Karnataka High Court
Kamalabai W/O Srinivasrao Atnoor vs State Of Karnataka And Ors on 15 July, 2024
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NC: 2024:KHC-K:4947
WP No. 201967 of 2019
IN THE HIGH COURT OF KARNATAKA
KALABURAGI BENCH
DATED THIS THE 15TH DAY OF JULY, 2024
BEFORE
THE HON'BLE MR JUSTICE R.NATARAJ
WRIT PETITION NO.201967 OF 2019 (LB-RES)
BETWEEN:
KAMALABAI W/O SRINIVASRAO ATNOOR
AGE: 75 YEARS, RESIDENT OF QTRS NO.44,
GUNJ COLONY, KALABURAGI
...PETITIONER
(BY SRI. VISHAL PRATAP SINGH, ADVOCATE)
AND:
1. STATE OF KARNATAKA THROUGH
ADDITIONAL CHIEF SECRETARY
TO GOVERNMENT
Digitally signed URBAN DEVELOPMENT DEPARTMENT,
by RENUKA ROOM NO.436, VIKASA SOUDHA,
Location: High BENGALURU-560001.
Court Of
Karnataka
2. THE COMMISSIONER
KALABURAGI CITY CORPORATION,
KALABURAGI-585102.
3. THE CHAIRMAN
STANDING COMMITTEE FOR TAXATION,
FINANCE AND APPEALS
KALABURAGI CITY CORPORATION,
KALABURAGI-585102.
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WP No. 201967 of 2019
4. THE REVENUE OFFICER
KALABURAGI CITY CORPORATION,
KALABURAGI-585102.
...RESPONDENTS
(BY SRI. VEERANAGOUDA M. BIRADAR, ADDITIONAL
GOVERNMENT ADVOCATE FOR R1;
SRI. KRUPA SAGAR PATIL, ADVOCATE FOR RESPONDENT
NOS.2 TO 4)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO
ISSUE AN APPROPRIATE WRIT, ORDER OR DIRECTION IN THE
NATURE OF WRIT OF CERTIORARI AND QUASH THE
ASSESSMENT OF PROPERTY TAX CARRIED OUT BY
RESPONDENT NO.4 DATED-20.10.2018 ON PROPERTY
BEARING NO. 8-1489 SITUATED AT NEHRU GUNJ KALABURAGI
WHOSE PROPERTY ID IS PID 6163 FROM THE YEAR 2005-06
TO 2018-19, WHICH IS MARKED AND FILED AS ANNEXURE-E.
2)DECLARE THAT POWER TO IMPOSE PENALTY UNDER SUB-
SECTION 5 OF SECTION 112A OF THE KARNATAKA MUNICIPAL
CORPORATIONS ACT, 1976 BY THE COMMISSIONER OR THE
AUTHORISED OFFICER AS DISCRETIONARY. 3) DECLARE THAT
THE PENALTY AT THE RATE OF TWO PERCENT PER MONTH OF
THE AMOUNT OF PROPERTY TAX ASSESSED AND DUE IN CASE
OF FAILURE TO PAY THE AMOUNT OF PROPERTY TAX AND TO
SUBMIT A RETURN FOUND IN SUB-SECTION 5(A) OF SECTION
112A OF THE KARNATAKA MUNICIPAL CORPORATIONS ACT,
1976 AS ARBITRARY AND ULTRA-VIRES OF THE
CONSTITUTION OF INDIA. 5) DIRECT THE RESPONDENTS TO
RETURN THE AMOUNT OF RS.76,111/- COLLECTED BY THEM
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WP No. 201967 of 2019
ILLEGALLY, AS PROPERTY TAX AND PENALTY FOR THE YEAR
2002-03 TO 2004-05 THROUGH COERCIVE ACTION.
THIS PETITION, COMING ON FOR PRELIMINARY HEARING
IN 'B' GROUP THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
The petitioner has challenged the validity of sub-section (5) of Section 112-A of the Karnataka Municipal Corporations Act, 1976 (for short, 'the Act, 1976') and to declare the imposition of penalty at two percent per month of the amount of property tax assessed and due in case of failure to pay the amount of property tax and to submit a return as per clause (a) of sub-section (5) of Section 112-A of the Act, 1976, as arbitrary and ultra vires of the Constitution of India. The petitioner has also sought for an appropriate writ to quash the assessment of the property tax carried out by respondent No.4 dated 20.10.2018 under the Self-Assessment Scheme for the years 2005-06 to 2017-18 (stated as 2018-19 in the prayer portion of the petition). The petitioner has also sought for a direction to the respondents to refund the amount of Rs.76,111/- collected by them as tax and penalty for the period from 2002-03 to 2004-05.
