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PETITIONER: BASAPPA RUDRAPPA BETGERI & ORS.

       Vs.

RESPONDENT: HUBLI DHARWAR MUNCIPAL CORPORATION

DATE OF JUDGMENT27/04/1971

BENCH: BHARGAVA, VISHISHTHA BENCH: BHARGAVA, VISHISHTHA SHELAT, J.M. DUA, I.D.

CITATION:  1971 AIR 1427            1971 SCR  535

ACT: Bombay  Municipal  Boroughs Act, 1925, ss.  73,  85-Levy  of house  tax by municipality on lessees of buildings owned  by municipality-Validity of levy.

HEADNOTE: The  respondent Corporation was originally constituted as  a Borough under the Bombay Municipal Boroughs Act, 1925 having been  converted  into a Corporation in  1962.   The  Borough owned several buildings in the area of its jurisdiction  and some of these were given on lease to the appellants in 1953. The  leases were renewed in 1955.  Neither in  the  original leases nor in the fresh leases was there any mention of  the liability  of the tenants to pay the house tax.   Subsequent to  the  execution of the fresh leases bills  were  received from  the respondent by the appellants calling upon them  to pay  the  house  tax imposed in  respect  of  the  buildings belonging  to  the respondent which were on lease  with  the appellants.   The  appellants filed a suit  challenging  the legality  of  the imposition of this house  tax.   The  main ground  taken was that the Municipality could not  impose  a house  tax  on buildings owned by itself.  The  trial  court held that the respondent was not competent to levy from  the tenants  any sum in excess of the agreed rents and  that  in the circumstances of this case notice under s. 206-A of  the Act  was  not necessary.  The Additional District  Judge  in appeal agreed that the levy was not valid but held the  suit not to be maintainable for want of a notice under s.  206-A. The High Court in second appeal held that the levy was valid and  that a notice under s. 206-A was necessary.  In  appeal by special leave to this Court, HELD:     There  is  nothing  in the scheme of  the  Act  to indicate that buildings belonging to the municipality itself cannot  be subjected to the house-tax which can  be  imposed under s. 73 of the Act.  The language of s. 85  specifically envisages imposition of such a tax on buildings belongIng to the  municipality.   It clearly lays down that  such  a  tax shall be leviable primarily from the actual occupier of  the property  on which the tax is assessed, even if he holds  it on  a  lease from the municipality.  The  fixation  of  such responsibility primarily on the occupier holding a  building on  lease from the municipality could only be laid  down  on

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the  basis that the buildings owned by the municipality  can be subjected to the tax.  Once the tax is imposed on such  a building it would be payable by the occupier if he holds  it as a lessee of the municipality. There is nothing  anomalous in  such  taxation  because the tax is  not  levied  by  the municipality on itself but on the lessee. [On  the above view the court did not find it  necessary  to decide  whether  before  the  filing  of  the  suit  by  the appellants   a  notice  under  s.  206-A  of  the  Act   was necessary.]

