Madras High Court
G. Viswanathan vs Kancheepuram Municipality on 10 April, 2014
Author: Pushpa Sathyanarayana
Bench: Pushpa Sathyanarayana
IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 10 04 2014 Coram The Hon'ble TMT. JUSTICE PUSHPA SATHYANARAYANA Second Appeal No. 561 of 2006 G. Viswanathan .. Appellant vs. Kancheepuram Municipality Rep. by its Commissioner Kancheepuram .. Respondent Appeal filed under Section 100 of the Code of Civil Procedure against the judgment and decree dated 29.04.2005 in A.S. No. 5 of 2004 on the file of the Court of Subordinate Judge, Kancheepuram confirming the judgment and decree dated 27.02.2003 made in O.S. No. 137 of 2001 on the file of the Principal District Munsif, Kancheepuram. For Appellant : Mr. E. Om Prakash for M/s Ramalingam Associates For Respondents : Mr. P. Srinivas JUDGMENT
Aggrieved by the unanimous decision of dismissal of the suit by the Courts below, the plaintiff has filed this Second Appeal.
2. The suit was one for declaration that the order Reference in ROC No. A7/5800/1999 dated 19.02.2001 confirming the Special Notice of Property Tax in Assessment No. 2460 with regard to the schedule mentioned property, is null and void and as a consequence, for grant of permanent injunction restraining the respondent / defendant Kancheepuram Municipality and its men from enforcing the said order in recovering the alleged enhancement of the property tax.
3. According to the plaintiff, who claims to be the absolute owner of the suit schedule property bearing No. 39, New No. 105, Ekambaranathar Koil Street, Kancheepuram, a portion of the suit property is used by him for his residence and the other portion of the premises is being used as a marriage hall. Originally, the respondent Corporation had levied Property Tax at Rs.791.90 upto the Assessment Year 1987 - 88 for half yearly and subsequently, for the second half yearly tax for 1987-88, it was increased to Rs.3167.60. As the said increase was not based on any merit, the plaintiff objected to the same but there was no response from the defendant. Again, for the Assessment Year 1991 92, the Property Tax was increased to Rs.3546/- for half yearly without any intimation of increase. Subsequently, the same was again increased from Rs.3546/- to Rs.3723/- during the second half year of 1992 93 but giving effect from the first half yearly of 1992-93, which was also without any notice. The plaintiff had paid the tax upto the first half year of 1993-94 without any protest. While so, the respondent Corporation had increased the Property Tax from Rs.3723/- to Rs.11,169/- for half yearly with effect from 01.10.1993. The defendant also had issued an attachment notice dated 03.03.1994 adding one more assessment of claiming a sum of Rs.410/-. As the Property Tax was not assessed in accordance with the provisions of the Tamil Nadu District Municipalities Act read with Tamil Nadu Buildings (Lease and Rent Control) Act and Rules, the plaintiff herein had filed O.S. No. 491 of 1994 for declaration that the Special Notice of Property Tax Amendment for the schedule mentioned property in Assessment Nos. 2460 and 2593 for half yearly is null and void and for permanent injunction restraining the defendant from recovering the amount. The said suit was decreed on 29.4.1997. Thereafter, after repeated requests of the plaintiff, the respondent sent a Demand Notice dated 05.4.1999 calling upon the plaintiff to pay the arrears of Tax at the rate of Rs.3,723/- per half yearly from the second half yearly for the Assessment Year 1993 94 to the first half yearly for the Assessment Year 1998 99 which comes to Rs.37,230/-. The defendant also sent a separate Demand Notice from the second half yearly Assessment Year 1993 94 to the first half yearly Assessment Year 1998 99. Thereafter, on 12.4.1999, the plaintiff sent the entire arrears of tax of Rs.37,230/- upto the first half yearly assessment year 1998 99 at the rate of Rs. 3723/- per half yearly by way of cheque. While so, the defendant again sent a notice dated 24.8.2000 calling upon the plaintiff to appear for an enquiry and another notice dated 06.9.2000 was sent calling upon the plaintiff to furnish the particulars with regard to schedule mentioned premises to revise the tax for the period from 01.01.1993 to 01.10.1998, for which, the plaintiff had sent a reply on 18.9.2000 stating his objections to raise the tax retrospectively and sent a sum of Rs.11,169/- by way of cheque. Thereafter, the defendant sent a special notice of Property Tax dated 24.11.2000 claiming enhanced tax at the rate of Rs.7,472/- from the second half yearly for the Assessment Year 1993 - 94 and at the rate of Rs.14,162/- from the second half yearly for the Assessment Year 1998 99 without giving any particulars, in violation of the decree in O.S. No. 491 of 1994. The plaintiff sent a reply on 18.12.2000 stating his objections and to make a proper enquiry. But the defendant, without making any enquiry, sent a confirmation order dated 19.02.2001 stating that the plaintiff is liable to pay the property tax for the schedule mentioned premises at the rate of Rs. 7,472/- per half yearly from the second half yearly Assessment Year 1993 94 up to the first half yearly Assessment Year 1998 99. The plaintiff also sent a reply to the defendant on 27.02.2001 to make a proper enquiry and for giving opportunity of personal hearing. However, the defendant had sent an attachment notice claiming arrears of tax of Rs.97,131/- up to the second half yearly Assessment Year 2000 2001. As the said order is against the tenor of the judgment in O.S. No. 491 of 1994, the plaintiff has filed the suit for declaration that the Notice dated 19.02.2001 is not binding on him.
