TMI Blog2022 (12) TMI 1327X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Madras Metropolitan Development Authority under World Bank Systems for rationalization of property tax assessment. The records reveal notes written in hand, calling for the report of the ORG and Annexure VIII of compilation filed by the Greater Chennai Corporation on 21.09.2022 contains a report of the study submitted during September, 1985. Property taxes are a major source of revenue to the State and the report of the Committee as well as the analysis of data supplied by the respondents reveal more than adequately, that this source of revenue was not being deployed effectively. Non-deployment of revenue sources only leads to the denial of proper infrastructure and facilities to the citizens and the enhancement in property tax rates is only a move forward in that direction - the present impugned enhancement is not vitiated simply by virtue of the recommendations made by the Finance Commission. At best, it is an exercise in collaboration by the Union and State in the best interests of the Country. This argument is answered accordingly. The impugned G.O. cannot be considered as a diktat. It does precede the CRs and is couched in affirmative terms, indicating that changes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase the burden upon the taxpayers. Basis of enhancement is arbitrary and contrary to the provisions of the Act or not - HELD THAT:- In the present case, there is no doubt that the respondents have complied with the procedure for enhancement, though as noted in the paragraphs above, the entirety of the procedure followed appears to be rather farcical. However, there is no dispute on the position that the impugned/offending orders have been placed in public domain and objections called for and disposed - In PATEL GORDHANDAS HARGOVINDAS VERSUS MUNICIPAL COMMISSIONER, AHMEDABAD [ 1963 (3) TMI 53 - SUPREME COURT] , a Constitutional Bench of the Hon ble Supreme Court considered an appeal on certificate granted by the Bombay High Court challenging imposition of a rate by the Municipal Commissioner, Ahmedabad, on vacant lands. The levy of rate was under Section 73 of the Bombay Municipal Boroughs Act, 1925. The provisions of the Hyderabad Municipal Corporations Act, 1955 and the relevant rules in the Hyderabad Municipal Corporations (Assessment of Property Tax) Rules, 1990 provided that tax shall be levied at such percentages of rateable value as may be fixed by the Commissioner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56 25897 of 2022 And WP.Nos.26134, 26173, 26179, 26183, 26187, 26190, 26174, 26180, 26184, 26188, 26176, 26182, 26186, 26189, 26193, 26198, 26228, 26230, 26235, 26237, 26244, 26232, 26236, 26238, 26242, 26279, 26357, 26484, 26559, 26577, 26621, 26622, 26686, 26736, 26742, 26786, 26790, 26798, 26800, 26791, 26794, 26799, 26796, 27014, 27183, 27184, 27213, 27252, 27256, 27258, 27336, 27337, 27341, 27431, 27939, 27985, 27989, 27992, 28037, 28101, 28377, 28380, 28474, 28654, 28660, 28663, 28662, 28666, 28670, 28842, 28959, 29059, 29085, 29196, 29204, 29247, 29442, 29470, 29478, 29485, 29483, 29488, 29490, 29495, 29497, 29501, 29489, 29493, 29499, 29502, 29503, 29507, 29494, 29500, 29504, 29506, 29508, 29509, 29896, 29942, 29946, 29947, 29951, 29954, 29996, 30078, 30083, 30091, 30097, 30105, 30106, 30115, 30118, 30288, 30290, 30295, 30300, 30303, 30383, 30405, 30423, 30446, 30448, 30455, 30574, 30612, 30616, 30854, 30863, 31154, 31177, 31188, 31190, 31219, 31221, 31224, 31225, 31251, 31288, 31411, 31414, 31430, 31435, 31560, 31713, 31732, 31744, 31774, 31882, 31886, 31977, 31982, 32087, 32208 32211 of 2022 And WMP.Nos.17875, 17876, 18691, 18693, 19216, 19217, 19561, 19560, 19679, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 587, 30588, 30604, 30615, 30617, 30620, 30621, 30653, 30654, 30655, 30656, 30651, 30652, 30658, 30659, 30691, 30692, 30724, 30726, 30841, 30847, 30843, 30846, 30878, 30879, 30884, 30885, 31016, 31017, 31156, 31157, 31180, 31181, 31189, 31190, 31212, 31213, 31324, 31326, 31331, 31332, 31415, 31416, 31420, 31422, 31514, 31515, 31622 31623 of 2022 Honourable Dr. Justice Anita Sumanth For the Petitioners : Mr.T.V.Ramanujan Senior Counsel For Ms.R.Ramya, Mr.S.Sundaresan, Mr.C.Jagadish, Mr.T.V.Lakshmanan And Others For the Respondents : Ms.Vaitheeswari Standing Counsel for R1 and R3 and Mr.P.S.Raman, Senior Counsel Assisted by Mrs.C.Sangamithirai, Special Government Pleader for R2 And Others COMMON ORDER A welfare State has necessarily to balance augmenting of its revenues so as to provide for sources of funds for welfare measures and other expenses of the State on the one hand, and mitigating the hardship of taxes as far as possible to its citizens, on the other. 2. The official website of the Income Tax Department refers to the perfect balance achieved by the emperor Manu in this regard stating that As the calf and the bee take their food little by littl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey are commensurate with the need of the State and in line with measures taken elsewhere in the Country for levy and collection of property tax. 6. The Committee had made certain recommendations proposing augmenting of rates of the taxes as well as the Basic Street Rates (BSR). There was also a proposal for adoption of a slab system. The Committee s report has been accepted by the State in passing the impugned G.O. The G.O. was gazetted on 11.04.2022 and a Notification issued for implementation of general revision of property tax within the limits of Greater Chennai and Coimbatore Corporations, with effect from the current year, i.e., with effect from the first half of 2022-23. 