Maharashtra Municipal Corporations Act (1949), S.3 - Bombay Village Panchayats Act (1958), S.4 - Constitution of India, Arts.243Q(2), 243G - Property tax - Levy of - Permissibility - Suit area, admittedly, was part of Village "A" - Requisite procedure prescribed under the Act 1949, and Act 1958 for purpose of inclusion of village area with Corporation limits - Not complied with by Corporation - In view of such facts, Corporation would not be empowered to impose property tax on the property situated in suit area - Mere inclusion of suit land/area in development plan of concerned Municipal Corporation - Would be of no consequences.
S.3 of Act 1949 provides that limits of larger urban area are required to be notified and published in official gazette in tune with Art.243 Q and particularly cl.2, of Constitution of India. In the present case it was not disputed that suit land was forming part of village 'A'. But there was no Government notification issued to include suit land within limits of Municipal Corporation, in terms of S.3. Further, for inclusion of any village from village limits in Corporation is also to be answered in tune with S.4(2) of Bombay Village Panchayat Act, 1958. However record shows that there was no declaration as contemplated u/s.4 that suit land was ceased to be a village. Under such circumstances, Corporation would not get right to impose tax. Mere inclusion of suit land in development plan of Municipal Corporation, would be of no consequences. Nor fact that appellant had made some payment to corporation in past or had applied for mandatory permission to Corporation, would operate as estoppel to question legality of demand notice by Corporation.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY (AURANGABAD BENCH)
K.U. CHANDIWAL, J.
Gramaudyogik Shikshan Mandal Vs. The Municipal Corporation, Aurangabad
First Appeal No. 1071 of 2013,Civil Application No. 14046 of 2013,Civil Application No. 5275 of 2013,Civil Application No. 12 of 2014
26th February, 2014
Citation: 2014(5) ALL MR 801
2. Record and proceeding received. Heard finally.
3. The appellant (Original plaintiff) feels aggrieved by the judgment and decree passed by the learned C.J.S.D. (Corporation Court) Aurangabad in Special Civil Suit No. 19 of 2010, dismissing the appellant's suit.
RELEVANT FACTS
4. (a) The appellant is educational charitable trust, imparting technical education and training situate in land survey No. 72 of village Satara, Tq. and District Aurangabad. A suit for declaration and perpetual injunction and for recovery of Rs.5,79,270/- was filed against the Municipal Corporation, Aurangabad. The suit was restricted to levy of property tax concerning library building meant for educational purpose. The plaintiff canvased, the property does not come within limits of Aurangabad Municipal Corporation, and without having authority it claimed Rs.21,92,937/- as an amount of tax on library building. An amount of Rs.5,79,270/- has been paid by the appellant under duress and urged for a decree that the bill demand dated 19.9.2008 was illegal.
(b) In the suit, respondent Corporation appeared by filing written statement and justified its claim. Learned C.J.S.D. framed issues. Parties adduced evidence and on 22.3.2013, the suit was dismissed. Hence this appeal.
5. The short point in the present appeal is whether the respondent Municipal Corporation is justified in claiming tax on building erected in land Gat No. 72 of village Satara, which is outside the limits of Aurangabad Municipal Corporation.
6. The appellant has relied upon the judgment of Division Bench of this court in writ petition No. 1234 of 2010 - Vyankatesh Yadavrao Shinde vs. State of Maharashtra - 2010 (4) Mh.L.J. 338 : [2010(3) ALL MR 84]. Mr. Shah, learned counsel for the appellant says, the finding of the Division Bench in writ petition No. 1234 of 2010 has answered the core issue, subject in the suit and appeal. He reiterates, since Gat No.72 is not forming part of Municipal Corporation area, there was no justification on the part of Municipal Corporation (respondent) to levy tax. According to him, any application seeking municipal permission for construction of building or paying tax in past has not estopped the appellant from challenging authority of Corporation to levy tax. There is no estoppal against the statute as indicated in 1995 (5) SCC 440-Bhagwat Bhagwantrao vs. State of Punjab and others. At the most, the Corporation can impose development charges under Section 124 of Municipal Corporation Act. The development charges and property charges are different.
