Gujarat High Court

State Bank Of India vs Vadodara Municipal Corporation on 17 November, 2021

Bench: Biren Vaishnav

      C/SCA/1425/2018                              ORDER DATED: 17/11/2021




            IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

              R/SPECIAL CIVIL APPLICATION NO. 1425 of 2018

                                  With
             CIVIL APPLICATION (FOR ORDERS) NO. 1 of 2018
             In R/SPECIAL CIVIL APPLICATION NO. 1425 of 2018
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                       STATE BANK OF INDIA.
                              Versus
             VADODARA MUNICIPAL CORPORATION & 2 other(s)
==========================================================
Appearance:
MR RITURAJ M MEENA(3224) for the Petitioner(s) No. 1
MR NILESH A PANDYA(549) for the Respondent(s) No. 1,2
NOTICE NOT RECD BACK(3) for the Respondent(s) No. 3
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    CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV

                            Date : 17/11/2021

                              ORAL ORDER

1 With the consent of the learned advocates appearing for the

respective parties, the matter is taken up for final hearing today. Rule.

Service of rule is waived by learned advocate for the respondents.

2 Heard Mr. Rituraj Meena, learned advocate for the petitoner and

Mr.Nilesh Pandya, learned advocte for the respondents. The prayer in the

petition reads as under:

"10(a) The Honbourable Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or writ of certiorari or writ in nature of certiorari or any other appropriate writ, direction or quashing and setting aside the tax bill dated 07.06.2016 demanding Rs.3,91,936/- and tax bill dated 12.07.2017 demanding rs.5,74,733/- for census no. 07-03-014-001-000-101 and tax bills dated 07.06.2016 demanding Rs.1,66,828/- and

C/SCA/1425/2018 ORDER DATED: 17/11/2021

12.07.2017 demanding Rs.2,40,399/- for census no. 07-03-014- 001-000-102 as arrears of tax from the year 2003 along with attachment orders dated 12.09.2017 being Warrant No. 112 and 113 passed by the Respondent No.1 Corporation claiming Rs.5,91,759/- and rs.2,47,617/- respectively issued by the respondent no.1 Corporation being absolutely illegal, null and void, violative of article 14, 19 and 21 of the Constitution of India."

3 On 27.09.2021, the Court passed the following order:

"1. When the matter is taken up for hearing, learned advocate Mr. Rituraj Meena has drawn the attention of the Court to the decision delivered by the Division Bench of this Court dated 7.9.2012 passed in Special Civil Application No.2053 of 2007 and drawn the attention to few observations made by the Division Bench of this Court. Since affidavit-in-reply is already filed and pleadings are completed, a request is made to take up the matter.

2. Considering the aforesaid request, list the matter on 11.10.2021. In the meantime, as indicated in the order dated 30.8.2018 passed in Civil Application No.1 of 2018 in Special Civil Application No.1425 of 2018, no coercive steps be taken by the respondent Corporation till the next date of hearing."

4 The case of the petitioner is that it is a body corporate engaged in

the business of banking. The Vadodara Municipal Corporation had let out

the property situated at census No.014 being the basement and the ground

floor of the VUDA Shopping Center at Fatehganj in 1976. The monthly

rent then charged was Rs.3,122/- and no formal lease deed was executed

between the parties.

4.1 In the year 1981, the respondent No.1 unilaterally increased the

rent to Rs.6,131.50/- per month. Repeated requests were made by the

petitioner to execute a lease deed. It appears that the respondent

C/SCA/1425/2018 ORDER DATED: 17/11/2021

Corporation unilaterally increased the rent with effect from 20.10.1986

asking the petitioner to retrospectively pay the increased rent. This

retrospective increase of rent was a subject matter of challenge by filing

Special Civil Application No. 2053 of 2007 before the Division Bench of

this Court. The petitioner on receipt of tax bills on 07.06.2016 showing

that the assessment was for the period outstanding from 01.04.2003,

approached the Corporation, informing the Corporation that they are

tenants to the building since long and they are paying property tax

regularly. A request was made to waive the recovery for the period post

2003 of Rs.4,00,845/- On a request, breakup of the outstanding amount

year wise was given, which would indicate that the demand that was

made by the Corporation was for the period from 2003-2004.

4.2 Pending this petition, it appears that by a notice dated 01.08.2018,

attachment order was issued for outstanding amount of tax dues, and

therefore, the civil application is also filed, wherein, the Court had

ordered the parties to approach the Mediation proceedings and pending

that process no coercive steps were to be taken. The mediation, however,

appears to have failed.

5 Mr.Rituraj Meena, learned advocate for the petitioner, would

submit that the issue is covered by a decision of the Division Bench of

this Court in the case of the same parties rendered in Special Civil

C/SCA/1425/2018 ORDER DATED: 17/11/2021

Application No. 2053 of 2007.

