(Prayer: This Writ Petition is filed under article 226 of the Constitution of India, praying to quash the Demand notice dated 06.06.2014 issued by R-3 At Annexure-A and etc.
This Writ Petition is filed under articles 226 and 227 of the Constitution of India, praying to direct the r-2 and 3 not demand Property Tax from the petitioner till the disposal of the appeal and direct the R-2 to consider and dispose of the appeal filed by the petitioner under Section 201 of the Karnataka Panchayat Raj Act 1993 Expeditiously, within a period of one month or any period this honorable court deems fit in the facts and circumstances of the case and etc.
These Writ Petitions are filed under article 226 of the Constitution of India praying to quash the demand notice dated 30.06.2014 for the year 2013-2014 issued by r-3 at annexure-a and etc.]
This wp is filed under articles 226 and 227 of the Constitution of india praying to quash the letter dated 16.07.2015 issued by the r-3 (annexure-a) calling upon the petitioner to pay 50% of the tax demanded by the r-1 gram panchayath to consider the appeal filed by the petitioner against the tax demanded by the r-1 gram panchayath and etc.)
1. All these petitions are disposed of by common order. The facts are taken from Writ Petition No. 22770/2016.
2. Unfortunately, a Public Sector Undertaking like the Bangalore International Airport Limited (BIAL) has to approach High Court Article 226 of the Constitution of India under writ jurisdiction against Zilla Panchayat and Anneswara Gram Panchayat on the issue of payability property tax under the provisions of Karnataka Panchayat Raj Act, 1993, Section 199 read with Schedule IV thereto.
3. The occasion to file these writ petitions by BIAL occurred because, the respondent No.3 Anneswara Gram Panchayat, served the impugned Demand Notice vide Annexure A dated 6.6.2014 demanding property tax in respect of constructed building and vacant land owned and possessed by the petitioner BIAL, in the territorial jurisdiction of Myalanahalli and Hunachuru villages at the rate of Rs.3.50 paise per Sq.M. as per the Annual Letting Value fixed by the State Government under Circular dated 24.5.2003. The demand raised against the petitioner-BIAL is to the extent of Rs. 1,55,35,752/- for the year 2013-2014 in respect of property belonging to the BIAL, known as Kempegowda International Airport .
4. The petitioner has assailed the said demand of property tax on various grounds, inter-alia, that the rate of tax demanded is far in excess of even the maximum rate of tax prescribed under Schedule-IV read with 199 of the Act of 1993, which provides for rate of tax on buildings to the maximum rate of tax at 10% of Annual Letting Value per annum, on constructed buildings and tax on vacant lands, not subject to agricultural assessment, for every one hundred square meter, one rupee per annum has been prescribed as the rate.
5. The petitioner-BIAL own and is in possession of about 4000 Acres of land spread in the territorial jurisdiction of following four Gram Panchayats and the built-up area of Airport, lies only in the territorial jurisdiction of one of them, Anneswara Gram Panchayat. The details of land area and built-up area as produced before this Court by the learned counsel for the petitioner is as under:-
|NAME OF GRAM PANCHAYAT||EXTENT OF LAND AREA||EXTENT OF BUILT UP AREA||EXTENT OF VACANT LAND|
|Bettakote||471 Acres||Nil||19,03,949 Sq.Meters.|
|Anneshwara||2,540 Acres||2,09,972 Sq. Meters||96,84,339 Sq.Meters.|
|BK Halli||818 Acres||Nil||33,12,527 Sq.Meters.|
|Doddajala||162 Acres||Nil||6,57,613 Sq.Meters.|
8. On a first reading of the said Circular with the said Table of Rates itself, it is clear that the rate of tax between Rs. 3-4 per Sq.M is far in excess of the maximum Scheduled rate of Re.1 only for 100 Sq.M of land vide Item-2 of Schedule IV of the Karnataka Panchayat Raj Act, 1993. The said rate of Rs.3 to 4 per Sq.M of land, therefore, apparently is not sustainable and is in conflict with the legislative rates prescribed in the Schedule-IV. It is well settled that in exercise of delegated legislative powers, the State Government cannot prescribe a rate of tax more than the maximum legislative rate prescribed in the Schedule of the Act itself.
9. Secondly, as far as the assessment of Annual Letting Value of building as prescribed in the Schedule-IV is concerned, that is also a matter of assessment and adjudication by the competent authority. The term Annual Letting Value as contained in Explanation in Schedule-IV reads as under:
Explanation: Annual Letting Value means the annual rent for which any building or land, exclusive of furniture or machinery contained or situated therein or thereon, might reasonably be expected to be let from year to year .
