challenged the attachment order dated 20.12.2006 and the demand notices issued by the 1st respondent Vadodara Municipal Corporation. 2. The petitioner, State Bank of India, is a tenant of Census No.014 which is a part of the premises of the first respondent situated in the basement and ground floor of VUDA Shopping Center at Fatehganj since 1976. It appears that when the premises were let out to the petitioner, initially, the first respondent had charged monthly rent of Rs.3012.75 ps. However, no formal lease deed was executed by and between the parties. Somewhere in the year 1981, the first respondent increased the rent to Rs.6131.50 ps. per month, which the petitioner had no option but to pay. It is the case of the petitioner that requests were made time and again to the officers of the first respondent to execute a proper lease deed setting out the agreed terms and conditions, however to no avail. It appears that subsequently the first respondent increased the monthly rent from time to time.
3. Insofar as the dispute in respect of the rent is concerned, it appears that in view of the threatened action by the first respondent calling upon the petitioner to pay the amount of rent with interest, the petitioner had instituted a suit being Civil Suit No.1172/99, for protecting its possession and essential services and against its eviction by coercive action as well as for fixation of standard rent. Such suit was pending at the relevant point of time when the petition came to be filed.
4. Subsequently, on 29.6.2003, the respondent authorities issued demand notices seeking to recover tax for the period from 28.10.1986 to 31.3.2003. In response to such demand notices, the petitioner raised detailed objections on 7.4.2003. It appears that once again on 25.6.2004, undated notices were issued by the first respondent threatening to disconnect the water supply as well as evict the petitioner from the premises in question and calling upon the petitioner to pay 18 per cent interest as well as tax demanded for the period from 28.10.1986 to 31.3.2003. It appears that the petitioner once again submitted its objections on 12.7.2004 informing the respondents that its earlier objections dated 7.4.2003 have not been decided. Such objections had not been decided by the respondents till the date of filing of the petition.
5. On 24.12.2006, the respondent authorities issued the impugned attachment order in respect of the property described hereinabove and demanded Rs.19,10,984/- along with interest without furnishing any break up of the amount due. By such order the petitioner was directed to make payment within seven days. The petitioner, therefore, requested for details of the break-up of the amount demanded by the petitioner. On 11.1.2007, the first respondent gave the breakup of the amount charged against the petitioner. However, there were huge discrepancies in the amounts so charged inasmuch as the amounts in the breakup did not match with the amounts charged by way of the demand notices. The petitioner, therefore, on 17.1.2007, addressed a communication to the second and third respondents demanding that till the objections filed by the petitioner on 7.4.2003 and 12.7.2004 were decided, the respondents ought not to have passed the order of attachment of the property. Being aggrieved by the action of the respondents in making the attachment order dated 24.12.2006 as well as issuing the demand notices, the petitioner has filed the present petition.
6. Mr. Nagesh Sood, learned counsel for the petitioner has submitted that the respondents throughout the period in question had been raising tax bills which were being duly paid by the petitioner. However, insofar as the rent is concerned, the first respondent had unilaterally increased the rent from time to time and suddenly by the demand notices sought to retrospectively recover property tax from the petitioner with effect from the year 1986. It was submitted that the respondents have no power or authority to recover property tax retrospectively, without following the due procedure as prescribed under the provisions of the Bombay Provincial Municipal Corporation Act, 1949 (hereinafter referred to as 'the BPMC Act'). According to the learned counsel the action of the respondents in unilaterally increasing the tax on the basis of arbitrary increase in the rent, was clearly contrary to the provisions of the BPMC Act and as such could not be sustained. It was accordingly urged that the impugned demand notices as well as the attachment order to be quashed and set aside, as being without authority of law.
7. Opposing the petition, Mr. Nilesh Pandya, learned counsel for the respondents, reiterated the averments made in the affidavit in reply filed on behalf of the respondents. It was submitted that after following due procedure in accordance with law, the respondents had issued notices for recovering the rent due from the petitioner and that the petitioner Bank had paid all the dues on 12th April 2001. That the petitioner bank had requested to extend the lease agreement from 28th October 1991 and therefore, the Corporation had decided to extend the lease agreement for a further period of five years. Accordingly, rent came to be initially increased to Rs.6524.80 per month upto 31st October 1996, and subsequently, Rs.9787.50 ps. per month from 1st November 1996 to 31st October 2006 and Rs.16312 per month from 1st November 2006 to 31st October 2011. It was submitted that, however, all the taxes were required to be paid by the petitioner Bank separately and hence, the first respondent had placed a proposal before the Standing Committee for recovering the same and that the Standing Committee had approved the proposal in terms of Annexure R-I. It was vehemently argued that the petitioner having not challenged the resolution of the Standing Committee, it is not open for it to now challenge the demand notices based upon such resolution. It was submitted that the petitioner being in arrears of rent as well as property tax, the Corporation has a right to exercise its powers under the BPMC Act.
