The Indian Hotels Co. Ltd. & Anr. v. The Calcutta Municipal Corporation & Ors.

The judgment of the Court was as follows:—

1. The writ petitioner No. 1 is a Company and carries on the business of running hotels owned by it. The Taj Bengal Hotel it one of the units of the petitioner No. 1 Company and is situated at 34.B, Belvedere Road, Alipore, Calcutta-27.

2. The petitioner No. 2 claims to be a shareholder and is also employed as the General Manager of the Taj Bengal Hotel referred to above. It appears that in March 1982, the petitioner Company obtained a lease of premises No. 34.B, Belvedere Road, Calcutta-27, for a period of 99 years and under the terms of the Lease Deed the petitioner Company is liable to pay the rates and taxes to the Calcutta Municipal Corporation on behalf of the Lessor.

3. It is the petitioners' further case that as an Assessee the petitioner Company receives the bills towards payment of the consolidated rates and taxes from the Calcutta Municipal Corporation for the respective quarters. According to the petitioners, whenever such rates become due in respect of a particular quarter, a bill is presented by the Municipal Authorities and the same is paid by the petitioners upon receipt of the bill within the rebate period.

4. According to the petitioners, the Calcutta Municipal Corporation sent the bill for the consolidated rates and taxes for the first quarter of 1992-1993 which amounted to a sum of Rs. 10,23,036/-. The said bill was duly paid by the petitioners on 4th July, 1992. It is the petitioners' further case that after determination of the Annual Value, the first consolidated rate bill raised on the basis of the such Annual value was presented to the petitioners for the period from April to June, 1992, that is the first quarter of 1992-1993.

5. It is the petitioners' definite case that subsequent to the bill for the said period from April to June, 1992, the petitioners did not receive any further rate bill and enquiries were, accordingly, made regarding non-presentation thereof. Upon such enquiry, the Petitioners' representative was advised by the Collector, Calcutta Municipal Corporation, to collect the bill for the 4th quarter of 1992-1993, the due date whereof had not expired, and to make payment of the same and, thereafter, to make further enquiries regarding the bills for the second and third quarters of 1992-1993. It appears that the petitioners obtained the bill for the 4th quarter of 1992-1993 and the same was paid on 2nd February, 1993, long before the period for which the rebate was valid.

6. It appears that the petitioners, thereafter, demanded the bills for the second and third quarters of 1992-1993, so that the same could be paid immediately, but the Collector, Calcutta Municipal Corporation, refused to issue bills for the said quarters, and, on the other hand, the petitioners were advised to pay the consolidated rate for the second and third quarters, together with interest and penalty.

7. The petitioners, thereafter, claim to have written to the Municipal Authorities stating that since the bills for the second and third quarters of 1992-1993 had not been presented to the petitioners, they could not be held responsible for non-payment of the same, but that if the said bills were made available to the petitioners, they would take steps to pay off the same immediately.

8. It is the petitioners' further case that on 26th February, 1993, the Collector, Calcutta Municipal Corporation, asked the petitioners to send their representative to the office of the Deputy Municipal Commissioner (Revenue), Calcutta Municipal Corporation, so that the matter could be resolved. According to the petitioners, their representative duly appeared before the Deputy Municipal Commissioner (Revenue) and subsequently, the Collector informed the petitioners' representative over the telephone that the Deputy Municipal Commissioner had agreed to waive penalty to the extent of 5% only and that the petitioners would be required to pay the rates and taxes for the second and third quarters of 1992-1993, together with penalty and interest, subject to reduction of 5% of the penalty, but without any rebate, by the noon of 27th February, 1993.

9. The aforesaid decision of the Deputy Municipal Commissioner (Revenue), is the subject matter of the present writ application, resulting in a challenge being thrown to the validity of Rule 33 and the Explanation to Section 216(1) of the Calcutta Municipal Corporation Act, 1980, as being ultra vires, void and liable to be struck down.

10. Appearing in support of the writ petition, Mr. Pradip Ghosh, learned advocate, firstly contended that having regard to the provisions of the Calcutta Municipal Corporation Act, 1980, hereinafter referred to as the “1980 Act”, it could not be contended that the petitioners had defaulted in paying the rates and taxes, since the bills for the second and third quarters of 1992-1993 had never been presented to the petitioners, and they were, therefore, unable to pay the same. It was also submitted by Mr. Ghosh that, although, the petitioners had offered to pay the consolidated rate bills for the second and third quarters of 1992-1993 also, they were prevented from doing so on account of penalty and interest added thereto.

11. Mr. Ghosh submitted that the Municipal authorities were entitled to raise a bill for a particular quarter, as and when it became due, and only after such bill was presented did the question of payment of the same arise.

