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The Sholapur Municipal Corporation Vs. Ramchandra Ramappa Madgundi - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai High Court
Decided On
Case NumberCivil Revision Application No. 852 of 1965
Judge
Reported in(1972)74BOMLR469
AppellantThe Sholapur Municipal Corporation
RespondentRamchandra Ramappa Madgundi
Excerpt:
bombay municipal boroughs act (bom. xviii of 1925), sections 82(3), 3(13), 81(6), 77a(2), 78(1)(d), 84(1) - alteration made in assessment list under section 82(3) whether becomes effective for period prior to commencement of official year in which such alteration made--such alteration when becomes effective--'current official year', meaning of expression in section 82(3).;an alteration made under section 82(3) of the bombay municipal boroughs act, 1925, in the assessment list prepared under section 78 of the act does not become effective for any period prior to the commencement of the official year in which the alteration in the assessment list is made and, therefore, the municipality is not entitled to levy tax for an official year or any part thereof which has already expired.;the.....s.p. kotval, c.j.1. in. this reference in essence we are called upon to determine what is the true meaning of the words 'current official year' used in sub-section (3) of section 82 of the bombay municipal boroughs act, 1925, but the question which has been referred for our decision does not highlight that controversy and therefore we have decided to reframe the question and substitute it by the following two questions:whether, on a true construction of section 82(3) of the bombay municipal boroughs act, 1925,(i) an alteration made in the assessment list prepared under section 78 thereof becomes effective for any period prior to the commencement of the official year in which the. alteration in the assessment list is made so as to entitle the municipality to levy tax for an official year.....
Judgment:

S.P. Kotval, C.J.

1. In. this reference in essence we are called upon to determine what is the true meaning of the words 'current official year' used in Sub-section (3) of Section 82 of the Bombay Municipal Boroughs Act, 1925, but the question which has been referred for our decision does not highlight that controversy and therefore we have decided to reframe the question and substitute it by the following two questions:

Whether, on a true construction of Section 82(3) of the Bombay Municipal Boroughs Act, 1925,

(i) an alteration made in the assessment list prepared under Section 78 thereof becomes effective for any period prior to the commencement of the official year in which the. Alteration in the assessment list is made so as to entitle the Municipality to levy tax for an official year or any part thereof which has already expired?

or

(ii) whether the alteration becomes effective from the commencement of the official year in which it is made so as to entitle the Municipality to levy tax with effect from the commencement of that year only?

2. This controversy has really arisen because of a conflict of views between the decision of a Division Bench of this Court in Jalgaon Municipality v. Khandesh Mills (1961) 64 Bom. L.R. 229, and the decision of another Division Bench of this Court in Chalisgaon Bor. Municipality v. Multanchand (1955) 58 Bom. L.R. 375 and some earlier single Bench decisions of this Court.

3. The facts upon which the controversy arises are simple. The respondents own a house No. 146 in Ganesh Peth, Sholapur which was assessed to house tax at Rs. 550 per year from the official years 1959-60 to 1963-64. In the year 1962 the owners were called upon to construct two latrines in order to provide necessary sanitary amenities to their tenants in that house. Those latrines wore constructed and a certificate of completion was granted to them from September 14, 1962. In consequence of this new construction the applicant Municipality issued a notice to the owners on January 22, 1963 under Section 82(1) of the Act proposing to enhance the annual letting value. The owners took objection, on February 15, 1963, as they were entitled to do to the enhancement. The Municipality gave the plaintiffs a hearing on March 26, 1964 and by an order passed on March 28, 1964 the plaintiffs' objections were rejected. The enhanced annual letting value was then fixed at Rs. 1,004 after deducting the 10 per cent. liable to be deducted under Section 78(2). After that we presume that the Municipality proceeded to amend its assessment list under its powers under Section 82 and to call upon the plaintiffs to pay up the enhanced assessment. The date on which the alleged amendment to the assessment list was made is not known but is also not in dispute. For the purposes of the arguments it was assumed in favour of the Municipality that it was made on March 28, 1964, immediately after the order. The Municipality then proceeded to recover the enhanced tax by serving the following bills upon the plaintiffs on the following dates and for the years mentioned against each:

Date of the Amount of Period of thebill the bill the bill___________ ____________ ______________Rs. 2.8.1963 64.12 14.9.62 to31.3.632.8.1963 124.75 1963-6430.4.1964 295.25 1964-65 (of this amount Rs. 125.25 was onaccount of the enhanced letting value).

4. The plaintiffs paid up the amount of all these bills in June 1964 but under protest and in consequence filed a suit out of which this reference arises, in the Court of the Fourth Joint Civil Judge, Junior Division, Sholapur (Small Cause Suit No. 665 of 1964). In addition to the above amounts the plaintiffs in the suit claimed a small amount of Rs. 11.80 for notice charges. The Civil Judge has decreed the entire claim. One of the points of law raised before the Civil Judge and decided against the Municipality was that the Municipality could not recover the tax with retrospective effect. Having decided the objections of the plaintiffs only on March 28, 1964 and the amendment to the assessment list having been made either immediately on that date or thereafter, they were claiming to recover the tax at the enhanced letting value even for previous years, that is to say, from September 14, 1962 to March 31, 1963 and for the year 1063-64. As regards the assessment for the year 1964-65 the Civil Judge held that there was no fresh notice issued and that the assessment for the year 1964-65 was also illegal.

