Allahabad High Court

Dr. A.C. Mullick & Others vs State Of U.P. & Others on 12 October, 2012

Bench: Ashok Bhushan, Abhinava Upadhya




HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

RESERVED ON 3.9.2012
 
DELIVERED ON 12.10.2012
 

 

 
Case :- WRIT TAX No. - 191 of 2011
 

 
Petitioner :- Dr. A.C. Mullick & Others
 
Respondent :- State Of U.P. & Others
 
Petitioner Counsel :- Priyanka Midha,Manish Goyal
 
Respondent Counsel :- C.S.C.,S.D. Kautilya,S.K. Gupta
 

 
Hon'ble Ashok Bhushan,J.

Hon'ble Abhinava Upadhya,J.

(DELIVERED BY HON'BLE ASHOK BHUSHAN, J.)

The petitioners by means of this writ petition have challenged the recovery proceedings initiated by Nagar Nigam Allahabad through Collector, Allahabad for recovery of house tax of building No. 35, Mahatma Gandhi Marg, Allahabad. A mandamus has also been sought commanding the respondents to realise and recover the house tax from respondents no. 7 to 9 owners of the building. Further prayer has been made for issuance of a writ, order or direction declaring Section 11 of the U.P. Act No. 17 of 1999 (U.P. Municipal Corporation (Amendment) Act of 1999 as ultra vires to Article 14 of the Constitution of India.

We have heard Sri Manish Goyal, assisted by Ms. Priyanka Middha for the petitioners, Sri S.D. Kautilya, learned counsel appearing on behalf of Nagar Nigam, Allahabad and Smt. Archana Srivastava, learned Standing Counsel for the State. Notices have not been issued to the respondents no. 7,8 and 9 who have been arrayed as owners of the building in question.

Counter affidavit and Supplementary counter affidavit have been filed on behalf of Nagar Nigam, Allahabad. A counter affidavit has also been filed by the State. Rejoinder affidavit and supplementary rejoinder affidavit have been filed by the petitioners. The issues raised in the writ petition can be conveniently decided on the pleadings of the parties which are on the record and it is not necessary to have presence of respondents no. 7,8 and 9. However, liberty is reserved to the said respondents to make an application for alteration/modification or variation of this order if, they feel so aggrieved.

Brief facts of the case as emerged from pleadings of the parties are; the petitioners, who are five in numbers, are tenants of building bearing municipal No. 35 Mahatma Gandhi Road, Allahabad. The predecessor in interest of respondents no. 8 and 9, the owners of the shops have let out the shops to the petitioners on rent. The petitioners claim to be allottees of the shops under the provisions of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972, U.P. Act No. 13 of 1972 (hereinafter referred to as '1972 Act'). The petitioners claim to have paid house tax to the respondents no. 7,8 and 9 on whom according to the petitioners the liability to pay property tax rest. The officials of the respondents no. 2 and 3 pasted a citation on the individual shop of the petitioners whereby the dues of house tax were shown to be for an amount of Rs. 30,72,048/- besides interest and recovery charges. The official, who visited the shop pasted the notice and asked the petitioners to immediately pay the aforesaid amount otherwise, the shops shall be attached. Copy of the citation dated 29.12.2010 has been brought on record as Annexure-1 to the writ petition. The citation was issued in the name of respondents no. 7 and 8 mentioning amount of Rs. 30,72,048/- as house tax dues. An order was issued by the Sub Divisional Officer on 8.2.2011 attaching the property belonging municipal No. 159/35 Mahatma Gandhi Marg, Allahabad. This writ petition was filed on 5.2.2011 by the petitioners and an interim order was passed on 21.2.2011 to the effect that the proceedings of attachment dated 8.2.2011 of the shop may continue however, shops of the petitioners be not closed. In the writ petition following reliefs have been prayed by the petitioners:

"a) issue a writ, order or direction in the nature of Certiorari calling for the record and quashing the entire recovery process initiated against the petitioners by respondent no. 2,3,5 and 6 with respect to house tax of Building No. 35 M.G. Road, Allahabad (Annexure-1 to the present writ petition).

b) issue a writ, order or direction in the nature of Certiorari calling for the record and quashing the entire proceedings against the petitioners or the shops in occupation of the petitioners for realization of house tax.

c)issue a writ, order or direction in the nature of Mandamus commanding the respondent no. 2,3, 5 &6 to realize and recover house tax from respondent no. 7 to 9 or from their property in accordance with Chapter XXI of U.P. Municipal Corporation Act, 1959.

d) issue a suitable writ, order or direction declaring Section 11 of the U.P. Act No. 17 of 1999 as ultra vires Article 14 of the Constitution of India."

A counter affidavit has been filed on behalf of respondents no. 2 and 3 dated 29.3.2011 sworn by Sri Mayank, Assistant Municipal Commissioner, Nagar Nigam. Two supplementary counter affidavits on behalf of respondents no. 2 and 3 dated 28.4.2011 sworn by Sri Mayank as well supplementary counter affidavit dated 7.5.2012 sworn by Sri Ravindra Kumar Tax Superintendent have been filed. In the counter affidavit, it has been stated that premises was constructed in the year 1935. There are number of shops occupied by various tenants including the petitioners. It is stated that owners of the building were paying in part, house tax of Rs. 5122/- on 3.6.2004, payment of Rs. 60,000/- on 29.3.2008 lastly on 16.9.2010 of Rs. 1425/-. It has been pleaded that there are arrears of liability of house tax from 2003 amounting to Rs. 30,72,048/- for which proceedings have been taken for recovery under Chapter XXI of the U.P. Municipal Corporation Act, 1959. It has been pleaded that if tax is not deposited by the owners, who are primarily liable then the same can be realised from the occupiers. It has been further stated that there being number of occupants in the building, the liability of the tenants have been divided according to the area occupied by the petitioners as well as other tenants. A chart giving proportionate liability of each of the petitioners and other tenants have been filed as Annexure C.A.1 dividing the liability of Rs. 30,04,294/- It has been pleaded that in the events, the petitioners have any grievance, they can submit self assessment of tax as per section 207-A of the Municipal Corporation Act. It has been pleaded that in case the answering respondents are restrained from realising the outstanding dues of the taxes, the Corporation will become defunct and the whole city as well as citizens of the municipal area shall be be adversely affected. It has been pleaded that petitioners have no locus standi to challenge the correctness of the recovery proceedings initiated against the building as they are not owners of the same. The annual value of the property has been assessed as per section 174 of the U.P. Municipal Corporation Act, 1959 (hereinafter referred to as '1959 Act') with regard to which owners of the premises never raised any objection and regularly paid the taxes till 2003-04 but thereafter only part payment has been made. Some of the petitioners have paid the water tax, which has been fixed in pursuance of the assessment of the property, thus the petitioners have accepted the assessment of the house tax and they have no right at this stage to challenge the same. The answering respondents have already served notice upon the owners of the building about the outstanding dues of the taxes and quantum of tax having never been challenged by the owners of the building, the petitioners have no right to challenge the annual value having already been accepted by the landlord.

The writ petition was heard by the Division Bench on 12.4.2012 on which date this Court directed the Nagar Nigam to produce the assessment annual value of the building with regard to 2003 revision by the next date. Following order was passed on 12.4.2012:

"Supplementary counter affidavit filed today by the respondent no. 2 and 3 is taken on record. The petitioner is granted two weeks' time to file supplementary rejoinder affidavit.

Learned counsel for the Nagar Nigam was directed by order dated 20.4.2012 to bring on record relevant assessment and annual value of the building and also the date when the last assessment was made. In the Supplementary Counter Affidavit, no record except relevant Khasara of ward has been filed. Learned counsel for the Nagar may also produce the assessment and annual value of the building with regard to 2003 revision on the next date fixed."

The Division Bench of this Court while hearing the writ petition on 20.4.2012 passed following order:

"Sri S.D. Kautilya, learned counsel for the petitioner prays for and is allowed three days time to file supplementary counter affidavit to bring on record relevant assessment and the annual value of the building and also the date when the last assessment was made."