4. The defendant had resisted the suit claiming various grounds. The defendant had also alleged that since the plaintiff had made certain improvement in the marriage hall, the tax had been increased. The defendant also submitted that payment of entire arrears of tax by the plaintiff on the basis of the pre-revision, tax is not sustainable.
5. Before the trial Court, the plaintiff had filed as many as 73 documents, viz., Exs. A.1 to A.73 and examined himself as P.W.1 and another independent witness one Perumal as P.W.2. The defendants had marked Exs. B.1 to B.3 and one Vijayakumari, Revenue Inspector, Kancheepuram, was examined as D.W.1.
6. The trial Court / learned Principal District Munsif, Kancheepuram, on consideration of the evidence and the submissions advanced by the learned counsel for the parties, dismissed the suit O.S. No. 137 of 2001, by judgment dated 27.02.2003, on the ground that it is premature as the same has been filed without exhausting the appeal remedy. On appeal, the First Appellate Court / learned Subordinate Judge, Kancheepuram, on appreciation of the facts and the materials available thereon, concurred with the finding of the trial Court and dismissed A.S. No. 5 of 2004 by judgment dated 29.4.2005. Feeling aggrieved by the concurrent finding of the Courts below, the plaintiff is before this Court with this appeal.
7. At the time of admission of this Second Appeal, the following substantial questions of law were formulated for consideration:-
(i) Whether the Courts below were right in rejecting the claim of the Appellant challenging the attachment order of the Municipality consequent to Revision of Property Tax Assessment of the Municipality in a Ciivl Suit, when such a relief under the Civil Suit is not barred by the Tamil Nadu District Municipalities Act?
(ii) Whether the remedy of Revision and Appeal provided under the Tamil Nadu District Municipalities Act against the assessment of Property Tax prevent the assessees from filing a suit under the General law on the grounds that the Municipality had acted arbitrarily?
8. Heard Mr. Om Prakash, learned counsel appearing for the appellant and Mr. P. Srinivas, learned counsel appearing for the respondent and perused the records.
9. Learned counsel appearing for the appellant / plaintiff contended that the appellant is entitled for the declaration sought for regarding the arbitrary revision of the Property Tax by the defendant Municipality. It was further contended that the Municipality had not referred to the suit filed earlier covering the same period of revision in O.S. No. 491 of 1994. Ex. B.1 dated 07.9.2000 is an application regarding details of the building to be assessed and Ex. B.2 is the letter sent by the plaintiff to the defendant Municipality demanding the details of the assessment. Based on Ex.B.1, the tax was fixed for the period from 1.10.1993 half yearly at Rs.7462/- and for the second phase from 01.10.1998, it was fixed at Rs.14,162/-.
10. The point to be decided is whether the Municipality is entitled to levy tax for the period that was covered under the earlier suit under Exs. A.1 and A.2. Ex. A.23 is Demand Notice dated 05.4.1999 calling upon the plaintiff to pay a sum of Rs.37,230/- for the period from 1993 94 second half yearly to 1998 99 first half year. In the said notice, it is specifically stated that for the second half of 1998 99, there is a revision and since the revision of tax was pending consideration, a Special Notice would be sent separately. In response to the Demand Notice made under Ex.A.23, the plaintiff had paid the entire arrears demanded under Ex.A.24 dated 15.9.1999.
