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PETITIONER: KALYAN MUNICIPAL COUNCIL & ORS.

       Vs.

RESPONDENT: USHA PAPER PRODUCTS (P) LTD. & ANR.

DATE OF JUDGMENT03/05/1988

BENCH: KANIA, M.H. BENCH: KANIA, M.H. PATHAK, R.S. (CJ)

CITATION:  1988 SCR  (3) 832        1988 SCC  (3) 306  JT 1988 (2)   260        1988 SCALE  (1)849

ACT:      Maharashtra  Municipalities  Act-S.  123(1)  of-Whether alteration in  assessment list  becomes  effective  for  any period prior  to commencement  of  official  year  in  which alteration in  assessment list  is made  and Municipality is entitled to  levy tax  for any  official year  or  any  part thereof already expired under provisions of.

HEADNOTE:      After levy  of the property tax by the Kalyan Municipal Council  (’the   Municipal  Council’)   on   the   immovable properties of  the  Respondent  No.  1  (’the  company’)  in respect of  certain years,  the Municipal  Council  detected certain new  construction and  alterations in  the  existing properties  of  the  Company,  and  on  October  3,  1973  a resolution was  passed by  the Standing Committee increasing the rateable  value of  the  said  immovable  property  from 1.4.70 to  31.3.74. A  demand notice,  demanding  additional property tax,  Educational cess  and Health  Tax, was issued thereafter to the Company. The Company challenged the notice of demand  before the  High Court. The High Court decided in favour of  the Company,  holding that alteration made in the assessment list  after following the procedure under section 123(1) of  the Maharashtra  Municipalities  Act  (the  ’said Act’) did  not become  effective for any period prior to the commencement of the official year in which the alteration in the assessment  list was  made and  the Municipality was not entitled to  levy tax  for an  official  year  or  any  part thereof which  was already expired. This appeal was filed in this Court against that decision of the High Court.      Dismissing the appeal, the Court, ^      HELD: The  ratio of  the decision  of the Full Bench of the Bombay  High Court  in Sholapur Municipal Corporation v. Ram Chandra  Ramappa Madgundi, [1972] 74 Bombay Law Reporter 469, upon  which the  judgment of the High Court impugned in this case  was based,  applied to  this case. The appellants contended that  the said case before the Full Bench had been wrongly decided  and the judgment under appeal based on that decision  was   also  erroneous.  this  contention  must  be negatived in view of the decision of this Court in Municipal Corpora-

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833 tion of  City of  Hubli v.  Subba Rao  Hanumatharao Prayag & Ors.,[1976]  3  S.C.R.  p.  883,  which  approved  the  said decision of  the Full  Bench of the High Court, and which is binding on the Court and clearly applicable to this case. In that judgment,  this Court  had pointed out that once it was accepted that  the process  of levying  the tax was complete only when  the assessment  list was authenticated and it was only then  that the  tax was  levied on the rate-payers, the authentication must  be made  within the  official year. The tax, being  a tax  for the  official year,  must  be  levied during the  official year  and since  the levy of the tax is complete only  when the assessment list is authenticated, it must follow  that the  authentication must take place in the official year.  The official year is the unit of taxation as far as Municipal property taxes are concerned. [836D,G,837A- B]      If an  assessment list  could be altered at any time if the conditions  set out  in Section  123 of the said Act are satisfied, the  result would be that there would be complete uncertainty in  the field of taxation of property and unwary purchasers  of  immovable  property  might  be  put  to  the difficulty  of  having  to  discharge  the  liabilities  for property taxes  for years  long prior  to the time when they had purchased  the immovable  property in  order to save the property from being sold in recovery proceedings. [837B-C]      Sholapur Municipal  Corporation v.  Ramchandra  Ramappa Madgundi, [1972]  74 Bombay  Law Reporter  469 and Municipal Corporation of  City of  Hubli  v.  Subha  Rao  Hanumatharao Prayag & Ors., [1976] 3 S.C.R. 883, referred to.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 317 of 1984.      From the Judgment and Order dated 10.1.80 of the Bombay High Court in Special Civil Application No. 1471/75.      P.H. Parekh for the appellants.      U.R. Lalit,  B.P. Maheshwari  and  R.S.  Rana  for  the respondents.      The Judgment of the Court was delivered by      KANIA, J.  This is  an appeal against the judgment of a Division Bench of the Bombay High Court delivered on January 10, 1980.  The appellants before us are the Kalyan Municipal Council (referred to 834      hereinafter as  ’the  Municipal  Council’),  its  Chief officer  and   the  State   of   Maharashtra   respectively. Respondent No.  1 is  a Private  Limited Company  and is the owner of  an industrial undertaking within the limits of the Municipal Council.  We propose  to refer to respondent No. 1 as ’the Company’.      The relevant  facts lie  within a  narrow  compass  and there is  no dispute  regarding the  same. Property  Tax was levied by  the Municipal Council on the immovable properties of  the   Company  within  the  territorial  limits  of  the Municipal Council  in respect  of the years 1970-71, 1971-72 and 1972-73.  In  September,  1973,  the  Municipal  Council claimed that  it had  detected certain  new construction and alterations in  the existing  construction belonging  to the Company and a report to that effect was made to the Standing Committee.  A   proposal  was   submitted  to  the  Standing Committee to  increase the  property tax  in respect  of the said immovable  property from  1.4.70 to 31.3.74. On October

