Municipal Corporation Of Delhi vs The Peerless General Finance & ...
1987 Latest Caselaw 23 Del

JUDGMENT

B.N. Kirpal, J.

(1) The short question which arises for consideration in this case is whether the land which was purchased by the respondent in an auction from the Delhi Development Authority can be subjected to property tax or not.

(2) On 12th March, 1982 the D.D.A. held an auction in respect of Plot No. 6, Asaf All Road, New Delhi. The auction was of lease hold rights and the respondent herein was the highest bidder. The possession of the land was taken by the respondent after its bid had been accepted, on 5th May, 1982. In August, 1982 a formal lease deed was executed by the D.D.A. in favor of the respondent.

(3) It appears that a notice under Section 126 of the Delhi Municipal Corporation Act was issued to the respondent to show cause why the property tax should not be levied under the said Act. Reply to the same was Sled but by order dated 27th November, 1984 the property was ordered to be subjected to tax. The contention of the respondent that no tax is leviable was not accepted.

(4) The respondent filed an appeal to the Addl. District Judge challenging its liability to pay the tax. The Add1. District Judge referred the provision of Section 120(c) of the Delhi Municipal Corporation Act and noted that the urea in which the land was situated, had not been declared as a developed area and secondly, the building plans of the respondent had not been passed and, therefore, no property tax could be levied. The Addl. District Judge held that the perusal of the Act showed that the respondent was not a person primarily liable for the payment of property tax, in as much as the land in question had not been transferred to it with the right to let within a period of ten years. The Addl District Judge by his order dated 31st August, 1985, therefore, set aside the levy of property tax on the said plot in respect of the assessment years 1982-83 and 1983-84.

(5) Being aggrieved the present writ petition has been filed by the Corporation.

(6) On behalf of the Corporation it has been vehemently urged before me that looking at the definition of "land" under Section 2(24) of the Act, the respondent is the owner of the leasehold rights and because of the relevant provisions of the lease deed the respondent can transfer his rights therein with the permission of the D.D.A. Therefore, the provision of Section 120(1)(c) are applicable and the land can be subjected to property tax. It is not disputed by the learned counsel for the petitioner that, during the assessment years in question, neither the building plans' had been passed nor had the construction on the plot in question been undertaken.

(7) In the present case we are concerned with the provision of Section 120 of the Act. The said section reads as follows :-

"120.(1) The property taxes shall be primarily leviable as follows :-

(A)if the land or building is let, upon the Lesser ;

(B)if the land or building is sub-let, upon the superior Lesser ;

(C)if the land or building is unlet, upon the person in whom the right to let same vests. Provided that the property taxes in respect of land or building, being property of the Union, possession of which has been delivered in pursuance of section 20 of the Displaced Persons (Compensation. and Rehabilitation) Act, 1954, shall be primarily leviable upon the transferee.

(2)If any land has been let for a term exceeding one year to a tenant and such tenant has built upon the land, the property taxes assessed in respe';t of that l?nd and the building erected thereon shall be primarily leviable upon the said tenant, whether the land and building are in the occupation of such tenant or a sub-tenant of such tenant. Explanation :-The term "tenant" includes any person deriving title to the land or the building erected upon such land from tie tenant whether by operation of law or by transfer inter vivos.

(3)The liability of the several owners of any building which is, or purports to be, severaly owned in parts or flats or rooms, for payment of property taxes or any Installment thereof payable during the period of such ownership shall be joint and several"

(8) A bare perusal of Section 120(1) shows as to on whom is the primary liability to pay the tax. The said provision is concerned both with land and buildings. In the present case the land is owned by the Government. After the leasehold rights had been auctioned, then by virtue of the lease deed dated August 2, 1982, leasehold rights had been transferred in favor of the respondent. The respondent has, therefore, become a tenant after the land in question had been let to it. According to Section 120(l)(a), the primary liability to pay the property tax is upon the Lesser who has let the land or building. This is not a case where the respondent has sub-let the land or building. Even if it was so, under Section 120(1)(b) the primary liability would be or. the superior Lesser.

(9) I cannot agree with the contention of the learned counsel for the petitioner that the present case falls under Section 120(1)(c) of the Act. Sub-clause (c) of sub-section (1) of Section 120 of the Act applies only to a case where a land or building is not let. In the present case, as I have already noted, with the accept of the bid of the respondent, the land in question is let out to the respondent. If the respondent further transfers its leasehold rights, that would be a case of sub-letting. That question has not arisen in the present case. The hand is in the possession of the respondent and by virtus of Section 120(1)(a) the primary liability to pay tax is upon the Lesser, namely, the Government.

(10) It is not as if the respondent would at no point of time become liable to pay the tax on the said land. The terms of lease in favor of the respondent is for a period in excess of one year. As and when the condition contained in subsection (2) of Section 120 of the Act are satisfied, then the liability to pay the property tax would be that of the respondent and not of the Government. Sub-section (2) of Section 120 of the Act, inter alia, provides for the payment of properly tax in respect of the land where the tenant has built a building. A reasonable construction of the said provision would be that when the building plans are passed and the Lesser or the tenant starts construction thereon, then the liablity to pay the tax would arise on that date. It is to be noted that the Municipal fees and taxes are levied primarily in order to augment the resources of the Corporation and other local bodies who are required to provide Municipal services. Therefore, it is in consonance with that policy that, as and when the construction of a building on land commences, the liability to pay the property tax shifts to the tenant who would thereafter be enjoying the Municipal services which are offered by the Corporation.

(11) It has been found as a fact, and it is not disputed, that during the assessment years in question the building plans of the respondent had not been sanctioned and no construction had taken place on the land in question. This being so, no property tax in respect of the said plot of land could belived on the respondent. The liability to pay the property tax was on the owner of the land. In this view of the matter, the assessment and levy of property tax on the respondent was rightly quashed by the Addl. District Judge. The liability of the respondent to pay the property tax would arise, as already noted, when its building plans are sanctioned and/or when it starts construction on the said plot of land and at that time the Corporation would be at liberty to levy and recover the property tax from the respondent.

(12) For the aforesaid reasons, the writ petition is dismissed.

(13) The parties will, however, bear their own costs,