R.M. Lodha, J.@mdashThe Municipal Corporation of Greater Mumbai and its functionaries have preferred this appeal aggrieved by the judgment and order dated October 14, 2004, passed by the learned Single Judge. The learned single Judge allowed the writ petition filed by the present respondent Nos.1 and 2 and quashed and set aside the orders dated 24th March, 2004 (Exhibits ''O1'', ''O2'' and ''P'') and the demands of payment pursuant to the bills (Exhibits ''R'', ''S1'' to ''S8'') so far as the present appellants sought to reassess the rateable value with effect from 1st April, 2000.
2. For the sake of convenience, we shall refer the first appellant- the Municipal Corporation of Greater Mumbai "the Corporation" and the present respondent No.1- Dalamal Tower Premises Co-operative Society Limited "the petitioner".
3. The petitioner claims to hold the property being plot of land with building ''Dalamal Tower'', situate at Plot No. 211, Backbay Reclamation, Municipal A Ward No. 1315 (127), Nariman Point, Mumbai (for short "the said property"). The said property consists of a building comprising of basement, ground and 15 upper floors. There are 116 open car parks, two enclosed garages in the basement and 274 units in the building. The said building is a non-residential (commercial) building. According to the petitioner, out of 274 units, 199 units are self occupied by its members and 75 units are given on leave and licence to third parties by the members.
4. On 29th March, 2001, the special notice being No. 312 of 2000-2001 was issued by the Corporation u/s 167 of the Mumbai Municipal Corporation Act, 1888 (for short, ''the Act'') in respect of the year 2000-2001 stating that the assessment has been amended in the official year (1.4.2000 to 31.3.2001) increasing the rateable value of the said property to Rs. 1,74,59,615/-. In the said notice, it was indicated that complaint there against may be made.
5. On 29th March, 2001 another special notice being No. 312A of 2000-2001 was issued by the Corporation u/s 162 (2) in respect of the year 2001-02 stating that the rateable value of the said property has been fixed at Rs.1,74,59,615/- for the year 2001-02 (1.4.2001 to 31.3.2002). In this notice also it was indicated that complaint there against may be made.
6. In the month of April, 2001, the petitioner filed the complaint regarding the special notices Nos.312 and 312A of 2000-2001 afore noticed which were issued on 29th March, 2001. The said complaint was registered as complaint No. ACR/310/2000-2001.
7. On 22nd March, 2002, the special notice No. 164/2001-2002 was issued by the Corporation u/s 167 in respect of the year 2001-02 stating that the assessment book had been amended for the official year 2001-02 (1.4.2001 to 31.3.2002) increasing the rateable value of the said property to Rs. 5,07,38,165/-.
8. Another notice being special notice No. 164A of 2001-2002 was issued by the Corporation on 22nd March, 2002 u/s 162(2) for the year 2002-03 stating that the rateable value of the said property has been fixed at Rs. 5,07,38,165/- for the year 2002-03 (1.4.2002 to 31.3.2003).
9. The petitioner filed the complaint regarding special notice No. 164 dated 22nd March, 2002 for the period 2001-02. The same was registered as complaint No. ACR/257/2001-2002.
10. It appears that in the meantime, several petitions including writ petition No. 1116 of 2002 and writ petition No. 1721 of 2002 were filed in this court challenging the circulars dated 8.12.2000, 6.1.2001, 25.9.2001, 16.3.2002 and 3.4.2002 issued by the Corporation in relation to the rateable value of various properties in Nariman Point area including the said property. While the petitions were pending, the Corporation investigated the complaint No. ACR/310/2000-2001 filed by the petitioner and by the order dated 27th May, 2002, the Corporation fixed the rateable value of the said property of Rs. 53,27,085/- with effect from 1st April, 2000 to 31st March, 2001.
11. The Division Bench presided over by one of us (R.M. Lodha, J.) disposed of the writ petitions including writ petition No. 1116 of 2002 and writ petition No. 1721 of 2002 and other similar writ petitions by the order dated 23.10.2002. In the order, the Division Bench recorded the statement of the Corporation that the impugned circulars were being withdrawn and, in view thereof, the action taken or reassessment done pursuant to the circulars cannot stand. The court directed the Corporation to reassess the properties for the purpose of property tax in accordance with law.
12. It is pertinent to note that on 23.10.2002 when the group of writ petitions was disposed of, the complaint No. ACR/257/2001-2002 filed by the petitioner regarding special notice No. 164 dated 22nd March, 2002 for the year 2001-02 was pending and no order had been made in the said complaint. In the light of the order that was passed on 23.10.2002, the Corporation by its communication dated 20th January, 2003, addressed to the Dalamal & Sons Investment Company through petitioner, recorded that the assessment for the year 2000-2001 has been rendered ineffective and that it was proposed to reassess the rateable value of the said property at Rs. 1,74,59,615/-.
13. On 21st January, 2003, the petitioner filed its objections. The petitioner supplemented the said objections by further detailed objections filed on 8.1.2004 and 27.1.2004.
14. To complete the narration of facts, it may be noticed here that the Corporation sent the notices which were received by the petitioner on 11th December, 2003 and 12th December, 2003. By the notice which was received by the petitioner on 11th December, 2003, it was informed that the complaint regarding the year 2000-01 in respect of ACR/310/2000-2001 relating to special notice u/s 167 dated 29th March, 2001 would be investigated and disposed of on 29th December, 2003. Similarly, by the notice that was received by the petitioner on 12th December, 2003, it was informed that the complaint regarding the year 2001-02 i.e. ACT/257/2001-2002 relating to special notice u/s 167 dated 22nd March, 2002 would be investigated and disposed of on 29th December, 2003.
15. The petitioner filed its objections on 29th December, 2003 and the personal hearing was granted to the petitioner on 30th December, 2003. As already indicated above, the petitioner filed supplementary objections on 8.1.2004 and 27.1.2004. The petitioner also submitted a tabulated statement showing details of owner occupied premises and other details as required by the Corporation with respect to the said property on 21.1.2004. The complaints were adjourned on 11th March and 17th March, 2004. On 24th March, 2004, the Corporation made an order in complaint No. ACR/310/2000-2001 relating to the special notice dated 29th March, 2001 u/s 167 fixing the rateable value at Rs. 90,44,455/- from 1.4.2000 to 31.3.2001. On this day, the Corporation also made another order in complaint No. ACR/257/2001-2002 relating to the special notice dated 22nd March, 2002 u/s 167 fixing the rateable value at Rs. 1,56,53,350/- to Rs. 1,57,33,070/- for 2001-2002 and the different rates ranging from Rs. 1,43,65,495/- to 1,55,72,620/- from 1.4.2003 to 31.3.2004. The petitioner was provided with the tabulated statement giving break-up of calculation of the rateable value for each individual unit in the said building.
16. The petitioner filed two appeals (848 of 2004 and 849 of 2004) u/s 217 of the Act before the court of Small Causes on 2.4.2004 aggrieved by the orders dated 24th March, 2004. On 29.5.2004, the petitioner was served with 8 supplement bills (dated 31st March, 2004) for payment of property tax for the period 1.4.2000 to 31.3.2004 at the reassessed rateable value for an amount aggregating to Rs. 4,28,51,911/-. Prior thereto on 26.4.2004, the petitioner received the bill dated 1.4.2004 for payment of property tax for the period from 1.4.2004 to 31.9.2004.
18. Though the petitioner has already filed appeals u/s 217 of the Act challenging the orders dated 24th March, 2004, passed by the Corporation in complaint ACR/310/2000- 2001 and ACR/257/2001-2002, the petitioner filed the writ petition challenging the said two orders dated 24th March, 2004 and bills/demands dated 31st March, 2004 and 1st April, 2004. The reliefs made in the writ petition read thus-
(a) that this Hon''ble Court be pleased to issue a writ of certiorari or a writ in the nature of certiorari, or any other appropriate writ, order or direction under Article 226 of the Constitution of India, calling for the papers and proceedings relating to the orders dated 24th March, 2004 (being Exhibits ''O- 1'', ''O-2'' and ''P'' hereto) and the demands for payment made by the Respondents pursuant thereto by Bills (being Exhibits R, S-1 to S-9 hereto), and after ascertaining the legality thereof to quash and/or set aside the same is so far as they seek to reassess the rateable value of the petitioner''s property and to impose the same with retrospective effect from 1st April, 2000.
(b) that this Hon''ble Court be pleased to issue a writ of Prohibition or a writ in the nature of Prohibition, or any other writ, order or direction under Article 226 of the Constitution of India against the Respondents restraining them, their servants, officers and agents from imposing the re-assessed rateable value on the Petitioner or from taking any steps to recover amount from the Petitioner on the basis of the said revision made by the impugned Orders dated 24th March, 2004 (being Exhibits ''O-1'', ''O-2'' and ''P'' hereto) and the demands for payment made by the Respondents pursuant thereto by bills (being Exhibits ''R'', ''S-1'' to ''S-8'' hereto).
19. Before the learned Single Judge, on behalf of the petitioner, the following contentions were raised;
(i) That the impugned order and the bills/demands issued are bad in law being in violation of law laid down by this court in the matter of Municipal Corporation of Greater Mumbai v. Jeeven Jyot Office & Business Premises Cooperative Society Limited.
