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2012 DIGILAW 709 (PNJ)

Pooran Singh v. Municipal Committee, Sunam

2012-05-11

G.S.SANDHAWALIA

body2012
JUDGMENT Mr. G.S. Sandhawalia, J.: - The present petition has been filed under Articles 226 and 227 of the Constitution of India praying for issuance of a writ in the nature of certiorari for quashing the impugned order dated 28.02.1994 (Annexure P- 1) vide which the appeal of the petitioner against the assessment of house tax for the year 1992-93 has been dismissed by respondent no. 2 and for quashing the impugned assessment of house tax being contrary to law and further directing respondent no. 1 to proceed further in the matter of house tax only in accordance with law or any other writ, order or direction that this Court may deem fit in the facts and circumstances of the case. 2. The pleaded case of the petitioner is that he is owner of property bearing No. B-II-27 and the petitioner received notice no. 487-Tax dated 10.02.1992 from respondent no. 1 regarding the increase in the annual rental value of the property in dispute. The petitioner submitted objections to the same on 17.03.1992 that the petitioner had not made any additions in the property and, therefore, no enhancement was required. He also submitted that no facility of water supply and sewerage connection was given to him by the Committee and the proposed enhancement in the house tax be withdrawn. It has been pleaded that the petitioner was paying house tax at Rs.1,150 and from this year, it was proposed to be increased to Rs.3,700 meaning that the proposed house tax of the property was to increase more than 3 times and the Administrator of the Municipal Committee, vide order dated 26.05.1992 after objections had fixed the annual rental value at Rs.27,600. 3. The petitioner had preferred an appeal against this order under Section 84 of the Punjab Municipal Act, 1911 (for short ‘The Act’) and the appeal of the petitioner was dismissed vide impugned order dated 28.02.1994. Accordingly, it is averred that the Municipal Committee did not fix any fair rent of the property in dispute and that unless fair rent is determined, the house tax could not be imposed since it has been conclusively held that the duty of the Municipal Committee is to first determine the fair rent and only then proceed further in the matter regarding the determination of house tax. Since the respondents had failed to follow the law laid down for enhancement of house tax , therefore, the whole procedure is illegal in the eyes of law and the order has been passed without any application of mind. 4. This Court, vide order dated 31.03.1994, directed the counsel for the petitioner to place on record copy of the order of the Municipal Committee dated 26.05.1992, whereby the assessment had been done by the Municipal Committee. The same order was complied with and thereafter the case was admitted for regular hearing and the operation of the assessment order and the order dismissing the appeal was stayed subject to the condition that the petitioner shall deposit 50% of the enhanced tax. In spite of a period of 18 years having expired from the date of admission, no written statement has been filed by the respondents and, therefore, the averments made in the writ petition are deemed to be correct as they have not been controverted in any manner. 5. A perusal of the order of assessment passed by the Administrator, Municipal Committee, Sunam goes on to show that the annual rental assessment for the year was Rs.8,500 and the annual rental value as assessed by the Tax Superintendent was Rs.31,000 and tax was accordingly proposed to be fixed at Rs.4,212. The Administrator, however, assessed the annual rental value at Rs.27,600 and assessed house tax at Rs.3,726 on the ground that notice had been issued under Sections 65 and 66 of the Act and the objections had been filed by the assessee and he was given opportunity of hearing and the objections were examined and the assessee was heard orally and since the shops were commercial institutions and at a conspicuous place near the bus stand and it was a commercial area, therefore, he rejected the objections and fixed the annual rental value at Rs.27,600 and accordingly assessed the house tax at Rs.3,726. A perusal of the appellate order passed by respondent no. 2 also shows that it has been dealt with in the same cursory manner and respondent no. A perusal of the appellate order passed by respondent no. 2 also shows that it has been dealt with in the same cursory manner and respondent no. 2, while exercising the power of the Deputy Commissioner, Sangrur, partly allowed the appeal by holding that the counsel for the appellant could not prove that the property of the appellant was not being used for commercial purposes and was not in the commercial area and accordingly found it appropriate to fix the annual rental value at Rs.25,000 and directed that the annual assessment of the property be fixed at Rs.25,000 and the excess amount deposited by the appellant be adjusted. 6. Since the assessment is for the year 1992-93, therefore, unamended provisions are applicable and the annual rental value of the house or building is to be determined on the amount at which the house or the building may reasonably be expected to be let out from year to year subject to certain deductions. The relevant un-amended provisions of the Act read as under:- “Annual value” has been defined in clause (1) of Section 3 of the Punjab Municipal Act, 1911. Sub-clause (b) of the clause (1) is relevant for the purposes of the question arising in the present petition and the said Sub-clause (b) reads, prior to its amendment in the year 1994, as under:” (1) “annual value” means - (a) ***** (b) In the case of any house or building, the gross annual rent at which such house or building, together with its appurtenances and any furniture that may be let for use or enjoyment therewith, may reasonably be expected to let from year to year subject to the following deductions: (i) such deduction not exceeding 20 per cent of the gross annual rent as the committee in each particular case may consider a reasonable allowance on account of the furniture let therewith; (ii) a deduction of 10 per cent 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 sub-clause shall be calculated on the balance of the gross annual rent after the deduction (if any) under Subclause (i); (iii) where land is let with a building, such deduction, not exceeding 20 per cent 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 upkeep 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 building, 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 terms “gross annual rent” shall not include any tax payable by the owner in respect of which the owner and the tenant have agreed that it shall be paid by the tenant.” 