In the supplementary counter affidavit dated 28.4.2011, it has been stated that the building in question was assessed in the year 1960 at the rate of Rs. 20,236/- thereafter in the year 1989 as Rs. 23,289 and in the year 2003, the building in question was again assessed as Rs. 2609340/-. Relevant Khasra of of the ward No. 23 have been brought on record along with the supplementary counter affidavit as Annexure SCA-1. A chart containing the details of the outstanding of the house tax dues from the year 2003-04 to 2010-2011 has been brought on record totalling Rs. 30,72048.47 as Annexure-SCA-2.

A supplementary counter affidavit dated 7.5.2012 has been filed stating that the total non residential constructed area of the building is Rs. 1153.21 square meters and the total area of the land is 2556.01 square meters. It is stated that the cost of the construction of the building as per section 174(a) was assessed as Rs. 24,69,950/- Similarly, the residential part of the building was also assessed as Rs. 139390.00. Annexure SCA -1 has been filed as a proforma of assessment of the building No. 159/35 signed by the Revenue Inspector and Tax Superintendent that annual value is Rs. 24,69,950.00. It has been further stated in the affidavit that original file prepared by revenue Inspector/Tax Superintendent in respect of the measurement of the building is not available and an inquiry has been set up. A report dated 2.4.2011 submitted to Tax Superintendent has also been brought on record stating that there is no information regarding original file. Report also mentions that a first information report be lodged regarding missing of the file. Rejoinder affidavit and Supplementary rejoinder affidavit have been filed by the petitioners. In the supplementary rejoinder affidavit, the petitioners have brought on record copy of the Rules namely; U.P. Nagar Maha Palika (Depreciation of Building) Rules, 1983 as well as the Government Order dated 11.7.2001 providing for constitution of Committee for determining the annual value as per Section 174(1) (a) . Copy of the letter of the Director of Local Body, dated 9.6.1997 has been brought on record by which the Director has directed all the Nagar Nigams to determine the annual value as per the 1983 Rules. The petitioners have also brought on record the letter of the Engineer, Public Works Department dated 26.2.1997 regarding the rates of plinth area of residential and non residential buildings.

A counter affidavit has also been filed on behalf of respondents no. 5 and 6, the Collector and Tahsildar of Allahabad stating that proceedings for recovery as arrears of land revenue has been initiated on the basis of the recovery certificate dated 9.11.2010, issued by Nagar Ayukta, Nagar Nigam, Allahabad. It is stated that citation was pasted on the building and thereafter the amount have not been paid, the building was attached by order dated 8.2.2011 and thereafter sale notice has also been issued. It has further been stated that a report has been submitted by Amin on 21.8.2012 that on inquiry regarding defaulter, it came to the notice that defaulter has died hence, it is not possible to effect the recovery and recovery be returned. It has been stated in the counter affidavit that proceedings to return the recovery certificate are going on.

We have heard learned counsel for the parties and have perused the record.

Sri Manish Goyal, learned Counsel for the petitioners challenging the vires of Section 11 of the U.P. Act No. 17 of 1999, contended that by said amendment in section 7 of the the U.P. Act No. 13 of 1972, two classes of tenants have been artificially created, which violates Article 14 of the Constitution of India. Elaborating his submissions, Sri Manish Goyal submitted that all tenants of the building in question are governed by U.P. Act No. 13 of 1972, which forms a homogeneous class and section 7 prior to its amendment by the aforesaid Act, dealt the liability of tenants to pay taxes in similar manner both for the tenants residing in the municipalities area as well as municipal corporation but by the amendment, tenants residing in municipal area and municipal corporation have been differently dealt with regard to payment of taxes, which is arbitrary and discriminatory hence, liable to be struck down. He submits that according to section 7 of the U.P. Act No. 13 of 1972, a tenant of the municipal area is liable to pay the landlord in addition to the rent, the taxes, which absolves him from the liability of payment of house tax, whereas a tenant of the municipal Corporation even though has made the payment of taxes to the landlord, he is not absolved from the liability. He submits that the classification made by the Legislature between the tenants of municipalities and municipal Corporation has no nexus with the object sought to be achieved.

Sri Goyal further submits that assessment of annual value of the building has not been made as per the provisions of the 1959 Act and the Rules nor any proceeding for recovery has been initiated as per the provisions of Chapter XXI of the 1959 Act. It is submitted that no notice for demand has ever been served on the petitioners. It is submitted that the action of the respondents in attaching the shops in which the petitioners are carrying on their business, is wholly illegal and contrary to the provisions of the 1959 Act. Sri Goyal submitted that inspite of the order of this Court passed in this writ petition for producing the original record pertaining to assessment of annual value of the building made in the year 2003, no record has been produced by the respondents hence, the Court may draw a presumption that assessment has not been done in accordance with the Act. It is submitted that no notice for any assessment of the building has ever been published as required by Section 208 of the 1959 Act. It is submitted that petitioners being tenants of specified portion of the building, it was required to be assessed separately after giving due notice to the petitioners. Sri Goyal further submitted that no assessment has been made as per section 174(1)(a) of the 1959 Act and the Rules framed thereunder. Referring to 1983 Rules, Sri Goyal submits that in the calculation, which has been brought on record along with the counter affidavit and supplementary counter affidavit, it is not shown that Nagar Nigam has given any depreciation, while determining the annual value of the building, which clearly indicates that the assessment of the annual value is contrary to the provisions of the Act and the Rules and no reliance can be placed on such assessment. He further submits that in the Government Order dated 11.7.2011, a Committee is contemplated for determining the annual value of the commercial buildings and it is not shown that any committee was constituted by the Nagar Nigam, Allahabad for making assessment of the annual value according to the said Government Order.

Sri S.D. Kautilya, learned Counsel for the Nagar Nigam refuting the contentions of the learned Counsel for the petitioners, contended that the petitioners have no right to challenge the annual value of the building as assessed by the Nagar Nigam in the year 2003. It is submitted that owners of the building never objected to the assessment and made the payment of tax although partly after 2003, which indicates that they have no objection against the annual value as assessed by the Nagar Nigam. Sri Kautilya further submitted that the annual value having been already assessed in the year 2003 of the commercial part of the building, the liability of each tenant has been separately determined as has been mentioned in Annexure-SC.A.1, according to the area which is in their occupation and the petitioners are liable to pay the proportionate amount as determined. Referring to 1983 Rules, it is contended by Sri Kautilya that the said Rules have no application in the petitioner's case and the 1983 Rules apply only with regard to the buildings constructed by the Government. He further submitted that in calculation of the annual value, the cost of the construction of the building has been determined as per Public Works Department rate for the plinth area and there has been determination of the annual value as per section 174 (1) (a) of the 1959 Act. He submits that it was open for the petitioners to file their self assessment under section 207A and they never submitted self assessment at any point to time hence, they cannot be heard in objecting the annual value as determined by the Nagar Nigam.

Sri S.D. Kautilya has placed much reliance on a Division Bench judgment of this Court dated 25.5.2012 in Shiv Sewak Singh & others Vs. State of U.P. and others 2012 (7)ADJ 724 as well as on the Division Bench judgment of this Court in Clark Hotel Limited Vs. State of U.P. and others reported in 2011 (3) ADJ 18 . Learned Counsel for the petitioners has also placed reliance on several judgements of the apex Court and this Court, which shall be referred to while considering the submissions in detail.

From submissions of learned counsel for the parties and pleadings on record, following issues arise for consideration:

1.Whether Section 11 of the U.P. Municipal Corporation (Amendment) Act, 1999 by which amendments were made under section 7 of U.P. Act No. 13 of 1972 is liable to be struck down as ultra-vires to Article 14 of the Constitution of India?

2.Whether according to the provisions of U.P. Municipal Corporation Act, 1959, the petitioners who are tenants, are liable to pay house tax to the municipal Corporation ?

3.Whether the payment of house tax along with the rent to the landlord as claimed by the petitioners absolve their liability of payment of house tax to the municipal Corporation?

4.Whether the Nagar Nigam can recover house tax pertaining to the portion of the building in tenancy of the petitioners or the recovery of house tax can only be made from the landlord/owners of the building?

