1. Both these matters have arisen from common judgment passed in Tax Appeal No.04 of 2009 and 05 of 2009, and, therefore, are being heard and decided by this common judgment.
2. Heard Mohd. Isa Khan, learned counsel for the petitioners and Sri A.K.Goyal, learned counsel for the respondent.
3. The writ petition is directed against judgment and order dated 26.5.2011 passed by Additional District Judge, Court No.18, Meerut in Tax Appeal No.4 of 2009 and 5 of 2009, whereby it has allowed aforesaid appeal and fixed Rs.5,20,000/-, 6,50,000/- and Rs.8,12,500/- as Annual Rental Value for triennial year 2002-2005, 2005-2008 and 2008-2011 respectively and directed Cantonment Board, Meerut to return amount deposited by respondents-appellants after adjusting the same in respect of Bungalow No.220, West End Road, Meerut Cantt., Meerut.
4. The facts, in brief, given rise to the dispute, subjected to the present writ petition, are as under:
5. Initially, Governor General-in-Council vide General Order dated 179 dated 12.9.1836, made provisions to regulate occupation of ground and disposal of land, building etc. situated within the limits of Military Cantonments, which was made applicable from different dates at different stations of the then Bengal Army of East India Company. The vacant land for the purpose of construction etc. could have been allowed on an application made to the Commanding Officer of concerned Military Cantonment. The land was allowed to be occupied as a Grant, subject to condition that the Government retain power of redemption at any point of time by giving a month's notice and paying value of such building, as may have been authorized to be erected. Further, the ground being property of Government, was not liable to be sold by grantee though constructed house etc. situate on the ground may be transferred by one military or medical officer to another in the manner provided in Clause 6 condition no.2, but by any other person, with previous consent of Officer Commanding the Station.
6. Subsequently, with enactment of Cantonment Act, 1924 (hereinafter referred to as "Act, 1924"), the property within the area of Cantonment became subject matter of provisions of the said Act.
7. In exercise of power under Section 280 of Act, 1924, Central Government framed Cantonment Land Administration Rules, 1925, which were replaced and new rules were framed namely Cantonment Land Administration Rules, 1937. Under Rule 4 thereof, a cantonment land, is classified as Class 'A', 'B' and 'C' land, for the purpose of preparing General Land Register under Rule 3. Rule 5 further classify Class 'A' land as 'A-1' and 'A-2'. Similarly, Rule 6 classify Class 'B' land as Class 'B-1', 'B-2', 'B-3' and 'B-4' land.
8. The land in dispute is Bungalow No.220, West End Road, Merrut Cantt. Meerut, measuring 4.637 acres. As per Land Record Register maintained by Cantonment Board, Meerut, it is B3 class of land and a old Grant conferring occupancy rights upon Daulatram Diwan Charitable Trust, Meerut. A photocopy of General Land Register, as it stood in August, 1988, has been filed as Annexure 2 to the writ petition.
9. The landlord is Government of India and land is managed through Military Estate Officer. It is said that old Grant was for residential purposes under Government General-in-Council circular dated 12.9.1836 but it has been changed by respondent occupant as commercial by establishing a public school thereon i.e. Diwan Public School though no sanction/permission has been obtained from competent authority for change of user. However, this Court is not concerned whether present user by respondent no.1 is valid, unauthorized or legal as such etc., since that is not subject in dispute of this writ petition. Here, only quantum of tax is under challenge and cause of action is confined thereto, I am also confining adjudication of dispute as it is strictly involved in the present writ petition.
10. Chapter 5 of Act, 1924 deals with taxation. Section 60 provides that Cantonment Board, with previous sanction of Central Government, may impose in any cantonment any tax, which under any enactment for the time being in force, may be imposed in any municipality in State wherein such cantonment is situated.
11. It is not disputed by parties that in view of property tax i.e. tax on land and building and water tax, besides other, was chargeable by Cantonment Board, Meerut. The property tax is assessed on annual value of building or land and same is the position in respect of water tax. The procedure for determining annual value has been provided from Sections 66 to 72 of Act, 1924. Vide notification dated 27.9.1941, Central Government imposed tax @ 12% p.a. on annual value of land and building situate within limits of Meerut Cantonment and rate of water tax was modified to 6.25% in place of 3.5% vide notification dated 23.7.1977, published in Government of India gazette dated 27.9.1977. Both these notifications are in respect to land within limits of Meerut Cantonment.
12. In order to assess property tax, Cantonment Board Meerut has to determine annual rental value of property, which is within limits of Meerut Cantonment.
13. The annual value, as such, has been defined under Section 64 of Act, 1924, and reads as under:
"For the purposes of this Chapter, "annual value" means--
(a) in the case of railway stations, hotels, colleges, schools, hospitals, factories and any other buildings which a1[Board] 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; and
(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 Board 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 value of any building is, by reason of exceptional circumstances, in the opinion of the Board, excessive if calculated in the aforesaid manner, the Board may fix the annual value at any less amount which appears to it to be just."
