It was contended, interalia, that as per Rule 7 (1) of the Rules 1990, all buildings located in a zone shall be classified based on types of constructions, nature of use etc. 36 categories of buildings would be identified in each zone. The Commissioner gathered information relating to the prevailing rental value of the buildings of various categories in a zone and arrived at average monthly or yearly rent for each category of building for square meter or plinth area. The survey was done taking into rental values in the zones. Page 5 of 13
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b) The building bearing Door No.4-8-1 is within the limits of Guntur Municipal Corporation and the same was assessed to property tax on rental basis as per Gazette No.77 dated 30.09.2007. The rental values on commercial buildings were finalized and the rates came into force effective from 01.10.2007. A notification was published intimating the public and also calling for suggestions of Rate Payers Association and Non-Governmental Organization. After considering the objections and suggestions submitted by the Rate Payers Association and Non-Governmental Organization, final publication was published, and new rates came into force with effect from 01.10.2007. Preliminary notification was published on 31.08.2007. After taking into consideration the suggestions made by Rate Payers Association and Non- Governmental Organization, the final publication was published for the information to public in local newspapers on 22.09.2007 informing that final publication published in Gazette No.77 dated 22.09.2007 shall come into force with effect from 01.10.2007. None objected to the new Rate.
c) The Guntur Municipal Corporation in its resolution No.487 dated 29.09.2008 resolved to enhance tax in respect Page 6 of 13 SRSJ WP No.9096 of 2011 of non-residential buildings on par with 50% over the existing tariff, which is in force as on 30.09.2007. The Corporation unanimously resolved to cancel the Gazette notification No.77. The matter has been taken to the notice of the Government through letter Roc.No.9045/2006/A1 in December, 2008. After careful examination, the Government cancelled the resolution of Council through G.O.Rt.No.128, MA&UD Dept, dated 02.02.2011 by exercising powers under Section 679A of the Hyderabad Municipal Corporation Act, 1955 (for short "Act 1955"). The petitioners' building was assessed as per new Gazette rates. The petitioners constructed a new building after obtaining plan from the Corporation vide B.A.No.646/2006/G2 dated 02.01.2006. The officials of the Corporation never threatened the petitioners.
4. Additional Counter affidavit was filed on behalf of 2nd respondent. It was contended, interalia, that the Government vide Memo No.20345/TC.1/2009/4 dated 25.11.2009 issued show cause notice and directed the 2nd respondent- Corporation to submit written explanation within 30 days. After considering the explanation, the Government issued Page 7 of 13 SRSJ WP No.9096 of 2011 G.O.Rt.No.128 dated 02.02.2011. Petitioners are liable to pay the tax amount of Rs.1,42,10,724/-.
5. Heard Sri C.Ramachandra Raju, learned counsel for petitioners, Sri Sivaji, learned Government Pleader for Municipal Administration & Urban Development for 1st respondent and Sri G.Naresh Kumar, learned counsel representing Sri M.Manohar Reddy, learned standing counsel for 2nd respondent.
6. Learned counsel for petitioners would submit that before cancelling the resolution of the Corporation, no show cause notice was issued to the Municipal Council. He would also submit that show cause notice was issued to Mayor, who in turn submitted explanation. The 1st respondent failed to consider the explanation. He would submit that notice to Mayor does not construe as notice to the Council.
7. Learned Government Pleader as well as learned standing counsel, on the other hand, would submit that after following the procedure and by taking into consideration the suggestions made by the Rate Payers Association and Non- Governmental Organization, publication was made fixing new Page 8 of 13 SRSJ WP No.9096 of 2011 rates in Gazette No.77 dated 22.09.2007 and the same came into effect from 01.10.2007. The petitioner did not object qua fixation of rates. He would submit that petitioners, if aggrieved, ought to have filed revision against the enhanced tax rates and eventually, prayed to dismiss the writ petition.
8. Now, the points for consideration are:
1) Whether G.O.Rt.No.128 Municipal Administration & Urban Development (TC.1) Department dated 02.02.2011, cancelling the resolution of the Guntur Municipal Corporation is valid?
2) Whether 1st respondent followed the procedure mandated under Section 679A of the Act 1955?
