Full Judgment Text
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PETITIONER:
KALYAN MUNICIPAL COUNCIL & ORS.
Vs.
RESPONDENT:
USHA PAPER PRODUCTS (P) LTD. & ANR.
DATE OF JUDGMENT03/05/1988
BENCH:
KANIA, M.H.
BENCH:
KANIA, M.H.
PATHAK, R.S. (CJ)
CITATION:
1988 SCR (3) 832 1988 SCC (3) 306
JT 1988 (2) 260 1988 SCALE (1)849
ACT:
Maharashtra Municipalities Act-S. 123(1) of-Whether
alteration in assessment list becomes effective for any
period prior to commencement of official year in which
alteration in assessment list is made and Municipality is
entitled to levy tax for any official year or any part
thereof already expired under provisions of.
HEADNOTE:
After levy of the property tax by the Kalyan Municipal
Council (’the Municipal Council’) on the immovable
properties of the Respondent No. 1 (’the company’) in
respect of certain years, the Municipal Council detected
certain new construction and alterations in the existing
properties of the Company, and on October 3, 1973 a
resolution was passed by the Standing Committee increasing
the rateable value of the said immovable property from
1.4.70 to 31.3.74. A demand notice, demanding additional
property tax, Educational cess and Health Tax, was issued
thereafter to the Company. The Company challenged the notice
of demand before the High Court. The High Court decided in
favour of the Company, holding that alteration made in the
assessment list after following the procedure under section
123(1) of the Maharashtra Municipalities Act (the ’said
Act’) did not become effective for any period prior to the
commencement of the official year in which the alteration in
the assessment list was made and the Municipality was not
entitled to levy tax for an official year or any part
thereof which was already expired. This appeal was filed in
this Court against that decision of the High Court.
Dismissing the appeal, the Court,
^
HELD: The ratio of the decision of the Full Bench of
the Bombay High Court in Sholapur Municipal Corporation v.
Ram Chandra Ramappa Madgundi, [1972] 74 Bombay Law Reporter
469, upon which the judgment of the High Court impugned in
this case was based, applied to this case. The appellants
contended that the said case before the Full Bench had been
wrongly decided and the judgment under appeal based on that
decision was also erroneous. this contention must be
negatived in view of the decision of this Court in Municipal
Corpora-
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tion of City of Hubli v. Subba Rao Hanumatharao Prayag &
Ors.,[1976] 3 S.C.R. p. 883, which approved the said
decision of the Full Bench of the High Court, and which is
binding on the Court and clearly applicable to this case. In
that judgment, this Court had pointed out that once it was
accepted that the process of levying the tax was complete
only when the assessment list was authenticated and it was
only then that the tax was levied on the rate-payers, the
authentication must be made within the official year. The
tax, being a tax for the official year, must be levied
during the official year and since the levy of the tax is
complete only when the assessment list is authenticated, it
must follow that the authentication must take place in the
official year. The official year is the unit of taxation as
far as Municipal property taxes are concerned. [836D,G,837A-
B]
If an assessment list could be altered at any time if
the conditions set out in Section 123 of the said Act are
satisfied, the result would be that there would be complete
uncertainty in the field of taxation of property and unwary
purchasers of immovable property might be put to the
difficulty of having to discharge the liabilities for
property taxes for years long prior to the time when they
had purchased the immovable property in order to save the
property from being sold in recovery proceedings. [837B-C]
Sholapur Municipal Corporation v. Ramchandra Ramappa
Madgundi, [1972] 74 Bombay Law Reporter 469 and Municipal
Corporation of City of Hubli v. Subha Rao Hanumatharao
Prayag & Ors., [1976] 3 S.C.R. 883, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 317 of
1984.
From the Judgment and Order dated 10.1.80 of the Bombay
High Court in Special Civil Application No. 1471/75.
P.H. Parekh for the appellants.
U.R. Lalit, B.P. Maheshwari and R.S. Rana for the
respondents.