7. The Notification had been published on 12.04.2022 (Chennai) and 13.04.2022 (Coimbatore) in both English and vernacular newspapers as per Section 98A of the 1919 Act and there was a call for objections, to be addressed to the Principal Secretary/Commissioner, of the Corporations, within 30 days from date of publication of the Notification. The Notification stated that upon expiry of the 30 day period, objections shall be considered and a decision taken by the Council. This was followed by CR No.63 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verned by specific enactments. Thus the directions under the impugned G.O. constitute unlawful intervention in an otherwise occupied field. (iii) The intervention by the State is fatal to the impugned revision, seeing as the respective statutes do not, in any manner, envision a role for the State to play in matters relating to the determination of property tax. (iv) The 1919 and 1981 enactments provide for the regulation of all matters relating to the levy, assessment, collection and recovery of property tax as well as a framework of statutory remedies for those aggrieved by the orders/assessments. The Councils of the respective Corporations are the ultimate authorities in whom vests all power necessary for the levy of property tax and all matters connected and incidental thereto. The impugned enhancements however, have not emanated from the Council, but at the instance of the State, vide the impugned G.O. This constitutes a usurping of the power of the Council by the State and is an excess of authority in terms of Article 162 of the Constitution of India. (v) The provisions of the 1919 and 1981 Acts that touch upon the subject of taxation are Sections 98, 98A, 99 and 100, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o fetch from month to month or year to year, less certain statutory deductions. (xiii) The Annual Rental Value (ARV) is thus the basis of levy of property tax and evidently, such ARV shall be based only upon the computational methodology set out under the Tamil Nadu Buildings (Lease and Rent Control) Act 1960 (in short Rent Control Act ) (xiv) The impugned G.O. and CRs refer, in vague terms, to Basic Street Rate (in short BSR ), which is a parameter entirely unknown to the tax paying public of Tamil Nadu. (xv) BSR, as a concept, was never the methodology for levy of tax, as in the past the assessment of property tax was consistently done on a case to case basis depending upon the returns filed by individual property owners. (xvi) Apart from being contrary to the methodology set out under the Statute, adoption of a general value, such as a uniform and standardised street rate for the purposes of assessment, would be incorrect insofar as all houses in the street would be grouped as one for the purposes of the rate and individual differences would be entirely lost sight of. (xvii) Therefore, as the basis upon which the street rates have been arrived at is a mystery, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipal Commissioner, Ahmedabad and Another [(1964) 2 SCR 608] (xi)The Mehta Multispeciality Hospitals India Pvt. Ltd. v. The Commissioner, Corporation of Chennai, Rippon Building, Chennai-600 003 and others (W.P.Nos.35304 of 2019 and batch dated 03.03.2021) (xii ) Commissioner v. Griha Yajamanula Samkhya and Others [(2001) 5 SCC 651) (xiii)Raza Buland Sugar Co. Ltd. v. Municipal Board, Rampur (Civil Appeal No.23 of 1964, dated 30.10.1964) (xiv)Bangalore Woollen, Cotton and Silk Mills Co. Ltd., Bangalore v. Corporation of the City of Bangalore (Civil Appeals Nos.448 and 449 of 1957, dated 05.04.1961) (xv)The Berar Swadeshi Vanaspathi and Ors. v. The Municipal Committee, Shegaon and Ors. (Civil Appeal No.234 of 1959, dated 28.03.1961) (xvi)Municipal Board, Sitapur v. Prayag Narain Saigal and Ors. (Civil Appeal Nos.847-848 of 1966, dated 16.01.1969) (xvii)City Municipal Council, Mangalore and Ors. v. Frederick Pais and Ors. (Civil Appeal Nos.1302 to 1906 of 1968, dated 13.10.1969) (xviii)Kunnathat Thathunni Moopil Nair v. The State of Kerala and Ors. (Petitions Nos.13 to 24, 42 and 46 to 54 of 1958, dated 09.12.1960) (xix)Bharat Kala Bhandar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch, published by The Macmillan Company in 1926. 16. The literature circulated elaborates upon the need for assessing properties to tax and the methodologies adopted generally in assessing properties. While providing a historical background to the levy of the tax itself is well taken, I bear in mind that the State enactment is itself of 1919 vintage, going even further back than the dates of the publications cited. 17. Some judgements cited by Mr. T.V.Lakshmanan that I elaborate upon in the later part of this order also provide illuminating historical context to the levy of property tax over the Ages. The state enactment has complete clarity on the mode and methodology to be applied in the assessments of properties, which is the Annual Rental Value, and intervention is required in respect of the manner of implementation of the provisions. 