1. This appeal by special leave is directed against the judgment and order of the High Court of Madhya Pradesh in Second Appeal No. 378 of 1961.
2. The respondents as trustees of a charitable trust are the owners of certain houses situate in Indore City. Prior to January 26, 1954 the Indore Municipality was governed by the Indore City Municipal Act, 4 of 1909. By virtue of the power conferred on it by that Act the Municipality used to levy and collect house tax at the rate of 7% of the gross annual letting value of these houses and the trustees duly paid such tax. After the formation of the State of Madhya Bharat, the legislature of that State passed the Madhya Bharat Municipalities Act, 1954 which came into force on January 26, 1954. The 1954 Act repealed amongst other Acts the Indore City Municipal Act 1909. The Indore Municipality however purported to levy the house tax on the basis of the gross annual letting value at the rate of 7% of such value for the financial years 1953-54 and 1954-55. This was objected to by the respondents on the ground that under the 1954 Act the tax could be assessed on the basis of gross annual letting value less 10% statutory allowance in lieu of costs of repairs or on any other account whatsoever. The difference came to Rs. 1,461, and of this the trustees claimed refund on the ground that the Municipality had collected the excess from them under pain of distress. The Municipality having refused to refund the excess the respondents filed the suit to recover it on the ground that the excess amount was illegally recovered. The Trial Court decreed the suit and the appeals filed by the Corporation in the District Court and the High Court were dismissed.
3. To appreciate the stand taken by the appellant Corporation it is necessary to examine some of the provisions of the two Acts Section 21 of the Indore City Municipal Act authorised the Municipal Council to impose tax on houses, buildings or lands within the municipal limits at a rate not exceeding 12 1/2 % of the gross annual letting value. As aforesaid, this Act amongst other Acts was repealed by the Madhya Bharat Municipalities Act, 1954. Section 2 of the 1954 Act which contains both a repealing and saving provisions repealed the several Acts set out therein. Clause (a) however provides that such repeal shall not affect the validity or invalidity of anything already done under any of the said enactments. Clause (c) of Section 2 provides that all rules, orders, bye-laws, notifications and notices, taxes and rates, made, passed, framed, issued or imposed or deemed to have been made, passed, framed, issued or imposed, shall so far as they are not inconsistent with this Act, be deemed to have been made, passed, framed, issued or imposed, as the case may be, under this Act. Section 69 authorises a Municipality to impose the several taxes set out therein including the tax on houses, buildings or lands or both. Section 70 lays down the procedure which the municipality would have to follow before it imposes any one of those taxes. Section 73 provides that when a tax on buildings or lands or both is imposed, the Chief Executive Officer shall cause an assessment list of all buildings or lands in the municipality to be prepared containing the particulars therein set out. Amongst such particulars are the valuation based on capital or annual letting value as the case may be on which the property is assessed. Sub-section 2 provides that in assessing the tax on buildings or lands, where the valuation determined under clause (d) of sub-section 1 is the annual letting value, a sum equal to 10% of such valuation shall be deducted therefrom in lieu of allowance for costs of repairs or on any account whatsoever. Section 75 provides for the publication of the assessment list and the right of the owner or occupier of properties included in the list to take inspection thereof and to make extracts therefrom. Section 76 provides for a public notice of time fixed for lodging objections to such assessment list and the hearing of such objections. Sub-section 4 of Section 76 provides for the authentication of the list. Sub-section 6 lays down that subject to such alternations as may be made therein under Section 77 and to the result of any appeal or revision made under Section 190 in the case of City Municipality and under Section 90 in the case of other municipalities, the entries in the assessment list so authenticated shall be accepted as conclusive evidence for the purposes of all municipal taxes of the valuation or annual letting value of buildings and lands to which such entries respectively refer and for the purposes of the tax for which such assessment list has been prepared of the amount of tax leviable on such buildings or lands 'in any official year in which such list is in force.' Section 79(1) provides that it would not be necessary for a Municipality to prepare a new assessment list for every year. It further provides that subject to the condition that such assessment list shall be completely revised not less than once in every 4 years the Municipality may adopt the valuation and assessment contained in the list for any year with such alterations as may be necessary for the year immediately following. But sub-section 2 lays down that the provisions of s. 75 and s. 76 shall be applicable every year as if a new assessment list has been completed at the commencement of the official year.
4. These provisions show that though by Section 2 the new Act repealed the Indore City Municipal Act, 1909 along with other Acts, the legislature by Section 2(c) saved certain things done under the repealed Acts, viz., rules bye-laws, orders, notifications and notices, taxes and rates made, framed, passed, or imposed or deemed to have been made, framed, passed, or imposed under the repealed Acts and added a fiction that so far as they are not inconsistent with the new Act they shall be deemed as if they were made, framed, passed or imposed as the case may be under this Act. We are informed by Counsel that under the rules made under the repealed Indore City Municipal Act, 1909 the Municipality had imposed the tax on houses at the rate of 7% of their gross annual letting value, that an assessment list on that basis was prepared for the year 1952-53 and that the Municipality has been levying tax at the said rate on the basis of the said assessment list for the two subsequent years.