12. Mr. Ghosh drew my attention to the provisions of Section 216 of the Calcutta Municipal Corporation Act, 1980, which reads as follows:—

Section 216:—“PRESENTATION OF BILL

(1) When any tax has become due, the Municipal Commissioner shall cause to be presented to the person liable for the payment thereof a bill for the amount due:

Provided that no such bill shall be necessary in the case of:—

(a) a tax on professions, trades and callings;

(b) a tax on advertisements;

(c) a toll.

EXPLANATION:— A bill shall be deemed to be presented under this section if it is sent by post under certificate of posting to the person liable for payment of the amount included in the bill, and in such case, the date borne on such certificate of posting shall be deemed to be the date of presentation of the bill to such person.

(2) Every such bill shall specify the particulars of the tax and the period for which change is made”.

13. Mr. Ghosh urged that from the language of Section 216 it would be very clear that only when any tax becomes due the Municipal Commissioner is competent to cause presentation of a bill for payment of the amount due.

14. Mr. Ghosh sought to urge that bills for payment of the rates and taxes could, therefore, be presented only when the tax became due. Mr. Ghosh urged that, although, a person's liability for payment arises in view of the provisions of Section 196 of the 1980 Act, the liability to pay tax for a particular period commences only after presentation of a bill in keeping with Section 216 of the aforesaid Act.

15. In this context, Mr. Ghosh also referred to the provisions of Rule 33 of the Calcutta Municipal Corporation (Taxation) Rules, 1987, hereinafter referred to as the “Taxation Rules”, which makes provision for the manner and date of payment of the quarterly instalments of rates and taxes. The portion of Rule 33 of the aforesaid Rules, which are relevant for the purposes of this case is as follows:—

“Rule 33 Manner and date of payment of quarterly instalments of rate—

1) The payment of consolidated rate shall be made in quarterly instalments and the quarter shall be taken to commence on the 1st day of April, the 1st day of July, the first day of October and the 1st day of January. The quarterly bill shall be presented not later than the 31st day of May for the first quarter, the 31st day of August for the second quarter, the 30th day of November for the third quarter and the 28th or 29th day of February, as the case may be, for the fourth quarter:

Provided that the advance bill for the subsequent quarter (s) may be sent to the rate-payers along with the bill for the current quarter separately.

A rebate of five per cent of the amount of bill shall be allowed if payment is made within such date as may reasonably be fixed by the Municipal Commissioner in this behalf. The payment may be made in any office of the Corporation receiving such payments on production of the bill(s) or on production of an authorised slip(s) for payment of consolidated rate obtained from the municipal office in case of non-receipt or loss of any bill.

2) Any deficiency in demand for consolidated rate shall be deemed to be an arrear, and such demand or any amendment made in consolidated rate shall be payable on presentation of bills.”

16. Mr. Ghosh submitted that the proviso to the aforesaid Rule was beyond the powers prescribed under Section 216 of the 1980 Act, in that a bill could be presented for payment in terms of Section 216 only when the tax had become due. Mr. Ghosh urged that by virtue of the proviso to Rule 33, an attempt was being made to introduce a provision in the Rules which was not contemplated under the Act itself.

17. Mr. Ghosh urged that on the above ground, the proviso to Rule 33, which provided that advance bills could also be sent, even prior to the tax becoming due, was beyond the powers given in the parent Act and was, therefore, liable to be declared ultra vires the provisions of Section 216 of the above Act.

18. In this context, Mr. Ghosh also referred to the provisions of Section 217 of the above Act which provides for issuance of notice and payment of notice fee, interest and penalty, in the event, the amount of tax for which a bill has been presented under Section 216 is not paid within 30 days from the date of presentation thereof. Mr. Ghosh drew my attention to Sub-sections (3) and (4) of Section 217 which makes further provision that if the bill remained unpaid after 30 days of presentation under Section 216, simple interest, as well as penalty, would be recoverable from the person liable to make such payment.

19. Mr. Ghosh urged that even from the provisions of Section 217 of the above Act it would be apparent that payment of tax was to be made only after a bill had been presented for the same, after it became due and payable. Mr. Ghosh pointed out that the Act did not make any provision for presentation of bills before the tax mentioned therein became due and payable by the person liable to pay such tax.

20. Mr. Ghosh then submitted that the Explanation to Section 216(1) of the above Act could, therefore, relate only to the bill in respect of which the tax had become due and payable and not to any advance bills as contemplated under the proviso to Rule 33 of the above Rules. Mr. Ghosh submitted that the Explanation to Section 216 not only enables the Municipal Authorities to send a bill under Certificate of Posting, which gives rise to a presumption under Section 114 of the Evidence Act, and creates a legal fiction that such bill would be deemed to have been presented to the persons liable for payment, whether actually received by him or not. Mr. Ghosh urged that as a result, even if the bill was not actually received by the person liable to pay the same, an irrebuttable presumption would be created in favour of the Municipal authorities giving rise to the consequence of even penalty and interest under Section 217 of the said Act.

