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TMI Blog2015 (9) TMI 1743X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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. - CWP No.17765 of 2015 (O&M) - - - Dated:- 10-9-2015 - HON'BLE MR. JUSTICE HEMANT GUPTA AND HON BLE MRS. JUSTICE RAJ RAHUL GARG Mr. Akshay Kumar Jindal, Advocate, for the petitioner. ORDER HEMANT GUPTA, J. Challenge in the present writ petition is to the Haryana Municipal Corporation (Amendment) Act, 2012 (for short the Act ) vide Haryana Act No.21 of 2012 particularly to Section 87(1)(a) contemplating determination of the property tax and also the notification dated 11.10.2013 (Annexure P-3) fixing the rates of property tax. 2. The petitioner is owner of the properties situated within the area of Municipal Corporation, Karnal. The Act, as originally enacted contemplated determination of the Annual Rental Value , as the basis for levy of house tax. The petitioner refers to the guidelines circulated by the Central Government mandating the reforms of the property tax system under the Jawaharlal N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elopment, economic classes of occupants, etc. The factor(s) that should be considered should be decided by the ULB taking into consideration local requirements and availability of information. 3. The petitioner contends that in pursuant of such recommendations, the State has enacted the Haryana Municipal Corporation (Amendment) Act, 2012 vide Act No.21 of 2012 substituting Section 87(1)(a) and Section 97 and at the same time introducing Sections 87A, 87B 87C. The relevant Sections, the legality and validity of which is subject matter of challenge, read as under: 87. Taxes etc. to be imposed by Corporation under this Act and arrangement of certain taxes collected by Government. (1) The Corporation shall, for the purposes of this Act, levy the following taxes- (a) a property tax payable by the owner or occupier of building and land at the rates notified by the Government, from time to time depending upon the area in which the building or land is situated, its location, purpose for which it is used, its capacity for profitable use, quality of construction and other relevant factors. xx xx 94. Apportionment of liability of taxes on land and building when premi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notified in this regard, of which he is either owner or the occupier at the rates notified under clause (a) of subsection (1) of Section 87. 5. Still further, Section 21 of the Act is to validate the notification issued on 21.06.2012 fixing the rates of tax. It is pointed out that earlier the State has issued notification dated 21.06.2012 prescribing the rate of tax, which was substituted by another notification dated 28.01.2013. Now, another notification has been issued on 11.10.2013 substituting the notification dated 28.01.2013, whereby the Municipal Corporations in the State of Haryana have been categorized in two categories i.e. (i) Municipal Corporations of Gurgaon and Faridabad are A1 Cities ; (ii) Municipal Corporations of Ambala, Panchkula, Karnal, Panipat, Rohtak, Hisar and Yamunanagar are A2 Cities . 6. It is contended by the learned Counsel for the petitioner that uniform varying rates of property tax have been imposed keeping in view the sizes of the plot and the purpose for which, the site is being used located in A1 and A2 cities without taking into consideration the factors enumerated in Section 87(1)(a) of the Act. The said provision contemplates that p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the location of building within the area of Municipal Corporation. 9. We have heard learned counsel for the petitioner at length and find that the arguments raised are required to be examined in two parts. Firstly, as to whether the provisions of the Act are illegal or ultra vires any provision of the Constitution and secondly as to whether, the notification fixing rates of tax, is in accordance with the provisions of Statute. 10. The charging provision to levy tax is Section 87A. It provides that the State Government shall notify the rate of property tax from time to time. The factors, which have to be taken into consideration by the Government, are (1) the area in which the building or land is situated; (2) its location; (3) purpose for which it is used; (4) its capacity for profitable use; (5) quality of construction and (6) other relevant factors. Such provision of the Statute cannot be challenged on the ground that it contravenes the guidelines as issued by the Central Government. 11. The power of imposition of the property tax falls within Entries 5 49 of List II of the Constitution. Such Entries read as under: 5. Local Government, that is to say, the consti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal tenancy, particularly in the case of buildings; and (iii) where either of these two methods is not available, by valuation based on capital value from which annual value has to be derived by applying a suitable percentage which may not be the same for lands and buildings. xx xx xx 14. .Essentially, in this case we are concerned with commercial property. It is the tax on the scarce resources, mainly the land whose prices are escalating, which provides an intelligible differentia (rational basis) having requisite connection with the object sought to be achieved. There cannot be a straight-jacket formula for determination of the annual value. The State is always entitled to raise resources by way of imposition of tax. As held in the case of Patel Gordhandas Hargovindas v. Municipal Commr., Ahmedabad, AIR 1963 SC 1742 cost of construction plus market value of the land thus constituted the very basis for determination of the annual value, where it is not possible to obtain figures concerning actual rent or hypothetical rent, it is in these circumstances that the cost of construction plus the market value of the land can form the basis for arriving at the annual value. 