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2019 DIGILAW 1555 (ALL)

Cantonment Board v. B. K. Das

2019-07-01

SAUMITRA DAYAL SINGH

body2019
JUDGMENT : Saumitra Dayal Singh, J. 1. Supplementary counter affidavit titled "Supplementary Affidavit" has been filed today by the respondent. Taken on record. Learned counsel for the petitioner does not propose to file any response to the same. Accordingly, the matter has been heard. 2. Heard Sri Udit Chandra, learned counsel for the petitioner and Sri Kiran Kumar Arora, learned counsel for the respondent. 3. The present writ petition has been filed by the Cantonment Board, Meerut against the judgment and order dated 23.11.2015 passed by learned Additional District Judge, Court no. 2, Meerut in Tax Appeal No. 06 of 2010. By that order, the learned court below has allowed the appeal filed by the respondent and set aside the revision of the assessment list made by the Cantonment Board, by its order dated 26.03.2009 passed under Section 73(a) of the Cantonment Act, 2006 (hereinafter referred to as the Act). Thereafter, the learned court below has itself revised the assessment list of the respondent under Section 73(b) of the Act and thereby fixed the Annual Rateable Value (ARV in short) of the buildings of the respondent, at Rs. 4,96,000/- for the period 2008 to 2011. Accordingly, the demand of tax has been directed to be taken out against the said respondent. 4. Admittedly, the respondent is the holder of the occupancy rights in Bungalow Nos. 170 and 170-A, Abu Lane, Kabari Bazar, Meerut Cantt. He appears to have let out part of those premises for commercial use while the remaining part of those premises is under his self-occupation. Portions of those buildings that have been let out are being used for running a car showroom, a bank and a shoe showroom. 5. By a notice dated 21.2.2009 issued by the Chief Executive Officer, Meerut Cantt, it was proposed to revise the ARV of the aforesaid properties being Bungalow Nos. 170 and 170-A. In the calculation sheet appended to the aforesaid notice, the method of proposed revision was disclosed - Cost of Land = (Area x STR x 40 x 2)/10. Thereafter, the cost of construction was disclosed at rate applicable to the constructed area and the Annual Rateable Value (ARV) was proposed to be calculated applying the formula - ARV = (Cost of land + Cost of Construction)/20. The respondent filed his objections to the aforesaid notice and disputed the proposed computation. Thereafter, the cost of construction was disclosed at rate applicable to the constructed area and the Annual Rateable Value (ARV) was proposed to be calculated applying the formula - ARV = (Cost of land + Cost of Construction)/20. The respondent filed his objections to the aforesaid notice and disputed the proposed computation. He relied on the annual rent received by him from letting out all parts of the premises. Thus, the method of computation of ARV proposed by the Cantonment Board was disputed. 6. The Chief Executive Officer, rejected that objection by his order dated 30.03.2009. In that order, the Chief Executive Officer referred to Section 73(a) of the Act and proceeded accordingly. Inasmuch as the notice for revision of the assessment had been issued disclosing the basis for that as provided under Section 73(a) of the Act, the actual rent received by the respondent was found not relevant, hence not considered. 7. In the appeal before the Additional District Judge, specific objections were raised that the procedure adopted under Section 73(a) of the Act was not applicable. The said objections found favour with the learned Additional District Judge, who has reasoned that there was no prior decision of the Chief Executive Officer to adopt the method provided under Section 73(a) of the Act, before proceeding to revise the ARV of the buildings of the respondent. Thereafter, the learned Additional District Judge has set-aside the revision to the assessment as made. Further, he has himself proceeded to consider the material on record and made a revision to the assessment on the basis of rent received i.e. he has proceeded to revise the ARV under section 73(b) of the Act. 8. Assailing the above order, learned counsel for the petitioner submits, in the first place, the notice dated 21.2.2009 read with the calculation sheet clearly disclosed the decision of the Chief Executive Officer to proceed to revise the ARV of the respondent under Section 73(a) of the Act. That notice was also acted upon and the respondent furnished his reply disclosing the computation under Section 73(a) of the Act at Rs. 95,00,000/-. Therefore, it has been submitted, there was no error in the assessment made by the Chief Executive Officer and the learned Additional District Judge has erred in setting aside that assessment. 9. That notice was also acted upon and the respondent furnished his reply disclosing the computation under Section 73(a) of the Act at Rs. 95,00,000/-. Therefore, it has been submitted, there was no error in the assessment made by the Chief Executive Officer and the learned Additional District Judge has erred in setting aside that assessment. 