Allowed

Pune Municipal Corporation. v. M/S. Deval Electroplators.

Bombay HC8 Mar 2024WP/1765/1996

Case brief

AI extract

What is this about?

Municipal corporation challenged orders reducing a property's rateable value. The court held annual assessment gives a fresh cause of action each year, so res judicata/estoppel does not bar appeal, but courts erred in substituting value based on dissimilar, older construction.

What did the court decide?

Rule made absolute in terms of prayer clause (b), restoring challenge to reduced rateable value; no costs.

Pune Municipal Corporation. Vs M/S. Deval… — Municipal and Town Planning | Bombay HC (2024)

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202-wp-1765-1996-J-Final.doc

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Nikita/AGK

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION

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WRIT PETITION NO.1765 OF 1996

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ATULGANESHKULKARNI Digitallysigned byATULGANESHKULKARNIDate:2024.03.0817:08:49+0530

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Pune Municipal Corporation
Shivaji Nagar, Pune, 411 005… Petitioner

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V/s.

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M/s. Deval Electroplators,
A registered Partnership Firm,
having its registered office at 41,
Electronic Estate, Pune – 9.

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… Respondent

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Mr. Abhijit P. Kulkarni a/w Mr. Gaurav Shahane a/w
Mr. Krushna Jaybhay for the Petitioner.

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Mr. Mandar Limaye for the Respondent.

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CORAM :AMIT BORKAR, J.

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DATED:MARCH 8, 2024

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JUDGMENT:

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1.By this petitioner under Article 227 of the Constitution of
India, the petitioner is challenging judgment and order passed by
the 9th Additional District Judge Pune in Civil Appeal No.343 of
1991 dated 12 September 1995 dismissing the appeal arising out
of judgment and order dated 25 April 1990 passed by the Principal
Judge of the Small Causes Court, Pune in Municipal Appeal No.52
of 1989 challenging bill dated21April 1989 and the assessment
order.

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2.The respondent is the owner of Plot No.41 in Survey No.44
Electronic Cooperative Society Pune-Satara Road, Pune.
Respondent constructed ground plus two floors building
admeasuring 3600 sq. ft. from 1980 to 1985.

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3.The petitioner corporation on 8 March 1986 issued a special
Notice bearing No.7248 proposing a rateable value of Rs.54,800/-.
Based on such notice, the respondent filed a complaint on 17
March 1986. On 11 July 1986, the Assessor and Collector of Tax
adjudicated a total estimated rent of Rs.2,945/- and based on its
fixed rateable value at Rs.30,050/-. According to the petitioner,
while fixing such rateable value the Assessor took into
consideration the area of construction, quality of construction and
other facts. The rateable value was fixed with effect from 1
February 1986. The respondent paid the bills based on the rateable
value fixed on 11 July 1986 up to the assessment year 1988 to
1989.

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4.On 5 June 1989, the respondent challenged the bill and
rateable value by filing Municipal Appeal No.52 of 1989 under
Section 406 of the said Act. The petitioner contested the appeal by
filing a reply and examined witnesses. By order dated 25 April
1990, the Small Causes Court allowed the appeal and set aside the
rateable value of Rs.30,050/- fixed by the petitioner and
adjudicated the rateable value for the respondent's property at
Rs.11,400/-. The Small Causes Court directed the petitioner to
refund the excess tax collected based on the bill dated 21 April
1989.

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5.Aggrieved thereby, the petitioner filed Civil Appeal No.343 of
1991 before the District Judge, Pune. The District Judge, Pune by
the impugned judgment and order dated 12 September 1995
confirmed the judgment and order passed by the Principal Judge
Small Causes Court Pune. Hence, the petitioner has filed a present
writ petition.

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6.The learned counsel for the Petitioner Corporation submitted
that the respondent accepted adjudication of rateable value by the
Assessor and Collector by order dated 11 July 1986. He paid bills
based on rateable value fixed at Rs.30,050/- in two subsequent
assessment years, i.e. the assessment year 1987-1988 and 1988-
1989. He submitted that a challenge to rateable value needs to be
raised in an appeal challenging bill immediately after fixation of
rateable value in which appeal the issue of ratable value can be
gone into. However, once the respondent accepts such rateable
value by paying a bill based on the same rateable value, his appeal
which is essentially disputes fixation of rateable value was not
maintainable. In support of his submission, he relied on the
Division Bench judgment of this Court in Ashok Srichand
Kewalramani Vs. Municipal Corporation of City of Pune
and Anr. reported in 1980 Mh.L.J. 534.

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7.He also invited my attention to sub-section (2) of Section
406 which mandates filing of an appeal within fifteen days after
the accrual of the complaint. He, therefore, submitted that in the
absence of a challenge to the rateable value fixed on 11 July 1986
which had been accepted by the respondent having made payment
till the assessment year 1989, the respondent's appeal was not

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maintainable. He submitted that the Principal Judge, Small Causes
Court was not justified in equating construction in the same
society completed in the year 1980 with the construction of the
respondent completed in the year 1985-1986. According to him,
based on the rateable value of such construction in the society, the
Court below could not have accepted the respondent's contention
that a similar rateable value ought to have been fixed by the
petitioner. In support of his submission, he placed reliance on the
judgment of this Court in Trilok Baburao Deshpande v.
Municipal Corporation of Greater City of Pune reported in
2013 (1) Mh.L.J. 794.

