1. Heard Sri B.C. Rai, learned counsel for the petitioner, learned Standing Counsel for respondents no. 1 and 2 and Sri C.K. Parekh, Advocate appearing for respondents no. 3 and 4.
2. This writ petition is directed against the order dated 24.09.2012 passed by District Magistrate, Muzaffar Nagar in Appeal No. 30 of 2011-12 dismissing petitioner's appeal against order dated 24.12.2003 passed by Chairman, Nagar Palika Parishad, Muzaffar Nagar.
3. The facts, in brief, giving rise to present dispute are as under.
4. For assessment of property tax, i.e., house tax and water tax in respect of House No. 498, Roorkee Road, Rampuri, District Muzaffar Nagar, where a Cinema Hall (Maya Palace) run, the Nagar Palika Parishad proceeded to determine annual value and tentatively fixed it at Rs. 72,000/-. Thereagainst, petitioner preferred objection before Tax Committee on 25.02.1997. By order dated 25.07.1997 the Tax Committee, Nagar Palika Parishad determined annual value of building at Rs. 39,000/-, whereupon house tax and water tax worked out was Rs. 3900/- per annum, respectively.
5. Aggrieved thereagainst, petitioner preferred Tax Appeal No. 13 of 1998-99 stating that revision of annual value and corresponding determination of house tax and water tax is exorbitant and excessive inasmuch as earlier house tax on the building was only Rs. 370/- per annum. The appeal was initially dismissed in default on 22.01.1999 but on application for recall, it was recalled on 04.01.2001 and on that very date, it was finally decided by remanding the matter to Nagar Palika Parishad on the ground that assessment was finalized without giving any opportunity of hearing to petitioner, therefore, Nagar Palika Parishad should give an opportunity of hearing to petitioner.
6. The matter then was heard on 27.12.2001. The Tax Committee on that very date passed an order determining annual value of building in question at Rs. 9,500/-. The house tax and water tax accordingly, came to Rs. 950/- per annum, respectively.
7. Since petitioner has already deposited house tax and water tax as per earlier assessment made on 25.07.1997, it submitted application to Nagar Palika Parishad for refund of excess amount of house tax and water tax, paid by him.
8. Thereafter on 01.01.2004, an order was issued by Executive Officer, Nagar Palika Parishad, Muzaffar Nagar stating that Adhyaksha, Nagar Palika Parishad has passed an order on 10.09.2003 observing that the order dated 27.12.2001 was obtained by concealment of material facts and, therefore, execution of order dated 27.12.2001 shall remain stayed until further orders.
9. Thereafter Adhyaksha, Nagar Palika Parishad sought comments and detailed information in respect of house tax, water tax and show tax etc. from department. The Junior Engineer/Draftsman submitted a report dated 12.12.2003, after making spot inspection and measurement of entire area of the building in dispute. The total valuation of land, according to him, comes to Rs. 1,25,59,650/- in the light of circle rate of land as per the Registration officer, which was Rs. 6200/- per square meter and the total area of land was 2025.75 square meter. The valuation of covered area was estimated as Rs. 59,08,314/- and, therefore, the total valuation of property was estimated as Rs. 1,84,67,964/-.
10. The Executive Officer forwarded report alongwith his comments wherein he stated that the order dated 27.12.2001 was obtained by tenant, M/s Maya Palace Cinema Hall and not by petitioner, M/s Prateek Papaers and Boards Pvt. Ltd., therefore, the order was bad.
11. The Chairman, Nagar Palika Parishad on 24.12.2003 passed order revoking its earlier order dated 27.12.2001 and directed to proceed for recovery as per earlier orders.
12. Petitioner was directed to pay house tax, water tax and show tax accordingly. The petitioner requested to supply a copy of the order dated 24.12.2003 but the same was not made available, compelling him to approach this Court in Writ Petition No. 614 of 2004, wherein this Court passed order directing District Magistrate to provide certified copy of the order dated 24.12.2003 to petitioner within a period of one month and disposed of the writ petition vide order dated 04.09.2008.
13. Despite said order, the Executive Officer refused to supply copy of aforesaid order to petitioner on the ground that Nagar Palika Parishad is contesting the matter on aforesaid subject, therefore, supply of copy of order would not be in the interest of Nagar Palika Parishad. The petitioner informed Additional District Magistrate (Administration), Muzaffar Nagar apprising that above stand may amount to contempt of this Court. Thereupon the Additional District Magistrate (Administration) intervened and directed Executive Officer, Nagar Palika Parishad vide letter dated 03.09.2011 to supply copy of order dated 24.12.2003 to petitioner. It is then the copy of order dated 24.12.2003 was supplied to petitioner whereagainst he preferred Appeal No. 30 of 2011-12 alongwith delay condonation application under Section 160 of U.P. Municipalities Act, 1916 (hereinafter referred to as the "Act, 1916"). The petitioner challenged order dated 24.12.2003 besides other on the ground that Chairman, Nagar Palika Parishad had no power to review the order dated 27.12.2001 and further that the procedure prescribed under Section 147(2) was not followed and no notice was ever issued to petitioner.