7. Mr. Patil, appearing for the Corporation says that urban development department has sanctioned development plan of Aurangabad city, which includes land Gat No.72. The appellant has got construction permission sanctioned from Municipal Corporation. The land Gat No. 72 is in Corporation since inception. Taxes are levied for providing services. Government of Maharashtra has by its letter dated 17.4.2010 informed the Municipal Corporation its intention to include land survey Nos. 28 to 44 and 46 of 75 within limits of Aurangabad Municipal Corporation, in pursuance to observations in writ petition No. 1234 of 2010 and consequently has asked the Municipal Corporation to send proposal for getting necessary sanction and hence a meeting dated 4.9.2010 was conveyed. The resolution dated 4.9.2010 recorded by the Municipal Corporation to include Gat no. 28 to 44 and Gat No. 46 to 75 in Municipal Corporation area is not given effect to, as subject No.68 dealing with this aspect has been kept abeyance by the Municipal Corporation, Aurangabad.
8. The learned C.J.S.D. based on the pleadings of the parties formulated following issues and accordingly recorded findings.
| ISSUES | FINDINGS | |
| 1. | Whether the plaintiff proved that survey No.72 is situated outside the limits of Aurangabad Municipal Corporation? | ...No |
| 2. | Whether the plaintiff proves that the demand bill dated 19.9.2008 bearing No. 37589 issued by the defendant Municipal Corporation is null and void? | ...No |
| 2A. | Whether plaintiff proves that suit property is exempted from payment of property tax as alleged? | ...No |
| 3. | Whether the plaintiff proves that the defendant Municipal Corporation illegally recovered Rs.5,79,270/- from them as alleged | ...No |
| 4. | Whether the plaintiff is entitled to relief of declaration as prayed? | ...No |
| 5. | Whether the plaintiff is entitled to relief of perpetual injunction as prayed? | ...No |
| 6. | Whether the plaintiff is entitled to recover Rs.579,270/- from the defendant Corporation as prayed? | ...No |
| 7. | What order or decree? | Suit is dismissed with costs. |
9. The controversy involves and rests to legal steps expected by authorities whether, taken or not. Hence, factual scenario need not be dwelt upon.
10. Section 3 of Municipal Corporation Act (formerly Bombay Provincial Municipal Corporation Act 1949) provides for specification of larger urban area and constitution of Corporation. Section 3 of the said Act reads as under:-
3. Specification of larger urban areas and constitution of Corporation.
(1) The Corporation for every City constituted under this Act existing on the date of coming into force of the Maharashtra Municipal Corporations and Municipal Councils (Amendment) Act, 1994, specified as a larger urban area in the notification issued in respect thereof under clause (2) of Article 243-Q of the Constitution of India, shall be deemed to be duly constituted Municipal Corporation for the larger urban area so specified forming a City, known by the name "The Municipal Corporation of the City of ......."
(2) Save as provided in sub-section (1), the State Government may, having regard to the factors mentioned in clause (2) of Article 243-Q of the Constitution of India, specify by notification in the Official Gazette, and urban area with a population of not less than three lakhs as a larger urban area.
(2A) Every larger urban area so specified by the State Government under sub-section (2) shall form a city and there shall be a Municipal Corporation for such larger urban area known by the name of the Municipal Corporation of the city of .....'
(3) (a) subject to the provisions of sub-section (2), the State Government may also from time to time after consultation with the Corporation by notification in the Official Gazette, alter the limits specified for any larger urban area under sub-section (1) or sub-section (2) so as to include therein, or to exclude therefrom, such area as is specified in the notification.
(b) Where any area is included within the limits of the larger urban area under clause (a) any appointment, notifications, notices, taxes, orders, schemes, licences, permissions, rules, by-laws or forms made, issued, imposed or granted under this Act or any other law, which are for the time being in force in the larger urban area, shall, notwithstanding anything contained in any other law for the time being in force but save as otherwise provided in section 129A or any other provision of this Act, apply to and be in force in the additional area also from the date that area is included in the larger urban area.
