Gujarat High Court
Gujarat Vidya Sabha vs Municipal Corporation Of The City Of ... on 19 October, 1994
Equivalent citations: (1995)1GLR419, 1996 A I H C 2677, (1995) 1 GUJ LR 419 (1995) 1 GUJ LH 901, (1995) 1 GUJ LH 901
Author: B.N. Kirpal
Bench: B.N. Kirpal
JUDGMENT B.N. Kirpal, C.J.
1. This judgment will dispose of First Appeals Nos. 614, 615 and 616 of 1980.
These Appeals are filed by a Public Charitable Trust, challenging the decision of the Small Causes Court, whereby the rateable value of the property of the appellants was reduced.
2. The appellant had constructed 'Premabhai Hall'. The construction was undertaken after the old hall which had been constructed on 1544 sq. yards had been demolished and additional land, measuring 1680 sq. yards had been acquired. A portion of the premises had been given on rent to Madura Bank and another portion to the Bank of India. A major portion of the building, however, was used for holding shows or cultural activities.
3. The Municipal Corporation had fixed separate rateable value with regard to the portion of the building which had been given on lease to Madura Bank and the Bank of India. The rateable value given in respect thereof and the tax which was charged subsequently on the same is not in question in the present proceedings. In these cases, we are concerned with the levy of property tax on the 'Premabhai Hall' itself.
4. The Municipal Corporation in respect of the four years in question, viz., 1976-77, 1977-78, 1978-79 and 1979-80, had fixed rateable value at Rs. 8,21,220/ - for 1976-77 and for subsequent years at Rs. 4,06,920/-.
5. Against the said fixation of the rateable value, appeals were filed by the appellant before the Small Causes Court. Taking into consideration the market value of the land as at 1976 at about Rs. 17,00,000/- and by adding thereto the cost of construction, the total value of the property was determined. On that, the Small Causes Court calculated the reasonable return at 6% and came to the conclusion that the annual letting value came to Rs. 2,86,860/-. In applying the rate of 6%, the Small Causes Judge was of the view that one had to keep the charitable intention of the Institute in mind while fixing the reasonable return. It is for this reason that instead of fixing the reasonable return at eight and two-third per cent, fixed the reasonable return at 6%. The aforesaid decision of the Small Causes Court has been challenged in these Appeals.
6. As far as the rateable value is concerned, we find that the principles adopted by the Small Causes Court, viz., cost of land plus cost of building and applying a reasonable return thereto, is in consonance with the judgment of this Court in Municipal Corporation, Ahmedabad v. Oriental Fire and General Insurance Company Limited of 1983 and connected matters, decided on 8th September, 1994. It was, however, argued that the land measuring 1544 sq. yards had been acquired a long time ago and this land had, in fact, been donated, for which no payment had been made. Whether the payment was made or not is immaterial because for fixing the rateable value on the basis of cost of construction and cost of land, it is the market value of the land when the construction commenced which is relevant. The land may have been acquired by gift or by purchase or in any other manner, but for the purpose of determining the rateable value, it is the market value of the land which has to be taken into consideration. Construction of the new hall commenced, we are informed by the learned Counsel, some time in 1970. Therefore, it is the value as on that date which should be taken into consideration. The value of land in 1976 taken at Rs. 17,00,000/- may not exactly be correct, because the value of land should have been taken as on the day when the construction commenced which was earlier in point of time. The Small Causes Court has valued 1544 sq. yards of land at Rs. 8,00,000/ - in the year 1976 and has added this to the price of Rs. 9,00,000/- which was paid for the additional land. It is unfortunately not in evidence as to what would be the market value of the land measuring 1544 sq. yards at the time when the construction commenced and this is a matter which may have to be gone into by the Small Causes Court at an appropriate stage. Otherwise, the method adopted by the Small Causes Court in determining the rateable value is not incorrect.
7. With the leave of the Court, another contention which has been urged by the learned Counsel for the appellant is that no property tax should have been levied in the instant case because the appellant was entitled to exemption under Section 132(1)(b) of the Bombay Provincial Municipal Corporations Act, 1949. It is submitted by the learned Counsel that it is a premises owned by a Public Charitable Trust and it is not used for any trade or commerce. It is further contended that the expenses incurred in the maintenance of the said hall are more than the income which is derived and the said hall has to sustain on donations. It is also submitted that the hall itself was constructed after donations had been received and the purpose for which the hall was constructed was a public charitable purpose and it is being used for the said purpose. It is also submitted by Shri A.C. Gandhi that a claim for exemption was made before the Corporation, but exemption has not been granted.
8. The Small Causes Court has not dealt with the question whether the appellant was entitled to the benefit of exemption under Section 132 or not. Whedier the property in question is being used for public charitable purpose or not is a question of fact which has to be decided on the evidence which may be led by either party. As the claim had been made before the Corporation but the same has not been decided by it or by me Small Causes Court, it would be appropriate that mis claim is, on merits, first investigated by the Small Causes Court.
9. The learned Counsel for the Corporation, however, submits that the question whether exemption under Section 132 is to be granted or not cannot be agitated in appeal before the Small Causes Court. Consequently, it was submitted, this contention cannot be raised in appeal before the High Court.
10. Property tax is levied under the provisions of Section 129 of the BPMC Act. The said section, inter alia, provides that property tax shall comprise of different types of taxes which shall "subject to the exceptions, limitations and conditions" which are provided, be levied on the buildings and lands. The levy of property tax, being subject to the exceptions, limitations and conditions which are provided under Section 129, clearly means that the assessing authority has to levy the tax after taking these exceptions, limitations and conditions into consideration. Section 132, inter alia, contains the exceptions to the levy of property tax and while making the assessment, the question of exemption has to be taken into consideration by the Municipal Authorities.
