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Municipal Council of Vizianagaram Vs. Shah Bibi Saheba - Court Judgment

LegalCrystal Citation
SubjectMunicipal Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberSecond Appeal Nos. 678 to 681 of 1962
Judge
Reported inAIR1968AP194
ActsAndhra Pradesh Urban Areas (Surcharge on Property Tax) Act, 1958 - Sections 3, 4, 4(1), 4(2) and 5; Andhra Pradesh (Andhra Area) District Municipalities Act, 1920; Madras District Municipalities Act - Sections 78, 80 and 124; Madras District Municipalities Rules - Rule 9; Hyderabad Municipal Corporation Act; Constitution of India - Articles 269, 270 and 271
AppellantMunicipal Council of Vizianagaram
RespondentShah Bibi Saheba
Appellant AdvocateS. Ramachandra Reddy, Adv.
Respondent AdvocateC.V. Dikshitulu and ;C.N. Babu, Advs.
DispositionSecond appeal dismissed.
Excerpt:
.....- surcharge on property tax can be levied only on assessment made in prescribed manner - levy and demand of surcharge invalid where notice not issued to assessee affording him opportunity. - - i am, therefore, satisfied that the application of the provisions relating to assessment does not alter the position which section 3 creates according to that section the surcharge is imposed from 1-4-1958. it is not made dependent upon the amendment. it is quite possible that the relevant facts like the assessee owning more than one house and whether he is himself occupying the building or is letting it out may be in dispute. we are only referring to it as throwing light on the connotation of the expression 'surcharge'.that article clearly establishes the surcharge is only an increase in the..........on the basis of the percentages prescribed in the table in column (3) of the act and issue a demand notice for the amount thus reckoned. a demand notice was thus issued to the respondent assessee in this case, therefore, the demand for surcharge was validly made.7. in making this contention the learned counsel for the appellant relied upon a decision of ekbote j., in municipal council vizianagaram v. sukeerthi suramma, s. a. no. 617 of 1962, d/- 7-4-1966 (ap). it is this decision which is relied on by the learned counsel for the appellant before n. d. krishna rao j., and the correctness of which was questioned before the learned judge by the learned counsel for the respondent. while deciding the said second appeal in s. a. no. 617 of 1962, d/- 7-4-1966 (ap) ekbote j., followed his.....
Judgment:

Sambasiva Rao, J.

1. These four second appeals involve one common question and the parties also are the same in all the four second appeals. These second appeals were referred to a Division Bench by N.D. Krishna Rao, J., as the correctness of the view taken by Ekbote J., in S. A. No. 617 of 1962 which was relied on by the learned counsel for the appellant before him and was questioned by the learned counsel for the respondent. The Municipal Council of Vizianagaram, represented by its Commissioner and Executive Authority is the appellant and an assessee in that Municipality is the respondent in all the four second appeals, The second appeals arise out of four suits filed by the appellant in the Court of the District Munsif at Vizianagaram for recovery of certain sums made up of:--

(1) house-tax due for certain half-years;

(2) Surcharge on the said house-tax; and

(3) Library cess and warrant fees.

2. In addition to the other defences the respondent as defendant raised the plea that the demand made by the appellant in so far as it relates to the surcharge and the library cess was illegal as the procedure prescribed under Sections 78 and 80 and Rule 9 of Schedule IV of the Madras District Municipalities Act had not been followed by the appellant Municipality before the demand was made.

3. The learned District Munsif upheld this contention of the respondent and held that the demand of tax towards surcharge and library cess made by the appellant was Illegal. In appeal preferred by the Municipality, the learned District Judge Visakhapatnam reversed the decision of the trial Court in so far as the demand of the library cess was concerned and held that the demand was made in accordance with the provisions of law. It, however, confirmed the decision of the trial Court in so far as the demand for surcharge was concerned and held that though Sections 78 and 80 of the Act have no application to the cases, since the procedure laid down by Rule 9 of Schedule IV of the District Municipalities Act was not followed before the demand was made, that demand was illegal and that, therefore, the defendant was not liable to pay the amount which represents the surcharge.

