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Andhra Pradesh High Court
Judges : K.S.SHRIVASTAVA, LINGARAJA RATH
S.B.H.Co-op.Bank Officers Welfare Associon, Hyderabad - Appellant
Versus
Government Of A.P.rep., by its Chief Secretary, General Administration Department, Hyderabad - Respondent
Decided On : 12-29-94
PROPERTY TAX - ANNUAL RENTAL VALUE - DETERMINATION - PLINTH AREA METHOD - VALIDITY - RULES FRAMED UNDER HYDERABAD MUNICIPAL CORPORATIONS ACT, 1955 AND ANDHRA PRADESH MUNICIPALITIES ACT, 1965 - ULTRA VIRES - ANNUAL RENTAL VALUE TO BE FIXED BY COMMISSIONER - LIMITED TO FAIR RENT UNDER A. P. BUILDINGS (LEASE, RENT AND EVICTION) CONTROL ACT - PLINTH AREA METHOD CAN BE RESORTED TO BY COMMISSIONER AS A BASIS AND GUIDE - ASSESSEES CAN CONTEST ANNUAL RENTAL VALUE, RATEABLE VALUE OR PROPERTY TAX DETERMINED - COMMISSIONER TO DECIDE OBJECTIONS OBJECTIVELY - RULES 3 TO 7 OF CORPORATION AND MUNICIPAL RULES ARE ENABLING PROVISIONS TO AID COMMISSIONER IN DISCHARGE OF FUNCTIONS - FORM-A PUBLICATIONS DEEMED TO HAVE BEEN ISSUED BY COMMISSIONER ON BASIS STATED ABOVE - BEFORE FORM-B IS ISSUED, COMMISSIONER TO AFFORD OPPORTUNITY TO ASSESSEES TO OBJECT TO DETERMINATIONS AND DECIDE OBJECTIONS ON CONSIDERATIONS DIRECTED ABOVE - PROVISIONS OF SECTIONS 214 TO 225 OF CORPORATIONS ACT TO BE SCRUPULOUSLY FOLLOWED SUBJECT TO PROVISIONS OF APPEAL.
Fact of the Case:
The challenge in all these Writ Petitions is to the mode of determination of the annual rental value of the buildings in the Municipal Corporation areas and the Municipalities of the State of Andhra Pradesh as has been brought in by the amendments of the Hyderabad Municipal Corporations Act, 1955, hereinafter referred to as "the Corporations Act", and the Andhra Pradesh municipalities Act, 1965, hereinafter referred to as "the Municipalities Act", by the Andhra Pradesh Municipal Laws (Amendment) Act, 1989 (Act No. 20 of 1989) which came into force on 1-11-1990, and the provisions made for determination of the annual rental value and the rate of monthly or yearly rent of buildings in the Hyderabad Municipal Corporations (Assessment of property-tax) Rules,1990 and the Andhra Pradesh Municipalities (Assessment of Taxes) Rules, 1990 respectively framed under the two Acts and referred hereinafter as "the Corporation Rules" and the "municipalities Rules".
Finding of the Court:
The Court held that the rules framed under the Hyderabad Municipal Corporations Act, 1955 and Andhra Pradesh Municipalities Act, 1965, which prescribed the plinth area method for determining the annual rental value of buildings for the purpose of property tax, were ultra vires. The Court held that the annual rental value should be determined by the Commissioner, taking into consideration the factors specified in the statutes, and that the plinth area method could only be used as a basis and guide, and not as a conclusive factor. The Court also held that the Commissioner was required to provide an opportunity to the assessees to object to the determination of the annual rental value and to decide the objections objectively.
Issues: 1. Whether the rules framed under the Hyderabad Municipal Corporations Act, 1955 and Andhra Pradesh Municipalities Act, 1965, which prescribed the plinth area method for determining the annual rental value of buildings for the purpose of property tax, were ultra vires? 2. Whether the annual rental value should be determined by the Commissioner, taking into consideration the factors specified in the statutes, and that the plinth area method could only be used as a basis and guide, and not as a conclusive factor? 3. Whether the Commissioner was required to provide an opportunity to the assessees to object to the determination of the annual rental value and to decide the objections objectively?