(ii) That the assessee for the purposes of property taxes is the society in relation to the said building and not the occupants of the units in the building independently. The repeal of the then existing Bombay Rent Control Act and the applicability of the Maharashtra Rent Control Act, 1999 to the said building does not change the situation so as to enable the Corporation to assess the self-occupied units separately from the units which are in occupation of the third parties on tenancy/leave and licence basis.
(iii) That the Corporation has no authority to impose revised rateable value retrospectively for a period prior to the commencement of the current official year. The Corporation acted contrary to the statutory mandate of Section 167 and several binding judgments of this court as well as the Apex Court.
20. The learned Single Judge issued rule and at the motion hearing disposed of the rule by the impugned order dated October 14, 2004 by making it absolute in terms of prayers (a) and (b) aforequoted.
21. This is how the Corporation and its functionaries have come up in appeal aggrieved by the order dated October 14, 2004 passed by the learned Single Judge.
22. Before addressing the issues that emerged during the course of hearing in the appeal, the survey of the relevant provisions of the Act shall be appropriate at this stage itself.
23. Section 3(p) defines ''tax'' to include any impost liable under the Act.
24. Section 3(bb) defines the expression "official year" to mean the year commencing on 1st day of April.
25. Sections 125 and 126 provides for the entire exercise with regard to the preparation of assessment book as well as budget in respect of ensuing official year. Such exercise is required to be carried out in the previous year.
26. Section 128 provides that the Corporation shall on/or before 20th day of March, after considering the proposals made by the Standing Committee, decide the rates at which Municipal taxes shall be levied subject to limitations and conditions prescribed in Chapter VIII in the next ensuing official year. The Municipal taxes have to be fixed as per Section 128 before 20th day of March each year.
27. The charging provision of taxes in the Act are Sections 139 to 144A. Section 139(1) provides for imposition of the property taxes. Section 140 makes provision that property taxes shall become leviable and levied on all buildings and lands and shall include water tax, sewerage tax etc.
28. Section 146 sets out that property taxes shall be leviable primarily from the actual occupier of the premises upon which the said taxes are assessed, if such occupier holds the said land immediately from the Government. Sub-section (2) provides that otherwise the property taxes shall be primarily leviable as provided therein. Sub-section (3) provides that if any land has been let for any term exceeding one year to a tenant and such tenant or any person deriving title has built upon, the property taxes assessed upon the said land and upon the building erected thereon shall be primarily leviable from the said tenant or such person irrespective of whether the said premises are in occupation of the said tenant or such person.
29. Apportionment of responsibility for the property taxes when the premises assessed are let or sublet is provided in Section 147. It provides that the tenant is liable to landlord for increased tax levied.
30. Section 149 requires notice to be given to the Commissioner by an assessee in respect of the transfer of title. The notice is required to be given in the prescribed form as indicated in Section 150. Section 151 provides that the liability for payment of property tax shall continue in the absence of the assessee failing to give notice to the Commissioner. u/s 153, it is the duty of the assessee to give notice to the Commissioner when any building or property thereof is demolished or removed otherwise than by an order of the Commissioner in order to enable the Commissioner to hold a person liable for payment of the said tax.
31. Section 154 provides for the method for determination of the rateable value.
32. Section 155 empowers the Commissioner to call for information or returns from the owner or occupier in order to decide the rateable value of any building and the land and to enable him to decide the person who is primarily liable for the payment of the property tax.
33. Section 156 provides that the Commissioner shall keep a book to be called the ''assessment book'' in which shall be entered in every official year all buildings and lands in Greater Bombay, the rateable value of each building and land determined as per the provisions of the Act; the name of the person primarily liable for payment of property taxes; amount at which the building or land is assessed to tax leviable thereon and the particulars of the charge in respect of the water supplied by the Corporation. As per the scheme of Section 156, the property tax is leviable on the basis of the rateable value which is fixed, as indicated in the assessment book, after the complaint, if any, is disposed of.
34. Section 160 provides that the assessment book which is required to be prepared for the next ensuing official year must be preceded by public notice.
35. Section 161 makes a provision for inspection of the assessment book.
36. Section 162 provides that the Commissioner shall at the time and in the manner prescribed in the public notice u/s 160, fix the date and time for deciding complaints against the rateable value which is entered in the Ward Assessment Book. If the complaint is not filed then the said entry is confirmed. On the other hand, if complaint is filed, the Commissioner is required to dispose of the said complaint as provided in section 162(1). Sub-section (2) of Section 162 provides that in every case where the rateable value of any premises is liable to be increased or if the rateable value is entered in the assessment book for the first time, the Commissioner shall, after issue of public notice u/s 160 read with Section 162(1), give a special written notice to the owner or the occupier specifying the nature of the entry and informing him that any complaint against the increased proposed rateable value shall be received in his office within 15 days from the service of the special notice.
37. Section 163 provides for the time and manner of filing complaint against the valuation. Every complaint against the amount of any rateable value entered into the assessment book needs to be made by written application to the Commissioner within the time prescribed therein. Such application shall set forth briefly but fully the grounds on which the valuation is complained against.
38. As per Section 164, the Commissioner shall cause all complaints so received to be registered in a book to be kept for this purpose and shall give notice in writing to each complainant, of the day, time and place when and where at his application will be investigated.
39. u/s 165(1), the Commissioner shall investigate and dispose of such complaints after hearing the complainants and when such complaints are disposed of, the same shall be noted in the assessment book and any necessary amendment arising from the disposal of the complaint shall be made in accordance with the result in the assessment book.
40. Section 166 provides for authentication of ward assessment book after all complaints have been disposed of. It provides that all complaints both pursuant to the public notice as well as special notice having been disposed of and the entries required by Section 156(e) have been duly completed in the ward assessment book, the said book shall be authenticated by the Commissioner. Where valid objections have been taken and disposed of, the same shall be incorporated in the form of amendments and shown in the assessment book. Section 166(2) provides that authentication of ward assessment book shall be accepted as a conclusive evidence of the amount of property taxes leviable on each building in the official year to which the book relates subject to alterations, if any, u/s 167.
41. Section 167 provides that the assessment book may be amended by the Commissioner during the official year. It provides that the Commissioner may upon the representation of any person concerned, or upon any other information, at any time, during the official year to which the assessment book relates amend the same by inserting therein the name of any person whose name ought to be so inserted or any premises previously omitted or by striking out the name of any person not liable for the payment of any property tax or by increasing or reducing the amount of any rateable value and of the assessment, based thereupon, or by making or cancelling an entry exempting any premises from liability to any property tax. Sub-section (2) of Section 167 provides that every such amendment shall be deemed to have been made for the purpose of determining the liability or exemption of the person concerned in accordance with altered entry, from the earliest day in the current official year when the circumstances justifying the amendment exist.
42. The aforesaid provisions have been noticed for being kept in mind while dealing with the controversy in this appeal.
43. One more aspect needs to be noticed at this stage: the petitioner in the writ petition averred that they were the owner of the said property. The Single Judge also recorded that the said building belonged to the petitioner and it is the registered owner thereof. However, in the appeal, an affidavit has been filed by the Corporation on 8th February, 2005 alongwith the documents questioning the petitioners'' case that it was the owner of the said property. According to the Corporation, the said property is not owned by the petitioner; M/s. Dalamal & Sons Investment is the lessee from the Government of Maharashtra and the bills are also raised in their name though through the petitioner. In response to the Corporation''s affidavit dated 8th February, 2006, the petitioner filed the reply affidavit on 16th February, 2006 alongwith some documents. On 27th February, 2006, when the matter came up before us, Mr. Aspi Chinoy, the senior counsel for the petitioner agreed that the Corporation may be permitted to rely upon the affidavit and the documents annexed therewith. He, however, submitted that the reply affidavit filed on behalf of the petitioner on 16th February, 2006 alongwith the documents be also considered. At this stage, therefore, we notice that it is not undisputed that the said property belongs to the petitioner or that the petitioner is the registered owner thereof. There is serious dispute about the ownership of the property. In so far as the record of the Corporation is concerned, the assessee for payment of the property taxes in respect of the said property is not the petitioner but M/s. Dalamal & Sons Investment.
44. We heard the senior counsel for the parties at quite some length. In the light of their forceful submissions, bereft of peripheral matter, two questions arise for our consideration: (one) Whether for the determination of the rateable value of the said property (''Dalamal Tower'') the Corporation was justified in taking into account the rent/compensation received by the members (or estimate of rent contained in its circulars) from their tenants/licensees in respect of the units exempted from the applicability of Maharashtra Rent Control Act, 1999. (two) Whether the assessment orders dated 24th March, 2004 cannot in law have effect from any date prior to 1st April, 2003 and, therefore, the assessment orders effective from 1.4.2000 are illegal?
Re: Question (one)
45. The fixation of the rateable value for the purposes of property taxes under the various Municipal Corporations Act has been in the nature of perennial dispute. The law reports are replete with decisions on this question. As a matter of fact, on behalf of both sides, the senior counsel cited good number of authorities to buttress their respective arguments.