5. The Civil Revision Application preferred by the Sholapur Municipal Corporation came before our learned brother K.K. Desai and he by his order dated December 9, 1968 felt that in view of the conflict between the decision of the Division Bench in the Ghalisgoan Borough Municipality's case and the decision of another Division Bench in the Jalgaon Borough Municipality's case the revision application ought to be disposed of by a Division Bench. The Civil Revision Application thereafter came to be put up before a Division Bench consisting of the same learned Judge and Mr. Justice Nathwani. They noticed that there was clear conflict as regards the true construction and effect of the provisions in Section 82(3) of the Bombay Municipal Boroughs Act, 1925 in the above two decisions and the conflict required to be resolved. Therefore, they referred the matter to a Full Bench. Before we proceed to state the respective contentions of the parties, it is necessary first to refer to some of the relevant provisions of the law upon which this controversy arises and must be resolved.

6. We are concerned in this case with the levy of a tax on buildings and lands, and the power to impose that tax is granted to the Municipal Corporation by Section 73(1) which prescribes that the Municipality may impose for the purposes of the Act inter alia the following tax:

(i) a rate on buildings or lands or both situate within the municipal borough;

This is, of course, subject to the provisions of Sections 75 and 76 of the Act and to the orders of the State Government. Section 75 prescribes the procedure preliminary to imposing the tax and Section 76 gives power to the State Government to sanction, modify the proposals for the tax and to impose conditions. These provisions are contained in Part (1) of Chapter VII which deals with 'Imposition of taxes'. In Part (2) of Chapter VII provision is made for 'Assessment of and liability to rates on buildings or lands'. So far as the assessment of tax on buildings or lands is concerned, Section 78(1) provides that the Chief Officer shall cause an assessment list of all buildings or lands or lands and buildings in the Municipal Borough containing information upon the five matters mentioned in Clauses (a) to (e) thereof. Clause (d) prescribes how the valuation should be mentioned in the assessment list by using the following words:

the valuation based on capital or annual letting value, as the case may be, on which the property is assessed;

That provision shows that where a property is in occupation or use of the owner the valuation is to be based upon the capital value of the property, but when it is let out as in the present case, it is to be based upon 'the annual letting value'. 'Annual letting value' is defined in the Act in Section 3(1) as follows:

'Annual letting value' shall mean the annual rent for which any building or land, exclusive of furniture or machinery contained or situate therein or thereon might reasonably be expected to let from year to year, and shall include all payments made or agreed to be made by a tenant to the owner of the building or land on account of occupation, taxes, insurance or other charges incidental to his tenancy.

Once a list is prepared under Section 78 it has to be published. Section 80 provides for the publication of a notice of the assessment list and gives to every person claiming to be either the owner or occupier of property included in the list, and any agent of such person, liberty to inspect the list and to make extracts therefrom without charge. After the publication of the notice of the preparation of the assessment list, a further public notice has to issue under Section 81 inviting 'objections to the. valuation or assessment in such list'. In all cases in which any property is for the first time assessed or the assessment is increased, a special notice has also to be given to the owner or occupier of the property, if known, and if the owner or occupier of the property is not known, the notice has to be affixed in a conspicuous position on the property. Sub-section (2) of Section 81 prescribes how the objections are to be made by the owner or occupier. Sub-section (3) provides for the hearing of objections, and disposal thereof. Sub-section (4) of Section 81 then provides that when all objections made under Section 81 have been disposed of and all amendments required to be made by Sub-section (3) have been made in the assessment list 'the said list shall be authenticated by the signatures of the chairman and at least one other member of the standing committee'. If the standing committee's powers and functions under Sub-section (3) have been transferred to any other committee, then different provisions have been made which need not detain us. Under Sub-section (5), the list so authenticated has to be deposited in the municipal office and shall there be open for inspection during office hours to all owners and occupiers of property entered therein or to the agents of such persons and a notice that it is so open has to be forthwith published. Then Sub-section (6) of Section 81 provides as follows:

(6) Subject to such alterations as may be made therein under the provisions of Section 82 and to the result of any appeal or revision made under Section 110, the entries in the assessment list so authenticated and deposited and the entries, if any, inserted in the said list under the provisions of Section 82 shall be accepted as conclusive evidence-

(i) for the purposes of all municipal taxes, of the valuation, or annual letting value on the basis prescribed in the rules regulating the rate, of buildings, lands and both the buildings and lands to which such entries respectively refer, and

(ii) for the purposes of the rate for which such assessment list has been prepared, of the amount of the rate leviable on such buildings or lands or both buildings and lands in any official year in which such list is in force.

7. These are the provisions made for the preparation of the assessment list, for the hearing and disposal of objections and for the authentication of the list and its custody and inspection. The following points may here be noticed regarding these provisions:

8. Firstly, the assessment and computation of the tax on lands and buildings is on the basis of the annual letting value and we have already seen that the annual letting value means the annual rent subject to certain items which are excluded and certain items which are included. This is clear from a mere perusal of the definition in Section 3(1) road with Section 78(1)(d). The basis of the tax, therefore, is the annual computation of the rate. This must obviously be so because the value of the property to be taxed may change from year to year. We shall see a little later when we consider the succeeding Section 84 that though the lists are liable to be revised every four years, it is the annual list on the basis of which alone the levy of the tax depends.

9. Secondly, it is for this reason that Section 82 had to make provision for the yearly amendment of the assessment list arid Sub-section (6) of Section 81 is expressly made subject to the provisions of Section 82.