8. From the averments made in the memorandum of the petition as well as the affidavit in reply filed by the respondents, it appears that there was a dispute with regard to the quantum of rent in respect of the subject premises between the petitioner bank and the first respondent Corporation and the first respondent had from time to time increased the rent of the subject premises. In connection with such dispute the petitioner had instituted a suit for fixation of standard rent, etc. being Civil Suit
petitioner Bank had been paying taxes as per the bills raised by the first respondent Corporation. However, it appears that on the basis of the unilateral increase of rent sought to be effected by the first respondent against the petitioner, a proposal was placed before the Standing Committee of the Corporation for recovery of additional amount of property tax from the petitioner which appears to have been approved. However, the respondents have not placed a copy of such resolution on record. A copy of what is stated to be the proposal is annexed as Annexure-R/1 to the affidavit-in-reply. However, the same does not appear to be a copy of such proposal as the same is merely in the form of a table with figures showing the amount of tax recoverable for different periods ranging from 1976-1981 to 2006- 2011, in terms of the resolution of the Standing Committee. Since, the attachment order is dated 20.12.2006, evidently such proposal would be for a period prior thereto and would not cover the period 2006-2011. Nonetheless, the fact remains that on the basis of a purported resolution passed by the Standing Committee, the first respondent issued the above referred six demand notices seeking to recover tax for the period beginning from 28.10.1986 to 31.3.03 with 18% interest. Upon issuance of such notices, the petitioner raised its objections on 7.4.03. However, such objections do not appear to have been decided. Thereafter, based upon the above referred demand notices, the respondent issued the attachment order dated 24.12.06 and demanded payment of Rs.19,10,984/- along with interest upto 31.10.06.
9. It is at this stage that the petitioner has approached this Court seeking the relief noted hereinabove. From the facts as noted hereinabove, it is evident that the attachment order dated 20.12.06 is based upon the above referred six demand notices seeking to recover tax from 20.10.86 to 31.3.03. The sole basis for issuing such demand notices appears to be the resolution passed by the Standing Committee approving of the proposal for retrospective recovery of tax. As noticed earlier, no such resolution passed by the Standing Committee has been placed on record. However, resolutions passed in earlier years have been annexed along with the affidavit-in-reply filed on behalf of the respondents. A perusal of such resolutions indicates that by virtue of such resolutions the Standing Committee has approved of the rent fixed in respect of the premises in question. By such resolutions the Standing Committee has not increased the tax payable by the petitioner. In one of the resolutions passed in the year 1976, it has been stated that apart from the rent fixed the petitioner shall be liable to pay the property taxes separately. Thus, it appears that the say of the respondent that the Standing Committee has approved increase in the amount of tax does not appear to be correct. However, for the present it may be assumed that such resolution has been passed by the Standing Committee.
10. What then is required to be examined is as to whether such resolution could be made the basis for recovery of additional property tax from the petitioner. It may be noted that the learned counsel for the respondents is not in a position to trace any power vested in the Standing Committed for levy of such tax. It does not need to be stated that Article 265 of the Constitution clearly prohibits any attempt to recover taxes except under the authority of law. It would, therefore, be necessary to advert to the relevant provisions of the BPMC Act and rules framed thereunder to ascertain as to whether of the demand raised by the impugned notices is backed by any authority of law.
