IMPORTANT POINT
Under the Calcutta Municipal Corporation Act, tenant, sub-tenant are entitled to written notices apart from public notice for assessment, revision of the consolidated rate or property tax.

Headnote:(i) Calcutta Municipal Corporation Act, 1980-Section 194 r/ws 230-Validity of-Property Tax-Determination of consolidated rates -Public notices required to be given to all concerned parties including owner, tenant, sub-tenant and occupier on tax and surcharge proposed to be levied for commercial or non-residential user of properties-Practical difficulties concerning multi-storeyed buildings occupied by several tenants, sub-tenants and occupants-Mere non-issuance and/or service of public and written notices to all concerned individuals who are persons preliminary liable or liable -Whether would be treated by concerned authorities and Courts as invalidating consolidated rate determined-(No).
       Held : We have examined the scheme in detail and we find that at the time of determination of valuation, assessment, revision of assessment and amendment of the assessment, public and written notices are required to be given to all concerned parties including owner, tenant, sub-tenant and occupier on tax and surcharge proposed to be levied for commercial or non-residential user of the properties. The tenants, sub-tenants and occupiers are entitled to written notices. The provisions contain a detailed procedure under which the tenants, sub-tenants or occupiers pursuant to a public notice and written notice, are entitled to participate in the process of valuation and assessment of consolidated rate by filing returns and objections. (Para 22)
       The underlined portion of the provisions of the Act is required to be followed and it grants effective participation to tenants, sub-tenants and occupants who, pursuant to public notice or written notices, approach the competent authority by raising objections and claim opportunity of hearing in the course of proceedings. We, therefore, find that the provisions of the Act allow full and effective participation to the tenants, sub-tenants or occupants in the process of assessment of consolidated rate. Taking into consideration, however, the practical difficulties particularly concerning multi-storeyed buildings occupied by several tenants, sub-tenants and occupants, a mere non-issuance and/or service of public and written notices to all concerned individuals who are persons primarily liable or liable , would not be treated by concerned authorities and courts as invalidating the consolidated rate determined and apportioned on various persons regarding such building/buildings unless a serious prejudice is found to have been caused to the persons aggrieved. (Paras 24 and 25)
       (ii) Calcutta Municipal Corporation Act, 1980-Section 195-Property tax-Consolidated rate of tax-Failure on part of landlord to pay consolidated rate or surcharge-Recovery from tenants by attaching rents payable by them-Whether there is dispute regarding the rent between landlord and tenant-Tenant is entitled to raise that dispute before the competent authority in course of assessment and get its adjudication through competent court-However, merely because there is a dispute regarding rent, Municipal authorities cannot be made to wait for finalising assessment till the dispute of rent is decided by some other forum. (Para 28)
       (iii) Calcutta Municipal Corporation Act, 1980-Sections 171 and 174-Property tax-Determination of consolidated rate of tax-Non participation by owner-Tenant or occupier has to be vigilant and has right to object to the same pursuant to public and written notices.
       Held : It is true that burden of tax based on valuation in the assessment is to be borne by the tenant or occupier but as we have examined the provisions, even though the landlord remains inactive by not contesting the assessment proposed, the tenant or occupier has to be vigilant and has right to object to the same pursuant to the public and written notices. The tenants or occupants who have to shoulder major portion of the tax burden, therefore, have to be vigilant and raise objections pursuant to public and written notices and contest the assessments on valid grounds in their own interest. (Para 30)
       (iv) Calcutta Municipal Corporation Act, 1980-Sections 189(5) and 4(6)-Appeal, right of-Pre-condition of maintaining appeal being deposit of entire consolidated rate demanded for property-Tenants, sub-tenants occupying a portion of building-Tenants, sub-tenants and occupiers as persons liable have to be recognised as aggrieved parties with independent right of appeal to them on pre-deposit of portion of a consolidated rate or surcharge, found leviable and recoverable from each of them.
       Held : As tenant, sub-tenant and occupants are "persons liable" with owner or lessor being the `persons primarily liable , the former category of `persons liable have a right to prefer appeal against proposed valuation and assessment of "consolidated rate" by deposit of that portion of "consolidated rate" or surcharge which is found leviable and payable by them. Such portion of "consolidated rate" and `surcharge is separately determined and ascertainable from the order of assessment and the demand bills and notices for recovery, if any, issued to the persons "primarily liable" or "persons liable". The decision of this Court in the case of Central Bank of India (supra) on the provisions of Bombay Act, therefore, in our opinion, is distinguishable. In the case before us, the tenants, sub-tenants and occupiers as "persons liable" have to be recognised as aggrieved parties with independent right of appeal to them on pre-deposit of portion of a "consolidated rate" or surcharge, found leviable and recoverable from each of them. (Para 40)
       (v) Calcutta Municipal Corporation Act, 1980-Section 231-Applicability-Property tax-Mode of recovery-Where property occupied by tenants, sub-tenants etc.-Apportionment of tax burden between owner or lessor as one party and tenant, sub-tenant or occupier as the other party-Where landlord or lessor pays the whole tax-Fiction created under Section 231 that tax apportioned on tenant would be treated as rent and would be recoverable as such-Provisions of Section 231 held valid-West Bengal (Tenancy) Act.