10. Thirdly, Sub-section (6) of Section 81 imparts conclusive evidentiary value to the entries in the assessment list and Sub-clause (i) makes the entries conclusive evidence for the purposes of all municipal taxes in regard to two things namely (a) the valuation or (b) the annual letting value, on the basis prescribed in the rules regulating the rate of buildings or lands or both the buildings and lands. Sub-clause (ii) of Sub-section (6) makes the entries also conclusive evidence for the purposes of the rate for which such assessment list has been prepared, but in this respect it is expressly provided that it shall be conclusive evidence 'of the amount of the rate leviable (in all the Government publications the word used is 'liable' but we think that is clearly a printing error) on such buildings or lands or both buildings and lands in any official year in which such list is in force'. The words which we have italicised clearly show that the assessment list would be conclusive evidence only for the official year in which such list is in force, that is to say for one year at a time in view of the definition of 'official year' in Section 3(13) as moaning the year commencing on the first day of April.

11. Lastly, it must be noticed that the liability to tax arises upon the duly authenticated assessment list because it is made conclusive evidence under Sub-section (6) of Section 81. It is in this context that the provisions of Section 82 and the succeeding section will have to be viewed.

12. The provisions with which we have so far dealt concern the preparation of the assessment list, hearing and disposal of objections against it, the authentication of that list and its evidentiary value. But values are liable to change, in the course of each year, of the property to be taxed and, therefore, it was necessary to provide for such changes as may come about in the assessment list. It is with that end in view that the provisions of Section 82 have been enacted. The material portions of Section 82 are as follows:

(1) The standing committee may at any time alter the assessment list by inserting or altering an entry in respect of any property, such entry having been omitted from or erroneously made in the assessment-list through fraud, accident or mistake or in respect of any building constructed, altered, added to or reconstructed in whole or in part, where such construction, alteration, addition or reconstruction has been completed after the preparation of the assessment-list, after giving notice to any person interested in the alteration of the list of a date, not less than one month from the date of service of such notice, before which any objection to the alteration should be made....

(3) An entry or alteration made under this section shall subject to the provisions of Section 110, have the same effect as if it had been made in the case of a building constructed, altered, added to or reconstructed on the day on which such construction, alteration, addition or reconstruction was completed or on the day on which the new construction, alteration, addition or reconstruction was first occupied, whichever first occurs, or in other cases, on the earliest clay in the current official year on which the, circumstances justifying the entry or alteration existed; and the tax or the enhanced tax as the case may be shall be levied in such year in the proportion which the remainder of the year after such day bears to the whole year.

Sub-section (1) gives power to the standing committee to alter at any time the assessment list by inserting or altering an entry in respect of any property but upon three grounds as follows:

1. that an entry has been omitted; or

2. erroneously made in the assessment list through fraud, accident or mistake, or

3. in respect of any building constructed, altered, added to or reconstructed in whole or in part, and where such construction, alteration, addition or reconstruction has been completed after the preparation of the assessment list.

If these conditions are fulfilled the standing committee has the right to alter at any time the assessment list by inserting or altering an entry in it, provided of course there is notice given to the aggrieved party and their objections considered. If an entry is thus amended, then the question arises, what is the effect of that amendment? and that is provided by Sub-section (3) of Section 82 and in this respect Sub-section (3) contemplates three different categories in which a different effect takes place. They are as follows:

1. In the case of a building constructed, altered, added to, or reconstructed, the amendment will take effect from the day on which such construction, alteration, addition or reconstruction was completed; or

2. on the day on which the new construction, alteration, addition or reconstruction was first occupied whichever of the two occurs first.

These two clauses, therefore, make it clear that the amendment made will operate from the date of completion or the date of occupation whichever event occurs first. Then we come to the third category of cases, which is the crucial category with which we are concerned in this matter.

3. It is a residuary category. In cases other than the two mentioned above the amendment is effective 'on the earliest day in the current official year on which the circumstances justifying the entry or alteration, existed.'

It is this somewhat cumbersome clause which we have just quoted over which all the controversy in this case, hinges.

13. What is contended on behalf of the Municipal Corporation is that even though in this case the objections of the plaintiffs were disposed of on March 28, 1964 and the amendment made on that date, the amended entry will be effective even for the two preceding years 1962-63 and 1963-64 because by the use of the words 'current official year' in the disputed clause is meant the then current official year. It is also emphasized in this connection that the clause speaks of the amendment taking effect 'on the earliest day' in the current official year and by the use of the words 'earliest day' obviously the clause intended to refer to that point of time when the liability to tax arose in respect of that property either upon the completion of that building or its occupation. In the present case, the completion certificate was granted on September 14, 1962 and that, therefore, would be 'the earliest day in the current official year' according to this interpretation.

14. On behalf of the plaintiffs this interpretation is contested, According to the plaintiffs' counsel 'current official year' means only one thing namely the official year which is current when the amendment is made in the assessment list. Counsel points out that the assessment list can never be corrected unless and until the objections of the owner or occupier are first heard and disposed of under Sections 81(2) and 81(3) and the assessment list authenticated under Section 81(4), because it is the assessment list so authenticated that is endowed with conclusive evidentiary value by Sub-section (6) of Section 81 and it is only when this conclusive evidentiary value is imparted to the assessment list that the liability to tax arises. Therefore it is urged that in the present case no liability could possibly arise until March 28, 1964 when the plaintiffs' objections were disposed of. We have already said that in this case the actual date of the amendment to the assessment list is not clear but counsel for both the parties agreed that that date may be taken as being the date on which the objections were disposed of. Therefore according to counsel for the plaintiffs the liability to tax in the present case cannot arise prior to March 28, 1964.

