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M.T. Cloth Market Merchants Association, Indore Vs. Indore Municipal Corporation, Indore and ors. - Court Judgment

LegalCrystal Citation
SubjectMunicipal Tax
CourtMadhya Pradesh High Court
Decided On
Case NumberMisc. Petition No. 172 of 1980
Judge
Reported inAIR1982MP180
ActsMadhya Pradesh Municipal Corporation Act, 1956 - Sections 132, 132(1), 132(2), 132(6), 133, 133(3), 173 and 174; Constitution of India - Articles 226 and 265
AppellantM.T. Cloth Market Merchants Association, Indore
Respondentindore Municipal Corporation, Indore and ors.
Appellant AdvocateS.R. Phadnis, Adv.
Respondent AdvocateS.J. Dhanji, Adv.
DispositionPetition partly allowed
Cases ReferredGanesh Ginning and Pressing Factory v. Municipal Council
Excerpt:
- - in our opinion, this was perfectly legal as from the date of imposition of these taxes, i. a reading of the judgment would show that the attention of the learned judges was not drawn to the final proposals by which these taxes were imposed and which is explained above clearly provide for adoption of annual letting value determined under the sampatti kar adhiniyam for purposes of assessment of these taxes. this case also like gujarati cooperative housing society's case cannot be held to be decisive of the question before us. it is well settled that in matters of taxation the state has wide freedom of classification. 22-23. the result of the aforesaid discussion is that all the contentions of the learned counsel for the petitioner challenging the imposition and collection of drainage.....g.p. singh, c.j. 1. by this petition under article 226 of the constitution of india, the petitioner challenges the imposition of lighting tax, drainage tax, general sanitary cess and the graduated flat rate by the municipal corporation, indore the petitioner further prays for quashing bill no. 597 dated 14th january, 1978 (annexure i to the petition).2. section 132 of the m. p. municipal corporation act 1956, enumerates the taxes which can be imposed by a municipal corporation. the section, in so far as relevant for purposes of this case, reads as follows:'s. 132. taxes to be imposed under this act.-- (1) for the purpose of this act, the corporation shall impose-- (a) a tax payable by the owners of the buildings or lands situated within the city with reference to the gross annual letting.....
Judgment:

G.P. Singh, C.J.

1. By this petition under Article 226 of the Constitution of India, the petitioner challenges the imposition of lighting tax, drainage tax, general sanitary cess and the graduated flat rate by the Municipal Corporation, Indore The petitioner further prays for quashing Bill No. 597 dated 14th January, 1978 (Annexure I to the petition).

2. Section 132 of the M. P. Municipal Corporation Act 1956, enumerates the taxes which can be imposed by a Municipal corporation. The section, in so far as relevant for purposes of this case, reads as follows:

'S. 132. Taxes to be imposed under this Act.-- (1) For the purpose of this Act, the Corporation shall impose--

(a) a tax payable by the owners of the buildings or lands situated within the city with reference to the gross annual letting value of the building or land called the property tax;

XX XX X(c) a general sanitary cess for the construction and maintenance of public latrines and for removal and disposal of refuse;

(d) a water rate;

Provided that the water tax shall be levied only in respect of the premises--

(a) to which the private water-supply is furnished from, or which are connected by means of communication pipes with any Municipal or Government water-works or

(b) which are situated in a portion of the city in which the Commissioner has given the pubic notice that the Corporation has arranged to supply water from Municipal or Government water-works by means of private water connections or public stand pots, fountains or by any other means.

(2) In addition to the taxes mentioned in sub-section (1) the Corporation may, for the purposes of this Act, impose any of the following taxes, namely,

XX XX X (e) a lighting rate where the lighting of public streets, places and buildings is undertaken by the Corporation:

XX XX X(g) a drainage tax, where a system of drainage has been introduced;

XX XX X

(3) Subject to the provisions of Article 277 of the Constitution of India any tax which immediately before the commencement of the Madhya Pradesh Municipal Corporation Law (Extension) Act, 1960 was being lawfully levied by the Corporation may, notwithstanding that such tax is not specified in sub-section (1) or (2), continue to be levied by the Corporation.

(4) The imposition of any tax under this section shall be subject to the provisions of the Act and of any other enactment for the time being in force

(5) The Municipal taxes shall be assessed and levied in accordance with the provisions of this Act and the rules and bye-laws made thereunder.

(6) The Government may, by notification in the Gazette, prescribe such maximum and minimum limits with respect of the amount or to the rate or both as may be specified in such notification within which the Corporation may impose taxes mentioned in sub-sections (1) and (2).