(4) The power to issue a notification under this section shall be subject to the condition of previous publication. "
11. It is explicit that limits of larger urban area are required to be notified and published in official gazette in tune with Article 243Q and particularly clause 2 of the Constitution of India. Article 243Q deals with constitution of Municipalities which reads as under:-
"243Q. Constitution of Municipalities.-
(1) There shall be constituted in every State,-
(a) a Nagar Panchayat (by whatever name called) for a transitional area, that is to say, an area in transition from a rural area to an urban area;
(b) a Municipal Council for a smaller urban area; and
(c) a Municipal Corporation for a larger urban area, in accordance with the provisions of this Part:
Provided that a Municipality under this clause may not be constituted in such urban area or part thereof as the Governor may, having regard to the size of the area and the municipal services being provided or proposed to be provided by an industrial establishment in that area and such other factors as he may deem fit, by public notification, specify to be an industrial township.
(2) In this article, "a transitional area", "a smaller urban area" or "a larger urban area" means such area as the Governor may, having regard to the population of the area, the density of the population therein, the revenue generated for local administration, the percentage of employment in non-agricultural activities, the economic importance or such other factors as he may deem fit, specify by public notification for the purposes of this Part."
12. There is no controversy as such village Satara, particularly land survey No.72 was forming part of village Satara. The inclusion of land in development plan of Aurangabad Municipal Corporation dated 15.10.1991 is sought to be put in force by Municipal Corporation. However, the legal position cannot be squeezed, as inclusion of development of area under development plan and in larger area of Municipal Corporation have different criteria. They travel in different legal concepts. Section 3 referred to above, will have to be followed scrupulously which from available record is not yet followed. It is not that Corporation or the state is powerless to do so. However, no steps are taken as yet by the Municipal Corporation though as referred earlier, Government of Maharashtra has by virtue of direction in writ petition indicated on 17.4.2010 to incorporate survey Nos. 28 to 44 and 46 to 75 within limits of Aurangabad Municipal Corporation, of course, by observance of Law. In that exercise, State desired, Municipal Corporation to send resolution and thereby to ensure inviting objections for such purpose. Corporation has kept resolution No. 68 dated 4.9.2010 in abeyance. Even if such resolution is passed, no objections are invited as yet. Thus, it is viewed that as of today, there is no government notification to include the above referred lands within limits of Aurangabad Municipal Corporation.
13. The Division Bench has also discussed that even if Aurangabad Municipal Corporation has treated area covered in survey Nos. 28 to 44 and 46 to 75 for village Satara to be part of Municipal Corporation limits, however, placing reliance on development plan, cannot be a answer to address the controversy. Division Bench has observed in para 4 "Whether particular area is part of Corporation limits or otherwise, can be answered only on the basis of the Notification issued by the State Government in that behalf. It is admitted position that there is no notification available either with the Corporation or with the State Government which would suggest that Gat Nos. 28 to 44 and 46 to 75 of village Satara were part of then Municipal Council, Aurangabad or for that matter Municipal Corporation, Aurangabad. The limits of then Municipal Council, Aurangabad are to be deemed to be included in the limits of Aurangabad Municipal Corporation being part of Schedule-I of the Notification. It is not in dispute that Satara village and more particularly Gat Nos. 28 to 44 and 46 to 75 situate at village Satara are not mentioned in Schedule-II of the said notification."
14. Division Bench has indicated that the powers of the Government for issuing notification are not taken away. The State Government has to take appropriate measures to issue notification to address the anomaly. It is curious, inspite of directions of Division Bench, for last 3-4 years, no steps are taken by the Authorities.
15. Mr. Patil, learned counsel for the Corporation is unable to point out government notification in terms of section 3 of Maharashtra Municipal Corporation Act. On the contrary, the very purport of Resolution by subject No.68 dated 24.9.2010 suggest there is no notification to that effect from the Government of Maharashtra.