15. The key words in Sub-section (3) of Section 82 are 'the earliest day in the current official year'. The word 'current' has no doubt several shades of meaning and is used in different contexts but its basic meaning is thus given in the Shorter Oxford English Dictionary. Its literal meaning would be 'Running; flowing.' But that sense is now rare. The other sense when it applies to a point of time is 'Running in time; in progress; belonging to the week, month, etc. now running 1608.' The expression in the context in which we find it in Sub-section (3) of Section 82 is used in the context of time, because it is used in the context of 'the earliest day in the current official year' and in that sense it seems to us that it can only mean the earliest day in the official year which is current when the amendment of the assessment list takes place, that is to say, the expression refers to only that official year which is running at the time when the amendment is made by insertion or alteration of an entry under Sub-section (1) of Section 82. If it were intended to include in the context in which it was used any of the past years prior to the date on which the amendment of the assessment list is made, the expression would not be 'on the earliest day in the current official year' but the expression would be 'on the earliest day in the then current official year', but that would amount to the unwarranted introduction of a word in the statute which is not there and which we cannot do.

16. In our opinion, the matter admits of little doubt when we consider the other portions of Sub-section (3) and the other sub-sections of Section 82. The last clause of Sub-section (3) of Section 82 provides for the consequence if the circumstances indicated in the earlier part of the sub-section are fulfilled by the use of the following words 'and the tax or the enhanced tax as the case may be shall be levied in such year in the proportion which the remainder of the year after such day bears to the whole year'. The words 'such year' in this clause obviously refer back to 'the current official year' earlier mentioned. Now having regard to the provisions of this clause which permits only the levy 'in the proportion which the remainder of the year after such day boars to the whole year', 'the current official year' could not possibly refer to any past year because there would be no question of computing 'the proportion which the remainder of the year after such day bears to the whole year' in the case of past years. To take the example of the present case itself, upon the arguments on behalf of the Municipal Corporation 'the current official year' would include both 1962-63 and 1963-64, because according to the Corporation the house had been completed by September 14, 1962, but for those years there would be no question of computing the enhanced tax 'in the proportion which the remainder of the year after such day boars to the whole year' because the owners (the plaintiffs) would be liable to pay for the whole year. This shows, therefore, that in view of the last clause of Sub-section (3) of Section 82 the words ' the current official year' earlier used, could never mean the past years, but must necessarily refer only to the current official year in which the amendment of the assessment list was made. Only in that context would the last clause become comprehensible and have a meaning.

17. The other indication is to be found in the provisions of Sub-section (6) of Section 81-a point to which we have referred in passing when dealing with those provisions. Sub-clause (i) of Sub-section (6) of Section 81 imparts conclusive evidentiary value to the entries in the properly authenticated assessment list 'for the purposes of all municipal taxes...annual letting value on the basis prescribed in the rules regulating the rate.' Sub-clause (ii) imparts conclusive evidentiary value to the entries in the authenticated assessment list for the purposes of the rate and 'of the amount of the rate leviable on such buildings or lands or both buildings and lands in any official year in which such list is in force'. Thus Sub-clause (ii) of Section 81(6) makes it clear that the conclusiveness imparted to the entries is only limited to the 'official year in which such list is in force'. In other words, the ambit of the conclusiveness is limited to each official year arid no more; not at any rate to past years prior to the current assessment list. If that be so, then in Clause (i) of Section 81(6) also 'annual letting value on the basis prescribed in the rules regulating the rate' can only mean that the same limitation as is mentioned in Sub-clause (ii) would equally apply to Sub-clause (i). If for the purposes of the rate the conclusiveness is only 'in any official year in which such list is in force', then for the purposes of the annual letting value also the conclusiveness must necessarily be 'in any official year in which such list is in force', because the annual letting value is on the basis prescribed in the rules regulating the rate.

18. Thirdly, we may point out that in the same legislation in Chapter VII dealing with municipal taxes Section 77A uses the expression 'preceding official year' in Sub-section (2) thereof. Section 77A was inserted by the Bombay Act 19 of 1935 and has been in force now for nearly 36 years. It was intended to empower the Municipal Corporation to levy taxes at a varying amount or rate and to lay down the maximum and the minimum limits within which the Corporation could tax both as regards the amount and the rate. The second proviso to Sub-section (2) to Section 77A says 'such increase or reduction shall not exceed ten per centum of the amount or rate at which such tax was leviable during the preceding official year'. Thus in the same Act and dealing with the same subject of tax when the Legislature intended to refer to a past year or years, they used the expression 'preceding official year' to specify such a past year. Surely in such a context it cannot possibly be the intention of the Legislature that when they used the expression 'current official year' in Section 82(3) they meant 'preceding official year' also. This suggests that the expression 'current official year' must necessarily be limited to a particular year with reference to the context in which it is used and in the context of Section 82(3) it can only mean the official year which was running when the amendment to the assessment list was made.

19. Lastly, it cannot be forgotten that all this controversy has arisen in the context of a tax the whole basis of which is an annual basis namely the annual letting value. This is clear from the provisions of Section 78(1)(d) which speaks of 'the valuation based on capital or annual letting value, as the case may be, on which the property is assessed' and 'the annual letting value,' we have already shown, is defined with reference to the annual rent for which any building or land might reasonably be expected to be let from year to year subject to certain exclusions and inclusions.