18. The respondents submit that there are 200 wards in the Greater Chennai Corporation, including 93 areas annexed to the Greater Chennai Corporation in 2011 as well as those comprising the erstwhile Corporation of Chennai. There has been no revision in the rates of property tax since 1998 in respect of 107 wards of the Greater Chennai Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Court. The PPP has been printed into booklets and supplied to all the learned petitioner counsel as well. 24. The statistics supplied are to illustrate the yawning gap between the actual rentals in certain areas when compared with the rentals, as determined under the present impugned methodology, the former being substantially higher in several instances. Thus, the specific submission is that in standardising the methodology for computation of ARV, taxpayers will stand to gain, as the ARV determined will be far less than the rent realisations, if taken on actual basis. 25. The details of the properties as provided by the respondents, including full addresses and the rental values, are not extracted in this order in the interests of the privacy of the property owners. To be noted that there has been no rebuttal by the petitioners to the aforesaid statistics and area-wise rental values. 26. The State vehemently objects to the petitioner s submissions that Basic Street Rate was never part of property tax assessments in Tamil Nadu. The respondents were asked to place on record material to establish this submission, specifically, that a uniform and standardised rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of use, age of buildings and other unique characteristics. This was the formula under consideration of the Andhra Pradesh Government and the Committee concluded that the Hyderabad formula was an acceptable formula that may be adopted in Tamil Nadu as well. Council Resolution bearing No.534/1977 19.06.1977 was passed to aforesaid effect. 33. While the details of the Council Resolution are unnecessary insofar as they go into the specifics of the various parameters to be adopted by the Corporations in determining annual value and gross annual rent, what impresses is that there has been application of mind to various relevant aspects, and an analysis and exchange of information between the States, at least the Southern States, such as Madras and Hyderabad as early as in 1977, to arrive at a method of assessment that would not just straddle, but also balance the interests of the people and the State. This is commendable. 34. The efforts to rationalize property tax assessment continued and G.O.Ms.No.11 dated 04.01.1983 considered a situation that rent may be removed from the ambit of the enactment and that the mode of assessment may be shifted wholesale to a new basis, suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. Built up area has, in fact, been recognised as a reasonable base of tax by the Privy Council as early as in the case reported in AIR (1944) FC 71. But built up area cannot, however, be the sole basis after the commencement of the Constitution. In fact, the Kerala Building Tax Act of 1951 did this exactly and was struck down on the ground that the various elements such as the character of the building, the place where it is situated, the cost of its construction and the period for which it will endure have not been taken into account. . . . . 37. Thereafter, G.O.Ms.No.1120 dated 23.11.1987 was issued considering an earlier ban imposed against the quinquennial revision of property tax in the Madras and Coimbatore Corporations. Under this Government Order, the ban was removed. In G.O.Ms.No.1178 dated 10.12.1987, Part I-A in the 1919 Act stood substituted in entirety to provide for the method of assessment of property tax. 38. In terms of this procedure, an assessee was to file a return of property tax within a specific time and if such a return was not filed, the Commissioner was entitled to authorize any person not below the rank of Bill Collector to enter upon, ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Annexure XVIII of the aforesaid guidelines contains a tabulation of various rates arrived at by the revenue Department of the Corporation of Chennai during the period 1993-94 for different areas and streets. This tabulation, running to 11 pages, contains a location code, location name, rate per sq. ft. in paise and land value per ground in lakhs. 45. Proceedings bearing number 10784/1999 dated 02.12.2004 came to be passed referring specifically to BSR and the proceedings read thus: 46. In 1998-99, the revenue Department has embarked upon the massive project/exercise of compiling the rental rates per street and a tabulation of the rates arrived at qua each street is placed before the Court at page 95 of compilation dated 19.09.2022. 47. A Committee set up for that express purpose had selected two to four houses per street and arrived at the average/rate that would be treated as the base rate for that street. It is that rate that is being applied across the city of Chennai in assessments for the last more than three decades, according to the State. 48. To a pointed question as to whether assessment orders issued thus far had over the years contained any referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . At the initial hearings conducted on 24.08.2022, 29.08.2022 and 01.09.2022, even pending decision in these writ petitions, there were umpteen difficulties expressed by the petitioners through their counsel, in coming to grips with the unfamiliar basis of taxation as well as in navigating the website of the Corporations. 