5.Whether for making assessment of commercial building covered by Section 174(1) (a) of the Act, the U.P. Nagar Mahapalika (Depreciation of Buildings) Rules, 1983 are applicable on the commercial building owned by private individual and the Nagar Nigam is liable to provide depreciation while calculating the estimated cost of erecting building?

6.Whether assessment of the building in question i.e. 159/35 M.G. Road, Allahabad has been made as per provisions of the 1959 Act?

7.Whether the petitioners who are tenants of the building have any locus standi to challenge the assessment made by the Nagar Nigam determining the annual value of the building?

8.Whether the recovery proceeding initiated by citation dated 29.12.2010 Annexure-1 to the writ petition is liable to be quashed with direction to the respondents no. 2,3,5 and 6 to realise the house tax from the respondents no. 7,8 and 9 or from their property?

The first issue raised by learned Counsel for the petitioners relates to vires of section 11 of 1999 Act. Before we consider the submissions of learned counsel for the parties, it is useful to note the relevant provisions of U.P. Act No. 13 of 1972 and U.P. Municipal Corporation Act, 1959.

Section 7 of U.P. Act No. 13 of 1972 contains a provisions "Liability to pay taxes". Section 7 prior to its amendment by U.P. Act No. 17 of 1999 was as follows:

"7. Liability to pay taxes.- Subject to any contract in writing to the contrary but notwithstanding anything contained in Section 179 of the Uttar Pradesh Nagar Mahapalika Adhiniyam, 1959 (U.P. Act II of 1959) or in Section 149 or in any rule made or notification issued under section 338 of the United Provinces Municipalities Act, 1916 (U.P. Act No. II of 1916) or in Section 14(1)(e) of the United Provinces Town Areas Act, 1914 ( U.P. Act II of 1914), the tenant shall be liable to pay to the landlord in addition to and as part of the rent the following taxes or proportionate part thereof, if any, payable in respect of the building or part under his tenancy, namely;

(a) the water tax;

(b) twenty-five per cent of every such enhancement in house tax made after the commencement of this Act, or such portion thereof , as is not occasioned on account of the increase in the assessment of the building as a result of the enhancement of rent under provisions of section 5:

Provided that nothing in this section shall apply in relation to a tenant the rate of rent payable by whom for the time being (excluding any enhancement of rent under provisions of section 5) does not exceed twenty five rupees per month."

Section 7 of the U.P. Act No. 13 of 1972 thus contained a non obstante clause giving overriding effect to the provisions of Act 13 of 1972 Act regarding liability of tenant to pay landlord proportionate part of taxes notwithstanding anything contained in Section 179 of U.P. Act 1959 and Section 149 of the U.P. Municipalities Act, 1916. Section 149 of the U.P. Municipalities Act, 1916 contained a provision pertaining to liability for payment of certain taxes on annual value. Section 149 of the U.P. Municipalities Act, 1916 Act is as follows:

"149. Liability for payment of certain taxes on annual value.-(1) Except when otherwise provided by rule, every tax other than a scavenging tax or tax for the cleansing of latrines and privies on the annual value of buildings or lands or of both shall be leviable primarily from the actual occupier of the property upon which the said taxes are assessed, if he is the owner of the buildings or lands or holds them on a building or other lease from the Government or from the board, or on a building lease from any person.

(2) In any other case the tax shall be primarily leviable as follows, namely:--

(a) if the property is let, from the lessor,

(b) if the property is sub-let, from the superior lessor

(3) On failure to recover any sum due on account of such tax from the person primarily liable, the board may recover from the occupier of any part of the buildings or lands in respect of which it is due that portion thereof which bears to the whole amount due the same ratio as the rent annually payable by such occupier bears to the aggregate amount of rent payable in respect of the whole of the said buildings or lands, or to the aggregate amount of the letting value thereof in the authenticated assessment list

(4)An occupier who makes any payment for which he is not primarily liable under the foregoing provisions shall in the absence of any contract to the contrary, be entities to be reimbursed by the person primarily liable."

Similarly Section 179 of 1959 Act contains a provisions regarding primary responsibility for certain property taxes on annual value, which is to the following effect:

"179. Primary responsibility for certain property taxes on annual value.- (1) Except where otherwise prescribed, every tax (other than a drainage tax or a conservancy tax) on the annual value of buildings or lands shall be leviable primarily from the actual occupier of the property upon which the tax is assessed, if he is the owner of the buildings or lands or holds them on a building or other lease from the Central or the State Government or from the Corporation, or on a building lease from any person.

(2) In any other case the tax shall be primarily leviable as follows, namely,--

(a) if the property is let from the lessor;

(b) if the property is sublet from the superior lessor;

(d) if the property is let in pursuance of an order under the Uttar Pradesh Urban Buildings (Regulations of Letting, Rent and Eviction) Act, 1972, from the tenant.

(3) On failure to recover any sum due on account of such tax from the person primarily liable, the Municipal Commissioner may recover from the occupier of any part of the buildings or lands in respect of which it is due that portion thereof which bears to the whole amount due the same ratio as the rent annually payable by such occupier bears to the aggregate amount of rent payable in respect of the whole of the said buildings or lands, or to the aggregate amount of the letting value thereof in the authenticated assessment list.

(4)An occupier who makes any payment for which he is not primarily liable under the foregoing provisions shall, in the absence of any contract to the contrary, be entitled to be reimbursed by the person primarily liable."

By U.P. Act No. 17 of 1999, section 11 was inserted by which section 7 of U.P. Act No. 13 of 1972 has been amended. Section 11 of U.P. Act No. 13 of 1972 is as follows:

"Section 7 - Liability to pay taxes.-Subject to any contract in writing to the contrary, but notwithstanding anything contained1in Section 149 of the Uttar Pradesh Municipalities Act, 1916], the tenant shall be liable to pay to the landlord in addition to and as part of the rent, the following taxes or proportionate part thereof, if any, payable in respect of the building or part under his tenancy, namely,--

(a) the water tax;

(b) twenty-five per cent of every such enhancement in house tax made after the commencement of this Act, or such portion thereof, as is not accrued on account of the increase in the assessment of the building as a result of the enhancement of rent under the provisions of Section 5:

Provided that nothing in this section shall apply in relation to a tenant the rate of rent payable by whom for the time being (excluding any enhancement of rent under provisions of Section 5) does not exceed twenty-five rupees per month."

Consequence of the above amendment is that overriding effect given to section 7 of U.P. Act No. 13 of 1972 as it existed prior to amendment has been taken away in so far as section 179 of U.P. Act 1959 is concerened. From section 7 the words "in Section 179 of the U.P. Nagar Mahapalika Adhiniyam, 1959" have now been deleted. U.P. Act No. 17 of 1999 is an Amending Act to further amend the U.P. Municipal Corporation Act, 1959 and to make consequential amendments in U.P. Act No. 13 of 1972. By the amendments by U.P Act No. 17 of 1999, the intention and purpose of amendment is clear that now the provisions of 1999 Act shall be given effect to, and overriding effect given to Section 7 of the U.P. Act No. 13 of 1972 has been taken away. The purpose and object of Act No. 17 of 1999 makes it clear that amendments have been brought with intention to augment revenue of the Corporation and fastening the tax liability on tenants. It is useful to refer to the prefatory note of the U.P. Act No. 17 of 1999:

"Prefatory Note- Statement of Objects and Reasons. - With a view to augmenting the revenue of the Corporation, simplifying the procedure for assessment, fastening tax liability on tenant where the property is let under the Uttar Pradesh Urban Buildings (Regulation of letting, Rent and Eviction) Act, 1972 and extending the facility of self assessment to the owner or occupier of the properties liable to tax, it has been decided to amend the Uttar Pradesh Municipal Corporation Act, 1959 and the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction Act, 1972 mainly to provide for-

(1)making the water tax leviable by the Corporation in areas where water is supplied by it;

(2)changing the definition of annual value to make it rational and transparent;

(3)exempting the owners occupying the residential buildings having carpet area of not more than fifteen square meters and the land and buildings of village abadi coming within the municipal area within the period of ten years from payment of tax;

(4)making the tenant liable to tax if the property is let under the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972;

(5)making educational/professional institutions run on commercial lines in private sector liable to pay house tax;

(6)giving option of depositing self assessment property tax to owners or occupier liable to property tax;

(7)the liability of interest on the amount of tax not paid in time.