11. It was then submitted by the learned Counsel for the respondent that even though the Commissioner, or his delegate may be required to determine or examine the question as to whether an assessee is entitled to exemption under Section 132 but such a question cannot be agitated in appeal before the Small Causes Court. Referring to Section 406 and to the judgment of this Court in the case of Municipal Corporation, Ahmedabad v. Oriental Fire and General Insurance Co. Limited F.A. No. 829 of 1983 and connected matters, decided on 8th September, 1994, it was sought to be contended that in appeal the tax which is fixed or the question whether exemption is to be granted or not cannot be agitated.
12. Section 406(1) provides that appeals which are filed relating to rateable value or tax fixed or charged are to be determined by the Judge.
13. The indication, therefore, is that appeals can be filed against the rateable value fixed or tax fixed or tax charged. Sub-section (2) of Section 406 states that no appeal referred to in Sub-section (1) shall be entertained unless Sub-clauses (a) to (e) wherever applicable have been complied with.
14. In Oriental Fire and General Insurance Company's case, this Court was concerned with the question whether the rateable value can be challenged by filing an appeal only against the bill which is sent demanding tax which is determined. It was held that Section 406(2)(b) specifically relates to the appeal against the rateable value and Sub-clause (d) relates to the appeal against any amendment made in the assessment book of the property tax. In this connection, it was observed that: "...neither the Act nor the Rules contemplate any complaint being filed against a bill of property tax and complaints, relating to property tax, can only be filed against the rateable value...." It was then emphasised that the Legislative intent was that the appeal is to be filed against the rateable value and in this connection it was observed that: "...no appeal can be preferred against a bill levying tax as a consequence of the rateable value having been determined...." Again, while summarising, it was observed by this Court: "...an appeal cannot be filed against a bill for the purposes of challenging the rateable value if complaint against a proposed fixation of rateable value had not been filed though opportunity had been given...." It is clear in our mind that the observations in Oriental Fire and General Insurance Company's case that no appeal could be filed against the bill levying tax was only in so far as in the said appeals the challenge which was sought to be raised refers to the rateable value. In other words, the challenge to the rateable value has been provided for independently under Section 406 and for which the condition provided by Section 406(2)(b) has to be satisfied and the same cannot be circumvented by filing an appeal against the tax bill and challenge the rateable value.
15. Section 406(1) does contemplate an appeal against the tax fixed or charged under the Act, in addition to appeal against the fixation of rateable value. It is open to an assessee not to challenge the rateable value but to challenge the tax fixed or charged on other grounds or relating to other matters. In Anant Mills Co. Ltd. v. Municipal Corporation for the City of Ahmedabad and Ors. 1993 (2) GLH 897 at page 920, it was observed by a Division Bench of this Court, while examining Section 406 and other relevant Sections, that questions of law regarding the determination of rateable value could be raised in appeal. Furthermore, in an appeal against the tax, questions of law such as, whether the appellant was primarily liable for payment of property tax, whether the premises were liable to be assessed to property tax and the like, could also be raised. Similarly, in our opinion, the question whether the appellant is entitled to the benefit of Section 132 could be raised in the appeal before the Small Causes Court. Such a question may be a pure question of fact or a mixed question of fact and law, but raising of such a contention would not amount to challenging the rateable value of the property in question, when such an appeal is filed on the receipt of the tax bill. The learned Counsel for the Corporation had sought to rely on the decisions of the Bombay High Court in Municipality of Ankleshwar v. Chhotalal Ghelabhai Gandhi LVII BLR 547, Gopal Mills Co. Ltd. v. The Broach Borough Municipality LVIII BLR 300 and Balakrishna Dharamdas Vora v. The Poona Municipal Corporation LXV BLR 119. In our opinion, the said decisions have no application. In those cases, it was, inter alia, observed that the question of validity of tax cannot be decided by the authorities under the Act. The question whether the appellant is entitled to exemption under Section 132 is not one relating to the validity of the tax. This question relates to an aspect of assessment to tax within the four corners of the law and a decision on the same does not amount to deciding upon the validity of the tax imposed under the Law.
16. In our opinion, therefore, the question whether the appellant was entitled to the benefit of the provisions of Section 132 was one which should have been decided by the Small Causes Court and a favourable decision not having been obtained, the appellant can agitate that question before this Court under Section 411 of the Act. Before concluding, we may take note of the contention raised by the learned Counsel for the appellant to the effect that prior to the demolition of the old "Premabhai Hall', the appellant was being exempted from the levy of property tax under Section 132 of the Act. Therefore, it is submitted that, on the facts, there has been no change and even though a new hall may have been constructed, the same is being used for charitable purposes and the earlier exemption which was being granted by the Corporation for the period prior to 1964-65 should have been continued. This is a contention which the appellant is at liberty to raise when the case is remanded to the Small Causes Court. Mr. P.G. Desai, however, refutes this contention, but this is a matter which will be gone into by the Small Causes Court at the appropriate stage.
17. For the aforesaid reasons, this Appeal is allowed and the case is remanded to the Small Causes Court for decision on the question, on merits, whether the appellant is entitled to exemption or benefit under Section 132 of the Act. If the Small Causes Court decides in favour of the appellant, then consequential benefits will ensue therefrom. There will be no order as to cost.