10. This apparently and obviously means that the determination of Annual Letting Value is to be made by the competent adjudicating authority. Even if it is presumed for the argument sake, as canvassed before this Court that the Annual Letting Value fixed for the different Gram Panchayats in the said Circular dated 24.5.2003 is to be adopted for the purpose of assessment of Annual Letting Value in the case of present petitioner-assessee-BIAL, none-the-less the requirement of compliance with the principles of natural justice would require it to be notified to the concerned assessee allowing him to raise objection for determination of the Annual Letting Value for imposition of tax. If the assessee, the Public Sector Undertaking like BIAL in the present case agrees to adopt the notified rates of Annual Letting Value , there may not be any dispute with regard to that and perhaps, it may be advisable for the public body like BIAL in the present case, to avoid any such dispute also, because, the State Government can be believed to have fixed the Annual Letting Value for different Gram Panchayats based on relevant factors considered by it and those rates of Annual Letting Value can be adopted as a measure of assessment of tax for the vacant land and constructed area of building also. But the rate of tax on such Annual Letting Value , in any case, cannot go beyond the maximum legislative rate of tax prescribed in Schedule-IV of the Act of 1993.
11. There is yet another practical problem of assessment of tax in the present case. A huge area of 4000 acres of land, belonging to the assessee-petitioner-BIAL is spread into the territorial jurisdiction of four Gram Panchayats named above. Therefore, apparently, four different Assessing Authorities can legitimately have the jurisdiction to assess the tax in respect of land building situated in their respective areas. Since this particular one assessee-BIAL, being a Public Sector Undertaking was also kept out of tax net for some initial years and tax liability in respect of the property tax under the provisions of the Karnataka Panchayat Raj Act, 1993, is said to have commenced only with effect from the year 2010-2011. This aspect of the matter also appears to have been considered at the level of State Government in this regard and at the level of Principal Secretary, Rural Development and Panchayat Raj Department on 11.10.2013 and copy of the Minutes have been placed on record as Annexure-D in W.P.No. 1140/2016 filed by the petitioner. The relevant extract of the said Minutes is quoted below for ready reference:-
In the light of the above, Principal Secretary, IDD requested Principal Secretary, RDPR to examine the request of BIAL in the above matters.
Mr. Bhaskar Bidapatti, Senior Director, BIAL informed that as per the initial assessment, the property tax for the area coming under the jurisdiction of Anneshwara Gram Panchayat is estimated at Rs. 6.20 crores and for all the four Gram Panchayats put together the total property tax amount is estimated to be around Rs. 10.00 crores. He requested that since any such outflow of expenses would have direct impact on the User Development Fee (UDF) being collected from the passengers, whether the Government could extend concessional rate while computing property tax duly keeping in view that BIAL is essential infrastructure project supported by both Govt. of India and Govt. of Karnataka.
Principal Secretary, RDPR mentioned that under Section 199 of the Panchayats are empowered to collect property tax and there are only two categories viz., residential and commercial enlisted in the instructions issued for computing the property tax. Hence, even though BIAL is an infrastructure project, since there is no specific provision BIAL falls under the commercial category and hence the tax would be computed as applicable to such category. However, he mentioned that instructions have been issued by circular dated: 24.05.2003 to constitute a Committee headed by the CEO, Zilla Panchayat to suitably decide on the annual letting value of proprietor. In this regard, he requested CEO, Bangalore Rural Zilla Panchayat to have a meeting with BIAL and the concerned Gram Panchayats to examine whether the annual letters value being adopted by them is reasonable and appropriate, duly taking into consideration the concerns expressed by BIAL .
12. The said consideration at the level of State Government, prima-facie indicates that the respective Gram Panchayats were supposed to nominate their representatives before the Chief Executive Officer of the Bengaluru Rural Zilla Panchayath, who is present in the Court today also and thereafter and a unified assessment procedure could be undertaken by the concerned authority allowing the participation of the said Chief Executive Officer, Zilla Panchayat, the petitioner-assessee, BIAL and four Gram Panchayats. But it appears that the said unified assessment procedure lost its way somewhere and thereafter one of the Gram Panchayats viz., the respondent No.3 Anneswara Gram Panchayath gave the impugned demand notice on 6.6.2014 and letter to the petitioner assessee insisting upon the payment of aforesaid property tax by the petitioner-assessee-BIAL.