11. The present case relates to the period 28.10.1986 to 31.03.2003. Thus, the levy of property tax would be partly governed by the provisions of the Act as they stood till 1.4.1999 when the same came to be amended and the subsequent period would be governed by the amended provisions. However, in the peculiar facts of the present case, probably the fact that the period is governed partly by the amended and partly by the unamended provisions of the Act is not of much significance. The authority to levy property taxes flows from section 127 (1) of the BPMC Act which empowers the Corporation to, inter alia, impose property taxes either under section 129 or under section 141B of the said Act. Sub-section (3) of section 127 provides that the municipal taxes are to be assessed in accordance with the provisions of the Act and the Rules. With effect from 1.4.1999, there were two sub-headings in relation to “Property Tax”, viz. “Property taxes” comprising of sections 129 to 141-A and “Property tax” comprising of sections 141-B to 141-F. Section 129 bears the marginal note “Property taxes of what to consist and at what rate leviable” and provides that for the purposes of sub-section (1) of section 127, property taxes shall comprise of the taxes enumerated thereunder which shall subject to the exceptions, limitations and conditions provided thereunder, be levied on buildings and lands in the City. The property taxes under section 129 of the Act are comprised of: (a) a water tax, (b) a conservancy tax, (c) a general tax, and (d) betterment charges leviable under Chapter XVI. Under section 129(c) a general tax at a prescribed rate is leviable on the rateable value of the property. Section 2(54) defines rateable value, inter alia, to mean the value of any building or land with reference to any given premises in accordance with the provisions of the Act the Taxation Rules framed under the BPMC Act. The marginal note to section 141-B of the Act, as it stood at the relevant time, speaks of “property tax at what rate leviable”. The said section provided that for the purposes of sub-section (1) of section 127, property tax shall, subject to such exceptions and conditions provided thereunder, be levied annually on building and lands in the City at such rate per square metre of the carpet area of buildings and of the area of lands as the Corporation may determine. A perusal of the tax bills issued for the period under consideration shows that the tax has been levied under section 129 of the BPMC Act. Besides, nothing has been brought on record to show that for the period under consideration property tax had been imposed under section 141B of the Act. Thus, the discussion is confined to the provisions of section 129 of the Act.
12. For the purpose of levy of general tax, the rateable value of the property has to be taken into consideration. Chapter VIII of the Schedule-A to the B.P.M.C. Act bears the heading Taxation Rules. Rule 7 thereof makes provision for the manner in which rateable value is to be determined. By virtue of rule 8 of the Taxation Rules the Commissioner is permitted to call for information or return from the owner or occupier or enter and inspect assessable premises. Rule 9 makes provision for keeping a book called “the assessment-book” and the entries to be made therein on every official year. Sub-rule (e) thereof, inter alia, provides for entering the amount at which each building or land or premises entered in such portion of the assessment book is assessed to each of the property taxes, if any, leviable therein. Rule 15 of the Taxation Rules bears the marginal note “Time for filing complaints against valuations to be publicly announced”. Sub-rule (1) thereof mandates that the Commissioner shall, at the time and in the manner prescribed in rule 13 give public notice of a day, not being less than fifteen days from the publication of such notice, on or before which complaints against the amount of any rateable value entered in the assessment-book will be received in his office. Sub- rule (2) of rule 15 which is relevant for the present purpose says that every case in which any premises have for the first time been entered in the assessment-book as liable to the payment of property- taxes, or in which the rateable value of any premises liable to such payment has been increased, the Commissioner shall, as soon as conveniently may be after the issue of public notice under sub-rule (1), give a special written notice to the owner or occupier of the said premises specifying the nature of such entry and informing him that any complaint against the same will be received in his office at any time within fifteen days from the service of special notice. Thus, sub-rule (2) of rule 15 of the Taxation Rules envisages issuance of a special written notice even in case where the rateable value of any premises is increased.