The Uttar Pradesh Municipal Corporation (Amendment) Bill, 1999 is introduced accordingly."

Clause (4) of the Statement of Objects and Reasons as noted above clearly indicates that now after the amendment, the tenants are liable to pay tax, if the property is let out under the provisions of U.P. Act no. 13 of 1972.

The submissions which has been pressed by learned Counsel for the petitioners is that treating differently to the tenants situated in the municipal area and the tenants situated in municipal Corporation area is violative of Article 14 of the Constitution of India. Learned Counsel for the petitioners submits that the geographical classification of the tenants based on situation of building has no nexus with the object sought to be achieved.

Article 14 Constitution of India forbids class legislation but it does not forbids reasonable classification for the purpose of legislation. Article 14 was considered and explained by the Constitution Bench of the apex Court in Buddhan Choudhry and Others Vs. The State of Bihar, 1955 (1) SCR 1045. Referring to earlier judgment of the apex Court, the apex Court laid down following:

"The provisions of article 14 of the Constitution have come up for discussion before this Court in a number of cases., namely, Chiranjit Lal Chowdhuri v. The Union of India, The State of Bombay v. F. N. Balsara, The State of West Bengal v. Anwar Ali Sarkar, Kathi Raning Rawat v. The State of Saurashtra, Lachmandas Kewalram Ahuja v. The State of Bombay and Qasim Razvi v. The State of Hyderabad and Habeeb Mohamad v. The State of Hyderabad. It is, therefore, not necessary to enter upon any lengthy discussion as to the meaning, scope and effect of the article in question. It is now well-established that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (ii) that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases; namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration."

The above judgment thus, clearly lays down that classification may also to be founded on geographical basis thus, classification on geographical basis is not prohibited provided there is a reasonable classification which has nexus with the object sought to be achieved.

The Constitution of India Part IX A contains various Articles regarding "Municipalities". Article 243Q itself contemplated different self Government institution including municipal council for a smaller urban area and municipal Corporation for larger urban area. Article 243-Q is quoted below:

"243Q. Constitution of Municipalities.- (1) There shall be constituted in every State,-

(a) a Nagar Panchayat (by whatever name called) for a transitional area, that is to say, an area in transition from a rural area to an urban area;

(b) a Municipal Council for a smaller urban area; and

in accordance with the provisions of this Part:"

The State Legislature has enacted the U.P. Municipalities Act, 1916 containing various provisions for municipalities in U.P. and the U.P. Municipal Corporation Act, 1959 for the establishment of Municipal Corporations in certain cities with a view to ensure better municipal government of said cities. Thus, Statute itself contains a classification between a municipality or a municipal Corporation, both being separate entity covered by separate statutory schemes, owners of the building situated in a municipal area or municipal Corporation area are obviously treated differently and different rate of tax can be imposed with regard to buildings in municipal area and municipal corporation area. Similarly the tenants situated in municipal area and municipal Corporation area can also be differently regulated by the statutory schemes and merely because the tenants situate in municipal area and municipal Corporation are regulated by different statutory schemes, it cannot be said that there is any unreasonable classification. The provisions of U.P. Act No. 17 of 1999 which amended Section 7 of U.P. Act No. 13 of 1972, is for the purpose and object as clearly indicated in the statement of objects and reasons as noted above. The amendment was brought for the purpose of augmenting the revenue of municipal Corporation and fastening the liability of tax on tenants in municipal Corporation who have been let out the premises under the U.P. Act No. 13 of 1972. The amendment has reasonable nexus with the object sought to be achieved. Unless the tenants are not made liable to pay the taxes, the municipal corporation may be deprived of payment of timely taxes due to various reasons including the dispute. Reference in this context is made to the Full Bench judgment of this Court reported in AIR 1959 Allahabad 562 Municipal Board of Bareilly Vs. Kundan Lal. The Bareilly municipal Board was divided in various wards. With regard to a building situated in ward No. 2, a notice demanding house tax was issued to owner Kundan Lal, which he refused. The Municipal Board filed a suit in the Court of the Judge of Small Causes. It was contended that the area where house tax has been imposed is differently treated from the area where no house tax has been imposed. A reference was made under section 113 of the Code of Civil Procedure by the learned Judge Small Cause Court as to Whether Section 128 of the Municipalities Act, which authorises a Municipal Board to impose certain taxes mentioned in it on any part of the municipality is void. The reference was answered holding that the provision was valid and not violative of any provisions. Following observations were made in paragraphs 8,9 and 10, which are quoted below:

"8. I am of opinion that if a municipal board decides to impose a tax on the annual value of buildings it is not under an obligation to impose that tax on every building within municipal limits or at the same rate on all the buildings, but every differentiation to be valid must be founded on a classification which passes the two tests laid down in Budhan Choudhary's case AIR 1955 SC 191.

9. Learned counsel for the Board has however contended that the Board has a right to select a taxing area within municipal limits and that, provided the tax is imposed equally on all persons resident in that area, no question of discrimination would arise which would attract the provisions of Article 14. He has cited no Indian authority in support of this proposition but has relied on passages to be found in the books on American constitutional law, and in particular on two passages in Willis on Constitutional Law to be found at pages 587 and 589. In the former of these passages the learned author says:

"The Supreme Court permits a wider discretion in classification under the power of taxation, if possible, that it does under the police power. One reason for this undoubtedly is the urgent need for revenue by the various governmental agencies. A state does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods, and even rates for taxation if it does so' reasonably"

and at page 589 the author says:

"The equality clause does not forbid geographical classification. A state, if it desires, may levy taxes over the entire state and thus make the state the unit; but "if the state desires, it may establish taxing districts or other sub-divisions, like a city or territory within a city. In such cases all that is required is the same basis of classification within the district of subdivision. Inequality of apportionment between the state as a whole and such district or sub-division will not invalidate the tax".

The principal authorities cited by the learned author in support of these statements are Forsyth v. Hammond (1897) .1.66 US 506: 41 Law Ed 1095. Fall-brook Irrigation District v. Bradley (1896) 164 US 112: 41 Law Ed 369, Myles Salt Co. Ltd v. Iberia and St. M. Drainage Dist. (1916) 239 US 478: 60 Law Ed 392 and Kelly v. Pittsburg (1882) 104 US 578: 26 Law Ed 658. I do not think that the passages cited by learned counsel or the authorities referred to therein really support the proposition for which learned counsel contends. The learned author, in my opinion, says no more than that as regards matters of taxation. The U. S. Supreme Court permits a very wide degree of classification but nevertheless there must be a classification whether it be as regards districts, objects, persons, methods or the like, and that that classification must be reasonable. None of the cases goes so far as even to suggest that the authority upon whom the state has conferred the power of taxation can itself discriminate between persons subject to taxation on a geographical basis unless that basis can be justified as a reasonable classification.

10. I would accordingly answer the first part of the reference in the negative, and the second part by saying that the particular house tax imposed by the Municipal Board, Bareilly, on the plaintiff in respect of his building in Ward No. 2 can be void only if it cannot be justified by the Board on the ground already stated by us. Whether it can be so justified will depend on evidence which is still to be produced in the case."

In view of the aforesaid discussions, we are of the view that provisions of Section 11 of the U.P. Act No. 17 of 1999 cannot be said to be violative of Article 14 of the Constitution of India. The submission of the learned counsel for the petitioners that provision is ultra-vires is thus rejected.

One more Division Bench judgment reported in 2011(3)ADJ 18 Clark Hotel Limited Vs. State of U.P. and others needs to be noticed. One of the submissions made before the Division Bench was that the definition of 'annual value' under section 140 of the Municipalities Act as well as under section 174-A of the 1959 Act is discriminatory. Thus, the classification between the municipal corporation and municipality was sought to be challenged on the ground of violative of Article 14. The said argument was repelled. It is useful to refer to paragraphs 14 to 18 of the judgment which are as follows:

"14. The Act applies to municipal corporations; whereas, the Municipalities Act applies to the municipalities as well as to nagar panchayats. These terms have been adopted from the Constitution.

