Karnataka High Court
The Karnataka State Road vs The Commissioner on 14 September, 2023
Bench: R Devdas
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WP No. 7173 of 2011
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 14TH DAY OF SEPTEMBER, 2023
BEFORE
THE HON'BLE MR JUSTICE R DEVDAS
WRIT PETITION NO. 7173 OF 2011 (LB-TAX)
BETWEEN:
THE KARNATAKA STATE ROAD
TRANSPORT CORPORATION
MYSORE URBAN DIVISION,
MYSORE
NOW REPRESENTED BY ITS
CHIEF LAW OFFICER, KSRTC,
SHANTHINAGAR,
BANGALORE 560027
...PETITIONER
(BY SRI. R V JAYAPRAKASH., ADVOCATE)
AND:
Digitally signed by 1.
JUANITA THEJESWINI THE COMMISSIONER
Location: HIGH MYSORE CITY CORPORATION,
COURT OF
KARNATAKA MYSORE
REPRESENTED BY ITS COMMISSIONER
2. REVENUE OFFICER
MYSORE CITY CORPORATION
MYSORE
...RESPONDENTS
(BY SRI. PALLAVA R, ADVOCATE)
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THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF
THE CONSTITUTION OF INDIA PRAYING TO CALL FOR ENTIRE
RECORDS ON THE FILE OF THE II ADDL. DISTRICT JUDGE,
MYSORE IN M.A. NO.9/2010 AND QUASH THE ORDER DATED
2.12.2010 PASSED BY THE II ADDITIONAL DISTRICT JUDGE,
MYSORE IN M.A. NO.9/2010 PRODUCED VIDE ANNEXURE-J
AND SET ASIDE THE DEMAND NOTICE DATED 15.2.2010
ISSUED BY RESPONDENT NO.2 PRODUCED VIDE ANNEXURE-F.
AND ETC.,
THIS PETITION, COMING ON FOR PRELIMINARY HEARING
- B GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
R.DEVDAS J., (ORAL):
The petitioner-Karnataka State Road Transport
Corporation (hereinafter referred to as 'the KSRTC' for
short) is before this Court aggrieved of the demand notice
dated 15.02.2010 raised by the respondent-Mysore City
Corporation (hereinafter referred to as 'the Corporation'
for short), in the matter of payment of property tax at the
hands of the petitioner-KSRTC and the subsequent
judgment dated 02.12.2010 of the II Additional District
Judge, Mysore in M.A.No.9/2010.
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2. The impugned demand notice was issued by the
respondent-Corporation calling upon the petitioner to show
cause as to why the tax payable by the petitioner-KSRTC
should not be re-assessed and recovered for the period
2002-2003 to 2008-2009.
3. It is not disputed that the petitioner-KSRTC had
declared the property tax payable by the petitioner under
a self-assessment scheme. It is the contention of the
petitioner-Corporation that in terms of sub-section (3) of
Section 112-A of the Karnataka Municipal Corporations
Act, 1976, (hereinafter referred to as 'the Act' for short)
the Commissioner is required to satisfy himself that the
returns submitted are correct and complete and the
Commissioner is required to assess the property tax in
accordance with the provisions of the Act and the rules
made thereunder and is required to send a copy of the
order of assessment to the owner or occupier concerned.
At any rate, the assessment under the self-assessment
scheme is required to be concluded within one year from
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the date of submission of returns. In that view of the
matter, it is submitted that there is no provision enabling
the Commissioner to reopen the case and reassess the
property tax payable by the petitioner-KSRTC after the
expiry of one year in terms of sub-section (3) of Section
112-A of the Act.
4. Per contra, learned Counsel for the respondent-
Corporation submits that the provision sought to be relied
upon by the learned Counsel for the petitioner does not
stipulate that re-assessment or revision of the assessment
filed at the hands of the assessee has to be concluded
within one year. Even if the provision mandates that the
assessment has to be concluded within one year, it does
not preclude the Commissioner from re-opening the case
wherever it is found that the assessment made by the
assessee is not in accordance with law.
5. The learned Counsel for the respondent-
Corporation seeks to place reliance on a decision of the
Hon'ble Supreme Court in the case of State of Punjab
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and Others Vs. Bhatinda District Cooperative Milk
Producers Union Ltd. (2007) 11 SCC 363, where it
was held that if no period of limitation is prescribed,
statutory authority must exercise its jurisdiction within a
reasonable period. It was held that what shall be the
reasonable period would depend upon the nature of the
statute, rights and liabilities thereunder and other relevant
factors. Learned Counsel for the respondent-Corporation
would submit that this Court is dealing with fiscal matters
and more importantly, taxes recoverable by the local body
under a statute and in that view of the matter, this Court
is dealing with public funds. The learned Counsel would
therefore submit that there cannot be any dispute that the
law in this regard would be that although there is no
period of limitation prescribed in the statute for re-opening
the assessment, nevertheless, having regard to the fact
that the respondent-Corporation is duty bound to recover
property taxes from the owners of the properties and
wherever it is found that the self-assessment made by the
assessee is incorrect or fraudulent, then the Commissioner
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is entitled to reopen such assessments and ensure that the
property tax is recovered from the lawful owner. In this
background, it is submitted that no fault can be found in
the impugned judgment passed by the II Addl. District
Judge, Mysore, dismissing the appeal filed by the
petitioner-KSRTC.
6. On the question of the reasonable period for re-
opening a case, more particularly re-assessment, the
learned Counsel for the petitioner would seek to draw the
attention of this Court to the decisions in the cases of
Joint Collector Ranga Reddy District And Another Vs.