4. The assessee has not preferred any second appeal, while the municipality has preferred these second appeals questioning the correctness of the decision of the lower appellate Court on the question of surcharge. Therefore, the only question that falls for consideration in these second appeals is whether the demand of surcharge made by the appellant against the respondent without following the procedure as laid down under Rule 9 of Schedule IV of the Madras District Municipalities Act is valid or not.

5. The surcharge in question is sought to be levied under the Andhra Pradesh Urban Areas (Surcharge on Property Tax) Act, 1958 (Act No. XIII of l958). Section 3 of the Act lays down:--

'Notwithstanding anything contained in the Municipal Act but subject to the provisions of Section 4, there shall be levied in the cities of Hyderabad and Secunderabad and in every major municipality in the State of Andhra Pradesh. with effect from the financial year commencing on the first day of April, 1958 a surcharge on the properly tax payable; for the year in respect of every building of the class specified in column (1) of the Table below at the rate specified against each such class in Column (2) of the said Table'

The table given in Section 3 of the Act prescribes varying percentages of the property-tax to be collected as surcharge based on the annual or rateable values of the buildings and also the population of the municipality concerned.

6. The learned counsel for the appellant contended that by virtue of the provisions of Section 3 of the Act a surcharge on the property tax stood automatically levied with effect from the financial year commencing from the first day of April, 1958. His argument was that once the property tax payable for the year in respect of a building was assessed and determined it was not any further necessary for the municipality to adopt the same procedure as contemplated by Rule 9 of Schedule IV of the District Municipalities Act, for making a demand of the surcharge. The demand for surcharge was not made subject to any further assessment. The Municipal Council had no option either to levy the surcharge or not. What all it was required to do was only to reckon the quantum of surcharge on the basis of the percentages prescribed in the table in column (3) of the Act and issue a demand notice for the amount thus reckoned. A demand notice was thus issued to the respondent assessee in this case, therefore, the demand for surcharge was validly made.

7. In making this contention the learned counsel for the appellant relied upon a decision of Ekbote J., in Municipal Council Vizianagaram v. Sukeerthi Suramma, S. A. No. 617 of 1962, D/- 7-4-1966 (AP). It is this decision which is relied on by the learned counsel for the appellant before N. D. Krishna Rao J., and the correctness of which was questioned before the learned Judge by the learned counsel for the respondent. While deciding the said second appeal in S. A. No. 617 of 1962, D/- 7-4-1966 (AP) Ekbote J., followed his own decision in Badrinarayana Rathi v. State of Andhra Pradesh, W. P. No. 607 of 1964 and batch D/-1-4-1966 (AP) and some other Writ Petitions.

In those writ petitions the petitioners sought the issuance of writs of prohibition restraining the Municipal Corporation of Hyderabad from levying, assessing or collecting surcharge on property tax. After the Andhra Pradesh Urban Areas (Surcharge on Properly Tax) Act. came into force the Municipal Corporation of Hyderabad issued a notification dated 7-11-1961, which was published on 9-11-1961, notifying that the assessment books for the period from 1-4-1958 to 31-3-1963 were completed in regard to the assessment of surcharge on property tax on buildings situated within the limits of the Municipal Corporation of Hyderabad leviable under Section 3 of the Act. The said notification also called, for objections, if any, to be filed on of before 4-12-1962. One of the contentions that was raised before his Lordship, by the petitioners was, that the Municipal Corporation was not competent to collect the surcharge with retrospective effect and that Section 3 of the Act does not directly impose the surcharge, but its levy is subject to an assessment subsequently made. It was contended that as long as the assessment under the Municipal Corporation Act in regard to surcharge is not made it cannot be due. Ekbote J.. repelled this contention. After referring to the several provisions of the Hyderabad Municipal Corporation Act relating to the assessment of the Property Tax, maintenance of assessment Books, their amendments, and receiving of complaints against the valuation etc., His Lordship observed:--