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8.Per contra, learned advocate for the respondent submitted
that the petitioner was under statutory obligation to assess the
property for municipal tax every year and, therefore, the cause of
action for challenging rateable value accrues independently every
year irrespective of the fact as to whether the same rateable value
is continued by the Taxing Authority. He submitted that the order
passed by the Assessing Officer indicates no application of mind.
No reasons are assigned while fixing the rateable value. Therefore,
the Courts below have rightly reduced the rateable value of similar
construction in the nearby area of the same society. He, therefore,
submitted that the writ petition deserves to be dismissed.

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9.I have heard both sides and given anxious consideration to
the submissions made on behalf of both sides.

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10. For adjudicating the issue involved, it is necessary to set out
Section 406 of the Bombay Provincial Municipal Corporations Act,

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1949 as stood in the year 1986 which is as under:

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“406. (1) Subject to the provisions hereinafter contained,
appeals against any rateable value or tax fixed or charged
under this Act shall be heard and determined by the Judge.

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(2)No such appeal shall be heard unless— (a) it is
brought within fifteen days after the accrual of the cause of
complaint;

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(b)in the case of an appeal against a rateable value a
complaint has previously been made to the Commissioner as
provided under this Act and such complaint has been
disposed of;

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(c)in the case of an appeal against any tax in respect
of which provision exists under this Act for a complaint to be
made to the Commissioner against the demand, such
complaint has previously been made and disposed of;

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(d)in the case of an appeal against any amendment
made in the assessment book for property taxes during the
official year, a complaint has been made by the person
aggrieved within fifteen days after he first received notice of
such amendment, and his complaint has been disposed of;

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(e)in the case of an appeal against a tax, or in the
case of an appeal made against a rateable value after a bill
for any property tax assessed upon such value has been
presented to the appellant, the amount claimed from the
appellant has been deposited by him with the
Commissioner.”

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11. Section 406(1) provides for an appeal against the rateable
value and/or tax fixed or charged under the said Act to be heard
by the Judge of the Small Causes Court. Sub-section 2(a) provides
for a limitation of fifteen days from accrual of cause of complaint.
Clause (b) deals with a case where an appeal has been filed

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against the rejection of the complaint regarding the determination
of rateable value after the bill of demand demanding property tax
is received by the appellant. There cannot be a dispute that
property tax is assessed based on the rateable value determined by
the Municipal Corporation.

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12. Section 129 as existed in the year 1986 reads thus:

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“129.Property taxes of what to consist and at
what rate leviable.— For the purposes of sub-section (1)
of section 127 property taxes shall comprise the following
taxes which shall, subject to the exceptions, limitations and
conditions hereinafter provided, be levied on buildings and
lands in the city.—

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(a)a water tax at such percentage of their rateable
value as the Corporation shall deem reasonable, for
providing a water supply for the City;

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(b)a conservancy tax at such percentage of their
rateable value as will in the opinion of the Corporation
suffice to provide for the collection, removal and disposal, by
municipal agency, of all excrementitious and polluted matter
from privies, urinals and cess-pools and for efficiently
maintaining and repairing the municipal drains construected
or used for the receipt or conveyance of such matter, subject
however to the provisos that the minimum amount of such
tax to be levied in respect of any one separate holding of
land or of any one building or of any one portioin of a
building which is let as a separate holding shall be eight
annas per mensem and that the amount of such tax to be
levied in respect of any hotel, club, industrial premises or
other large premises may be specially fixed under section
137 :

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Provided that when determining under section 99 or
section 150 the rate at which conservancy tax shall be levied

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for any official year or part of an official year, the
Corporation may determine different rates for different
classes of properties.

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(c)a general tax of not less than twelve per cent but
not more than thirty per cent of their rateable value, which
may be levied, if the Corporation so determines on a
graduated scale;

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(d)betterment charges leviable under Chapter XVI.

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Explanation.— Where any portion of a building or land
is liable to a higher rate of the general tax such portion shall
be deemed to be a separate property for the purpose of
municipal taxation.”

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13. Based on the scheme of the Act and taxation Rules, it
appears that the commissioner needs to adopt or alter entries in
the assessment book every year. It is an obligation of the Municipal
Commissioner to publish public notice required under the Taxation
Rules every year and, therefore, the right accrues to the person
every year to raise an objection. Therefore, every year there is a
fresh cause of action in the matter of assessment of property tax.
Therefore, a party cannot be estopped from challenging
assessment on the grounds that the matter became final in the
earlier year. If a property is liable to be taxed under a statute
which is the law of the land, it must be so taxed without having
regard to the fact that earlier year's basis of taxation was not
challenged.