14. In order to determine property tax for the period of 2002 and onwards, a technical staff of Cantonment board inspected Bungalow No.220 and recommended annual rental value thereof as Rs.77,70,300/-. A public notice dated 29.4.2002 was issued under Section 68 of Act, 1924 for triennial assessment 2002-2005 to be effective from 1.4.2002, proposing annual rental value of Bungalow No.220 as Rs.77,70,300/-.
15. The respondents submitted objection against proposed assessment for triennial assessment 2002-2005. The Assessing Committee considered objections as also proposed assessment and determined annual rental value as Rs.5,20,000/- per annum only. This authentication was notified under Section 69(2) of Act, 1924 by Cantonment Executive Officer on 01.3.2003 making aforesaid assessment applicable from 1.4.2002.
16. The respondents did not file any appeal to the aforesaid assessment but when recovery of Rs.1,17,366/- was sought to be effected from respondents, he preferred Writ Tax No.106 of 2004, which was allowed vide judgment dated 25.3.2004 and thereagainst review application of Cantonment Board was also rejected. Thereafter, the matter was taken in SLP No.19276 of 2004 and 19277 of 2004, which were decided along with some other appeal vide judgment dated 6.8.2008. The Apex Court quashed the order of this Court as also assessment order and directed Assessing Authority to decide the matter afresh. The operative part of judgment reads as under:
"We order accordingly.
Respondent would be at liberty to file its fresh objections within six weeks from today in reply to the notice, already issued, for the assessment in question. Respondent is directed to co-operate with the assessing authority in finalisation of the assessment. The assessing authority, if possible, shall decide the matter within six months from the date of filing the objections by recording a finding regarding the exigibility of the property tax on the educational institution under the Act and if the same is decided against the respondent, fix the annual value and consequent tax payable. Respondent within its rights will be at liberty to challenge the order of the assessing authority in accordance with law.
We make it clear that the amount deposited by the respondent with the Cantonment Board as a pre-condition for hearing of the appeal shall be refunded by the Cantonment Board within six weeks from today.
In other appeals, under the orders of this Court, respondents have deposited half of the principal amount with the appellants.
Appellants are directed to refund the said amount to the respondents within six weeks from today.
All contentions are left open.
Nothing stated herein shall be taken as an expression of opinion on the merits of the dispute and the assessing authority shall be at liberty to decide the matter afresh under the Act in accordance with law after taking into consideration the fresh objections to be filed by the respondent.
The Appeals are disposed of in the above terms."
17. In the meantime, Act, 1924 was replaced by a new Act namely Cantonment Act, 2006 (hereinafter referred to as "Act, 2006"). Further, for triennial assessment w.e.f. 1.4.2008 i.e. from 2008-2011, Chief Executive Officer, Meerut Cantonment Board prepared a revised list of assessment and notified aforesaid through public notice and invited objections.
18. Pursuant to Apex Court's judgment dated 6.8.2008, a notice dated 8.9.2008 was issued by Cantonment Board, requiring petitioner to submit certain documents in order to determine exigibility of house tax and water tax under Section 103 of Act, 1924 and Section 116 of Act, 2006. The documents pertaining the period of 1.4.1999 to 31.3.2002 were required to be furnished. The petitioner also calculated the amount refundable to the respondents towards aforesaid taxes pursuant to the Apex Court decision dated 6.8.2008 and a sum of Rs.53,837.50 was refunded to the respondents vide cheque No.042904 dated 16.9.2008.
19. As already said, a notice was issued to the respondents, he submitted reply thereto on 18.9.2008 but all the documents, as requested, were not supplied. A reminder was sent by Cantonment Board on 11.11.2008 and 14.1.2009. Thereafter, the matter was heard by Assessment Committee. The Assessment Committee held that building is exigible to tax and proposed assessment of Rs.4,34,89,357/- per annum for triennial assessment 2008-2011 and a notice under Section 76 of Act, 2006 was issued to the respondents accordingly.
20. In respect of earlier period, respondents was given further reminder to submit all the documents and copy of the said reminder dated 5.2.2009 and 9.2.2009 are on record as Annexure 18 and 19 to the writ petition. The documents, as required, were not submitted by respondent but a detailed objection dated 20.2.2009 was filed in reply to the notice dated 27.1.2009 issued under Section 76 of 2006 stating that no tax is payable and secondly that assessment of Annual Rental Value is highly excessive. The respondent again was issued reminder for submitting documents. One of such reminder dated 18.3.2009 is on record as Annexure 24 to the writ petition. The Assessment Committee held vide resolution, which is Annexure 27 to the writ petition, that institution in question is taxable for property tax and not exempted under Section 99(2)(b) of Act, 1924. It says as under:
" In this view of the matter we hold that the schools are exigible to property tax u/s 64(a) of the Cantonment Act, 1924 and therefore the case for exemption u/s 99(2)(b) fails and the exemption is hereby denied."