15. Article 243Q(1) of the Constitution of India defines municipal corporations, nagar panchayats, as well as municipal councils. It explains them as follows:

A municipal corporation consist of the larger urban area;

In our state municipal council is known as Municipality. It consist of a smaller urban area;

Nagar panchayat consists of a transitional area which is in transition from a rural area to an urban area.

16. The Act applies to the municipal corporations; whereas, the Municipalities Act applies to nagar panchayats as well as to municipalities (municipal councils) but does not apply to municipal corporations. The areas of operation of these two enactments are different. The Act applies to larger urban area; whereas, the other (the Municipalities Act) applies to the smaller urban area as well as to the rural area in transition to an urban area.

17. The larger urban area and smaller urban area as well as rural area in transition to an urban area fall in different classes. There are different kinds of problems and development plans. There can be different provisions.

18. In view of above, it cannot be said that Section 174(a) of the Act is discriminatory."

The issues Nos. 2, 3 and 4 being inter-related are taken together. The issue in the writ petition being the payment of house tax on annual value of the building, the question as to who is primary liable to pay house tax assumes importance. Learned Counsel for the petitioners relying on section 7 of the U.P. Act No. 13 of 1972 contends that payment of house tax to the landlord along with rent absolve the petitioners from any liability of payment of house tax. It is relevant to note the scheme of the U.P. Act No. 13 of 1972 as well as U.P. Municipal Corporation Act, 1959 and the consequence of the amendment brought by the U.P. Act No. 17 of 1999.

Section 7 of the 1972 Act provided that a tenant shall be liable to pay to the landlord in addition to his part of the rent, the taxes or proportionate part thereof as enumerated in section. Section 7 of the Act, which is quoted as below:

(a) the water tax;

There were provisions in Section 149 of the U.P. Municipalities Act, 1916 and Section 179 of the U.P. Nagar Mahapalika Adhiniyam, 1959 pertaining to payment of tax. It is useful to look into the relevant provisions of Section 179 of the U.P. Nagar Mahapalika Adhiniyam, 1959 at the time when U.P. Act No. 13 of 1972 was enacted. Section 179 of 1959 Act as it existed at the time of enactment of U.P. Act No. 13 of 1972 was as follows:

"179. Primary responsibility for certain property taxes on annual value.- (1) Except where otherwise prescribed, every tax (other than a drainage tax or a conservancy tax) on the annual value of buildings or lands shall be leviable primarily from the actual occupier of the property upon which the tax is assessed, if he is the owner of the buildings or lands or holds them on a building or other lease from the Central or the State Government or from the Mahapalika, or on a building lease from any person.

(2) In any other case the tax shall be primarily leviable as follows, namely,--

(a) if the property is let from the lessor;

(b) if the property is sublet from the lessor;

(3) On failure to recover any sum due on account of such tax from the person primarily liable, the Mukhya Nagar Adhikari may recover from the occupier of any part of the buildings or lands in respect of which it is due that portion thereof which bears to the whole amount due the same ratio as the rent annually payable by such occupier bears to the aggregate amount of rent payable in respect of the whole of the said buildings or lands, or to the aggregate amount of the letting value thereof in the authenticated assessment list.

(5)An occupier who makes any payment for which he is not primarily liable under the foregoing provisions shall, in the absence of any contract to the contrary, be entitled to be reimbursed by the person primarily liable."

It is relevant to note that Section 7 of 1972 Act contains a non obstante clause by clearly providing that "notwithstanding anything contained in Section 179 of the Uttar Pradesh Nagar Mahapalika Adhiniyam, 1959 or in Section 149 or in any rule made or notification issued under section 338 of the United Provinces Municipalities Act, 1916....." The Legislature thus gave an overriding effect to the provisions of Section 7 of the 1972 Act and the liability to pay tax of the tenants was to be discharged in accordance with the provisions of Section 7. It is relevant to note that section 7 fastens only partial liability of payment of house tax on a tenant, whereas section 179 of 1959 Act deals with primary responsibility of certain taxes on annual value. U.P. Act No. 17 of 1999 amended both 1959 Act as well as U.P. Act No. 13 of 1972 as noted above. The prefatory note to Act No. 17 of 1999 noted the objects and reasons for enactment of U.P. Act No. 17 of 1999. The objects and reasons of U.P. Act No. 17 of 1999 specifically mentions as follows:

"With a view to augmenting the revenue of the Corporation, simplifying the procedure for assessment, fastening tax liability on tenant where the property is let under the Uttar Pradesh Urban Buildings (Regulation of letting, Rent and Eviction) Act, 1972"

The object of the amendment was that the tenant be fastened with the liability of payment of tax. Clause (d) was inserted in Section 179(2). Section 179 after its amendment by U.P. Act No. 17 of 1999 is as follows:

(2) In any other case the tax shall be primarily leviable as follows, namely,--

(a) if the property is let from the lessor;

(b) if the property is sublet from the superior lessor;

(d) if the property is let in pursuance of an order under the Uttar Pradesh Urban Buildings (Regulations of Letting, Rent and Eviction) Act, 1972, from the tenant.

(6)An occupier who makes any payment for which he is not primarily liable under the foregoing provisions shall, in the absence of any contract to the contrary, be entitled to be reimbursed by the person primarily liable."

It is relevant to note that in Section 7 of the U.P. Act No. 13 of 1972, the amendments were made simultaneously by the same amending Act No. 17 of 1999 and the preamble of U.P. Act no. 17 of 1999 is to the following effect:

" An Act further to amend the Uttar Pradesh Municipal Corporation Act, 1959 and to make consequential amendment in the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972"

In Section 7 of the U.P. Act No. 13 of 1972 the non obstante clause giving overriding effect to Section 7 of the Act to Section 179 of 1959 Act, has been taken out which clearly meant that overriding effect given to section 7 of the U.P. Act No. 13 of 1972 to Section 179 of the 1959 Act is withdrawn and thus, section 7 has no overriding effect now to the section 179. The purpose and object of amendments brought by U.P. Act No. 17 of 1999 is clearly delineated from the amendments brought into both the Acts i.e. U.P. Act no. 13 of 1972 and 1959 Act. Section 7 which had earlier overriding effect to Section 179 does not now have any overriding effect to Section 179. The partial liability of house tax which was provided in section 7 is now substituted by full and primary liability of tenant who has been let out premises under the U.P. Act No. 13 of 1972. The intention was now to clearly give effect to the provisions of section 179 over the provisions of section 7 of the U.P. Act No. 13 of 1972. Thus, there is a clear conflict between Section 7 of 1972 Act and Section 179 of 1959 Act. Although Act No. 13 of 1972 is a subsequent Act in time as compared to 1959 Act but the amendments brought in U.P. Act No. 17 of 1999 by which in so far as property which is let out under the 1972 Act to a tenant is concerned, the primary liability of tax is on the tenant and by same enactment, the overriding effect of Section 7 of U.P. Act No. 13 of 1972 have been withdrawn. The clear intention of the Legislature was to give overriding effect to statutory scheme as contained in Section 179. The principle of statutory interpretation although provided that when there is a conflict between the two special Acts, the Act later in point of time shall prevail, whereas when amendments have been brought in an earlier Act, the statutory scheme brought by subsequent amendments have to be looked into for finding out as to which Act shall prevail. In this context reference is made to the judgment of the apex Court reported in 2008(8) SCC 148 Bank of India Vs. Ketan Parekh. In the aforesaid case, there was conflict between the two enactments namely; Special Courts ( Trial of Offences Relating to Transactions in Securities) Act,1992 and the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Amendments were made in 1992 Act in the year 1994. While resolving the conflict between the two Acts, the apex court laid down that the amendments which were brought in earlier Act being later in point of time shall prevail. Following was laid down in paragraph 28:

" 28. In the present case, both the two Acts i.e. the Act of 1992 and the Act of 1993 start with the the non- obstante clause. Section 34 of the Act of 1993 starts with non-obstante clause, likewise Section 9-A of the Act of 1992. But incidentally, in this case Section 9-A came subsequently, i.e. it came on 25.1.1994. Therefore, it is a subsequent legislation which will have the over-riding effect over the Act of 1993. But cases might arise where both the enactments have the non-obstante clause then in that case, the proper perspective would be that one has to see the subject and the dominant purpose for which the special enactment was made and in case the dominant purpose is covered by that contingencies, then notwithstanding that the Act might have come at a later point of time still the intention can be ascertained by looking to the objects and reasons. However, so far as the present case is concerned, it is more than clear that Section 9-A of the Act of 1992 was amended on 25.1.1994 whereas the Act of 1993 came in 1993. Therefore, the Act of 1992 as amended to include Section 9-A in 1994 being subsequent legislation will prevail and not the provisions of the Act of 1993."