14. The District Magistrate, Muzaffarnagar, however, dismissed appeal vide order dated 24.09.2012 only on the ground that petitioner must have information of inspection made on 12.12.2003 by Junior Engineer but did not submit any objection and has also not adduced any evidence that no opportunity of hearing was given, therefore, appeal deserved to be dismissed. These two orders dated 24.12.2003 and 24.09.2012 have been assailed in this writ petition.
15. Sri B.C. Rai, learned counsel for petitioner contended that dispute relates to assessment period of 1996-2001. Initially Nagar Palika Parishad determined annual value of property in dispute as Rs. 9800/- per annum vide order dated 27.12.2001. Thereagainst no appeal was preferred even by respondents no. 3 and 4 under Section 160. Hence order dated 27.12.2001 became final. It could not have been reviewed by Chairman, Nagar Palika Parishad. Sri Rai then contended that if it is assumed that an order of assessment can be reviewed, modified, recalled etc. with reference to Section 147(a)(c), then in that case, it was incumbent upon Nagar Palika Parishad to follow the procedure prescribed in sub-section (2) of Section 147, which has not been complied at all and despite specific objection raised before Appellate Authority it has also failed to apply its mind on this aspect, and, therefore, the impugned orders are patently illegal and liable to be set aside. He lastly contended that respondents have tried to create a picture as if the annual value of building in question is very high but erstwhile Nagar Palika Parishad authorities, for some reason, otherwise have made excessive assessment without looking into the facts that disputed period of assessment is 1996-2001, therefore, valuation had to be assessed as it would have been in 1996. The value of land however has been taken into consideration by Junior Engineer in its report dated 12.12.2003, forwarded by Executive Officer alongwith his report to Adhyaksha, applying the circle rate applicable/determined in 2003, which has no relevance at all for the purpose of determining annual value of property tax for the period 1996-2001. This clearly shows a total non application of mind as also a prejudiced approach on the part of respondents.
16. Sri C.K. Parekh, learned counsel appearing for respondents no. 3 and 4, has filed a detailed counter affidavit. Therein the basic facts as stated in writ petition are not disputed. He, however, has tried to justify determination of annual value with reference to show tax in respect whereto no issue otherwise involved before authorities below nor has been raised by petitioner before this Court.
17. The report of Junior Engineer has been filed as Annexure-12 to the counter affidavit, which shows that on 12.12.2003 the then prevailing market value of land has been taken into consideration for determining value of land over which construction has been raised and thereafter valuation of covered area has been taken without giving its detail as to how and in what manner it has been computed. On that report Executive Officer submitted report on 24.12.2003 forwarding the matter to Chairman who passed order on 27.12.2003, cancelling earlier order dated 27.12.2001 in a mechanical manner. The respondents have not disputed that before passing order dated 24.12.2003 no notice was issued to petitioner. A specific averment in this regard has been made by petitioner in para 26 of the writ petition which has been replied in para 15 of the counter affidavit giving general reply by combining reply of paras 19 to 35 and baldly denying the same.
18. On behalf of respondent no. 2 also a counter affidavit has been filed in which it has not said anything with regard to notice under Section 147(2) but from a bare reading of paras 3, 4 and 20 thereof, stand of respondent no. 2 appears to be that the spot inspection was made on 12.12.2003, therefore, petitioner must have information of such inspection and he ought to have filed objections thereagainst. Since it has not furnished any evidence that before passing impugned order dated 24.12.2003 no opportunity was given to him by Nagar Palika Parishad, therefore, this plea of opportunity cannot be accepted. It is not stated by any of the respondents asserting that notice was given to petitioner before passing order dated 24.12.2003.
19. Having heard learned counsel for the parties, in my view, this writ petition deserves to succeed. My reasons are as under.
20. From record, it is evident that building in question is owned by M/s Prateek Papers and Boards Pvt. Ltd. There is no tenant like, Maya Cinema Hall in the building but the Cinema Hall is being run by petitioner itself. Maya Palace is the name of Theater. Therefore, assumption on the part of respondents that 'Maya Palace' is the tenant or a separate entity than petitioner, is something, their own innovation and assumption, without any factual basis. Learned counsel for the respondents could not dispute this fact.
