Mufti, Actg. C.J.
1. The petitioner is an owner liable to pay tax under Urban Immovable Property Tax Act, 1962 (shortly 'the Act') in respect of a house and shop situate in Rughnath Bazar within the limits of rating area Jammu. In the approved valuation list for the period 1968 to 3973, which became effective with effect from 1st October 1968, the annual letting value of the house and shop was assessed and fixed at Rs. 3600/-. On 28-11-1969, the, Assessing Authority issued a notice to the petitioner informing her that it was necessary to amend the valuation list in the manner that the annual value of the property is determined at Rs. 8400/- with effect from 1st October, 1968 and required her to show cause why the proposed amendment should not be made. The petitioner objected to the amendment. By his order dated 7-2-1970, the Assessing Authority, after repelling the objections, determined the annual rent at Rs. 8284/- retrospectively with effect from 1st October, 1968 and levied the tax accordingly. The petitioner went in revision to the Excise and Taxation Commissioner but without success. Aggrieved by the order, the petitioner has filed this writ petition and challenged the amendment as void, illegal and without jurisdiction. The writ petition came up for hearing before a Division Bench consisting of two of us. For the petitioner, the following two points were urged before the Division Bench:
1. That the amendment could not be made effective for any period prior to the year 1969-70,
2. That the amendment was vitiated on the ground of non-consideration of the material argument raised on behalf of the petitioner before the authorities below that the annual valuation could not exceed the fair rent assessable under the Jammu and Kashmir Rouses and Shops Rent Control Act.
2. In support of the first point reliance was placed upon a Division Bench judgment of this court in EastIndia Hotels Ltd. v. Assessing Authority, 1978 STC 5: (1977 J&K; LR 510 : AIR 1978 NOG 81). In that case, it has been held that an amendment to the approved valuation list cannot be made effective for any period prior to the date of order making the amendment. On behalf of the State the correctness of this judgment was disputed on the ground that the view expressed therein was against the terms and spirit of the Act and it was urged that the judgment required reconsideration. Being of the opinion, that the point raised required reconsideration, the Division Bench desired that the case should be placed before a Full Bench. That is how this case has come up before this Bench.
3. Before us, learned counsel for the State contended that, on a true construction of the relevant provisions of the Act, an amendment shall have effect from the date on which the circumstances justifying such amendment existed and would be operative till the current valuation list subsists. He particularly laid stress on the provisions of Section 9 and submitted that the power to amend has been predicated to the requirement 'to bring the list into accord with the existing circumstances', which necessarily implies that the amendment should be related to the date on which the circumstances justifying the same existed and not to the date when it is formally ordered. He invited our attention to the latest amendment in Section 9 whereby it has been provided that an amendment or alteration in the valuation list shall have the effect from the date it became necessary. He submitted that this intention was writ large on the un-amended Section 9 and has now been made more specific by the latest amendment. He contended that the view to the contrary expressed in the case of East India Hotels, 1977 J&K; LR 510: AIR 1978 NOC 81 (supra) runs counter to the letter and spirit of the unamended Section 9 and the relevant provisions of the Act.
4. In order to appreciate the submissions, it will be necessary to examine briefly the provisions of the Act dealing with the assessment and levy of the tax on the land and buildings under the Act. Section 3 is the charging section and leaving portions not relevant, reads:
'3. Levy of tax. -- (1) There shall be charged levied and paid an annual tax on such buildings and lands situated in the rating area shown in the Schedule to this Act as may be specified by the Government by notification in the Government Gazette, at such rate not exceeding twenty-five per centum of the annual value of such buildings and lands, as the Government may determine in respect of each such rating area:
Provided that there the tax calculated on the annual value exceeds the tax difference between the said annual value and exemption limit, as referred to in Clause (c) of Sub-section (1), or as fixed by the Government under Sub-section (2), of Section 4, the tax leviable shall be equal to the said difference:
Provided further that the Government may fix graduated rates of tax on different slabs of annual value of such lands and buildings subject to maximum specified in this Section.' Section 5 provides for ascertainment of the annual value and says that such value shall be ascertained by estimating the gross annual rent at which the land or building together with its appurtenances might reasonably be expected to be let from year to year less certain statutory deductions mentioned therein. Section 7 deals with the making and operation of the valuation list and provides as under:--
'7. Making and operation of valuation list. -
(1) A valuation list shall be made by the prescribed authority in accordance with the rules framed under this Act for every rating area so as to come into force either on the first day of April or the first day of October, and thereafter new valuation lists shall be made from time to time so that the interval between the dates on which one valuation list and the next succeeding valuation list respectively come into force shall be a period of five years :
Provided that the Government may by order -
(a) extend or reduce by six months or one year the interval which would otherwise elapse between the coming into force of any two successive lists for any rating area; and
(b) divide any rating area into parts for the purposes of a new valuation list and determine the years in which thenext following valuation list for each of such parts respectively shall be made and come into force.
(2) Subject to the provisions of any such order as aforesaid, every valuation list shall come into force on the first day of April or the first day of October, as the case may be, next following the date on which it is finally approved by the assessing authority and shall, subject to the provisions of this Act and the rules made thereunder (including the provisions with respect to the alteration of and the making. of additions to the valuation list), remain in force until it is superseded by a new valuation list.'