11. Learned counsel for the Municipality vehemently contended that a suit questioning the assessment is clearly barred under the Statute and the remedy available to the respondent is elsewhere and the appellant is barred from invoking the jurisdiction of the Civil Court.
12. Before proceeding with the merits of the case, this court feels that it would be worthwhile to refer to Sections 81, 82 and 84 r/w Section 354 of the District Municipalities Act.
"Sec.81. Levy of Property tax.- (1) The property tax shall be levied on all buildings and lands within the Municipality.
(2) (a) In relation to any building newly constructed or where any addition or alteration has been made to any existing building, the owner or occupier of such building,
(b) where the title of any building or land is transferred, such transferee
(c) in relation to any building or land, in the event of death of the person primarily liable to the payment of property tax, the person on whom the property is transferred, shall furnish to the executive authority within such date as may be prescribed, a return for such building or land containing such details as may be prescribed for the assessment of the property tax to the said building or land.
(3) In the case of reassessment or general revision of any property tax leviable under this Act, the owner or occupier of any building or land shall furnish to the executive authority within such time as may be prescribed a return in such form containing such details as may be prescribed for the assessment of property to such building or land.
(4) If any owner or occupier of any building or land fails to furnish a return as required under sub-section (2) or sub-section (3) or furnishes an incomplete or incorrect return the executive authority or any person authorised by him in this behalf shall cause an inspection to be made and also to make such local enquiries as may be considered necessary, and based on such inspection an information collected, shall prepare a return shall be furnished to the owner or occupier of the building or land.
(5) On receipt of a return under sub-Section (2) or sub-section (3) or on the basis of the return prepared by the executive authority under sub-section (4) and after considering the objections if any received the executive authority shall determine the tax payable in accordance with the provisions of this Act and shall send an intimation to that effect to the person concerned.
(5-A) In the case of failure to furnish a return under sub-section (2) or sub-section (3) the executive authority shall, in addition to the tax determined under sub-section (5), direct the owner or occupier of any building or land to pay by way of penalty, a sum of rupees two hundred and fifty or five per cent of the tax determined under sub-section (5), whichever is higher.
(6) For the purpose of assessment of property tax for any building or land in the Municipality the executive authority or any officer authorised by him in his behalf may enter, inspect, survey and measure any building or land, after giving due notice to the owner or occupier before such inspection and the owner or occupier shall be bound to furnish necessary information required for this purpose.
(7) The property tax on building and land shall, subject to the prior payment of the land revenue, if any, due to the State Government thereon, be a first charge upon such building or land and belonging to the person liable to pay tax.
82. Minimum and maximum basic property tax, additional basic property tax, etc.- The State Government shall prescribe the minimum and the maximum rates of-
(a) basic property tax for the building or land having regard to
(i) existing property tax;
(ii) the value of the building and land; and
(iii) the use of the building;
(b) additional basic property tax for every building with reference to its location.
(bb) additional base property tax for every building with reference to its type of construction;
(c) the concession with regard to age of the building."
13. Section 84 of the Tamil Nadu District Municipalities Act, 1920 deals with the procedure to be adopted in assessing and calculating property tax. It runs as follows:
"Assessment and calculation of property tax:- (1) For the purpose of levy of property tax, every building shall be assessed together with its sites and other adjacent premises occupied as an appurtenance thereto:
[ } (2) The property tax shall be calculated as follows:
(a) Firstly, the basic property tax for a building shall be calculated at the rate fixed by the municipal council;
(b) Secondly, the additional basic property tax for such building shall be calculated at the rate fixed by the municipal council and added to the basic property tax so arrived at under clause (a);
(c) Thirdly, on the quantum arrived at under clauses (a) and (b) the concession having regard to the age of the building at the rate fixed by the municipal council shall be deducted and the amount so arrived at shall be the property tax payable in respect of any building for every half-year and shall be paid by the owner or occupier of such building within the half-year period.
(3) The executive authority shall issue a property tax book containing all the details of the building or land and the property tax payable in relation to such building or land in such form as may be prescribed.
