Maintainability of claim for refund of lawfully levied and collected tax.

This is a revision by the Municipality of Madurai and the point arising for consideration in it is whether the petitioner is bound to refund the property-tax collected by it from the 1st respondent on the ground that the assessments were not in conformity with the Act. There is no dispute that the property, which is the subject-matter of the assessment of which the first respondent is the owner, had been leased to a tenant and the property-tax during the half-years now in question was based upon the actual rent then received by him from the tenant. Subsequently an application was filed by the tenant under the Madras Buildings. (Lease and Rent Control) Act of 1949 for fixation of fair rent for the premises and the Rent Controller fixed a lesser sum than had been originally paid by the tenant as. the fair rent for the premises, and the landlord was also directed to refund the difference between the rent received and the fair rent as fixed. On this the 1st respondent (property-owner) applied to the Municipality for the refund of the excess property-tax paid by him for the previous period on the ground that the assessments were based upon a mistake in the computation of the rental value of the premises. The Municipality refused the demand and the suit was filed for the recovery of this alleged excess assessment. The learned Subordinate Judge has. decreed the suit and the Municipality has filed the present revision.

In support of the Judgment of the lower Court, reliance has been placed upon a judgment of Raghava Rao, J., in Coimbatore Municipality v. Govindayyar1, where the learned Judge has held that under section 82 of the District Municipalities Act the Municipality is bound to take into account the fair rent fixed by the Rent Controller in arriving at the property-tax to be levied upon the property. On the other hand, there is a decision of a Bench of the Bombay High Court in Gulam Ahmed v. Bombay Municipality2, where following a long line of cases in England relating to assessment for rating purposes, it was held that fair rent fixed for the premises under the Rent Control Acts could not be taken into account in the assessment of the property-tax under the Municipal Acts. This decision was brought to the notice of RaghavaRao, J.

I further feel that the judgment of Raghava Rao, J., requires reconsideration in view of certain anomalies which would necessarily arise, if it was held that the Municipal authorities were bound by decisions in the Rent Control Proceedings to which they are not parties. In the first place, if the decision of Raghava Rao f were right, a distinction would have to be made between cases where persons are in occupation of their own properties and those where they are let to tenants for the Rent Control Act does not enable the fixation of fair rent for premises in the owner’s own occupation. It can’t be that in cases where an owner is in occupation the basis of the computation of the annual rent would be different from those where the property is let to third parties. Secondly the criterion for the determination of assessing the property-tax is the annual rent for which the property could reasonably be let. If the contention raised on behalf of the 1st respondent is correct this cannot depend upon whether an application for fixation of fair rent has been made or not. It cannot be that if a tenant notwithstanding that he is entitled to file an application and have his rent reduced continues to pay a higher rent for reasons of his own, the property-tax could be based upon the higher figure but where an application has been made and a lower rent has been fixed as fair rent, the latter should be the basis for the assessment of property-tax. If the argument for the 1st respondent is correct, then the Municipal authorities ought themselves apply the provisions of the Rent Control Act and then determine the reasonable rent which could be derived from the property-a situation which would be anomalous in the extr