Municipalities cannot retroactively impose property taxes for periods before the current financial year based on alterations in assessment lists.

1. Respondent No. 1, Kalyan Municipal Council (hereinafter referred to as the "Municipal Council"), had by resolution dated 30th July, 1969 imposed a consolidated property tax as contemplated by S.105, sub-sections (1)(a) and (2) of the Maharashtra Municipalities Act, 1965 (hereinafter referred to as "the Act"), at the rate of 20% to be effective from 1st Oct., 1969. Under the provisions of the Act the said imposition should have been made before 30th June, 1969 and power having been given to the State Government to extend that date, the Municipal Council had asked for such extension which was accordingly granted by the State Government. The period of assessment in question in this petition is 1970-71 to 1972-73. The Municipal Council issued a notice under S.123(1) of the Act alleging that in the property in question which belonged to the petitioner, some additional constructions were made and, therefore, the assessment had to be revised, and the revised assessment came to Rs. 11,986/- and at the rate for four years a sum of Rs. 56,156.80 was due from the petitioners. We are not concerned with the merits of the objections which the petitioners raised, but it suffices to say that the petitioners' objections were rejected and accordingly a notice of demand was issued by the Municipal Council on 9th Jan., 1975 for the period 1st April, 1970 to 31st March, 1974 demanding a total amount of Rupees 51,626.80 which included combined property tax of Rs. 44,170.80 and the appropriate amount of the education cess and additional health tax.

2. This notice of demand has been challenged by the petitioner in this petition substantially on two grounds. The first ground is that the resolution dated 30th July, 1969 is entirely without jurisdiction. The Municipal Council could not have increased the rate of assessment from 15% which was originally the rate to 20% and that the same is contrary to the provisions of S.112 of the Act and secondly, in any case, having regard to the decision of the Full Bench of this Court in Sholapur Municipal Corporation v. Ramchandra , 74 Bom LR 469 : (1972 Tax LR 2581), the Municipal Council has no power to make a demand for the period prior to the official year in which the alteration in the assessment list his been made.

3. It is not in dispute that before the special general meeting of the Municipal Council passed the resolution dated 30th July, 1969, the rate of property tax recovered by the Municipal Council was 15%. It is this rate, according to the learned Counsel, which has been raised to 20% and it is contended that Cl.(b) of the proviso to S.112 of the Act restricts the scope of the increase in the rate of the tax and it could not exceed 10% of the amount at which the tax was leviable during the preceding official year. What is contended is that having regard to the provisions of Cl.(b) of the proviso to S.112(1), the maximum increase permissible to the Municipal Council was only by 1.5% being 10% of the 15% of the rateable value. On a perusal of the provisions of Chap. IX of the Act it appears to us that the contention is clearly misconceived. S.105 to 112 of the Act deal with imposition of compulsory and voluntary taxes. One of the innovations introduced in S.105 of the Act was that the Municipal Councils were statutorily obliged to impose a consolidated property tax on lands or buildings or both situated within the municipal area and on their rateable value as determined in accordance with S.114. S.105(2) specified the components of the