46. First in the series of decisions is the decision in
47. The other case upon which very heavy reliance was placed by the senior counsel for the petitioner is the case of the
48. In the case of
49. The case of Municipal Corporation, Indore v. Smt. Ratnaprabha, AIR 1977 SC 308 related to a building situated in Indore and subject to the provisions of Madhya Pradesh Accommodation Control Act, 1961. The building was self-occupied. There was no occasion to pay the standard rent fixed by the Controller. The annual value of the building was sought to be assessed for rating purposes under the Madhya Pradesh Municipal Corporation Act, 1956. The relevant provision in the Act provided that the annual value of any building shall, notwithstanding anything contained in any other law for the time being in force be deemed to be the gross annual rent at which such building might reasonably be expected to let from year to year, subject to certain specified deductions. The argument of the assessee was that even though no standard rent in respect of the building was fixed by the Controller, the reasonable rent contemplated under the Act could not exceed the standard rent determinable under the Rent Control Act and it was incumbent on the Municipal Commissioner to determine the annual value of the building on the same basis at which its standard rent was required to be fixed under the Rent Control Act. The Supreme Court negatived the contention of the assessee in the light of the words "notwithstanding anything contained in any other law for the time being in force" in Section 138(b). The Supreme Court held that while "the requirement of the law is that the reasonable letting value should determine the annual value of the building, it has also been specifically provided that this would be so "notwithstanding anything contained in any other law for the time being in force" and observed that it would be a proper interpretation of these words "to hold that in a case where the standard rent of a building has been fixed u/s 7 of the Rent Control Act, and there is nothing to show that there has been fraud or collusion, that would be its reasonable letting value, but where this is not so, and the building has never been let out and is being used in a manner where the question of fixing its standard rent does not arise, it would be permissible to fix the rateable value which is reasonable without regard to the provisions of the Rent Control Act.
50. The Supreme Court in the case of
51. In the case of
52. In the case of
11. Before parting with this appeal, we feel compelled to express our doubts as to the soundness and continuing relevance of the view taken by this Court in several earlier decisions that the property tax must be determined on the basis of fair rent alone regardless of the actual rent received. Fair rent very often means the rent prevailing prior to 1950 with some minor modifications and additions. Property tax is the main source of revenue to the municipalities and municipal corporations. To compel these local bodies to levy and collect the property tax on the basis of fair rent alone, while asking them at the same time to perform all their obligatory and discretionary functions prescribed by the statute may be to ask for the impossible. The cost of maintaining and laying roads, drains and other amenities, the salaries of staff and wages of employees- in short, all types of expenditure have gone up steeply over the last more than forty years. In such a situation, insistence upon levy of property tax on the basis of fair rent alone disregarding the actual rent received- is neither justified nor practicable. None of the enactments says so expressly. The said principle has been evolved by courts by a process of interpretation. Probably a time has come when the said principle may have to be reviewed.
53. In the case of
54. In the case of
55. In
56. The Supreme Court in the case of
57. In the case of
23. As already noticed even without specific determination, the standard rent was held to have been statutorily determined u/s 2(10)(b) of the Rent Act. Upon analysis of the various municipal laws and the judgments of this Court it is held that in case where the municipal laws exclude the applicability of the Rent Acts by incorporating non obstante clause in the taxing statute, the powers of the authorities under the Municipal Acts are not circumscribed by the limits indicated in Padma Debi case and followed in that group of cases. In cases where the fair rent payable by the tenant has been determined and there is no justification for refusing to accept that fair rent as rental value of the premises, the municipal authorities should generally accept the standard rent fixed, notwithstanding the non-applicability of the Rent Acts because such a view would be a reasonable guideline to determine the rate of rent at which such land or building might, at the time of assessment, be reasonably expected to let from year to year. The rent which the tenant is receiving from his sub-tenant is also an important statutory consideration for determining the rent at the time of assessment to which the property might reasonably be expected to be let from year to year. Such a consideration is also justified on the principles of reasonableness. We cannot agree that in all cases, notwithstanding the non obstante clause the annual rental value cannot be fixed beyond the standard rent determined or determinable under the rent statute. We also find it difficult to hold that in all cases the rent actually paid by the sub-tenant to the tenant be taken as a sole criterion for determining the annual value on the assumption that such land or building might, at the time of assessment, is reasonably expected to get the aforesaid amount of rent if let from year to year. The argument that the rent actually received by the owner should always be deemed to be reasonable rent in the absence of fraud, collusion and other extraneous considerations is too general and broad proposition of law which cannot be accepted for the purposes of determining the annual value of the property for the purposes of Section 174 of the 1980 act. In the light of clear and unambiguous provisions of Section 174 of the 1980 act, it cannot be held that the amount realised by a tenant from a sub-tenant cannot, at all be taken into consideration for the purposes of determining the gross annual rent in the absence of extraneous considerations. There is no substance in the submission of the learned counsel appearing for the appellant that allowing the municipal corporations to assess the annual rateable value on the basis of the income of a tenant from the property would be grossly unfair and would have the effect of rendering the rate provisions of the Act unreasonable, arbitrary and unconstitutional. The Act itself has taken care by making sufficient provision in Sections 193 and 194 regarding the liability to pay the rent and apportionment of such liability when the premises are assessed, let or sublet. On proof of creation of sub-tenancy, the owner of the building may also be entitled to seek eviction of their tenants under the relevant provisions of the Rent Acts applicable in the State where the land or property is located. We find some substance in the submission of the learned counsel for the appellant that permitting the municipal authorities to assess the annual value only on the basis of the rent paid by the sub-tenant to the tenant and fixing its liability on the owner may adversely affect the owners of the buildings who have let their premises at a time when rents were meager and who under the rent control statutes are deprived of getting possession back of the lands and buildings from their tenants. The 1980 Act, therefore, requires application of mind by the municipal authorities to determine the rents on the basis of reasonableness by keeping into account all relevant circumstances including the actual rent received by the owner, hypothetical standard rent, the rent being received by the tenant from his sub-tenant and other relevant consideration, such as prevalent rate of rent of lands and building in the vicinity of the property being assessed. Only because the owner of the building is not getting the same rent which the sub-tenant is paying to his lessor, cannot be made a basis to deprive the corporations from determining the annual valuation and taxing the land or building on that basis. If such a plea is accepted, it would be against the provisions of the statute which has been enacted to provide civic services in the form of water, drainage, sewerage, collection, removal and disposal of solid waste, fire prevention and fire safety maintenance of street and public places etc., in the municipal area where such land or building is situate.
24. We do not find any conflict in the judgments of this Court so far as the determination of annual value of the property under the municipal laws is concerned. Distinction, if any, is based upon the relevant provision of the statute of a State with which this Court was dealing, particularly with respect to such statutes which contained a non obstante clause. We are of the view that the basis for determination of annual rent value has to be the standard rent where the Rent Control Act is applicable and in all other cases reasonable determination of such rent by the municipal authorities keeping in view various factors as indicated herein earlier, including the rent which the tenant is getting from his sub-tenant. In appropriate cases the owner of the property may be in a position to satisfy the authorities that the gross annual rent of the building of which the annual valuation was being determined cannot be more than the actual rent received by such owner from his tenant. The municipal authorities shall keep in mind the various pronouncements of this Court, the statutory provisions made in the specified Municipal Acts, keeping in mind the applicability or no applicability of the Rent Act and the peculiar circumstances of each case, to find out the gross annual rent of the building including service charges, if any, at which such land or building might, at the time of assessment, be reasonably expected to let from year to year in terms of Section 174 of the 1980 Act.
25. Keeping in view the facts of the present appeal we are of the opinion that the High Court was right in remanding the appeals to the Appellate Tribunal for deciding on merits but was not justified to restrict the consideration only on the basis of rent being paid by the sub-tenant to the tenant for the purposes of determining the gross annual value. The Appellate Tribunal shall consider the appeals in the light of our judgment by keeping in mind all the circumstances including the rent actually received by the owner of the building and the rent being paid to the tenant by his sub-tenant. The Appellate Tribunal shall also keep in mind the peculiar circumstances of the case, if any, for determining the gross annual rent at which the building in controversy, at the time of assessment, is reasonably expected to let from year to year, less the allowances and other considerations referred to in Section 174 of the 1980 act. If the annual valuation determined as more than the gross annual rent which the appellant is actually receiving from his tenant, the appellant shall be at liberty to recover the excess amount paid in terms of Section 194 of the 1980 Act.
58. In the case of
59. The case of Municipal Commissioner of Greater Mumbai v.Jeevan Jyot Office & Premises Co-operative Society Ltd. (F.A.393 of 1975 decided on 28th October, 1980) related to a building belonging to the Co-operative Society consisting of several flats. The flats were held by the members who were the shareholders and the members of the society. In fixing the rateable value, the investigating officer divided the flats in two categories viz. one category of flats which were occupied by the members themselves and the other category of flats which were allowed by the members to be occupied by the licensees against payment of compensation. It was held by the Division Bench that the compensation received by the members from their licensees can never be determinative of what ordinarily a building can fetch by way of rent. The occupants/licensees, the Division Bench held, are assumed to be temporary occupants who are required to pay for more than the standard rent due to the expedience and immediate needs. It was also held that what members received from the occupants cannot be relevant for determining what the society can reasonably expect to receive by way of rent at the market rate. The Division Bench observed that the members of the society were neither owners of any part of the building nor can they claim ownership of the flat as such. That the society was the owner of the entire building and the conveyance was executed in favour of the society and not in favour of the members was not in dispute. It was, thus, held that income of the society being relevant, what the society fetches in the market alone can be basis for determination of the rateable value of the property and that the Corporation has no right to take into account, for the purpose of fixation of the rateable value, the amount of compensation received by the members from their licensees when the tax was assessed on the society on the hypothesis that the society was the owner of the property.
