Delhi High Court
South Delhi Municipal ... vs V.D. Chawla on 22 December, 2016
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Judgment : 22.11.2016
+ W.P.(C) 3632/2015 & C.M. No.6479/2015
SOUTH DELHI MUNICIPAL CORPORATION..... Petitioner
Through Ms.Madhu Tewatia, Advocate.
versus
V.D. CHAWLA ...... Respondent
Through Mr.S.K.Jain, Advocate.
CORAM:
HON'BLE MS. JUSTICE INDERMEET KAUR
INDERMEET KAUR, J. (oral)
1 Petitioner before this Court is the SDMC. It is aggrieved by the
order dated 22.01.2014 passed by the Municipal Taxation Tribunal.
By this common order 9 appeals had been decided.
2 Facts
at the outset disclose that this dispute relates to the
determination of the annual value under the Unit Area system of the
property tax which was for the Assessment Years 2004-05 to 2012-13.
The averments in the petition disclose that the petitioner had been
issued a show cause notice dated 12.10.2012 under Sections 123-D of
the Delhi Municipal Corporation Act, 1957 notifying the respondent to
produce relevant evidence/documents to explain as to why his
assessment should not be revised/re-opened. Simultaneously a notice
under Section under Section 152A of the said Act has also been issued
to him asking him to explain as to why penalty be not imposed upon
him for filing an incorrect tax return.
3 On 27.11.2012 an assessment order (determining annual value
of the property at Rs.34,42,520/- on the basis of the available record
and after getting the property inspected) was made. A rectification
application seeking rectification of the assessment order dated
27.11.2012 was filed.
4 The impugned order was passed on 22.01.2014. It inter alia
held that no notice was given to the assessee to revise the annual value
and as such the assessment order was illegal and contrary to law. A
direction had been given by the Tax Tribunal (in terms of the
impugned order) to refund the tax deposited to the assessee along with
the interest at 12% per annum. This order has been impugned.
5 Learned counsel for petitioner confines her submission to two
aspects of the matter. She has not assailed the order of the Tax
Tribunal directing the petitioner to refund the principal amount which
had been deposited by the assessee; she has however assailed the
interest part. Her submission is that in view of the judgment of the
Bench of this Court in W.P.(C) 12758/2005 Ritu Sengupta Vs. M.C.D.
(delivered on 01.8.2008) since there is no statutory provision in the
DMC Act entitling the petitioner to claim interest, the interest
component should be set aside. Her additional submission is that the
impugned order directing the petitioner to issue fresh notices under
Section 123 (C)(2) of the DMC Act is also illegal; no specific
statutory provision should have been enunciated; submission being
that notices will be issued by the petitioner Corporation in accordance
with law;
6 Learned counsel for the respondent submits that the impugned
order calls for no interference. Additional submission is that the
interest ordered by the petitioner Corporation payable to the
respondent is also an order which calls for no interference. Learned
counsel for respondent has placed reliance upon a judgment delivered
by the Division Bench of this Court in LPA No.1750/2005 Municipal
Corporation of Delhi Vs. Ramesh Chand Aggarwal on 15.5.2008 to
support his submission that the interest component awarded by the
Tribunal is an order which suffers from no infirmity.
7 Arguments have been heard. Record has been perused.
8 Record discloses that a notice under Section 123D of the DMC
Act had in fact been issued to the assesses informing them that the
return of self-assessment property tax as required to be filed by them
had not been filed. They had been granted liberty to appear before the
Assistant Assessor and Collector. The date fixed was 30.10.2012.
The impugned order had noted the stand of the Corporation which was
to the effect that the petitioner had not appeared and had not filed his
return. This was, however, negatived by the record. The record of
the Corporation had been examined by the Tribunal. It had noted that
the respondent Corporation had admitted that the reply of the assessee
was on the record and in fact he had filed his return within time.
9 After hearing the parties, this Court is of the view that the
conditions stipulated in paras 8 and 10 of the impugned order that
notices have to be issued under Section 123(C)(2) of the DMC Act be
read as notices to be issued by the petitioner in accordance with law.