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3,  1973,   the  Standing   Committee  passed  a  resolution increasing the rateable value of the said immovable property of the  Company from  1.4.70 to  31.3.74.  After  serving  a notice on  the Company  as required  under the provisions of Section  123(1)   of  the   Maharashtra  Municipalities  Act (referred to hereinafter as the ’said Act’), and hearing the objections  filed   by  the  Company  against  the  proposed increase, a  demand notice  was issued  on  the  Company  on January 9,  1975 demanding  an amount of Rs.51,626.69 and an appropriate amount of Educational Cess and additional Health Tax. This  notice of demand was challenged by the Company by way of  Special Civil Application No. 147 of 1975 before the High Court  of Judicature  at Bombay.  The Division Bench of the Bombay  High Court  which decided the said Special Civil Application held  that the  case was covered by the decision of a  Full Bench  of  the  Bombay  High  Court  in  Sholapur Municipal Corporation v. Ramchandra Ramappa Madgundi, [1972] 74 Bombay  Law Reporter,  p. 469.  The Division Bench of the Bombay High  Court in  the impugned judgment has pointed out that there  was no  dispute that a notice dated November 17, 1973, being  the notice as contemplated by Section 123(1) of the said  Act was  issued to  the Company  for amending  the assessment list. This notice was served after 17th November, 1973. After  analysing the  provisions of Section 123 of the said Act  and following  the aforesaid  decision of the Full Bench, the Division Bench took the view that alteration made in the  assessment list  after following the procedure under Section 123(1) of the said Act does not become effective for any period prior to the commencement of the official year in which the  alteration in the assessment list is made and the Municipality is  not entitled  to levy  tax for  an official year or 835 any part  thereof which  is already  expired.  The  Division Bench pointed  out in the present case the alteration in the assessment list  was made  after 31st March, 1974 and before 31st March,  1975. In view of this the said alteration could not have  the effect  of increasing  the assessment  for any year prior  to the  year commencing from 1st April, 1974. It is the  correctness of  this decision, which is sought to be assailed before us in this appeal.      Since the  decision under appeal is based mainly on the said decision  of a  Full Bench  in  the  case  of  Sholapur Municipal  Corporation   v.  Ramchandra   Ramappa   Madgundi (supra), we  may briefly  refer to  the said  decision. That decision was based on the provisions of the Bombay Municipal Boroughs Act, 1925, but the ratio of the decision applies to the case  before us,  because the relevant provisions of the Bombay Municipal  Borough Act  and the  said Act are in pari materia.  As  far  as  the  question  raised  before  us  is concerned, the  provisions of Section 82, Sub-section (3) of the Bombay  Municipal Boroughs  Act are in pari materia with the provisions  of Section  123(3) of the said Act. The Full Bench of  the  Bombay  High  Court  in  that  case  came  to conclusion that  the alteration made, under Section 82(3) of the Bombay  Municipal Boroughs  Act, in  the assessment list prepared under  Section 73  of  that  Act  does  not  become effective for  any period  prior to  the commencement of the official year in which the alteration in the assessment list is made  and, therefore, the Municipality is not entitled to levy tax  for an official year or any part thereof which has already expired.  It  was  also  held  that  the  expression "current official  year" in  Section 82(3) of that Act means the earliest  day in the official year which is current when the amendment of the assessment list takes place, that is to