56. The petitioners number 155 out of a tax base of approximately 13 lakh assessees. This Court was thus of the view that urgent and immediate measures must be taken by the authorities to enable those assessees who had chosen to comply and not challenge the demands, to so comply and remit the amounts. That apart, the grievances expressed by the petitioners was also legitimate. 57. The officials of the Greater Chennai Corporation, who were present at the hearing were directed to ensure that the website was made user-friendly and contained all necessary details to inform the assessees of the basis of assessment. At the hearing conducted on 02.09.2022, the Greater Chennai Corporation was directed to upload on the websites, the compendium of Basic Street Rates arrived at originally, accompanied by the revised factorial, in the interests of transparency and such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of BSR. 63. Learned counsel who appears for the petitioners in W.P.Nos.32087 of 2022 etc. batch has also filed a compilation dated Nil with the following documents: i) News Report dated 19.11.2019 ii) Circular bearing Na.Ka.No.60639/08/B-3, dated 02.01.2009 iii)G.O.(Ms.No.228 dated 13.11.2008 iv) Circular bearing Na.Ka.No.34283/2008/B4, dated 10.07.2008 v)Circular No.70035/2005/R1 dated 11.03.2009 vi)Order dated 04.04.2016 passed in W.P.No.10514 of 2016 vii)Proceedings of the Commissioner, Coimbatore Corporation dated 02.06.2008 viii) G.O.(Ms.)No.110 dated 23.06.2008 64. The Coimbatore Corporation has not really established the application of BSR, over time. That said, there has been a great degree of opaqueness in the reach of the Notifications and Government Orders under which this methodology was promulgated at the relevant point in time, and this is on account of, in some measure, to the absence of robust methodologies for dissemination of information at the relevant point in time. 65. A perusal of the documents presented by the Chennai Corporation presented leaves me in no doubt that the respondents have arrived at BSR as e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paque manner in which the property tax assessments were hitherto framed, the cumbersome structure of the website of the Corporations and the difficulties in navigation, were well taken. The officials of the Greater Chennai Corporation were directed to enable the following: a. Property Tax Calculator to be enabled in the website for the public. b. Facilitation arrangements to be made in Zonal Offices to address the queries of assessees with regard to revision of property tax. c. To submit documents regarding discussions held in GCC regarding implementation of General Revision. d. Evidences for streetwise Monthly Rental Value collected. 72. This would, the Court trusts, address the grievances of the petitioners in regard to the difficulties encountered in navigating the website, obtaining the basis of calculation and having the grievances addressed. The respondents are put to strict compliance of their undertaking before this Court and must ensure that future amendments, Notifications and Government Orders as and when they are passed, are updated on the website within 24 hours of such amendment/updation/GO having been issued. 73. All the issues raised and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich property tax is levied: Provided that such reduction does not contravene the proviso to subsection (2) of section 99. (4) Where any resolution under this section has taken effect for a particular year, no proposal to alter the rates or the date fixed in such resolution so far as that year is concerned shall be taken into consideration by the council without the sanction of or a direction from the [State Government]. 99. Description and class of property tax .--- (1) If the council by a resolution determines that a property tax shall be levied, such tax shall be levied on all buildings and lands within the city save those exempted by under this Act or any other law. The property tax may comprise--- (a) a tax for general purposes; (b) a drainage tax for the purpose of defraying the expenses connected with the drainage system of the city ; (c) a lighting tax for the purpose of defraying the expenses connected with the lighting of the city: Provided that where the drainage tax is levied the council shall declare what proportion of the tax is levied in respect of drainage works and the proportion so declared shall also be specified in the notice pub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Act in respect of such advertisement or advertisements, the annual value of such land or building for the purpose of assessing then property tax thereon shall be ascertained as if such land, building or portion is not used for the display of such advertisement or advertisements.] (3) The [State] Government shall have power to make rules regarding the manner in which the person or persons by whom and the intervals at which, the value of the land, the present cost of erecting the building and the amount to be deducted for depreciation, shall be estimated or revised in any case or class to cases to which clause (a) of the first proviso to sub-section (2) applies, and they may, by such rules, restrict or modify the application of the provisions contained in Schedule IV to such case or class of cases]. 