21. Mr. Ghosh contended that Section 557 of the 1980 Act provides for the manner in which notices and bills are to be served. It provides that every notice or bill is to be sent either by registered post or delivered personally or by affixation. Mr. Ghosh submitted that Section 557 did not make any provision for service of bills under Certificate of Posting, as has been provided for in the Explanation to Section 216(1) of the above Act. Mr. Ghosh further submitted that the Explanation to Section 216(1) of the above Act creates an irrebuttable presumption which is contrary to the rebuttable presumption which can be drawn in terms of Section 114(e) of the Evidence Act. Mr. Ghosh urged that in such circumstances, even the Explanation to Section 216(1) was arbitrary and contrary to the provisions of Section 557 of the aforesaid Act and was, therefore, liable to be declared ultra vires.

22. In support of his contention that liability to be taxed was different from liability to pay such tax (Emphasis added), Mr. Ghosh referred to and relied upon a Single Bench decision of this Court in the case of (1) Karnani Properties Ltd. v. The Corporation of Calcutta, reported in AIR 1973 Calcutta at page 488, wherein while considering various provisions of the Calcutta Municipal Act, 1951, including those relating to the liability to pay the rates and taxes, the learned Judge, on an interpretation of the general scheme relating to payment of taxes, held that, although, the liability to be taxed arose under different provisions of the Act, the liability to pay arose on the bills for payment of such tax being presented.

23. In this regard, Mr. Ghosh also referred to a decision of another learned Single Judge in the case of (2) Bimal Kumar Das… v. Corporation Of Calcutta…., reported in AIR 1978 Calcutta at Page 420, wherein similar sentiments were expressed following the decision in the Karnani Properties case (supra).

24. Mr. Ghosh repeated that the proviso to Rule 33 of the Calcutta Municipal Corporation (Taxation) Rules, 1987, were liable to be declared ultra vires the provisions of Section 216 of the above Act, and the Explanation to Section 216 of the said Act was also liable to be declared, as ultra vires, being contrary to the provisions of Section 557 of the said Act and raising an irrebuttable presumption, which was contrary to the provisions of Section 114(e) of the Evidence Act.

25. Appearing for the Calcutta Municipal Corporation and its authorities, Mr. A.P Sircar, appearing with Mr. Fazlul Huq, firstly referred to the various provisions of the 1980 Act relating to the whole scheme of taxation and the liability to pay such taxes under the said Act, comprising Part IV of Chapter XIII of the said Act.

26. Referring to Section 170(i)(a) of the 1980 Act, Mr. Sircar submitted that the same empowered the Corporation to levy a consolidated rate on lands and buildings and Section 170(2) thereof provided that the levy, assessment and collection of the taxes mentioned in Sub-Section (1), is to be in accordance with the provisions of the said Act, and the Rules and Regulations made thereunder.

27. Mr. Sircar then referred to the provisions of Section 171 of the 1980 Act and submitted that the tax was required to be determined on the Annual value of the lands and buildings, in accordance with the calculation provided in the Section itself.

28. Mr. Sircar then referred to Section 196 of the 1980 Act which provides that the consolidated rates and taxes are required to be paid by the person liable for the payment thereof, in quarterly instalments, on such dates and in such manner as may be determined by the Corporation by making Regulations therefor.

29. Mr. Sircar urged that the provisions of Section 196 of the 1980 Act make it very clear that the tax assessed, on lands and buildings in terms of Section 170(1)(a) of the said Act was an annual tax, payment whereof was to be made in instalments. Mr. Sircar urged that the liability to pay was in respect of the entire amount of tax and the same became due and payable as a whole for the particular year, but was allowed to be paid in instalments. Mr. Sircar urged that the “liability to pay” or the payment of the Annual tax did not become due each time an instalment became due and payable, but became due and payable in respect of the entire amount as a whole.

30. Mr. Sircar contended that Section 196 of the 1980 Act, and Rule 33 of the Calcutta Municipal Corporation (Taxation) Rules, 1987, combined together the provisions of Section 191 of the Calcutta Municipal Corporation Act, 1951.

31. Referring next to the provisions of Sections 215, 216 and 217 of the 1980 Act, Mr. Sircar pointed out that they formed part of Chapter XVI relating to payment and recovery of taxes. Mr. Sircar urged that the said Chapter and consequently, Sections 215, 216 and 217 related to the mode of recovery of taxes which had become due and payable in terms of the provisions of Chapter XII, comprising Sections 170, 171 and 196 of the 1980 Act.

32. Mr. Sircar sought to urge that the relevant provisions were comprised in two different chapters in the 1980 Act, the former dealing with assessment of the Annual tax and the mode of payment thereof, and the latter relating to the method for recovery of the said taxes which had become due. Mr. Sircar submitted that liability to pay taxes under Chapter XII of the 1980 Act was an established fact, while issuance of bills in respect thereof under Chapter XVI related to recovery of such taxes.