21. Having said so, it further held that since running of educational institution on the land in question was unauthorized, the school comes in the category of "unauthorized schools" hence Annual Rental Value is liable to be determined in the manner it is applicable to unauthorized schools. Consequently, Annual Rental Value for 2002-2005 was determined on Rs.41,10,762/- and for 2005-2008, it came to be Rs.68,53,724/-. The details of calculation for the aforesaid two triennial assessment orders are as under:
"i. The final ARV for 2002-05 is as under :
Cost of land = Area in Sq. Mtrs. X Circle Rate = 18766.86 x Rs.2500/- = Rs.46917150/-
Cost of Construction of building, as per calculation Sheet is Rs.35298103/-
23. Consequently, tax bill no.02 dated 4.7.2009 was issued demanding house tax of Rs.4,93,291/- and water tax of Rs.2,56,923/- for the year 2002-2003, 2003-2004 and 2004-2005 each. For 2005-2006, 2006-2007 and 2007-2008, house tax and water tax demand was raised to the tune of Rs.8,22,447 and 4,28,358/- and for 2008-2009, it was demanded to the tune of Rs.13,89,383/- and Rs.7,23,637/- respectively. The total demand for the period 2002-2003 to 2008-2009, after adjusting already deposited amount, was raised for Rs.50,86,097/- towards house tax and Rs.26,49,008/- towards water tax.
24. The respondents 1 and 2 preferred appeal no.04 of 2009 against aforesaid assessment bill dated 4.7.2009 and resolution determining Annual Rental Value. Another appeal no.5 of 2009 was instituted in respect of triennial assessment made for 2008-2011. Both these appeals were consolidated and learned Additional District Judge, Court No.18, Meerut has decided the same vide impugned judgment dated 26.5.2011. The Appellate Court has held that claim of exemption from respective taxes under Section 99(2)(b) and 99(2)(f) of Act, 1924 is not valid. Accordingly, on this aspect, the matter has been decided against respondent 1 and 2.
25. It then proceeded to consider whether assessment actually made against respondents for three triennial assessment blocks is justified or not. However, coming to the merits of actual assessment made by Assessment Committee finalized by Cantonment Board, Appellate Court has come to the conclusion that assessment made assuming that construction of building for running school is unauthorized, is not justified since no such finding has been recorded that construction was raised without sanction of map or it is unauthorized and illegal. Similarly, assessment of building particularly when it is an old building, has also not been made obtaining any report of concerned expert on the matter and circle rates of the land have been applied arbitrarily. It also observed that upto 2001-2002, Annual Rental Value was only Rs.4,50,000/- while it has been revised multi fold in the subsequent year, which is not justified. But having said so, it then observed that Cantonment Board having already determined annual rental value of Rs.5,20,000/- in the triennial assessment of 2002-2005 and therefore, there is no reason not to accept the same as such and has made it operative for the said triennial assessment block and then for the assessment block 2005-2008 it has been approved at Rs.6,50,000/- by giving increase of 25%, and, giving increase in 2008-2011, lower Appellate Court has made it Rs.8,12,500/-.
26. To my mind, this approach of Lower Appellate Court cannot be accepted and approved. The earlier assessment has already been set aside and, therefore, has lost its efficacy. For the subsequent period. If some relevant and cogent material has come to the notice of authorities concerned, responsible for making assessment and policy and criteria for assessment has also changed, the same cannot be ignored all together only on the ground that it could have resulted in multi fold increase in the Annual Rental Value. Judicial notice can be taken of the fact that property value has also gone up multi fold. It cannot be said that assessment made for three years would justify increase of only 25% for the next three years. In any case, there is no basis for such assessment and if assessment made by Assessment committee lacks some objectivity since some relevant aspect has not been considered or ignored or has wrongly been taken into account, it was incumbent upon it to have remanded the matter to Assessment Committee for making fresh assessment after looking into this aspect correctly and in accordance with law, but, in absence of such on mere assumption and conjecture, revised assessment and that too for three triennial assessment blocks i.e. from 2002-2011 ought not to have been made by Lower Appellate Court on its own without having any material before it, which according to it was not available before Assessment Committee and not taken into account by it.
27. In view thereof, both the writ petitions, in my view, deserve to be allowed and is hereby allowed to the extent that impugned appellate order dated 26.5.2011 is set aside only to the extent it has determined on its own Annual Rental Value of property in dispute for the period 2002-2005, 2005-2008 and 2008-2011 and the matter is remanded to the Assessment Committee to re examine and re-assess the Annual Rental Value and corresponding amount of tax payable by respondents 1 and 2 after taking into account all relevant material, which it has failed to consider, as observed, in the impugned appellate judgment. The appellate judgment, in so far as it has held that respondent no.1 institution is not exempted from tax under Section 99(2)(b) of Act, 1924 is hereby affirmed and upheld.
28. The writ petitions are allowed, in the manner, as aforesaid, and the matter is remanded to the Assessment Committee to comply with the directions as stated above.
Order Date :- 15.4.2014 KA