74. I now address the specific issues raised by the petitioners. I The trigger for the enhancement is itself misconceived. 75. Petitioners argue that the recommendations of the Central Finance Commission do not bind the State Governments. In the present case, the impugned GO and CRs make it apparent that it is, in fact, the Central Finance Commission recommendation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , property taxes can help increase revenue buoyancies at the third tier. Our specific observations and recommendations on property tax are contained in our report for 2020-21 at para 5.2 (xxi): The importance of mobilisation of own revenues by self-governing local bodies cannot be overemphasised. It leads to better ownership and accountability. Internationally, property tax is one of the most effective instruments for revenue mobilisation by local bodies. For historic reasons as well as because of vested interests, property tax yields remain negligible in India. We recommend that to qualify for any grants for urban local bodies in 2021-22, States will have to 8 appropriately notify floor rates and thereafter show consistent improvement in collection in tandem with the growth rate of State's own GSDP. 7.98 This condition in the report for 2020-21 shall continue to be applicable as an entry level condition for all the urban local bodies for availing the grants. Further, this condition is over and above the requirement of timely online availability in the public domain of both unaudited accounts for the previous year and audited annual accounts for the year before prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loor rates and operationalise the arrangements in 2021-22. The condition of notifying the floor rates of property tax will apply for eligibility of grants from 2022-23. Once the floor is notified, the condition of growth in property tax collection being at least as much as the simple average growth rate of the State's own GSDP in the most recent five years will be measured and taken into account from 2023-24 onwards. 79. In Mohit Minerals Pvt. Ltd. (supra), three judges of the Hon ble Supreme Court discussed in detail the constitutional architecture behind the levy of Goods and Services Tax. In dealing with the contextual meaning of the term recommendation , such recommendations have been categorised as five in number, Category No.1: Recommendation by the President prior to laying before the Parliament for voting, Category 2: Recommendation followed by consultation; Category 3: Recommendation with accountability; Category 4:Non-qualifying recommendation and Category 5: Recommendations which are obligatory in nature. 80. The Bench then went on to discuss the category under which the recommendations of the GST Council would fall. In the present case, the recommendations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the State to issue executive orders in respect of all subject matters that fall within List 2 of the 7th Schedule to the Constitution of India. This authority is however, subject to the existence of any statutory enactment already in existence, with respect to the same subject matter. 85. State would point out that it has nowhere, sought to issue directions to the Corporations. It accedes to the position that it does not lie within the domain of the State to have issued any directions to the Corporations in regard to the subject under consideration, being levy and assessment of property tax. The impugned G.O., is not an exercise of authority under Article 162, and to make this abundantly clear, the concluding paragraph of the G.O., uses the word advise not direct . Thus the impugned G.O. is merely an advisory and purports to be nothing further. 86. The decision in the case of S.Arunachalam (supra) challenging G.O.Ms.No.542, Local Administration and Water Supply Department, dated 29.04.1986 is to the effect that Executive power under Article 162 of the Constitution of India is unavailable in respect of a subject matter which is covered by other legislation. In other w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Collector, Coimbatore dated 02.06.2022. 91. The above documents show the sequence of events that have transpired post issuance of G.O. dated 30.03.2022. A Resolution was passed by the Coimbatore Corporation on 11.04.2022, followed by a Public Notice in the Dina Thanthi on 13.04.2022. The Board of Taxation and Finance Committee met and discussed the necessity for and basis of the enhancements to property tax regime. A Resolution was thereafter passed on 17.05.2022 proposing the impugned changes, based upon, and leading to the Resolution of the Council dated 26.05.2022. 92. The trajectory of events are, in my view, acceptable and indicate application of mind by the Corporations. Undoubtedly, the events have been spearheaded by the Union, specifically the Central Finance Commission and consequently the State. However, the ultimate decision has been taken by the authorities of the Corporations. 