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Manubhai Ishvarlal v. Surat Municipal Corporation
Factual and Procedural Background
The petitioners, who are occupying part of a building at Sural, filed petitions seeking to quash and set aside special notices, bills (including education cess bills) and attachment notices on the ground that those notices were issued without authority of law.
The petitioners occupy portions of a building bearing registration Nos. 1156-57 and 1160 of Ward No. 9. They relied on an earlier order dated 5-12-1990 (Annexure 'B') as showing permission for construction. Paragraph 2.6 of a supporting affidavit (Spl. C.A. No. 283 of 1996) is ambiguous: it states construction started in 1991 and that 70% of the work (including basement, ground floor and second floor) was completed "in the year" but fails to specify which year the completion occurred. The petitioners also stated that a tailoring shop on the ground floor has been run since June 1995 and produced a certificate under the Bombay Shops and Establishment Act.
The respondent Municipal Corporation issued Special Notices under provisions of Rule 15(2) read with Rule 20(2) of the Taxation Rules of Chapter VIII of Schedule 'A' to the Bombay Provincial Municipal Corporations Act of 1949. The petitions challenge those assessments and notices.
Legal Issues Presented
- Whether the Special Notices, bills (including education cess bills) and attachment notices issued by the Municipal Corporation were without authority of law.
- Whether, where an assessment book for an official year has been completed, the Commissioner may thereafter tax the property for a previous year (as argued by the petitioners relying on L.M. Patel).
- Whether failure by the person primarily liable to give notice under Rule 5(1) and Section 263 permits the Commissioner to assess or reassess under Rule 21-A (i.e., whether Rule 21-A enables assessment within one year from discovery of the relevant facts when no notice was given).
- Whether the petitioners were given a reasonable opportunity and whether the assessment orders were passed in accordance with law.
Arguments of the Parties
Petitioners' (Appellants') Arguments
- Counsel for the petitioners (Mr. N.M. Kapadia) submitted that the issue was covered by this Court's decision in L.M. Patel and Ors. v. Baroda Municipal Corporation (1995(1) GCD 751), and that, on that authority, once the assessment book for a particular year is completed and prepared, the property cannot be taxed for the previous year thereafter.
- It was also contended that no reasonable opportunity was given to the petitioners and therefore the orders were bad.
Respondent (Municipal Corporation)'s Arguments
- Counsel for the Municipal Corporation (Mr. Desai) argued that the petitioners failed to give the notice required by Rule 5(1) of Chapter VIII after completion of building works, and failed to comply with Section 263 which requires notice to the Commissioner within one month of completion and prescribes that occupation without permission is prohibited until the Commissioner grants permission or fails to refuse within 21 days.
- He relied on Rule 21-A (and contrasted it with Rule 21-B) to contend that where the Commissioner notices occupation or completion and the person liable failed to give notice under Rule 5(1), the Commissioner may, within one year from when the relevant facts came to his notice, fix or refix rateable value and assess or reassess property taxes for the year during which the building was newly erected, rebuilt, enlarged, reoccupied or the user changed.
- He further contended that in the present cases petitioners had multiple opportunities to produce evidence before the assessment officer but did not do so; they did not deny occupation since 1991 during assessment proceedings and did not prefer appeals against the assessment orders.
- He submitted that Rule 21-B is inapplicable here because it applies only where completion of the assessment book was not possible before the expiry of the year due to a Court order or other competent authority; whereas Rule 21-A applies where a failure to give the notice required by Rule 5(1) is noticed by the Commissioner.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| L.M. Patel and Ors. v. Baroda Municipal Corporation, reported in 1995(1) GCD 751 (Guj.) | The principle that assessment must be completed before the assessment book is closed for the official year and that, subject to the express provision in Rule 21-B, once the official year has expired it would not be open to the Commissioner to assess and levy property tax for the period for which the assessment book is completed. | The Court considered this authority but held it not applicable to the present cases because Rule 21-A permits assessment within one year from notice where the person primarily liable failed to give the notice required under Rule 5(1). Thus the petitioners' reliance on L.M. Patel was rejected as inapposite to the facts before the Court. |
Court's Reasoning and Analysis
The Court's analysis proceeded in a sequence grounded on the statutory scheme and the factual record before the assessment officer:
- The Court noted ambiguity in the petitioners' pleadings (paragraph 2.6), specifically that the petitioners did not state when certain floors were completed, which undermined their claim about the timing of completion and occupation.