21. Learned counsel for petitioner drew my attention to para 5 of his reply dated 20.01.2004, which was submitted before Executive Officer with reference to Executive Officer's order dated 01.01.2004, wherein it has specifically said that there is no tenant like Maya Palace Cinema Hall but this entire building and Cinema Hall is of petitioner and name of Theater is Maya Palace. Same thing has been reiterated in para 4 of the rejoinder affidavit filed in reply to counter affidavit filed by respondent no. 2. On this aspect Sri C.K. Parekh, Advocate could not place any fact otherwise to controvert what has been said by petitioner. Therefore, the first assumption that order dated 27.12.2001 was obtained by Maya Palace and not by petitioner is baseless, unfounded and a total imagination of respondents no. 3 and 4.
22. Now I come to other legal issues. If an assessment has been made and it has been done incorrectly, may be on account of fraud or misrepresentation or even by mistake, can it be revised and enhanced by virtue of Section 147(1)(c) of Act, 1916. It reads as under:
"147. Amendment and alteration of list.--(1) The Municipality may at any time alter or amend the assessment list--
. . . . . . .
(c) by enhancing the valuation of, or assessment on any property which has become incorrectly valued or assessed or which, by reason of fraud, misrepresentation or mistake, has been incorrectly valued or assessed."
23. If there is any increase or addition or alteration in building then also revaluation or reassessment is permissible under Section 147(1)(d). A clerical, arithmetical or otherwise error is open for correction under Section 147(1)(g).
24. Sri Parekh, states that the order dated 24.12.2003 falls within the ambit of Section 147(1)(c). I do agree. That being so, it cannot be doubted that procedure laid down under sub-section (2) of Section 147 has to be followed. It reads as under:
"(2) Provided that Municipality shall give at least one month's notice to any person interested of any alteration which the Municipality proposes to make under clauses (a), (b), (c) or (d) of sub-section (1) and of the date on which the alteration will be made."
25. In the present case Sri Parekh, despite repeated query, could not inform as to when any notice was issued to petitioner before passing the order dated 24.12.2003. On the contrary, during course of argument, when a specific query was made by this Court, he conceded that in the record there is no such notice available which may show compliance of Section 147(2), before passing order dated 24.12.2003. He also could not dispute that an officer of Nagar Palika Parishad, if makes inspection of a premises or takes measurement, the occupier is not under any obligation to submit objection thereagainst else it would be open to Municipality to exercise its power under Section 147(1)(c) without observing procedure under Section 147(2) of Act, 1916. This reason given by District Magistrate is ex facie illogical and shows an empty mind approach on his part. The reason behind absurdity to this extent on the part of District Magistrate is a subject of investigation.
26. Inspection and measurement of building is a different kind of statutory powers of officers of Nagar Palika Parishad. That has nothing to do with the power of enhancement of assessment or valuation etc. under Section 147(1). If Nagar Palika Parishad intended to take up a matter for enhancement of valuation etc. by exercising power under Section 147(1)(c), it was incumbent upon it to issue a show cause notice to occupier/ owner of premises concerned disclosing reason for such exercise of power and also to inform a date on which it proposes to make such alteration. That is the mandate of Section 147(2) of the Act. It is obligatory. The purpose of information of this date is that such person, if so desires, may avail opportunity of hearing also before Municipality. The minimum period of notice before exercising power under Section 147(1)(c) is one month. Therefore, an order under Section 147(1)(c) cannot be passed unless a month's time notice is given to person concerned. Since the foundation of the sub-section is to comply the principle of audi alterem partem, it is and has to be held mandatory.
27. In the present case aforesaid procedure has not been followed. Therefore, it cannot be doubted that impugned order dated 24.12.2004 is in utter violation of principles of natural justice as also the procedure under Section 147(2), which is mandatory and obligatory being in furtherance of principle of natural justice. The impugned order, thus, a nullity in the eyes of law.
28. Thirdly what I find from record is that power under Section 147(1)(c) can be exercised by Municipality. The term "Municipality" has been defined in Section 2(9), which reads as under:
"(9) "Municipality" means an institution of self-Government referred to in clause (e) of Article 243-P of the Constitution."
29. It is said that a power which can be exercised by Municipality can also be delegated to President of Municipality under Section 50 of Act, 1916. A perusal of Section 50 shows that delegation under various provisions of Act, 1916 where a President of Municipality can exercise the functions of Municipality has been specifically mentioned but Section 147 is not one of such provisions.
30. Sri C.K. Parekh, Advocate refers to Section 50(e)(ii) and Schedule 1, Second Column and submits that thereunder the power can be delegated to President/Chairman of Nagar Palika Parishad.