13. This unmindful unilateral exercise on the part of one of the Gram Panchayats has not only resulted in unnecessary litigation before this Court between the two public organs of the State, but it has also opened the possibilities of a conflict, as different rates of Annual Letting Value and rate of tax can be applied by the four different Gram Panchayats for the assessment of property tax on the same assessee, for the same period, which is clearly not permissible as far as rate of tax is concerned. The petitioner-assessee-BIAL being in an unique position like this, being the owner and in possession of a huge chunk of land of 4000 Acres could very well be subjected to this property tax by the one unified assessment procedure as contemplated and discussed in the said meeting of the Principal Secretary to Rural Development and Panchayath Raj Department as indicated in Annexure-D Minutes dated 11.10.2013 and even now that remains not only a desirable but necessary procedure to avoid unnecessary litigation and conflict of application of relevant law to the one assessee.
14. This Court, is therefore, not inclined, nor it is required to go into the merits of the claims of the rival parties before this Court, but these writ petitions deserve to be disposed of with the following directions to both the parties:
(i) The impugned demand notices in all these writ petitions raising the demand of property tax against the petitioner-assessee-BIAL are quashed and set aside;
(ii) The assessment powers for assessing the property tax under the provisions of Karnataka Panchayath Raj Act 1993 are directed to be exercised only by sole Assessing Authority, viz., the respondent No. 2-Chief Executive Officer of Zilla Panchayat, Bengaluru Rural District, qua the present assessee, BIAL, having the unique feature which it has, as aforesaid;
(iii) The said Officer, respondent No.2 Chief Executive Officer, Zilla Panchayath, Bengaluru Rural District, is directed to serve the comprehensive show-cause notice to the petitioner assessee within a period of one month from today as well as to the four Gram Panchayats involved in this case as aforesaid, along with the relevant material documents/ Circulars, etc., relied upon by the respondent for this levy allowing them to participate in the assessment proceedings;
(iv) The Petitioner-assessee-BIAL may show cause before the said Respondent No.2 along with its relevant evidence within next period of one month;
(v) The said respondent No.2 Chief Executive Officer of Zilla Panchayat, Bengaluru Rural District, is directed to pass speaking Assessment Order adjudicating and deciding the objections of the petitioner-assessee within next one month thereafter and serve the adjudication order along with the demand notices upon the petitioner assessee, a copy of which will also be served on the concerned four Gram Panchayats also;
(vi) The petitioner-assessee is directed to abide by the said order and pay the due demand of property tax in terms of that order, within a period of three months thereafter;
(vii) Upon the said tax revenue being collected by respondent No.2-the Chief Executive Officer, Zilla Panchayath, Bengaluru Rural District, the said property tax revenue shall be allocated and distributed amongst the four Gram Panchayats involved in the present cases depending upon the land area in their respective territorial jurisdiction, for which, the respective Gram Panchayat may submit the requisite evidence for establishing their respective land areas, before the said respondent No.2;
(viii) The tax on Annual Letting value of building will entirely go to Respondent-Anneswara Gram Panchayat and remaining tax revenue will be distributed amongst the four Gram Panchayats in the aforesaid rates of their respective land areas;
(ix) The aforesaid entire exercise of notice, reply, assessment, collection and distribution of tax should be completed on or before the end of this financial year 31/3/2017;
(x) The respondent No.2 the Chief Executive Officer of Zilla Panchayat, shall be at liberty to consider and apply the provisions of the Karnataka Panchayat Raj (Gram Panchayat Taxes and Fees) Rules 1994, while passing the aforesaid order as directed by this Court;
(xi) The property tax already been paid by the petitioner-assessee for the year 2010-2011 will remain subject to the final adjudication by the respondent No.2 and will be adjusted against the demand so raised by the respondent No.2 in the aforesaid order;
(xii) It is made clear that in view of the aforesaid position of the facts and law in this regard the said respondent No.2 will not impose any penalty or interest for the alleged delay in payment of tax by the petitioner-assessee, for the assessment period prior to passing of this order, namely for the financial years 2010-11 to 2016-17;
(xiii) That since a regular appeal under the provisions of Section 201 of the Act of 1994, read with Rule 39 lies before the said respondent No.2 Authority itself at Zilla Panchayat Level, in view of the aforesaid directions directing the said respondent No.2 Chief Executive Officer only to pass the aforesaid assessment order, it goes without saying that in case, the petitioner-assessee feels aggrieved by the order passed by respondent No.2, it will be at liberty to approach this Court by way of fresh writ petition.
Petitions are accordingly disposed of. No costs.