20. Reference was made to Section 84(1) of the Act. Section 84(1) prescribes that it shall not be necessary to prepare a now assessment list every year. It also provides that subject to the condition that every part of the assessment list shall be completely revised not less than once in every four years, the Chief Officer may adopt the valuation and assessment contained in the list for any year, with such alterations as he may deem necessary for the year immediately following. It was urged that there is an obligation to revise the assessment list only every four years and that therefore upon the interpretation we have placed on Section 82(3) several properties which may come into being during those four years, or which may have undergone some changes and therefore be liable to greater or lesser tax, would be over-taxed or would escape taxation for all the previous years before the entry is corrected in the fourth year when the revision takes place and that that could not have been the intention of the Legislature. The short answer to this contention is that when Sub-section (1) of Section 84 prescribes that the Corporation shall completely revise the assessment list every four years it has prescribed only the outermost limit by which the Corporation is obliged to revise, but that does not imply that within that limit of four years the Corporation shall not revise. There is no bar upon the Corporation from revising the list each year under Section 84 at all. On the other hand, there is every indication in the Act itself that the assessment list for each year must be a separate assessment list and be authenticated as such. Sub-section (2) of Section 84 says, 'But the provisions of Sections 80, 81 and 82 shall be applicable every year as if a new assessment list had been completed at the commencement of the official year.' Thus, even though no new list is actually prepared in each year, the law considers the list already existing 'as if a new assessment list had been completed at the commencement of the official year'. There is nothing also in Sub-section (6) of Section 81 contrary to this view. On the contrary, we have shown that Sub-clause (ii) of Sub-section (6) of Section 81 refers to 'any official year in which such list is in force' indicating thereby that the list is in force only for one year at a time.

21. This, in our opinion, is the true construction of Sub-section (3) of Section 82. We are fortified in the view which we have taken by all the decisions that have been brought to our notice and to which we will presently refer, except one namely the decision in Jalgaon Municipality v. Khandesh Mills. Before we refer to those decisions we may refer to a decision of the Supreme Court under a parallel statute, namely Madhya Bharat Municipalities Act (Act 1 of 1954), which repealed the Indore City Municipal Act 4 of 1909. See Municipal Corporation v. Hiralal : [1968]2SCR125 . The provisions of Section 76(6) of that Act are for the purpose of the point before us in pari materia with the provisions of Section 81(6) of our Act and the provisions of Section 79 of that Act are in pari materia with the provisions of Section 84 of our Act. Dealing with the provisions of Section 76(6) of that Act the Supreme Court held in that case (p. 130):.The Municipal tax is an annual tax leviable for a particular official year and the assessment list on the basis of which the tax is assessed is for each such official year. This is supported by the words 'such assessment list' and 'of the amount of tax leviable...in any official year in which such list is in force' in Section 76(6).

Dealing with the section analogous to our Section 84 the Supreme Court held (p. 130):

Ordinarily therefore the Municipal Corporation has to prepare a fresh assessment list every year. The legislature however has empowered by Section 79, as other State legislatures have similarly done in several Municipal Acts, to adopt the valuation and assessment contained in the assessment list prepared in an earlier year provided, however, that it prepares a fresh list once in every 4 years. But Sub-section 2 of Section 79 provides expressly that when such a previous list is adopted for a particular official year it can be done subject to the provisions of Sections 75 and 76. In other words, an assessment list being for a particular official year even when an assessment list prepared in an earlier year is adopted it becomes the list for such subsequent year subject to the procedure laid down in Sections 75 and 76. The list so adopted has therefore to be published, has to invite objections and has to be authenticated in the manner prescribed by Section 76(6) after disposing of the objections if any and it is then only that it becomes conclusive evidence of the valuation and the tax assessed thereon for that particular official year. If it were otherwise, the annual letting value or the value estimated on a particular building or house would be static for 4 years during which the Corporation can go on adopting the assessment list prepared in an earlier year and the owner or the occupier of the building would be deprived of the right to object to the valuation or the annual letting value or the tax assessed thereon for at least 4 years even though the valuation or the annual letting value thereof may have decreased for one reason or the other. In order to prevent such a result the legislature has provided by Sub-section 2 of Section 79 that where a, municipality adopts a previously prepared list for any subsequent year the provisions of Sections 75 and 76 shall be applicable as if a new assessment list has been completed at the commencement of that particular official year.

These remarks, in our opinion, would be equally applicable to the similar provisions in the Bombay Municipal Boroughs Act.

22. But there is a direct authority for the view which we have taken so far as this Court is concerned. The earliest decision is that of a learned single Judge of this Court in Sholapur Municipality v. Governor General (1946) 49 Bom. L.R. 752, a case which should have been particularly instructive for the defendants in this case, for it was a decision in which they themselves were a party. That was a case where the defendants in the present case, then known as the Municipal Borough, Sholapur, had inadvertently omitted to levy a tax on certain buildings of the plaintiff situated within its limits when it was preparing the assessment list for the year commencing from April 1, 1937. They discovered the error in May 1939 and after giving the requisite notice to the plaintiff in that case corrected the assessment list under Section 82. They then sent a bill to the plaintiff for the recovery of the arrears of the tax for the two previous years namely 1937-38 and 1938-39. That liability to pay for those two years was disputed. It will be noticed that the facts were almost identical with the facts in the present case. It was held that under Section 82(3) the corrected list must be deemed to have come into force only from April 1, 1939, that is to say 'the current official year' in which the assessment list was amended and therefore the Municipality could not recover the arrears for the years 1937-38 and 1938-39 according to the corrected list. Dealing with the very problem which has been presented to us in this reference, Mr. Justice Lokur held after quoting the provisions of Sub-section (3) of Section 82 (p. 753):.In the case of a mistaken omission in the assessment list the correction obviously becomes effective 'on the earliest day in the current official year on which the circumstances justifying the entry existed.' This clearly shows that the corrected assessment list is to be deemed to have come into force from the first day of the current official year if the building to be taxed was in existence before the beginning of that year. 'Official Year', according to the definition in Section 3, Sub-section (13), means the year commencing on the first day of April, so that when the assessment list prepared for the year beginning with April 1, 1937, was corrected after May, 1939, the corrected list must be deemed to have come into force from the first day of April, 1939.