- The Corporation issued Special Notices under Rule 15(2) read with Rule 20(2) of the Taxation Rules of Chapter VIII to tax the property from 1-4-1991, as the Commissioner had noticed occupation or completion from that date.
- The Court explained the statutory requirements: Rule 5(1) requires the person primarily liable to give notice within fifteen days when a new building is erected, rebuilt or reoccupied; Section 263 requires notice within one month of completion accompanied by prescribed certificates and prohibits occupation until permission is granted or the Commissioner fails to refuse within 21 days.
- The Court distinguished Rule 21-A and Rule 21-B: Rule 21-B applies where preparation or completion of the assessment book could not be done before the expiry of the year due to a Court order or other competent authority; Rule 21-A applies where the Commissioner later notices a new or reoccupied building and the person primarily liable failed to give notice under Rule 5(1), permitting assessment or reassessment within one year from when such facts came to the Commissioner's notice.
- Applying Rule 21-A, the Court accepted the respondent's position that because the petitioners had not given the notice required by Rule 5(1) or complied with Section 263, the Commissioner was entitled to proceed under Rule 21-A to fix or refix rateable value and assess taxes from the year in which the building was newly erected or occupied (here indicated as from 1-4-1991).
- The Court examined the assessment proceedings and found that the petitioners (through a representative) had multiple opportunities before the assessment officer but produced no documentary evidence contesting occupation since 1991; the only objections raised related to parking and alleged excess assessment. The Court treated the absence of evidence and the lack of contention that occupation did not occur since 1991 as significant and concluded the assessment officer had acted in accordance with law after hearing the assessee.
- Given these factors—the failure to give statutory notice, the Commissioner’s power under Rule 21-A, the petitioners' failure to produce evidence at assessment or to prefer appeals—the Court held that the petitioners' legal reliance on L.M. Patel was not applicable to these facts and that their objections lacked merit.
Holding and Implications
Holding: The petitions are REJECTED and the notices are discharged.
Direct consequences and orders made by the Court:
- The petitions challenging the Special Notices, bills and attachment notices were dismissed.
- The Court directed payment of costs from a deposit previously made by the petitioners: out of Rs. 12,000 deposited with the Registry pursuant to the Court's direction, Rs. 6,000 is to be paid by accounts payee cheque to the Sural Municipal Corporation towards the cost of the petitions, and the remaining Rs. 6,000 is to be deposited with the Legal Aid Committee.
Implications beyond the parties: The opinion confines its analysis to the statutory scheme (Rules 5, 21-A, 21-B and Section 263) and the facts of these cases. The Court did not purport to lay down any broader new precedent; it applied existing provisions and distinguished the precedent relied on by the petitioners, finding it inapplicable on the facts presented.
1. The petitioners, who are occupying a building at Sural, have filed these petitions praying to quash and set aside the special notices, bills including education cess bills and the attachment notices as the same are issued without authority of law.
2. Short facts are as under:
The petitioners are occupying part of a building bearing registration No. 1156-57 and 1160 of Ward No. 9, Surat. It is contended by the petitioners that by order dated 5-12-1990 at Annexure 'B' to the petition, permission was granted for construction.
Paragraph 2.6 of Spl. C.A. No. 283 of 1996, which is ambiguous, is reproduced verbatim as under:
2.6 The petitioners submit that the petitioner firm started construction of the building in the year 1991 and that 70% work of the construction work with the basement, ground floor and the second floor have been completed in the year and still, construction is yet to be completed and the premises Nos. 104 and 105 on the first floor and also at the premises Nos. 202 and 203 on the second floor and also third floor. It is submitted that the petitioner firm has started tailoring shop in shop-1 on the ground floor which is admeasuring 5' x 10". The petitioner has obtained certificate under the Bombay Shops and Establishment Act in his name and is running the said shop since June, 1995, copy whereof is annexed hereto and marked as Annexure-G to this petition. Thus, the only premises which is in use in the whole of the building that is also by the personal use and occupation by the petitioner No. 1.
