2001 Supreme(SC) 836

2001(3) Supreme 674
SUPREME COURT OF INDIA
(From Andhra Pradesh High Court)
S.P. Bharucha, D.P. Mohapatra and S.N. Phukan, JJ.
The Commissioner -Appellant
versus
Griha Yajamanula Samkhya & Ors. -Respondents
Civil Appeal No. 4052 of 1996
With
Civil Appeal Nos. 4957-4060
And
Civil Appeal Nos. 4061-4088 of 1996
Decided on 2-5-2001
Counsel for the Parties :
For the Appearing Parties : R.F. Nariman, A. Raghuvir, Gopal Subramaniam, Sr. Advocates, L. Nageswara Rao, Roy Abraham, T.S. Venkataramana, Guntur Prabhakar, A. Subba Rao, A.D.N. Rao, P. Venkat Reddy, Anil Kumar Tandale, P.S. Narasimha, P. Sridhar, V.G. Pragasam, L. Nageswara Rao, M.D. Adkar, S.D. Singh, Vishwajit Singh, G. Seshagiri Rao, S. Muralidhar, R. Santhanakrishnan, Ms. Saroj Patnaik P.P. Singh and D. Mahesh Babu, Advocates.

IMPORTANT POINT
The Hyderabad Municipal Corporation Act, 1955 and the Hyderabad Municipal Corporation (Assessment of Property Tax) Rules, 1990 provide a complete code for assessment of the property tax to be levied for the buildings and lands within the Municipal Corporation.

Headnote:(i) Hyderabad Municipal Corporation Act, 1955-A.P. Municipalities Act, 1955 (as amended in 1989)-The Hyderabad Municipal Corporation (Assessment of Property Tax) Rules, 1990-The A.P. Municipalities (Assessment of Taxes) Rules, 1990-High Court holding that the committee constituted by the Government has no role to play and the Commissioner is not benied by its recommendations-Whether correct? (Yes).

       Held : Coming to the Committee set up by the State Government, we find that the State Government constituted the Committee under an executive order. Our attention has not been drawn to any provision of the Act which empowers the State Government to constitute such a Committee under the statute. A provision is made in the Act for District Level Committees; but its role is only advisory. The Committee set up by the State Government has no statutory existence, its recommendations are advisory and are not binding on the Commissioner. In this regard also the High Court cannot be said to have committed any illegality in holding that the powers of the Commissioner are not fettered by the recommendation of the Committee. The intent and purpose of the exercise to determine the annual rental value is to avoid arbitrariness in the process of assessment of the tax and also to ensure that the landlord does not escape payment of amount due as tax by taking recourse to fraudulent and manipulated under-writings of the rental value. For proper implementation of the provisions of the Municipal Act it is necessary that the power of assessment should be vested in an authority specified in the statute. The importance of specifying the authority to assess property tax under the Municipal Act cannot be over-emphasised. Keeping in view the incidence of the tax the persons who are to bear the burden of payment of the tax and the effect it will have on the funds of the municipalities for the purpose of development of the area, the legislature vested the power in the Commissioner of the Municipal Corporation to complete the exercise. As noted earlier, the statute makes provision for setting up committees like the District level Committee; but such committees play an advisory role for rendering assistance to the Commissioner in the matter. Therefore, the order of the State Government making the decision of the Committee binding on the Commissioner is not sustainable and the view taken by the High Court in this regard is unassailable. (Paras 35 and 36)

       (ii) Hyderabad Municipal Corporation Act, 1955-Sections 199, 212 and 223-Rateable value how to be determined for levying property taxes-Hyderabad Municipal Corporation (Assessment of Property Tax) Rules, 1990-Rules 3 to 7-Rules regarding annual rental value and fixation of monthly or yearly rent-Whether a Code? (Yes)-High Court holding that the annual rental value to be fixed by the Commissioner in the Corporation areas shall be limited to the fair rent either determined or determinable under the A.P. Buildings (Lease, Rent and Eviction) Contral Act and that provisions in rules 3 to 7 of the Corporation Rules are only enabling provision to help Commissioner but not to fetter his direction-Whether correct? explained case law discussed-Appeal partly allowed.

       Held : Recently, in the case of East India Commercial Co. Pvt. Ltd. v. Corporation of Calcutta (1998) 4 SCC 368 : 1998(3) Supreme 425, this Court taking note of several earlier decisions including Corporation of Calcutta v. Padma Debi, 1962(3) SCR 49, Guntur Municipal Council v. Guntur Town Rate Payers Association, 1971(2) SCR 423, Corporation of Calcutta v. Life Insurance Corporation of India, 1971(1) SCR 248, Municipal Corporation v. Ratnaprabha (supra) and Central Bank of India vs. Municipal Corporation for the City of Ahmedabad, 1995(4) SCC 696, summed up the gist of the principles deducible from the decisions in the following words :

       "From the aforesaid decisions, the principle which is deducible is that when the Municipal Act requires the determination of the annual value, that Act has to be read along with Rent restriction Act which provides for the determination of fair rent or standard rent. Reading the two Acts together the rateable value cannot be more than the fair or standard rent which can be fixed under the Rent Control Act. The exception to this rule is that whenever any Municipal Act itself provides the mode of determination of the annual letting value like the Central Bank of India case relating to Ahmedabad or contains a non obstante clause as in Ratnaprabha case then the determination of the annual letting value has to be according to the terms of the Municipal Act. In the present case, Section 168 of the Municipal Act does not contain any non obstante clause so as to make the Tenancy Act inapplicable and nor does the Act itself provide the method or basis for determining the annual value. This Act has, therefore, to be read along with determining the annual value. This Act has, therefore, to be read along with Tenancy Act of 1956 and it is the fair rent determinable under Section 8(1) (d) which alone can be the annual value for the purpose of property tax."

       From the statutory provisions noted above, it is clear that the Act provides that the tax shall be levied at such percentages of the rateable value as may be fixed by the Corporation. It further provides the method and manner of determination of the rateable value. The determination of the annual rental value which is the basis for calculation of the rateable value is also provided in the Act and the Rules. The Act mandates that the Commissioner shall determine the tax to be paid by the person concerned in the manner prescribed under the statute and the rules. It is our view that the Act and the Rules provide a complete code for assessment of the property tax to be levied for the buildings and lands within the municipal corporation. There is no provision in the statute that the fair rent determined under the Rent Control Act in respect of a property is binding on the Commissioner. The legislature has wisely not made such a provision because determination of annual rental value under the Act depends on several criteria. The criteria for such determination provided under the Act may not be similar to those prescribed under the Rent Control Act. Further the time when such determination was made is also a relevant factor, if in a particular case the Commissioner finds that there has been a recent determination of the fair rent of the property by the authority under the Rent Control Act he may be persuaded to accept the amount as the basis for determining the annual rental value of the property. But that is not to say that the Commissioner is mandatorily required to follow the fair rent fixed by the authority under the Rent Control Act. The High Court therefore did not commit any error in holding that the determination of fair rent under the Rent Control statute will not be binding on the Commissioner for the purpose of assessment of property tax under the Act. (Paras 33 and 34)

       Held consequently on the discussions in the foregoing paragraphs, the decision that emerges is that only the findings/decision of the High Court in point nos.(3) and (5), as stated in the judgment under challenge, are to be set aside. It is ordered accordingly. The appeals are allowed in part. No costs. (Para 37)