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14. The Apex Court in the case of Commissioner of Income
Tax, West Bengal v. Durga Prasad More reported in AIR
1971 SC 2439 has held that neither the principle of res judicata

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nor rule of estoppel is applicable to assessment proceedings.

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15. In M.M. Ipoh & Ors. v. Commissioner of Income-
tax, Madras reported in AIR 1968 SC 317, it is held that the
doctrine of res judicata does not apply so as to make a decision on
a question of fact or law in a proceeding for assessment in one
year binding in another year. The assessment and the facts found
are conclusive only in the year of assessment and such finding on
facts may be good evidence for subsequent years. But if such a
question falls for adjudication in another year, such adjudication is
not binding.

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16. The Apex Court in paragraph 8 of Mathura Prasad
Bajoo Jaiswal v. Dossibai N.B. Jeejeebhoy reported in
(1970) 1 SCC 613 held as under:

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“8.In a case relation to levy of tax a decision valuing
property or determining liability to tax in a different taxable
period or event is building only in that period or event, and
is not binding in the subsequent years, and therefore the rule
of res judicata has no application : See Brokan Hill
Proprietory Company Ltd. v. Municipal Council of Broken
Hill. [(1926 AC 94].”

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17. It is now well settled that the decision on the question of
property tax, income tax and rating assessment constitutes an
explanation of the principle of res judicata and the decisions given
regarding tax of a particular year or assessment adjudication do
not give rise to binding estoppel on the parties in respect of
subsequent assessment of tax. The rationale for such a principle
appears to be that the question of liability of the taxpayer for

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subsequent years tax cannot be regarded as the same question of
his liability for the assessment year. If a property is liable to be
taxed under a statute, it must be taxed without having regard to
the fact that for earlier year it successfully escaped taxation on an
erroneous view of fact or law.

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18. I am, therefore, of the opinion that the appeal challenging
rateable value out of assessment for a particular year is
maintainable in the absence of challenge to the same rateable
value in the earlier assessment years.

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19. The next question that arises for consideration is the basis
adopted by the Judge of the Small Causes Court to be a building
constructed in the year 1980 for reducing the rateable value of a
building constructed by the respondent in the years 1985-1986.
The record indicates that the Assessing Officer fixed rateable value
based on the location of the property on the Pune-Satara Highway
having constructed using the best quality material. Based on such
factors, the Assessing Officer fixed reasonable estimated rent at
Rs.2,430/- in respect of first and second floor ad-measuring 1,620
sq. ft. and maintained rateable value in respect of workshop ad-
measuring 855 sq. ft. The total estimated rent calculated was
Rs.2,945/- and accordingly rateable value wax fixed at
Rs.30,050/-.

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20. The Small Causes Court based on the construction of the
ground and first floor by the owner of a nearby property in the
same society reduced the rateable value equating it with the
construction completed in the year 1980. The Appellate Court

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recorded a finding that the rateable value of similar construction in
the vicinity ought to have been the basis of fixing the rateable
value of the respondent's property. However, the Appellate Court
has not assigned reasons while recording a finding that the
construction based on which rateable value of the respondent’s
property was reduced, was held to be similar on what basis.

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21. It needs to be noted that ordinarily, it is not possible that two
premises having similar nature of construction and
accommodation are available. However, the Assessing Authority is
not equipped with machinery that would enable it to collect such
evidence as it is not expected that the Authority would go out
searching and collecting evidence to bring on record material
which would enable the Assessing Authority to apply the principle
of parity as is done by the Appellate Court. For the purpose of
finding reasonable rent, the Assessing Authority has to keep in
view principles of standard rent as deductible from Rent Control
Law which permits the cost of construction to be adopted as the
basis for calculating rateable value in case of self-occupied
properties. It is permissible if the Assessing Authority works out
the cost of land by reference to the date of commencement of
construction and the reasonable amount spent on construction.
The tax is to be levied on the rateable value of any land or building
which is determined by finding out the only rent at which such
land or building may reasonably be expected to be let out from
year to year by deducting a sum equal to ten per cent of such
annual rent. Such annual rent at which a building may reasonably
be expected to let would be higher in case of building construction

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which is recent as compared to construction of the building which
is older. There is nothing wrong if a property having recent
construction is required to pay more tax than older construction
based on the quality of material used for construction.

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22. Therefore, in my opinion, it was necessary for the Appellate
Authority to consider the material on record as to whether the
material used for construction by the respondent was similar to the
material used by the owner of the structure in the vicinity. The
factor of the gap of five years in construction is also relevant for
deciding the cost of construction having an effect on reasonable
rent. Therefore, in my opinion, the Courts below were not
justified in setting aside rateable value fixed by the petitioner by
substituting it based on construction in the vicinity completed five
years back. Hence, following order:

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23. Rule is made absolute in terms of prayer clause (b).

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24. No costs.

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(AMIT BORKAR, J.)

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Pune Municipal Corporation. v. M/S. Deval Electroplators.

Case brief

What is this about?

What did the court decide?

Pune Municipal Corporation. v. M/S. Deval Electroplators.

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Cases cited

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