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2. The petitioner contends that she is the owner of a property bearing No.8-1489 situate at Nehru Gunj, Kalaburagi, having succeeded in a civil suit which culminated in execution in E.P.No.103/2007 before the Prl. Civil Judge (Jr. Dn.), Gulbarga. Respondent No.4 issued a demand notice dated 03.05.2017 to the petitioner demanding property tax from the year 2005-06 till the year 2017-18. The petitioner submitted a reply requesting the respondent No.4 to waive off the penalty and agreed to pay the property tax. Since the petitioner did not pay the amount of property tax demanded, the respondent No.4 had assessed the property tax under the Self-Assessment Scheme for the year 2005-06 till 2017-18. Later, in terms of an endorsement dated 26.02.2019, the respondent No.4 rejected the request of the petitioner for waiver of the penalty and called upon the petitioner to pay the property tax with penalty as determined.
3. Being aggrieved by the assessment carried out by respondent No.4 dated 20.10.2018 for the period from 2005-06 to 2017-18 (stated as 2018-19 in the prayer portion of the petition), the petitioner is before this Court in this writ petition. -5-
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4. Learned counsel for the petitioner contended that the introduction of the Self-Assessment Scheme by the State Government and requiring a Municipal Corporation to collect the tax at particulars rates impinged upon the constitutional right of Municipal Corporation to impose and collect the property tax. In support of his contention, he referred to Part IXA of the Constitution of India as well as Entry 5 in List II of the Seventh Schedule and contended that the law enacted by a State Legislature should empower a local self-governing Institution to impose and collect the property tax. He submits that in the scheme of things, it is the Corporation alone which should determine what should be the rate of tax and how it should be collected and not the State Government. He invited the attention of this Court to various provisions of the Act, 1976 and contended that it is the State which has exercised power to impose and collect the tax and submits that this is in stark contrast with the rights conferred upon the Municipal Corporations. Therefore, he contends that the Self-Assessment Scheme which is introduced by the State Government, encroached into the powers of the Municipal Corporation. In so far as the penalty of two percent per month of the property tax -6- NC: 2024:KHC-K:4947 WP No. 201967 of 2019 due imposed on defaulters as provided under clause (a) of sub- section (5) of Section 112-A of the Act, 1976, he contends that there is no basis for imposition of such high rate of penalty. He further submits that the imposition of penalty at two percent per month of the amount of property tax assessed is unreasonable and has no basis apart from being excessive. He contends that the property in question was derived by the petitioner in the year 2007 and that the property is in a dilapidated condition and without there being proper legislation as to how the value of such a property could be arrived at to determine the property tax, he submits that the imposition of penalty at two percent per month of the property tax due is arbitrary and warrants interference.
5. Per contra, the learned counsel for respondent Nos.2 and 4 submits that the imposition of penalty is only a deterrent against defaulters and Courts have held from time to time that such imposition of penalty is not arbitrary or unreasonable. He relied upon the judgment of this Court in W.P. No.56279/2015 (decided on 25.05.2016). Further, he contends that if the petitioner is aggrieved by the rate of tax imposed and assessed by the respondent No.4, the proper -7- NC: 2024:KHC-K:4947 WP No. 201967 of 2019 remedy is to go before the Standing Committee constituted under the provisions of the Act, 1976 and not by challenging those notices before this Court in a writ petition. He also contends that the Municipal Corporation is only a self-governing Institution, which is bound to comply the law as enacted by the State Government and therefore, imposition of penalty at two percent per month of property tax is as per the law provided under clause (a) of sub-section (5) of Section 112-A of the Act, 1976.
6. Learned Additional Government Advocate resonated the submissions of the learned counsel for respondent Nos.2 to
4.
7. I have considered the submissions of the learned counsel for the petitioner and the learned Additional Government Advocate for respondent No.1 and the learned counsel for the respondent Nos.2 to 4.