60. The learned Single Judge of this court in the case of Biswa Bandhu Sen v. Municipal Corporation of Greater Bombay and others 1981 Bom.C.R.1006 relied upon the judgment in the case of Jeevan Jyot and held that the amount of compensation received by the member was not determinative of the rateable value.
61. Yet another Single Judge of this court in the case of
62. Having noticed wide spectrum of decisions cited at bar, we now proceed to find answer to question (one) noticed above in the facts of the present case and the legal position.
63. The petitioner set up the case in the writ petition that it was the owner of the said property. The learned Single Judge also proceeded on the basis that the said building belonged to the petitioner; that the petitioner is a registered owner and unit holders in the building are its shareholders and the members. However, the facts that turned out before us by way of affidavit filed by the Corporation and the documents annexed thereto tell the different story. That the petitioner does not have any conveyance in its favour in respect of the said property until date does not seem to be in doubt. As a matter of fact, the land was leased to M/s. Dalamal & Sons Investment Company (for short, ''the Company'') by the State Government with the right to construct building thereon. The company was put in possession of the land leased by the Government. The company constructed the building thereon known as ''Dalamal Tower''. The property has been assessed to property tax from 1st April, 1977 in the name of the Company. In the assessment book maintained by the Corporation u/s 156 of the Act, under the heading "names of persons primarily liable for payment of property tax in respect of the said property" is
Government of Maharashtra lessee M/s. Dalamal & Sons Investment Company.
64. However, the learned senior counsel for the petitioner contended before us that the company was never the lessee of the plot; that the plot was allotted to the company as promoters of the Co-operative Society to be formed or the premises purchasers; that the allotment was expressly made for the benefit of the society and lease was to be executed by the Government directly in favour of the society; that after the construction of the building Dalamal Towers, the society has been formed; that the Society (petitioner) is registered for the last 24 years; that the Company was not in possession of the building nor in any way concerned therewith; that the Government has been directed to execute a lease directly in favour of the petitioner and, accordingly, the Company cannot be said to be actual occupier of the building nor were the Company ever holding the property from the Government rather the petitioner is actual occupier of the property and is holding the same from the Government.
65. As to whether the Society is the owner of the said property or not cannot be decided in this appeal. However, from what we have noticed above, one thing is very clear that in the assessment book maintained by the Corporation, the primary liability to pay property tax is on the company as the company continues to be the assessee of the property all throughout. At no stage, the petitioner, after the construction of the building in the year 1982 or thereafter intimated to the Corporation about their rights in the property or for the amendment of the entries in the assessment book. The issue, that the petitioner is not the owner of the said property and that the company is primarily liable to pay property tax of the said property as per the record, has been raised by the Corporation not for the purposes of determination of ownership of the said property but to show that line of reasoning adopted in the case of Jeevan Jyot or the ratio in that case has no application to the fact situation of the present case. This aspect has to be kept in mind when we deal with the applicability of Jeevan Jyot.
66. The Deputy Assessor and Collector (City) from and after the year 2000 in computing the rateable value of the said building adopted the letting rate of Rs. 3250/- per 10 sq.mtrs per unit on the ground floor of the building and Rs. 1950/- per 10 sq.mtrs. per unit on the upper floors of the building in respect of the units given by the members of the petitioner-society to third parties on leave and licence or rental basis where these licensees/ tenants are excepted from the applicability of the Rent Control Act while continuing the letting rate of Rs. 125/- and Rs. 250/- per 10 sq.metres respectively for the ground and upper floors respectively for units occupied by the members. The controversy is with regard to the fixation of the rateable value of the said building by taking into consideration the letting rate of Rs. 3250/- per 10 sq.mtrs. per unit for ground floor and letting rate of Rs. 1950/- per 10 sq.mtrs. per unit for upper floor where those units are not amenable to the Rent Control Act. The question is, is such determination of rateable value illegal and in contravention of law.
67. Section 3(1)(b) of the Maharashtra Rent Control Act, 1999 exempts the premises let to Banks and Companies having a capital of more than Rs. one crore. The premises in occupation of such Banks and companies are, thus, exempted from the applicability of the Rent Control Act. It is true that the exemption subsists only as long as the tenancy of such class of tenants exists.
68. The crucial words in Section 154(1) are "the amount of annual rent for which such land or building might reasonably be expected to let from year to year". That is the touchstone for fixing the rateable value in the Act. Where the property is controlled by the Rent Control Act, the rateable value cannot be more than the fair or standard rent which can be fixed under the Rent Control Act. On the other hand, where the Municipal laws exclude the applicability of the Rent Acts by incorporating non obstante clause in the taxing statute, the constraints or restrictions of fair or standard rent do not apply in fixing the rateable value. In this category of the cases, the limits indicated in Padma Debi case, Life Insurance Corporation case, Guntur Town Rate Payers'' Association case and Dewan Daulat Rai Kapoor case are not attracted. In so far as the Bombay Municipal Corporation Act is concerned, there is no non obstante clause in the taxing provisions excluding the applicability of the Rent Control Act. Can it be said, that the property excepted from the Rent Control Act, not because of any such provision in the Municipal Corporation Act but because of exclusion in the Rent Control Act itself, be not taxed by fixing rateable value keeping in view all relevant factors including the rent which the tenant is getting from sub-tenant or member of the society from his tenant (by whatever name called)? In respect of the property, for whatever reason, where the Rent Control Act is not applicable, the reasonable determination of such rent by the Municipal authorities after taking into consideration all relevant factors including the rent/licence fee which the member was getting from his tenant or licensee cannot be said to be altogether irrelevant. In India Automobiles, the three Judge Bench of the Supreme Court scanned its previous decisions and it was held that the basis for determination of annual rent value has to be the standard rent where the Rent Control Act was applicable and in all other cases reasonable determination of such rent by the municipal authorities keeping in view various factors including the rent which the tenant is getting from his subtenant. The contention that allowing the Corporation to assess the annual rateable value on the basis of the income of a tenant from the property would be grossly unfair and would have the effect of rendering the provisions of the Act unreasonable, arbitrary and unconstitutional was negatived. It was held that only because the owner of the building is not getting the same rent which the sub-tenant was paying to his lessor cannot be made a basis to deprive the Corporation from determining the annual valuation and taxing the land or building on that basis.
69. The decision of the Supreme Court in the case of India Automobiles, crystallises the legal position that while fixing the rateable value or the annual rent which may be reasonably expected from such property, the local authority must keep in mind whether such property is subject to Rent Control Act or not. Does this legal position not comprehend the situation where such property or part of it is not subject to Rent Control Act because of exemption under the Rent Control Act. In our view, it plainly does. Where the property is subject to Rent Control Act, rateable value is limited to standard rent determined or determinable under the Rent Act. There is no difficulty and the Courts have consistently ruled to that extent. Where the Municipal Corporation Laws exclude the applicability of Rent Control Act by non-obstante clause for determining annual valuation and taxing the land and building, there is again no difficulty that the concerned Municipal Corporation may take into consideration all relevant factors including the rent received or receivable from such property without constraints of standard rent. Certain Municipal Corporation Laws themselves provide the mode and manner of determination of annual value irrespective of Rent Control Act, in such cases, the determination of rateable value has to be accordingly. A case like this, where part of the property (some units) is exempted from the applicability of Rent Control Act (because of class of such tenants), shall, in our opinion, be covered by the ratio in the case of Government Servant Cooperative House Building Society and the second category of the cases highlighted in India Automobiles.
70. That the Municipal Corporation is entitled to revise the rateable value of the properties which have been freed from rent control, is approved by the Supreme Court in the case of Government Servant Co-operative House Building Society Ltd. It was held therein that the actual rent would afford reliable evidence of what the landlord might reasonably expect to get and that there would ordinarily be in a free market close approximation between the actual rent received by the landlord and the rent which might reasonably expect to be received from a hypothetical tenant.
71. The senior counsel for the petitioner strenuously urged that in computing the rateable value of the property owned by an assessee, what is relevant is the notional rental which a hypothetical tenant would pay for such property. As the property sought to be assessed is the entire building and the person liable to pay the tax is the owner of the entire building, the letting/licence granted by the individual members of the premises allotted to them to third parties is irrelevant for determining the rateable value of the building. In the submission of Mr. Aspi Chinoy since the said letting/licence by individual member is irrelevant, it must follow that it is equally irrelevant whether the premises are let by the members to such tenants/licensees which have the effect of making such individual premises exempted from the Rent Act so long as such letting/licence subsist. He would submit that the individual premises occupied by the petitioner''s members are not being assessed nor such tax being levied on the members as owners thereof. The exemption of a particular unit/premises from the Rent Control Act, consequent upon such premises being let/licensed by the member to a bank or limited company would be relevant if the member was being held liable for the property tax as the owner of the premises, which is, however, not the case as the said property is being assessed as a whole and the person sought to be held liable is the petitioner society and if one has to go by the entries in the assessment book, it is the company and the entire property is not exempted from the Rent Act. His submission is that in any event, the liability of the Rent Control Act to a particular tenant or to the premises consequent to the letting to a particular tenant only so long as such letting subsist, the Corporation is not entitled to compute the rateable value without preference to this kind of rent. Heavy reliance was placed by the learned senior counsel for the petitioner to the decisions in the matter of Life Insurance Corporation, Dewan Daulat Rai Kapoor and East India Commercial Company.