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say, the  expression refers  to that  official year which is running at  the time when the amendment is made by insertion or alteration of an entry under Section 82(1) of the Act.      The submission  of Mr.  Parekh, learned counsel for the appellants, is that the aforesaid case before the Full Bench was wrongly  decided  and,  as  the  judgment  under  appeal follows the  said decision  of the Full Bench, that judgment is also  erroneous and  liable to be set aside. In our view, this contention must be negatived in view of the decision of this Court  rendered by  a Bench  of three learned Judges in Municipal  Corporation   of  City  of  Hubli  v.  Subha  Rao Hanumatharao Prayag  & Ors.,  [1976]  3  S.C.R.  p.  883.  A perusal of  the said decision makes it clear that this Court took the  view that the scheme of relevant provisions of the Bombay Municipal  Boroughs Act, 1925 shows that the official year is the unit of time for the levy of property tax under 836 that Act.  It was  further held that the expression "current official year"  in the context in which it occurs in Section 82, Sub-section  (3) clearly  signifies the  earliest day in the official year which is current when the amendment in the assessment list  takes place and that expression refers only to the  official year  which is running at the time when the amendment is  made by  insertion or  alteration of  an entry under sub-section  (1) of  Section 82. Thereafter this Court goes on to point out as follows:           "It would,  therefore, seem  clear, on  a combined           reading of Sub-sections (1) and (3) of Section 82,           that an  amendment, in  order to  be effective  in           levying tax  for an  official year,  must be  made           during the  currency of the official year. This is           now well  settled as a result of several decisions           of Bombay High Court culminating in the Full Bench           decision  in  Sholapur  Municipal  Corporation  v.           Ramchandra (supra) and we do not see any reason to           take a different view."      The aforesaid  statement in  the judgment of this Court clearly shows  that the  decision of  the Full  Bench of the Bombay High  Court  in  Sholapur  Municipal  Corporation  v. Ramchandra (supra)  was approved by this Court. The decision of the aforesaid Bench of this Court is binding on us and is clearly applicable  to the  case before us. In that judgment this Court  pointed out  that once  it was accepted that the process of  levying  the  tax  is  complete  only  when  the assessment list  is authenticated  and it  is only then that the tax  is levied  on the  ratepayers, it  is difficult  to resist the  conclusion that  the authentication must be made within the  official year.  The tax,  being a  tax  for  the official year,  must obviously be levied during the official year and since the levy of the tax is complete only when the assessment list  is authenticated  it must  follow that  the authentication must take place in the official year.      Mr. Parekh  urged, although  not with  much conviction, that the  decision of  this Court  in the  case of Municipal Corporation of  City of  Hubli  v.  Subha  Rao  Hanumatharao Prayag &  Ors. (supra)  can be distinguished because in that case there was no question of any additional construction or new construction  being detected.  In our  view  it  is  not possible to  make any  such distinction.  The question which arose before  the Court was whether an assessment list which was finalised  and authenticated on July 24, 1952, after the expiry of  the official  year 1951-52 on 31.3.1952, could be regarded as a good or valid assessment list for the official year 1951-52. The entire scheme of the provisions 837

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pertaining to the preparation of the assessment list and the levy of  property tax  under the  Bombay Municipal  Boroughs Act, which  is materially  similar to  the scheme  under the said Act,  was considered  and the aforesaid conclusion were arrived at. There is no substance in the contention that the said decision  can be distinguished. Moreover, with respect, we see no reason to take a different view from the one taken in the  aforesaid case.  The official  year is  the unit  of taxation as  far as  Municipal Property  taxes are concerned and, if the contention of Mr. Parekh is accepted, the result would be  that an  assessment list  could be  altered at any time if  the conditions  set out  in Section 123 of the said Act are  satisfied, with  the result  that  there  would  be complete uncertainty  in the  field of  taxation of property and the  unwarry purchasers  of immovable  property might be put to the difficulty of having of discharge the liabilities for property  taxes for  years long  prior to  the time when they purchased  the immovable  property in order to save the property from being sold in recovery proceedings.      In the  result, the  appeal fails and is dismissed with costs. S.L.                                  Appeal dismissed. 838