Thus the provisions of Section 179 of the 1959 Act have to be given full effect which fastens primary responsibility for payment of tax on the tenant with regard to property which is let out under the U.P. Act No. 13 of 1972. The petitioners categorical case in the writ petition is that the petitioners are allottees under the provisos of the U.P. Act No. 13 of 1972. It is useful to quote paragraph 13 of the writ petition in which the petitioners have stated to the following effect:

"13. That since the petitioners are allottees under the provisions of U.P. Act No. 13 of 1972, Section 7 of the said Act creates the liability upon tenants to pay the tax to the landlord."

Section 179(2) (d) of the 1959 Act fastens the liability on the tenant hence, it is the petitioners who are primarily responsible for payment of house tax on the annual value. Sub-section (3) of Section 179 delineates statutory scheme that when taxes cannot be recovered from the person, who is primary liable, the Municipal Commissioner may recover from the occupier of any part of the buildings or lands in respect of which it is due to the extent of that portion which bears to the whole amount due the same ratio. Giving a harmonious construction to the provisions of Section 179 of the 1959 Act, the Scheme is clearly delineated that tenants who have been let out only a portion of the building can be held responsible only to that portion which bears to buildings or lands to the portion of tax of the entire building. The petitioner's case that they have paid house tax to the landlord does not absolve the petitioners from payment of house tax to the Municipal Corporation for which they are primary liable under the Act. In the counter affidavit, the respondents have brought on record various applications submitted by some of the tenants of the premises in question in which a request was made to the District Magistrate that recovery of the house tax be made only from the owners of the building and no recovery should be effected from the tenants. One of the applications dated 16.2.2011 has been brought on record on page 27 of the counter affidavit filed. In view of what have been stated above, the tenants being primary liable to pay tax, they cannot be absolve from liability to pay house tax to the Municipal Corporation and their application given to the Municipal Corporation to recover the house tax from the owner is wholly misconceived. In view of the foregoing discussions, we answer the issues no. 2,3 and 4 as follows:

Issue No. 2: The petitioners who are tenants of the premises have been let out the premises under the U.P. Act No. 13 of 1972 are liable to pay house tax to the Municipal Corporation.

Issue No. 3: The payment of house tax along with rent to the landlord as claimed by the petitioners does not absolve the petitioners from liability to pay house tax to the Municipal Corporation.

Issue No. 4: The Municipal Corporation can recover the house tax pertaining to the portion of the building in tenancy of the petitioners proportionate to liability of the house tax of the building and the submission of the petitioners that house tax can be recovered only from the landlord/owners of the building, cannot be accepted.

The issue next to be considered is as to whether, while making assessment of the commercial building covered by Section 174 (1) (a) of 1959 Act the rules namely U.P. Nagar Mahapalika (Depreciation of Buildings) Rules, 1983 are applicable and the municipal corporation is obliged to provide for depreciation while calculating the estimated costs of erecting building.

Section 174 of the 1959 Act defines 'Annual Value'. Section 174 of the 1959 Act is as follows:

"Section 174 - Definition of "annual value"

(1) "Annual value" means--

(a) in case of railway stations, colleges, schools, hotels, factories, commercial buildings and other non-residential buildings, twelve times the value arrived at on multiplying with multiplier to be fixed by rules in the monthly rate of rent per square foot of residential buildings fixed under clause (b) with the covered area of the building or open area of the land or both, as the case may be.

(b) in the case of a building or land not falling within the provisions of clause (a),' twelve times the value arrived at on multiplying the carpet area of the building, or the area of the land, by the applicable minimum monthly rate of rent per square foot of the carpet area in the case of building or the applicable minimum monthly rate of rent per square foot of the area in the case of land, as the case may be, and for this purpose the minimum monthly rate of rent per square foot shall be such as may be fixed once in every two years by the Municipal Commissioner on the basis of the location of the building or the land, nature of the construction of the building, the circle rate fixed by the Collector for the purposes of the Indian Stamp Act, 1899 and the current minimum rate of rent in the area for such building or land and such other factors, and in such manner, as may be prescribed:

Provided that where the annual value of any building would, by reason of exceptional circumstances, in the opinion of the Corporation, be excessive if calculated in the aforesaid manner, the Corporation may fix the annual value at any less amount which appears to it equitable.

Explanation I.-- For the purpose of calculation of annual value the carpet area shall be calculated as under--

(i) Rooms--full measurement of internal dimension;

(ii) Covered Verandah--full measurement of internal dimension;

(iii) Balcony, Corridor, Kitchen and Store--50 per cent measurement of internal dimension;

(iv) Garage--one-fourth measurement of internal dimension;

(v) Area covered by bathroom, latrines, portico and staircase shall not form part of the carpet area.

Explanation II.-- The standard rent, the agreed rent or the reasonable annual rent of a building for the purposes of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 shall not be taken into account while calculating the annual value of that building.

(2) Where the Corporation so resolves, the annual value for the purpose of assessment of property taxes shall,--

(a) in the case of land and owner-occupied residential building which is not more than ten years old, be deemed to be 25 per cent less and if it is more than ten years but not more than twenty years old, be deemed to be 32.5 per cent less, and if it is more than twenty years old, be deemed to be 40 per cent less than the annual value determined under clause (b) of sub-section (1); and

(b) in the case of residential building let on rent, which is not more than ten years old, be deemed to be 25 per cent more, and if it is more than ten years but not more than twenty years old, be deemed to be 12.5 per cent more than the annual value determined under clause (b) of sub-section (1), and if it is more than twenty years old, be deemed to be equal to the annual value determined under clause (b) of sub-section (1)."

In this writ petition, the building in question which is in tenancy of the petitioners is undisputedly a commercial building. The annual value of the commercial building falling under section 174(1)(a) is to be determined as per the provisions contained under section 174(1) (a). For determining annual value of a commercial building proportion not below 5% to be fixed by the rule of the sum obtained by adding the estimated present cost of erecting the building less depreciation at a rate to be fixed by rules, to the estimated value of the land appurtenant thereto. The conditions as enumerated in sub section (a) of Section 174(1) thus, are as follows:

(1)Annual value is a proportion not below 5% to be fixed by rule is of the sum obtained by adding-

(a) estimated present cost of erecting the building less depreciation at a rate to be fixed by rules ; and

(b) estimated value of the land appurtenant thereto.

The Rules namely; U.P. Nagar Mahapalika (Depreciation of Buildings) Rules, 1983 has been framed in exercise of the powers under sub-section (1) of section 540 read with clause (a) of Section 174 of the 1959 Act. The rules itself begin with the following:

"In exercise of the powers under sub-section (1) of section 227 and sub-section (1) of section 540 read with clause (a) of section 174 of the Uttar Pradesh Nagar Mahapalika Adhiniyam, 1959 (U.P. Act No. II of 1959), the Governor is pleased to make the following rules for determining depreciation of buildings for the purpose of calculation of annual value, after their previous publication with the notification No. U/372-I/XI-7-27-K-1982, dated December 1, 1983 as required by sub-section (2) of section 540 of the said Adhiniyam;"

Rule 1(2) provides that rule shall apply to all Nagar Maha Palikas in Uttar Pradesh. Rules 2,3,4 and 5 which are relevant in the present case are quoted as below:

"2. For the purpose of determining depreciation, buildings shall be classified as 'A', 'B', 'C', 'D' or 'E' in accordance with the table given in Form II, referred to in rule 6 in Annexure 'B' under Chapter XIII of the Financial Hand Book Volume V, Part I, and a building shall be placed in any of the said categories if it is constructed or is equipped with at least 75 per cent of the items mentioned under the particular category.