A perusal of the section quoted above would show that the Taxes mentioned in subsection (I) are obligatory. In other words, the Corporation must impose these taxes. General sanitary tax and water rate fall under this category. The taxes mentioned in subsection (2) are not obligatory but they can also be imposed by the Corporation. Lighting rate and drainage tax come under this class. Apart from the taxes which can be imposed under sub-sections (1) and (2), the Corporation can continue to levy any tax not mentioned therein which immediately before the commencement of the M. P. Municipal Corporation Law (Extension) Act, 1960 was being lawfully levied by the Corporation. The taxes as provided in sub-section (5) are to be assessed and levied in accordance with the provisions of the Act and the rules and bye-laws made thereunder. Subsection (6) authorises the Government to prescribe maximum and minimum limits of the taxes.

3. The procedure for imposition of taxes is contained in Section 133 which reads as follows:

'Section 133. Procedure for imposing tax.-- (1) The Corporation may at a special meeting bring forward a resolution to propose the imposition of any tax under Section 132 defining the class of persons or description of property proposed to be taxed, the amount or rate of tax to be imposed and the system of assessment to be adopted:

Provided that no such resolution shall be passed by the Corporation for the imposition of any tax coming under Clause (o) of Sub-section (2) of Section 132 unless the Government shall have first given their approval to the selection of the tax by the Corporation

(2) Such resolution shall be published in the Gazette and in such other manner as may be prescribed by bye-laws. Any person residing within the city and objecting to proposed tax may, within thirty days from the publication of the resolution in the Gazette, submit his objection in writing to the Corporation and the Corporation shall at a special meeting take his objection into consideration.

(2-A) If the Corporation decides to amend its proposals or any of them, it shall publish amended proposals, along with a notice indicating that they are in modification of those previously published for objection.

(2-B) Any objections which may be received to the amended proposals within thirty days shall be dealt with in the manner prescribed in Sub-section (2-A).

(2-C) The Corporation shall publish its final proposals in the Gazette, and the tax shall then come into force on such date as may be specified in that notification.

(3) A notification of the imposition of a tax under this section shall be conclusive evidence that the tax has been imposed in accordance with the provisions of this Act.

(4) Nothing contained in this section shall apply to tax mentioned in Clause (a) of Sub- Section (2) of Section 132 which shall be charged and levied in accordance with Section 135. Briefly stated, the first step is passing of a resolution defining the class of persons, description of property proposed to be taxed, the amount or rate of tax to be imposed and the system of assessment to be adopted. The resolution is published in the Government Gazette for inviting objections. Objections filed within thirty days are considered by theCorporation. The Corporation then publishes its final proposals and the tax comes into force on the date as may be specified in the notification. The notification of the imposition of tax is conclusive evidence that the tax has been imposed in accordance with the provisions of the Act.

4. Property tax is one of the taxes which the Corporation can impose (see Section 132 (1) (a)). The imposition of this tax is regulated by Sections 135 to 159. The rate of property lax is relatable to annual value which is defined in Section 138. The preparation of assessment list is covered by Sections 143 to 152.

5. The proposal for imposition of drainage tax was passed by resolution dated 10th March, 1970. By this resolution the Corporation proposed to levy drainage tax at the rate of 1 1/2% of the annual value of buildings in areas where a system of drainage has been introduced by the Corporation, It was also proposed that annual letting value for imposition of drainage tax be taken to be that which is determined from time to time for imposition of property tax by the Corporation or by the State Government, it was further proposed that even if the owner of a house did not obtain any connection from the Corporation drainage line, he will be liable for payment of drainage tax unless the drainage connection is refused by the Corporation. These proposals made in the resolution dated 10th Mar., 1970 were published in the Government Gazette dated 7th Aug., 1970 for inviting objections. The proposals along with the objection received were again considered by the Administrator by order dated 26th October, 1970 as by then the Corporation had been superseded. The Administrator rejected the objections and approved the proposals. The Corporation then published the final proposals and notified that the drainage tax shall come into force from 1st Apr., 1971. This notification as published in the Gazette dated 26th Mar., 1971 reads as follows :--

^^e/;izns'k uxj ikfydk fuxe vf/kfu;e].'' - 2 lu~ .'' /kkjk dh mi/kkjk 2 l dsvUrxZr iznk 'kDrh;ksa dks iz;ksx esa ykrs gq, mDr vf/kfu;e dh /kkjk 2 dhmi&/kkjk 2 dk [kaM m ds vUrxZr yxk;k x;k ty&fodkl; dj tks fd uxjiz'kkld }kjk izLrqr ekad .- fnukad 2' vDVwcj .'O }kjk Lohdkjfd;k x;k gS tks fd iwoZ esa vf/kfu;e dh /kkjk dh mi /kkjk 2 ds vuqlkjjkti= fnukad ' vxLr] .'0 esa izdkf'kr gks pqdk gSA

vr% bl vf/klwpuk }kjk tkfgj fd;k tkrk gS fdmijksDr dj fnukad vizsy .' ls bUnkSj uxj lhek esa ykxw gksdj ns;gksxkA**

