No interest is payable on the amount refunded by the KMC under Section 197 of the Kolkata Municipal Corporation Act, 1980.

Debangsu Basak, J.

Is the Corporation liable to refund the amount deposited with it under Section 197 of the Kolkata Municipal Corporation Act, 1980 with interest and if so, at what rate?

2. Such issue emanates from the factual matrix which is adumbrated hereafter. The petitioner is an assessee in respect of Property Tax payable under the Kolkata Municipal Corporation Act, 1980. The Hearing Officer, Kolkata Municipal Corporation by an Order dated March 14, 1996 had fixed an annual valuation of the property concerned. This annual valuation had resulted in a quantum of Property tax payable by the petitioner. The petitioner being aggrieved by such order of fixation of annual valuation by the Hearing Officer had filed a writ petition before this Hon'ble Court. Such writ petition was disposed of by an Order dated October 23, 1997 which had directed the writ petitioner to deposit the full amount of the tax assessed to prefer an appeal from the order of the Hearing Officer before the appellate authority established under the Kolkata Municipal Corporation Act, 1980 being Municipal Assessment Tribunal. The petitioner had deposited such amounts. The petitioner had preferred two appeals before the Municipal Assessment Tribunal against the order of the Hearing Officer. The appeals were ultimately disposed of by an Order dated June 19, 2001. The Municipal Assessment Tribunal had reduced the annual valuation that what was fixed by the Hearing Officer. By reason of such reduction in the annual valuation, the Property Tax incidence on the petitioner stood reduced. The petitioner, therefore, became entitled to receive refund out of the sum deposited when preferring the appeal. The petitioner had thereafter by several letters requested the Corporation authorities to refund the excess amount deposited. The Corporation authorities had claimed that they were entitled to some amounts of Property Tax from the petitioner for other periods. In its correspondence the petitioner had also asked for adjustment of the excess amount paid with the liability of the petitioner to the Corporation and for refund. Even after adjustment, the petitioner is entitled to refund. The petitioner has now approached this Court seeking refund together with interest. The Corporation authorities are agreeable to refund, however, without any interest.

3. Mr. Kishore Dutta, learned Senior Advocate for the petitioner contends that, the petitioner is entitled to refund together with interest. He contrasts the existing provisions of Section 197(iii) with Section 197 operating at the point of time when the petitioner had made the deposit pursuant thereto. It is contended that, Section 197 had been amended with effect from May 1, 2007. The petitioner had deposited the amount in terms of the unamended Section 197. It is submitted that, Section 197(iii) now clarifies that such refund amount would not accrue any interest. Such provisions with regard to no interest being payable on the amount to be refunded were not there in the unamended Section 197.

4. Relying on 1999 West Bengal Law Reporter (Cal) page 527 (Larsen & Toubro Limited & Ors. v. Calcutta Municipal Corporation & Ors.) it is submitted that, the Corporations authorities are liable to refund the excess amount taken on deposit together with interest. It is submitted that the provisions of the Interest Act, 1978 are attracted in such cases.

5. With regard to the rate of interest payable by the Corporation authorities it is submitted that the same rate of interest should be levied on refund as enjoined under Section 217(3) of the Kolkata Municipal Corporation Act, 1980 for default of payment of Property Tax.

6. Mr. Dutta however fairly draws the attention of the Court to 2002 Volume 4 Calcutta High Court Notes page 569 (Amal Kumar Roychowdhury & Anr. v. Kolkata Municipal Corporation & Ors.) and submits that, the Court has held that no interest is payable by the Corporation authorities after considering Larsen & Toubro Limit