The Judgment of the Court was delivered by
KANIA, J. This is an appeal against the judgment of a
Division Bench of the Bombay High Court delivered on January
10, 1980. The appellants before us are the Kalyan Municipal
Council (referred to
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hereinafter as ’the Municipal Council’), its Chief
officer and the State of Maharashtra respectively.
Respondent No. 1 is a Private Limited Company and is the
owner of an industrial undertaking within the limits of the
Municipal Council. We propose to refer to respondent No. 1
as ’the Company’.
The relevant facts lie within a narrow compass and
there is no dispute regarding the same. Property Tax was
levied by the Municipal Council on the immovable properties
of the Company within the territorial limits of the
Municipal Council in respect of the years 1970-71, 1971-72
and 1972-73. In September, 1973, the Municipal Council
claimed that it had detected certain new construction and
alterations in the existing construction belonging to the
Company and a report to that effect was made to the Standing
Committee. A proposal was submitted to the Standing
Committee to increase the property tax in respect of the
said immovable property from 1.4.70 to 31.3.74. On October
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3, 1973, the Standing Committee passed a resolution
increasing the rateable value of the said immovable property
of the Company from 1.4.70 to 31.3.74. After serving a
notice on the Company as required under the provisions of
Section 123(1) of the Maharashtra Municipalities Act
(referred to hereinafter as the ’said Act’), and hearing the
objections filed by the Company against the proposed
increase, a demand notice was issued on the Company on
January 9, 1975 demanding an amount of Rs.51,626.69 and an
appropriate amount of Educational Cess and additional Health
Tax. This notice of demand was challenged by the Company by
way of Special Civil Application No. 147 of 1975 before the
High Court of Judicature at Bombay. The Division Bench of
the Bombay High Court which decided the said Special Civil
Application held that the case was covered by the decision
of a Full Bench of the Bombay High Court in Sholapur
Municipal Corporation v. Ramchandra Ramappa Madgundi, [1972]
74 Bombay Law Reporter, p. 469. The Division Bench of the
Bombay High Court in the impugned judgment has pointed out
that there was no dispute that a notice dated November 17,
1973, being the notice as contemplated by Section 123(1) of
the said Act was issued to the Company for amending the
assessment list. This notice was served after 17th November,
1973. After analysing the provisions of Section 123 of the
said Act and following the aforesaid decision of the Full
Bench, the Division Bench took the view that alteration made
in the assessment list after following the procedure under
Section 123(1) of the said Act does not become effective for
any period prior to the commencement of the official year in
which the alteration in the assessment list is made and the
Municipality is not entitled to levy tax for an official
year or
835
any part thereof which is already expired. The Division
Bench pointed out in the present case the alteration in the
assessment list was made after 31st March, 1974 and before
31st March, 1975. In view of this the said alteration could
not have the effect of increasing the assessment for any
year prior to the year commencing from 1st April, 1974. It
is the correctness of this decision, which is sought to be
assailed before us in this appeal.
Since the decision under appeal is based mainly on the
said decision of a Full Bench in the case of Sholapur
Municipal Corporation v. Ramchandra Ramappa Madgundi
(supra), we may briefly refer to the said decision. That
decision was based on the provisions of the Bombay Municipal
Boroughs Act, 1925, but the ratio of the decision applies to
the case before us, because the relevant provisions of the
Bombay Municipal Borough Act and the said Act are in pari
materia. As far as the question raised before us is
concerned, the provisions of Section 82, Sub-section (3) of
the Bombay Municipal Boroughs Act are in pari materia with
the provisions of Section 123(3) of the said Act. The Full
Bench of the Bombay High Court in that case came to
conclusion that the alteration made, under Section 82(3) of
the Bombay Municipal Boroughs Act, in the assessment list
prepared under Section 73 of that Act does not become
effective for any period prior to the commencement of the
official year in which the alteration in the assessment list
is made and, therefore, the Municipality is not entitled to
levy tax for an official year or any part thereof which has
already expired. It was also held that the expression
"current official year" in Section 82(3) of that Act means
the earliest day in the official year which is current when
the amendment of the assessment list takes place, that is to
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say, the expression refers to that official year which is
running at the time when the amendment is made by insertion
or alteration of an entry under Section 82(1) of the Act.