9. Once the notice itself disclosed the decision made by the Chief Executive Officer to proceed under Section 73(a) of the Act, there was no further or other decision required to be taken or disclosed by him. Further, referring to the language of Section 76 of the Act, it has been submitted, learned Additional District Judge has completely erred in reaching the conclusion that there was no decision to proceed under Section 73(a) of the Act. 10. In that regard, it has also been submitted, no other interpretation can be given to the language of Section 73(a) of the Act inasmuch as if any other or separate decision were to be made, another step or condition would have been introduced before a notice for assessment may be issued. Neither there is such suggestion arising from a plain reading of the language of Section 73 of the Act nor there is any procedure provided therefor. Therefore, the order passed by the learned Additional District Judge is patently erroneous. On the other hand a complete opportunity to rebut the proposed revision of assessment was available to the respondent under Section 76 of the Act, which had also been availed. 11. Alternatively, it has been submitted, in any case, the Cantonment Board had never made any assessment under Section 73(b) of the Act and that course should have been left open to the Cantonment Board to be adopted if the assessment made under Section 73(a) of the Act was being set-aside but no final assessment could have been made at the hands of the appellate authority. 12. Responding to the above, Shri Arora submits, Section 73 of the Act provides for definition of "Annual Rateable Value" (ARV in short) of different premises. It reads: "73. 12. Responding to the above, Shri Arora submits, Section 73 of the Act provides for definition of "Annual Rateable Value" (ARV in short) of different premises. It reads: "73. Definition of "annual rateable value" - For the purposes of this chapter "annual rateable value" means:- (a) in the case of hotels, colleges, schools, hospitals, factories and any other buildings which the Chief Executive Officer decides to assess under this clause, one-twentieth of the sum obtained by adding the estimated present cost of erecting the building to the estimated value of the land appertaining thereto. (b) in the case of building or land not assessed under clause (a), the gross annual rent for which such building exclusive of furniture or machinery therein or such land is actually let or, where the building or land is not let or in the opinion of the Chief Executive Officer is let for a sum less than its fair letting value, might reasonably be expected to let from year to year: Provided that, where the annual rateable value of any building is, by reason of exceptional circumstances, in the opinion of the President Cantonment Board, excessive if calculated in the aforesaid manner, the President Cantonment Board may fix the annual rateable value at any less amount which appears to him to be just." 13. In the first place, under sub-section (a), a method has been provided to compute the ARV. By very nature, such a method would lead to the computation of the highest ARV as the value of the land and the present value of the construction form the basis for such computation, which value is bound to escalate with time while actual rent payable for such premises may or may not increase, correspondingly or proportionately. 14. The Act has prescribed that method for assessment of the ARV of buildings where hostels, colleges, schools, hospitals and factories are being run. Admittedly, the present buildings do not fall under that description. Then, "any other building" that may be subjected to that highest ARV would have to be first included or notified by a decision made by the Chief Executive Officer. Admittedly, the present buildings do not fall under that description. Then, "any other building" that may be subjected to that highest ARV would have to be first included or notified by a decision made by the Chief Executive Officer. Inasmuch there was no prior decision of the Chief Executive Officer to apply the provisions of Section 73(a) of the Act to the class of buildings, namely, banks, car or other showrooms, section 73(a) of the Act could not have been applied for the purpose of making the revision to the ARV of such buildings. 15. Even at the stage of the original assessment, in his objection, the respondent had clearly relied on the actual rental value of the premises in question as the basis to determine their ARV and had thereby relied on section 73(b) of the Act. Only in the alternative, by way of argument, it had offered valuation in accordance with Section 73(a) of the Act. 16. As to the assessment made by the Appellate Authority, it has been submitted, the actual rental value of the premises, as disclosed by the respondent, was never disputed by the Cantonment Board and, therefore, the Appellate Authority has not erred in accepting the same in the interest of bringing a closure to an old dispute. Even in the present petition, the computation offered by the respondent has not been disputed on facts. Therefore, the present writ petition deserves to be dismissed. 