Ratio Decidendi: 1. The rules framed under the Hyderabad Municipal Corporations Act, 1955 and Andhra Pradesh Municipalities Act, 1965, which prescribed the plinth area method for determining the annual rental value of buildings for the purpose of property tax, were ultra vires because they fettered the discretion of the Commissioner in determining the annual rental value and were inconsistent with the provisions of the statutes. 2. The annual rental value should be determined by the Commissioner, taking into consideration the factors specified in the statutes, and that the plinth area method could only be used as a basis and guide, and not as a conclusive factor, because the plinth area method was not a recognized method of valuation and did not take into account the individual characteristics of each building. 3. The Commissioner was required to provide an opportunity to the assessees to object to the determination of the annual rental value and to decide the objections objectively because the principles of natural justice required that the assessees be given an opportunity to be heard before the determination was made.
Final Decision: The writ petitions were allowed to the extent indicated in the judgment, but there was no order as to costs.
( 1 ) THE challenge in all these Writ Petitions is to the mode of determination of the annual rental value of the buildings in the Municipal Corporation areas and the Municipalities of the State of Andhra Pradesh as has been brought in by the amendments of the Hyderabad Municipal Corporations Act, 1955, hereinafter referred to as "the Corporations Act", and the Andhra Pradesh municipalities Act, 1965, hereinafter referred to as "the Municipalities Act", by the Andhra Pradesh Municipal Laws (Amendment) Act, 1989 (Act No. 20 of 1989) which came into force on 1-11-1990, and the provisions made for determination of the annual rental value and the rate of monthly or yearly rent of buildings in the Hyderabad Municipal Corporations (Assessment of property-tax) Rules,1990 and the Andhra Pradesh Municipalities (Assessment of Taxes) Rules, 1990 respectively framed under the two Acts and referred hereinafter as "the Corporation Rules" and the "municipalities Rules". So far as the Corporations Act is concerned Section 199 provides for levy of property- taxes of the categories (a) general tax; (b) water tax; (c) drainage tax; (d) lighting tax; and (e) conservancy tax on the buildings and lands and stipulates the levy to be at the percentage of the reteable values of the property as is fixed by the Corporation but so fixed however that the aggregate of the percentage so fixed is not less than 15% or higher than 30% of the rateable value. Section 212 provides how the rateable value is to be determined. Prior to the amendment on 1-11-1990 the provision was that the rateable value of any building or land other than that specified in sub-section (2) was to be fixed by deducting from the amount of the annual rent for which the buildings or lands could reasonably be expected to be let from year to year, a sum equal to ten per cent of the annual rent, and that the deduction shall be in lieu of all allowances for repairs or on any other account whatever. After amendment the Section 212 (1) (a) provides that the annual rental value of lands and buildings shall be deemed to be the gross annual rent at which they may reasonably be expected to be let from month to month or from year to year with reference to its location, type of construction, plinth area, age of the building, nature of use to which it is put and such other criteria as may be prescribed. In sub-section (b) the annual rental value is stipulated to be deemed to be the gross annual rent at which they may reasonably be expected to be let from month to month or from year to year, less a deduction at the rate of 10% for buildings aged upto 25 years ; of that portion of such gross annual rent which is attributable to the buildings, apart from their sites and adjacent lands occupied as appurtenance thereto and the deduction shall be in lieu of all allowances for repairs or on any other account whatsoever. The proviso to sub-section states that in respect of residential buildings occupied by the owner the rebate shall be 40 per cent inclusive of the deduction permissible elsewhere. It is submitted at the Bar, that in respect of the Corporations other than the Hyderabad Municipal Corporation, the same provisions of the Act or the Rules apply, by virtue of Section 7 of those Corporations Acts of relative values, for property taxation. Similarly Section 87 of the Municipalities Act was also substituted, by amendment, to provide in place of similar provisions, as was existing in the Corporations Act earlier, that the annual rental value of lands and buildings shall be deemed to be the gross annual rent at which they may reasonably be expected to be let from month to month or from year to year with reference to its location, type of construction, plinth area, age of the building, nature of use to which it is put and such other criteria as may be prescribed. In sub-section (3), of Section 87 provision was made that notwithstanding anything in the Andhra Pradesh Buildings (Lease, Re
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