       Held : The provisions of the Tenancy Act merely enable the landlord to make a demand of arrears of rent and in default of the payment of the same sue the tenant for recovery of rent or eviction on the ground of non-payment of rent despite demand. The tenant can get protection against eviction on the ground of arrears of rent only if he makes requisite deposit of the arrears in the manner laid down in the provisions of the Tenancy Act. A provision to fictionally treat tax as rent is necessitated because in the absence of such a fiction in Section 231 of the Act, the landlord would be compelled to pay the whole amount of tax which is recoverable from him under the Act and would be left to an expensive and cumbersome remedy of filing a civil suit for recovery of such tax paid on behalf of the tenant, sub-tenant or occupant. Such a fiction is required to be incorporated under Section 231 of the Act because a private party cannot recover tax. If a lessor is obliged to pay a portion of tax leviable on the tenant, the landlord can recover the same not as tax but only as part of rent . The fiction created by the legislation in Section 231 to treat tax as rent has to be taken to its logical conclusion. The Act under consideration and the Tenancy Act both are State Legislations. No question arises of legislative incompetence. There does not appear any inter se conflict between the two Acts. Both have to be read and applied harmoniously to achieve the legislative intent in the two enactments. The contention based on Section 231 of the Act, therefore, also does not commend to us and is rejected. (Para 46)
       (vi) Calcutta Municipal Corporation Act, 1980-Section 171-Property tax-Premises in occupation of tenants-Grievance made that tax structure puts disproportionate liability on tenant-Whether acceptable-(No).
       Held : We have already taken note of the stand of the Corporation that premises i.e. lands and buildings in metropolitan town of Calcutta are mostly occupied on meagre rents from the landlords, yet, in those tenanted premises commercial and non-residential activities are going on a scale which, requires more and more civic amenities to be provided by the Corporation. Since the landlords are getting only small rents and the occupants are actually putting the premises to more beneficial use sometimes generating huge incomes, a just tax structure should put lesser burden of tax on the landlord than on the tenants who are in actual occupation. The grievance, therefore, raised that the tax burden is much higher on the tenants, sub-tenants or occupants than on landlords, according to us, is not legitimate and is no ground to assail the impugned provision. (Para 48)
       (vii) Calcutta Municipal Corporation Act, 1980-Sections 171, 174 and 231-West Bengal (Tenancy) Act-Property tax-Apportioning burden of tax on landlord and tenant-Rented premises for which Tenancy Act is applicable-Whether there is discriminatory treatment of rented premises governed by Tenancy Act-(No).
       Held : We have examined the scheme of the Act and we find that in apportioning the burden of tax on landlord and tenant a uniform scheme or tax structure has been evolved under the Act on the basis of actual and notional rental value of the premises. The liability of the landlord towards tax is limited to the valuation based on actual rent received and the assessment made of the tax based on letting value of the premises is the liability of the tenant/sub-tenant or occupier. Merely because Tenancy Act is attracted to accommodations with rent less than Rs. 3,000/- per month and not to other accommodations having higher rent, does not create any dis-similar situation in application of the Act to various categories of tenants paying rent more or less than Rs. 3,000/-. The portion of tax liable to be paid by the occupant or tenant is not directly recovered by the Corporation from them but is recoverable through the landlord and the landlord has been given right of reimbursement by demanding it from the tenant, sub-tenant or the occupant. For recovering such portion the tax payable by the tenant, sub-tenant or occupant, which has been paid by the landlord, is deemed to be "rent" only for the limited purpose of its recovery. The modes of recovery are by a demand notice under the Tenancy Act and if necessary by filing an eviction suit. Resort to remedy before the regular court is also not prohibited. On this aspect of apportionment of tax and mode of recovery of tax, the Act does not make any discrimination between tenants of premises covered by the Tenancy Act and others not covered by the said Act. (Para 50)
       (viii) Calcutta Corporation Act, 1980-Sections 171, 174, 193, 195 and 231-Property tax-Determination of consolidated rates -Apportionment-Mode of recovery.
       Held : (1) In view of specific provisions of the Act and as the provisions of the Act impose burden of tax to an appreciable extent on the tenant, sub-tenant and occupiers and the tax is liable to be recovered from them through the landlord or directly by attachment of rent or other coercive modes, the tenants, sub-tenants and occupants are entitled to an opportunity to participate in the process of valuation and assessment. They are entitled, therefore to written notices apart from public notice for assessment, revision of assessment or amendment of assessment of the consolidated rate or tax. It is also made clear that pursuant to the public notice or written notice, the returns submitted by the tenant, sub-tenant or occupier, with regard to determination of annual value shall be considered by the corporation. The same procedure would be followed in revision of the annual valuation. (2) It is further made clear that non-issuance of public notice or notices and/or non-service of written notices to the persons primarily liable would not necessarily invalidate the proceedings of assessment or reassessment or amendment of the valuation for consolidated rate unless it is established by the party aggrieved that a serious prejudice was caused to it for want of notice. (3) Under the provisions of the Act since the tenant, sub-tenant or occupier have to share burden of an appreciable portion of "consolidated rate" exclusive or inclusive of `surcharge in relation to properties used for non-residential and commercial purposes and as the Act provides for opportunity of participation to them pursuant to a public notice and written notice in assessment and reassessment of tax, they have a right of appeal provided under the Act. It is made clear that tenant, sub-tenant and occupiers held liable for payment of a portion of tax have a right of appeal on pre-deposit of portion of tax levied and made recoverable from them. (4) It is also made clear that to enable the tenant, sub-tenant or occupier as person liable to pay consolidated rate they would have a right to obtain necessary information on payment of requisite fee in accordance with Section 178 of the Act and Corporation authorities are legally bound to furnish such requisite information. (Para 51)