93. In K.Lakshminarayanan and others (supra), this Court dismissing the Writ Petitions filed by those petitioners questioning the nominations made by the Central Government under Section 3(3) of the Government of Union Territories Act, 1963, refers to the division of Legislative and E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received. The disposal of the objections is merely by way of reiteration of the Council Resolution and Notification. 100. In my view, the procedure followed by the Corporations has been by the book and there has been strict compliance with the letter of the law. However, the spirit of the law is quite another matter and there has been a total lack of transparency in calling for objections. Moreover, the manner in which the objections have been dealt with is farcical. 101. It is my considered view that had the objections been dealt with in a serious manner as would behove the respondents, there would have been no necessity for the present Writ Petitions, since complete clarity could be provided by the Corporations even at that stage. 102. It pains the Court to state that the objections have been disposed frivolously without accordance of any weightage to the queries raised. All the queries pertain to issues that have been agitated in these Writ Petitions, being the basis of enhancement and the procedure to be followed in the levy and collection of taxes. It is incumbent upon the authorities to have provided due explanation to these queries and this Court deprecates the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 providing for methodology of assessment of property tax deems the annual value of lands and buildings to be the gross annual rent at which they may reasonably be expected to let from month to month or year to year, less enumerated deductions. 109. The proviso to Section 100(2) deems the gross annual rent in the case of the Government or Railway building or any building of a class not ordinarily let and of which the gross annual rate cannot be estimated, to be 6% of the total of the estimated market value of the land at the time of assessment after effecting the deductions provided for. 110. The buildings of the nature referred to in the proviso would constitute special type of buildings. The petitioners in W.P.Nos. 19914, 30863, 31188, 31190, 29247, 28654, 28660, 28663, 28037, 29896, 31774, 32208 and 32211 of 2022 comprise assessees of special buildings. Though, in the regime of taxation hitherto followed, the basis of taxation of special assessees was different, all the counters filed by the respondents are in general terms and no counters have been specifically filed in these Writ Petitions. No specific submissions have been made in regard to these buildings, even by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) the prayer was for a mandamus restraining the State from levying or collecting property tax on the basis of the notional value or plinth area contrary to the express statutory provisions under the 1919 Act. There was a proposal that was floated by the State that it would be the plinth area that would be adopted for the basis of levy and collection of property tax. The move was resisted by that petitioner, who pointed out that such assessment would not be an assessment based on rental value, but an assessment based upon the dimensions of the property itself. 117. In counter, the respondents stated, relying upon Section 100, that the basis was quite correct and should not be interfered with. A specific contention was also raised by the petitioner therein that the annual value of the buildings can only be arrived at with reference to the provisions of the Rent Control Act. 118. At this juncture, the petitioners would draw heed of this Court to the fact that the Rent Control Act has been repealed with effect from 22.02.2019 but would still urge that the principles of determination of fair rent under that Act could continue to be applied for other purposes including assessment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 919, and not with reference to the Rent Control Act. 8. The respondents state that, in any event, in actual practice the Corporation found that the rents fixed with reference to the fair rent formula are always very much higher than those assessed by the Corporation under the Madras City Municipal Corporation Act and that the fair rent formula leads to the tax structure being regressive in incidence as it does not take into account the nature of the structure or the building and the situations and the area in which it is located. 120. This Court framed four questions on the basis of the pleadings as follows: 1. Whether the plinth area basis could be adopted for determining the annual value of buildings? 2. Whether the second respondent has adopted the plinth area basis in making the general revision of assessments? 3. Whether the fair rent formula is to be uniformly applied by the second respondent in determining the annual value of all buildings in the City as urged by the petitioner? 4. Whether the reason as to why and how the revision of assessments has taken place in a particular case should be set out in the notices issued under rules 2-B, 3 and 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs was held to be the proper measure of determinable fair rent. 127. One of the learned counsel has made elaborate submissions on this aspect of the matter. The first decision relied upon is the judgment of the Hon ble Supreme Court in Raza Buland Sugar Co. Ltd. (supra), which dealt with the challenge to a proposal of taxation on the ground that the proper procedure as set out under the U.P. Municipalities Act, 1916 was not followed. The appeal ultimately came to be dismissed, the Court holding that it is only a mandatory provision that calls for strict compliance, whereas substantial compliance would be sufficient with regard to a directory provision. 