33. Referring to a Bench decision of this Court in the case of (3) Gillanders Arbuthnot & Co. Ltd. v. Corporation of Calcutta reported in 1986 (1) CHN at Page 262, Mr. Sircar submitted that the observations of the learned Single Judge in the Karnani Properties case (supra) was held to be obiter and it was held that presentation of a bill to the person liable to pay was not a condition precedent to the institution of a suit against him for recovery of consolidated rates.

34. Mr. Sircar also referred to the Bench decision of this Court in the case of (4) Mathura Prosad v. Corporation of Calcutta, reported in 48 CWN at Page 336, which had been referred to in the case of Gillanders Arbuthnot & Co. Ltd., in support of the proposition that no bill was required to be presented to the person liable to pay prior to institution of a suit against him for recovery of the arrear consolidated rate under Section 204 of the Calcutta Municipal Act, 1923.

35. In this regard, Mr. Sircar also referred to a decision of a learned Single Judge of this Court in the case of (5) Hakim Soban Ali v. Kanailal Sarma, reported in 60 CWN at Page 948, where similar sentiments were expressed on the finding that since the rate due is a charge on the holding, service of the bill and notice of demand is not a condition precedent for recovery of the amount due by way of a suit under Section 162 of the Bengal Municipal Act, 1932.

36. Mr. Sircar also referred to certain portions of the Karnani Properties case (supra) in order to establish that the observations made in paragraph 3 of the judgment regarding liability to pay the rates and taxes on presentation of the bills, had been made in the facts and context of that particular case where a question arose as to whether the person liable to pay was entitled to a hearing before an order was passed imposing levy.

37. Referring to the case made out by the petitioners that they had not been served with the bills for the 2nd and 3rd quarters of 1992-1993, and that the Explanation to Section 216 of 1980 Act created an irrebuttable presumption of service despite the fact that service had not been effected, Mr. Sircar contended that when a specific mode of service had been provided for in Section 216, that was the method to be adopted for the purposes of Section 216 and not the procedure prescribed in Section 557 of the said Act.

38. Referring to a passage from C.B Singh's “Statutory Interpretation”, 4th Edition, at Page 134, Mr. Sircar submitted that the intention of the legislature had to be given effect to, despite the unhappy language in which a statutory provision may be couched.

39. Mr. Sircar urged, that it was for the Courts to make an effort to retain the impugned provisions of a Statute or Rules framed thereunder, by giving a meaningful and harmonious interpretation to such provisions, keeping in mind the intention of the legislature, before striking them down as ultra vires.

40. Mr. Sircar urged that the deeming provisions contained in the Explanation to Section 216(1) of the 1980 Act must be construed as being confined to the date of presentation of the bill for the particular quarter for which the same became due, and not for all the quarters at a time, in view of the provisions of Rule 33 of the Taxation Rules, 1987.

41. Mr. Sircar submitted that since the provisions of Section 216(1) of the 1980 Act were applicable to all rate payers, it could not be contended that such provisions were discriminatory so as to attract the provisions of Article 14 of the Constitution, particularly since the said provisions related to recovery of arrear rates and taxes and not to the question regarding liability to pay the same.

42. Mr. Sircar pointed out that Section 214 of the 1980 Act relates to “any tax levied under the Act” and not to the quarterly instalments provided for in Section 196 thereof, and, accordingly, the question which arises relate to recovery of the rates and taxes levied annually and not for a particular quarter only, for which provision had been made for payment in instalments.

43. In support of his aforesaid contentions, Mr. Sircar referred to and relied upon the decision of the Supreme Court in the case of (6) Hiralal Ratanlal v. The Sales fax Officer, Section III, Kanpur reported in (1973) 1 SCC 216 : AIR 1973 SC at page 1034, wherein while interpreting the provisions of Explanation II to Section 3D of the U.P Sales Tax Act, 1948, it was, inter alia, observed that even though the Explanation was not very happily worded, the intention of the legislature, being clear and unambiguous, must be given effect to.

44. Mr. Sircar concluded his submissions by contending that while liability to pay rates and taxes was an annual liability, for the sake of convenience of the rate-payers, the legislature had made provision for payment of the annual liability in instalments. Mr. Sircar urged that, although, the entire amount became due at a time under Section 196 of the 1980 Act, it was payable in instalments in terms of Rule 33 of the Taxation Rules, 1987.

45. Mr. Sircar urged that since it had been held by the Division Bench that presentation of a bill was not a condit on precedent for the purpose of instituting proceedings for recovery of arrear rates and taxes, it could not be contended by the petitioners that without presentation of the bills for the 2nd and 3rd quarters of 1992-1993, they were not liable to pay the rates and taxes for the said period, and not having paid the same, were not also liable to pay interest and penalty thereupon.

