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2003 DIGILAW 290 (PNJ)

Raj Kumar v. State Of Haryana

2003-02-17

N.K.SODHI, N.K.SUD

body2003
Judgment N.K.Sodhi, J. 1. This order will dispose of Civil Writ Petition 4580 of 2002 and other 29 connected writ petitions in which common questions of law arid fact arise. 2. Section 69 of the Haryana Municipal Act, 1973 (for short the Principal Act) prescribes for levy of tax payable by the owner of buildings and lands at a certain percentage of the annual value of such buildings and lands as the State Government may determine within the prescribed limits. Challenge in this bunch of writ petitions is to the vires of Haryana Municipal (Amendment) Act, 2001 whereby the definition of annual value in Clause (1) of Section 2 of the Principal Act has been amended. The direction issues by the State government under Proviso (ii) of Section 2(1)(b) and (c) as introduced by the Amending Act have also been impugned. Prior to the amendment of the Principal Act, Clause (b) and (c) of Section 2(1) were as under:- 2. Definitions........ (i) "annual value" notwithstanding anything contained in any other law for the time being in force, means, (a)....... (b) in the case of any house or building together with its appurtenance or any furniture that may be let for use and enjoyment therewith, the gross annual rent (i) to be calculated on the basis of fair rent fixed under the law relating to rent restriction for the time being in force; or (ii) where no fair rent referred to in item(i) is fixed, at which it is expected to be let or it is actually let, whichever is greater, subject to the following deductions;- (1) a deduction not exceeding twenty per centum of the gross annual rent as the committee in each particular case may consider a reasonable allowance on account of the furniture let therewith; (2) a deduction of twelve and a half percentum for the cost of repairs and for all other expenses necessary to maintain the building, in a state to command such gross annual rent. The deduction under this sub-clause shall be calculated on the balance of the gross annual rent after the deduction, if any, under item (1); (3) Where land is let with a building such deduction, not exceeding twenty percentum of the gross annual rent, as the committee in each particular case may consider reasonable on account of the actual expenditure, if any, annually incurred by the owner on the maintenance of the land in a state to command such gross annual rent. Explanation I.- For the purposes of this clause it is immaterial whether the house or buildings and the furniture and the land let for use or enjoyment therewith are let by the same contract or by different contracts, and if by different contracts, whether such contracts are made simultaneously or at different times. Explanation II.- The term "gross annual rent" shall not include any tax payable by the owner in respect of which the owner and tenant have agreed that it shall be paid by the tenant. Explanation II.- The term "gross annual rent" shall not include any tax payable by the owner in respect of which the owner and tenant have agreed that it shall be paid by the tenant. (c) in the case of any house or buildings, the gross annual rent of which cannot be determined under Clause (b), five percentum on the sum obtained by adding the estimated present cost of erecting the building, less such amount as the committee may deem reasonable to be deducted on account of depreciation, if any, to the estimated market value of the site and land attached to the house or building; Provided that- (i) in the calculation of the annual value of any premises, no account shall be taken of any machinery thereon; (ii) when a building is occupied by the owner under such exceptional circumstances as to render a valuation at given percentum on the cost of erecting the buildings, less depreciation excessive, a lower percentage may be taken." After the amendment, these Clauses have been substituted with the following two Clauses;- "(b) in the case of any land on which no building has been erected, but on which a building can be erected, and on any land on which a building is in the process of erection, five per cent of the estimated market value of the land; (c) in the case of any house or building whether self occupied or tenanted, five percentum on the sum obtained by adding the estimated present cost of erecting the building, less such amount as the Government may deem reasonable to be deducted on account of deprecation, if any, to the estimated market value of the site and any land attached to the house or building; Provided that- (i) in the calculation of the annual value of any premises, no account shall be taken of any machinery thereon; (ii) the basis of assessing the present market value of the land, the cost of erecting the building and depreciation, shall be such as may be decided by the Government. Different rates may be determined for different categories of buildings and lands; (iii) if the actual annual rent received by the owner is higher than the annual value as determined, then the actual annual rent shall be deemed to be the annual value for the purpose of this Act; (iv) the annual value of the building so determined shall be subject to a deduction of ten percent for the cost of repairs and other expenses necessary for the proper maintenance of the building; (v) when a building is occupied by the owner under such exceptional circumstances as to render a valuation at five percentum on the cost of erecting the building, less depreciation excessive, a lower percentage may be taken." From the aforesaid provisions, it would be clear that prior to the amendment the annual value of any house or building was to be calculated on the basis of fair rent fixed under the law relating to rent restriction for the time being in force and where no such rent had been fixed then it was to be determined at such rent at which such building was expected to be let or was actually let, whichever was greater. In other words, annual value was earlier determined on the basis of rent which the building actually fetched or was capable of fetching. This basis has now undergone a change and the annual value of any house or building whether self-occupied or tenanted is determined at five percentum of the sum obtained by adding the estimated present cost of erecting the building minus depreciation reasonably allowed by the State Government to the estimated value of the site and any land appurtenant to the house or building. To put it in simple words, the annual value is now determined at five per cent of the cost of construction plus the value of the land subject of course, to a reasonable depreciation as allowed by the State Government. Proviso (ii) to Clause (c) of Section 2(1) as introduced by the Amending Act, authorises the Government to issue directions determining the basis of the assessing the present market value of the land, the cost of erecting the building and depreciation. While doing so, different rates may be determined for different categories of buildings and lands. Proviso (ii) to Clause (c) of Section 2(1) as introduced by the Amending Act, authorises the Government to issue directions determining the basis of the assessing the present market value of the land, the cost of erecting the building and depreciation. While doing so, different rates may be determined for different categories of buildings and lands. Section 250 of the Principal Act also enables the Government to issue directions to any committee for carrying out the purposes of that Act. Exercising its powers under Provision (ii) to Section 2(1) (c) read with Section 250 of the Principal Act, the State Government has issued directions regarding the amendments of house tax and tax on land (copies of which are Annexures P-1 and P-2 with CWP 4580 of 2002). According to these directions, the following formula has been uniformly prescribed for the purpose of determining annual value and levy of house tax thereon:- (i) Cost of properlyBasic value of the property plus cost of the land at the rate fixed by the Collector. (ii) Annual value of the property.5% of the annual value of the property. (iii) Rebate on annual maintenance.10% of the annual value of the property, after rebate (iv) Annual value after rebate.90% of the annual value (v) Land & building tax for residential building.a) 2.5% of the annual value determined after rebate b) 5 % of annual value after rebate of commercial building. 