6 Mr.Nilesh Pandya, learned advocate appearing for the Municipal

Corporation would dispute that proposition and submit that with regard to

the petitioner's property, the petitioner is doing the business of banking as

a tenant. The property tax was originally calculated on the basis of F-4

factor, little knowing that the petitioner was not the owner of the property

but the tenant and once it came to the knowledge of the Corporation that

the assessment had to be made of the tax on the basis of the petitioner

being the tenant, the bills with the differences in assessment were issued.

Examining the decision of this Court in the case of State Bank of India

vs. Vadodara Municipal Corporation, it will be relevant to reproduce the

paragraphs which deals with the power of the Municipal Commissioner to

issue bills for the concerned year only. The relevant paragraphs read as

under:

"15. Examining the facts of the present case in the light of the above statutory scheme and the principles propounded in the above decision, admittedly property tax is sought to be recovered from the petitioner at an increased rate on the basis of some resolution passed by the Standing Committee of the Corporation, that too with retrospective effect from 1986. It is not the case of the respondents that prior to such increase any notice had been issued to the petitioner under rule 15(2) of the Taxation Rules seeking to increase the rateable value of the premises on the basis of the increased rent. All that appears to have been done is that a proposal for increasing the rent of the premises along with property taxes came to be submitted to the Standing Committee which approved of the same. Thus, the action of the respondents in

C/SCA/1425/2018 ORDER DATED: 17/11/2021

seeking to recover additional property taxes without issuance of notice under rule 15(2) of the Taxation Rules, being contrary to the provisions of the Rules, is rendered unsustainable.

16. Examining the matter from another angle, the record clearly shows that for the period 1976 to 2003, regular tax bills had been issued to the petitioner which had been duly paid. Now, additional taxes are sought to be recovered for the period 1986 to 2003. As noticed earlier, a perusal of the provisions of the BPMC Act as well as the Taxation Rules indicates that there is no provision which empowers the Standing Committee of the Corporation to increase the tax payable by any person. All such powers are vested in the Commissioner. Assuming for a moment that the Standing Committee has exercised delegated powers, even then a condition precedent would be that the Commissioner should be vested with such powers. It may be recalled that in the above decision the Division Bench has placed reliance upon an earlier decision of this court in Anant Mills Co. Ltd. v. Municipal Corporation, Ahmedabad, 1993 (2) GLH 897, wherein after examining the scheme of the Act the Division Bench held that the assessment must be completed before the close of the relevant official year and once the official year has expired, the Commissioner cannot assess or levy property tax. "Official year" has been defined under section 2(44) of the BPMC Act to mean the year commencing on the first day of April. Thus, in the light of the statutory scheme, even the Commissioner cannot assess or levy property tax once the official year has expired. As a natural corollary, if no such powers are vested in the Commissioner, the Standing Committee, assuming that such powers are delegated to it, cannot exercise such powers. Under the circumstances, once the official years corresponding to the period 28th October 1986 to 31st March 2003 had expired, there was no power vested in any of the respondent authorities to increase the rate of tax. The action of the respondents in seeking to recover additional tax from the petitioner for the period 28.10.1986 to 31.3.2003 is, therefore, clearly without authority of law and as such would be directly hit by Article 265 of the Constitution which ordains that no tax shall be levied or collected except by authority of law. The impugned demand notices, therefore, cannot be sustained and as such are quashed and set aside. Consequently, the order of attachment which is based upon such demand notices also cannot be sustained.

17. On behalf of the first respondent Corporation, the learned counsel had pointed out that while making order dated 22.1.07,

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whereby the respondents were directed not to take coercive actions for the purpose of recovering the amount mentioned in the communication dated 11th January 2007, on condition that the petitioner deposits the amount mentioned therein, that is, Rs.19,10,984/- with the Corporation, before the returnable date, that is, 6th February 2007, the Court had also noted that the learned counsel for the petitioner had stated that alternative remedy available under the provisions of the BPMC Act had become time barred. True it is that the petitioner has approached this court after the period of limitation for preferring appeals against the demand notices had expired. However, that by itself is not sufficient ground to non-suit the petitioner, more so, when on merits the court has found that the entire demand is without authority of law. Under the circumstances, merely because there is an alternative remedy which had not been availed of within the prescribed period of limitation, the jurisdiction of this court under Article 226 of the Constitution of India is not ousted."

7 It is not in dispute that the Division Bench of this Court on

examining the facts of the case which are akin to the facts of the present

case and on examining the Statutory Scheme, held that the assessment

must be completed before the close of the relevant official year and once

the official year has expired, the Commissioner cannot assess or levy

property tax. The Division Bench categorically observed that in light of

the Statutory Scheme, even the Commissioner cannot assess or levy

property tax once the official year has expired. The Commissioner has no

power to do so.

8 In view of this issue having been concluded and decided in favour

of the petitioner by the judgment as referred to hereinabove, the prayers

C/SCA/1425/2018 ORDER DATED: 17/11/2021