13. At this juncture it may be apposite to refer to the decision of a Division Bench of this High Court in Municipal Corporation of Ahmedabad v. Oriental Fire and General Insurance Co. Ltd., 1994 (2) GLR 1499 wherein the court, in the context of rule 15(2) of the Taxation Rules held thus:
“42. xxxxxxx Reading all the aforesaid Rules together, the scheme appears to be that rateable value has to be determined and in order to do so, particulars can be obtained, under Rule 8, from the owner or the occupier, of such building, land or premises. Omission to comply with the requisition would invite the provisions of Rule 8(3). Entries in the assessment book are to be entered, giving the information mentioned in Rule 9 and when entries mentioned in clauses (a), (b), (c), (d) of Rule 9 have been completed, then Rule 13(1) requires public notice being given, and copy of the assessment book being placed for inspection. Where difficulty arises in ascertaining the name of the person, who is primarily liable for payment of property taxes, recourse can be had to Rule 12. After the public notice is issued, inspection of the same can be had and within the time prescribed, complaints can be filed against the rateable value under Rule 15. After issuing the public notice under Rule 15(1), a special notice has to be given in writing to the owner or occupier, where premises had been entered in the assessment book for the first time or the rateable value of the premises has been increased. After complaints have been filed, to the proposed rateable value, under Rule 16, the same are to be registered and under Rule 17, and notice for hearing is to be given to each of the complainants. Rule 18 contemplates hearing of the complaints and the result thereof is to be noted in the book of complaints and necessary amendment is to be made, in accordance with such result, in the assessment book. The entries made are conclusive evidence as to the amount of respective property tax, but during the official year, and subject to sub-rule (2), the Commissioner may make amendments in the assessment book under Rule 20. Rule 21 enables the Commissioner to adopt the entries of the last preceding year's book as entry for each new year after giving requisite public notice. A new assessment book is required to be prepared at least once in every four years.”
“57. xxxxxx Under the Act, the liability to pay property tax is fastened on the occupier or the tenant only under the provisions of Sec. 140. The demand for property tax can be made only after the assessment book has been finalised and a bill raised. The assessment book is finalised only when provisions of the Rules, including Rule 15, have been complied with and complaints received and determined under Rule 18. xxxxxx.”
“61. The requirement of giving a notice under Rule 15(2) is clearly in consonance with the principles of natural justice. The Rule contemplate that once entries have been entered in the assessment book, then they can be adopted in subsequent years and that a new assessment book must be made once every four years. The advertisement, contemplated by Rule 1:3, is only to the effect that the assessment book is ready and that it can be inspected at a place to be notified therein. In case of a property newly constructed or where the rateable value is to be enhanced, such public notice under Rule 13 would give no indication regarding the entries made. The requirement of Rule 15(2) of giving a special notice is only to make the person concerned aware of the fact that the premises are going to be entered in the assessment book for the first time or the rateable value is liable to be changed.
62. What will be the effect, if a special notice, as contemplated by Rule 15(2), is not issued Reading of Rule 15(2) shows that giving of special notice is mandatory. The use of the word 'shall' in Rule 15(2) clearly indicates that there is an obligation which is cast on the authorities concerned to issue a notice in writing notwithstanding the fact that a general notice may have been published under Rule 13. A notice under Rule 13, published in the newspaper, would not indicate the properties, which are newly added in the assessment book or the changes with regard to the rateable value, which have been made. The public notice under Rule 13 would merely state that the entries in the assessment book have been completed and the same is open for inspection. In the case of new properties, where rateable value has been increased, special notice must be given under Rule 15(2). As we have already observed, the requirement of giving a special notice under Rule 15(2) incorporates one of the cardinal principles of natural justice. The owner is required to be put to notice as to what action is contemplated by the Corporation with regard to the fixation of rateable value. If no such notice is given, then the result, which must, normally, follow is that the said assessment will have to be quashed. xxxxxxx”
“65. The provisions of Rule 20 clearly show that the power of the Commissioner to make changes in the entry can be exercised only during the official year itself. Once this official year is over, the Commissioner will have no jurisdiction to make any alteration. In Anant Mills Co.Lid.
v. Municipal Corporation, Ahmedabad, 1993(2) GLH 897, it was held by a Division Bench of this Court, after examining the scheme of the Act, that the assessment must be completed before the close of the relevant official year and once the official year has expired, the Commissioner cannot assess and levy property tax and, therefore, the Court also cannot issue direction to the Commissioner to do something which was not permissible under the Act. The quashing of the assessment would mean that the Commissioner would not be in a position to reassess and levy property taxes and the taxes for those official years would be totally lost to the Corporation. This being the position, the appellate Court cannot and should not set aside the assessment and remand the case for de novo assessment by the Commissioner. Any remand would, obviously, serve no useful purpose.”
14. From the principles enunciated in the above decision, to the extent the same are relevant for the present purpose, two things are clear. Firstly, that before increasing the rateable value of any premises it is mandatory for the Commissioner to issue notice under sub-rule (2) of rule 15 of the Taxation Rules. Secondly, that in view of the provisions of rule 20 of the Taxation Rules, the power of the Commissioner to make changes in the entry can be exercised only during the official year itself. Once the official year is over, the Commissioner will have no jurisdiction to make any alteration.
