Back
IN THE HIGH COURT OF ORISSA, CUTTACK
B.P. Routray, J.
Kalyani Maternity Hospital Pvt. Ltd., Bhubaneswar - Appellant
Versus
Bhubaneswar Municipal Corporation (bmc) - Respondent
W. P. (C) No. 6590 of 2012
Decided On : 22-04-2021
Holding Tax - Municipal Corporation - Orissa Municipal Act, 1950 (OM Act), Orissa Municipal Corporation Act, 2003 (OMC Act) - Sections 693, 694 - The court discussed the authority of the Bhubaneswar Municipal Corporation (BMC) to raise the rate of 'holding tax' under the OMC Act with reference to Sections 693 and 694. It highlighted the absence of the concept of 'holding tax' under the OMC Act and the limitations of the transitional provisions in justifying the increase in tax rates. The court quashed the impugned demand notice as it sought to collect holding tax at a higher rate than that prevalent under the OM Act, which was unsustainable in law.
Fact of the Case:
The petitioner challenged a demand notice issued by the Bhubaneswar Municipal Corporation (BMC) for holding tax, latrine tax, and lighting tax. The petitioner contended that the demand was without the authority of law as the BMC intended to impose a new rate much higher than the mandate under the Orissa Municipal Act, 1950 (OM Act) and the Orissa Municipal Corporation Act, 2003 (OMC Act).
Finding of the Court:
The court found that the BMC's authority to raise the demand in terms of the OMC Act was being challenged, and therefore, it had to be dealt with by the court. It held that no tax could be levied and collected by BMC without the authority of law, emphasizing the constitutional mandate that 'no tax shall be levied or collected except by authority of law'. The court quashed the impugned demand notice as it sought to collect holding tax at a higher rate than that prevalent under the OM Act, which was unsustainable in law.
Issues: The issues revolved around the authority of the Bhubaneswar Municipal Corporation (BMC) to raise the rate of 'holding tax' under the Orissa Municipal Corporation Act, 2003 (OMC Act) and the legality of the demand notice issued by BMC.
Ratio Decidendi: The court emphasized that no tax could be levied and collected by BMC without the authority of law, as mandated by the Constitution. It highlighted the absence of the concept of 'holding tax' under the OMC Act and the limitations of the transitional provisions in justifying the increase in tax rates.
Final Decision: The court quashed the impugned demand notice as it sought to collect holding tax at a higher rate than that prevalent under the OM Act, which was unsustainable in law. It directed the petitioner to pay the holding tax at the same rate as when the OM Act was in force for the period prior to the commencement of the OMC Act.
ORDER
1. This matter is taken up by video conferencing mode.
2. The present writ petition has been filed seeking to challenge the demand notice dated 9th February, 2012 issued by the Bhubaneswar Municipal Corporation (BMC), whereby the Petitioner has been asked to pay the sum of Rs.4,49,440/- as 'holding tax, latrine tax and lighting tax'.
3. Earlier the Confederation of Citizens' Association, Bhubaneswar had filed W.P.(C) No.11764 of 2011 challenging BMC's notification dated 15th December, 2010 enhancing 'holding tax' on the basis of the erstwhile Orissa Municipal Act, 1950 (OM Act) with the aid of Sections 693 and 694 of the Orissa Municipal Corporation Act, 2003 (OMC Act).
4. The grievance of the Petitioner in that case was that the Commissioner intended to impose a new rate at a much higher rate than the mandate under the OM Act as well as the OMC Act. Further it was contended that a notification had been issued without following procedure under Chapter-13 of the OMC Act or the pari materia provision in the OM Act. The said writ petition was disposed of on 12th August, 2011 by this Court with the following order:
'Learned Govt. Advocate is directed to take notice on behalf of Opposite Party No.1. An extra copy of the writ petitioner be served on him by tomorrow. Notice issued to opposite party no.2 by Registered post with A.D. requisites for which shall be filled by Tuesday (16.8.2011).
Pending consideration of the misc. case, the revision of rent is stayed under the Old Act as per Annexure-2, but the holding tax must be paid as was being paid earlier. It is open for the municipal Corporation to revise the tax in accordance with the provisions of Sections 694(3) read with Sections 205, 208, 209 and 210 and other relevant provisions of Chapter-XIII.
Urgent certified copy of this order be granted as per rule.'
5. Based on the same notification dated 15th December 2010, the impugned demand dated 9th February, 2012 was raised on the Petitioner by BMC leading to the filing of the present petition in which the prayer is for a direction to issue to the BMC to receive the holding tax as earlier paid by the Petitioner.
6. On 20th April, 2015 while directing to issue notice to the Opposite Party, the following interim order was passed: 'As an interim measure, we direct that the holding tax as was being paid earlier shall be paid but the revision thereof shall remain in abeyance until further orders.'
7. Mr. G.M. Rath, learned counsel appearing for the Petitioner submits that neither Section 693 nor Section 694 of the OMC Act can be invoked to raise the rate of 'holding tax' that was leviable under the OM Act after its repeal. He points out that under the OMC Act the concept of 'holding tax' does not exist. Therefore, the demand is entirely without the authority of law. In support of this submission, he referred to the decision of the Constitution Bench of the Supreme Court in New Delhi Municipal Council v. State of Punjab and Others, (1997) 7 SCC 339.
8. Mrs. Padhi, learned counsel appearing for the Opposite Party (BMC), first submitted that against the impugned demand notice, the Petitioner has an alternative remedy under the OMC Act and therefore, this Court should not interfere. Secondly, she submitted that the procedure envisaged under the OM Act for enhancing the rate of 'holding tax' has in fact been followed and therefore, in the light of the transitional provision contained in Section 694(3) of the OMC Act, the BMC was entitled to raise the 'holding tax' and recover it from the Petitioner. She referred to the affidavits filed by the BMC in the present case on 6th August, 2019 and 5th December, 2019.
9. The above submission of learned counsel for the parties have been considered.
10. The Court finds no merit in the preliminary submission of the BMC that the Petitioner has an alternative remedy against the demand notice. Here the very authority of the BMC to raise such a demand in terms of the OMC Act is being challenged. This has to be d
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
