Property tax to be levied on capital value of the land.

1. One Shanmugha Nadar, a citizen of Madurai City, owned 1-46 cents of vacant land which he laid out into plots for being sold as house sites. In the lay-out plan, an extent of 1-10 cents was covered by the house sites; the balance of 36 cents represented the space left for road purpose.

2. The Madurai City Municipal Corporation functioning under the Madurai City Municipal Corporation Act, 1971 (Tamil Nadu Act XV of 1971) by its Commissioner levied property tax on the capital value of Shanmugha Nadar's land of the aggregate extent of 1-46 cents. The basis of the tax, according to the assessments made by the Commissioner, was the market value of the land which was determined at the Rs. 1,000 per cent. On this basis, property tax was levied for two half years in 1970-71 and one half year in 1971-‘72. Before the assessing authority, Shanmugha Nadar represented that the basis of the assessment was wrong and the real value of the property could not exceed Rs. 400. This objection was negatived, and assessments were made on the basis I have already mentioned.

3. Thereupon, the land owner filed O. S. No. 390 of 1972 on the file of the III Additional District Munsif, Madurai Town, for a declaration that the levy of property tax in the manner and on the basis aforesaid, was illegal. An ancillary relief for a permanent injunction restraining the Madurai Corporation from collecting tax was also asked for in the suit. The Madurai Corporation resisted the suit on two main grounds One was that the suit was not maintainable in view of the provisions of section 495 (1) of the Madurai City Municipal Corporation Act, 1971. The other objection was that the property tax, as levied, was on a proper basis and in accordance with the statute.

4. The learned District Munsif who tried the suit, took note of the provisions of section 495(1) of the Act which enacted that an assessment made under the authority of the Act, shall not be impeached by reason of any mistake, unless the provisions of the Act had not been complied with in substance and in effect. The learned District Munsif acted on the evidence of D. W. No. 1, the Municipal Corporation's assessor, to the effect that the capital value of the suit land was fixed on the basis of the sale deeds relating to neighbouring lands and hence, held that it could not be said that the assessment of the market value at the rate of Rs. 1,000 per cent was arbitrary or excessive.

5. Having held that assessment was based on a proper basis of market value, the learned District Munsif held that the tax-payer was not entitled to impeach the assessment on the ground that the assessed value was erroneous, On appeal, the learned Principal District Judge confirmed the decision of the trial Court. He observed that "An Officer specially deputed by the Government, has inspected the property to ascertain the market value and fix the capital value for the purpose of assessment …………”. Therefore, according to the District Judge, it cannot be said that there was no basis for the levy or that the levy itself was wrong or that the provisions of the Madurai City Municipal Corporation Act had not been complied with.

6. The owner has now brought this second appeal before this Court. The arguments at the bar ranged over a fairly wide field. But the principal contention was whether the assessment made by the Madurai Corporation was in substantial compliance with the provisions of the Madurai City Municipal Corporation Act, 1971.

7. The relevant provision authorising the Madurai City Municipal Council to levy the tax, presently in dispute, is to be found in section 120(4)(a) of the Act. This section reads as under:-

“Save as otherwise provided in clause (b), the Council shall, in the case of lands which are not used exclusively for agricultural purposes and are not occupied by, or adjacent and appurtenant to, buildings, levy the property tax on the capital value of such lands at such percentages as it may fix which shall not exceed s