TMI Blog2004 (4) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... ution dated 11-5-2001 and thereafter a final notification, contemplated under Section 212 of the Act read with Hyderabad Municipal Corporations (Assessment of Property Tax) Rules, 1990 (in short 'the Rules'), was issued on 22-9-2001. 3. The General Body of the Municipal Corporation considered the matter once again and passed resolution dated 3-10-2001 requiring the Commissioner to reduce the rates of tax notified under Notification dated 22-9-2001. A revised Notification was issued on 20-10-2001, making certain amendments to the final notification dated 22-9-2001. The Corporation issued individual notices dated 24-9-2001 intimating the assessees, the rates of the revised tax. Some of the assessees filed objections to the revised rates, and final orders were passed on consideration of the same. Aggrieved by such orders, fairly large number of assessees filed appeals in the Court of Senior Civil Judge at Vijayawada under Section 282 of the Act. 4. Since the number of appeals was large, they were distributed among various Courts of the similar jurisdiction. Some Courts took the view that the Corporation did not follow the procedure prescribed under the Act, particularly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same were taken into account before the demand notices were issued. 8. Placing reliance upon the judgments rendered by this Court and the Hon'ble Supreme Court, the learned Additional Advocate General submits that omission to publish Notification under Section 218 does not have the effect of annulling the entire process and proceedings. He contends that the irregularity, if any, resulting out of non-compliance of the said provisions, can be rectified by taking recourse to Section 684 of the Act. He made extensive arguments on the facts, by making reference to various documents, which form part of the record; to demonstrate that the Corporation has taken an objective and dispassionate view, in the matter of fixation of ARV, categorization of buildings, and making individual assessments. 9. Sri S.R. Ashok, learned Senior Counsel advanced the arguments on behalf of the assessees. Sri V.S.R. Anjaneyulu, learned Counsel had supplemented the same. They submit that the procedure and steps prescribed under Sections 218 to 220 are mandatory and non-compliance with the same, would vitiate the entire proceedings. They urge that the publication of notifications under Rule 3 or 7 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, banks, post offices, factories etc. Rule 5 mandates that the buildings in each Zone shall be classified into six categories, depending on the type of construction; viz., (a) RCC posh buildings (b) RCC ordinary buildings (c) Madras terraced or Jack arch roofed buildings (d) Mangalore tiled roof buildings (e) Country tiled buildings and (f) huts. A further classification of the building into six categories, depending on the uses to which they are put, is provided for under Rule-6. These uses are, (a) residential, (b) shops, (c) shopping complexes, (d) public or private offices, (e) commercial or industrial uses, (f) cinema theatres or places of public entertainment etc. Thereby 36 categories of buildings emerge for the purpose of fixation of ARV. During the course of this exercise, 2 sets of draft and final notifications are required to be published, one under Rule-3 and the other under Rule-7. It is necessary to extract the same for better understanding of the Scheme under the Rules: Rule 3: Annual Rental Value:--(1) The annual rental value of lands and buildings shall be deemed to be the gross annual rent at which they may reasonably be expected to be let from month to month ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation shall contain the monthly or yearly rental value of the buildings in a Zone together with the localities/areas with particulars of door numbers included in the Zone. The objections or suggestions, if any, on the said notification shall have to be sent to the Commissioner within 15 days from the date of its publication. The Commissioner shall consider the objections and suggestions, if any, received in response to the said notification and revise the Zones and the monthly or yearly rental values wherever necessary. He shall then place all the proposals before the District bevel Advisory Committee constituted by the Government for its final recommendations. Thereupon the Commissioner shall publish a final notification in Form-A in the District Gazette and local newspaper having circulation in the district for information of the public, (the other paragraphs of the Rule omitted as not necessary) 13. Rule 3(2) provides for publication of a draft notification in a daily newspaper and in the District Gazette, calling for objections and suggestions to be submitted within 15 days from the date of publication of the proposals to fix the rate of rent for the plinth area. After publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra Pradesh Gazette and in the local daily newspapers and also by posting placards in conspicuous places throughout the ward. Section 219: Assessment book to be open to inspection:--(1) Every person who reasonably claims to be the owner or occupier of some premises entered in the assessment book or the agent of any such owner or occupier shall be permitted free of charge, to inspect and to take extracts from any portion of the said book which relates to the said premises; (2) Any person not entitled under Sub-section (1) to inspect and take extracts from an portion of the assessment book free of charge shall be permitted to do so on payment of such fee as shall from time to time be determined in this behalf by the Commissioner, with the approval of the Standing Committee; Section 220: Time for filing complaints against valuations to be publicly announced:--(1) The Commissioner shall, at the time and in the manner provided in Section 218, given public notice of a day, not being less than twenty one days from the publication of such notice, on or before which complaints against the amount of rateable value in the ward assessment book will be received in his office. (2) In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpts preparation of the Assessment Book afresh subject to certain conditions. This, broadly, is the scheme for preparation of assessment and levy of property tax. 18. Social scientists recognize levy of taxes as one of the four important attributes of sovereignty. Levy of taxes, therefore, partakes the character of sovereign power. Once absolute power is conceded to the State to levy taxes, hardly there exists any scope for a citizen to question the basis for such tax. The principle of Quid Pro Quo Seldom applies to the field of taxation, though it applies to the realm of levy of fee in a limited scale. The protection to a citizen in this regard is limited mostly to scrutinizing of legislative competence and insistence, on adherence to the procedure prescribed in law. In fact, Article 265 of the Constitution of India mandates that no tax shall be levied or collected except on authority of law. The requirement under this Article applies equally to substantive and procedural aspects. It takes in its fold, not only existence of law enacted by a competent Legislature, but also the strict adherence to such provisions. 