Section 9 provides for the amendment of the approved valuation list and says as under :--
'9. Amendment of current valuation list. -- Subject to such rules, if any, as the Government may think fit to make in this behalf, the assessing authority may at any time make such amendments in a valuation list as appear to it necessary in order to bring the list into accord with the existing circumstances and in particular may -
(a) correct any clerical or arithmetical error in the list;
(b) correct any erroneous insertions or omissions or any misdescriptions;
(c) make such additions to or corrections in the list as appear to the authority to be necessary by reason of -
(i) a new building being erected after the compl etion of the valuation list,
(ii) a building included in the valuation list being destroyed or substantially damaged or altered since its value was last determined,
(iii) any change in the ownership of any building or land;
Provided that not less than fourteen days before making under the foregoing provisions any amendment in the valuation list for the time being in force other than correction of a clerical or arithmetical error, or correction of an erroneous insertion, omission or misdescription, the assessing authority shall send notice of the proposed amendment to the owner of the building or land and shall also consider any objection thereto which may be made by him.'
Section II provides that the tax shall be levied in accordance with the valuation list in force for the time being and shall be collected and be recoverablenotwithstanding any appeal which may be pending with respect to that list, Section 12 provides that the tax shall be payable quarterly on such dates as may be prescribed.
5. The scheme of these provisions shows that the liability to pay tax on lands and buildings arises from the valuation list prepared under the Act, A valuation list once made remains effective for a period of five years, The list can, however, be amended or altered at any time during the period it is operative. The tax is to be levied on yearly basis during the period for which the valuation list remains operative. The tax is, however, payable in quarterly instalments and on such dates as may be prescribed.
6. Now once we take the view that liability to pay the tax arises from the valuation list and that the valuation list once made remains operative for a period of five years, though the tax is to be levied only on yearly basis, the conclusion is irresistible that the amendment of the list, in order to be effective for levying tax for any year, need not necessarily be made in that year and may even be made retrospectively in any subsequent year so long as the list continues to be in force provided that the circumstances justifying the amendment existed in that year. Any other view would imply that with the passage of each year the list would become inoperative for that year. That would make it a list effective from year to year and not for a period of five years, This is what the Legislature did not clearly intend. For, the Act contains an express mandate that the valuation list, once made, shall remain operative for a period of five years.
7. Apart from this consideration, there is intrinsic evidence in Section 9 to support the view expressed above. By virtue of Section 9, the power to amend the valuation list is predicated to the requirement that it should be necessary 'in order to bring the list in accord with the existing circumstances.' Thus the power to make an amendment would depend upon the existence of circumstances justifying the same. Such circumstances might be there either when the list was initially prepared but had remained unnoticed or they might develop during the course of the period for which the listremains operative. It necessarily follows that an amendment, in order to be effective in levying tax for any year, will depend upon the existence of the circumstances justfying such amendment during that year and not on when it is actually effected, provided, of course, the list is still in operation when the amendment is effected. This view is illustrated by Clauses (a), (b) and (c) of this section. Clauses (a) and (b) conceive of amendments which are justified by the circumstances existing at the inception of the list which have escaped notice inadvertently. Clause (c) contemplates changes based on developments during the currency of the list. In this background I am of the opinion that an amendment, in order to be effective to levy tax retrospectively, can be validly effected in the approved valuation list provided circumstances justifying such amendment existed at the relevant time and the amendment is effected while thej list is still in force.
8. In the case of East India Hotels, (1977 J&K; LR 510 : AIR 1978 NOC 81), a Division Bench of this Court, has taken the view that the amendment would be effective only in respect of the year in which it is effected and for the subsequetn years so long as the valuation list remains in force and thatit cannot be extended to a period prior to the date of amendment. For this, the Bench drew support from a Supreme. Court decision sion in Municipal Corporation of the City of Hubli v. Subha Rao, AIR 1976 SC 1393: (1976 Tax LR 1720). The decision is based upon the Bombay Municipal Boroughs Act (18 of 1925). The salient feature of this Act was that the assessment list was prepared from year to year and not for a number of years. In this context the Supreme Court held that an amendment in the valuation list, in order to be effective in levying the tax for any year, must be made during the currency of that year. The decision is clearly distinguishable in the present case. Here the valuation list remains operative tor five years and not only for a single year. Accordingly reliance on this decision was competely mis-placed. The decision in East India Hotels, I may say with respect, is not correct and must be overruled.
9. In the present case, it has been found that the circumstances justifyingthe amendment existed right from 1st of October, 1968. The amendment was effected while the valuation list was still in force. On the principle stated above, the authorities below were justified in holding that the amendment would be effective from 1st of October, 1968 and that the tax shall be levied accordingly. The first point therefore fails.
10. Coming to the second point it may be noted that the petitioner has caused a personal affidavit to be filed of the counsel who conducted the case before the authorities below. Counsel has given a sworn statement that before the authorities below he has consistently argued that the annual value could not exceed the fair rent assessable under the Jammu and Kashmir Houses and Shops Rent Control Act. But neither of them considered the argument although it had an important bearing on the result of the case. There is no counter affidavit from the other side. We are, therefore, inclined to hold that the aforesaid argumentwas really advanced before the authorities below. The question, however,remains whether this was a material'consideration for determining the annual valuation. On this question thereis not much room for controversy. For.in the case reported as AIR 1962 SC151, it has been held that this is arelevant consideration. Accordingly theomission to consider this aspect of thematter, would amount to an error ofjurisdiction and vitiate the finding. Inthis view, the impugned orders areliable to be set aside.
11. The result, therefore, Is that the petition succeeds and is allowed. The impugned orders are set aside and the Assessing Authority is directed to make a fresh order in accordance with law keeping in view the observations made above.
A.S. Anand, J.
12. I agree.
L.K. Kotwal, J.
13. I agree.