128. In the present case, there is no doubt that the respondents have complied with the procedure for enhancement, though as noted in the paragraphs above, the entirety of the procedure followed appears to be rather farcical. However, there is no dispute on the position that the impugned/offending orders have been placed in public domain and objections called for and disposed. Thus the ratio of this judgment is of no avail to the petitioners. 129. In Bangalore Woollen, Cotton and Silk Mills Co. Ltd. that turns on a chal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to contribute to a poor rate according to their means but no specific method of assessment was laid down. The annual value of a person's property within the parish gradually became recognised as the most satisfactory basis and this was first given statutory approval in 1836 132. Pursuant to the passing of the Poor Relief Act, 1836 providing for a tax on the occupier of land and building, the Poor Rate Assessment and Collection Act came to be passed in 1869, which provided for the method of assessment and collection as before as per Poor Rate Act, 1801. The basis of the levy was understood to be the annual value of land and building as contradistinguished with the capital value of land and building. Thus, the basis was clearly, letting value and not capital value . 133. In 1869, the Valuation (Metropolis) Act came to be passed levying tax on the rateable value which meant gross value less deductions. Gross value mean the annual rent' which a tenant might reasonably be expected to pay. The Rating and Valuation Act, 1925 codified the enactments thus far, providing for uniformity and proper methodology in the levy and collection of property tax. 134. At paragr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty in the respondent Corporations. 140. Thus, assessments, once made, would continue to hold the field, till such time they are revised by the authorities in a manner known to law or at the instance of the parties, that is, the assessee or the Corporation. To clarify, the remittances of tax would have to be made every half year, on the basis of the last concluded assessment. 141. Technology has replaced the necessity for manual intervention in the process of assessment, though sufficient human resources must be deployed for updation of the website, intervention in the process of assessment where necessary, and resolving grievances of the taxpayers promptly. In my considered view, this is a step forward in the right direction. In the event of a dispute, statutory revision/appeal remedies are always available. 142. In Nagar Panchayat, Kurwai (supra), the challenge was to a fee levied for parking of motors, trucks and buses in the bus stand, owned and maintained by the Nagar Panchayat. The challenge was repelled, the Court reiterating recourse to statutory remedial measures, if the demand by the Panchayat was exorbitant, unreasonable or without any quid pro quo. In the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , changes the basis completely. 149. Interestingly, the Court had noticed that UAM is, in fact, a better method in comparison with the earlier method based on annual rent. However, they felt that a change in methodology must flow from the Statute and thus it is only if Section 63 of the NDMC Act were to be amended, that the changed methodology could be accepted. At paragraph 83, they conclude as follows: 83. Thus, we agree with the High Court that the impugned Bye-laws that provide UAM which is based on value of the property that on rental which the property is likely to fetch and are, therefore, foreign to the methodology provided in Section 63 of the NDMC Act. Such Bye-laws are, thus, ultra vires the provisions of the NDMC Act. They are in excess of the scope and ambit of powers vested in the NDMC Act under Section 388(1)(A)(9) of the NDMC Act. 150. In Municipal Corporation of Delhi (supra) the Hon ble Supreme Court considered the question as to whether after the 1988 amendment to the Delhi Rent Control Act, such enactment did not apply to a particular property either for the reason that the rent fixed was more than Rs.3,500/- per month, or the property had been ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be read along with Rent Restriction Act which provides for the determination of fair rent or standard rent. Reading the two Acts together the ratable value cannot be more than the fair or standard rent which can be fixed under the Rent Control Act. The exception to this rule is that whenever any Municipal Act itself provides the mode of determination of the annual letting value like the Central Bank of India case relating to Ahmedabad or contains a non obstante clause as in Ratnaprabha case then the determination of the annual letting value has to be according to the terms of the Municipal Act. 152. In the 1919 Act, though the prescription is for the determination for tax on ALV, there is no stipulation or restriction placed, upon the specific methodology for determination of ARV. Evidently, and this is in the interests of the petitioners as well as the respondents, the most scientific and practical methodology must be applied, of which two are fixation of rent under the Rent Control Act and based upon the BSR. 153. In Griha Yajamanjula Samkhya (supra), three Judges of the Hon ble Supreme Court decided the controversy relating to the extent of powers of the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustainable and the view taken by the High Court in this regard is unassailable. 