Mr. Desai for the Municipality argues that the preparation of the assessment list is only a step towards the recovery of the arrears of tax, which was already imposed, as soon as the sanction of the Government was obtained under Section 76 to the rules for the imposition of the house-tax. But, as I have already pointed out, the sanction to impose a tax is to be distinguished from the liability to pay the tax which is dealt with in the second part of Chapter VII of the Act.

As regards the arising of liability under the Act the learned Judge held (p. 754):.it clearly appears from Section 78 that the preparation of the assessment list is essential to the arising of the debt, and it is only those properties which are included in that list that are liable to pay the tax as set out therein.... The machinery for the imposition of the tax may be independent of the obligation of the tax-payer. But the heading of the second part of Chapter VII read with Section 78 makes it clear that the preparation of the assessment list is not a mere machinery but the list is a document which creates the liability of the tax-payer to pay the tax, and the machinery for the recovery is provided for in c. VIII.

23. The next decision of this Court is the one reported in Ahmedabad Mun. Corporation v. Kulinsinh (1954) 57 Bom. L.R. 259, also a decision of a single Judge. In that case the facts were slightly different. The Ahmedabad Municipal Corporation prepared a list for the imposition of a special water rate for the year 1946-47. After the commencement of the assessment year on April 1, 1946 it amended one of its rules which came into force on July 1, 1946. That rule became applicable to the assessee. Therefore on March 24, 1947 the Municipality issued a notice under the then Section 32 of the Bombay Municipal Boroughs Act to the assessed for amendment of the assessment list. The notice was served on April 2, 1947. The assessee's objections were all rejected and the Municipality then called upon the assessee to pay the special water tax for the period from July 1, 1946 to March 31, 1947. The learned Judge held that the assessee was not liable to pay this special water tax for the period from July 1, 1946 to March 31, 1947, because if the assessment was made before March 31, 1947 the end of the official year it would have taken effect from July 1, 1946 which was the earliest day in the current official year 1946-47 within the meaning of Section 32 of that Act. A reference was made to the provisions of Section 82(3) to support the contention of the Municipal Corporation that they could recover for a period prior to the year in which the rule was amended. It was urged on the basis of the provisions of Sub-section (3) of Section 82 that the circumstances justifying the alteration came into existence on July 1, 1946 when the rule was amended and it was urged, therefore, that it was within the power of the Municipality to levy the tax from July 1, 1946. The learned Judge answered the point by saying (p. 260):.But in my view this argument overlooks the importance of the word 'current' in Sub-section (3) of Section 82. The liability to the payment of the tax is contingent upon the authentication of the list or amendment thereof, for under Sub-section (6) of Section 81, the entries in the assessment list are to be accepted as conclusive evidence of the valuation and the basis prescribed in the Rules. The alteration could be made at any time during the current official year, and under Sub-section (3) of Section 82 the amendment takes effect from the earliest day in that official year.

24. Both these single Bench decisions were referred to and approved by a Division Bench of this Court in Chalisgaon Bor. Municipality v. Multanchand. In that case after a completion certificate had been granted to the owner of a building on October 18, 1951 the Chief Officer of the Municipality amended the assessment list for the official year 1951-52 on March 31, 1952 and incorporated therein an entry relating to the building for the period from October 18, 1951 to March 31, 1952, but a notice inviting objections against the valuation of the building was not issued in the same official year. It was received by the assessee on April 2, 1952. He then submitted his objections and on July 9, 1952 the Standing Committee of the Municipality rejected the objections. Thereafter a bill was sent to the applicant demanding the house tax for the period from October 18, 1951 to March 31, 1952. The question was whether the Municipality had the right to assess the building in the official year 1952-53 for house tax for the official year 1951-52 which according to the definition ended on March 31, 1952. The Division Bench held that the Standing Committee having rejected the objections only on April 9, 1952 the earliest day within the meaning of Section 82(3) was April 1, 1952, that is to say, the commencement of the current official year. Thereby the Division Bench clearly indicated that the current official year was the year in which the tax became finally payable by the assessee upon the rejection of the objections. This case further establishes another important point namely that where objections are taken after notice by the Municipality the fact of the acceptance or rejection of the objections itself is one of the circumstances justifying the entry or alteration within the meaning of Sub-section (3) of Section 82. Thus, until the objections under Section 81 are finally disposed of, Sub-section (3) of Section 82 would not come into play. As regards the effect of Sub-section (3) of Section 82 also the Division Bench in that case held (p. 379):.This scheme of the Act necessarily postulates that if any alteration is to be made in the assessment list, it must be carried out during the course of the official year. If the list is altered during the course of the year, the liability arising by reason of alterations made rectifying omissions or erroneous entries becomes enforceable as from the date on which the assessment list comes into operation and in other cases where a fresh entry is made on account of new constructions from the first day on which the building becomes liable to pay the rate or tax.

Having regard to the facts of that case the Division Bench held that the official year 1951-52 having expired on April 1, 1952, and before that date no alteration having been made in the assessment list in the manner prescribed by Sub-section (2) of Section 82, it was not open to the municipality to re-open the assessment list for the expired year and to seek to levy house tax for that year.