7. From the provisions reproduced above, it would be clear that the procedure provided under the Act was never followed by the assessing authority and neither this aspect was noticed by the appellate authority. This issue is no longer res integra and has been settled conclusively firstly by the Hon’ble Apex Court in Devan Daulat Rai Kapoor etc. vs. New Delhi Municipal Committee and another, AIR 1980 SC 541 and the said view was reiterated in Dr. Balbir Singh and another vs. MCD, AIR 1985 SC 339 . Thereafter, a full Bench of this Court in Banarsi Dass Mahajan vs. State of Punjab and another, 1990 (1) PLR 1 also examined the issue and held that the Commissioner must first exercise powers under Clause (b) to determine the figure the building may reasonably be expected to be let out and according to the principles of rent law and give permissible deductions. The relevant paragraph reads as under:- 21. Before leaving this aspect of the case it is significant to note that clause (c) of Section 93 of the Corporation Act has an identical provision as in the Municipal Act and the Supreme Court in Devan Daulat Rai Kapoor’s case (supra) was not unaware of that provision when examining the whole provision. The relevant paragraph reads as under:- 21. Before leaving this aspect of the case it is significant to note that clause (c) of Section 93 of the Corporation Act has an identical provision as in the Municipal Act and the Supreme Court in Devan Daulat Rai Kapoor’s case (supra) was not unaware of that provision when examining the whole provision. Repeatingly and summingly, we hold that the Commissioner must first do the exercise under clause (b) to determine at what figure the building may reasonably be expected to let in accordance with the principles of the Rent Laws, give permissible deductions in the light of the Explanations, deviate to subclause (ii) of the first proviso if he can but keep foothold on his deliberations under clause (b), apply both the provisos in the above manner and then determine the annual rateable value. If he is unable to do so for any substantive reason, then he may take resort to clause (c) again keeping a foothold thereon and applying the provisos when applicable so as to arrive at a just figure. In so far as clause (c) is concerned, it provides determining the estimated present cost of erection of the building minus depreciation and adding to it estimated market value of the site and of any land attached to the building, from which 5 per cent of the sum total represents the gross annual amount. Now it is known that the cost of erection of buildings keeps rapidly changing, the rates of depreciation are minimal and the estimated market value of the site and any land attached to the building goes sky rocketing. The whole thing is inchoate in clause (c). The employment of this clause, as preferred by learned counsel for the Corporation, on the prospect of legitimate expectancies of a higher revenue dividend, and a justified measure to meet the cost of running day to day affairs of the Corporation which, at the Bar, were stated to be bordering on bankruptcy, cannot be permitted. The Legislature designedly made clause (c) apply only in the situation when the gross annual value of a building cannot be determined under clause (b). As stated before, to both clauses do the provisos apply but as an integral part the said two clauses, and that too as safeguards, so that neither the Corporation nor the tax-payer is dealt with unjustly. As stated before, to both clauses do the provisos apply but as an integral part the said two clauses, and that too as safeguards, so that neither the Corporation nor the tax-payer is dealt with unjustly. In the event of conflict between two successful determinations, the determination which is favourable to the tax-prayer would normally have to govern the field, and we hold it so, well settled as it is as a principle.” 8. Counsel for the petitioner has also relied upon M/s. Sai Surgical Industries vs. State of Punjab, 1997 (2) PLR 524 wherein also, a similar order was quashed on the ground that the annual rental value of the property has to be determined on the basis of the fair rent or standard rent. 9. The impugned orders go on to show that this procedure has not been followed and neither the appellate authority took into consideration the fair rent of the building and proceeded to enhance the annual rental value only on the basis of surmises and conjunctures that the building in question was commercial and situated in a commercial area and enhanced annual rental value and the corresponding house tax on its own whims and fancies without resorting to the principles of Rent Law as laid down in the above mentioned judgments. 10. Accordingly, the writ petition is allowed. Assessment order dated 26.05.1992 (Annexure P-2) and the appellate order dated 28.02.1994 (Annexure P-1) dismissing the appeal of the petitioner are quashed with liberty to the Municipal Committee, Sunam to re-assess the house tax in accordance with the provisions of law. Since the respondents are not represented, there is no order to any costs. ------------------