'These are the provisions relating to the assessment of property, which are made applicable by virtue of Section 5 of the Act. It will be clear from what is stated above in regard to these provisions that they are not very much relevant for the purpose of quantifying the surcharge on the property tax. Property tax is assessed according to the direction contained in the said provisions, and when once property tax is determined, that forms the basis for the purpose of levy of surcharge under the Act. When property tax is determined, the only thing which remains is to quantify the amount of surcharge according to the rates mentioned in Section 3 That would only be an arithmetical calculation Assessment in the form and the manner mentioned in the above said provisions in regard to property tax is not necessary for the purpose of quantifying the surcharge. In spite of these provisions being made applicable, the Municipal Corporation is not expected to do anything except calculating the surcharge on property tax which admittedly was determined in the case in so far as the petitioners are concerned. I am, therefore, satisfied that the application of the provisions relating to assessment does not alter the position which Section 3 creates According to that Section the surcharge is imposed from 1-4-1958. It is not made dependent upon the amendment. The levy it imposed by the enactment and comes into effect from 1-4-1958 Whether the Municipal Corporation commences the proceedings in regard to collection in the same year or a year after that, would not be relevant for the purpose of finding out as to when the surcharge is imposed by the Act. In the absence of any specific duty to perform in regard to assessment except calculating the amount of surcharge at the rates mentioned in Section 3 on the property-tax which is already determined, a notice for the purpose of collection of the surcharge alone is what is expected from the Municipal Corporation That would be a demand for collecting surcharge in pursuance of Section 3 of the Act I do not therefore, find any difficulty in holding that Section 3 imposes the surcharge from 1-4-1958 and is not made dependent upon the completion of assessment or quantifying the amount of surcharge in each case. No question of retrospective collection in this case, therefore, arises.'

8. The learned counsel for the respondent did not dispute the proposition that by virtue of the provisions of Section 3 of the Act the Municipal Corporation or Council is bound to levy a surcharge on the property tax from 1-4-1958. He however, disputed the basis of the decision of Ekbote J., that the levy of surcharge is not made dependent upon any assessment; that the municipal corporation is not expected to do anything except calculating the surcharge on the property tax which was already determined and a demand notice for the purpose of collection of the surcharge alone is what is expected from the Municipal Corporation or Council. His stand is that though the surcharge is leviable from 1-4-58 the concerned Municipal Council should make an assessment in accordance with the provisions of Sections 3 to 5 of the Act and also of Rule 9 of Schedule IV of the District Municipalities Act which is also made applicable to the levy of surcharge by virtue of Section 5 of the Act. The aforesaid provisions require an assessment to be made in order to determine the quantum of surcharge that is leviable. Such assessment and determination of the surcharge cannot validly be made without adopting the procedure under Rule 9 of Schedule IV of the District Municipalities Act. He, therefore, disputes the proposition that the levy of surcharge under the Act is not made dependent upon any assessment.

9. In order to test the correctness of these respective contentions it is necessary to examine in the first instance the relevant provisions of the Act. The provisions of Section 3 of the Act have already been extracted above. That section prescribes the rates of surcharge that are leviable on the basis of the percentages of the property tax varying with the annual or rateable values of the buildings and the population of the Municipalities. Section 4 of the Act lays down the manner of assessment of surcharge. The marginal note to Section 4 of the Act, viz., 'manner of assessment of surcharges' itself is meaningful and significant.