6. By resolution dated 11th March, 1970, the Corporation proposed to impose lighting rate at the rate of 0.4% of the annual letting value of a house in areas where the lighting of public streets, places and buildings are undertaken by the Corporation. The annual letting value as determined from time to time for imposition of property tax by the Corporation or by the Government was proposed to be the basis for imposition of lighting rate. It was also proposed that a house situated in an area where street lighting is undertaken by the Corporation be taxed even though there is no electric connection in the house. The proposals were published in the Government Gazette dated 7th Aug., 1970. The objections were considered and overruled by the Administrator by his order dated 26th Oct., 1970 and the proposals were approved. The final proposals were made effective from 1st Apr., 1971 and were published by a notification in the Government Gazette dated 26th March, 1971 which reads as follows :--

^^e/;izns'k uxj ikfydk fuxe vf/kfu;e.'' - 2] lu .'' /kkjk dh mi /kkjk 2 l dsvUrxZr iznk 'kfDr;ksa dks iz;ksx esa ykrs gq, mDr vf/kfu;e dh /kkjk 2 dhmi&/kkjk 2 dk [kaM g ds vUrxZr yxk;k x;k izdk'k vfHkdj tks fd uxjiz'kkld }kjk izLrko ekad .2] fnukad 2' vDVwcj .'O }kjk Lohdkjfd;k gS] tks fd iwoZ esa vf/kfu;e dh /kkjk dh mi/kkjk 2 vuqlkj jkti=]fnukad ' vxLr .'O esa izdkf'kr gks pqdk gSA

vr% bl vf/klwpuk }kjk tkfgj fd;k tkrk gS fdmijksDr dj fnukad vizsy .' ls bUnksj uxj lhek esa ykxw gksdj ns;gksxkA**

7. The imposition of general sanitary cess was proposed by the Administrator's order dated 22nd January, 1971 at the rate of 4% of the annual letting value. The proposal was published for inviting objection. The objections were considered by the Administrator by his order dated 21st June, 1971. The Administrator reduced the rate of cess to 2% of the annual letting value. The amended proposals were again published in Government Gazette of 11th Feb., 1972. The objections received were finally considered and rejected by order dated 15th Nov., 1972 and the proposal to impose general sanitary cess at 2% was approved. It was also ordered that it shall come into force from 1st Apr., 1973 and that a final notification be published in Government Gazette with the approval of the local Government Department (Urban), The final notification was published in the Gazette dated 24th Aug., 1973 as follows:--

^^vke turk dks lwfpr fd;k tkrk gS fd e/;izns'kuxj ikfydk fuxe vf/kfu;e .'' - lu~ .'' dh /kkjk 22 dh mi/kkjk bZ ds lkFk ifBr /kkjk dk [kaM 2 dk mi[kaM l }kjk O;kidLoPNrk midj 'kfDr;ksa ds iz;ksx esa ykrs gq, uxj iz'kkld }kjk vkns'k ekad' fnukad 2 twu .' Lohr vuqlkj iwoZ esa jkti= fnukad Qjojh.'2 esa foKfIr izdkf'kr dh xbZ o turk ls izkIr vkifk;ksa o lw>ko ijiz'kkfld vkns'k ekad . fnukad ' uoEcj .'2 }kjk vfUre Lohfriznku dh xbZ ,oa O;kid LopNrk&mi; dj e/;izns'k jkti= esa izdkf'kr gksus dsfnukad esa bUnksj 'kgj dh lhek esa izHkko'khy gksxkA**

8. The bye-laws in respect of drainage tax were published in the Gazette dated 28th Dec., 1973, Bye-law No. 4 of these bye-laws provides that the tax shall be levied at 1.5% of the annual letting value or at such rate as may he fixed from time to time and the annual letting value shall be taken to be that value as may be determined for imposition of property tax in accordance with Sections 139 to 159 of the Act. Bye-laws relating to lighting rate were published in Government Gazette dated 24th May, 1974. Bye-law No. 4 of these bye-laws also provides that lighting rate shall be levied at 40 paise per cent of the annual letting value as determined for imposition of property tax in accordance with Sections 135 to 138. Bye-laws relating to general sanitary cess were finally published in Government Gazette dated 28th December 1973. Bye-law No. 4 of these bye-laws provides that the cess would be imposed at 2% of the annual letting value as defined in Section 138 and as determined for imposition of property tax.

