2003 (2) TMI 30 - HC - Income Tax

Challenge in this bunch of writ petitions is to the vires of the Haryana Municipal (Amendment) Act, 2001, whereby the definition of annual value in clause (1) of section 2 of the principal Act has been amended. - After the amendment the law had changed and fresh directions had been issued by the State Government keeping in view the amended provisions. The Municipal Council had, thus, no option but to revise the assessment in the light of the fresh directions issued in terms of the amended provisions which, as we have held above, were constitutionally valid. - In the result, the writ petitions fail and they stand dismissed

Summary

Issues:
Challenge to the vires of the Haryana Municipal (Amendment) Act, 2001 and directions issued by the State Government regarding house tax and land tax valuation.

Analysis:
The judgment addressed the challenge to the vires of the Haryana Municipal (Amendment) Act, 2001, which amended the definition of "annual value" in the Haryana Municipal Act, 1973. The amendment changed the method of calculating the annual value of buildings and lands for tax purposes. Prior to the amendment, the annual value was based on fair rent or expected rent, while post-amendment, it was determined at five percent of the cost of construction plus land value with reasonable depreciation. The State Government issued directions regarding the valuation formula for house tax and land tax based on property cost, annual value, maintenance rebate, and tax rates for different types of buildings.

The petitioners challenged the formula set by the State Government, arguing that it left no discretion to vary the property value even if the actual market value was lower, rendering the objection process redundant. They also contested the use of District Collector-fixed rates for land value determination, claiming it did not reflect the actual value. The court rejected both contentions, stating that the structure value had to be determined case by case, and objections could still be raised. The use of Collector-fixed rates for land valuation was deemed fair and reasonable as it was based on actual sale transactions, reflecting market value. The court held that using Collector rates was not arbitrary and did not violate constitutional provisions.

An additional objection was raised regarding the revision of house tax assessment by a Municipal Council, which had adopted an older assessment. The court dismissed this argument, stating that post-amendment, the Council was bound to revise assessments based on fresh directions from the State Government. As no other points were raised in the petitions, they were dismissed, and each party was directed to bear their own costs.