25. This was the ambit of the rule as to the extant of retrospectivity of the entries made when an assessment list is amended, laid down by the Division Bench. We must, however, make one point clear. That decision did not lay down that in no case could an amendment have retrospective operation. In order to indicate the true extent of this rule as to retrospectively laid down in the Division Bench judgment, we may usefully refer to another decision of this Court reported in Subbappa Mallappa v. Bonni (1947) 50 Bom. L.R. 701. In this case the Hubli Borough Municipality published a revised assessment list on March 31, 1939, that is to say the last day of the official year 1938-39. The plaintiff raised objections to his assessment, but they were not considered until August 1939. On October 18, 1939 the plaintiff was informed that his objections had been rejected. The question was whether the plaintiff's liability arose on April 1, 1939 or it arose only when his objections were considered and disposed of and after the final assessment list was made. Here it will be seen that the objection to the application of the rule as to retrospectivity was confined only to one official year namely the year 1939-40 and the short dispute was whether within that year the assessment list should take effect from the first day of the official year or from the day on which the plaintiff's objections were rejected and he was informed accordingly. In such a case the Division Bench held that the liability to pay the tax arose independently of the objections or of the disposal of the objections and the revised assessment list became effective at the commencement of the official year i.e. April 1, 1939. Therefore, the claim of the Municipality to recover the house tax was upheld. We cite this case only to show the ambit of the rule laid down in Chalisgaon Borough Municipality's case, within a particular year. If the liability to pay tax arises, the liability must relate back to the first day of that year, but that would not justify the amendment made in one official year being utilised to recover tax of any previous official year. That is why the Division Bench in the Chalisgaon Borough Municipality's case observed at p. 381 that.Subbappa's case, appears to be an authority for the proposition that alterations made in an assessment list under Section 81(3) have a limited retrospective operation i.e. the liability for a rate under an assessment list which is finalised and authenticated during the course of an official year arises in case of inadvertent omissions as from the date on which the assessment list is brought into operation and in cases where there has been new construction or alteration of a building during the course of the year from the date on which the building became liable to tax. But Subbappa's case, in our judgment, is no authority for the proposition that a more extensive retrospective operation to an assessment list is intended to be given so as to enable a municipality to alter the assessment list of previous years.

25. This was the clear position as it emerged from these authorities and there was no doubt or dispute as to the construction of Section 82(3) for all the years from 1947 when the Sholapur Municipality's case was first decided until 1955 when the Chalisgaon Municipality's case was decided, but in Jalgaon Municipality v. Khandesh Mills a Division Bench of this Court struck a different note which has given rise to this reference. In this case, the facts were somewhat peculiar. In 1947 the Municipality altered one of its Rules, namely, Rule 4 in respect of valuation of properties of factories. The rates were substantially raised. The Rule had to obtain the sanction of the Government which sanction was granted on November 25, 1947, and the Rule became effective from April 1, 1948. Pursuant to the amended rule an assessment list was prepared and bills were issued to the factory owners. On April 27, 1949 one of the owners one Raghavji Kanji filed a suit for a declaration that the new Rule was ultra vires and applied for an injunction. A temporary injunction was obtained pending the suit and a permanent injunction was granted by the decree in the suit on September 21, 1950. The Municipality then went in appeal to the District Court but, in the meanwhile, the defendant, in that case the Khandesh Spinning and Weaving Mills Co. Ltd. itself filed suit No. 20 of 1951 on March 5, 1951 for similar reliefs. Pending the suit this Court gave a decision in a similar matter pertaining to the Amalner Municipality now reported in Amalner Municipality v. Pratap Mill (1951) 54 bom.L.R. 451, and in view of that decision both the suits filed by the defendant in that case as also by Raghavji Kanji were dismissed. Thus, it will be seen that a considerable time was lost due to the actions brought by the assessee in that case. After the assessee's suit was dismissed, the Municipality heard the objections and again on the rejection of the assessee's objections he also preferred an appeal to the Magistrate under Section 110 of the Act. The Magistrate held the defendent company liable to pay the higher amount of tax. Against the Magistrate's decision there was an appeal to the Sessions Court, but the Sessions Court held on December 21, 1954 that the assessment made on the basis of the new Rule was illegal. Then on June 14, 1955 the Municipality filed a suit contending that it was entitled to recover the amount of the tax for the year 1951-52, which was not recovered because of the mistaken entry in the assessment list. The question was whether the Municipality could recover that tax for the past year 1951-52. One of the points which was argued in that case was whether it would have any jurisdiction to entertain a suit of this kind instituted by the Municipality, a point with which we are not concerned, but as regards the provisions of Section 82(3) the Division Bench held as follows (p. 238):

It is clear that Section 82(3) is a counterpart of Section 81(6). It provides that an entry or alteration made under the section shall subject to the provisions of Section 110 have the same effect as if it had been made on the earliest day in the current official year in which the circumstances justifying the entry or alteration existed. In the judgment cited and referred to above, emphasis seems to have been laid on the words 'current official year'. It seems to us that decisive words in the sub-section are 'circumstances justifying the entry or alteration'. The first question, therefore, in each case to be determined is, when did the circumstances exist which justified the alteration? Once that is determined it would not be difficult to go to the earliest day of the current official year during which such circumstances existed. The circumstances which can justify the alteration of the entry, in our opinion, could only be the initial mistake, accident or fraud. If there is no mistake, then there can be no question of altering the entry. It is only because there is a mistake in the entry that the occasion arised to alter it. The section does not speak of the point of time when the discovery of an omitted entry or the alteration of an entry is made for the purpose of giving effect to the new or amended entry. If it were to be held, as has been held in those cases, that it becomes effective on the earliest day in the current official year in which such entry is made or altered we will be changing the language of the section which is not justified. It is, therefore, clear that the intention of the Legislature was to make it effective from the first day of the current official year in which the circumstances, i.e. the mistake, which justified the alteration of the entry, existed.