46. Mr. Sircar urged further that the challenge thrown to the vires of the proviso to Rule 33 of the Taxation Rules, 1987, as being ultra vires the provisions of Section 216 and the similar challenge thrown in respect of the Explanation to Section 216(1) of the 1980 Act, was not maintainable, and the writ petition was liable to be dismissed with costs.

47. Appearing for the State and the State respondents, Mr. Aloke Basu Chowdhury repeated Mr. Sircar's contention that the liability to pay rates and taxes did not arise upon presentation of the rate bills, but under Section 196 of the 1980 Act, and hence the petitioners could not contend that Since the rate bills for the 2nd and 3rd quarters of 1992-1993 had not been presented to them, they were absolved of the liability to pay interest and penalty thereupon.

48. Placing a good deal of reliance on the decision in the case of Gillanders Arbuthnot & Co. Ltd., (supra) cited by Mr. Sircar, Mr. Basu Chowdhury submitted that the provision of Section 216 of the 1980 Act were only part of the process for recovery of the rates and taxes and did not give rise to an independent liability for payment of such rates and taxes, and the challenge thrown to the vires of the Explanation to Section 216(1) of the said Act and the proviso to Rule 33 of the Taxation Rules, 1987, was, therefore, misconceived and was not sustainable.

49. Mr. Basu Chowdhury urged that presentation of advance bills did not prejudice the rate payers in any way, inasmuch as, they were not required to make immediate payment in respect thereof, but were required to make payment as when the instalment for the respective quarter became due. Mr. Basu Chowdhury urged further that the proviso to Rule 33 of the Taxation Rules, 1987, cannot, therefore, be said to be in conflict with either Section 196 or Section 216 of the 1980 Act, in respect whereof the said Rule was framed.

50. Although, Mr. Basu Chowdhury referred to the decision of the Appeal Court in the Karnani Properties' case, reported in (7) 84 CWN at Page 48, he, ultimately, did not make any submissions in respect there of.

51. Replying to the submissions made on behalf of the Calcutta Municipal Corporation and the State. Mr. Ghosh reiterated that in view of the provisions of Section 217 of the 1980 Act, the question of interest and penalty is dependant upon presentation of the rate bill. Mr. Ghosh urged that unless the rate bill was presented, there could be no liability for payment of interest and penalty, as was being contended on behalf of the Corporation and the State.

52. Mr. Ghosh also reiterated that the proviso to Rule 33 of the Taxation Rules, 1987, conflicted with the Explanation to Section 216(1) of the 1980 Act on two grounds, namely, (i) the concept of presentation of advance bills, as provided for in Rule 33 was absent from Section 216, which was the parent section, and (ii) the date of presentation, as contemplated under Section 216(1), is altered by the said Rule framed for the purpose of giving effect to the provisions of Section 216(1) of the 1980 Act.

53. Mr. Ghosh then sought to distinguish the decision of the Division Bench in Mathura Prosad's case (supra) by referring to another Bench decision of this Court in the case of (8) Subimal Chatterjee v. Corporation of Calcutta reported in 51 CWN at page 326, wherein, after considering the decision in Mathura Prosad's case, it was held that a defaulter for the purpose of a suit for recovery of arrear rates and taxes under Section 204 of the Calcutta Municipal Act, 1923, was not merely some one from whom such rates and taxes were due, but a person who had defaulted in payment of the dues, despite presentation of bills for the said dues under Section 189 of the said Act.

54. Incidentally, as pointed out by Mr. Ghosh, the above decision was noted with approval by the Appeal Court in the Karnani Properties case (supra), referred to by Mr. Basu Chowdhury.

55. Mr. Ghosh submitted that having regard to the Bench decision of this Court in the case of (9) Corporation of Calcutta v. G.D Mohta reported in 88 CWN at page 309, on the failure of the Calcutta Municipal Corporation to present the bills for the 2nd & 3rd quarters of 1992-1993, it could not claim any interest or penalty for the said period, in view of the provisions of Section 217 of the 1980 Act.

56. In this connection, Mr. Ghosh also referred to the decision of the House of Lords in the case of (10) Arab Bank Ltd. v. Barclays Bank (Dominion, Colonial and Overseas) reported in 1954 (2) Weekly Law Reports at page 1022, wherein while considering the question of suspension of an accrued right for payment owing to outbreak of war, it was held that the customer must first make a demand for payment before he has a cause of action against the Bank.

57. Mr. Ghosh also referred to the definition of the word “due” in Earl Jowitt's “The Dictionary of English Law”, wherein “due” has been defined to mean that a sum of money is payable as a debt either immediately or at a deferred date, depending upon the construction in a given case.

