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1969 Supreme(P&H) 15
PUNJAB & HARYANA HIGH COURT
Hans Raj Sodhi, J.
British India Corporation Limited
Versus
Deputy Commissioner, Gurdaspur
Civil Writ No. 1526 of 1964,
Decided On : JANUARY 31, 1969
The annual rental value for house tax assessment cannot be assessed at an amount higher than the fair rent determined under the Rent Control Act, and the assessment list must be completed before the first day of January or the first day of April following the year for which the tax is proposed to be levied.
Headnote:
HOUSE TAX - ASSESSMENT - ANNUAL RENTAL VALUE - RENT CONTROL ACT - APPLICABILITY - INTERPRETATION OF SECTIONS 66 AND 68 OF THE PUNJAB MUNICIPAL ACT, 1911 - ARBITRARY INCREASE IN ASSESSMENT - INVALIDITY.
Fact of the Case:
The petitioner company challenged the enhanced house tax assessment levied by the Municipal Committee, Dhariwal, for the years 1962-63 and 1963-64, arguing that the assessment was arbitrary and not based on any objective data.
Finding of the Court:
The Court held that the annual rental value for the purpose of house tax assessment cannot be assessed at an amount higher than the fair rent determined under the East Punjab Urban Rent Restriction Act, 1949 (Rent Control Act). The Court also held that the assessment list must be completed before the first day of January or the first day of April following the year for which the tax is proposed to be levied, and that any increase in assessment must be based on objective data and disclosed in a speaking order.
Issues: 1. Whether the annual rental value for house tax assessment can be assessed at an amount higher than the fair rent determined under the Rent Control Act? 2. Whether the assessment list must be completed before the first day of January or the first day of April following the year for which the tax is proposed to be levied? 3. Whether any increase in assessment must be based on objective data and disclosed in a speaking order?
Ratio Decidendi: 1. The Court held that the annual rental value for house tax assessment cannot be assessed at an amount higher than the fair rent determined under the Rent Control Act, as the Rent Control Act provides a formula for determining the fair rent, which is the maximum amount that a landlord can legally charge for rent. The Court relied on the Supreme Court decision in The Corporation of Calcutta v. Smt. Padma Debi and others, which held that the law of rent control cannot be ignored in ascertaining the reasonable expectation of a landlord in the matter of rent. 2. The Court held that the assessment list must be completed before the first day of January or the first day of April following the year for which the tax is proposed to be levied, as the provisions of Sections 66 and 68 of the Punjab Municipal Act, 1911, require the assessment list to be completed before the relevant year of assessment commences. 3. The Court held that any increase in assessment must be based on objective data and disclosed in a speaking order, as the assessing authority is a quasi-judicial body and must act on objective data and provide reasons for its decision.
Final Decision: The Court allowed the writ petition and quashed the impugned order of enhanced assessment passed by the Municipal Committee, Dhariwal. The Court also directed the Municipal Committee to make a fresh assessment in accordance with the observations made in the judgment.
Sodhi, J.
1. This judgment will dispose of two connected writ petitions No. 1526 of 1964 and 1540 of 1968. The learned counsel for both the parties are agreed that common question of law and fact arise in both these petitions and arguments have been advanced only in the former writ petition. The only difference on facts in regard to the two writ petition is that Civil Writ No. 1526 of 1964 is directed against the assessment of house tax levied by Municipal Committee, Dhariwal, in respect of certain property of the petitioner company for the years 1962-63 and 1963-64 whereas in the latter writ petition the challenge is against enhanced assessment made in similar circumstances for the year 1966-67.
2. It is alleged in Civil Writ No. 1526 of 1964 that the town of Dhariwal was first a Notified Area Committee and was subsequently declared a Small Town Area Committee. It continued as such upto the year 1952-53 when it was converted into a Committee to which provisions of the Punjab Municipal Act, 1911 , as amended upto date and hereinafter called the Act, became applicable. There was an assessment of house tax made for various items of the property owned by the petitioner company on the basis of gross annual rent worked out by the Small Town Area Committee constituted under the Punjab Small Town Act, 1921. The total amount of annual value assessed for the year 1952-53 was Rs. 60, 032/- and from 1953-54 it was increased to Rs. 64,194/- on which amount the house tax was being paid by the company upto the year 1961-62. It occurred to the respondent Municipal Committee to revise the rental value of the various buildings owned by the petitioner Company and by its resolution passed on 21st May, 1962, notices were sent to the petitioners under Section 65 of the Act. The objections had to be filed within thirty days and a sub-committee was appointed to hear those objections. The sub-committee did hear the objections and recommended an increase in the amount of the annual rental value from Rs. 64,194/- to Rs. 75,900/-. The Municipal Committee considered this report at its meeting held on 11th January, 1963, but thought the amount to be too low and decided to increase the same to Rs. 94,070/-. A copy of the resolution passed by the Municipal Committee, whereby the recommendations of the sub-committee were accepted with variation enhancing the amount to Rs. 94,070/- has been attached with the writ petition as Annexure `C. The petitioner company preferred an appeal under Section 84 of the Act to the Deputy Commissioner, Gurdaspur, who allowed the same on 24th April, 1963, and set aside the assessment made by the respondent Municipal Committee. A copy of the order of the Deputy Commissioner so passed has not been placed on record by either of the parties but it has been produced now by Mr. D.N. Aggarwal, counsel for the respondent Municipal Committee. The Deputy Commissioner was of the opinion that no opportunity as envisaged by law was given to the petitioner company to be heard by the Municipal Committee itself and that hearing of objections by the sub-committee was not a sufficient compliance with law. A fresh assessment was accordingly ordered after giving an opportunity to the petitioner to be heard. The Municipal Committee again considered the matter and after hearing the representatives of the petitioner company and going though their objections, passed a resolution on 30th September, 1963, confirming the same assessment as had been made in its earlier resolution of 11th January, 1963. An appeal was again filed under Section 84 by the petitioner company before the Deputy Commissioner but it was dismissed on 18th of April, 1964. Hence the present writ petition.
3. Mr. Bhagirath Dass, learned counsel for the petitioner, has raised three contentions. It has been submitted that it was incumbent upon the Municipal Committee to have fixed gross annual rent of the buildings in question by keeping in view the provisions of the East Punjab