[(4) (a) Where there is any land without any building situated within the municipal limits, the executive authority shall determine the property tax payable for such land at the rate fixed by the municipal council.
(b) Where there is any land with building situated within the municipal limit and if the extent of the land left vacant is twice the plinth area of the building, the executive authority shall determine the property tax on the vacant land which exceeds twice the plinth area of the building at the rate fixed by the municipal council.
Provided that no property tax on any land shall be levied under this sub-section of the extent of such land with or without any building thereon does not exceed two thousand and four hundred square feet.
(5) The municipal council may, subject to such rules as may be made by the Government, by notification, in this behalf, exempt any building having a carpet area not exceeding one hundred square feet constructed with wind walls and thatched roof from the levy of property tax.]"
14. Sub-sections (1) and (2) of Section 354 of the Act provide that the assessment or demand or charge imposed, under the authority of the Act, shall not be impeached or affected by reason of any clerical error or by reason of any mistake in respect of the name, residence, place of business or occupation of any person, etc. provided that the provisions of this Act have, in substance and effect, been complied with. Sections 354(1) and (2) are reproduced here under for convenient reference:
"Assessments, etc., not to be impeached.-
(1) No assessment or demand made and no charge imposed, under the authority of this Act shall be impeached or affected by reason of any clerical error or by reason of any mistake (a) in respect of the name, residence place of business or occupation of any person, or (b) in the description of any property or thing, or (c) in respect of the amount assessed, demanded or charged: provided that the provisions of this Act have been in substance and effect, complied with. And no proceedings under this Act shall merely for defect in form, be quashed or set aside by any Court of Justice.
(2) No suit shall be brought in any Court to recover any sum of money collected under the authority of this Act or to recover damages on account of any assessment, or collection of money made under the said authority:
Provided that the provisions of this Act have been, in effect, complied with."
15. Therefore, it is seen that Section 354(2) of the Act clearly spells out that no challenge can be made to the assessment by reason of any clerical error or by reason of any mistake (a) in respect of the name, residence, place of business or occupation of any person, or (b) in the description of any property or thing or (c) in respect of the amount assessed, demanded or charged. Hence, it is clear that the appellant cannot question the assessment on the grounds mentioned in Section 354 of the Act.
16. From the materials available on record, it is seen that in the suit O.S. No. 491 of 1994, notice dated 03.3.1994 was challenged and the suit was decreed in favour of the plaintiff on 29.4.1997. After the disposal of the said suit, Ex.A.23 came to be issued and the demand made therein was paid by the plaintiff which is evident from Ex.A.24 receipt. But the defendant had sent Demand Notice for Rs.1,45,530/- for the period 1993 94 to 2000 01.
17. Learned counsel appearing for the appellant / plaintiff contended that the tax for the period from Assessment Year 1993 94 second half yearly to Assessment Year 1998 99 first half yearly, have been paid as per the demand Ex.A.23 and under receipt Ex.A.24 and that was also the subject matter in the previous suit. As per Ex.A.24 for the period upto 1998 99, first half yearly was paid. In Ex.A.23 notice, it is specifically stated that for the period 1998 99 second half yearly, the revision is pending consideration. So it is deemed that the period prior to that, is already assessed and there is no dispute regarding the quantum of assessment and the tax paid by the plaintiff is also received by the Municipality. Therefore, the only question to be decided is whether the Municipality is entitled to revise it retrospectively in the name of revision, overlapping the same period for which already assessment has been made and money received.