D.Narsing Rao and Others (2015) 3 SCC 695 and
State of Gujarat Vs. Patel Raghav Natha and Others,
AIR 1969 SC 1297. Learned Counsel for the petitioner
would submit that no doubt, the Hon'ble Supreme Court
has held in several cases that where the period of
limitation is not prescribed, power should be exercised
within a reasonable time and what is reasonable would
depend on the facts and circumstances of each case.
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However, in the two cases cited hereinabove, the Hon'ble
Supreme Court has held that the power exercised more
than one year after the order cannot be held to be
reasonable. It is therefore submitted that in the facts and
circumstances of this case, this Court may hold that the
impugned demand notice issued by the respondent-
Corporation after a lapse of more than nine years cannot
be held to be reasonable and accordingly, the impugned
demand notice should be quashed and the judgment of the
District Court should also be set aside.
7. Heard the learned Counsel for the petitioner-
KSRTC, the learned Counsel for the respondent-
Corporation and perused the petition papers.
8. It is fairly agreed by the learned Counsels, after
having gone through several decisions of the Hon'ble
Supreme Court including the cases referred to
hereinabove, that where no period of limitation is
prescribed, power should be exercised within a reasonable
time. The question therefore would be as to whether the
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impugned demand notice issued by the respondent-
Corporation on 20.08.2008, 09.09.2009, 02.11.2009 ,
12.11.2009 and 17.11.2009 are within reasonable time.
9. The respondent-Commissioner also issued a notice
on 15.02.2010 having considered the objections filed at
the hands of the petitioner-KSRTC on 04.03.2010.
Therefore, this Court is required to consider as to whether
the impugned notices can be held to be raised within a
reasonable time or whether the demand notices are
required to be quashed and set aside on the ground that
they were issued beyond reasonable period.
10. Having gone through the judgments cited by the
learned Counsels at the bar, this Court finds that the law
declared by the Hon'ble Supreme Court is that if no period
of limitation has been prescribed, statutory authority must
exercise its jurisdiction within a reasonable period. What
should be the reasonable period would depend upon the
nature of the statute, rights and liabilities thereunder and
other relevant factors.
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11. With this benchmark, when we analyse the
nature of the dispute brought before this Court, this Court
finds that the demand raised by the respondent-
Commissioner is for recovery of lawfully payable property
tax at the hands of the petitioner-KSRTC. The tenor of the
demand notices is that the declaration made by the
petitioner-KSRTC while submitting the self-assessment
returns is contrary to law, in as much as, the immovable
properties owned by the petitioner are being used for
public purposes and are commercial in nature and
therefore, the same could not have been assessed as
residential premises. Without going into the merits of the
demand raised by the respondent-Corporation, this Court
should notice that we are dealing with public funds, money
recoverable by the statutory authority in respect of
property tax payable under the statute viz., the Karnataka
Municipal Corporations Act, 1976.
12. When this Court is dealing with fiscal matters,
regard should be had to the fact that the statutory
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authorities are duty bound to ensure that due property
taxes are paid by the owners of the properties and no
scope is given for short payment. When Courts are
dealing with fiscal matters and competing claims are made
by individual citizens of this country, Courts are required
to ensure that legally recoverable taxes are collected from
the owners of the property and no scope is given to the
persons manning the Corporation to dole out undue
advantage or benefits to individual persons or assessees.
Having regard to the magnitude of the assessments that
are filed and the limited staff manning the Corporation,
moreso, in the matters of collection of taxes, the
Assessing Officer will no doubt be faced with shortage of
time and hands.
13. Having regard to these aspects and the fact that
sub-section (3) of Section 112-A of the Act mandates that
the assessment under the self-assessment scheme shall
be concluded within one year from the date of submission
of the returns filed under sub-section (1) it is clear that
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the assessments were required to be concluded within the
prescribed period. The question however is as to whether
that could be termed as the period within which a revision
or re-assessment could be made by the competent
authority. On a plain reading of the provision, it does not
restrict the powers of the competent authority to re-assess
or re-open the assessments and to conclude the same
within a period of one year.
14. In that view of the matter, this Court has to
accept the submission of the learned Counsel for the
respondent-Corporation that the period prescribed under
sub-section (3) of Section 112-A is not regarding the re-
opening or re-assessment of the self-assessment made by
the owners of the properties.
15. However, this Court is required to consider what
would be the reasonable period within which the
respondent-Commissioner could have re-opened or re-
assessed the returns filed by the petitioner-KSRTC. Again,
having regard to the fact that this Court is dealing with
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fiscal matters, public money and the nature of the statute
and the functions of the respondent-Commissioner, this
Court is of the considered opinion that the reasonable
period for permitting the Commissioner to re-open and re-
assess the returns filed by the assessee in terms of
Section 112-A of the Act, would be three years.
16. Having concluded that the reasonable period
within which the respondent-Commissioner could have re-
opened the case and exercised the power of revision in the
matter of self-assessment returns filed at the hands of the
petitioner-KSRTC, the demand raised beyond the period of
three years cannot be sustained. This Court is of the
considered opinion that the returns filed by the petitioner-
KSRTC for the years 2006-2007, 2007-2008 and 2008-
2009 could be validly re-opened or reassessed by the
respondent-Commissioner. The petitioner should be
permitted to file its objections and the respondent-
Commissioner shall consider such objections and proceed
to pass orders in accordance with law.
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17. The impugned judgment dated 02.12.2010
passed by the II Additional District Judge, Mysore, in
M.A.No.9/2010 is set aside.
Accordingly, the writ petition stands disposed of.
Sd/-
JUDGE
JT/-
CT: JL