9. The first contention raised by the learned councel for the petitioner is that the final publications made in the Gazette, whichwe have extracted above, did not conform to the requirement of Section 133 (2-C) and, therefore, the imposition of drainage tax, lighting rate and sanitary cess was invalid. Section 133 (2-C) requires that the Corporation shall publish its final proposals in the Gazette and the tax shall then come into force on such date as may be specified in that notification. A perusal of the notifications published in respect of these taxes would go to show that they do not in terms reproduce the proposals as finally approved but refer to the proposals that were earlier published in Gazette for inviting objections and mention that the said proposals were approved by the Administrator. In our opinion, this is sufficient compliance with Section 133 (2-C). The original proposals mentioning the nature of tax, property proposed to be taxed, rate of tax and the system of imposition were already published in the Gazette. The Corporation acting through the Administrator finally approved those proposals. The final notifications refer to the Gazette where the original proposals were published and state that they were approved. The original proposals as published earlier in the Gazette thus become part of the final notifications and have to be read along with them. It was not obligatory to reproduce them again in the final notifications. In our opinion. Section 132 (2-C) was substantially complied with,

10. It was also submitted with reference to the imposition of the general sanitary cess that the date of enforcement mentioned in the notification was not approved by the proper authority. This point is not taken in the petition and in the absence of any specific objection to that effect we declined to heat the petitioner on that point. It was further submitted in the same context that the final notification in respect of imposition of general sanitary cess was issued without the permission of the Government. It is submitted that the Administrator's order dated 15th Nov., 1972 specifically stated that the publication in the Gazette should be after approval of the Local Government Department (Urban) which was not obtained. It is not disputed that the approval of the State Government or the Local Government Depart-ment (Urban) was not necessary under the Corporation Act for imposition of General sanitary cess. It is true that the order of tha Administrator dated 15th Nov., 1972 states that final publication in the Gazette be made after obtaining the approval of the Local Government Department (Urban). But it appears that the permission contemplated inthe order was only in respect of publication in the Government Gazette and not for any other purpose. Be that as it may, as no permission of the Government or any Government Department is necessary under the law for imposition of the tax the reference to such a permission in the order of the Admin-istrator has to be ignored and the imposition of the tax would not be invalid even if there was no permission of the Government. In this connection it may be mentioned that Section 133 (3) provides that the notification of the imposition of a tax shall be conclusive evidence that the tax has been imposed in accordance with the provisions of the Act. It is not open to the petitioner to challenge the imposition of the tax after it is finally notified for want of a non-essential require-ment.

11. The second contention raised by the learned counsel for the petitioner is that the aforesaid taxes have been, assessed on the basis of the annual letting value as deter-mined by the Government for imposition of property tax under the Madhya Pradesh Nagariya Sthawar Sampatti Kar Adhiniyam, 1964, and that the taxes ought to have been levied on the basis of the annual letting value determined in accordance with the provisions of the Corporation Act, i.e. Sections 138 to 152, as was provided in the bye-laws.

12. It may here be mentioned that from 1964 to 31st March, 1970 property tax was levied both by the Government and the Local Bodies, such as the Municipalities and Municipal Corporations. The Government levied the tax under the Sampatti Kar Adhiniyam whereas the Municipalities and Municipal Corporations levied the same under the Municipalities Act and the Corporation Act. From 1st April 1971 to 31st March 1976, the State alone recovered the property tax as a prohibition for the local bodies was introduced in Section 36 of the Sampatti Kar Adhiniyam by Act No. 3 of 1971. By Act No. 50 of 1976, Section 36 was deleted and areas within Municipal and Corporation limits were taken out from the operation of Sampatti Kar Adhiniyam. So from 1st April, 1976 onwards the Municipalities and Municipal Corporations are alone recovering the property tax within their local areas,

13. The drainage tax and the lighting rate came into force on 1st April, 1971. At the time when these taxes were imposed, the Corporation was not levying any property tax and annual letting value of buildings was not being determined under the Corporation Act for levying property tax. This positioncontinued till 1st April, 1976 when the Corporation again got the power to levy property lax. We have already referred to the proposals that were finally approved by the Administrator for imposition of these taxes. The proposals approved in respect of drainage tax and lighting rate specifically relate to the rate of ihese taxes to the annual letting value as determined by the Corporation or the State Government for imposition of property tax from time to time. A correct interpretation of these resolutions would be that if the Municipal Corporation was levying property tax, the annual letting value as determined for imposition of property tax by the Corporation would be the basis for assessment of these taxes but in case the Corporation at any particular period was not levying any property tax, then the annual letting value as determined for imposition of property tax by the State Government shall be the basis on which these taxes would be assessed. The bye-laws in respect of these two taxes, no doubt, refer to the annual letting value as may be determined, under the provisions of the Corporation Act but the bye-laws have to be read consistent with the final orders of the Administrator imposing the taxes and they cannot be read so as to supersede the final order. An independent determination of annual letting value for assessment of these two taxes under the bye-laws in accordance with Sections 138 to 152 may have to be resorted to only in those cases where there is no determination of annua! letting value by the Corporation or the State Government for imposition of property tax. The assessment of annual letting value in accordance with the aforesaid provisions of the Act is a tardy process. Drainage tax and lighting rate are simple imposts. The idea behind the proposal to impose these taxes as finally approved by the Administrator was to correlate them with the annual letting value determined by the Corporation or the State Government for imposition of property tax and not to undertake the exercise of a fresh determination of annual letting value simply for imposition of these taxes. It is not in dispute that up to 1st April 1976 the assessment lists prepared for imposition of property tax under the Sampatti Kar Adhiniyam were utilized for assessment of these taxes. In our opinion, this was perfectly legal as from the date of imposition of these taxes, i.e., 1st April, 1971 to 1st April, 1976, there was no assessment of property tax under the Corporation Act by the Corporation and, therefore, the annual letting value under the Corporation Act was not determined and the taxes had to be assessed in accordance with the annual letting value determined for imposition of property tax under the Adhiniyam.