2B. The following formula is to be adopted for the land and building tax as per the amended notification for the industrial buildings and institutions:- (i)Cost of buildingBasic cost of the building plus constructed area of the building as per the rates fixed by the Collector (the cost of the vacant land shall not betaken into account) (ii)Annual value of the property5% of the annual value of the property. (iii)Annual rebate on account of maintenance10% of (he annual value of the property. (iv)Annual value after rebate90% of the annual value. (v)Land and building tax5% of the annual value. (iii)Annual rebate on account of maintenance10% of (he annual value of the property. (iv)Annual value after rebate90% of the annual value. (v)Land and building tax5% of the annual value. Note: If the actual annual rent of the property is more than the annual value of the land, then the annual rate of property shall be taken to be annual value of the building." 3 The validity of the amended provisions and that of the formula prescribed by the State Government has been challenged by the learned counsel for the petitioners on the following two grounds:- (i) That the formula as fixed by the State Government for the purpose of determining the value of the property is an arithmetic formula which leave no discretion with the Municipal Committee/Corporation/Council to vary the same even in cases where the actual market value of the property in question is less than the value arrived at on the basis of the aforesaid formula. This, according to the petitioners, does not leave any scope for raising any objections to the proposed valuation of the property and, therefore, the provision regarding inviting of objections to the proposed valuation has been rendered redundant. (ii) That the State Government is not justified in fixing the value of the land on the basis of the rates as fixed by the District Collector(s) which, according to the petitioners, do not necessarily reflect the actual value of the land. 4. Having heard counsel for the parties, we are not impressed with either of the contentions raised by the learned counsel for the petitioners. It may be mentioned at the outset that neither the amended provisions nor the directions issued by the State Government prescribed any fixed rate for determining the value of the structure raised on any land. In the very nature of things the value of the structure will have to be determined in each case depending upon the nature and type of construction raised. What has been prescribed by the Government instructions is the rate of the land and the rate of depreciation which according to the statutory provisions has to be reasonable in the circumstances of each case. Thus, the objection that the statutory provision providing for inviting of objections has been made redundant, is without any basis. It is open to an occupier/owner of the property to raise objections regarding the valuation of the structure. Thus, the objection that the statutory provision providing for inviting of objections has been made redundant, is without any basis. It is open to an occupier/owner of the property to raise objections regarding the valuation of the structure. Thus, the only question which requires our consideration is whether the determination of the value of the land on the basis of the rates as fixed by the District Collector is reasonable. Our answer to this question is in the affirmative. The determination of the value of the land on the basis of the rates fixed by the Collector is fair and reasonable because such fates are determined on the basis of the actual sale transactions which take place in a particular area during a certain period. These rates by and large reflect the correct market value of the land in that area and, therefore, the basis as adopted by the State Government cannot be said to be unreasonable or arbitrary so as to make the provision violative of Article 14 of the Constitution. Since the market rate of the land as fixed by the Collector is based on the average of the actual sale transactions that have taken place, the rates so fixed may in some cases be slightly more than the actual value while in some cases even less. This by itself will not make the provision arbitrary even though it may cause hardship in some isolated-case. Determination of the value of land on the basis of the Collectors rates is one mode of determining the value of the land. This mode cannot be struck down and arbitrary and violative of Article 14 of the Constitution merely because there may be some other mode(s) of determining the value of the land unless the one adopted/prescribed by the State Government is shown to be patently unreasonable. We have, therefore, no hesitation in rejecting both the contentions. 5. Before concluding, we may also notice an additional objection raised by Mr. I.P.S. Doabia, Advocate in CWP No. 7563 of 2002. It was urged by the learned counsel that the Municipal Council, Yamunanagar had by its resolution No. 4 dated 24.3.2001 adopted the house tax assessment of the year 1997-98 for the year 2001-02. 5. Before concluding, we may also notice an additional objection raised by Mr. I.P.S. Doabia, Advocate in CWP No. 7563 of 2002. It was urged by the learned counsel that the Municipal Council, Yamunanagar had by its resolution No. 4 dated 24.3.2001 adopted the house tax assessment of the year 1997-98 for the year 2001-02. According to the learned counsel, the Municipal Council could not revise the assessment for the year 2001-02, and, therefore, the impugned house tax bills issued by it were liable to be quashed. The argument is being noticed only to be rejected. The resolution referred to by learned counsel was passed by the Municipal Council prior to the amendment of the Principal Act. After the amendment the law had changed and fresh directions had been issued by the State Government keeping in view the amended provisions. The Municipal Council had, thus, no option but to revise the assessment in the light of the fresh direction issued in terms of the amended provisions which, as we have held above, were constitutionally valid. 6. No other point was raised in any of the other writ petitions and the learned counsel appearing for the petitioner had adopted the aforesaid two contentions advanced in CWP No. 5480 of 2002. 7. In the result, the writ petitions fail and they stand dismissed leaving the parties to bear their own costs.