Reading this paragraph, it is clear that the petitioners have not stated as to when the basement, ground floor and second floor have been completed.
3. It appears that respondent-Corporation issued Special Notices to the petitioners under provisions contained in Rule 15(2) read with Rule 20(2) of the Taxation Rules of Chapter VIII of the Schedule 'A' to the Bombay Provincial Municipal Corporations Act of 1949 (hereinafter referred to as the Act).
4. Mr. N.M. Kapadia, learned Advocate submitted that in the instant cases, the issue is covered by a decision of this Court in the case of L.M. Patel and Ors. v. Baroda Municipal Corporation, reported in 1995(1) GCD 751 (Guj.). He further submitted that no reasonable opportunity is given and, therefore, the order is bad. He further submitted that once the assessment book of a particular year is completed and prepared, thereafter in the subsequent year, the property cannot be taxed for the previous year as the same has not been entered in the assessment book of that particular year in which the property was not entered in the assessment register.
5. As against this, Mr. Desai, learned Advocate for the respondent-Municipal Corporation submitted that in the instant cases, after completion of the building, the petitioners were required to give notice to the Municipal Commissioner as provided in Rule 5 of Chapter VIII, which reads as under:
5. (1) When any new building is erected, or when any building is rebuilt or enlarged, or when any building which has been vacant is rcoccupied or when the user of any building is changed, the person primarily liable for the property taxes assessed on the building shall within fifteen days give notice thereof, in writing, to the Commissioner.
6. He further submitted that Section 263 of the Act requires that within a period of one month from the completion of erection of a building or execution of any such work as described under Section 254 has to deliver or send or cause to deliver or send to the Commissioner at his office notice in writing of such completion accompanied by certificate in the form prescribed in the bye-laws, signed and subscribed in the manner so prescribed and shall give to the Commissioner all necessary facilities for the inspection of such building or of such work and shall apply for permission to occupy the building. sub-section (2) of this section prohibits any person to occupy or permit to be occupied any such building or use or permit to be used the building or part thereof affected by any work until a permission has been received from the Commissioner in this behalf, or the Commissioner has failed for twenty-one days after receipt of the notice of completion to intimate his refusal of the said permission. Mr. Desai submitted that in the petition, it is nowhere stated that notice under Rule 5 was given or permission was granted as contemplated under the Act or the rules, and, therefore, the occupation itself is contrary to law. He further submitted that ordinarily, the assessment book is completed in the manner laid down under the Rules. Rule 21-B will come into picture if the preparation or completion of assessment book was not possible before the expiry of the year on account of any order of the Court or any other competent authority and in such circumstances, if subsequently there is levy, collection and recovery of any taxes on such assessment book or part, or as the case may, shall not be called in question merely on the ground that the assessment book or part thereof was not entered or was not completed during the year to which it related. In the case of L.M. Patel (supra) referred to by the learned Advocate for the petitioners, it was contended that the petitioners have already paid the taxes to the Corporation upto 31-3-1983 on the basis of assessment which prevailed during that period. However, special notices were issued in June 1983 for increase in the rateable value. Thereafter, the Corporation by its order dated 5-3-1984 informed the petitioners that annual rateable value has been revised for the period between 1-2-1979 to 31-3-1980. It was in this background, as per the language used in Rule 21-B of the Act, the Court held that the assessment must be completed before the assessment book is closed for the official year, subject to express provision in Rule 21-B and once the official year has expired, it would not be open to the Commissioner to assess and levy property tax for the period for which assessment book is completed.