14. The learned counsel for the petitioner also submitted that the drainage tax and lighting rate could not be validly assessed from 1st Apr., 1971 to 1st April, 1976 for want of bye-laws. The bye-laws in respect of these two taxes were published in the Government Gazette dated 28th Dec., 1976. The argument is that in the absence of the bye-laws there was no procedure for assessment which could be applied and hence the taxes could not be assessed and recovered. We nave already stated that the final proposals which imposed these taxes adopted the annual letting value in force from time to time for assessment of property tax under the Corporation Act or the Sampatti Kar Adhiniyam for assessment of these taxes. It is not in dispute that there was available to the Corporation the assessment list of property tax under the Sampatti Kar Adhiniyam which furnished the basis for assessing these taxes by the Corporation. In such a situation a detailed procedure for assessment of these taxes was not necessary. Even in the absence of bye-laws the taxes could be assessed after following the principles of natural justice. It is true that Article 265 of the Constitution directs that no tax shall be levied or collected except by authority of law, but the Constitution does not make it obligatory that the procedural provisions for assessment, which depend upon the nature of the tax imposed by the statute, must be detailed. Even a provision to make an assessment in accordance with quasi judicial procedure need not be expressly made and the assessment and recovery of the tax will be upheld if an implied provision to that effect can be inferred. (See Asst. Collector, C. E. v. N. T. Co. of India Ltd., AIR 1972 SC 2563 and Roopchand v. K. U. M. Samiti, Raipur, 1975 MPLJ 326 : 1975 Tax LR 1932). A similar question arose in relation to imposition of tax on advertisements in Shri Krishna Pictures v. Administrator, Indore Municipal Corporation, 1980 Jab LJ 530 and it was held by a Division Bench of this Court that Sections 173 and 174 of the Corporation Act laid down a quasi judicial procedure for assessment of the tax which could be followed in the absence of any bye-laws. The same principle applies here and the absence of the bye-laws did not make the assessment and collection of the taxes invalid. The following observations of this Court on this pointin Shri Krishna Picture's case fully apply here:

'A reading of Section 173 will show that the Commissioner can cause a bill on account of any tax imposed which has become due to be presented to the person liable for the payment thereof. The bill has to show the period for which and the thing in respect of which the same is claimed. The bill has also to specify the time within which an objection may be preferred. On receipt of such a bill the person concerned may either pay the same or raise an objection to the payment before the Commissioner. If the bill is not paid and if no objection is raised, the Commissioner issues a notice of demand under Section 174. It is implicit in the terms of Section 174 that if a person on whom the bill is served raises objections within fifteen days, the objections should be decided by the Commissioner in a quasi-judicial manner and it is only when the objections are overruled that a notice of demand can follow. The order of the Commissioner rejecting the objections and issuing a notice of demand can be challenged in appeal because the notice of demand is appealable under Section 134. Now in cases where there are separate bye-laws for assessment of tax made under Section 427 (3), the objections which a person can take under Section 174 on presentation of a bill would be of a limited character. It would then not be open at this stage to challenge the assessment of tax. But in cases where there are no bye-laws providing for assessment of tax, the bill issued by the Commissioner under Section 173 would be in the nature of provisional assessment of tax which can be challenged by raising objections under Section 174. The objections in such a case will include also objections to assessment of tax and would be investigated judicially and if the objections are overruled, the person concerned would have a right of appeal under Section 184. We do not find any cogent reason to limit the scope of Sections 173 and 174 for recovery of those taxes only for which a separate provision for assessment has been made. As earlier pointed out by us, the procedure and machinery for assessment of a tax from its very nature depends upon the nature of the tax. If the tax is a simple impost for which no separate procedure for assessment is necessary, Sections 173 and 174 can be used not only for recovery but also for assessment of the tax in the manner indicated above. As the procedure under these sections is quasi-judicial in nature and is coupled with a safeguard of appeal, it cannot be said that the procedureis administrative and does not fulfil the requirement of the Constitution.'

