All the buildings in which the business is being carried on are situated within the municipal limits of Akola town and are, therefore, governed by the H.R.C. Order which controls and fixes the rent. Law as to how to determine the annual letting value on self occupied urban houses governed by the Rent Control legislation seems to be fairly settled. The last spoken word on the subject can be located in the case of Dr. Balbir Singh v. M/s. M.C.D., . After taking review of the case of Devan Daulat Rai Kapoor v. New Delhi Municipal Committee, the legal position has been summed up thus:
"The test therefore is not what is the standard rent of the building but what is the rent which the owner reasonably expects to receive from a hypothetical tenant and such reasonable expectation can in no event exceed the standard rent of the building determinable in accordance with the principles laid down in the Rent Act, though it may in a given case be lower than such standard rent."
Bombay High Court
Khadya Peya Vikreta Sangh And Ors. vs Municipal Council on 6 December, 1988
Equivalent citations: 1989 (2) BomCR 39, 1989 MhLJ 291
Bench: V Mohta, W Sambre
1. Khadya Peya Vikreta Sangh, Akola, an association of persons carrying on business of running lodging and boarding houses in the town of Akola and its 22 members have by this petition challenged the new mode of determination of the rateable value of the buildings in which the business in carried on for the levy of the consolidation property tax by the Municipal Council, Akola, the sole respondent. The petitioners Nos. 2 to 14 who are carrying on the business in rental buildings have also challenged the imposition of the said levy upon them.
2. Until September/October 1985 the said tax was being levied only on the owners of the buildings and that too after determining the rateable value of the building on the basis of actual rent. The respondent drastically changed the old measure of determination of the rateable value. Room rent charged from the guests in the lodging houses in the town was taken to be the new measure. Average room rent was determined at Rs. 8/- per room per lodge, average occupancy was determined at 50 per cent and so calculated, annual letting value for all lodges in the town was determined at the rate of Rs. 4/- per day per room. Liability to pay tax in respect of the tenanted premises was fixed both on the landlord and the tenant. Owner was made liable as before to pay the tax determined upon the rateable value based on actual rent and the tenant was made liable to pay on the basis of rateable value based on the average income of the room rent as indicated above after deducting the rent paid by the tenant.
3. Two contentions are raised in this petition.
(i) Fixing the primary responsibility for the tax upon the occupier is illegal.
(ii) New measure of assessment of the rateable value of the self occupied buildings whose rents are controlled by the C.P. and Berar Letting of Houses and Rent Control Order, 1949 [The H.R.C. Order] is wholly unwarranted.
The respondent has raised a preliminary objection to the maintainability of the petition on the ground of pendency of the appeals filed by the petitioners Nos. 2 to 23 against the bills.
4. We will first deal with the preliminary objection in which we see no substance. In the first place, existence of an alternate remedy is no bar to entertain a writ petition. All depends upon a hoast of factors including the nature and stage of the challenge. Pure questions of law of general importance affecting a large number of persons arise in this petition. Appeals have been filed after the filing of this petition, perhaps because we refused to grant any interim orders. When those appeals came up for hearing on 26th June, 1986 before the Judicial Magistrate, Akola, the respondent applied for stay of those proceedings by making a regular application (a copy of which is presented before us), contending that the Magistrate should not hear the matters since the mode of determining the rental value and the assessment is challenged in this petition. Period of more than 32 months has elapsed after the filing of the petition. Against this backdrop we do not think that the respondent has any justification to raise a preliminary point. The preliminary objection is , therefore, overruled.
5. Now the merits. The scheme of the Maharashtra Municipalities Act, 1965 (The Act) relevant for decision of the points may be noticed first Section 2(27) defines the terms "occupier" and section 2(32) defines the term "owner". Chapter IX of the Act deals with the subject of 'Municipal Taxation' Section 105 deals with the imposition of compulsory taxes. The consolidated property tax on lands or buildings or both is one such tax "based on their rateable value as determined in accordance with section 114" (section 105(1) (a)). Section 114 lays down the mode of determination of rateable value and reads thus:
"114 (1) In order to fix the rateable value of any building or land assessable to a property tax, there shall be deducted from the amount of rent for which such building or land might reasonably be expected to let, or for which it is actually let, from year to year, whichever is greater, a sum equal to ten per centum of the said annual rent, and the said deduction shall be in lieu of all allowances for repairs or on any other account whatever.
(2) The value of any machinery contained or situate in or upon any building or land shall not be included in the rateable value of such building or land."
Section 125 specifies the persons on whom the primary responsibility to pay the property tax rests. Section 125(1) reads thus:---
"125(1). Subject to provisions of sub-section (2) property taxes assessed upon any premises shall be primarily leviable as follows, namely---
(a) if the premises are held immediately from the Government or from the Council, from the actual occupier thereof:
Provided that, property taxes due in respect of buildings vesting in the Government and occupied by servants of the Government or other persons on payment of rent shall be leviable primarily from the Government;
(b) if the premises are not so held---
(i) from the lessor if the premises are let;
(ii) from the superior lessor if the premises are sub-let;
(iii) from the person in whom the right to let the premises vests if they are unlet".