72. We have already indicated above - we need not repeat - that the decisions in Life Insurance Corporation of India, Dewan Daulat Rai Kapoor and East India Commercial Company have been succinctly explained by the three Judge Bench of the Supreme Court in the case of India Automobiles and that these cases fall in the category where the property is amenable to the Rent Control Act. In East India Commercial Company Pvt. Ltd., it was held that where the property is covered by Rent Restriction Act then the Municipal Act has to be read alongwith the Rent Restriction Act that provide for determination of fair rent or a standard rent; reading the two Acts together, the rateable value cannot be more than the fair or standard rent which can be fixed under the Rent Restriction Act. Obviously, where the property is covered by Rent Restriction Act, the annual value cannot exceed the standard rent which can be fixed under the Rent Restriction Act. The present case is a bit different. The property comprises of building having basement, ground and 15 upper floors. In the record of the Corporation, the assessee is the company. The flat purchasers framed the Co-operative society in the name of the petitioner and out of total 274 units, 199 units are self-occupied by the members of the petitioner-society and 75 units are given on tenancy or leave and licence to third parties by the members of the petitioner-society. Some of those units which have been given on leave and licence/tenancy to third parties are the banks or financial undertakings or the companies having a paid up share capital of Rs. 1,00,00,000/- or more, and, exempted by Section 3(1)b) of the Maharashtra Rent Control Act, 1999.
73. True it is that the said building is assessed to the property tax as one property in the hands of the company. The assessment of the said property for property taxes can only be done by taking into consideration the individual units. If some units of the building are not controlled by the Rent Act, obviously, it is a relevant factor for arriving at the rateable value of the whole building. In the case of Dr. Balbir Singh, the Supreme Court while dealing with the category of cases where the properties were partly self-occupied and partly tenanted, held that each unit would have to be determined on he principle set out for fixation of the standard rent and within the upper limit fixed by the standard rent. Of course, that was a case where all units of the building were covered by the rent control legislation. What is relevant to notice from the judgment of the Supreme Court in the case of Dr. Balbir Singh is that the distinct and separate units of occupation need to be assessed.
74. The Division Bench of this court through one of us (R.M. Lodha, J.) in the case of
Besides what is directed by the Apex Court is that rating of the whole land must be valued as vacant land in the relevant year as was done immediately in the preceding year but it cannot be deducted from the aforesaid direction that the whole vacant land shall be valued for the purposes of rating in the relevant year at one rate only. If that was so, there was no reason for remitting the matter to the Assessor for determination of rateable value for part of the land admeasuring 1060 sq.yds. The Apex Court, as a matter of fact, accepted the concept of notional division of plot of land and for a part of land admeasuring 1060 sq.yds. Which was being built upon, directed the Assessor to determine the rateable value afresh, of course to be valued as vacant land. The emphasis in the direction of the Apex Court in Polychem is that whole land including the land which is being built upon must be valued as vacant land. Take a case relating to a land of 10,000 sq.yds. For the purpose of fixation of rateable value. Part of such land say about 5000 sq.yds. Is ditch and remaining 5000 sq.yds. Is a buildable land. Obviously in the facts and circumstances, the whole land of 10,000 sq.yds. Needs to be notionally divided for the purposes of rating, because the rating of the land forming ditch may be much less than the rating of remaining land which is buildable. What has been decided by Apex Court in Polychem to be binding as a ratio is that the land which is being built upon (in other words land under construction or under development) for the purpose of rating has to be valued as vacant land in the relevant year. That does not mean necessarily for whole land at the same rate. We endeavoured to find out whether the orders passed by the Assessor and Collector impugned herein are without jurisdiction as was sought to be contended by relying on the judgment of the Apex Court in Polychem which must be corrected in writ jurisdiction. We hold that contention of the petitioners cannot be accepted as the land which is being built upon has been assessed as vacant land though at much higher rate than the land which is not being improved upon. Legality, correctness or otherwise justification of the high rateable value fixed for land under construction as vacant land than the remaining land simpliciter has to be questioned by the aggrieved party in a statutory appeal provided u/s 217 of M.M.C. Act, 1888 which is in the nature of original proceedings. Since, according to us, the petitioners have adequate and efficient statutory remedy in challenging the fixation of rateable value of land under construction, we need not go into the matter further and the petitioners, if so advised, may challenge fixation of rateable value in the statutory appeal.
75. In the light of the aforesaid legal position, it can be held without hesitation that though the said property is to be assessed as one property, the actual and factual position of each unit has to be kept in mind including as to whether such unit is controlled by Rent Act, and rateable value of the entire building has to be computed accordingly. If a particular unit is exempted u/s 3(1)(b) of the Rent Control Act, it is surely relevant to take this factor into consideration and it is fallacious to contend that the landlord cannot be reasonably expected to receive the same amount of rent from a hypothetical tenant. Section 147 of the Act provides that the tenant is liable to landlord for increased tax levied. As a necessary corollary, the member is liable to the society for increased tax levied if the member has let out the premises to the tenant whose tenancy is not restricted by Rent Act.
76. Mr. Aspi Chinoy, heavily relied upon the following observations in the case of Dewan Daulat Rai Kapoor:-
10. ... The anomalous situation which would thus arise on the contention of the Revenue would be whilst the tenant is occupying the building the measure of the annual value would be the contractual rent, but if the tenant vacates and the building is self-occupied, the annual value would be restricted to the standard rent determinable under the Act. It is difficult to see how the annual value of the building could vary according as it is tenanted or self-occupied. The circumstance that in each of the present cases the tenant was debarred by the period of limitation from making an application for fixation of the standard rent and the landlord was consequently entitled to continue to receive the contractual rent, cannot therefore affect the applicability of the decisions in the Life Insurance Corporation case, and the Guntur Municipal Council case and it must be held that the annual value of the building in each of these cases was limited by the measure of the standard rent determinable under the Act.
77. The aforesaid observations of the Supreme Court have to be read in the context of its decision that the annual value of the building governed by Rent Control Act must be limited by the measure of the standard rent determinable under that Act notwithstanding the fact that the standard rent has not been fixed by the Rent Control Act and the same principle applies to the self-occupied buildings where the building is controlled by the rent control legislation. Moreover the said observations are also in the context of applicability of the decisions in the Life Insurance Corporation case and the Guntur Municipal Council to the case. The proposition stated by way of analogy or anomaly is not always authoritative. In the classic words of Lord Halsbury, ''A case is only an authority for what it actually decides. I entirely deny that it can be quoted for a proposition that may seem to follow logically from it.''
78. The learned senior counsel for the petitioner placed strong reliance upon the decision of the Division Bench of this court in the case of Jeevan Jyot wherein it was held that the income of the society being relevant, what the society fetches in the market alone can be the basis for determination of the rateable value of the property and that the Corporation has no right to take into account for the purpose of fixation of the rateable value the amount of compensation received by the members from their licensees when the tax is assessed on the society on the hypothesis that the society is the owner of the property. In our view, Jeevan Jyot cannot be applied to the facts of the present case for more than one reason. For one, the petitioner society is not the undisputed owner of the land and the building as was the case in Jeevan Jyot. We have already noticed in the earlier part of the judgment that there is no conveyance or transfer of the subject property in favour of the petitioner society. As a matter of fact, in the record of the Corporation, the assessee is the company and the primary liability to pay the property tax is on that company. In Jeevan Jyot, it was not in dispute that the society was the owner of the entire building and the conveyance was executed in favour of the society. Second, and more importantly, Jeevan Jyot did not relate to the case where some members of the society had let out their respective units to the tenants exempted from the Rent Control Act. Such situation did not occur in Jeevan Jyot. That changes the whole scenario. The changed fact situation changes the applicability of rule laid down in Jeevan Jyot to the present case. Moreover after Jeevan Jyot, there are series of decisions of the Supreme Court and the legal position is crystalised in India Automobiles.
79. The learned Single Judge seriously erred in holding that the criteria adopted by the Corporation in distinguishing the self-occupied premises from those who are in occupation in different commercial undertakings on account of having been allowed to be occupied on leave and licence basis is contrary to law laid down by this court in Jeevan Jyot case which was followed in Biswa Bandhu Sen and Maker Bhawan case. In our considered view, the conclusions arrived at by the learned Single Judge in paragraphs 11 and 12 of the impugned order are inconsistent with the law laid down by the Apex Court in India Automobiles and in the case of Government Servant Cooperative House Building Society Ltd. Kamla Mills cases falls in the category where the property is subject to the control of Rent Act.
80. We find fallacy in the contention that since there is no existence of non obstante clause in the Act, in respect of the units even though they are exempted from Rent Control Act, it must be presumed that the rateable value for the whole building would be standard rent alone as would be the case for the units controlled by the Rent Control Act.