14-A. General sanitary cess was enforced from 24th August, 1973. The bye-laws in respect thereof were published on 28th Dec., 1973. The proposal as finally approved imposing this tax does not indicate as to how the annual letting value is to be calculated. The proposal does not give any option to adopt the annual letting value determined under the Sampatti Kar Adhiniyam if no annual letting value is determined for imposition of property tax under the Corporation Act. This is the distinction between this tax and drainage tax and lighting rate. The mode of determination of annual letting value is given in the bye-laws. The bye-laws provide that the annual letting value would be that value which is defined in Section 138 of the Corporation Act and determined for assessment of property tax. It is not in dispute that the assessment of this cess up to 1st April, 1976 is on the basis of the annual letting value determined in accordance with the Sampatti Kar Adhiniyam and not on the basis of the annual letting value determined under the Corporation Act Annual leiting value determined for assessment of property tax under the Sampatti Kar Adhiniyam could not be adopted for assessment of general sanitary cess for the reason that no such liberty was given to the Corporation in the final proposal or the bye-laws. The assessment of general sanitary cess up to 1st April, 1976, therefore, was not in accordance with law.

15. We now come to the period after 1st April, 1976. The assessment of all the aforesaid three taxes had been made up to 1977-78 when this petition was filed. The assessment for the years 1976 and 1977-78 was made on the basis of the assessment list determining the annual letting value under the Sampatti Kar Adhiniyam which was adopted for purposes of assessment of property tax under the Corporation Act by virtue of Section 143 which, as amended by Act No. 50 of 1976 from 1st April, 1976, reads as follows:

'Section 143. Assessment of annual value and duration of assessment--(1) The annual value of any land or building situate within the city as determined under the Madhya Pra-desh Nagariya Sthawar Sampatti Kar Adhiniyam, 1964, (No. 14 of 1964) or the rules made thereunder, and in force for the purpose of that Act immediately before the 1st day of April, 1976 shall be deemed to be the annual value for the assessment of property tax on such land or building under this Act of the land or buildings therein and theannual value of such land or buildings shall remain unchanged for a period of one year and may be revised thereafter by the Commissioner at the termination of successive period of one year.

(2) The Commissioner may, instead of making a new assessment every year, adopt the existing assessment, with such alteration as he thinks fit, as the assessments for each new year, giving to persons affected by such alterations the same notice of the altered valuation and assessment as would have been required if a new assessment had been prepared.

(3) The Commissioner shall arrange for a survey for the purpose of assessment of each part of the city at least once in five years save for the omission, with the previous consent of the Standing Committee, of any small areas which might be more conveniently reassessed in a subsequent year.'