31. Section 50(e) reads as under:
"50. Functions of a Municipality that must be discharged by the President.--The following powers, duties and functions of a Municipality may be exercised, and shall be performed or discharged, by the President of the Municipality and subject to the provisions of Sections 53 and 53-A not otherwise, namely-
. . . . . . .
(e) all other duties, powers and functions of a Municipality with the exception of,--
(i) where there is an executive officer, those vested in an executive officer by Section 60 and where there is a medical officer of health, those vested in the medical officer of health by Section 60-A;
(ii) those specified in the second column of Schedule 1; and
(iii) those delegated by the Municipality under Section 112."
32. I find that clauses (i), (ii) and (iii) are those matters where duties, powers and functions of Municipality cannot be delegated to be performed by President. These clauses are exceptions to various other provisions of Section 50. In Schedule 1, I find that Section 147(1) is also mentioned but then in remark column it is mentioned that it "may be delegated". After reading Section 50(e)(ii) with Schedule 1 of Act, 1916, I find that if specifically the power is delegated by Municipality to the Chairman with regard to functions under Section 147(1), the President/Chairman of Municipality may exercise such power but not otherwise.
33. In the counter affidavit it is not stated anywhere that Chairman/President of Nagar Palika Parishad has been delegated such power by Municipality. Therefore, in absence of anything to show delegation, it was not within the competence of President/Chairman to pass the order dated 24.12.2003. In other words, in absence of any delegation by Municipality specifically with reference to power under Section 147(1), the Chairman/President of Nagar Palika Parishad could not have exercised powers under Section 147(1). In the present case, since it is not shown that there is any such delegation, the impugned orders are liable to be set aside being wholly unauthorized and without jurisdiction.
34. I am also surprised to see the casual fashion with which District Magistrate has looked into the appeal and decided same without applying mind to various issues raised therein. It appears that in a committed manner he has passed appellate order with a determination of dismissing it. He has also not cared to look into the fact that alleged valuation shown by Junior Engineer and Executive Officer has nothing to do with respect to period for which annual value was to be determined. The circle rate as applicable in 2003, was wholly irrelevant for determining annual value for the years 1996-2001 yet the learned Appellate Authority has not cared at all. This reckless approach on his part has virtually frustrated the very purpose of having an Appellate Authority.
35. There is another aspect of the matter. How "annual value" is to be determined is provided in Section 140 of Act, 1916, which reads as under:
"140. Definition of annual value.--(1) "Annual value" means.--
(a) in the case of railway stations, hotels, colleges, schools, hospitals, factories, and other such buildings, a proportion not exceeding five per centum, to be fixed by rule made in this behalf of the sum obtained by adding the estimated present cost of erecting the building to the estimated value of the land appurtenant thereto; and
(b) in the case of a building or land not falling within the provisions of 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 Municipality is let for a sum less than its fair letting value, might reasonably be expected to let from year to year.
(2) Provided that where the annual value of any building would be reason of exceptional circumstances, in the opinion of the Municipality be excessive if calculated in the aforesaid manner, the Municipality may fix the annual value of any less amount which appears to it equitable." (emphasis added)
36. Section 141(1) which may apply to building in question since a Cinema Hall is being run therein, I find that for the purpose of "annual value", it is the estimated present "cost of erecting the building" and the estimated value of "land appurtenant" thereto. It has to be examined, therefore, first whether the land over which construction is raised, would constitute appurtenant land or not; and, whether it is the entire land, value whereof would be taken note, or only the land appurtenant to construction raised, which has to be looked into.
37. All these aspects require a thorough investigation and application of mind. Hierarchy of appeal has been provided by Legislature with an intention that a person liable to pay house tax and water tax should have a fair opportunity in the matter of determination of tax liability at the local level. It is not to be imposed upon him in a wholly arbitrary fashion. Municipality, being the beneficiary, may act with some preconceived notion while determining "annual value" but a District Magistrate, being an outsider and independent authority, shall look into the matter independently, objectively and without being influenced by any other consideration.
38. In the present case the District Magistrate concerned who has passed impugned appellate order, unfortunately has failed to satisfy the above objective and confidence, reposed by Legislature while conferring power of appeal.
39. In view of above discussion I have no hesitation in holding that both the orders are wholly illegal.
40. In the result, the writ petition is allowed. The impugned orders dated 24.12.2003 and 24.09.2012 are hereby quashed. The petitioner is also entitled to costs, which I quantify to Rs. 20,000/- against respondents no. 2 and 3, which shall be shared by them equally.
Order Date :- 29.04.2014 AK