Note- An extract of the table is given in Appendix I and reference to Superintendeing Engineer therein shall for the purpose of this rule, be deemed to be reference to an officer of the Engineering Department of the concerned Nagar Mahapalika, not below the rank of Executive Engineer, as may be authorised in this behalf by the Nagar Mahapalika and reference to "Public Works Department" and "Government" in note (X) shall be deemed to be reference to "the owners".

3.For the purpose of clause (a) of section 174 of the Act, the proportion for the purpose of determining annual value of the buildings, referred to therein, shall be 7 per cent and the annual value of the building shall be 7 per cent of the sum obtained by adding the estimated present cost of erecting the building calculated in accordance with rule 4, less depreciation at the rates fixed under rule 5 to the estimated value of the land appurtenant thereto.

4.The estimated cost of erecting a building shall be calculatd on the basis of the prevalent Public Works Department Plinth area rate for such specifications as are used in the building or part of the building.

5.The annual depreciation rate of class of building given in Column I of the table given below shall be given in Column 2 thereof:

Column 1

Column 2

Class of building

Annual depreciation

'A'

0.4%

'B'

0.5%

'C'

0.6%

'D'

0.7%

'E'

0.8%

Provided that the depreciated value of the building shall in no case fall below the scrap value of the building:

Note- "Scrap Value" means the value of the material which can be recovered from the building if demolished and shall not be less than 18 per cent, 16 per cent, 14 percent, 12 per cent and 10 per cent for 'A', 'B', 'C', 'D', 'E' class of buildings respectively"

Sri S.D. Kautilya, learned counsel appearing for the Nagar Nigam vehemently submitted that the said Rules are not applicable with regard to determination of annual value under section 174 by Municipal Corporation Allahabad. He submits that note '(X)' of the 1983 Rules clearly indicates that the said Rules are applicable for the buildings which have been erected by Public Works Department or by Government. It is useful to quote note '(X)' which is as follows.

"(X) Classes A and B will be found suitable for buildings recently erected by the Public Works Department and Classes C and D will generally be suitable for old buildings which have been erected by Government in the past or purchased. Few, if any, main buildings of residential quarters will come into class E, which will mostly be reserved for outhouses."

Replying the aforesaid submission, Sri Manish Goyal, learned Counsel for the petitioners submits that the note contained in rule 2 as noted above, clearly indicates that reference of Public Works Department and Government in the note (X) shall be deemed to be reference to "the owners". A perusal of above note which is part of rule 2, clearly indicates that when building is owned by a private person, the words "Public Works Department" and the "Government" mentioned in the note (X) have to be read as " the owners". Thus, the aforesaid depreciation Rules are clearly applicable for determination of the annual value of the buildings under section 174 of the 1959 Act.

As noted above, learned counsel for the Nagar Nigam inspite of the order of the Court directing the Nagar Nigam to produce the relevant assessment made in the year 1983 along with records, no record has been produced by the municipal Corporation. An affidavit has been filed that the file has been misplaced and a direction has been issued for lodging the first information report. The Supplementary counter affidavit dated 7.5.2012, filed on behalf of the Corporation has brought on record, calculation pertaining to annual value of the building No. 159/35 as made on 3.5.2002 by the Tax Superintendent and Revenue Inspector, which is filed as Annexure SCA1. From perusal of the said calculation, it is clear that the total area of commercial building as well as lands appurtenant has been mentioned and multiplying the commercial area 1153.21 with 4000 as rate of construction, the value of erecting the commercial building has been arrived at but calculation does not indicate that any depreciation of the building was given which is required by 1983 Rules. When the learned counsel appearing for the municipal Corporation has taken stand that Rules 1983 are not applicable and on the materials brought on record, it is clear that depreciation having not been given as required by the 1983 Rules, while arriving at annual value of the commercial building, there is no room of any doubt that Corporation has not determined the annual value according to the statutory provisions. We fail to see as to how such important part of the functions of the municipal corporation which enjoins the municipal corporation to determine the annual value of the commercial building, statutory requirement has escaped. This clearly shows callous and careless attitude and act on the part of the officials of the municipal corporation. When the municipal corporation is unable to comprehend the statutory scheme of arriving at annual value of the commercial building, how it protects the interest of owners and tenants as well as interest of the Corporation is a big question mark. Corporation thus has completely failed in protecting its own interest of realising the house tax as per the correct annual value. The attitude of the Corporation is reflected in the statements made on behalf of the Corporation vehemently opposing the applicability of the 1983 Rules, whereas 1983 Rules are clearly applicable.

It is further relevant to note that the proportion which is to be taken up for the annual value has been provided in 1983 Rules. Rules 3 and 4 provide for arriving at estimated cost of erecting a building which is to be calculated on the basis of the prevalent 'Public Works Department Plinth Area rate'. The plinth area rates are notified by Public Works Department from time to time. The petitioners in the supplementary rejoinder affidavit, filed as Annexure-SRA-3 has brought on record an order of the Engineer in Chief dated 26.2.1997 providing for plinth area rate of different description of buildings. It is not necessary for us to enter into and find out as to what was rate which was required to be applicable for estimating the correct annual value of the building. But we fail to see unless the 1983 Rules are applicable how the proportion of 7% is applied by the Corporation and how the plinth area rate has been applied for calculating the estimated cost of the erection of the building. We thus, hold that 1983 Rules are fully applicable. At this juncture, it is also relevant to note an order of the State Government dated 11.7.2001 which has been filed as Annexure-SRA-5 to the supplementary rejoinder affidavit by which order the Government has clearly noted that no appropriate arrangement has yet been made by the Government for determination of annual value of the commercial building hence, by the Government order a Committee was contemplated to be constituted headed by Mukhya Nagar Adhikari which was required to examine and assess the assessment of commercial building and fixation of tax liability. The State Government had constituted the Committee to examine the assessment of annual value of commercial building by holding meeting at least twice in a month. The said committee was constituted only to strengthen the supervision and checking of assessment of commercial building and was to be implemented by the municipal Corporation. Unless the Government Order dated 11.7.2001 is modified or varied by any subsequent Government Order, it is to be adhered to by the municipal Corporation and the Corporation is to be benefited by the views of the said Committee, while carrying out its statutory obligation to make assessment.

Issues No. 6 and 7 being inter connected are taken together. The provision for assessment and levy of appropriate taxes are contained in Sections 207 to 218. In the supplementary counter affidavit, it has been stated that assessment was made of the building in the year 1960 at the rate of Rs. 10236/- and thereafter in the year 1989, it was raised up to 23289/-. It is further case of the Corporation that in the year 2003, the building in question was assessed as Rs. 26,09340/-. A copy of the Khasra pertaining to the aforesaid period including the Khasra for the year 2003-11 has been brought on record. However, in spite of the specific order passed by this Court twice, neither any assessment list as prepared in the year 2003 nor any other document pertaining to the assessment made in the year 2003 has been brought on record except the calculation chart filed as Annexure-1 to the supplementary counter affidavit and the order dated 7.5.2002 signed by Tax Superintendent and Revenue Inspector. A plea has been taken in the supplementary counter affidavit that original file pertaining to the land in question is misplaced. Sri S.D. Kautilya, learned counsel for the Nagar Nigam has also vehemently contended that owners having not raised any objection against the assessment made in the year 2003, the petitioners who are only tenants have no right to raise any objection against the assessment. The petitioners' case on the other hand is that the petitioners were neither given any notice of the assessment made in the year 2003 nor they had been given any opportunity in this context. The case of Nagar Nigam is clearly stated in paragraph 36 of the counter affidavit, which is as follows:

"36. That contents of paragraph no. 24 of the writ petition are absolutely misconceived, wrong, hence denied. The petitioners are not the owner of the building in question and as such no notice was required to served upon them for the purpose of assessment. Further they are paying the water tax on the basis of assessment made by the answering respondent which clearly stopped them from making such objection. It is further stated that quantum of the assessment was never challenged by the owner of the building and he was regularly paying the tax as per the demand of the answering respondent. The building was constructed some time in the year 1935."

