2015 (9) TMI 1743 - HC - Customs

Determination of the property tax - notification dated 11.10.2013 (Annexure P-3) fixing the rates of property tax - whether the notification dated 11.10.2013 fixing the rate of tax is in accordance with the provisions of Section 87(1)(a) of the Act? HELD THAT - The State legislature is competent to make the provisions of law as applicable retrospectively. In the present case, Section 21 of the amending Act, validates the notification issued on 30.9.2003 and 21.6.2012. Therefore, it is not a retrospective imposition of tax, but validating of the action taken earlier i.e. the notification dated 30.9.2003 and 21.6.2012. The notification dated 11.10.2013, has been issued in terms of Section 87(3) and Section 149(1) of the Act. The levy of tax and rates have been made applicable from the Financial Year 2010-11 but with a further option that the property owners have the option to pay the same as per the new or old policy, whichever is opted by them. Therefore, it is open to the owners to opt for the rates, which were prevailing prior to the publication of the notification on 11.10.2013. It is not a retrospective taxation, but an option has been given to pay the tax as per the old policy or the new provisions. Thus, the Notification dated 11.10.2013 is not contrary to the provisions of the Statute. Petition dismissed.

Summary

Issues Involved:
1. Legality and validity of the Haryana Municipal Corporation (Amendment) Act, 2012, particularly Section 87(1)(a).
2. Legality and validity of the notification dated 11.10.2013 fixing the rates of property tax.
3. Allegations of discriminatory and arbitrary provisions in the Act.
4. Allegations of excessive delegated legislation.
5. Allegations of violation of principles of natural justice.
6. Allegations of harsh conditions for the right of appeal under Section 139.
7. Allegations of the Act being contrary to Central Government recommendations.
8. Allegations of retrospective application of the notification.

Detailed Analysis:

1. Legality and Validity of the Haryana Municipal Corporation (Amendment) Act, 2012:
The petitioner challenged the Haryana Municipal Corporation (Amendment) Act, 2012, specifically Section 87(1)(a) which determines property tax. The court upheld the Act, stating that the power to impose property tax falls within Entries 5 and 49 of List II of the Constitution, making the State Legislature fully competent to legislate on this subject. The court cited the Supreme Court's judgment in Municipal Committee, Patiala v. Model Town Residents Association, which upheld the classification of buildings based on self-occupied and tenanted statuses for tax purposes.

2. Legality and Validity of the Notification Dated 11.10.2013:
The notification dated 11.10.2013, which fixed different rates of property tax for various categories of properties, was challenged for not considering factors enumerated in Section 87(1)(a). The court found that the notification did take into account relevant factors such as area, location, purpose of use, and quality of construction, as required by Section 87(1)(a). The court concluded that substantial compliance with these factors was sufficient and upheld the notification.

3. Allegations of Discriminatory and Arbitrary Provisions:
The petitioner argued that the Act and the notification were discriminatory and arbitrary, lacking clear guidelines for tax calculation. The court rejected this argument, stating that Section 87(1)(a) provided sufficient guidelines, and the State Government had considered these factors while fixing tax rates. The court emphasized that the classification of cities and properties was a conscious decision by the State Government.

4. Allegations of Excessive Delegated Legislation:
The petitioner claimed that Sections 87 and 97 gave sweeping powers to the State Government, amounting to excessive delegated legislation. The court disagreed, noting that the power to notify tax rates fell within the executive domain of the State Government, as provided by the statute. The court found no illegality in the delegation of this power.

5. Allegations of Violation of Principles of Natural Justice:
The petitioner contended that the Act and notification did not provide an opportunity for a hearing before fixing tax rates, violating natural justice principles. The court held that the levy of property tax was statutory, and the statute itself provided mechanisms for self-assessment and appeals. The court concluded that there was no violation of natural justice, as the statutory framework allowed for adjudication and appeals.

6. Allegations of Harsh Conditions for the Right of Appeal:
The petitioner argued that requiring the deposit of the tax amount before entertaining an appeal under Section 139 was harsh and effectively took away the right of appeal. The court cited precedents where similar provisions were upheld, stating that the right of appeal is statutory and can be conditioned by the legislature. The court found no constitutional or legal impediment in imposing such conditions.

7. Allegations of the Act Being Contrary to Central Government Recommendations:
The petitioner claimed that the Act contravened Central Government guidelines, making it ultra vires. The court clarified that the guidelines were advisory, and the State Legislature was competent to legislate on property tax independently. The court upheld the Act, noting that it did not need to align exactly with Central Government recommendations.

8. Allegations of Retrospective Application of the Notification:
The petitioner challenged Clause 4(i) of the notification, arguing it applied retrospectively. The court found that the State Legislature was competent to validate earlier notifications and that the provision allowed property owners to choose between old and new tax policies. The court concluded that it was not retrospective taxation but an option for property owners, thus upholding the notification.

Conclusion:
The court dismissed the writ petition, upholding the legality and validity of both the Haryana Municipal Corporation (Amendment) Act, 2012, and the notification dated 11.10.2013. The court found no merit in the arguments presented by the petitioner, affirming the legislative competence and procedural fairness of the State Government's actions.