9. Before proceedings further, it is apt to extract Section 679A of the Hyderabad Municipal Corporations Act, 1955:-
679-A. Government's power to cancel or suspend resolutions etc.:--
(1) The Government may, either suo motu or on representation of any councillor, the Mayor or the Commissioner, by order, in writing--
(i) cancel any resolution passed, order issued, or licence or permission granted; or
(ii) prohibit the doing of any act which is about to be done, or is being done, in pursuance or under colour of this Act, if in their opinion--
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(a) such resolution, order, licence, permission or act has been passed, issued, granted or authorised in accordance with law;
(b) such resolution, order, licence, permission or act is in excess of the powers conferred by this Act or any other enactment; or
(c) the execution of such resolution or order, the continuance in force of such licence or permission or the doing of such act is likely to cause financial loss to the Corporation, danger to human life, health or safety or is likely to lead to a riot or breach of peace or is against public interest:
Provided that the Government shall, before taking action under this section on any of the grounds referred to in clauses (a) and (b), give the authority or person concerned an opportunity for explanation:
Provided further that nothing in this sub-section shall enable the Government to set aside any election which has been held.
(2) If, in the opinion of the Government, immediate action is necessary on any of the grounds referred to in clause (c) of sub-section (1) they may suspend the resolution, order, licence, permission or act as the case may be, for such period as they think fit pending the exercise of their power under sub-section (1).
10. A careful perusal of the section, extracted supra, would manifest the power of the Government to cancel or suspend resolutions. The Government may either suo motu or on representation of any councilor, the Mayor or the Commissioner, cancel or suspend the resolution. First provisio to Section 679A (1) (i) (ii) would indicate that the Page 10 of 13 SRSJ WP No.9096 of 2011 Government, before taking action on any of the grounds referred to in clauses (a) and (b), an opportunity should be afforded to the authority, or the person concerned.
11. As per Section 679A (2), the Government can take immediate action, if it is in the opinion of the Government that the resolution is likely to cause financial loss to the Corporation, danger to human life, health or safety, pending exercise of power under Section 679A (1).
12. The contention of learned counsel for petitioners that no notice was issued to the council before cancelling the resolution No.487 dated 29.09.2008, may not be correct in the facts of this case. A perusal of G.O.Rt.No.128 dated 02.02.2011 would disclose that pursuant to passing of resolution No.487 dated 29.09.2008 cancelling the final Gazette No.77 dated 30.09.2007, the Commissioner, Guntur Municipal Corporation addressed letter in December, 2008 to the Government. Initially, the authority by exercising the power under Section 679A (1), suspended the resolution for a period of six months, since it causes financial loss to the Corporation. Notice was issued to the Mayor, Guntur Page 11 of 13 SRSJ WP No.9096 of 2011 Municipal Corporation. After considering the explanation submitted by the Mayor, the authority cancelled the resolution No.487 dated 29.09.2008. Thus, the authority adhered to the procedure mandated in Sec 679A of the Act.
13. Basing on rental value of buildings of various categories, as per Section 248 of the Act 1955, after calling for objections tax was fixed and the same was published vide Gazette No.77 dated 30.09.2007. In fact, a preliminary notification was published on 31.08.2007 and thereafter final publication was published in the local newspaper on 22.09.2007 informing the public that the rated fixed will come into operation with effect from 01.10.2007.
14. Going by the material on record, the petitioners obtained building permission vide B.A.No.2007- 2007/BAP/646.G2 dated 21.04.2006 and the petitioners' building was assessed to tax as per new Gazette rates. It is not the case of petitioners that they submitted any objections and the same were not considered. Petitioners are contending that while cancelling the resolution of the Corporation, 1st respondent did not issue any notice to the council. Page 12 of 13
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15. During the hearing, when the Court posed a question to learned counsel for petitioners as to definition of the Council, learned counsel for petitioners would submit that Municipal Council is not defined in the Act. In the opinion of this court, the Municipal Council is the elected body of representatives headed by the Mayor in Corporation.
16. Case at hand, while exercising power under Section 679A of the Act 1955, 1st respondent while suspending the resolution issued notice to the Mayor and the Mayor, in turn, submitted explanation. After considering the explanation, eventually the resolution was cancelled. Though it was contended that notice to Mayor is not notice to Council, when the Municipal Council is headed by the Mayor, notice to Mayor is sufficient and in fact, it is notice to the Council.
17. Payment of property taxes is crucial for sustaining civic infrastructure and public services. Taxpayers' contribution ensures smooth functioning of essential facilities, such as roads, schools and health care etc.
18. As discussed supra, case at hand, 1st respondent by following the procedure under Section 679A of the Act 1955, Page 13 of 13 SRSJ WP No.9096 of 2011 initially suspended the resolution and later, cancelled it after considering the explanation submitted by the Mayor. Since the 1st respondent followed the procedure and cancelled the resolution, this Court does not find any merit in this writ petition and the same is liable to be dismissed.
19. Accordingly, the Writ Petition is dismissed. No costs.
As a sequel, pending miscellaneous petitions, if any, shall stand closed.
________________________________ JUSTICE SUBBA REDDY SATTI 25th January, 2024 PVD