Basappa Rudrappa Betgeri & Ors. v. Hubli Dharwar Municipal Corporation

Bhargan, J.-This appeal by special leave arises out of a suit challenging the validity of imposition of house-tax and notices issued for realisation of that tax from the appellants. The res-pondent, the Hubli Dharwar Municipal Corpor&tion. was originally constituted as a Borough under the Bombay Municipal Boroughs Act, 1925 (hereinafter referred to as "the Act"). At the relevant time, when the disputes leading to the suit arose, it was still a Borough, but it became a Corporation subsequently in the year 1962. The Borough owned several buildings in Dharwar. Some of these buildings were given on leases, to the appellants. These leases were executed in favour of the appellants by the Borough some time in March and April, 1953. Thereafter, by a General Committee Resolution No. 36 dated 29th June, 1953, the Borough decided to recover house-tax and other municipal taxes from the private individuals who were telllllnts of the municipal buildings leased out to them. In pursuance of this Resolution, a notice was issued by the President of the Borough that all the citizens in oc-cupation of the buildings owned by the Municipality must pay the taxes assessed on them in respect of the premises under their occupation. On 9th September, 1953, the appel!a.nts preferred joint objections against the levy of the house-tax and its realisa .. tion from them. On 9th September, 1954, the Government of Bombay sanctioned the amendment to the then existing House-tax Rules framed under the Act in respect of this Borough, and the General Committee p315sed a Resolution on the 19th February. 11 1955 sanctioning the levy of taxes on Municipal owned buildings,

adopting the sanctioned taxes, and bringing them into force with effect from !st April, 1955 by giving necessary public notice as required by law. Notice under section 77 was published on 25th February, 1955 and then the taxes came into forct on !st April, 1955. Thereafter, fresh lease-deeds were executed by the respon-dent in favour of the appellants on 11th May, 1955. It may be mentioned that, neither in the original leases of 1953, nor in the fresh leases of 1955, was there &ny mention about liability of the tenants to pay the house-tax. Subsequent to the execution of these fresh leases, bills were received from the respondent by the appel-lants calling upon them to pay the house-tax imposed in respect of the buildings belonging to the respondent which were on lease with the appellants. The appellants, thereafter, filed the suit, out of which the present appeal has arisen, challenging the legality of the imposition of the tax. The main ground taken was that the Municipality could not impose 81 house-tax on buildings owned by itself, so that the imposition of this house-tax was invalid in law. The suit was resisted on the plea that it was a valid taxation. A further defence was taken that the suit waa bad for failure on the part of the appellants to give notice to the respondent under sec-tion 206-A of the Act. "The trial Court decreed the suit, holding that the respondent was not legally competent to levy from the tenants, any sum in excess of the agreed rents, and the bills is-sued for recovery of excess were not valid and that, in the circum-illbnces of this case, notice under s. 206-A of the Act was not necessary. On appeal, the Ilnd Additional District Judge agreed with the trial Court that the levy of the tax was not justified, but held that the suit without 81 proper notice under section 206;A of the Act was not maintainable. He, therefore, allowed the ap-peal and dismissed the suit with costs. On second appeal, the High Court of Mxsore upheld the dismissal of the suit, but on both the grounds, viz., that the tax was validly levied, and that the suit wa~ not maintainable for want of proper notice under section 206-A of the Act. It is against this decision that the ap-pellants have come up to this Court. It may be mentioned that the appellants sued the Borough in a representative capacity as representing all the tenants of buildings belonging to the Borough.

Learned counsel for the appellants took us through the various provisions of the Act and relied on the scheme of the Act to urge that a Municipality could not tax its own buildings. The power to impose a tax on buildings is contained in section 73 of the Act, the relevant portion of which is as follows :-

"73. (I) Subject to any genera.I or special orders which the State Government may make in this behalf and to the provisions of sections 75 and 76 a. municipality may impose f<!r the purposes of this Act any of the following tax~. namely:-

(I) a rate on building or lands or both situate with-in the municipal borough;"

A proviso to this provision, which is relevant, may also be quoted :

"Provided further that :