17. Having heard learned counsel for the parties and having perused the record, in the first place, it cannot be said that the respondent had not objected to the method of assessment proposed in the notice dated 21.02.2009. While the ARV was proposed to be revised solely on the basis of method provided under Section 73(a) of the Act, the respondent clearly objected to the same and offered the properties for assessment on the basis of actual rent received. Therefore, the respondent had clearly invoked the provision under Section 73(b) of the Act as the correct basis for making the assessment. 18. Then, the statutory intendment is clear. ARV of "all other buildings" falling outside the description of buildings used to run hostels, colleges, schools, hospitals and factories may, in the first place may be determined under Section 73(b) of the Act, i.e. on the basis of the gross annual rent for which such building is actually let. 18. Then, the statutory intendment is clear. ARV of "all other buildings" falling outside the description of buildings used to run hostels, colleges, schools, hospitals and factories may, in the first place may be determined under Section 73(b) of the Act, i.e. on the basis of the gross annual rent for which such building is actually let. That value may be much lower and in any case would be different from the value determined under Section 73(a) of the Act owing to difference in method of computation. Besides the fact that the value of the land appurtenant and current value of construction of such building are not to be included in the ARV, in any case, the actual rent received may have too far fetched and/or no direct or proportionate or rationale connection with the total value of the property in question. 19. Also, it plainly emerges from a reading of section 73 of the Act that the two methods provided thereuder are mutually exclusive. The choice of the method to be adopted to estimate the ARV of any particular building is legislatively pre-determined. Under the mandatory prescription made by the legislature, the ARV of the types of buildings classified under sub-clause (a) of section 73 of the Act, alone has to be determined in the manner prescribed under that provision of law. Similarly, all other buildings have to be subjected to determination of ARV under section 73(b) of the Act, according to the method prescribed thereunder. There is no discretion or choice in that regard with the assessing authority to choose one or the other method. That choice is legislatively governed. 20. Therefore, in such fact and in such position of law, the objections are found to clearly bring out that the respondent had taken a categorical stand that the property be assessed under Section 73(b) of the Act on the basis of actual rent received and not on the basis of value of the land and the current value of erection of all construction existing thereon. By way of an alternative stand, the respondent had disclosed the value for the purposes of Section 73(a) of the Act. It would not, in any way, dilute the objection that the properties could not be assessed under Section 73(a) of the Act. By way of an alternative stand, the respondent had disclosed the value for the purposes of Section 73(a) of the Act. It would not, in any way, dilute the objection that the properties could not be assessed under Section 73(a) of the Act. In view of the mandatory legislative intent noted above, there is no room to consider acquisence or estoppel, contrary to law. Thus, it has to be accepted that the respondent had objected to the method adopted by the Chief Executive Officer under Section 73(a) of the Act. 21. Coming to the core issue, whether the properties could have been assessed under Section 73(a) of the Act, that provision of law provides a special method for computation of the ARV with respect to class of buildings namely hostels, colleges, schools, hospitals and factories. While generally, all buildings (irrespective of their use), are subjected to tax on the basis of their ARV assessed under section 73(b) of the Act, certain specified categories or class of buildings have been excluded from applicability of the general method provided under Section 73(b) of the Act, on the basis of their user. They must necessarily be assessed to tax by the Cantonment Board by applying the method provided under section 73(a) of the Act i.e. one-twentieth of the sum total of the value of the land and the estimated present cost of construction of the building standing thereon. 22. The car and other showroom and bank being run in the buildings of the respondent clearly and admittedly do not fall in the description of buildings specifically given in section 73(a) of the Act. They are neither hostels nor colleges nor schools nor hospitals nor factories. Then coming to the power delegated by the legislature upon the Chief Executive Officer of the Cantonment Board, to include "any other building" to which the method of determination of ARV provided under section 73(a) may be applied, in the first place the power delegated is legislative not executive. Then, the words "any other building" appearing in section 73(a) of the Act, appear after the words "hostels, colleges, schools, hospitals and factories." These proceeding words clearly suggest or bring out the intention of the legislature to identify and subject to tax certain buildings (by following the method specified therein), on the basis of their user such as boarding accommodation for students etc. educational institutions; hospitals and factories. 