81. We, thus, hold that for the determination of rateable value of the said property (Dalamal Tower), the Corporation was justified in taking into account the estimate of rent contained in its circulars in respect of the units let out by the members to the tenants exempted under the Maharashtra Rent Control Act though the assessment is of the entire building as one property. Re : Question (two)
82. Mr. K.K. Singhvi, the senior counsel for the Corporation urged that the Corporation is entitled to amend the rateable value of a property and charge taxes on that basis from the earliest day in the current official year in which the amendment was carried out and the notice was issued to the assessee. According to him, the notice u/s 167 was issued on 29th March, 2001 that resulted in assessment dated 27th May, 2002. This court while disposing of the writ petition held that the assessment so made was ineffective upon withdrawal of the circulars by the Corporation and left it open to the Corporation to reassess the properties in accordance with law. He submitted that pursuant to the liberty granted by this court, the Corporation issued notice dated 20th January, 2003 for reassessment. The said notice was referable to the same complaint which was lodged pursuant to the notice dated 29th March, 2001 and after considering the objections, the order was passed on 29th March, 2004. According to Mr. K.K. Singhvi, the amendment had been carried out on 29th March, 2001 and as per the provisions of Section 167, the taxes were levied from the first day of official year being 1st April, 2000. It was argued by him that even the notice dated 29th March, 2001 issued u/s 167 stated that the assessment book has been amended. The reassessment pursuant to the liberty of this court and the order dated 29th March, 2004 upon disposal of objections cannot by any stretch of reasoning be construed having effect of retrospective levy of taxes. The senior counsel would submit that the charging provisions of taxes in the Act are Sections 139 to 144A. Sections 156 to 166 provide for the manner in which the assessment of taxes is to be carried out. Section 166 provides that upon disposal of all complaints, if any, the entry required by clause (e) of Section 156 having been completed in the ward assessment book, the said book will be authenticated by the Commissioner. Sub-section (2) of Section 166 provides that upon authentication, the ward assessment book subject to such alteration as may be made therein under the provisions of Section 167 is accepted as conclusive evidence of the amount of property tax leviable in the official year to which the book relates. Mr. K.K. Singhvi argued that the authentication u/s 166 is made subject to the power to amend u/s 167. Section 167 relates to the amendment of the assessment book and provides that the Commissioner may upon the representation of the persons concerned or upon any other information, at any time during the official year to which the assessment book relates, amend the same. Section 167(2) provides that each such amendment shall be deemed to have been made for the purposes of determining the liability of exemption of the person concerned in accordance with the altered entry from the earliest day in the current official year when circumstances justifying the amendment exist. According to Mr. K.K. Singhvi, the Act does not contemplate for authentication of the amendment done u/s 167. He strenuously urged that even if the objections to such amendments are decided subsequently, the same would not affect the entitlement of the Corporation to charge taxes as per the amendment from the first day of the official year in which the amendment was made. In support of his contentions, Mr. K.K. Singhvi relied upon the judgment of the learned Single Judge in the case of Vinay R. Gupta and Ors. v. Municipal Corporation of Greater Mumbai, decided on 27th March, 1995. He also relied upon two judgments of the Supreme Court: (i)
83. Mr. Aspi Chinoy and Mr. D.J. Khambatta, the senior counsel for the petitioner, on the other hand, supported the impugned order and urged that the two orders dated 24th March, 2004 made in ACR/310/2000-2001 and ACR/257/2001-2002 are illegal and ultra vires in so far as they purported to create liability retrospectively for a period 1.4.2000 to 31.3.2003. They referred to the scheme of Sections 160 to 167 and submitted that the alteration made u/s 167 could override the existing authenticated entry in the assessment book after following the procedure again as contemplated under Sections 162-165 and the amended entry once authenticated u/s 166(1) becomes conclusive u/s 166(2). They would submit that any other interpretation would mean that amendments u/s 167 will not be conclusive and could be made by the Corporation without the assessee having any right to complaint there against. In their submission, even the Corporation does not treat Section 167 as a self-contained code unrelated to Sections 162-166 in as much as while issuing notice u/s 167, the Corporation draws attention to the fact that the complaint can be filed there against u/s 163 (2). The learned senior counsel submitted that as a matter of fact, the complaints filed by the petitioner against the notices dated 29th March, 2001 and 22nd March, 2002 issued by the Corporation u/s 167 have been entertained, investigated and decided under Sections 162-165. They also invited our attention to Section 217 which provides that amendment u/s 167 is subject to the complaints procedure u/s 162-165 and it further provides that in cases relating to Section 167, the appeal may be preferred by the aggrieved person after his complaint has been disposed of. The learned senior counsel, in support of their contentions relied upon the Full Bench decision of this court in
84. The facts have already been narrated by us in the beginning of the judgment. On 29th March, 2001, the two special notices were issued by the Corporation. The special notice No. 312/2000-2001 was issued by the Corporation u/s 167 in respect of the year 2000-2001 stating that the assessment book has been amended increasing the rateable value of the said property to Rs. 1,74,59,615/- from 1.4.2000. The other notice issued on 29th March, 2001 was u/s 162(2) in respect of the year 2001-2002 stating that the rateable value of the said property has been fixed at Rs. 1,74,59,615/- for the year 2001-2002. Again two notices were issued on 22nd March, 2002. Special Notice No. 164/2001-2002 was issued u/s 167 in respect of the year 2001-2002 stating that the assessment book has been amended increasing the rateable value to Rs. 5,07,38,165/- from 1.4.2001. Another special notice dated 22nd March, 2002 was u/s 162(2) for the year 2002-2003 stating that the rateable value of the said property has been fixed at Rs. 5,07,38,165/- for the year 2002-2003. Regarding the special notices issued on 29th March, 2001, the petitioner filed complaint in the month of April, 2001 which was registered as complaint No. ACR/310/2000-2001. In respect of the special notice issued on 22nd March, 2002, the petitioner filed complaint in the month of April, 2002 which was registered as complain No. ACR/257/2001-2002. The complaint No. ACR/310/2000-2001 was disposed of on 27.5.2002 and for the year 2000-2001 (1.4.2000 to 31.3.2001), the rateable value was fixed at Rs. 53,27,085/-. The circulars which were the foundation of the order dated 27.5.2002 were challenged before this court in the writ petitions. The said writ petitions were disposed of on 23.10.2002 on the statement made on behalf of the Corporation that the impugned circulars were being withdrawn. This court noticed that the action taken or reassessment done pursuant to the said circulars could not stand. The Court directed the Corporation to reassess the subject property for the purpose of property tax in accordance with law. The Corporation then issued letter on 20th January, 2003 recording that the assessment done for the year 2000- 2001 has been rendered in effective by the order dated 2.10.2002 and that it proposes to reassess the rateable value of the property at Rs. 1,74,59,615/-. The petitioner filed the objections in response to the said communication. The said objections were treated as part of the complaint No. ACR/310/2000-2001 (relating to special notice u/s 167 dated 29th March, 2001) and were ultimately disposed of by the order dated 24th March, 2004. Similarly, in respect of the year 2001-2002, the notice was sent on 12th December, 2003 that the petitioner''s complaint ACR/257/2001-2002 (pursuant to the special notice u/s 167 dated 22nd March, 2002) shall be investigated and disposed of. The said complaint also came to be disposed of by the order dated 24th March, 2004. The orders passed on 24th March, 2004 are in continuation of the complaints which were registered pursuant to the notices issued on 29th March, 2001 (complaint ACR 310/2000-2001) and dated 22nd March, 2002 (ACR/257/2001-2002). If the argument advanced on behalf of the petitioner is accepted, it would result in absurd situation in as much as for the assessment years 2000- 2001 (1.4.2000 to 31.3.2001) and 2001-2002 (1.4.2001 to 31.3.2002), despite the liberty granted by this court, the reassessment of the property (of course in accordance with law) could never be done because the period of official years 2000- 2001 and 2001-2002 had already expired. The crucial thing is, and that we have to decide, whether the amendment in the assessment book u/s 167 becomes operative as soon as made as contended by Mr. K.K. Singhvi or such amendment in the assessment book has to undergo the procedure provided under Sections 162 to 165 and then authentication u/s 166(2) before it becomes operative.