(a) no tax imposed as aforesaid, other than a special miinitary cess, a drainage tax or a water-rate, shall, with-out-the express consent of the Government, be leviable in respect of any building or part of any building or of any vehicle, animal or other property, belonging to Gov-ernment and used solely for public purposes and not used or intended to be used for porposes of profit; and no toll shall be Ieviable in respect of any animal or vehicle 538 SIJP&EMll .COU&T l\IU'OB.l'S [1971] SUPP. s.c.&. • used for the passage of 1-oop~ or the ~cmve~ of Gov· ernment stores or of any other Go~~ property, oc for the passage of military or poli.c~ftkers on . duty or the passage or conve~ of any po;rSOJ! or property . in their custody; · .. • • • Section 74 t!ien provides for p11~nt of an .ad hoc sum ascer· tailned in the manner provided hi that section by the Government or district local board in lieu of a rate on buildings vesting in the Government or in the distri~t local boards which are exempt· ed under clause (a) of the proviso quoted above. Section 75 then lays down the procedure for imposition of the tax 11nd s. 75(c) gi~es the right of filing objections to the inhabitants of the bo-rough. It ma.y be noted that the right of filing objections is not confined only to owners of buildings, but is granted to inhabitants of the borough which will not excjude the Government or the district local board in respect of their buildings which may not satisfy the requirements of the proviso to section 73 inasmuch as they may not be actually used for public purposes and, hence. may be liable to be taxed. Section 78 makes provision for pre-paration of an assessment list and requires that that list should contain the names of the owner as well as occupier, if known. Section 79 deals with cases where the person primaaily liable for payment of this tax cannot be ascertained, and makes it sufficient to designate him in the assessment book/as "the holder" of such premises without further description. Section 80 lays down the manner in which the completed assessment list is fo be published a.nd gives a right to every person claiming to be either the owner or occupier of property included in the list, and 11ny :Lgent of such tierson, to inspect the list and to lll'ake exttaets tfierefrom without charge. Finally, attention was drawn to ~he provisions of section 85, which lays down who is to be primarily responsible for payment of the tax, in the following language :-

"85. A tax imposed in the form of a rate on build-ings or land or bod!. shall be levi!ble primarily from the actual occupier of the property upon which the tax ~ as-sessed if he is the owner of the property; or bolds it on a building, or other lease from ~ .Govjl!lllDellt ot from the municipa.lity. or on a building lease from any person. Othttwise the tax shaD be primtirily Jeviabte as follows. namely:-

(a) if the property Is tet from t~ lessor;

(b) if the ptDperty Is subla, from the superior lessor, (c) if th\' pro.POf!Y i$. l!llkt. fmm the ~ In whom the right to let 11).e same vi:sta.'"

We are Unab\e \<> aaree with learned. counsel for the appellants that this scheme of the Act contams any indication that buildings belonging to the municipality itself cannot be subjected to the house-tax which can be imposed under section 73 of the Act. In fact, the language of section 85 specifically envisages imposition of such a tax on buildings belonging to the municipality. It clearly lays down tha.t such a tax shall be leviable primarily from the actual occupier of the property on which the tax is assessed, even if he holds it on. a lease from the municipality. The fixation of such responsibility primarily on the occupier holding a building on lease from the municipality could only be laid down on the ba~is that the buildings owned by the municipality can be subjected to the tax. Once the tax is imposed on such a building, it would be p:iyable by the cscupier if he holds it as a lessee of the muni-cipality. The same principle applies in the case of buildings held on a lease from the Government. It may be noted that all Gov-ernment buildings are not exempted from the tax. Only those buildings are exempted which are used solely for public purposes and are not used or intended to be used for purposes of profit. Learned counsel urged that it is anomalous that 81 municipality should be permitted to impose tax on buildings owned by itself. But this argument loses sight of the fact that the tax is primarily payable by the occupier and not by the owner. The purpose of imposition of tax by 81 municipality on its own buildings is to ensure that it is paid by the lessees of those buildings. Of course, if the building is not on lease, the. imposition of the tax would •erve no purpose at all. That, however, wilI not make the impo-sition of tax _by the municipality on its own buildings invalid which imposition will be really effective whenever that building is given out on lease to any other person. In these circumstances, we fully agree with the High Court that the tax was validly impos-ed and the suit challenging its realisation from the appellants had 1T tq fail. .

In view of our decision on the validity of the ~. the ques-tion whether a notice under section 206-A of the Act wlis neces-sary or not becomes immaterial. The appeal fails and is dismissed with costs.