The submission of Mr. Parekh, learned counsel for the
appellants, is that the aforesaid case before the Full Bench
was wrongly decided and, as the judgment under appeal
follows the said decision of the Full Bench, that judgment
is also erroneous and liable to be set aside. In our view,
this contention must be negatived in view of the decision of
this Court rendered by a Bench of three learned Judges in
Municipal Corporation of City of Hubli v. Subha Rao
Hanumatharao Prayag & Ors., [1976] 3 S.C.R. p. 883. A
perusal of the said decision makes it clear that this Court
took the view that the scheme of relevant provisions of the
Bombay Municipal Boroughs Act, 1925 shows that the official
year is the unit of time for the levy of property tax under
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that Act. It was further held that the expression "current
official year" in the context in which it occurs in Section
82, Sub-section (3) clearly signifies the earliest day in
the official year which is current when the amendment in the
assessment list takes place and that expression refers only
to the official year which is running at the time when the
amendment is made by insertion or alteration of an entry
under sub-section (1) of Section 82. Thereafter this Court
goes on to point out as follows:
"It would, therefore, seem clear, on a combined
reading of Sub-sections (1) and (3) of Section 82,
that an amendment, in order to be effective in
levying tax for an official year, must be made
during the currency of the official year. This is
now well settled as a result of several decisions
of Bombay High Court culminating in the Full Bench
decision in Sholapur Municipal Corporation v.
Ramchandra (supra) and we do not see any reason to
take a different view."
The aforesaid statement in the judgment of this Court
clearly shows that the decision of the Full Bench of the
Bombay High Court in Sholapur Municipal Corporation v.
Ramchandra (supra) was approved by this Court. The decision
of the aforesaid Bench of this Court is binding on us and is
clearly applicable to the case before us. In that judgment
this Court pointed out that once it was accepted that the
process of levying the tax is complete only when the
assessment list is authenticated and it is only then that
the tax is levied on the ratepayers, it is difficult to
resist the conclusion that the authentication must be made
within the official year. The tax, being a tax for the
official year, must obviously be levied during the official
year and since the levy of the tax is complete only when the
assessment list is authenticated it must follow that the
authentication must take place in the official year.
Mr. Parekh urged, although not with much conviction,
that the decision of this Court in the case of Municipal
Corporation of City of Hubli v. Subha Rao Hanumatharao
Prayag & Ors. (supra) can be distinguished because in that
case there was no question of any additional construction or
new construction being detected. In our view it is not
possible to make any such distinction. The question which
arose before the Court was whether an assessment list which
was finalised and authenticated on July 24, 1952, after the
expiry of the official year 1951-52 on 31.3.1952, could be
regarded as a good or valid assessment list for the official
year 1951-52. The entire scheme of the provisions
837
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pertaining to the preparation of the assessment list and the
levy of property tax under the Bombay Municipal Boroughs
Act, which is materially similar to the scheme under the
said Act, was considered and the aforesaid conclusion were
arrived at. There is no substance in the contention that the
said decision can be distinguished. Moreover, with respect,
we see no reason to take a different view from the one taken
in the aforesaid case. The official year is the unit of
taxation as far as Municipal Property taxes are concerned
and, if the contention of Mr. Parekh is accepted, the result
would be that an assessment list could be altered at any
time if the conditions set out in Section 123 of the said
Act are satisfied, with the result that there would be
complete uncertainty in the field of taxation of property
and the unwarry purchasers of immovable property might be
put to the difficulty of having of discharge the liabilities
for property taxes for years long prior to the time when
they purchased the immovable property in order to save the
property from being sold in recovery proceedings.
In the result, the appeal fails and is dismissed with
costs.
S.L. Appeal dismissed.
838