85. The expression "official year" means the year commencing from first day of April. Section 156 indicates that property tax is leviable on the basis of rateable value fixed after disposal of complaints, if any, and as indicated in the assessment book. The scheme of Sections 160,162,165 and 166 is that the assessment list is required to be authenticated every year before commencement of the ensuing official year. Once authentication takes place, the tax becomes leviable. The authentication made u/s 166 is subject to the power to amend u/s 167. The Commissioner, u/s 167, on the represent ion of the concerned person or on its own on the basis of inquiries made by him can amend the assessment book. Section 167 does not contemplate notice to be given to the assessee before making amendment in the assessment book by the Commissioner. The special notice that is given to the assessee is after the amendment is made in the assessment book. The liability to pay property tax as per amended entry accrues in the official year it is made. 86. In the case of Solapur Municipal Corporation, the Division Bench referred the question; "whether on the true construction of Section 82(3) of the Bombay Municipal Boroughs Act, 1925, (i) an alteration made in assessment list u/s 78 thereof becomes effective for any period prior to the commencement of the official year in which the alteration in the assessment list is made so as to entitle the Municipality to levy tax for an official year for any part thereof which has already expired thereto or (ii) whether the alteration becomes effective from the commencement of the official year in which it is made so as to entitle the Municipality to levy tax with effect from commencement of that year only'' to the Full Bench. The Full Bench was concerned with Sections 81(6) and 82(3) which read thus:
Section 81
(6) Subject to such alterations as may be made therein under the provisions of Section 82 and to the result of any appeal or revision made u/s 110, the entries in the assessment list so authenticated and deposited and the entries, if any, inserted in the said list under the provisions of Section 82 shall be accepted as conclusive evidence-
(i) for the purposes of all municipal taxes, of the valuation, or annual letting value on the basis prescribed in the rules regulating the rate, of buildings, lands and both the buildings and lands to which such entries respectively refer, and
(ii) for the purposes of the rate for which such assessment list has been prepared, of the amount of the rate leviable on such buildings or lands or both buildings and lands in any official year in which such list is in force." Section 82
(1) The standing committee may at any time alter the assessment list by inserting or altering an entry in respect of any property, such entry having been omitted from or erroneously made in the assessment-list through fraud, accident or mistake or in respect of any building constructed, altered, added to or reconstructed in whole or in part, where such construction, alteration, addition or reconstruction has been completed after the preparation of the assessment list, after giving notice to any person interested in the alteration of the list of a date, not less than one month from the date of service of such notice, before which any objection to the alteration should be made....
(3) An entry or alteration made under this Section shall subject to the provisions of Section 110, have the same effect as if it had been made in the case of a building constructed, altered, added to or reconstructed on the day on which such construction, alteration, addition or reconstruction was completed or on the day on which the new construction, alteration, addition or reconstruction was first occupied, whichever first occurs, or in other cases, on the earliest day in the current official year on which the circumstances justifying the entry or alteration existed; and the tax or the enhanced tax as the case may be shall be levied in such year in the proportion which the remainder of the year after such day bears to the whole year.
87. The Full Bench held that an alteration made u/s 82(3) of the Bombay Municipal Boroughs Act, 1925 in the assessment list prepared u/s 78 of the Act does not become effective for any period prior to the commencement of the official year in which the alteration in the assessment list is made and the Municipality is not entitled to levy tax for an official year or any part thereof which has already expired. It was held that the alteration becomes effective from the commencement of the official year in which it is made so as to entitle the Municipality to levy tax with effect from the commencement of that year only. It was also held that the expression "current official year" in Section 82(3) of the Act means the earliest day in the official year which is current when the amendment of the assessment list takes place, that is to say, the expression refers to only that official year which is running at the time when the amendment is made by insertion or alteration of an entry u/s 82(1) of the Act. Dealing with the words "current official year" in Section 82(3), the Full Bench emphasised that these words mean the official year which was running when the amendment to the assessment list was made. That the current official year could never mean the past years is beyond doubt. We respectfully follow this statement of law. However, the manner of amendment to the assessment list u/s 82(3) of Bombay Municipal Boroughs Act, 1925 and Section 167 of the Bombay Municipal Corporation Act, 1888 is different.
88. Section 82(3) contemplates, upon fulfilment of the conditions set out in sub-section (1), the notice to be given to the aggrieved party and consideration of objections before any alteration is made by the standing committee. Section 167 of the Act does not contemplate any notice to be given to the aggrieved party and their objections considered before alteration is made. The notice that is given to the aggrieved person after the amendment has already been made cannot be compared with the notice that the law requires to be given before amendment in the assessment book. As per the scheme of Section 167(2), every such amendment shall be deemed to have been made for the purpose of determining the liability or exemption of the person concerned in accordance with the altered entry, from the earliest day in the current official year when the circumstances justifying the amendment existed. The concept of ''current official year'' is same but the scheme of amendment or alteration in the assessment book after it has been authenticated u/s 166(1) is entirely different than the scheme contained in Section 82 of the Bombay Municipal Boroughs Act, 1925 which was under consideration before the Full Bench. The scheme of Sections 166 and 167 of the Act, as we see it, does not suggest that amendment or alteration made in the assessment book has to be authenticated again u/s 166 after following the procedure under Sections 162-165.
89. In the case of Municipal Corporation of City of Hubli, the Supreme Court with reference to the scheme of Sections 78 to 84 of the Bombay Municipal Boroughs Act held that the assessment list in order to be effective in levying tax must be authenticated before expiry of the official year for which it is prepared, otherwise it would be void and inoperative. The Full Bench decision of this court in the case of Solapur Municipal Corporation was approved. For what we have already indicated above while considering the case of Solapur Municipal Corporation, this case is of no help to the petitioner.
90. In Kalyan Municipal Council, the Supreme Court held that the alteration made in the list after following the procedure u/s 123(1) of the Maharashtra Municipalities Act does not become effective for any period prior to the commencement of the official year in which the alteration in the assessment list is made and the Municipality is not entitled to levy tax for an official year or any part thereof which has already expired. Since the levy of the tax is complete only when the assessment list is authenticated, the authentication must take place in the official year. While holding so, the Supreme Court followed its judgment in the case of Municipal Corporation of City of Hubli. This decision also approves the Full Bench decision of this court in Solapur Municipal Corporation. From this case also, the proposition cannot be deduced that an amendment made in the assessment list u/s 167 has to have authentication u/s 166 to be conclusive evidence to make the assessee liable after following the procedure under Sections 162-165 of the Act.
91. The case of Dr. Satish Dattatray Shivalkar arose from the Bombay Provincial Municipal Corporation Act. It was held therein that the property tax being tax for official year, must be levied only during official year and retrospective demand by amendment or alteration of assessment entry is not justified. In the said decision that was delivered by one of us (R.M. Lodha, J.) relied upon the decision of the Supreme Court in the case of Municipal Corporation of City of Hubli and Kalyan Municipal Council and the Full Bench decision of Solapur Municipal Corporation. In so far as facts of the present case are concerned, the amendment in the assessment list u/s 167 of the Act was initially made on 29.03.2001 and thereby the property tax was levied as per amended entry for the official year 1.4.2000 to 31.3.2001. Later on by virtue of the order of this court, the reassessment had to be done. The judgment in the case of Dr. Satish Dattatray Shivalkar is of no help to the petitioner.
92. In the case of Abdeali Shaikh Tayabali Zaidy, the learned Single Judge of this court on consideration of the provisions of the Maharashtra Housing and Area Development Act and the Bombay Municipal Corporation Act held that levy of enhanced repair cess cannot operate retrospectively to cover past official year. It was held that where the additional entries are made or any amendments are carried out in the ward assessment book, the relevant provisions of the Bombay Municipal Corporation Act are required to be complied with. It was held that the amendment of an entry made in the assessment book can operate only from the earliest day in the current official year when the circumstances justifying the amendment existed. The Single Judge relied upon the judgment of the Supreme Court in the case of Municipal Corporation of City of Hubli and the Full Bench decision in Solapur Municipal Corporation.
93. In the case of Karnani Buildings, the Single Judge of this court held that until authentication, the amendment in the assessment book u/s 167 is in the nature of proposed action and increase cannot be validly effective for the period prior to the year of authentication. We are informed by Mr. K.K. Singhvi, the learned counsel for the Corporation that this judgment was reversed by the Division Bench by consent of the learned counsel for the parties.
94. In
21. ... The provisions contained in Sections 105 to 112 above only relate to the preparation of an assessment list of properties which are liable to such tax. They are procedural in nature and the charging section for the tax is Section 99 of the Act. Section 99 itself does not provide for any limitation of time on the imposition of tax. The High Court has, however, read limitation of time in Section 112 on the authentication of the assessment list. According to the High Court, the period of limitation for the Municipality to authenticate the list is up to July 31 of the official year to which the list relates, and in default by the Municipality, the period of limitation for the person appointed by the State Government is up to March 31 of the said official year. What is further, according to the High Court, the Municipality cannot authenticate the assessment list beyond July 31 of the official year and it is the person(s) appointed by the State Government alone who can do so and that too up to March 31 of that official year. It is difficult to accept this reasoning. According to us, the High Court has erred in reading in the provisions of Section 112 an intention by the legislature to lay down a period of limitation either for the Municipality or for the person or persons appointed by the State Government. It is obvious that Section 112 in the context in which it appears is both directory and enabling in nature insofar as it requires the Municipality to authenticate the list before July 31 of the official year. That the provisions are no more than directory is clear from the fact that they provide that if the Municipality fails to do its duty, the State government may complete the work by appointing a person(s) to do it. This is as it should be since the various provisions of the Act show that the revenue and the expenditure of the Municipality, among others, is controlled and regulated by the State Government. Further the section requires that the Municipality should complete the authentication of the assessment list before a particular date which, in the present case happens to be, July 31 of the year. It was necessary to incorporate in the section the said provision to give enough time to the State Government to step in and authenticate the list before the end of the official year. The official year is the same for the Municipality as well as the State Government and for the purposes of budgeting, the provision that the assessment list should be authenticated by the particular dates was necessary to be incorporated. However, even Section 112 which is procedural in nature, does not state that the list which is authenticated by the Municipality after July 31 of the official year and by the person appointed by the Government after March 31 of the same official year would be invalid. On the contrary, when the Municipality fails to authenticate the assessment list till July 31 of the official year, the section empowers the State Government to appoint a person or persons to authenticate the same. It was also necessary to prescribe some time-limit for the authentication by the person so appointed and hence the section provides that person(s) so appointed shall authenticate it by March 31 of the official year. In any case, neither the Municipality is prevented from authenticating it beyond July 31 nor is the person(s) appointed by State Government prevented from doing so beyond March 31 of the official year. In the present case, there was an additional factor which was relevant to be taken into consideration. The Municipality had levied the property tax for the first time in the official year 1967-68 and the State Government felt that it should be given time to authenticate the same before March 31, 1968. That is the reason why the State Government did not appoint a person to authenticate the list after July 31, 1967, even though the Municipality had failed to do so. Instead, the State Government had extended the time for the Municipality to do so, till March 31, 1968. The step taken by the Government was in conformity with the interpretation of the provisions of Section 112 which, as stated earlier, are only directory and enabling in nature. The High Court has, therefore, erred in holding that the Municipality could not authenticate the assessment list after July 1967 and it is only the State Government which could do it. This the High Court did, as stated earlier, by reading July 31, 1967 as the period of limitation for the Municipality to authenticate the list for the official year 1967-68. There is no dispute that the Municipality authenticated the list by March 28, 1968. The finding of the High Court that the assessment list for the year 1967-68 is void and illegal is, therefore, clearly wrong.