When the liability of payment of tax is on the tenants who have been let out the premises under U.P. Act No. 13 of 1972, we fail to to see why they have no locus to challenge the assessment made by the Nagar Nigam. The person who is primarily liable to pay house tax have every right to have his say on the assessment. The provisions of 1959 Act does not contain any provision prohibiting the tenants or occupiers of the building to file any objection against the assessment. Section 208 provides for publication of list and Section 209 provides for objection. Sections 207 to 209 which are relevant are quoted below:

"207 - Preparation of assessment list.-The Municipal Commissioner shall cause area wise rental rates and an assessment list in the city or part thereof to be prepared from time to time, in accordance with the manner prescribed in the Rules.

207A - Option to deposit self-assessment property tax.-Notwithstanding any other provisions of this Act, the owner or occupier primarily liable for payment of tax in respect of a building may himself assess every year his liability regarding, the amount of property tax payable by him and in doing so he may himself determine the annual value of the building in accordance with the provisions of Section 174, and deposit the property tax so assessed by him in such manner, together with a statement of such self-assessment in such form, as may be prescribed.

207B - Submission of the details of houses or lands for assessment of tax.-(1) For the purposes of annual rental value, the owner or the occupier of every house or land shall submit a property return upto a date as may be prescribed.

(2) Any person failing to submit the return referred to in sub-section (1) without proper reasons shall be liable to pay penalty as may be prescribed.

(3) The penalty referred to in sub-section (2) may be compounded by the Municipal Commissioner.

Section 208 - Publication of list.-The Municipal Commissioner shall publish the list prepared under section 207 in accordance with the manner prescribed in the rules.

209 - Objections on proposed rates and list.-The Municipal Commissioner or an officer authorized by him in this behalf shall dispose off the objections in accordance with the manner prescribed in the rules."

At this juncture, it is also necessary to note one submission which has been vehemently pressed by Sri S.D. Kautilya, learned counsel for the Nagar Nigam. Learned Counsel for the Nagar Nigam submitted that the petitioner never submitted any self assessment as required by Section 207A. Learned counsel for the Nagar Nigam lost sight of the provisions of section 207A of the 1959 Act, which provides that self assessment is to be submitted in respect of residential building and not for commercial building. Thus, section 207A has no application in the present case.

Section 210 provides that municipal corporation or any officer authorised by him shall authenticate by his signature the assessment list which is to be deposited in the office of the Corporation and is to be declared for public inspection. No such assessment list has been produced with regard to building in question. In the facts of the present case, when no detail of assessment made in the year 2003 has come and further the calculations which have been brought on record as Annexure-SCA-1 to the supplementary counter affidavit dated 7.5.2002 does not indicate that the same has been made in accordance with the statutory Rules 1983, we are of the view that the Corporation be directed to make assessment of annual value w.e.f. the year 2003 for which the Corporation is to give notice of proposed assessment to all the tenants occupiers/owners of the building and thereafter make assessment and after making assessment take steps for recovery of the tax from the tenants i.e. the petitioners.

The Division Bench judgment of this Court relied by Sri S.D. Kautilya i.e. the judgment dated 25.5.2012 in writ petition No. 1129 of 2011, Shiv Sewak Singh & Ors Vs. State of U.P. & Ors now needs to be considered. The Division Bench in the said judgment was considering a writ petition. The challenge was to process of increase of the property tax levied on the properties situate in the municipal area of Allahabad for the year 2011-12. A perusal of the judgment indicates that Division Bench had in the said writ petition considered the determination of annual value mainly with regard to residential buildings. The Court had not considered the determination of annual value of non residential buildings more so; the issues raised in the present writ petition have not been dealt in the said writ petition. Thus, the said judgment does not help the learned Counsel for the Nagar Nigam in the present case. Another Division Bench judgment relied by the learned counsel for the Nagar Nigam is 2011 (3)ADJ 18 Clark Hotel Limited Vs. State of U.P. & others. In the said writ petition, there had been assessment of the annual value of the building against which appeal was filed under section 472 of the Act, which was allowed. The Corporation appeal against the said judgment was dismissed and the writ petition filed by the Corporation was also dismissed. Subsequently on construction of some more rooms and halls in the hotel, the notice was issued for assessment which was challenged in the appeal which was dismissed. The petitioner filed a writ petition which was allowed, the matter was remanded and thereafter reassessment proceedings were undertaken. In the re-assessment proceedings objections were filed which were rejected and the rejection order was sought to be challenged in the writ petition. The Division Bench held in the said writ petition that remedy of challenging the assessment is to file an appeal under section 472 of the Act. There cannot be any dispute to the proposition as laid down in the aforesaid Division Bench judgment. The said judgment does not help learned counsel for the Nagar Nigam in the present case.

Now coming to issue no. 8 as noticed above, the State itself has come with the case that it is not possible to effect recovery as per citation issued by the Tahsildar dated 29.12.2010, We feel it unnecessary to enter into issue as to whether citation has been validly issued or not. The State in its counter affidavit has stated that steps are being taken to send back the citation. In view of the aforesaid, the ends of justice would be served in setting aside the citation dated 29.12.2010 with liberty to the respondents to take steps for recovery in accordance with law.

The petitioners however, having been held liable to pay house tax proportionate to the area in their tenancy, we are of the view that till assessment is made by the Corporation w.e.f. 2003 as observed above, the petitioners may be directed to make payment of house tax to the municipal corporation Allahabad in proportion to the area in their tenancy as per the assessment which was prevalent prior to 2003 i.e. Rs. 23,289/-. The Corporation cannot effectively function unless taxes are paid by the persons who are primary liable to pay taxes in time and in accordance with the assessment made. The function of Corporation requires carrying out various development works for the benefit of resident and unless the taxes are paid in time, the Corporation shall not be able to carry out its obligation. Thus, to balance the equity between the parties, till assessment is made by the Corporation w.e.f. 2003 in which year it claims to have assessed the building in question, the petitioners shall deposit the entire house tax due from 2003 till date according to the proportion of area under their tenancy. The Corporation in its counter affidavit at page 23 has given the respective area of the each tenants including the petitioners, who may make the payment accordingly.

In view of the foregoing discussions, the ends of justice be served in partly allowing the writ petition with the following directions:

(1)The prayer of the petitioner to declare section 11 of U.P. Act No. 17 of 1999 as ultra-vires is refused.

(2)The recovery proceedings initiated by citation dated 29.12.2010 Annexure-1 is quashed.

(3)The petitioner shall deposit the house tax as per the assessment prevalent prior to 2003, w.e.f. 2003 till date proportionate to the area in their tenancy as compared to the total area of the commercial building within one month from today before the respondent no. 2.

(4)The municipal Corporation shall make assessment of the building No. 159/35 M.G. Marg, Allahabad w.e.f. 2003 in accordance with Section 174(1) (a) of 1959 Act and 1983 Rules for which notice of proposed assessment be given to the petitioners, other tenants and owners of the building, providing at least two weeks time to file objection to the proposed assessment. The municipal Commissioner thereafter shall finalise the assessment with regard to the aforesaid building and determine the liability of each of the petitioners/tenants and thereafter take steps for recovery of taxes in accordance with Chapter XXI of 1959 Act. The payment made by the petitioners as directed above of the house tax as well as the payment received from the owners of the building shall be adjusted in the ultimate liability as determined by the municipal Corporation.

(5)The petitioners, if they feel aggrieved from the assessment as directed above, it shall be open for them to take recourse to the statutory provisions of Section 472 of the 1959 Act.

The parties shall bear their own cost.

Order Date :- 12.10.2012

LA/-