15. Examining the facts of the present case in the light of the above statutory scheme and the principles propounded in the above decision, admittedly property tax is sought to be recovered from the petitioner at an increased rate on the basis of some resolution passed by the Standing Committee of the Corporation, that too with retrospective effect from 1986. It is not the case of the respondents that prior to such increase any notice had been issued to the petitioner under rule 15(2) of the Taxation Rules seeking to increase the rateable value of the premises on the basis of the increased rent. All that appears to have been done is that a proposal for increasing the rent of the premises along with property taxes came to be submitted to the Standing Committee which approved of the same. Thus, the action of the respondents in seeking to recover additional property taxes without issuance of notice under rule 15(2) of the Taxation Rules, being contrary to the provisions of the Rules, is rendered unsustainable.
16. Examining the matter from another angle, the record clearly shows that for the period 1976 to 2003, regular tax bills had been issued to the petitioner which had been duly paid. Now, additional taxes are sought to be recovered for the period 1986 to 2003. As noticed earlier, a perusal of the provisions of the BPMC Act as well as the Taxation Rules indicates that there is no provision which empowers the Standing Committee of the Corporation to increase the tax payable by any person. All such powers are vested in the Commissioner. Assuming for a moment that the Standing Committee has exercised delegated powers, even then a condition precedent would be that the Commissioner should be vested with such powers. It may be recalled that in the above decision the Division Bench has placed reliance upon an earlier decision of this court in Anant Mills Co. Ltd. v. Municipal Corporation, Ahmedabad, 1993 (2) GLH 897, wherein after examining the scheme of the Act the Division Bench held that the assessment must be completed before the close of the relevant official year and once the official year has expired, the Commissioner cannot assess or levy property tax. “Official year” has been defined under section 2(44) of the BPMC Act to mean the year commencing on the first day of April. Thus, in the light of the statutory scheme, even the Commissioner cannot assess or levy property tax once the official year has expired. As a natural corollary, if no such powers are vested in the Commissioner, the Standing Committee, assuming that such powers are delegated to it, cannot exercise such powers. Under the circumstances, once the official years corresponding to the period 28th October 1986 to 31st March 2003 had expired, there was no power vested in any of the respondent authorities to increase the rate of tax. The action of the respondents in seeking to recover additional tax from the petitioner for the period 28.10.1986 to 31.3.2003 is, therefore, clearly without authority of law and as such would be directly hit by Article 265 of the Constitution which ordains that no tax shall be levied or collected except by authority of law. The impugned demand notices, therefore, cannot be sustained and as such are quashed and set aside. Consequently, the order of attachment which is based upon such demand notices also cannot be sustained.
17. On behalf of the first respondent Corporation, the learned counsel had pointed out that while making order dated 22.1.07, whereby the respondents were directed not to take coercive actions for the purpose of recovering the amount mentioned in the communication dated 11th January 2007, on condition that the petitioner deposits the amount mentioned therein, that is, Rs.19,10,984/- with the Corporation, before the returnable date, that is, 6th February 2007, the Court had also noted that the learned counsel for the petitioner had stated that alternative remedy available under the provisions of the BPMC Act had become time barred. True it is that the petitioner has approached this court after the period of limitation for preferring appeals against the demand notices had expired. However, that by itself is not sufficient ground to non-suit the petitioner, more so, when on merits the court has found that the entire demand is without authority of law. Under the circumstances, merely because there is an alternative remedy which had not been availed of within the prescribed period of limitation, the jurisdiction of this court under Article 226 of the Constitution of India is not ousted.
18. For the foregoing reasons, the petition succeeds and is accordingly allowed. The impugned demand notices, as well as the attachment order dated 20.12.06, are hereby quashed and set aside. Consequently, the petitioner shall be entitled to refund of the amount of Rs.19,10,984/- deposited by it pursuant to the interim order dated 22.1.07 passed by this Court along with simple interest at the rate of 9% per annum. The first respondent shall refund the amount of Rs.19,10,984/- with interest as indicated hereinabove, within a period of two months from the date of receipt of a copy of this order. Rule is made absolute accordingly with no order as to costs.
(Akil Kureshi, J.) (vjn) (Harsha Devani, J.)