58. Mr. Ghosh lastly referred to a Full Bench decision of the Madras High Court in the case of (11) S.P.L.P Narayanan Chettiar v. M.A.R Annamalai Chettiar, reported in AIR 1961 Madras, at Page 313, wherein the difference between the expressions “owing” and “payable” was sought to be explained. It was held that the expression “owing” signifies an obligation to pay at a future date, while the unqualified expression “payable” signifies an obligation to pay at once.

59. Mr. Ghosh reiterated that the provisions of the Explanation to Section 216(1) of the 1980 Act and the proviso to Rule 33 of the Taxation Rules, 1987, were liable to be declared ultra vires and struck down.

60. The issues which emerge from the submissions advanced on behalf of the respective parties and the materials on record can be divided into two categories.

61. The first category relates to the question as to whether without presentation of bills for recovery of the rates and taxes due, the Calcutta Municipal Corporation would be entitled to charge interest and impose penalty thereupon.

62. The second category, which is linked with the first category, involves the vires of the Explanation to Section 216(1) of the 1980 Act and the proviso to Rule 33 of Taxation Rules, 1987.

63. While considering the question regarding the Corporation's right to recover rates and taxes without presentation of bills therefor, it would be profitable to look into the provisions of the 1980 Act empowering the Corporation to impose rates and taxes for lands and buildings and for recovery and/or realisation thereof.

64. Part IV of the 1980 Act deals with taxation.

65. Section 170, which is the first section in Chapter XII, which forms a part of Part IV of the said Act, empowers the Corporation to levy various taxes, including a consolidated rate on lands and buildings. The rest of the chapter deals with the manner in which such rates and taxes are to be assessed and paid.

66. Chapters XIII, XIV, XIVA and XV deal with tax on professions, trades and callings, advertisements other than advertisements in newspapers, carts and carriages and other taxes, with which we are not concerned.

67. Chapter XVI deals with payment and recovery of taxes.

68. We are therefore, concerned with Chapters XII and XVI of the aforesaid Act for the, purposes of this case.

69. Of the various provisions in Chapter XII, apart from Section 170, only Section 196 is relevant for our purpose, as it provides for the manner in which the consolidated rate on lands and buildings is to paid, and reads as follows:—

“Section 196. Payment of consolidated rate of lands and buildings. Save as otherwise provided in this Act, the consolidated rate on any land or building under this Chapter shall be paid by the person liable for the payment thereof in quarterly instalments on such dates and in such manner as the Corporation may determine by regulations”.

70. In order to give effect to the provisions of the 1980 Act relating to taxation, the State Government, in exercise of the powers conferred by Section 170, framed the Calcutta Municipal Corporation (Taxation) Rules, 1987. Rule 33 of the said Rules is the corresponding Rule to Section 196 of the said Act and has been reproduced hereinbefore.

71. I shall have occasion to revert back to the above Rule in the context of the submissions of the respective parties regarding the vires of the proviso to Sub-rule (1).

72. The next relevant provisions are Sections 214, 215, 216 and 217 of the 1980 Act.

73. Section 214 which prescribes the procedures in which any tax levied under the 1980 Act may be recovered, reads as follows:—

“Section 214. Manner of recovery of taxes under Act. Save as otherwise provided in this Act, any tax levied under this Act may be recovered in accordance with the following procedure and in such manner as may be prescribed—

(a) by presenting a bill, or

(b) by serving a notice of demand, or

(c) by distraint and sale of defaulter's movable property, or

(d) by the attachment and sale of a defaulter's immovable property, or

(e) in the case of consolidated rate on lands and buildings, by the attachment of rent due in respect of the land or the building, or

(f) by a certificate under the Bengal Public Demands Recovery Act, 1913 (Ben. Act III of 1913)”.

74. Section 215 lays down that save as otherwise provided in the Act, any tax levied under the Act, shall be payable on such dates, in such number of instalments and in such manner as may be prescribed.

75. Section 216, which together with Sections 196 and 217, is relevant for the purposes of this case, has been reproduced hereinbefore.

76. Section 217, which is to be considered along with Section 216, in deciding the question relating to imposition of penalty and interest, provides as follows:—

“Section 217, Notice of demand, notice fee, interest and penalty.

(1) Save as otherwise provided in this Act, if the amount of the tax for which a bill has been presented under Section 216, is not paid within thirty days from the presentation thereof or if the tax on professions, trades and callings or the tax on advertisement is not paid after it has become due, the Municipal Commissioner may cause to be served upon the person liable for the payment of the same a notice of demand in such form as may be specified by the Corporation by regulations.

(2) For every notice of demand which the Municipal Commissioner causes to be served on any person under this section, a fee of such amount, not exceeding twentyfive rupees, as the Corporation may determine by regulations shall be payable by the said person and shall be included in the cost of recovery.