It shows that it contemplates an assessment of surcharge. The different sub-sections of the section also refer to the assessment of the surcharge Sub-Section (1) of Section 4 of the Act prescribes 5 per cent of the property tax as the rate of surcharge where a person owns only one building in major municipality and it is wholly occupied by the owner irrespective of its annual or rateable values. Sub-section (2) of Section 4 of the Act and the proviso thereto prescribe varying rates in cases where a person owns more than one building and where some or all of them are either occupied wholly or partly by the owner or let out on rent and also in cases of remaining buildings. There can be no doubt that surcharge on the property tax cannot be demanded unless an assessment and determination is made in accordance with the provisions of Section 4 of the Act. The questions whether a person owns only one building or more than one building or whether he is himself residing in the building or has let it out and other connected questions will have to be decided in a proper and regular assessment before the actual rate of surcharge that is leviable is arrived at and the amount of surcharge is determined. Such determination cannot be made by the Municipal Corporation or Council, all by itself, without reference to the assessee. It is quite possible that the relevant facts like the assessee owning more than one house and whether he is himself occupying the building or is letting it out may be in dispute. For instance in one of the four second appeals we are now dealing with, the respondent-defendant raised the contention that she did not own the building in respect of which the surcharge was demanded. It is, therefore, incumbent on the Municipal Council to decide all such questions in a regular assessment proceeding. In our view that is why the word assessment is specifically used in Section 4 of the Act.

10. This view is further reinforced by the provisions of Section 5 of the Act which provide that-

'Save as otherwise provided in this Act, all the provisions of the relevant Municipal Act and the rules made thereunder relating to the assessment or realisation of property tax, or in any manner connected therewith (including exemption from assessment) shall apply to the assessment and realisation of the surcharge levied under this Act'.

Section 3 of the Act thus specifically, contemplates not only realisation but also assessment of the surcharge. Therefore, while it does not make any special provision in regard to such assessment and realisation of the surcharge, it makes the relevant provisions of the Municipal Act and the rules thereunder, applicable to the assessment and realisation of surcharge under the Act.

11. Certainly Rule 9 of Schedule IV of the District Municipalities Act is part of the District Municipalities Act which is the Municipal Act relevant to the present cases. In fact, Section 124 of the Madras District Municipalities Act lays down that--the rules and tables embodied in Schedule IV shall be read as part of this chapter.

The said Rule 9 of Schedule IV reads as follows:--

'When assessment books have been prepared for the first time and whenever a general revision of such books has been completed, the executive authority shall give public notice stating that revision petitions will be considered if they reach the municipal office within a period of sixty days from the date of such notice in the case of the Government, a railway administration or a company, and of thirty days from the said date in other cases. The notice shall be affixed to the notice board of the municipal office and on the same day be published in the municipality by beat of drum.

Provided that in every case where there is an enhancement in the assessment, the executive authority shall also cause intimation thereof to be given by a special notice to be served on the owner or occupier of the property concerned;

Provided further that, in every case where a special notice is required to be served on the owner or occupier under the first proviso, the period of sixty days and thirty days referred to in this rule shall be calculated from the date of service of such special notice.'

12. Therefore, Rule 9 requires that when assessment books have been prepared for the first time and whenever a general revision of such books has been completed the executive authority of the Municipal Council shall give public notice in the manner stated therein. As has been stated above, a reading of the Judgment of His Lordship Ekbote J., in the Writ Petitions, would show that the Municipal Corporation of Hyderabad did in fact issue such a notification which was dated 7th November, 1961 notifying that the assessment books for the period from 1-4-1958 to 31-3-1963 were completed in regard to the assessment of surcharge on property tax on buildings situated within the limits of the Municipal Corporation of Hyderabad, leviable under Section 3 of the Act and it also called for objections, if any, which were to be filed on or before 4-12-1962 A similar notification or public notice does not appear to have been given in these cases before us. The first proviso to Rule 9 la down that whenever there is an enhancement in the assessment, it is incumbent on the executive authority of the Municipal Council to cause intimation thereof to be given by a special notice to be served on the owner or occupier of the property concerned. When a surcharge is levied on the property tax, it is, in our view, an enhancement of the property tax. It is to be noted that the subject matter of the tax and surcharge remains and continues to be the building itself. Therefore, when a surcharge is levied on the property tax it is only an additional tax by way of increase in its rate. We are supported in this view by the decision of a Division Bench of this Court in Anantha Kondayya Setty v. Commissioner, Kurnool Municipality. : AIR1963AP379 . Chandra Reddy C.J. speaking for the Bench observed at page 268 (of Andh WR): (at p. 380 of AIR):

