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IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
NISHITA MHATRE, TAPASH MOOKHERJEE, JJ.
The Kolkata Municipal Corporation & Anr. – Appellants
Versus
Fabworth Promoters Pvt. Ltd. & Ors – Respondents
MAT 171 of 2016 and CAN 1228 of 2016 with W.P. 4928 (W) of 2015
Decided On : 30-06-2016
PROPERTY TAX - LIABILITY - LAND LEASED BY KMDA - ASSESSMENT - IN THE HANDS OF OWNER-KMDA OR LESSEE-FABWORTH - OWNED BY OR BELONGING TO - DISTINCTION - NOT MAINTAINABLE - ANNUAL VALUATION - DETERMINATION - SECTION 176 READ WITH SECTION 171(8)(A)(II) OF THE KMC ACT - APPLICABLE.
Fact of the Case:
Fabworth, a private company, was granted a 99-year lease by KMDA for a plot of land to construct a 5/7 Star Hotel. The lease agreement stipulated that Fabworth would pay all property taxes on the demised land and buildings. The annual valuation of the land was determined by KMC at Rs.13,27,71,870/-. Fabworth objected to the valuation, but its objections were overruled. Fabworth filed a writ petition challenging the valuation. The learned Single Judge directed KMC to consider all documents produced by Fabworth and to make an assessment in accordance with law. A committee was constituted for conducting the hearing, and it upheld the annual valuation calculated by KMC. Fabworth filed a second writ petition, which was allowed by the learned Single Judge (Kar Gupta, J.). Kar Gupta, J. held that the provisions of Section 176 read with Section 171(8)(a)(ii) of the KMC Act were applicable for calculating the annual value of the property. On remand, a fresh notice of hearing was issued by the Hearing Officer to Fabworth. The Hearing Officer passed an order reiterating the earlier order passed by KMC calculating the annual valuation at Rs.13,27,71,870/-. Aggrieved by this order Fabworth filed a third writ petition which was allowed by the learned Single Judge (Arijit Banerjee, J.). The learned Judge held that the land in question was "owned by" KMDA and that the property tax in respect of the land should be assessed in the hands of KMDA.
Finding of the Court:
The Court held that the land in question was "owned by" KMDA and that the property tax in respect of the land should be assessed in the hands of KMDA. The Court held that the provisions of Section 176 read with Section 171(8)(a)(ii) of the KMC Act were applicable for calculating the annual value of the property. The Court held that the phrases "owned by" and "belonging to" in Section 171(8)(a) of the KMC Act are synonymous.
Issues: 1. Whether the land which has been leased by the KMDA, a body constituted under the Kolkata Metropolitan Development Authority Act, 1972, should be taxed in its hands or in the hands of the lessee. 2. Could it be said that the land in question was "owned by" KMDA but did not "belong to" it but Fabworth, as suggested on behalf of the KMC?
Ratio Decidendi: 1. The land which has been leased by the KMDA should be taxed in its hands and not in the hands of the lessee. 2. The land in question was "owned by" KMDA and did "belong to" it.
Final Decision: The appeal is dismissed.
Nishita Mhatre, J.
1. This appeal is directed against the judgment and order dated 6th January, 2016 in W.P. No.4928 (W) of 2015. It has been preferred by the Kolkata Municipal Corporation and its Commissioner (hereinafter referred to as “KMC”). The Respondent Nos.1 and 2 are Fabworth Promoters Pvt. Ltd. (hereinafter referred to as “Fabworth”) and its director, respectively. Respondent No.3 is the Kolkata Metropolitan Development Authority (hereinafter referred to as “KMDA”). Respondent No.4 is the Hearing Officer whose order was challenged before the learned Single Judge by Fabworth.
2. A plot of land measuring about 5.61 acres at the junction of Dhapa Road and Eastern Metropolitan Bypass is owned by the KMDA. A notice was published on 20th February, 2006 by the KMDA inviting tenders for leasing this land for constructing a 5/7 Star Hotel thereon. Fabworth being interested, offered a lease premium of Rs.189,67,41,000/-, which was the highest bid received by the KMDA. The bid was accepted and a Lease Deed was executed between the KMDA and Fabworth on 20th September, 2007. The lease was for a period of 99 years and was renewable for a further period of 99 years. Several restrictions were placed on the lessee in the Lease Deed with the right of reversion being maintained by the lessor. As mentioned earlier the lease premium was Rs.189,67,41,000/- and the annual rent was Rs.1/- per cottah.
3. Fabworth applied for mutation its name as a lessee of the premises on 4th October, 2007. KMC informed it that the annual valuation in respect of the said premises with effect from 3rd quarter of 2008 was determined at Rs.13,27,71,870/-. While applying for the mutation, the form filled in by Fabworth indicated that the existing recorded owner was “unassessed”. The mutation in the name of Fabworth as lessee was effected on 11th October, 2007 and a building permit was granted by the KMC in favour of the Fabworth subsequently. This building permit refers to KMDA as the lessor while Fabworth has been recorded as the lessee. On receipt of the calculation for the annual valuation of the premises, Fabworth objected to the same. However, its objections were overruled by an order dated 30th December 2008. That order was challenged by Fabworth by preferring WP 9372(W) of 2012. On 25th July, 2013 the learned Single Judge of this Court disposed of the said writ petition. The KMC was directed to consider all documents produced by Fabworth and to make an assessment in accordance with law. The KMC was expected to pass a reasoned order within three months, after affording an opportunity of hearing to all the interested parties.
4. Thereafter, a committee was constituted for conducting the hearing, although the hearing was expected to be conducted by a Hearing Officer under the Kolkata Municipal Corporation Act (hereinafter referred to as “KMC Act”). The committee upheld the annual valuation calculated by the KMC and observed that Section 176 of the KMC Act was not applicable since the lease granted in favour of Fabworth must be deemed to be a perpetual lease and therefore it would be liable to pay property tax on that basis in respect of the aforesaid premises. A second writ petition was filed by Fabworth being W.P. No. 30732(W) of 2014. On 12th December, 2014 the learned Single Judge (Kar Gupta, J.) quashed the order dated 13th August, 2014.
5. The learned Judge discussed various judgments and observed as follows:
“In view of the above, the respondent No.11 was under obligation to pay the property tax of the premises under reference at the first instance. No material is available on record to show that the provisions of sub section (3A) of Section 193 and/or Section 230 could be invoked in this case. Therefore, the impugned order is liable to be set aside on that ground alone”.
6. After setting out the provisions of Section 171(8)(a)(ii) and Section 176 of the KMC Act, the learned Judge observed as follows:
“The liability of the respondent No.11 is evide
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