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2015 Supreme(MP) 1110
IN THE HIGH COURT OF MADHYA PRADESH
A.M. Khanwilkar, Sanjay Yadav, JJ.
Essarjee Education Society – Appellant
Vs.
State of M.P. – Respondent
Writ Petition No. 4719 of 2015
Decided On : 20-10-2015
For the Petitioner: Shri. Siddharth Gupta, learned counsel
For the Respondent:Shri. Samdarshi Tiwari, learned Dy. Advocate General, Shri. P.K. Kaurav, learned counsel
The main legal point established in the judgment is the interpretation and application of the provisions of the M.P. Municipal Corporation Act, 1956, particularly regarding the imposition of various taxes and cess, the requirement of prior approval of the State Government, and the recovery of tax since 2010.
Headnote:
M.P. Municipal Corporation Act - Legality of demand notice - Section 175 - 132(6)(o) and Section 132(5)(a) - 132(1), (c), (d), (e) - 132(6)(o) - 132-A - Summary of Acts and Sections: The court discussed the legality of the demand notice issued under Section 175 of the M.P. Municipal Corporation Act, 1956, and the challenge to the constitutional validity of Section 132(6)(o) and Section 132(5)(a) of the Act. It also considered the imposition of various taxes and cess under Section 132(1)(c), (d), (e), 132(6)(o), and 132-A, and the requirement of prior approval of the State Government for imposition of development cess, education cess, and water tax. The court upheld the levy of taxes under Section 132(1)(c), (d), (e), educational cess under Section 132(6)(o), and water cess under Section 132-A, but set aside the levy of urban development cess.
Fact of the Case:
The case concerned the legality of a demand notice issued under Section 175 of the M.P. Municipal Corporation Act, 1956, and the challenge to the constitutional validity of certain sections of the Act. The petitioner, a society running a private professional technical institution, sought a declaration of the sections as ultra vires the Constitution of India and quashment of the demand notice and permanent orders.
Finding of the Court:
The court upheld the levy of taxes under Section 132(1)(c), (d), (e), educational cess under Section 132(6)(o), and water cess under Section 132-A, but set aside the levy of urban development cess.
Issues: The issues considered by the court included the legality of the demand notice, the challenge to the constitutional validity of certain sections of the Act, the imposition of various taxes and cess, the requirement of prior approval of the State Government, and the recovery of tax since 2010.
Ratio Decidendi: The court held that the imposition of urban development cess and its recovery could not be upheld, as the legislature had exempted the lands or buildings for which property tax is not leviable from cess. The court also upheld the imposition of water charges under Section 132-A, as it met the requirements of the law. Additionally, the court rejected the contention that the taxes and cess were levied from retrospective years, as the petitioner failed to establish that the taxes were levied for the first time in 2013 or 2014.
Final Decision: The petition was disposed of with the court upholding the levy of certain taxes and cess under the M.P. Municipal Corporation Act, 1956, while setting aside the levy of urban development cess.
Sanjay Yadav, J.
Present case concerns itself with the legality of the demand notice dated 27.3.2015 issued under Section 175 of the M.P. Municipal Corporation Act, 1956 (hereinafter referred to as 1956 Act'); whereby, Regional Officer, Regional Office No.3, Municipal Corporation, Bhopal has called upon the petitioner to deposit an amount of Rs. 21,69,756/- towards minimum essential consolidated tax, consolidated tax, general water cess, education cess and urban development cess (2%) for the financial year 2010-11 to 2013-14 and 2014-15.
2. Petitioner is a society registered under the provisions of M.P. Societies Registration Act, 1973 and is running a private professional technical institution in the name of Corporate Institute of Science and Technology within the municipal limits of respondent-Municipal Corporation, Bhopal.
3. Present writ petition is filed for declaration of Section 132(6)(o) and Section 132(5)(a) of the Act of 1956 as ultra vires the Constitution of India and for quashment of permanent orders no.15/2014 and 2/2013 and the demand notice dated 27.3.2015.
4. At the outset, the petitioner, however, gives up the challenge to the vires of Section 132(6)(o) and Section 132(5) (a) of 1956 Act, in view of decision by a Division Bench of this Court in Hoarding Advertisement People Welfare v. State of M.P., W.P. No.3987/2008 on 12.3.2015. In view whereof, the petition so far it relates to the challenge to constitutional validity of Section 132(6)(o) and Section 132(5) (a) of 1956 Act, stands dismissed.
5. In respect of the challenge to the Permanent Orders No.15/2014 and 2/2013 and the demand notice dated 27.3.2015, though an objection is raised on behalf of respondent-Municipal Corporation that the petitioner has an alternative efficacious statutory three tier remedy under Sections 147, 148 and 149 respectively, providing a forum for settlement of dispute relating to valuation and the liability. However, taking into consideration the nature of challenge on the ground of sustainability of the imposition of tax/cess on the touchstone of Section 132 of 1956 Act, we decline to accede to the objection raised on behalf of respondents that the petitioner be relegated to avail the remedy under the statute.
6. It is the contention of the petitioner that being an educational institution and having been exempted from payment of property tax levied under Section 135 of 1956 Act, it is not liable to pay the tax levied under Section 132(1), (c), (d) and (e) unless separately determined under Section 132(5) (a) of 1956 Act. It is further contended that the petitioner is not liable to pay general water cess, educational cess and urban development cess (2%) which has been imposed by the Corporation in purported exercise of power under Section 132(6)(o) either, in absence of prior approval of the State Government, as contemplated therein. It is also the contention that having been exempted from property tax, the respondent-Corporation are not justified in realising other taxes from retrospective year.
7. As regard to challenge of permanent order No.15/2014, it is contended by learned counsel for the petitioner that vide said order, respondent-Corporation has decided for imposition of various other taxes specified under Section 132(1)(c), (d) and (e) of 1956 Act on the basis of property tax values applicable and determined with reference to commercial properties situated at Bhopal. It is also contended that procedure laid down under Section 132(5)(a) has not been followed specifically for determining the rate of taxation with respect to the buildings and lands of educational institution which are exempted from property tax. Instead, determination of tax levied under Section 132(5)(a) is on the basis of determination of tax under Section 132(5)(b). It is contended that since the Corporation has failed to follow the procedure laid down under Section 132(5)(a) for imposition of tax other than property tax, the impugned permanent order no