157. Equally so, in the present case, though the annual letting value (ALV) is the basis for determination of the annual value of the property, there are no fetters placed on the authorities as to how such annual rent may be determined. Once the annual value is determined by application of a proper and appropriate method, the process of computation begins, based on the ARV determined. Notably while the details of computation are expressly stipulated, by setting out the specific percentages and ceiling limits of available deductions, in comparison, there is no method stipulated for the manner in which ARV is to be determined. 158. In Lokmanya Mills Barsi Ltd. , the challenge was to Rule 2-C framed by the Barsi Borough Municipality in terms of the Bombay Municipal Boroughs Act, 1925. There was a resolution passed by the Municipality in 1944 to enhance the levy of tax on the assessment of lands and buildings. The rental value was fixed at Rs.40/- for every 100 sq. ft. and after following the process of calling for objections and obtaining of necessary approvals, the Rules were made operative from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onclusion on this issue well: (i) Where the enactments concerned, stipulate a specific method for arriving at the value of the property, such method must be applied by the State. The statutory method stipulated is the ARV and this must form the basis of levy of property tax. (ii) Where the specific methodology for determination of the ARV is set out either in the Statute concerned or connected Rules and Regulations, the authorities are bound to follow the same. In the present case, there is no such stipulation, and hence the authorities are vested with the discretion to arrive at the proper methodology to determine ARV, such as BSR, application of the formula under the Rent Control Act or any other, for that matter. (iii) Such methodology as applied must be one which is normally accepted as being a reasonably accurate method for determination of annual value and must not present difficulties in the mode of computation involved. (iv) Any change in methodology, assuming that the governing enactment provides for the same, must be carried out in strict compliance with the statutory provisions and in compliance with the principles of natural justice. In the present case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the procedure that is perpetrated now. 172. Admittedly, there is no restriction on the methodology as to how ALV is to be determined and thus there is substantial play in the joints that has been afforded to the respondents in this regard. 173. This issue is thus held in favour of the respondents. IV. Whether the slab rate provided within the BSR is permissible. 174. The factorial that is provided under the impugned CR and GO contain a further break-up of a slab rate in respect of properties as follows: 175. In this connection, a comparison is made between the methodology under the impugned Government Order as well as in the National Capital of Delhi and in Bangalore, to show that no such slab rate is provided for in either jurisdiction. This argument does not appeal as every State/UT is at liberty to design the levy of tax to suit its tax base, and in the best manner that it conceives. 176. The petitioners, who have challenged this particular aspect of the matter, would argue that have been discriminated against, merely for ownership of a larger property. Ownership of properties that are larger in dimensions is not a sin and the slab imposed is punitiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voluntary organisation registered under the provisions of the Societies Registration Act, 1860. 184. The Bench referred to the majority decision in an earlier judgment in S.P.Gupta V. Union of India, (AIR 1982 SC 149) to the effect that any member of the public having sufficient interest, can maintain an action for such judicial redress for public injury arising from a breach of public duty or from violation of a provision of the constitution or law and seek enforcement of such duty or observance of the constitutional/legal provision. 185. Thus the entitlement of the organisation to enforce the rights of retirees was held to be and its locus standi were held to be unquestionable. These writ petitions are also held maintainable as the questions raised in these Writ Petitions also concern a challenge to a G.O. and CR that have far reaching public consequences. Conclusion 186. In conclusion, i) The amendments by way of impugned Government Order in G.O.Ms.No.53 dated 30.03.2022, Gazette Notification dated 11.04.2022 and Council Resolution (CR) Nos.63 of 2022 dated 30.05.2022 (Chennai) and 94 dated 26.05.2022 (Coimbatore) stand confirmed and challenges to the same ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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