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Act qua the land and by proceeding to arrive at the costs of construction of the houses by invoking the instance of registration on transfer of houses under the Registration Act. If the Assessing Officer is competent to arrive at the market value for the purposes of determination of the house tax under the Punjab Municipal Act, the legislature while enacting the Act, is competent to lay down the basis of determination of the house tax. The factors mentioned in Section 87(1)(a) i.e. the area in which the building or land is situated, its location, purpose for which it is used, its capacity for profitable use, quality of construction and other relevant factors, are the relevant guidelines incorporated in the statute itself to determine the rate of tax. Since the levy of property tax falls within the exclusive domain of the State legislature, it is the legislature which is competent to determine the basis of levy of the property tax. Thus, we do not find any illegality when Section 87(1)(a) of the Act was incorporated empowering the State Government to notify the rates of property tax by taking into consideration the factors as mentioned therein. 14. The question which requires ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sabzi mandi/timber market/ sub-market yard, clubs, hotels, stand-alone hostel, paying guest house, private office buildings and restaurants. 16. Conceivably, all relevant uses regarding profitable use of the property entailing the house tax, have been taken into consideration. The quality of construction is taken into consideration when a nominal property tax of Rs.1.00 per square yard per year is levied for A1 cities and Rs.0.75 per square yard per year for A2 cities on house with plot size upto 300 square yards. Still further 100% rebate is provided to all residential building upto 250 square yards owned by the ex-servicemen or families of deceased soldiers, exservicemen and ex-central paramilitary personnel etc. and also to the religious properties, orphanages, Municipal Buildings, cremation/Burial Grounds etc. Therefore, the purpose for which the building is used, the nature of construction etc., has been kept in view while fixing different rates of tax. Even if a particular purpose has not been taken into consideration, it will not vitiate the levy of property tax as the provisions of Section 87(1)(a) are the guidelines which have to be taken into consideration and are dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is liable to penalty which amount of penalty can be subjected to appeal. Therefore, it is the process to facilitate the payment of property tax voluntarily. In Government of Andhra Pradesh v. P. Laxmi Devi (Smt.), (2008)4 SCC 720, the Hon ble Supreme Court held that where the language of the taxing provision is plain, the court cannot concern itself with the intention of the legislature. It was held as under:- 20. In Partington v. Attorney General, (1969) LR 4 HL 100, Lord Cairns observed as under:- If the person sought to be taxed comes within the letter of the law he must be taxed, however, great the hardship may appear to the judicial mind. On the other hand if the court seeking to recover the tax cannot bring the subject within the letter of the law, the subject is free, however, apparently within the spirit of the law the case might otherwise appear to be. The above observation has often been quoted with approval by this Court, and we endorse it again. In Bengal Immunity Co. Ltd. v. State of Bihar, AIR 1955 SC 661, this Court held that if there is hardship in a statute it is for the legislature to amend the law, but the court cannot be called upon to discard the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad and Ors. (supra) the appellant had challenged the constitutional validity of Section 406(e) of the Bombay Municipal Corporation Act which required the deposit of the tax as a precondition for entertaining the appeal. The proviso to that provision permitted waiver of only 25% of the tax. In other words a minimum of 75% of the tax had to be deposited before the appeal could be entertained. The Supreme Court held that the provision did not violate Article 14 of the Constitution. 20. Similar provisions have been examined by a Full Bench of this Court in M/s Emerald International Ltd. v. The State of Punjab, 1997(2) PLR 797. In M/s Emerald s case, the Full Bench held as under:- 20. The perusal of the aforementioned observations of the apex Court clearly show that the apex Court while dealing with the constitutional validity of certain provisions of the Bombay Provincial Municipal Corporations Act and Section 406 of the said Act as amended by Gujarat Act (5 of 1970) held that the right of appeal was the creature of the statute and that it failed to understand as to why the Legislature while granting the right of appeal could not impose conditions for the exercise of such right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing conclusions can be deduced : (a) The appeal is a creation of a Statute and in case a person wants to avail of the right of appeal, he has to accept the conditions imposed by the Statute. (b) The right of appeal being a creature of Statute, the Legislature could impose conditions for exercise of such a right. Neither there is a constitutional nor legal impediment for imposition of such a condition. (c) The right of appeal is neither natural nor inherent attaching to a litigation and such a right neither exists nor can be assumed unless expressly given by the Statute. (d) Even if, this Court was to interpret the bare provisions of two statutes, i.e., the Punjab General Sales Tax Act, 1948 and the Haryana General Sales Tax Act, 1973, it could safely be held that there is a complete bar to the entertainment of an appeal by the appellate authority without the payment of tax amount unless the authority is satisfied that the dealer is unable to pay the amount so assessed and only in that situation the appellate authority for the reasons to be recorded in writing can entertain the appeal without deposit of the payment of such amount. 21. The argument that the amend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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