JUDGMENT: CIVIL APPELLATE JURISDICTION :Civil Appeal No. 2206 of 1966. Appeal  by special leave from the judgment and  order  dated February 23. 1966 of the Mysore High Court in Second  Appeal No. 888 of 1961. 536 S.   V. Gupte Naunit Lal S.S.  Khanduja and  Swaranjit Sodhi for the   appellants. K.   R Chaudhuri, for the respondent The Judgment of the Court. was delivered by Bhargava,  J.-This appeal by special leave arises out  of  a suit challenging the validity of imposition of house-tax and notices  issued  for  realisation  of  that  tax  from   the appellants.   The  respondent, the Hubli  Dharwar  Municipal Corporation,  was originally constituted as a Borough  under the   Bombay  Municipal  Boroughs  Act,  1925   (hereinafter referred  to as "the Act").  At the relevant time, when  the disputes leading to the suit arose, it was still a  Borough, but  it became a Corporation subsequently in the year  1962. The  Borough  owned several buildings in Dharwar.   Some  of these  buildings were given on leases’, to  the  appellants. These  leases were executed in favour of the  appellants  by the   ]Borough   some  time  in  March  and   April,   1953. Thereafter,  by a General Committee Resolution No. 36  dated 29th  June, 1953, the Borough decided to  recover  house-tax and  other municipal taxes from the private individuals  who were tenants of the municipal buildings leased out to  them. In pursuance of this Resolution, a notice was issued by  the President of the Borough that all the citizens in occupation of  the  buildings owned by the Municipality  must  pay  the taxes  assessed  on them in respect of  the  premises  under their  occupation.  On 9th September, 1953,  the  appellants preferred joint objections against the levy of the house-tax and its realisation from them.  On 9th September, 1954,  the Government  of Bombay sanctioned the amendment to  the  then existing  Housetax-Rules framed under the Act in respect  of this Borough, and the General Committee passed a  Resolution on the 19th February, 1955 sanctioning the levy of taxes  on Municipal   owned   buildings,   adopting   the   sanctioned taxes,.and  bringing  them into force with effect  from  1st April, 1955 by giving necessary public notice as required by law.   Notice  under  section  77  was  published  on   25th February,  1955  and then the taxes came into forct  on  1st April, 1955.  Thereafter, fresh lease-deeds were executed by the  respondent  in favour of the appellants  on  11th  May, 1955.   It may be mentioned that, neither in’  the  original leases  of 1953, nor in the fresh leases of 1955, was  there any mention about liability of the tenants to pay the house- tax.   Subsequent  to the execution of these  fresh  leases, bills  were received from the respondent by  the  appellants calling upon them to pay the house-tax imposed in respect of the. buildings belonging the respondent which were on  lease

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with  the  appellants. The appellants thereafter  filed  the suit out of which the present appeal has arisen, challenging the legality of the imposition of the tax.  The main  ground taken was that the 537 Municipality could not impose a house-tax on buildings owned by  itself,  so that the imposition  of-this  house-tax  was invalid in law.  ’The suit was resisted on the plea that  it was a valid taxation.  A further defence was taken that the suit  was bad for failure, on the part of the appellants  to give  notice  to the respondent under section 206-A  of  the Act.   The  trial Court decreed the suit, holding  that  the respondent  was,  not  legally competent to  levy  from  the tenants,  any  sum in excess of the agreed  rents,  and  the bills issued for recovery of excess were not valid and that, in the circumstances of this case. notice under s. 206-A  of the  Act was not necessary.  On appeal,.the  and  Additional District Judge agreed with the trial Court that..- the  levy of  the  tax  was not justified, but held  that  the  suit, without  a proper notice under section 206-A of the Act  was not  maintainable  He  therefore,  allowed  the  appeal  and dismissed  the suit with costs.  On second appeal, the  High Court  of  Mysore upheld the dismissal of the suit,  but  on both the grounds, viz., that the tax was validly levied, and that the suit was not maintainable for want of proper notice under section 206-A of the Act.  It is against this decision that  the appellants have come up to this Court.  It may  be mentioned  that  the  appellants  sued  the  Borough  in   a representative  capacity as representing all the tenants  of buildings belonging to the Borough. Learned  counsel  for  the appellants took  us  through  the various  provisions of the Act and relied on the  scheme  of the  Act to urge that a Municipality could not tax  its  own buildings.   The  power  to impose a  tax  on  buildings  is contained in section 73 of the Act, the relevant portion  of which is as follows               "73.  (1)  Subject to any general  or  special               orders which the State Government may make  in               this behalf and to the provisions of  sections               75  and 76 a municipality may impose  for  the               purposes  of  this Act any  of  the  following               taxes, namely :-               (1)   a  rate  on building or lands.  or  both               situate with-               in the municipal borough;"               A   proviso  to  this  provision,,  which   is               relevant, may also be quoted:               "-Provided further that:               (a) no tax imposed as aforesaid, other than  a               special  sanitary  cess, a drainage tax  or  a               water-rate, shall,without the express  consent               of,  the Government be leviable in respect  of               any building or part of any building or of any               vehicle,  animal or other property,  belonging               to  Government  and  used  solely  for  public               purpose  and not used or intended to  be  used               for proposes of profit;  and no toll shall  be               leviable in respect of any’ animal or vehicle               538               used   for  the  passage  of  troops  or   the               conveyance  of  Government stores  or  of  any               other Government property, or for the  passage               of military or police-officers on duty or  the               passage   or  conveyance  of  any  person   or               property in their custody,