18. The manner in which the taxation has to be done is well settled by the Division Bench judgment of this Court in the case of Dindigul Anna District Tax Payers Sangam, rep. By its President vs. Government of Tamil Nadu and another reported in 1994 (2) L.W. 715 wherein in paragraph 15, it has been observed as follows:-
"It is clear from the above decision of the Apex Court that when the Rent Controller has not fixed the fair rent for a building the municipal authorities will have to arrive at their own figure of fair rent in accordance with the principles laid down in the Rent Control Act. It is also clear from the preamble portion of the guidelines dated 15. 1993 that the said guidelines were issued only to enable the municipal authorities to arrive at their own figure of fair rent of the buildings in accordance with the principles laid down under Sec.4 of the Tamil Nadu Buildings (Lease and Rent Control) Act and Sec.82(2) of the Act and to ensure objectivity and avoid arbitrariness in the determination of the annual value of the buildings for the purpose of revision of property tax. It is seen from the counter affidavits filed on behalf of the municipal authorities, in these three writ petitions that after a study of the property tax pattern, the increase in the price of land, cost of construction and depreciations to be allowed in terms of the provisions of the Rent Control Act, a standard process was evolved and the guidelines referred to above were issued with a view to avoid hardship to individual assessees. It is further pointed out in the counter affidavit filed by the municipal authorities that in that view a committee was constituted and standard/fair rent was arrived at in respect of similarly situated areas depending upon the locality, its importance, the market rate of the land and other amenities which is called basic value. The basic value was arrived at after taking into-consideration of the relevant materials. From the basic value further deduction is being allowed depending upon the nature of construction. age of the construction and other materials as seen from the assessment work sheets produced by the municipal authorities in the typed set of papers. A perusal of the assessment work sheets produced in the typed set of papers will go to show that but for the standardised process and the determination of the annual value on the basis of guidelines issued the revision made on the basis of fair rent formula alone might have resulted in ten-fold increase of tax in respect of almost all the premises either residential or non-residential or factory premises. Further, under the guidelines a ceiling is fixed for enhancement of property tax consequent on the general revision of the property tax as follows:
Residential Buildings Enhancement should not exceed (owner occupied) 50% of pre-revi-sion tax.
Residential buildings Enhancement should not exceed (rented) 100% of the pre-revision tax.
For commercial Enhancement should not exceed buildings 200% of pre-revision tax. Again, in the said guidelines standard deductions as permissible under the Act were also allowed in conformity with Sec.82(2) of the Act."
19. In this case, if it is seen whether the assessment was made as per the above ruling, then the answer is negative. In this case, the respondent has not only failed to follow the procedure prescribed for assessment of annual rental value and for fixation of the property tax but also failed to give the break-up particulars to show how the figure was arrived at and also did not give any particulars as to how they can vex the appellant once again for the same period to which he had already paid tax. The respondent could not place any materials before me justifying his right of vexing the appellant to pay tax twice. And, of course, the assessment order made is bereft of particulars regarding how the assessment was made. When such is the case and the assessment is vitiated, the bar of alternative remedy under Section 89 of the Act can be a mere formality.
20. Now, if I see the attack on the notice as to whether it is in line with Section 354 of the Act, then, the answer is negative. The challenge to the assessment order is made not on the ground that there is any clerical error or mistake in respect of the above said aspects but on the ground that the assessment order itself is vitiated because of non-observance of the mandatory procedure prescribed in the Statute and also that the taxation is made retrospectively. The respondent could not make out any case that they scrupulously followed the mandatory provisions in its true letter and spirit. As already mentioned in the foregoing paragraphs that the provisions of the Act have not been complied with in substance and effect in making the assessment order, I do not have any hesitation to hold that the Assessment Order is vitiated and hence, pressing into service of S. 354(2) of the Tamil Nadu District Municipalities Act is of no avail to the respondent. I am also guided by the binding precedent of this Court on the subject in Magdoom Sheriff alias Suntan Sheriff vs. Kancheepuram Municipality by its Commissioner, Kancheepuram reported in 1993 (2) MLJ 262. At this stage, it is also pertinent to point out that the respondent herein was a party to the judgment in the case cited supra. Having suffered the decree for not following the procedures, the respondent, at least in this case, ought to have followed the mandatory procedure.
21. In view of my discussion above, I am of the considered view that the suit can be maintained and the substantial questions of law are answered in favour of the appellant in view of the fact that the procedures followed is not in consonance with the mandatory provisions of the Tamil Nadu District Municipalities Act.
In the result, the Second Appeal stands allowed setting aside the concurrent finding of the Courts below and the suit is decreed as prayer for. However, in the facts and circumstances of the case, there shall be no order as to costs.
10 04 2014 Index : Yes / No Internet : Yes / No gri To
1. Subordinate Judge Kancheepuram
2. Principal District Munsif Kancheepuram
3. The Section Officer V.R. Section High Court Madras PUSHPA SATHYANARAYANA, J.
gri Pre-Delivery Judgment in S.A. No. 561 of 2006 Delivered on 10 04 2014