19. It is age old, and time tested principle of law that a subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat manner or not at all, enunciated by the Privy Council in Nazir Ahmad v. Kind Emperor, AIR 1936 PC 253, and reiterated by the Supreme Court from time to time (see Gujarat Electricity Board v. Girdharlal Motilal, , applies with greater vigor to the field of taxation. The Consideration: 23. Reverting to the cases on hand, the undisputed facts are that initially a draft notification was issued under the Rules in the year 1993. On account of pendency of various proceedings in different Courts, further steps could not be taken. It is not known as to whether a draft notification issued in 1993 was the one under Rule 3 and whether a final notification under that Rule was issued. However, a draft notification under Sub-rule (2) of Rule 7 was issued on 23-4-2001. Objections were received and on consideration of the same, the Corporation issued a final notification on 22-9-2001 in Form-A under Sub-rule (3) of Rule 7. The General Body of the Corporation at its meeting held on 3-10-2001 took exception to the rates of ARV fixed under the notification dated 22-9-2001. Taking the same into account, the Commissioner made some amendments to the notification dated 22-9-2001, and it was repu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 212 and the Rules, to each and every building. Though the same may constitute a valid basis, it is not the absolute consideration for assessing a building to tax. For example, Clause (d) of Section 214 directs the following information be entered: if any such building or land is not liable to be assessed to the general tax, the reasons of such non-liability. 28. From this it is evident that the Corporation is vested the discretion to exempt a building or land from levy of the general tax, but after furnishing the reasons in support of such a decision. 29. Section 218 mandates that once the Assessment Book under Section 214 is ready, the Commissioner shall give public notice thereof and the place where the Assessment Book or a copy of it can be inspected. The mode of publication is also stipulated. Section 219 enables the assessees not only to inspect the Assessment Book, but also to take extract of it, free of cost, if it relates to his own premises or on payment of costs, if it relates to some other premises. The purpose underlying this section is to enable the assessee to make out a point by way of comparison of his premises with those of any others in the area. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of issuance of publication of notification under Section 218, making the books available for inspection under Section 219 and publication of notification under Sub-section (1) of Section 220 enabling the assessees to complain and disposal of the same under Section 223. Till such a procedure is not adopted, there is no way that the assessment book can become authenticated. Conversely, unless the book is authenticated, the question of issuance of any notice of demand on the basis of it does not arise. 32. The significance of notifications issued under the statutes imposing taxes was recognized and emphasized by the Supreme Court in most unambiguous terms. In Atlas Cycles Ltd. v. Haryana State, , the Supreme Court observed as follows: ...... a taxing provision always receives a strict interpretation for the obvious reason that there must be clear and express language imposing a tax and the date from which such tax shall come into effect. Notifications under the Act are the only authority and mandate for imposition and charge of tax. 33. An important argument on behalf of the Corporation is that though the notifications under Sections 218 and 220(1) were not published, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealing with the non-compliance with the publication through placards, the Division Bench held that there is no substance in the contention. Reference was made to the factum of issuance of special notice under Sub-section (2) of Section 220 and existence of Section 684 of the Act. The cases on hand are in no way comparable to that. Publication in the Gazette, which was mandatory from 1969 onwards as well as publication in the local newspapers were made therein, whereas no such compliance is present in the cases on hand. 38. Though it is doubtful whether the doctrine of substantial compliance has any place in the field of taxation, it can be said that the judgment in Himayatnagar Rate Payers Association (supra) was rendered on such a principle. The situation obtaining in the present case is of an absolute non-compliance. 39. In SBH Co-operative Bank Officers Welfare Assocation case (supra), a Division Bench of this Court had analyzed the entire scheme of taxation by the Municipalities in the State of Andhra Pradesh. The provisions of the Act were interpreted. It ultimately enlisted nine requirements to be scrupulously followed before any tax is levied. On an appeal to the Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , though is a defect, need not be attached with much significance, since no special damage is caused to the owners by the so-called defect. Therefore, taking the clue from the expression used in Sub-section (1) of Section 684 that may at any time as far as possible, be rectified, the said defect can be ignored. 43. With great respect I am of the view that, it is difficult to reconcile the opinions expressed in the passages extracted above. Once it is observed that Section 218 is mandatory, its non-compliance could not have been treated as an informality or omission. In a way, it leads to a contradiction in terms. A provision of law, once recognized as mandatory, does not permit of any deviation from it. Conversely, if any deviation or omission as regards a provision is permitted, it ceases to be mandatory; and tends to become directory. When a Division Bench of this Court, as late as in 1987 categorically held that provisions of Sections 218 to 225 of the Act shall be scrupulously followed and the same was confirmed by the Supreme Court, hardly there exists any scope for a total condonation of a complete non-compliance with Section 218 under any pretext. 