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2025 Supreme(Online)(Mad) 56777
IN THE HIGH COURT OF JUDICATURE AT MADRAS
MOHAMMED SHAFFIQ, J
M/s.Raptakos Brett & Co. Ltd., Rep. By its Senior Manager, Mr.S.R.Obilraj – Appellant
Versus
The Corporation of Chennai, Rep. By its Commissioner – Respondent
W.P. No.26601 of 2021
For the Appellants/Petitioners: Mr.Rahul Balaji
For the Respondents: Mrs.V.Vijayalakshmi, Mr.A.S.Ragul Adhithya
Demand notices for tax are invalid if based on non-finalized annual value, violating principles of natural justice requiring opportunity to be heard.
Headnote:(A) Chennai City Municipal Corporation Act, 1919 - Section 35 - Chennai Metropolitan Water Supply and Sewerage Act, 1978 - Levy of water and sewerage tax based on annual value - Writ petition filed against demand notices for water and sewerage tax including surcharge deemed illegal as prior annual value not finalized - Court emphasized the need for determining water and sewerage tax only after establishing annual value, citing principles of natural justice. (Paras 12, 13)
(B) Taxation - Demand notices without prior finalization of annual value - Notices deemed to violate principles of natural justice as no opportunity of hearing provided to the petitioner before imposing tax demands. (Para 12)
Facts of the case:
The petitioner challenged demand notices pertaining to water and sewerage tax claiming them illegal and without authority of law, highlighting non-finalization of property annual value before the demand.
Findings of Court:
The Court ruled the demand notices must be set aside, directing the respondents to afford the petitioner an opportunity for hearing.
Issues: The primary issue was the legality of demands for tax and surcharge levied without finalizing prior annual value as required, and proper opportunity for hearing.
Ratio Decidendi: The court finds illegitimacy in the demand notices, concluding any levy of water and sewerage tax necessitates a finalized annual value, with emphasis on adhering to the principles of natural justice in administrative actions.
Result: Writ petition stands disposed of.
| Table of Content |
|---|
| 1. legality of demand notices against property tax. (Para 1 , 2 , 3 , 6) |
| 2. dispute over surcharge levied on disputed annual value. (Para 8) |
| 3. court's ruling on the illegitimacy of the demand notices. (Para 12) |
| 4. finality of decision setting aside demand notices. (Para 13) |
ORDER
The present writ petition is filed on the premise that demand notices issued by 4th respondent dated 23.10.2021 and 3rd Respondent dated 09.11.2021 with regard to water and sewerage tax including surcharge thereof and all further proceedings pursuant and consequent thereto is without authority of law and thus illegal.
2. Petitioner company is engaged in manufacture of pharmaceutical, Dietetic Specialities and Nutraceuticals products with factories in Chennai, Alwar, Roha, Karad, Dahej and Thane. Petitioner's registered office is at Mumbai and has a factory at No.142, (Old No.66), Velachery Road, Chennai- 600 042. Petitioner's factory building at Velachery was constructed during 1959 – 1962. Property tax was levied and assessed by respondent Corporation and paid regularly without default. During 2006-07, petitioner made certain alterations and additions to its factory premises in respect of an extent of 21,221.70 sq.ft., after obtaining necessary approval from the authorities concerned. The total constructed area after such alteration/ addition now stands at 71,196 sq.ft.
3. There has been several rounds of litigation prior to this writ petition before this Court with regard to fixation of Annual Value of property for the purposes of levy of property tax for the period commencing 2007. The dispute with regard to fixation of property tax is submitted to commence with a property tax revision order dated 29.03.2007 from the 1st respondent wherein a demand of Rs.17,72,576/- towards property tax was made. This was followed by further demands for the period 2001-02 onwards. This court does not propose to set out in detail the various demands raised under the Property tax except to state that the assessment to property tax of the subject property was the subject matter of challenge in the following Writ Petitions and Writ Appeal viz., a) WP.Nos.18758 to 18763 of 2009, b) WP.Nos.18321 to 18323 of 2010, c) WP.No.2928 of 2011, and d) WA.No.2618 of 2018
3.1. At the outset, it may be relevant to note that it is not in dispute that in terms of Section 35 of the Chennai Metropolitan Water Supply and Sewerage Act, 1978 , (hereinafter referred to as “CMWSS Act”) Water tax and Sewerage tax is levied on the basis of “Annual Value” determined under the Chennai City Municipal Corporation Act, 1919 .
4. As stated supra, I do not propose to deal with in detail the Writ Petitions referred to supra except to state that Writ Appeal No.2618 of 2018 was disposed of by this Court directing the petitioner to prefer an appeal before the Taxation Appellate Tribunal, Chennai. Accordingly, Petitioner preferred an appeal before the Tribunal in Appeal No.26 of 2018, under the Chennai City Municipal Corporation Act, 1919 . Petitioner continued to pay property tax at the earlier rate.
5. Taxation Appellate Tribunal vide order dated 16.02.2021, fixed the annual value of petitioner's property. Final order of assessment was passed by 2nd respondent on 02.09.2021 on the basis of the finding of Taxation Appellate Tribunal and the property tax assessment came to be finalised at Rs. 2,85,355/-
with effect from the assessment year 2000-01 till date.
6. While so, the 3rd and 4th Respondents issued notices demanding payment of water and sewerage tax under the CMWSS Act. It is submitted that the petitioner had not availed of Metro Water Services but provided with sewerage connection only. Further, 4th Respondent had issued a demand and cut off notice dated 23.10.2021 calling upon petitioner to pay a sum of Rs.44,76,009/- on the basis of the annual value determined by the Taxation Appellate Tribunal. Petitioner was also called upon to pay surcharge of Rs.21,82,447/- towards delayed payment.