It is no doubt true that this view is in conflict with the view earlier taken in the cases to which we have referred, but while the single Bench decisions in the Sholapur Municipality's case and the Ahmedabad Municipality's case were referred to by the Division Bench we are somewhat surprised that no reference whatsoever has been made to the Division Bench judgment in the Chalisgaon Borough Municipality's case. After all that was a Division Bench judgment and would have bound the Division Bench in the Jalgaon Municipality's case.

That is the first defect in the judgment of the Jalgaon Municipality's case, but, with respect, we are also unable to agree with the interpretation which has been placed by the Division Bench in that case upon the provisions of Section 82(3) for the following reasons:

26. We have already said that the key words in Sub-section (3) of Section 82 are the words 'current official year'. We have also already given our reasons why in our opinion those words mean the official year which was current or running when the assessment list was amended, but in the decision of the Division Bench there is absolutely no answer to that reasoning or to the view taken in the previous cases as to the interpretation of the words 'current official year'. The Division Bench noted this when it remarked that in the judgment cited and referred to above 'emphasis seems to have been laid on the words 'current official year'', but there is no reason given why emphasis should not be so laid upon those words. It is not enough to say that 'the decisive words in the sub-section are 'circumstances justifying the entry or alteration''. In other words, the earlier cases emphasised one part of Sub-section (3) of Section 82 and the Division Bench in Jalgaon Municipality's case without reference to the earlier cases emphasised another part of Sub-section (3) of Section 82. In our opinion, the expression used in Sub-section (3) of Section 82 is a composite expression 'on the earliest day in the current official year on which the circumstances justifying the entry or alteration existed' and that provision of the law must be read as a whole. The error in the Jalgaon Municipality's case was to emphasise only one part namely the words 'circumstances justifying the entry or alteration', but even assuming that we were to consider only the words 'circumstances justifying the entry or alteration', we are at a loss to know why the fact that objections were taken and the objections were disposed of on a certain date, is not one of the 'circumstances justifying the entry or alteration' within the meaning of Sub-section (3) of Section 82. We also cannot see how holding that a new entry becomes effective on the earliest day in the current official year in which such, entry is made or altered, would amount to changing the language of the section as the Division Bench held.

27. The Division Bench was also in error, in our opinion,-and we say so with utmost respect,-in the view which it took at the very threshold that Section 82(3) is a counterpart of Section 81(6). Section 81(6), as we have already indicated, lays down an artificial rule of evidence and says that the entries in the assessment list authenticated under Sections 81(4) and (5) shall be conclusive evidence as regards the tax, the valuation, the annual letting value and for the purposes of the rate. No doubt imparting this conclusiveness to the entry gives rise to the liability of the tax-payer to pay in terms of the assessment list, but we fail to see how for that reason Section 81(6) can be a counterpart of Section 82(3) or vice versa. Section 82(3) is a part of Section 82 which deals with amendments of the assessment list and insertion or alteration of entries therein and Sub-section (3) lays down what is the effect of those entries if made. The conclusiveness can only be imparted to the entries so inserted or altered by way of amendment after the authenticated assessment list is amended by making of the new entry in it. That is the only effect of Section 81(6). We think that it was an error, therefore, to regard Section 82(3) as a counterpart of Section 81(6). The decision was reached by ignoring the words 'current official year' in Section 82(3) which was the very expression emphasised in the previous Division Bench cases and the other decisions of single Judges.

28. Much the same argument that Section 82 (3) is a counterpart of Section 81 (6) was also advanced in Subbappa Mallappa's case to which we have referred above and was thus repelled by the Division Bench in that case (p. 705):

It is said that whereas retrospective effect is contemplated by Section 82, no such effect is contemplated by Section 81, and it is, therefore, argued that it must be the intention of the legislature that the revised assessment-list does not become effective until after the disposal of the objections or until after the result of an appeal or revision is known. We do not think that such a construction is justified either. Sections 78, 79, 80, and 81 deal with the procedure which is to be followed in regard to an assessment-list. Section 81 lays down the stages before an assessment is authenticated. Section 82 deals with a special subject and Section 84 deals generally with an annual assessment-list and a revised assessment list once in every four years. The omission, therefore, to make in Section 81 a provision similar to the one contained in Section 82 is not at all of any significance. The subject of an annual assessment-list or a revised assessment-list is dealt with in Section 84 and retrospective effect to an annual assessment-list or to a revised assessment-list is given by virtue of Sub-section (2) of Section 84.

For these reasons we are not in agreement with the decision in Jalgaon Borough Municipality's case. We think that it was not correctly decided and that, on the other hand, the correct view has been taken in the Chalisgaon Borough Municipality's case. The decision in Chalisgaon Borough Municipality's case and the earlier decisions of single Judges of this Court were all followed by a Division Bench of the Gujarat High Court in The Municipal Corporation, Ahmedabad v. Zaveri Keshavlal [1965] 6 Guj. 701.

29. In the result, we answer the questions framed as follows:

Question (i) in the negative.

Question (ii) in the affirmative.

The papers will now be sent back to the Division Bench for disposal of the Revision Application.


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