16. For inclusion of any village from village limits in Corporation, is again to be answered in tune with Section 4(2) of Bombay Village Panchayat Act 1958. Section 4 deals with declaration of village conceived as under:-
4. Declaration of Village:- (1) l[Every village specified in the notification issued under clause (g) of article 243 of the Constitution of India shall be known by the name of that village specified in that notification.]
Provided that, where a group of revenue village or hamlets or other such administrative unit or part thereof is [specified in that notification] to be a village, the village shall be known by the name of the revenue Village, hamlet or as the case may be, administrative unit or part thereof, having the largest population.
(2) Where the circumstances so require to include or exclude any local area from the local area. of a village or to alter the limits of a village or that a local area shall cease to be a village, then the notification issued in the like manner after consultation with the Standing Committee and the Panchayat concerned,' at any time, may provide to-
(a) include within, or exclude "from any village, any local area or otherwise alter the limits of any village, or
(b) declare that any local area shall cease to be a village; and thereupon the local area shall be so included or excluded, or the limits of the village so altered, or, as the case may be, the local area shall cease to be a village:"
Whereas circumstances required to include or exclude any local area from local area of village or to alter limits of village or that local area shall ceased to be a village then notification has to be issued in the like manner after consultation with standing committee and the Gram Sabha of the Panchayat concerned at any time, it may provide (a) include within, or exclude "from any village, any local area or otherwise alter the limits of any village, or (b) declare that any local area shall cease to be a village and thereupon the local area shall be so included or excluded, or the limits of the village so altered, or, as the case may be, the local area shall cease to be a village. No such procedure seems to be adhered, at least no document is flashed, to tune with above compliance.
17. The effect of section 4 of Bombay Village Panchayat Act also cannot be taken away relating to a legal rights flowing in favour of tax payer i.e. the appellant.
18. Thus, the source of power of Municipal Corporation will necessarily flow by virtue of Section 3(b) of the above referred Corporation Act. Compliance of Section 4 of Bombay Village Panchayat Act also has to be established by Respondents. Until the area is notified as such, the Corporation shall not get right or authority to impose tax. It is more than clear Government's powers are not eclipsed, however, there should be a procedure to be followed under the statute. This is more so, the amended provisions of Article 243G having come in force from 1.6.1993 (74th amendment) alongwith 73rd amendment, warrants such compliance.
19. Article 243G of the Constitution of India contemplates as under:-
"243G. Powers, authority and responsibilities of Panchayats".-
Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow the Panchayats with such powers and authority as may be necessary to enable them to function as institutions of self-government and such law may contain provisions for the devolution of powers and responsibilities upon Panchayats at the appropriate level, subject to such conditions as may be specified therein, with respect to-
(a) the preparation of plans for economic development and social justice;
(b) the implementation of schemes for economic development and social justice as may be entrusted to them including those in relation to the matters listed in the Eleventh Schedule."
20. Constitution of India mandate that no tax shall be levied or collected except by authority of law. Hon'ble Supreme Court has observed "tax is undoubtedly in the nature of compulsory extraction of money by public authority for public purpose the payment which is acceptance by law. AIR 1954 SC 388 : [2009 ALL SCR (O.C.C.) 101]- Ratilal Gandhi vs. State of Bombay.
21. The Maharashtra Regional Town Planning Act 1966 deals with provisions or planning of development and use of land to make better provision for preparation of development plan, particularly to provide for creation of new towns. The M.R.T.P. Act does not provide conferring power on development authority to enable to levy taxes. Sanction of legislature to create development authority was with a view to establish new town and have authorized such development authority to acquire whole transferred land situate within area of jurisdiction of new town or site to be established.