The fact that the petitioner Corporation will issue fresh notices to the
respondent has not been disputed. Dispute only being that there could
be no direction to the petitioner Corporation to issue notice under any
fixed provision of law. The impugned order is modified to that extent.
10 Question of the component of interest was examined by the
Bench of this Court in the judgment of Ritu Sengupta (supra). That
Bench of this Court after examining the contention as to whether a
refund is permissible to an assessee with or without interest was of the
view that since there was no statutory provision in the DMC Act
entitling an assessee to a refund along with interest, interest up to the
date of the filing of the petition had been disallowed. That Court had
also examined gone on to examine whether the assessee could be paid
pendentelite interest on the principal amount. The Bench had drawn a
conclusion that this was within the discretion of the Judge depending
on the facts and circumstances of each case. However, this grant of
interest could be resorted to only either by a Writ Court or in a regular
suit. The Court in that case had disallowed the pendentelite interest as
well.
11 This Court is of the view that that the judgment of Ritu
Sengupta (supra) would not come to the aid of the petitioner. There is
admittedly no statutory provision permitting refund of principal
amount along with interest; however, the powers of a Writ Court to
grant interest has not been negatived. The submission of the learned
counsel for petitioner that the Tax Tribunal could not have granted the
interest is a submission with force; thus that part of the impugned
order granting refund of interest on the principal amount passed by the
Tax Tribunal is set aside. However, this Court is admittedly at liberty
to examine the aspect of interest and if the discretion weighs in favour
of the assessee this Court is not prohibited from granting interest.
This position at law is undisputed.
12 In the facts of this case, this Court is of the view that the
assessee had been coerced to deposit the principal amount along with
interest; this was by attachment of his rent. The assessee also could
not have filed an appeal assailing the assessment order without deposit
of the full tax amount. The assessee had no option but to deposit the
tax amount, if, he wanted to assail the assessment order. The fact that
the assessment order was prima facie illegal for the reason that it had
noted that the assessee has not filed his income tax return was
negatived by the examination of the record by the Tribunal which had
come to a conclusion to the contrary. The Tribunal after the
examination of the record had noted that the assessee has filed his tax
return well within time. Thus the forced deposit of the principal
amount along with interest by the assessee worked to the prejudice of
the assessee.
13 Learned counsel for the respondent has argued on the doctrine
of "unjust enrichment". Submission being that the petitioner is
enjoying the money of the assessee without any fault on the part of the
assessee; in these circumstances, he is entitled to a refund of the
principal amount along with the interest.
14 This submission of learned counsel for respondent is well
founded. This Court also notes that in the judgment of Ramesh
Chand Aggarwal (supra) the Division Bench of this Court had noted a
similar argument vis-a-vis the parties; in that case the refund of the
principal amount had been ordered to be refunded to the assessee
along with interest @ 15% per annum.
15 Relevant extract of the aforenoted order reads herein as under:
"4.The second submission of the learned counsel for the MCD is that
the Tribunal ought not have directed payment of interest on the
amount of refund and, in any event, the interest granted @ 5% p.a. is
excessive and unreasonable. We are afraid that this contention of the
counsel is also without any merit. When the MCD is enjoying the
amount of excess tax which the MCD was not entitled to have, then
there is no reason why the assessee should be deprived of the benefit
of the interest which otherwise he was entitled to if he had deposited
the said amount in bank of invested in the market. The MCD has used
this amount and the assessee was deprived of the same. It is also
required to be noted that in this case that during the relevant time the
MCD used to charge interest @ 22% p.a. for delayed payment of tax.
In the facts and circumstances of the case we feel that interest @ 15%
p.a. cannot be said to be excessive or unreasonable."
16 In this background, this Court is of the view that the grant of
interest @ 12% per annum to be refunded along with the principal
amount is an order which does not suffer from any infirmity.
17 Thus the second submission of the learned counsel for the
petitioner is rejected.
18 Petition disposed of in the above terms.
INDERMEET KAUR, J
NOVEMBER 22, 2016
ndn