23. educational institutions; hospitals and factories. 23. Therefore reading the entire provision of section 73(a) consistently the phrase "any other building" may be also read as referring to any building identified as a class/type of buildings, chosen on the basis of general use to which it is put and not on the basis of its ownership or individual sub-identity. Just as all hostels or all colleges or all schools or all hospitals or all factories, without any exception would be subjected to assessment in accordance with provisions of section 73(a) of the Act, so also "any other building" that may be included by delegated legislative action would have to belong to a class of building identified by its user such that all buildings being put to similar use would necessarily be simultaneously subjected to the same method of valuation of ARV. 24. The legislature has clearly chosen to first specify certain class/type of buildings, on the basis of their user as the basis to apply the exceptional or special method of valuation of their ARV. In absence of other any statutory indication to the contrary, the language in the later part of the sub-section must be read in consonance with that inherent/underlying legislative intent or guideline. The same basis or criteria must bind the delegate of the legislature in exercise of his powers, to include and thus subject to tax "any other building" in accordance with the method contained in section 73(a) of the Act. 25. Even otherwise, if the submission being advanced by learned counsel for the petitioner is to be accepted, though in the first place, Section 73(a) of the Act would apply to a class of buildings namely hostels, colleges, schools, hospitals and factories but the Chief Executive Officer could chose to adopt the method provided under that sub-section to one particular building belonging to any other class and leave out the remaining buildings of the same class. 26. Thus, the Chief Executive Officer of the Cantonment Board could include one car or other showroom or bank within the scope of Section 73(a) of the Act while leaving all other similarly situated car or other showrooms or banks from the ambit of that provision. 26. Thus, the Chief Executive Officer of the Cantonment Board could include one car or other showroom or bank within the scope of Section 73(a) of the Act while leaving all other similarly situated car or other showrooms or banks from the ambit of that provision. It would lead to grossly different property assessments being made within the same cantonment area, though the nature and use of all such buildings may be the same and even though they may be situated in vicinity and even though they may be owned by the same person and be fetching exactly same amount of actual annual rent. 27. The said interpretation would in effect allow the Chief Executive Officer to pick and choose according to his whims and fancies, some of the buildings to a higher rate of tax while leaving out all others in the same class. Besides the fact that such interpretation would be plainly arbitrary it would be wholly contrary to the legislative intent contained in the first part of the Section 73(a) of the Act where the legislature itself has chosen to subject all occupants of same category of buildings to be treated similarly, based on the objective criteria of use to which the buildings have been put. If allowed it would necessarily introduce plain arbitrariness and hostile discrimination in the enforcement of law. 28. Second, in the facts of the present case, there does not appear to exist any decision by the Chief Executive Officer to subject car or other showrooms or banks to tax or revision of tax under Section 73(a) of the Act. No decision has been brought on record nor any communication issued by the Chief Executive Officer has been brought on record in that regard. Therefore, that power is not shown to have been exercised. Hence, it was not open to the Chief Executive Officer to apply the provisions of Section 73(a) of the Act against the respondent. 29. Still otherwise, if it is assumed that the power under section 73(a) of the Act could be applied to subject individual buildings to the method of determination of ARV provided therein, the submission that the notice dated 20.02.2009 itself contained the decision of the Chief Executive Officer to invoke Section 73(a) of the Act also cannot be accepted. 