8. Though the learned counsel for the petitioner raised that the self assessment scheme is arbitrary and beyond the rule making power of the State Government on the touchstone of Part IXA of the Constitution of the India, -8- NC: 2024:KHC-K:4947 WP No. 201967 of 2019 he was unable to point out the power of the Corporation to independently impose and collect tax, particularly, in the nature of a property tax. Part IXA of the Constitution of India, in Article 243X of the Constitution of India, deals with the power to impose taxes by, and Fund of the Municipalities. It mandates that the Legislature of a State may, by law, authorize a Municipality to levy, collect and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such limits. Therefore, it is a legislature of a State which alone is entitled to fix the rate of tax and also authorize the Municipality to levy, collect and appropriate such taxes in accordance with the procedure prescribed under the Act, 1976. In the case on hand, the State Government has promulgated the Act, 1976 which confers power on the Municipal Corporation to collect taxes subject to general or special orders of the State.
9. The contention of the learned counsel for the petitioner that the power to determine the rate of tax, -9- NC: 2024:KHC-K:4947 WP No. 201967 of 2019 impose and collect it from the citizens within a municipal area should be left to the absolute discretion of the Municipal Corporation, is not the intention of Part IXA of the Constitution of India. Part IXA of the Constitution of India deals with the power to self-govern the municipal area. The funds of the Corporation which are provided in Section 149 of the Act, 1976, includes all moneys received by or on behalf of the Corporation by or under the Municipal Corporations Act or any other law, all taxes, tolls and other imposts, fines, fees, penalties paid to or levied by it under the Act, all proceeds of land or other properties sold by the Corporation and all rents accruing from its land or property and all interests, profits and other moneys accruing by gifts or transfers from the Government or private individuals or otherwise shall constitute the corporation fund and shall be held, applied and disposed of in accordance with the provisions of the Act, 1976, the rules and the regulations made thereunder or any other law for the time being in force. Therefore, the funds that are collected including the property tax collected by the
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NC: 2024:KHC-K:4947 WP No. 201967 of 2019 Corporation would be deemed to be funds belonging to the Corporation which would be deployed for the purposes provided under the Act, 1976. Therefore, the petitioner cannot contend that the introduction of the self- assessment scheme by the State Government was in violation of Part IXA of the Constitution of India as even Part IXA of the Constitution of India mandates the imposition and collection of taxes through a legislation.
10. In the case on hand, the petitioner in a reply to the notice issued by respondent No.4 has categorically stated that she is wiling to pay the property tax as determined, but has sought for rebate of the penalty of 2% imposed. Therefore, the petitioner cannot approbate and reprobate and contend that the introduction of the self-assessment scheme is in violation of Part IXA of the Constitution of India.
11. Coming to the next contention that the imposition of 2% penalty under Section 112-A(5) of the Act, 1976, is without any basis, the Courts have held from
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NC: 2024:KHC-K:4947 WP No. 201967 of 2019 time to time that the imposition of penalty is nothing but a deterrent against the defaulters. Similar such penalties are found even in the Income Tax Act as well as under the provisions of the Sales Tax Act. It is now well settled that the legislation made by a State legislature, is deemed to be constitutionally valid unless and until the petitioner is able to demonstrate that the legislation lacks legislative competence and or that it is arbitrary. In the case on hand, except contending that imposition of penalty at 2% was arbitrary and unreasonable, the petitioner did not point out how, the provisions of Section 112-A(5) of the Act, 1976 was unreasonable as it is applied across the board in respect of all defaulters who defaulted in payment of property tax. The provision does not sub-classify amongst defaulters and does not deal with them differently. Therefore, it cannot be contended that the provisions of Section 112-A(5) of the Act, 1976 is arbitrary. It also cannot be contended that it is unreasonable inasmuch as, the purport of Section 112- A(5) of the Act, 1976 is to deter defaulters from defaulting
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NC: 2024:KHC-K:4947 WP No. 201967 of 2019 in payment of property tax. The Courts have time and again held that such imposition of penalty is just and proper and cannot be termed unreasonable.
12. In that view of the matter, this petition lacks merit and is dismissed.
In view of disposal of the writ petition,
I.A.No.1/2019 stands disposed off.
Sd/-
JUDGE
SMA - para Nos.1 to 7
RSP - para No.8 till the end
List No.: 1 Sl No.: 45