(3) On the amount of the bill remaining unpaid after thirty days of presentation of the bill under Section 216, a simple interest at such rate as may be determined by the State Government from time to time shall be payable for the period commencing on the first day of the quarter following that in which the bill is presented and ending with the month preceding the month in which such payment is made.

EXPLANATION:—In calculating the interest payable under this sub-section, a fraction of a rupee in the amount of the bill on which the interest is to be calculated shall be rounded off to the nearest rupee, fifty paise being treated as rupee one.

(4) When the person liable for payment of any tax fails to pay the tax within the quarter for which the bill has been presented under Section 216, such sum, not exceeding fifteen per cent of the amount of the tax as may be determined by the Corporation by regulation shall be recovered from him by way of penalty in addition to the amount of the tax, the notice fee payable under Sub-Section (2) and simple interest in accordance with Sub-Section (3).

(5) The amount due as penalty or interest under this section shall be recoverable as an arrear of tax under this Act”.

77. It will be apparent from the aforesaid provisions that the liability to pay rates and taxes on lands and buildings is created under Chapter XII of the 1980 Act, but its recovery is provided for in Chapter XVI, which indicates how the taxes due are to be recovered.

78. It will also be apparent from the scheme of recovery as envisaged in Chapter XVI, that barring the exceptions provided for in Sub-Section (1) of Section 216, when any tax becomes due, the Municipal Commissioner shall cause to be presented to the person liable a bill for the amount due, so that the same may be paid by him.

79. A conscious distinction has, therefore, been made by the legislature between the liability to pay the rates and taxes and actual payment itself.

80. Section 216(1) of the 1980 Act imposes a mandatory duty upon the Municipal Commissioner to present for payment to the person liable to make such payment, a bill for the amount due, specifying the particulars of the tax and the period for which the charge was being made.

81. The aforesaid provisions of Section 216(1) of the 1980 Act have to be read with Section 196 thereof so far as the consolidated rates for lands and buildings are concerned. As mentioned hereinbefore, such consolidated rates are required to be paid in quarterly instalments in the manner prescribed by regulations, which for the said purpose is comprised in Rule 33 of the Taxation Rules, 1987.

82. As mentioned hereinbefore, Rule 33 indicates the different quarters for which the rates have to be paid in instalments Accordingly, although, the rate-payer has the liability to pay the rate for the entire year in terms of Section 196 of the 1980 Act, such payment is broken up into four instalments, and does not become due for payment till the commencement of the quarter in question. The simple test in this situation would be to see whether the Corporation would be entitled to demand the rates for the period commencing on the 1st day of July in the previous quarter commencing from 1st April. The answer is obviously in the negative.

83. Rule 33, of the Taxation Rules, 1987, makes it very clear, that the consolidated rates are to be paid in quarterly instalments, and consequently, the rate for a particular quarter cannot be said to have become due in a previous quarter. Hence a bill can be presented only for the quarter for which such rate becomes due.

84. This will also be evident from the fact that the latter portion of Rule 33(1) provides for presentation of the bill for the quarter commencing on 1st April by 31st May, and presentation of the bills for the other quarters within two months of the amounts becoming due.

85. The 1980 Act does not contain any provision for presenting advance bills for amounts not yet due and a bill is required to be presented only after the rate for a particular quarter becomes due.

86. The proviso to Sub-Rule (1) of Rule 33 of the Calcutta Municipal Corporation (Taxation) Rules, 1987, which provides for advance bills to be sent is, therefore, clearly beyond the scope of the provisions contained in the statute itself and is as a consequence ultra vires the provisions of Section 216(1) of the Calcutta Municipal Corporation Act, 1980, and must be struck down.

87. Mr. Sircar's submissions regarding the rate-payer's liability to pay the rates for the entire year is no doubt correct, but we are not really concerned with that aspect of the matter, since such liability has not been denied by the petitioners. What we are really concerned with is the question as to when such liability becomes due for payment and whether when such liability becomes due for payment, such payment is to be made irrespective of whether any bill for the amount due is presented to the rate payer or not.

88. It is in such context that I am unable to accept the latter part of Mr. Sircar's submissions that when the rates for a particular quarter becomes due, it is to be paid by the rate payer even without a bill having been presented. Section 216(1) of the 1980 Act, read with Rule 33 of the Taxation Rules, 1987, is rather clear on the point that a bill has to be presented to the rate-payer within a specified time when the rate, payable for a quarter becomes due and, thereafter, the liability to pay is converted into a recoverable due on presentation of such bill. Non-payment of the dues after presentation of the bill gives rise to the consequences mentioned in Sections 217, 219, 220, 221, 221A, 221B, 223 and 228 of the ??? Act.

89. Of the various decisions cited on behalf of the parties on this point, I am inclined to accept those cited by Mr. Ghosh. The Single Bench decision in the Karnani Properties' case (supra) was noted with approval by the Division Bench in Subimal Chatterjee's case (supra).

