2017 (4) TMI 1152 - HC - Indian Laws

Final demand notice concerning property tax in respect of the Petitioners cellular sites situate within the municipal limits of the Respondent Corporation - penalty levied under Section 267A - Held that - Subsection (2) inter alia provides that no such appeal shall be entertained in the case of an appeal against any tax including interest and penalty imposed in respect of which provision exists under the Act for a complaint to be made to the Commissioner against the demand, unless such complaint has previously been made and disposed of. That clearly gives away the intention of the legislature to treat penalty as tax for the purposes of Section 406 and make any fixation or charge of penalty appealable. Mr.Tulzapurkar contends that this provision merely deals with those cases where a provision exists under the Act for a complaint to be made to the Commissioner against the demand of interest or penalty charged. That is not the point. The provision is clearly to provide for the cases suggested by Mr.Tulzapurkar. But the corollary is that interest or penalty charged under the Act, by definition, comes within the expression tax used in subsection (1) of Section 406. Appeals merely lie against the matters provides for in subsection (1), which include tax . Subsection (2) carves out certain cases from out of the larger class of appealable matters, where special conditions for filing of appeals are provided. There is no reason to specially provide for cases of appeals from interest or penalty charged (where there is a provision of complaint to the Commissioner), if such cases were not to fall, in the first place, in the category of appealable cases. For all these reasons, it is obvious that any interest or penalty charged is included in the expression tax used in Section 406(1) and is appealable as such. Once we come to the conclusion that penalty charged under Section 267A is appealable, we see no reason not to relegate the aggrieved assessee to the statutory appellate forum. We have already discussed this aspect in the order above whilst dealing with conservancy tax under Section 131 of the Act. All contentions of the Petitioner on merits of the levy, some of which have been noted above, are open to it, to be urged before the appellate forum. We express no opinion on them.

Summary

Issues Involved:
1. Exigibility of mobile towers to property tax.
2. Dispute over specific items of the tax demand.
3. Jurisdictional challenge under Article 227 of the Constitution.
4. Conservancy tax.
5. Shasti (penalty) on illegal constructions.
6. Availability of statutory remedy by way of an appeal under Section 406 of the Maharashtra Municipal Corporations Act.

Detailed Analysis:

Exigibility of Mobile Towers to Property Tax:
The petitioners challenged the demand notices concerning property tax on their cellular sites within the municipal limits of the respondent corporation. The Supreme Court's judgment in Ahmedabad Municipal Corporation vs. G.T.L. Infrastructure Ltd. AIR 2007 SC 597 settled the issue, holding mobile towers exigible to property tax. The petitioners did not dispute this position but challenged specific items of the demand.

Dispute Over Specific Items of the Tax Demand:
The dispute pertained to eleven items of tax claimed by the respondent, with the petitioners contesting five items: conservancy tax, water supply benefit tax, conservancy benefit tax, shasti on illegal constructions, and penalty. The petitioners pressed their submissions specifically on conservancy tax, shasti, and penalty, opting to pursue challenges to the other items before the appellate forum under Section 406 of the Act.

Jurisdictional Challenge Under Article 227:
The petitioners argued that the errors in the tax demand were jurisdictional, warranting interference under Article 227 of the Constitution. However, the court noted that any tax fixed or charged under the Act could be challenged by way of an appeal under Section 406, and the petitioners should pursue this statutory remedy.

Conservancy Tax:
Section 131 of the Act provides for the levy of conservancy tax or sewerage tax. The tax can only be claimed for premises in specific portions of the city where public notice has been given or where premises are connected by a drain with a municipal drain. The petitioners argued that no such public notice was given, and no such matter accumulated or was deposited on the premises. The court held that these arguments could be addressed to the appellate forum under Section 406, as the grievance was essentially about the erroneous finding of the conditions for tax levy.

Shasti (Penalty) on Illegal Constructions:
The petitioners contended that no hearing was given before levying shasti or penalty, and there was non-compliance with a previous court order. The court had earlier set aside the demand for shasti and penalty, directing the corporation to follow the procedure in accordance with law. The petitioners argued that shasti or penalty under Section 267A was not a "tax" and thus not appealable under Section 406. The court, however, noted that the term "tax" in Section 406 includes penalty, as indicated by the legislative intent and the statutory framework.

Availability of Statutory Remedy by Way of an Appeal:
The court emphasized that the petitioners should utilize the statutory remedy of appeal under Section 406 for challenging the tax demand, including shasti and penalty. The court cited precedents distinguishing between tax, penalty, and interest, but noted that the terms could be used interchangeably depending on legislative intent. The court concluded that penalty under Section 267A is appealable and directed the petitioners to pursue their grievances before the appellate forum.

Conclusion:
The petition was dismissed, with the court directing the petitioners to seek redress through the statutory appellate mechanism provided under Section 406 of the Act. The court did not express any opinion on the merits of the levy, leaving all contentions open for the appellate forum. No order as to costs was made.