(1) This is an application under Article 226 of the Constitution for the issue of a writ of certiorari to quash a notice issued by the respondent, the Corporation of Madras, under S. 137-B of the Madras City Municipal Act, 1919.
(2) In respect of certain premises, the petitioner was paying a property tax of Rs. 322-21 nP 2-2-1963, the respondent issued a notice under S. 137-B of the Madras City Municipal Act demanding a sum of RS. 2730 as for tax and a further sum of Rs. 68-25, bringing a total of RS. 2798-25 for the first half year of 1962-63. It was also stated therein that the annual value of the premises, which was previously Rupees 2730 has been increased to Rs. 21,840 and this notice stated that in the exercise of the powers under S. 137-B, the sum demanded was treated as a sum due on an escaped assessment, and the petitioner as called upon to pay the amount within 15 days from the date of the service of the notice. She was also informed that if the amount was not paid, steps for realisation would be taken. The petitioner complains that no reasonable opportunity was given and that the revenue officer had already decided without hearing objections to increase the property tax. It is alleged that the notice and demands are contrary to law, that he principles of natural justice have been violated and in fact the revenue officer has exceeded his jurisdiction.
(3) On behalf of the respondent, a counter affidavit has been filed. It is stated that he demand of the tax made on the petitioner is based on the rental income, which is Rs. 2000, per month, as reported by the assessor. It is claimed that notices under S. 137-B and Rule 3 Part I-A of the Schedule IV of the Madras City Municipal Act have been issued informing the petitioner that the Corporation proposed to alter the annual valuation. The petitioner was also informed that a personal hearing would be held on 8-2-1963. It is however not denied in this counter affidavit that along with the notice fixing the personal hearing a further notice under S. 137-B demanding payment of the enhanced tax was also served. It is claimed that an opportunity had been given to the petitioner and that there could be no complaint tin that regard.
(4) It is not in dispute that two notices were issued to the petitioner. The first one is under Rule 3 Part I-A of Schedule IV of the Madras City Municipal Corporation Act and it stated thus:
'Please take notice that the property tax assessment books will be amended by altering the annual value of the property and the amount of the property tax payable thereon form the valuation of Rs. 2730 and tax of Rs. 341--25 plus library cess Rs. 8-53 to he valuation of Rs. 21840 and tax of Rs. 2730 plus library cess Rs. 68-25 in respect of buildings and lands described hereunder. Your objection, if any, to such amendment will be heard by me at my office in the Ripon Buildings on 8-2-1963 at 3 p.m..'
(5) The notice under S. 137-B made a demand calling for the payment of tax of Rupees 2798-25 for the first half year of 1962-63. Both of these notices appear to have been issued on the same day, that is, 2-2-1963. Turning to S. 137-B of the Act, it is seen to confer a power on the appropriate authority to assess in a case of escape form assessment. It enables the authority, notwithstanding anything to the contrary contained in the Act or the Rules, if any persons has been assessed in any half year or year at a lower rate than the rate at which he is assessable, to serve on such person a notice assessing him to the tax due at any time within 3 years from the date on which such person should have been assessed. Schedule IV part I-A provides for assessment of property tax. Rule 3 enables the Commissioner after giving notice to the parties concerned and hearing their objections to amend the property tax assessment books at any time between one general revision and another. It also states that such amendment shall be deemed to have taken effect on the first day of the half year in which it is made. If the rules are applied and the amendment is made the owner has the right to move the Commissioner by revision petition to reduce the tax. While the rules insist upon a personal hearing being given to the owner, S. 137-B contains no such direction in specific terms. But it seems to be undeniable that unless the assessment upon the owner is revised in any manner known to law, the Commissioner cannot issue a demand for recovery of any amount over and above what is found recorded in the assessment books. It is elementary that principles of natural justice require that before an enhanced liability can be fastened upon a tax prayer, he should be given an opportunity of being heard. Despite the fact that S. 137-B starts with the words 'notwithstanding anything to the contrary contained in this Act or the rules framed thereunder'. I am unable to agree that the demand could have been made upon the petitioner without hearing her in that regard. What S. 137-B enables the Commissioner to do is only to validate recovery of tax for earlier years when once it has been found that the property has been under-assessed. The rules contained in Part I-A of Schedule IV are ex facie prospective in their application. It is only to he extent of enabling the recovery for the previous three years that S. 137-B has been expressly enacted. It does not mean that without any enquiry of any description and with out giving an opportunity to the tax-payer to state this case against the enhancement of the tax, the Commissioner can straightway proceed to issue a demand under S. 137-B. An amendment of the property tax assessment books effected by Rule 3 of Part I-A of Schedule IV clearly takes effect on the first day of the half year in which it is made. It is this limitation that is relaxed. That he Commissioner can issue a notice demanding tax at an enhanced figure under S. 137-B without reference to the rules contained in the schedule is to my mind wholly erroneous.
(6) Mr. Chengalvarayan, learned counsel for the Corporation, urges that he petitioner has other appropriate remedies under the Act and that the appropriate remedies under the Act and the discretionary jurisdiction of this court in writ should not be exercised in his favour. I would have been willing to accept this contention had the proceedings of the Commissioner been confined only to the rules contained in Schedule IV. But, on the other hand, the Commissioner has purported to exercise the power under S. 137-B and to issue a demand even in advance of the amendment of the property tax assessment books and threatened coercive proceedings against he tax payer. It seems to me that this is a proper case where the writ should issue.
(7) The notice issued under S. 137-B is accordingly quashed. It would be open to he Commissioner to issue a fresh notice under the rules, amend the property tax booms after giving notice to the petitioner to make her representations and thereafter invoke, if so advised the powers under S. 137-B for the realisation of tax. In the circumstances, there will be no order as to costs.
(8) Petition allowed.