22. The powers conferred upon the development authority are under Section 160 of M.R.T.P. Act, which is reproduced as under:-
"160. Dissolution of Regional Planning Board, Special Planning Authority and New Town Development Authority:-
(1) Where the State Government is satisfied that the purposes for which any Regional Board, Special Planning Authority or Development Authority was established under this Act have been substantially achieved so as to render the continued existence of the Board or Authority in the opinion of the State Government unnecessary [or where the State Government is of opinion that the work of acquiring, developing and disposing of land in the area of any new town should be entrusted to any corporation, company or subsidiary company referred to in sub-section (3A) of section 113;] the State Government may, by notification in the Official Gazette, declare that the Regional Board, Special Planning Authority or Development Authority [constituted under sub-section (2) of section 113] shall be dissolved with effect from such date as may be specified in the notification [or that the Development Authority declared under sub-section (3A) of section 113 shall cease to function in relation to such area of the new town from such date as may be specified in the notification]; and such Board or Authority shall be deemed to be dissolved accordingly [or as the case may be, shall be deemed to cease to function in relation to such area of such new town].
(2) From the said date-
(a) all properties, funds and dues which are vested in, or realizable by the Regional Board, Special Planning Authority or Development Authority [for the purposes of the Act] shall vest in, or be realizable, by the State Government;
(b) all liabilities which are enforceable against the Regional Board, Special Planning Authority or Development Authority shall be enforceable against the State Government; and
(c) for the purpose of carrying out any development which has not been fully carried out by the Board or Authority and for the purpose of realizing properties, funds and dues referred to in clause (a), the functions of the Regional Board, Special Planning Authority, or Development Authority shall be discharged by the State Government.
[(3) Where a Development Authority constituted under sub-section (2) of section 113 for the area of any new town in dissolved, and a corporation or company in relation to that area is declared to be New Town Development Authority for that area under sub-section (3A) of section 113, then the provisions of sub-section (2) of this section shall consequent upon such dissolution apply with this modification that as if for the words "State Government" wherever, they occur, the words, brackets, figures and letter "Development Authority declared under sub-section (3A) section 113" were substituted.]
Section 114(3) of M.R.T.P. Act reads as under:-
"114. (3) For the avoidance of doubt, it is hereby declared that the provision of sub section (1) with respect to the powers of Development Authorities relate only to their capacity as statutory corporation; and nothing in this section shall be construed as authorizing the disregard by a Development Authority of any enactment or rule of law."
23. It is indeed more than clear that the development authority has not been conferred with right to levy tax and make recovery thereof. The development authority at the most can recover development charges in terms of Section 124 of M.R.T.P. Act, which is indeed not inconsistent with the levy structure of taxes.
24. The appellant applying for mandatory permission to Municipal Corporation or making some payment in past will not operate as estoppel to question legality of demand notice. There was no conferment of power upon Municipal Corporation for inclusion of these survey numbers within limits of Municipal Corporation, even if it was shown in the development plan. The development plan is naturally prospective and for future achievements. The Corporation cannot be expected to act arbitrary and in whims to pressurize citizen to bow to its unethical demands and shrug off its legal obligation.
25. There is no controversy that Municipal Corporation is public body and has to do various functions to public at large, including maintain employees for discharge of various functions towards public. Taxes are for providing services, however, that does not mean that without following requisite procedure under law without inclusion of a particular survey number within Corporation limit, the Corporation is permitted to levy tax.
26. It was pointed out by the appellant that the Municipal Corporation has not provided basic amenities in the village. There are no roads, no sewage/drainage line, no water supply. Though this is not the stage to deal with these submissions, still Corporation is certainly under an obligation to provide basic amenities since it has recovered development charges. The Corporation has no licence to plunder. There should not be institutional malaise in implementing regulation and good governance. Corporation's inability thus is associated with inhibition of powers, for want of inclusion of properties in its limit.
27. In the fact situation, the question formulated herein before will have to be answered in favour of the appellant that land Gat No.72 of village Satara is outside limits of Aurangabad Municipal Corporation.
28. The appeal is partly allowed. The demand notice dated 19.9.2008, bearing No. 37589, issued by Municipal Corporation is held illegal. Appellant's amount of Rs.5,79,270/- lying with Municipal Corporation will be subject to accounts. No costs.
29. Civil application Nos. 5275 of 2013, 14046 of 2013 and 12 of 2014 disposed of.
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