A reading of this section will go to show that annual letting value of any land or building situate within the city as determined under the Sampatti Kar Adhiniyam and in force for the purpose of that Act immediately before 1st April, 1976 became the annual value for the assessment of the property tax on such land or building under the Corpoia-tion Act until the Commissioner made a fresh valuation and determination of the value under the Corporation Act The fiction introduced by Section 143 has the effect of making the annual value determined under the Sampatti Kar Adhiniyam as the annual value determined in accordance with the Corporation Act, i.e. Sections 138 to 152. Until a new list is prepared, the annual value so adopted by Section 143 is deemed to be annual value under the Corporation Act. The annual value so enforced for the purposes of assessment of property tax under the Corporation Act could also be used for assessment of drainage tax, lighting rate and general sanitary cess. The first two taxes could be levied on the basis of the annual letting value determined from time to time for assessmenl of property tax by the Corporation or the Government. The Government ceased to impose any property tax from 1st April, 1976 within the Corporation area. The amendments introduced in Section 143 made the annual value determined under the Sampatti Kar Adhiniyam as the annual value determined under the Corporation Act. There is absolutely no difficulty in holding that drainage tax and lighting rate could be assessed on the basis of this annual value. As regards general sanitary cess, the argument of the learned counsel is that mis course was not possiblebecause the bye-laws specifically provide for annual letting value defined in Section 138 and determined for assessment of property tax. Now under Section 143 the annual value determined under the Sampatti Kar Adhiniyam became the annual letting value under the Corporation Act and so it must be held that this annual value is in accordance with Section 138 which defines annual letting value for purposes of the Corporation Act. The fiction has to be given its full effect. There is thus no difficulty even for assessing general sanitary cess on the basis of the annual value adopted by Section 143 for the period from 1st April, 1976 onwards. The learned counsel for the petitioner relied upon a decision of a Division Bench of this Court in Gujarati Co-operative Housing Society Ltd. v. Indore Municipal Corporation, Misc. Petn. No. 781 of 1974, decided on 2nd March. 1979 in support of his submission that lighting rate and drainage tax could not be collected on the basis of the annual letting value determined under the Sampatti Kar Adhiniyam. That case related to the year 1971-72. The bill and demand notice for that year were quashed in that case on the ground that the taxes were not assessed on the annual letting value as determined under the Corporation Act and were assessed on the annual letting value determined for assessment of property tax under the Sampatti Kar Adhiniyam. A reading of the judgment would show that the attention of the learned Judges was not drawn to the final proposals by which these taxes were imposed and which is explained above clearly provide for adoption of annual letting value determined under the Sampatti Kar Adhiniyam for purposes of assessment of these taxes. Learned Judge relied upon the case of Laxmidas v. Indore Municipal Corporation, 1975 MPLJ 525 : (AIR 1975 Madb Pra 223). That was a case relating to the assessment of cess under the M. P. Nir-ashritonki Sahayata Adhiniyam. As provided in Section 7 of the said Act the cess has to be assessed on the gross annual letting value or annual letting value of land or building determined in accordance with law relating to the local authority which, in case of a Corporation, will mean the Corporation Act. There is no liberty in Section 7 (1) (ii) to assess the cess on the basis of annual value determined under the Sampatti Kar Adhiniyam and. therefore, the assessment in that case was held to be invalid. Laxmidas's case is, therefore, distinguishable and could not be applied when the final proposals imposing drainage tax and lighting rate have given liberty to the Corporation for adopting theannual letting value under the Sampatti Kar Adhiniyam for assessment of these taxes. The material provisions were thus not brought to the notice of the Court in Gujarati Cooperative Housing Society's case. That decision, therefore, cannot be of any binding force. That case was just followed by another Bench in Anant v. M. C. Indore, Misc. Petn. No. 11 of 1972, decided on 19th Jan., 1981 (Indore Bench) without any discussion whatsoever. This case also like Gujarati Cooperative Housing Society's case cannot be held to be decisive of the question before us. Learned counsel for the petitioner also relied upon a decision of a Division Bench of this Court in Madhya Pradesh Awas Samasya Nivaran Sanstha v. Indore Municipal Corporation, Misc. Petn. No. 253 of 1974, D/- 2-3-1979. That was a case relating to the assessment of general sanitary cess. That demand in that case was for a period prior to 1st April 1976. It was held to be illegal as the assessment of the cess was made on the basis of the annual letting value determined under the Sampatti Kar Adhiniyam. We agree with the decision in this case for we have earlier pointed out that in so far as general sanitary cess is concerned, there is no option or liberty given to the Corporation to adopt the annual letting value determined under the Sampatti Kar Adhiniyam for assessment of the cess prior to 1st April, 1976.

16-17. The learned counsel for the petitioner then submitted that the imposition of all the three aforesaid taxes was invalid for the reason that no maximum or minimum has been prescribed by the State Government under Section 132 (6). A perusal of this provision would show that it is not obligatory for the Government to prescribe any maximum or minimum with respect to the amount or to the rate of taxes specified in Sub-sections (1) and (2) of Section 132. When these limits are prescribed, the Corporation's power of taxation must be exercised within the limits but omission to prescribe the maximum and minimum limits do not take away the power of the Corporation to impose the taxes. The learned counsel relied upon Ganesh Ginning and Pressing Factory v. Municipal Council, Anjad, 1979 MPLJ 85 which related to the construction of Sections 127 (2) and 130 of the M. P. Municipalities Act, 1961. Section 130 as then in force authorised the Municipal Council to vary the tax within the limits prescribed under Section 127 (2). On a proper construction of this provision it was held that unless the limits were prescribed, the Municipal Council could not vary the tax. The language of those sections was entirelydifferent and the case relied upon has no application here.

18. It was next submitted that at the time when the Administrator approved the final proposals in respect of these taxes, the total period of supersession of the Corporation had exceeded two years and, therefore, the Administrator could not function. The relevant provision in this context is Section 423 of the Corporation Act. The Administrator appointed by the Government after a Corpora-lion is superseded continues as provided in Section 423 (1) (b) 'until the Corporation is reconstituted.' The Administrator does not vacate his office simply because the maximum period of supersession of the Corporation is over. A similar argument was negatived in Laxmidas's case A 1975 Madh Pra 223. The following observations from the decision in that case are relevant here (at p. 229) :--

'The next argument that the Administrator cannot function beyond a period of more than two years because the total period of supersession cannot exceed two years is also without any substance. The Administrator can continue as provided by Section 423 (1) (b) 'until the Corporation is reconstituted.' The Corporation admittedly has so far not been reconstituted. If the petitioner feels that the Government must take steps to reconstitute the Corporation as two years have expired from the date of supersession he may, if he is so advised, take legal steps for enforcing that public duty. That matter, however, cannot be considered in this petition. It is enough for the present controversy to say that the Administrator continues in office because the Corporation has not so far been reconstituted.'