90. The decisions cited by Mr. Sircar are all on the question as to whether the Corporation was entitled to file a suit for recovery of arrear rates without presenting bills for the said arrears. But in such an eventuality, the Corporation would not be entitled to claim interest and penalty, having regard to the Bench decision of this Court in G.D Mohta's case (supra).

91. Section 217 also makes it clear that after presentation of the bill, the rate-payer defaults in making payment of the amount due as indicated in the bill, within thirty days of such presentation, a demand notice may be served, and simple interest will be payable on the amount due for the period during which the amount remains unpaid. Section 217 also provides that if the person liable for payment fails to pay the tax within the quarter for which the bill is presented under Section 216, penalty at the prescribed rate will also be recovered from him.

92. Section 219 provides that if a person liable for payment does, within thirty days of the service of demand under Section 217, pay the amount due, the said amount, together with all costs, interest and penalty may be recovered under a warrant.

93. It is, therefore, abundantly clear from the scheme for recovery of taxes, contemplated under Chapter XVI of the 1980 Act, that presentation of a bill for any amount due is a pre-condition for charging or imposing any interest or penalty, in the event the amount due for the prescribed remains unpaid.

94. Even if it is assumed that the person liable to pay the rates is required to pay the quarterly rate, even without being presented with a bill or bills, there can be little doubt that even if such payment is delayed and is made beyond the quarter for which it is due, the Corporation cannot charge interest or impose penalty thereupon having regard to the specific provisions of Sub-sections (3) and (4) of Section 217 of the 1980 Act.

95. Accordingly, if the Calcutta Municipal Corporation is unable to prove that bills for the 2nd and 3rd quarters of 1992-1993 were lawfully presented to the petitioners, it would not, in my view, be entitled to charge interest or impose penalty for the said period, and the amounts paid by the petitioners by way of rates for the said two quarters pursuant to the interim order passed by this Court on 3rd March, 1993, would be deemed to be in full settlement of the rates payable for the said period.

96. Except for the Certificate of Posting in respect of bills said to have been sent by the Calcutta Municipal Corporation on 15th June, 1992, there is no other evidence in support of the Corporation's claim that the rate bills for all the four quarters of 1992-1993 had been sent to the petitioners.

97. From the said Certificate of Posting itself it will be clear that when the same had been sent, only the rate for the first quarter of 1992-1993 had become due.

98. In view of my earlier finding that the Statute makes specific provision in Section 216(1) of the 1980 Act for a bill to be presented to the rate-payer when any amount becomes due and that the proviso to Rule 33(1) of the Taxation Rules, 1987, is ultra vires the said provisions, even if the bills for the subsequent quarters were sent on 15th June, it would not amount to proper service for the purposes of Section 196 of the 1980 Act read with the undisturbed portions of Rule 33(1) of the Taxation Rules, 1987, as the Calcutta Municipal Corporation was not empowered to send such bills in advance.

99. Even if for argument's sake Mr. Sircar's submission is accepted that, in view of the specific provision relating to service by Certificate of Posting, as provided in the Explanation to Section 216(1) of the 1980 Act, the provisions relating to service as mentioned in Section 557 of the said Act are excluded, even then a question arises as to whether the presumption raised in the explanation is rebuttable or not.

100. In my view, such deeming provision has to be considered in the manner in which a similar presumption may be drawn under Section 114(e) of the Evidence Act, and such presumption of service must be held to be rebuttable and not absolute. Once the provision relating to presentation of bills in advance has been struck down, there can no longer be any anomaly regarding the date of presentation of the bills in respect of periods for which the amounts had not become due and the provisions of the Explanation must, therefore, be held to be intra vires once the proviso to Rule 33(1) of the Taxation Rules, 1987, is struck down.

101. The presumption regarding service raised in the Explanation to Section 216(1) of the 1980 Act, is, therefore, a rebuttable presumption and is capable of being rebutted by the concerned rate-payer.

102. Of course, in the instant case, such presumption or its rebuttal is not really relevant in view of my finding that the Corporation was not entitle to send bills in advance.

103. The writ application, therefore, succeeds, and is allowed. The proviso to Rule 33(1) of the Calcutta Municipal Corporation (Taxation) Rules, 1987, is declared ultra vires and is struck down accordingly.

104. The payment of the rates for the 2nd and 3rd quarters of 1992-1993 by virtue of the order passed by this Court on 3rd March, 1993, with rebate facilities and without payment of interest and penalty shall be treated as valid discharge of the petitioner's liability for the Municipal rates and taxes for the said quarters in respect of premises No. 34-B, Belvedere Road, Calcutta-700027.

105. There will be no order as to costs. All parties are to act on a xerox signed copy of the judgment and order on the usual undertaking.

106. S.K.G