Section 126 specifies circumstances as to when even the occupier may be held liable for payment of property taxes. It reads thus:
"126. (1) If the sum due on account of any property tax remains unpaid after a bill for the same has been duly served upon the person primarily liable for the payment thereof and the said person be not the occupier for the time being of the premises in respect of which the tax is due, the Chief Officer may serve a bill for the amount upon the occupier of the said premises or, if there are two or more occupiers thereof, may serve a bill upon each of them for such portion of the sum due as bears to the whole amount due to the same ratio which the rent paid by such occupier bears to the aggregate amount of rent paid by them both or all in respect of the said premises.
(2) If the occupier or any of the occupiers fails within thirty days from the service of any such bill to pay the amount therein claimed, the said amount may be recovered from him.
(3) No arrear of a property tax shall be recovered from any occupier under this section which has remained due for more than one year, or which is due on account of any period for which the occupier is not in occupation of the premises on which the tax is assessed.
(4) If any sum is paid by, or recovered from, an occupier under this section, he shall be entitled to credit thereof in account with the person primarily liable for the payment of the same."
Section 129 makes it mandatory upon the owner of the property to serve a notice of transfer on the Municipality. Indeed, not giving a notice is made an offence. Section 131 mentions that in the absence of such a notice of transfer the liability to pay the tax even for the period subsequent to the transfer, continues upon the original holder.
6. It would thus be seen that primary liability to pay the property tax is of the owner as per section 125(1)(b)(i) and it is only in certain contingencies specified in section 126(1) that a bill for the tax can be served upon the occupier. In the instant case, admittedly, no such contingency existed. Thus, the bills issued against the petitioners Nos. 2 to 14 cannot stand legal scrutiny and have to be quashed and set aside on that solitary ground.
7. All the buildings in which the business is being carried on are situated within the municipal limits of Akola town and are, therefore, governed by the H.R.C. Order which controls and fixes the rent. Law as to how to determine the annual letting value on self occupied urban houses governed by the Rent Control legislation seems to be fairly settled. The last spoken word on the subject can be located in the case of Dr. Balbir Singh v. M/s. M.C.D., . After taking review of the case of Devan Daulat Rai Kapoor v. New Delhi Municipal Committee, the legal position has been summed up thus:
"The test therefore is not what is the standard rent of the building but what is the rent which the owner reasonably expects to receive from a hypothetical tenant and such reasonable expectation can in no event exceed the standard rent of the building determinable in accordance with the principles laid down in the Rent Act, though it may in a given case be lower than such standard rent."
The aforesaid ration was sought to be distinguished by the learned Counsel for the respondent on the basis of the difference between the text of section 116 of the Delhi Municipal Corporation Act under which the said case arose and section 114 of the Act. Sole emphasis was on the presence of the words "or for which it is actually let, from year to year whichever is greater "insection 114 of the Act. Undoubtedly, the two provisions are not similarly worded but we are unable to see how the difference noted above will have any serious impact on the aspect of the correct measure for determining the annual letting value of a self occupied building from which no actual rent is received. Inevitably the measure will have to be the rent received from a hypothetical tenant. In such cases of self occupied buildings governed by the H.R.C. Order, the rateable value will have to be held to be limited by the upper limit of fair rent fixed under the H.R.C. Order. Thus, annual letting value of such buildings can not be determined without keeping in view the outer limit of the rent which a landlord of a house can legally recover from a hypothetical tenant. Undisputed position on record is that this aspect of the matter has not been considered in the process of assessment of letting value. We may notice that Chapter II of the H.R.C. Order contains a scheme of determination of fair rent which depends upon several factors including the age of the building, cut off date being 1st April, 1940.
8. Room rent charged from guests by a lodger is taken by the respondent to be the measure of assessing the letting value. The respondent has made no secret of the fact that assessment has been made on the "unit and profit" basis. Now it is a matter of common knowledge that room rent of a lodge includes charges for several facilities like furnishing, services etc. and the room rent does not necessary depend on the letting value of the building as such. Thus, the room rent factor cannot determine the annual letting value of the building for the purposes of assessment of the consolidated property tax under section 114 of the Act. Moreover, the respondent has made no distinction between a lodge and a lodge. Average rate of Rs. 8/- per room is taken to be the basis for every lodge in the town irrespective of the situation of the building, the time of its construction and the standard of the facilities and services provided. Thus in the process of making assessment unequals have been treated as equals for no justifiable reasons. For determination of rateable value for the purposes of assessing the property tax on self occupied building, what is relevant is the rateable value of that building based on rent from a hypothetical tenant which in cases where the H.R.C. Order applies cannot exceed the maximum provided thereunder. Thus, looked from any angle, the assessments made by the respondent cannot be sustained at all and have to be quashed and set aside.
9. The respondent has relied upon following two decisions to support the assessment :
(i) The Secretary, Mahad Municipality v. The Divisional Controller, Bombay State Road Transport Corporation , 63 Bom.L.R. 174.
In both these decisions different formulas for assessment of annual letting value have been considered. None of those cases touch the points involved.
10. To conclude, the impugned assessments and so also the bills based thereupon are quashed and set aside. The petition is allowed and Rule made absolute in the above terms with no order as to costs.
11. We are informed that the taxes are deposited with the respondent as required under section 170 of the Act since appeals under section 169 cannot be entertained without making those deposits. We direct the respondent to refund the excess amount within a period of three months from today failing which the refundable amount shall carry interest at 12 per cent annum from that date.
No comments:
Post a Comment