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Section 74 then provides for payment of an ad hoc sum ascer- tained  in  the  manner  provided in  that  section  by  the Government  or  district local board in lieu of  a  rate  on buildings vesting in the Government or in the district local boards  which are exempted under clause (a) of  the  proviso quoted  above.  Section 75 then lays down the procedure  for imposition of the tax and s. 75(c) gives the right of filing objections  to  the inhabitants of the borough.  It  may  be noted that the right of Ming objections is not confined only to owners of buildings, but is granted to inhabitants of the borough  which  will  not  exclude  the  Government  or  the district local board in respect of their buildings which may not  satisfy the requirements of the proviso to  section  73 inasmuch  as  they  may  not be  actually  used  for  public purposes and, hence, may be liable to be taxed.  Section  78 makes  provision for preparation of an assessment  list  and requires  that  that list should contain the  names  of  the owner as well as occupier, if known.  Section 79 deals  with cases where the person primarily liable for payment of  this tax  cannot  be  ascertained, and  makes  it  sufficient  to designate him in the assessment book/as "the holder" of such premises without further description.  Section 80 lays  down the  manner in which the completed assessment list is to  be published  and gives a right to every person claiming to  be either  the  owner or occupier of property included  in  the list, and any agent of such person, to inspect the list  and to   make  extracts  therefrom  without  charge.    Finally, attention  was drawn to the provisions of section 85,  which lays down who is to be primarily responsible for payment  of the tax, in the following language:-               "85.   A tax imposed in the form of a rate  on               buildings  or land or both. shall be  leviable               primarily  from  the actual  occupier  of  the               property upon which the tax is assessed if  he               is the owner of the property, or holds it on a               building,  or other lease from the  Government               or  from  the municipality, or on  a  building               lease  from  any person.   Otherwise  the  tax               shall be primarily leviable as follows, namely               :-               (a)   if the property is let from the lessor;               (b)   if  the  property is  sublet,  from  the               superior lessor,               (c)   if  the  property Is  unlet, from  the               person in whom               the right to let the same vests 539 We  are  unable  to  agree, with  learned  counsel  for  the appellants  that  this  scheme  of  the  Act  contains   any indication  that  buildings belonging  to  the  municipality itself  cannot  be subjected to the house-tax which  can  be imposed under section 73 of the Act.  In fact, the  language of  section 85 specifically envisages imposition of  such  a tax on buildings belonging to the municipality.  It  clearly lays  down that such a tax shall be leviable primarily  from the  actual  occupier of the property on which  the  tax  is assessed,  even  if  he  holds  it  on  a  lease  from   the municipality.  The fixation of such responsibility primarily on  the  occupier  holding  a building  on  lease  from  the municipality  could only be laid down on the basis that  the buildings owned by the municipality can be subjected to  the tax.   Once the tax is imposed on such a building, it  would be payable by the occupier if he holds it as a lessee of the municipality.   The  same-principle applies in the  case  of buildings  held on a lease from the Government.  It  may  be

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noted  that all Government buildings are not  exempted  from the  tax.  Only those buildings are exempted which are  used solely  for public purposes and are not used or intended  to be used for purposes of profit.  Learned counsel urged  that it is anomalous that a, municipality should be permitted  to impose  tax on buildings owned by itself But  this  argument loses sight of the fact that the tax is primarily payable by the  occupier  and  not  by  the  owner.   The  purpose   of imposition of tax by a, municipality on its own buildings is to ensure that it is paid by the lessees of those buildings. Of  course, if the building is not on lease, the  imposition of  the tax would serve no purpose at all.   That,  however, will  not make the imposition of tax by the municipality  on its  own buildings invalid which imposition will  be  really effective  whenever that building is given out on  lease  to any  other person.  In these circumstances, we  fully  agree with the High Court that the tax was validly imposed and the suit challenging its realisation from the appellants had  to fail. In  view  of our decision on the validity of  the  tax,  the question whether a notice under section 206-A of the Act was necessary  or not becomes immaterial.  The appeal fails  and is dismissed with costs. G.C.                                Appeal dismissed. 540