95. The Supreme Court, with reference to the provisions of Section 112 held that in so far as the provision required for Municipality to authenticate the list before July 31 of the year is concerned, it is directory.
96. The case of
10. if objections to the valuation and assessment lists are filed u/s 150, they are required to be disposed of by the Chief Executive Officer after giving the objector an opportunity of being heard u/s 151. Sub-section (3) of Section 151 requires that when the objection has been determined, an order passed on such objection shall be recorded in the register and, if necessary, an amendment made in the assessment list in accordance with the order passed on the objection. This order of the Chief Executive Officer may be appealed from by any person who is dissatisfied with it, u/s 152. The appeal lies to the District Judge whose decision u/s 152(1) "shall be final". During the pendency of the appeal, the tax payable in terms of the order appealed against may be levied and realised. However, if ultimately the District Judge decides in favour of the objector, the Chief Executive Officer "shall refund to the person from whom the same has been levied or realised, the amount of tax or instalment or the excess thereof over the amount properly leviable in accordance with such final decision, as the case may be, or adjust such excess amount against any future demand". 11. Every valuation made by the Chief Executive Officer u/s 153 is final subject to the provisions of Sections 151 and 152. In other words until and unless an order is passed u/s 151(3) by the Chief Executive Officer or u/s 152 by the District Judge, the valuation made by the Chief Executive Officer must prevail. Finally, when the objections have been determined, and appeals disposed of the assessment list shall be authenticated by the Chief Executive Officer in the manner specified. The importance of the authentication lies in the fact that under subsection (2) of Section 154, the assessment list shall be "conclusive evidence of the amount of holding tax leviable on each holding within Patna in the financial year to which the list relates". This, in brief, is an overview of the provisions which are relevant for the disposal of this appeal.
97. Though the learned senior counsel for the parties relied upon the decisions noticed above in support of their respective contentions about the construction and scope of section 167 of the Act, we may indicate that only three decisions viz., Vinay R. Gupta, Karnani Buildings and Abdeali Shaikh Tayabali Zaidy have direct bearing as these three cases concern Section 167 of the Act. The other decisions have arisen from different statutes having distinct scheme of law.
98. Section 82 of the Bombay Municipal Boroughs Act is not comparable with Section 167 of the Act. Similarly Section 123 of the Maharashtra Municipalities Act, 1965 that contemplates issuance of notice before amendment in the assessment list is also not comparable with Section 167 of the Act. Section 123 of Maharashtra Municipalities Act was found by the Supreme Court pari materia with the provision of Section 82 of Bombay Municipal Boroughs Act in the case of Kalyan Municipal Council. Solapur Municipal Corporation, Municipal Corporation of City of Hubli and Kalyan Municipal Council are, thus, of no help in considering the scope and construction of Section 167 of the Act. The learned Single Judge of this court in the case of Abdeali Shaikh Tayabali Zaidy observed that Section 82 of the Bombay Municipal Boroughs Act, 1925 is in the material particulars similar to Section 167 of the Act. We respectfully disagree for the reasons already indicated above. Section 167, on the other hand, is materially distinct from Section 82 of the Bombay Municipal Boroughs Act, 1925. We have no issue in respect of the proposition that the levy of tax is for every official year and the amendment is also in respect of the current official year and it cannot operate retrospectively to cover past official year. To that extent, there cannot be any dispute but the observation in Abdeali Shaikh Tayabali Zaidy that Section 167 of the Act is similar in material particulars with Section 82 of the Bombay Municipal Boroughs Act, 1925 is not correct. In so far as Karnani Buildings case is concerned, the Single Judge applied the decisions of the Supreme Court in the case of Kalyan Municipal Council and the Municipal Corporation of City of Hubli while holding that the amendment in the assessment list u/s 167, until authentication, is in the nature of the proposed action and, therefore, increase cannot be validly effective for the period prior to the year of authentication. We do not accept the decision of Single Judge in Karnani Building for three reasons. First, the said judgment has already been set aside by the Division Bench. Second, liability to tax as per altered entry in the assessment book u/s 167 accrues for the current official year in which the amendment is made. No notice is required to be given to the affected person before making such amendment. That the special notice is given by the Corporation after amendment is made in the assessment list enabling the affected party to file the complaint does not alter the legal position. The subsequent decision on the complaint shall not mean that the levy of tax is retrospective. The date of amendment in the assessment book is determinative and not the date of decision on the complaint or disposal of objections. Even if the objections to such alterations or amendment made u/s 167 are decided subsequently and the decision given on the complaint is amenable to appeal u/s 217, it does not affect the entitlement of the Corporation to charge taxes as per the amendment in the assessment book carried out u/s 167 from the first day of the financial year in which the amendment was made. Third, the decisions of the Supreme Court in Kalyan Municipal Council and Municipal Corporation of City of Hubli were not applicable in the scheme of Section 167.
99. For what we have discussed above, we are unable to hold that the alteration in the assessment book u/s 167 could override the existing authenticated entry in the assessment book after following the procedure again as contemplated under Sections 162-165 and the amended entry once authenticated u/s 166(1) becomes conclusive u/s 166(2).
100. The challenge to the orders dated 24th March, 2004 on the ground that by the said orders the Corporation seeks to enhance tax retrospectively, thus, cannot be sustained on facts as well as in law and the finding of the Single Judge in this regard is liable to be set aside and we set aside accordingly.
101. The Single Judge recorded in paragraph 25 of the order that the orders dated 24th March, 2004 do not disclose the basis on which the reassessment has been made and the said orders are not speaking orders. We are unable to sustain the findings of the Single Judge recorded in paragraph 25. The Single Judge overlooked and ignored the unitwise calculation made by the Investigation Officer for reaching the rateable value of the said building.
102. That the orders dated 24th March, 2004 are amenable to the statutory appeal u/s 217 of the Act is not in dispute. If there was any grievance by the petitioner that the basis for reassessment is not disclosed or the said orders are non-speaking orders, they ought to have pursued the appeals and taken those appeals to the logical conclusion. Having filed the appeals, in our considered view, there was nothing extraordinary that justified bypassing the statutory remedy of appeal. Surely, the present case does not fall in the category of
103. We sum up our conclusions thus:
(i) Where the property comprises of various units and the said property is being assessed as one property, the actual and factual position of each unit has to be kept in mind including as to whether such unit is controlled by Rent Control Act.
(ii) If a particular unit is exempted u/s 3(1)(b) of the Maharashtra Rent Control Act, 1999, and is in tenancy of a third party, it is relevant for the Corporation to take this factor into consideration alongwith other relevant factors while computing the rateable value of the entire property. This is not inconsistent with the legal position that in computing rateable value of the property owned by an assessee, the notional rental which a hypothetical tenant would pay for such property is relevant.
(iii) The Jeevan Jyot case shall not be applicable to a fact situation where though society is the owner of the entire building but some of its members had let out their respective units to the tenants exempted from the Rent Control Act.
(iv) For the determination of rateable value of the property ''Dalamal Tower'', the Corporation was justified in taking into account the estimate of rent contained in its circulars in respect of the units let out by the members of the petitioner-society to the tenants exempted under the Maharashtra Rent Control Act, 1999 though the assessment is of the entire building as one property.
(v) The conjoint reading of Sections 166 and 167 of the Bombay Municipal Corporation Act, 1888 does not suggest that the alteration in the assessment book u/s 167 could override the existing authenticated entry in the assessment book after following the procedure again as contemplated under Sections 162-165.
(vi) The orders dated 24th March, 2004 do not seek to enhance the tax retrospectively in the light of the liberty granted by this court in its order dated 23rd October, 2002 and, therefore, the assessment orders effective from 01.04.2000 are not illegal.
(v) The Single Judge erred in allowing the petition in terms of prayers (a) and (b).
104. The result is that we would allow the appeal and set aside the judgment and order dated October 14, 2004 and we order accordingly. The writ petition filed by the petitioner stands dismissed. No costs.