29. Still otherwise, if it is assumed that the power under section 73(a) of the Act could be applied to subject individual buildings to the method of determination of ARV provided therein, the submission that the notice dated 20.02.2009 itself contained the decision of the Chief Executive Officer to invoke Section 73(a) of the Act also cannot be accepted. That decision must, by very nature, precede and also be shown to exist independent of the procedure for the revision of the assessment list. 30. The proposal to revise the assessment list is a proposal to which the owner or occupier has a right to object by virtue of Section 76 of the Act. Therefore, normally there would arise objections that any particular building does not subscribe to the description of class or type of buildings specified under section 73(a) of the Act and/or to the valuation proposed of such a building, however, it cannot be contemplated that in such proceedings it may be objected and thereafter adjudicated whether a building be included thereunder or be subjected to that method of valuation. 31. Whether there exists a decision to provide for a category specification of the building (that may be subjected to such revision under Section 73(a) of the Act) or not either by plain declaration made by the principal legislature (or by his delegate, the Chief Executive Officer), is a matter of existence or otherwise of statutory law - whether by way of principal legislation or delegated legislation. The only issue that may fall for consideration is the existence or otherwise of such law or whether the subject building ascribes to that law. However, this adjudicatory procedure cannot be adopted or be utilised to create a law. It would remain a matter that would fall outside the scope of the Section 76 of the Act. Such decision would remain a legislative action and therefore it must be shown to exist independent of the notice containing the proposal to revise the assessment. Even otherwise, the notice issued under section 73(a) of the Act is only a proposal and not a decision, which may or may not be enforced upon the final order being passed. 32. In other words, the proposal to revise the assessment is consequential to the decision of the Chief Executive Officer that must precede the issuance of the notice. Even otherwise, the notice issued under section 73(a) of the Act is only a proposal and not a decision, which may or may not be enforced upon the final order being passed. 32. In other words, the proposal to revise the assessment is consequential to the decision of the Chief Executive Officer that must precede the issuance of the notice. Unless a decision is first made to categorize buildings to be subjected to the higher/different method of valuation under section 73(a) of the Act, it cannot be left open to the Chief Executive Officer to issue a notice seeking to revise such assessment. 33. Keeping in mind that the decision to be made by the Chief Executive Officer would be an act of delegated legislation there cannot be allowed to exist any ambiguity about its existence. The decision must be clearly taken and disclosed to all before any notice may be been issued to revise the assessment list on that basis. Any ambiguity about its pre- existence may invalidate the exercise of the power itself. 34. The further submission advanced by the learned counsel for the petitioner that there is no procedure provided for making the decision by the Chief Executive Officer, to include any other buildings within the scope of Section 73(a) of the Act, does not appeal to reason. While making such a decision, the Chief Executive Officer acts as a delegate of the legislature and not as a quasi-judicial authority. Therefore, principally, there is neither any procedure required to be followed to exercise that power, nor rules of natural justice have any application to that exercise. 35. However, the last submission advanced by the learned counsel for the petitioner does merit acceptance, inasmuch as the Chief Executive Officer has only made assessment under Section 73(a) of the Act and had not applied his mind to the nature of objections raised by the respondent nor he considered the material produced with reference to Section 73(b) of the Act. In such a case, where the applicability of Section 73(a) of the Act was in dispute, the CEO had not accepted the method of valuation proposed by the respondent, it would have been proper for the Appellate Authority to remit the case to the Chief Executive Officer, to pass a fresh order in accordance with Section 73(b) of the Act. 36. Accordingly, the writ petition succeeds in part. 36. Accordingly, the writ petition succeeds in part. While findings of the Appellate Authority regarding the assessment made under Section 73(a) of the Act being illegal are wholly proper and are thus sustained, the later part of the order making quantification/ assessment under Section 73(b) of the Act is found to be pre-mature and is accordingly set-aside. The matter is remitted to the Chief Executive Officer, Cantonment Board, Meerut Cantt, to pass a fresh order, in light of the observations made above, as expeditiously as possible, preferably within a period of three months from today, after affording reasonable opportunity of hearing to the respondent. 37. The writ petition is accordingly partly allowed.