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IN THE HIGH COURT AT CALCUTTA
Altamas Kabir, J.
The Indian Hotels Co. Ltd. & Anr. - Petitioners
Versus
The Calcutta Municipal Corporation & Ors. – Respondent
Decided on : September 30, 1994
CALCUTTA MUNICIPAL CORPORATION ACT, 1980 - SECTION 216(1) EXPLANATION - PROVISO TO RULE 33 OF THE CALCUTTA MUNICIPAL CORPORATION (TAXATION) RULES, 1987 - Vires - Levy of interest and penalty - Presentation of bills - Liability to pay rates and taxes - Liability to pay the rates and taxes on presentation of the bills - Whether presentation of a bill is a condition precedent for the purpose of instituting proceedings for recovery of arrear rates and taxes - Whether the proviso to Rule 33 of the Taxation Rules, 1987 is ultra vires the provisions of Section 216 and the similar challenge thrown in respect of the Explanation to Section 216(1) of the 1980 Act is maintainable.
Fact of the Case:
The petitioners, a company and its general manager, challenged the vires of the Explanation to Section 216(1) of the Calcutta Municipal Corporation Act, 1980, and the proviso to Rule 33 of the Calcutta Municipal Corporation (Taxation) Rules, 1987. The petitioners claimed that they were not liable to pay interest and penalty for the 2nd and 3rd quarters of 1992-93 as they had not received the rate bills for those periods. The petitioners also contended that the proviso to Rule 33 was ultra vires Section 216(1) of the Act.
Finding of the Court:
The court held that the proviso to Rule 33 of the Taxation Rules, 1987 was ultra vires Section 216(1) of the Calcutta Municipal Corporation Act, 1980, and was, therefore, struck down. The court also held that the Explanation to Section 216(1) of the Act was intra vires once the proviso to Rule 33(1) of the Taxation Rules, 1987, was struck down. The court further held that the petitioners were not liable to pay interest and penalty for the 2nd and 3rd quarters of 1992-93 as they had not received the rate bills for those periods.
Issues: 1. Whether the proviso to Rule 33 of the Calcutta Municipal Corporation (Taxation) Rules, 1987, is ultra vires the provisions of Section 216 of the Calcutta Municipal Corporation Act, 1980? 2. Whether the Explanation to Section 216(1) of the Calcutta Municipal Corporation Act, 1980, is ultra vires? 3. Whether the petitioners are liable to pay interest and penalty for the 2nd and 3rd quarters of 1992-93?
Ratio Decidendi: 1. The proviso to Rule 33 of the Calcutta Municipal Corporation (Taxation) Rules, 1987, is ultra vires the provisions of Section 216 of the Calcutta Municipal Corporation Act, 1980, because it provides for the presentation of advance bills, which is not contemplated under Section 216. 2. The Explanation to Section 216(1) of the Calcutta Municipal Corporation Act, 1980, is intra vires once the proviso to Rule 33(1) of the Taxation Rules, 1987, is struck down, as it creates a rebuttable presumption of service of the bill. 3. The petitioners are not liable to pay interest and penalty for the 2nd and 3rd quarters of 1992-93 as they had not received the rate bills for those periods.
Final Decision: The writ application was allowed. The proviso to Rule 33(1) of the Calcutta Municipal Corporation (Taxation) Rules, 1987, was declared ultra vires and struck down. The payment of the rates for the 2nd and 3rd quarters of 1992-93 by virtue of the order passed by the court on 3rd March, 1993, with rebate facilities and without payment of interest and penalty shall be treated as valid discharge of the petitioner's liability for the Municipal rates and taxes for the said quarters.
The writ petitioner No.1 is a Company and carries on the business of running hotels owned by it. The Taj Bengal Hotel it one of the units of the petitioner No. 1 Company and is situated at 34/B, Belvedere Road, Alipore, Calcutta-27.
2. The petitioner No.2 claims to be a share holder and is also employed as the General Manager of the Taj Bengal Hotel referred to above.
3. It appears that in March 1982, the petitioner Company obtained lease of premises No. 34/B, Belvedere Road, CaIcutta-27, for a period of 99 years and under the terms of the Lease Deed the petitioner Company is liable to pay the rates And taxes to the Calcutta Municipal Corporation on behalf of the Lessor.
4. It is the petitioners' further case that as an Assessee the petitioner Company receives the bills towards payment of the consolidated rates and taxes from the Calcutta Municipal Corporation for the respective quarters. According to the petitioners, whenever such rates become due in respect of a particular quarter, a bill is presented by the Municipal Authorities and the same is paid by the petitioners upon receipt of the bill within the rebate period.
5. According to the petitioners, the Calcutta Municipal Corporation sent the bill for the consolidated rates and taxes for the first quarter of 1992-93 which amounted to a sum of Rs. 10,23,036/-. The said bill was duly paid by the petitioners on 4th July, 1992. It is the petitioners' further case that after determination of the Annual Value, the first consolidated rate bill raised on the basis of the such Annual value was presented to the petitioners for the period from April to June, 1992, that is the first quarter of 1992-93.
6. It is the petitioners' definite case that subsequent to the bill for the said period from April to June, 1992, the petitioners did not receive any further rate bill and enquiries were, accordingly, made regarding non- presentation thereof. Upon such enquiry, the petitioners' representative was advised by the Collector, Calcutta Municipal Corporation, to collect the bill for the 4th quarter of 1992-93, the due date whereof had not expired, and to make payment of the same and, thereafter, to make further enquiries regarding the bills for the second and third quarters of 1992-93. It appears that the petitioners obtained the bill for the 4th quarter of 1992-93 and the same was paid on 2nd February, 1993, long before the period for which the rebate was valid.
7. It appears that the petitioners, thereafter. demanded the bills for the second and third quarters of 1992-93, so that the same could be paid immediately, but the Collector, Calcutta Municipal Corporation, refused to issue bills for the said quarters, and, on the other hand, the petitioners were advised to pay the consolidated rate for the second and third quarters, together with interest and penalty.
8. The petitioners, thereafter, claim to have written to the Municipal Authorities stating that since the bills for the second and third quarters of 1992-93 had not been presented to the petitioners, they could not be held responsible for non-payment of the same but that if the said bills were made available to the petitioners, they would take steps to pay off the same immediately.
9. It is the petitioners' further case that on 26th February, 1993, the Collector, Calcutta Municipal Corporation, asked the petitioners to send their representative to the office of the Deputy Municipal Commissioner (Revenue), Calcutta Municipal Corporation, so that the matter could be resolved. According to the petitioners, their representative duly appeared before the Deputy Municipal Commissioner (Revenue) and subsequently, the Collector informed the petitioners' representative over the telephone that the Deputy Municipal Commissioner had agreed to waive penalty to the extent of 5% only and that the petitioners would be required to pay the rates and taxes for the second and third quarters of 1992-93, together with penalty and interest, subject to red
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