44. An effort was m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reliance is placed on the judgment of the Supreme Court in Municipal Board, Sitapur v. Prayag Narain Saigal and Firm Moosaram Bhagwan Das, , for the proposition that minor irregularities can be taken care of under the provisions analogous to Section 684. Firstly, the total non-compliance with the mandatory provisions such as Sections 218 and 220(1) cannot be treated as an irregularity. Secondly, the complaint before the, Supreme Court was not about the non-publication, but publication of the draft rules, and the notice, separately. Thirdly, no prejudice was caused to the assessees in that case, since the entire exercise has resulted in reduction of tax by 10%. 48. My learned brother who decided the CMSA Nos. 47 and 2003 and batch treated the observations of the Division Bench in Himayatnagar Rate Payers Association case (supra) as almost an exemption granted in favour of the Corporation from complying with Sections 218, 219 and Sub-section (1) of Section 220. As pointed out in the preceding paragraphs, the only non-compliance in that case was about publication through placards. Publications in the Official Gazette and the local newspapers were made. After elaborately discussing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de of publication cannot be viewed in isolation, nor treated as a licence to the Corporation to ignore or by pass Sections 218, 219 and 220(1) as a whole. A reading of the above passage clearly discloses that the book prepared under Section 214 would assume authenticity only on compliance with the relevant provisions of Sections 218 to 224. In Union of India v. Amrit Lal Manchanda, , the Supreme Court held that the observation of a Court in judgment has to be read in the context in which it is made and not in isolation. A judgment cannot be interpreted in the same way as a statute. 50. I am conscious of the limitations, in departing from a judgment rendered by another learned Single Judge, on the same set of facts. Concept of Stare Decisis is one of the hallmarks of Indian Jurisprudence, which in turn is inherited mostly from English Law. Adherence to the same ensures uniformity and consistency. At the same time, when it is noticed that the ratio decidendi laid down by superior Courts or Benches is not reflected in a precedent emerging from a Bench of the same strength, a delicate situation arises, namely whether to follow the precedent and ensure consistency in approach, withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the case itself: but just what this class is will depend on how widely we abstract the facts in question. 53. Edgar Bodenheimer, in his book on jurisprudence, described the significance, and method of identification of ratio decidendi as under: (A) case is not controlling as a precedent for the sole reason that similarities and parallels between the facts of the earlier and later cases can be discerned. The ratio decidendi must be discovered by relating the facts of the two cases to a principle of legal policy which reasonably covers both situations. In many instances, this principle of policy will not spring into existence as a finished creature the first time it is expressed by a Court. It will often have been stated by the Court in a tentative and groping fashion, and its true import and scope will not be capable of being ascertained until other Courts have had a chance to correct the inadequacies of the first formulation and to graft exceptions, qualifications, and caveats upon the principle. In this way the ratio decidendi of a case often develops its true and full meaning slowly and haltingly, and it may take a whole series of decisions involving variations of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide as to whether it is the proper drug at all to be administered at all, and if so, to decide its dosage. The situation cannot be circumscribed by any hard and fast rules of principles. 57. Examined from this angle, the judgment in Himayatnagar Rate Payers Association (supra) has to be treated as authority for proposition that the liability of payment of tax is contingent upon the authenticity of the Assessment Book or its amendment and that it is only when the entire procedure set out in Sections 218 to 223 is complied with, that the assessment book assumes finality. This is evident from the paragraphs of the judgment extracted in the earlier part of this judgment. This constitutes the ratio decidendi. The stray observation that the non-publication of notification under Section 218 through placards is not fatal to the process, that too in the context of compliance with two other modes of publication, cannot be treated as a declaration of law to the effect that the Sections 218, 219 and 220(1), need not be complied with in any manner whatsoever. The said observation is nothing, but an obiter dicta. Even if there existed any doubt in this regard, it stood clarified by a subseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r repealing of a provision of law is within the prerogative of the Legislature. The Courts cannot usurp the same. The only occasion for the Courts to remove a provision from a statute book is, by striking it down as being unconstitutional when challenged and on being satisfied. Such an occasion did not arise so far, in the context of the said provisions. The Conclusion : 62. Viewed from any angle, the action of the Corporation in issuing notices straight away under Sub-section (2) of Section 220, and thereafter the demand notices, without following the procedure under Section 218, 219 and Sub-section (1) of Section 220 cannot be sustained. It is impermissible in law to undertake an expost facto publication of notices under Section 218 of the Act. What is required to precede, cannot be permitted to succeed. 63. Hence the assessments in question are set aside and it is directed that the Corporation shall be competent to levy the tax only after it complies with the procedure prescribed under Sections 218, 219 and 220 of the Act. 64. In the result, the appeals preferred by the Corporation stand dismissed and the appeals preferred by the assessees are allowed. - - TaxTMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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