5. Counsel for the appellant Corporation argued that the Corporation was entitled to levy the house tax at the rate of 7% of the gross annual letting value and that it was not bound to deduct the 10% allowance provided by Section 73(2) from such gross annual letting value. The argument was, firstly, that the appellant Corporation could do so because the rules made under the Indore Act are saved by Section 2(c) and therefore the rate of 7% of the gross annual letting value at which the tax was levied also has been saved and secondly, that under Section 79(1) of the 1954 Act the Corporation need not prepare a fresh assessment list every year, that it has to prepare a fresh assessment list only once in every 4 years, that the Corporation therefore can and in fact has adopted the said list for the two years in question and that that being so, the list so adopted was in force during the years in question and has to be accepted under s. 76(6) as conclusive evidence of the annual letting value as also for the amount of tax leviable on the buildings or lands or both. He contended that that being the position the respondents were debarred from objecting to the annual letting value and the quantum of tax based on it as entered against the respondents' properties in the said assessment list.
6. We are not impressed with these contentions as in our view they are not warranted on the true construction of the provisions of the Act. The Indore Municipal Act being no longer in force as from January 26, 1954, obviously no tax could be levied or imposed thereunder after that date. The rules made and the taxes imposed under the repealed Act are not doubt amongst other things saved and are deemed to have been made, framed, passed or imposed under the new Act but clause (c) of Section 2, it must not be forgotten, lays down an important qualification that they are to be deemed to have been made, or imposed etc., under the new Act to the extent that they are consistent with the provisions of the Act. Section 73 read with Section 69 provides that a tax on houses or buildings shall be levied on the annual letting value and that in assessing such tax a sum equal to 10% of such letting value shall be deducted therefrom. The tax levied under the old Act and the rules framed thereunder on the basis of the gross annual letting value is obviously inconsistent with the provisions of s. 73 of the Act. The saving and the deeming provisions in s. 2(c) can only apply if the tax is assessed in the manner consistent with the provisions of s. 73, that is, if it is assessed on the net and not the gross annual letting value after deducting 10% statutory allowance in lieu of the costs of repairs or any other account whatsoever. If the construction of Section 2(c) as suggested by Counsel were to be accepted it would render Section 73(2) nugatory, for, the Municipal Corporation in that case can go on imposing the tax on the basis of the gross annual letting value for ever despite the express provision for levying tax on the basis of net annual letting value, i.e., the value arrived at after deducting 10% of the gross annual letting value.
7. The second part of the contention is equally unacceptable because, if accepted, it will be contrary to the provisions of Sections 75, 76 and 79 of the Act. After going through the procedure laid down in Sections 70, 71 and 72 Section 73, enjoins upon the Chief Executive Officer to have an assessment list made containing inter alia valuation or annual letting value at which the property is assessed and the amount of tax assessed on the basis of such valuation or annual letting value. Under Sections 75 and 76 when the assessment list is prepared in accordance with the provisions of Section 73 it has to be published and time has to be fixed for lodging objections against the entries therein. After such objections are heard and disposed of the assessment list has to be authenticated as provided by Section 76(6). Sub-section 6 of Section 76 lays down that such assessment list when authenticated becomes conclusive evidence for purposes of all taxes, of the valuation or annual letting value and of the amount of tax leviable on such buildings or lands or both in any official year in which such list is in force. 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).
8. 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 Secs. 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. The word, 'if' appearing in sub-section 2 of Section 79 is obviously a mistake and must be read as 'as if' because the word 'if' standing by itself makes no sense at all. Section 79 therefore has to be construed to mean that though a Municipality need not prepare a fresh assessment list every year and need prepare such list once in every 4 years and can adopt an earlier assessment list such an adopted list becomes the assessment list for that particular year as if it was a new list and to which Sections 75 and 76 apply.
9. The result of the foregoing discussion is that appellant Corporation was entitled to adopt the assessment list prepared for the year 1952-53 for the two assessment years, 1953-54 and 1954-55, under Section 79 and therefore that list became the assessment list for each of the 2 years in question. That fact however does not entitle the appellant Corporation to impose the house tax on the basis of the gross annual letting value as such imposition is inconsistent with Section 73 under which the annual letting value would be the gross annual letting value less 10% statutory allowance.
10. But the contention was that the tax imposed on the basis of the gross annual letting value was saved by Section 2(c) and that that saving coupled with the fact that the assessment list prepared for 1952-53 was adopted for the years in question made the entries in the assessment list so adopted conclusive evidence of the annual letting value and the amount of tax assessed thereon and entitled the Corporation to collect the tax assessed on the gross annual letting value. Therefore, it was argued, both the annual letting value and the amount of tax shown in that list were conclusive evidence and could not be assailed. Counsel however forgets that even on the footing that the resolution passed by the Indore Municipality to levy the tax at 7% of the gross annual letting value and on the strength of which the list for 1952-53 was prepared was saved and was deemed to have been so made under the 1954 Act it can be deemed to have been so made in so far as it is consistent with the provisions of the Act. Therefore, to the extent that it is inconsistent with Section 73 it is neither saved nor deemed to have been made under the Act and has to be adjusted in the light of the provisions of Section 73(2). It follows that the appellant-Corporation was not entitled to demand the tax assessed on the gross annual letting value. The High Court therefore was right in decreeing the suit and to order refund of the said excess amount against the appellant Corporation.
11. The appeal fails and is dismissed with costs. The costs of this appeal as also those in the next appeal No. 383 of 1965 are to be taxed on the footing of one hearing fee.
12. Appeal dismissed.