19. It was then contended that only owners of buildings were subjected to tax which makes these taxes discriminatory. The learned counsel argued that persons carrying on business or profession who were not owners of buildings have not been made liable for these taxes. There is no merit in this argument. It is well settled that in matters of taxation the State has wide freedom of classification. The State does not have to tax every thing in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation, if it does so reasonably. A perusal of the bye-laws in respect of these taxes goes to show that the taxes can be recovered from owners and occupiers. Persons who carry on business or profession within the Corporation limits are expected to be in most ofthe cases owners or occupiers of buildings. It was, therefore, not necessary to make them liable separately for these taxes. In our opinion, there is no merit in the contention that the taxes are discriminatory.

20. It is also contended that when objections were filed to the proposals imposing the taxes, the objections were not personally heard. Section 133 of the Corporation Act which is relevant on this point does not provide for any oral hearing. All that it provides is that the Corporation should take the objections into consideration before finally approving its proposals. Absence of oral hearing to the objectors, therefore, does not invalidate the taxes.

21. It was then argued that the taxes are unreasonable as they are imposed also on those persons who does not need the facility. A perusal of Section 132 (I) (c) and Section 132 (1) (e) and (g) would go to show that it is not necessary for the validity of the imposition that a person on whom the cess or tax is imposed should be taking the advantage of the sanitary, lighting or drainage facilities provided by the Corporation. This argument must, therefore, be rejected. It was also said that the impositions are vague. In our opinion, there is no vagueness in the impositions and the argument has to be mentioned only to be rejected.

22-23. The result of the aforesaid discussion is that all the contentions of the learned counsel for the petitioner challenging the imposition and collection of drainage tax and lighting rate fail. As regards the general sanitary cess, the petitioner's objection is sustained for the period from 24th August, 1973 to 1st April, 1976.

24. We may now come to the challenge made in this petition to the imposition of the tax known as graduated flat rate. The tax known by this name is in essence a water rate imposed by the Corporation. The Corporation supplies water within the Corporation limits. The Corporation was previously a Municipality governed by the Indore Municipal Act (Act No. 4 of 1909). Section 21 (x) of this Act authorised a municipality to impose 'a water rate where water is supplied by the Municipality'. The water rate was imposed under this provision by the Indore Municipality. There were separate rates for houses in which water connection was taken with meter or without meter and different rates for those houses where no water connection was at all taken. Water fate on houses where no water connection was taken was imposed on the theory thatthe house owners must be taking water from some public tap, stand-pot, or fountain provided by the municipality. The water rate imposed on houses where there is no water connection is known as graduated flat rate. The rate was revised from time to time. It was 1st revised by the Indore Municipality by notification dated 22nd December 1940. The graduated flat rate in this notification is related to the rental value of houses. The graduated flat rate at the revised rate con-tinued to be in force even after the enforce-ment of the Corporation Act and constitution of the Indore Municipality as a Corpo-ration under this Act. So far there is no difficulty. The learned counsel for the petitioner does not dispute this position. All that is challenged before us is the revision of graduated flat rate by administrator's order dated 18th May, 1973 passed under Section 162 (2) to the Corporation Act. The graduated flat rate is however related to the area of buildings and not to their rental value. If is this notification which is challenged. There is only one argument which has been advanced by the learned counsel in this context. It is submitted that it was not open to the Corporation to exercise the power of provision of the tax under Section 162 (2) as this was not a tax covered by Sub-section (1) or Sub-section (2) of Section 132. It was submitted by the learned counsel that this tax was continued only under Sub-section (3) of Section 132, for it is not specified in Sub-sections (1) and (2) and that to such a tax power of revision under Section 162 (2) is not available. Section 162

(2) enables the Corporation to abolish, suspend, reduce or increase any tax with the sanction of the Government It is not disputed that sanction of the Government was obtained for issuance of the notification dated 18th May, 1973 which revised the graduated flat rate. The argument of the learned counsel that this power is not available to this tax because it is not mentioned in Sub-sec-tion (1) or Sub-section (2) of Section 132 proceeds upon a wrong foundation. The graduated flat rate, as already seen, is nothing but a water rate. A water rate is a tax mentioned in Clause (d) of Section 132 (1). The contention of the learned counsel has, therefore, no substance.

25. The learned counsel for the petitioner submitted that penalty provisions in the bye-laws are invalid. No penalty has so far been

imposed and so it is not necessary for us to decide this matter in this petition.

26. The petition is partly allowed. The assessment of demand of general sanitary cess for the period from 24th August, 1973to 1st April, 1976 are quashed. In all other respects, the petition fails and is dismissed. There will be no order as to costs. Security amount be refunded to the petitioner.


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