7. In the instant case, special notices have been issued to the petitioners, a copy of which is produced at page 110 wherein it is indicated that the property is to be taxed for a period from 1-4-1991 and has to be entered into the assessment register from the said date. Mr. Desai, learned Advocate drew our attention to Rule 21-A, which reads as under:
21A. Whenever it is noticed by the Commissioner that a new building has been erected or a building has been rebuilt or enlarged or any building which was vacant has been reoccupied or the user of any building has been changed and that the person primarily liable for the property taxes on such building has failed to give notice as required by Sub-rule (1) of Rule 5, the Commissioner may, within a period of one year from the date on which the aforesaid relevant facts came to his notice, proceed to fix or refix the rateable value of such building and assess or reassess the property taxes on such building in accordance with the provisions of this act and these rules with reference to the period commencing from the year during which the building was newly erected or the building was rebuilt or enlarged or was reoccupied or the change of user took place and accordingly the taxes so asssessed may be levied, collected and recovered and the provisions of this act and these rules shall so far as may be, apply to such levy, collection and recovery.
8. Mr. Desai, learned Advocate submitted that as it came to the notice that the premises is being occupied since 1991, a Special Notice was issued, keeping in mind the provisions contained in Rule 21-A. As stated earlier, the petitioners have not given notice under Rule 5 or have not complied with Section 263 of the Act. Mr. Desai further submitted that even after granting adjournment, petitioners have not produced any material before the assessment officer. Even on or about 31-5-1995, the petitioners were asked to produce evidence but no document whatsoever was produced. Mr. Desai has placed before us the original file of assessment pertaining to the property in question. In all the cases, Manubhai Punjabhai has remained present before the assessment officer and no evidence was produced. He merely stated that parking place should not be assessed and the assessment is excessive. It is required to be noted that no contention is raised before the assessment officer that the property is not in occupation since 1991 or any time thereafter. If that be so, we cannot say that the order passed by the officer is not in accordance with law. It is required to be noted that in some of the orders, it has also been observed that time was granted but no evidence is produced. In view of this, it is clear that after hearing the assessee, the appellate officer has passed the orders in accordance with law. Inspite of opportunity, no documentary evidence is produced or even contention is not raised that they were not occupying since 1991, Hence, the case is an afterthought. It is also clear that the contention raised by the learned Advocate that once the assessment year is completed and if the property is not entered in the assessment register for that official year, the property cannot be assessed has no merit in view of the language used in Rule 21 A. It was open for the petitioners to prefer an appeal against the impugned order of assessment. It appears that in the presence of the petitioners, orders have been passed. Not only that, but they are served with the orders but they have not preferred appeals against the orders.
9. Rules 21-A and 21-B operates in different fields. Rule 21-B would apply in a case where preparation or completion of the assessment book was not possible before the expiry of the year on account of any order of a Court or any other competent authority while Rule 21A will apply in a case where a new building has been erected or a building has been rebuilt or enlarged, or any building which has been reoccupied or the user of any building is changed and that the person primarily liable for the property taxes on such building had failed to give notice as required by Sub-rule (1) of Rule 5 and if it is noticed by the Commissioner, then within a period of one year from the date on which the aforesaid relevant fact came to his notice, proceed 10 fix or refix the rateable value of such building and assess or reassess the property taxes on such building in accordance with the provisions of the Aet. Thus, in the instant case, it is very clear that in the absence of intimation to the Commissioner under Rule 5(1), the Commissioner had no knowledge that the building is completed or that the building is occupied, and therefore, chargeable. In a case where the building is completed or the part is completed and is occupied without prior permission as contemplated under Section 263 and Rule 5, the Commissioner would not know and, therefore, the legislature has provided that if it is later on noticed by the Commissioner that such building is used without permission, action for assessment can be taken within a period of one year from the date on which it is noticed. Hence, the case on which the reliance is placed by the petitioners is not applicable in the instant case.
10. In the result, the petitions are required to be rejected, and are hereby rejected. Notice discharged.
While issuing notice, this Court directed the petitioners to deposit a sum of Rs. 12,000/- which the petitioners have deposited with the Registry. Out of the said amount, registry is directed to pay Rs. 6,000/- by accounts payee cheque to the Sural Municipal Corporation towards cost of these petitions and the remianing Rs. 6,000/- is directed to be deposited with Legal Aid Committee.
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