JUDGMENT

Dharmadhikari, J.-The present appeal along with other connected appeals is on the question of validity and proper interpretation of impugned provisions of Calcutta Municipal Corporation Act 1980 (hereinafter referred to as the Act for short), which are contained in Part IV Chapter XII under the Heading "Powers of Taxation and Fixation of Consolidated Rates".

2. The three Judges Special Bench of the High Court of Calcutta on a reference made by the Division Bench of the said Court, on the validity and interpretation of the impugned provisions of the Act relating to taxes on property has delivered a common judgment in different Writ Petitions, which has been assailed by tenants, sub-tenants and landlords by separate appeals which are being decided by this common judgment. It is not in dispute that the State Legislature is competent to make a law conferring authority on the local bodies to impose property tax to generate revenue for providing civic amenities like supply of water, drainage, sewerage, collection, removal and disposal of solid waste, fire prevention and fire safety, maintenance of streets and public places and other allied services in the municipal areas where lands or buildings are situated. A brief survey of the history of the legislation is necessary.

3. The repealed Act i.e. Calcutta Municipal Act of 1951 levied equal tax on owner and occupier of the lands and buildings within the municipal area. It provided for issuance of two separate Bills where the premises are occupied only by one tenant. The occupant s share of tax was collected from the tenant as the occupier s Bill. However, in the case of premises having more than one occupier, the 1951 Act had provided that the taxes under both the Bills i.e. the owner s and the occupier s Bill, would be paid by the owner, but in turn, he was competent to collect half of the total taxes paid i.e. occupier s share proportionately from each occupier. The taxes were charged on the rent payable and the rate was also low. The working of the above provision of the Act of 1951 resulted in development of a system where the occupier s share of tax was included in the rent by the owner and both the shares were paid by the owner to the municipality instead of owner paying the taxes and then pursuing remedies against the tenants for collection of the portion of tax imposed by the Act on the tenant or occupier.

4. In conformity with the above mentioned provisions of the Municipal Act 1951, the West Bengal Premises Tenancy Act 1956 (shortly referred to as Tenancy Act ) provides that 50 of the total property tax can be included in the "Fair rent."

5. According to the Corporation, with the ever-increasing population of Calcutta and requirement felt of increasing and improving the civic amenities, it is found necessary to increase property tax particularly on lands and buildings which are being put to use within the municipal area for non-residential and commercial purposes. The earlier system which existed under the Municipal Act of 1951, the revenue collected through property tax was limited by the "Fair rent" fixed under the tenancy law. To augment revenue of the Corporation for increasing and maintaining the civic amenities it was felt necessary that a separate `Surcharge should be levied on properties occupied for non-residential or commercial purposes.

6. The present Act was enacted in 1980 providing for valuation on the basis of market rate of rent and higher rate of tax by introducing a consolidated rate of tax combining the tax on owners and tax on occupiers. The surcharge leviable on the occupiers of properties for non-residential/commercial use was included in the "consolidated rate". The present Act by the impugned provisions provides for collection of the entire tax named as "consolidated rate" inclusive of owner s and occupier s share from the owner with the right being given to the owner to make recovery of unpaid surcharge from the occupier or the tenant as

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2003 Supreme(SC) 795

IMPORTANT POINTUnder the Calcutta Municipal Corporation Act, tenant, sub-tenant are entitled to written notices apart from public notice for assessment, revision of the consolidated rate or property tax.

Cases Referred (4)

IMPORTANT POINT
Under the Calcutta Municipal Corporation Act, tenant, sub-tenant are entitled to written notices apart from public notice for assessment, revision of the consolidated rate or property tax.