'The short point for consideration is whether this Act authorises the Municipalities to levy tax on the property-tax, or whether the surcharge contemplated by the Act is only an additional tax on the buildings. This Act was made with a view to provide for levy of surcharge on property-tax on certain buildings in the major Municipalities in. the State of Andhra Pradesh Section 3 which is the charging section postulates-

'Notwithstanding anything contained in the Municipal Act but subject to the provisions of Section 4, there shall be levied in the cities of Hyderabad and Secunderabad and in every major municipality in the State of 'Andhra Pradesh, with effect from the financial year commencing on the first day of April, 1958, a surcharge on the property tax, payable for the year in respect of every building of the class specified in column (1) of the Table below at the rate specified against each such class in column (2) of the said Table'.

'Now, what is the character of the levy that is within the contemplation of this enactment? The surcharge here is only an additional tax on the buildings. It cannot be regarded as a tax on the tax. On the other hand, it partakes of the same character as the property tax to which the building is subject. The Act only permits an increase in the property-tax at the rate specified against each class in column (2) of the said Table. The subject-matter of the tax remains the building itself. That it is nothing but an increase in the rate of property-tax on the building could be gathered from Article 271 of the Constitution, which says:

'Notwithstanding anything in Articles 269 and 270, Parliament may at any time increase any of the duties or taxes referred to in the articles by a surcharge for purposes of the Union and the whole proceeds of any such surcharge shall form part of the Consolidated Fund of India.'

'It is true that Article 271 is inapplicable to the present case. We are only referring to it as throwing light on the connotation of the expression 'surcharge'. That Article clearly establishes the surcharge is only an increase in the duties or taxes leviable under a particular enactment, i.e., it is an extra charge or tax.'

13. When it is thus clear that the surcharge is only an enhancement or the property-tax, the executive authority is bound to serve a special notice on the owner or occupier of the property when it is proposed to levy the surcharge. It is admitted before us on behalf of the appellant that no such special notice has been served on the respondent or the occupier of the properties in respect of which the surcharge is demanded. Had such a special notice been issued to the respondent it may be that she could have raised several objections, that are within the ambit of Section 4 of the Act or that she is not liable to pay the surcharge or tax as she is not the owner of the building. As has been noticed above, one of the contentions she raised is that she is not the owner of the buildings and is not, therefore, liable to pay the tax as demanded.

14. We, are, therefore, clear that the Act, though it levies surcharge on and from 1-4-1958 on the property-tax it does contemplate and provide for an assessment thereof. In our view the relevant provisions of the Act leave no doubt as to this conclusion. For these reasons we are not able to agree with the view taken by Ekbote J., in (W. P. No. 607 of 1964 and batch D/-1-4-1966 (AP) and some other W. Petns. and the S. A. No. 617 of 1962, D/-7-4-1966 (Andh Pra) that the levy of surcharge under the Act is not made subject to any assessment.

15. When once assessment is held to be necessary as it has also been held by the Courts below these second appeals will have to be dismissed. It is admitted for the appellant that the procedure contemplated by Rule 9 of Schedule IV has not been followed in these cases and a notice has not been issued to the respondent affording him an opportunity to make a representation and raise objections on the basis of Section 4 of the Act, and other contentions if any. When that procedure is not followed and adequate opportunity is not given to the assessee it is clear that the levy and demand of the surcharge is invalid

16. We, therefore, hold that the lowerCourts have rightly held that the respondent was not liable to pay the amount ofsurcharge and were right in disallowing theclaim of the appellant in this behalf. Inthis view these second appeals fail and aredismissed with costs of the respondent.


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