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TMI Blog2015 (9) TMI 1743X X X X Extracts X X X X X X X X Extracts X X X X ..... ods of assessment of tax, suggested adoption of unit area system. The relevant extract from the Property Tax ULB Level Reform circulated by Government of India reads as under: "Valuation and Assessment: As has been spelt out in Section 11, the present system of assessment is not transparent and not capable of selfassessment. It rewards the unscrupulous and penalizes the honest tax payer. It is in this context that the Government of India had recommended adoption of a system which is formula based and capable of selfassessment. Diffferent cities have tried out alternative approaches to introduce a self-assessment system. These may be a capital value based system, a rental value based system or a unit area system based on multiple factors. Each State/ULB should decide which system is most suitable for it, given its local circumstances. (It must be mentioned that JNNURM does not mandate that there should be a change in the system of assessment since this may take a couple of years to finalize and implement. The first priority should be for achieving full coverage of assessments within the existing system and full recovery of taxes.) Whatever be the basis decided upon the system ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 87 is let or sub-let and amount of rent payable in respect thereof is less than the property tax, then the occupier shall be liable to pay the difference between the amount of the said property tax and the rent paid by him. xx xx 97. Property list - Save as otherwise provided in this Act, each Corporation shall cause a property list of all lands and buildings in the municipal area to be prepared in such form and manner and containing such particulars with respect to each land and building, as may be prescribed. xx xx 100. New Property list - It shall be at the discretion of the Corporation to prepare for the whole or any part of the municipality a new property list every year. xx xx 146. Amendment of property list - (1) The authority may at any time amend the property list by inserting the name of any person whose name ought to have been or ought to be inserted, or by inserting any property which ought to have been or ought to be inserted, or by altering the details of any property which has been erroneously valued or assessed through fraud, accident or mistake, whether on the part of the authority or of the assessee, or in the case of a tax payable by the owner or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... location; purpose for which it is used; its capacity for profitable use; quality of construction and other relevant factors. It is contended that none of these factors have been taken into consideration while issuing impugned notification dated 11.10.2013. 7. On the basis of the above provisions of the Statute and the rates fixed, learned counsel for the petitioner has argued that the provisions of the Act are discriminatory and arbitrary, as there are no guidelines framed in the Statute as to how the property tax has to be calculated and/or levied. It is also argued that Sections 87 and 97, as amended, are vague and give sweeping powers to the State Government and thus, it is a case of excessive delegated legislation. It is also argued that the Act and the notification issued do not contemplate any opportunity of hearing before fixing the rates nor the occupier has any Forum to dispute the levy of property tax. Therefore, the provisions of the Act violate the principles of natural justice. It is also argued that an appeal under Section 139 can be entertained only on deposit of the amount of tax, which is harsh and in fact, takes away the right of appeal of the occupier(s). It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al selfgovernment or village administration. xx xx 49. Taxes on lands and buildings." 12. The State Legislature is, thus, fully competent to legislate on the subject of municipal tax as it is reserved for the States as per subjects contained in List II. There is no Central Statute in respect of levy and collection of the property tax situated in the State. Therefore, only the State Legislature is competent Legislature to impose property tax in the State. A Division Bench judgment of this Court in a case reported as Model Town Residents Association v. State of Punjab etc., (2002) 3 PLR 88, has upheld the competence of the Legislature to impose house tax, it being in exercise of entry 49 of list II. In appeal against the said order, the Hon'ble Supreme Court in a judgment reported as Municipal Committee, Patiala v. Model Town Residents Association & others, (2007) 8 SCC 669 while upholding the said part of the order, set aside the order passed by this court. The Court held that the powers of the State Legislature to classify the buildings between the self-occupied residential houses and self-occupied commercial houses under the Punjab Municipal Act, 1911 is legal and justified wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the object sought to be achieved. ....... 16. In the present case, the High Court has further held that Section 3(8aa) was ultra vires and unconstitutional for want of guidelines which gives wide powers to the officers in the matter of fixing annual value. This finding of the High Court is equally erroneous. ............ Therefore, leeway has to be given to the A.O. for arriving at the market value of the land and the cost of construction by applying apposite principles under the Land Acquisition Act qua the land and by proceeding to arrive at the cost of construction of the houses by invoking the instances of registration on transfer of houses under the Registration Act. Therefore, in our view, the High Court had erred in striking down Section 3(8aa). xx xx xx" In concurring, but separate judgment, it was observed to the following effect: "27. It is so well settled and needs no restatement at our hands that the legislature is supreme in its own sphere under the Constitution subject to the limitations provided for in the Constitution itself. It is for the legislature to decide as to when and in what respect and of what subject matter the laws are to be made. It is for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no guidelines have been framed in the statute as to how the property tax is to be calculated and levied, is not tenable. Section 87(1)(a) of the Act gives sufficient guidelines which have to be taken into consideration by the State Government before notifying the property tax such as the area in which the building is situated i.e. size of the plot and the location i.e. where it is located. It may include a locality within a city or whether the locality within the city is divergent for the purposes of levy of property tax; use of property where it is residential, commercial, institutional etc., the capacity for profitable use i.e., whether it is self occupied, residential property or a commercial property and use for business, quality of construction etc. If in the light of such test, the notification dated 11.10.2013 is examined, we find that the State Government has taken into consideration the factors enumerated in Section 87(1)(a) of the Act. Firstly the area and location in which the building is situated has been taken into consideration when Faridabad and Gurgaon have been classified as A1 Cities, attracting higher property tax. The cities in Haryana do not have wide spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue or give sweeping powers to the State Government. The conferment of power to notify the rate of tax cannot be said to be arbitrary. It falls within the executive domain of the State Government in terms of the Statue. 18. The argument that the notification fixing the rate of tax does not provide any opportunity of hearing nor there is any Forum for the owner or occupier to dispute the levy of the property tax, is not tenable. Since the levy of property tax is statutory, the statute has to provide for the opportunity of hearing or Forum to dispute the levy of property tax. Under the un-amended provisions, there was a wide discretion available with the executive authorities to assess the property tax by taking into consideration the factors, which were subjective and variable. The State legislature has plugged the loopholes taking out such discretion by framing a uniform rate of tax, which can be paid by the owners themselves. It is a facility to pay property tax on a pre-determined rate. Therefore, the same cannot be challenged on the ground that no opportunity of hearing was provided nor there is any Forum to challenge the levy of property tax. In taxing statutes, the requirement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nguage of a taxing provision is plain, the Court cannot concern itself with the intention of the legislature. Hence, in our opinion the High Court erred in its approach of trying to find out the intention of the legislature in enacting the impugned amendment to the Stamp Act. xx xx xx 46. In our opinion, there is one and only one ground for declaring an Act of the legislature (or a provision in the Act) to be invalid, and that is if it clearly violates some provision of the Constitution in so evident a manner as to leave no manner of doubt. This violation can, of course, be in different ways, e.g. if a State legislature makes a law which only Parliament can make under List-I to the Seventh Schedule, in which case it will violate Article 246(1) of the Constitution, or the law violates some specific provision of the Constitution (other than the directive principles). But before declaring the statute to be unconstitutional, the Court must be absolutely sure that there can be no manner of doubt that it violates a provision of the Constitution. If two views are possible, one making the statute constitutional and the other making it unconstitutional, the former view must always be pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the two Acts have already been upheld by the Division Bench while referring the case to us. The aforementioned observations, in our considered view, throw sufficient light, for holding that the assessee have to accept the conditions laid down in the provision pertaining to appeals if they want to take advantage of the same and that the conditions imposed therein cannot be described to be onerous. Moreover, the words "undue hardship" cannot, in our considered view, be equated with the words "unable to pay" as have been used in the statute. xx xx xx 23. ..................The Apex Court ( In Vijay Parkash D. Mehta and Jawahar D. Mehta vs. Collector of Customs (Preventive) Bombay, AIR 1988 SC 2010) held that the aforesaid provision provides conditional right of appeal and that it was obligatory on the appellant to deposit the dues or penalty pending appeal, failing which the Tribunal was competent to reject the appeal. It was further held that the proviso did empower the Appellate Authority to dispense with such deposit in case of undue hardship. The right to appeal, it was observed by the apex Court was neither an absolute right nor an ingredient of natural justice, the principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sory. The State Legislature is competent to legislate on the subject of the property tax in terms of Entry 49 List II. Therefore, merely because the legislation as enacted is not exactly the same as suggested by the Central Government, the State Act cannot be said to be illegal. 22. Another argument which was raised needs to be discussed at this stage. The leaned counsel for the petitioner has referred to Clause 4(i) of the notification dated 11.10.2013, which reads as under:- "4. General (i) The new system of taxation and rates shall be applicable from the financial year 2010-11 onwards with the stipulation that for the period prior to the date of publication of this notification, the property owners shall have the option to pay as per the new or old policy, whichever is opted by them." 23. We find that the State legislature is competent to make the provisions of law as applicable retrospectively. In the present case, Section 21 of the amending Act, validates the notification issued on 30.9.2003 and 21.6.2012. Therefore, it is not a retrospective imposition of tax, but validating of the action taken earlier i.e. the notification dated 30.9.2003 and 21.6.2012. The notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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