l Appeals Nos 1302 to 1906 of 1968
752 Appeals by special leave from the judgment and orders dated September 26 27 and 29 1967 of the Mysore High Court in Writ Petitions Nos
907 1004 1005 1175 and 1245 of 1967
Jagadish Swarup Solicitor General C R Somasekharan and R B Datar for the appellants in all the appeals
M Veerappa and G Narayana Rao for respondent No 1 in all the appeals
section section Javali and section P Nayar for respondent No 2 in all the appeals
The Judgment of the Court was delivered by Vaidialingam J
These five appeals by special leave by the City Municipal Council Mangalore and the Commissioner of the City Municipal Council are directed against the orders passed by the Mysore High Court in Writ Petitions Nos
907 1004 1005 1175 and 1245 of 1967 quashing the demand notices issued by the appellants against the first respondent in each of these appeals for payment of property tax for the half year ending September 30 1966
As the grounds of attack levelled against the demand notices by the said respondents are common we will only refer to the averments contained in Writ Petition No 907 of 1967 out of which Civil Appeal No 1302 of 1968 arises
buildings situated in Ward 11 and Ward XX within Mangalore Municipality in the South Canara District which originally formed part of the Madras State and which on reorganisation of the States became part of the State of Mysore
The Mysore Municipalities Act 1964 Act XXII of 1964 hereinafter referred to as the Mysore Act came into force from April 1 1965 as per the notification dated September 23 1965 issued by the State Government
Certain sections had already come into force
Till the Mysore Act came into force the Mangalore Municipality was governed by the Madras District Municipalities Act 1920 Act V of 1920 hereinafter called the Madras Act
The Madras Act had provided for levy of property tax the procedure to be adopted for the same and as to how the annual value of a building was to be arrived at as well as the percentage at which the property tax was to be levied
Similarly the Mysore Act had also provided for levy of property tax prescribing the ascertainment of annual ratable value and also the rate at which the tax was to be levied
Although the Mysore Act came into force from April 1 1965 the appellants issued demand notices for property tax under the said Act for the assessment year 1965 66
In those demand notices the Municipal Council determined the ratable annual 753 value under section 101 2 of the Mysore Act and assessed the tax on the basis of that annual ratable value but at rates under the Madras Act
The tax was paid as per the demand notices
But on March 16 1967 the appellant issued the impugned notices of demand under the Madras Act for payment of property tax for the year 1966 67
The tax demanded on the basis of the Madras Act was considerably higher than that originally demanded and paid under the Mysore Act for the assessment year 1965 66
Notwithstanding the protest made by the first respondent the appellants threatened to collect the tax as per the demand notices and hence the first respondent filed Writ Petition No 1907 of 1967 challenging the demand notices
The main grounds of attack against the
demand notices as raised in the said Writ Petition were that after the passing of the Mysore Act the appellants had no power to levy property tax under the Madras Act and therefore the demands were illegal
The demand notices were further attacked on the ground that section 382 of the Mysore Act which related to the repeal of many Acts including the Madras Act and the saving provisions contained therein did not justify the issue of the demand notices
The first respondent accordingly prayed for quashing the demand notices issued under the Madras Act
He had also raised certain contentions regarding the levy of health cess included in the notices but it is unnecessary to refer to those averments as the High Court has held against the first respondent and that question does not arise in these appeals
The appellants pleaded that under the Mysore Act property tax among other things has been imposed after following the procedure prescribed in sections 95 to 97 therein and the imposition of tax has come into force from April 1 1967 but for the period in question viz the year 1966 67 the demands were legal and valid in view of the provisions contained in section 382 of the Mysore Act
Notwithstanding the repeal of the Madras Act the provisions contained in section 382 of the Mysore Act clearly saved the right of the appellants to levy property tax under the Madras Act to adopt both the annual value as well as the rate of tax as per the assess ment registers maintained under the said Act
In particular the appellants relied upon the second proviso in section 3821 of the Mysore Act and the third proviso inserted in the said section with retrospective effect by the Mysore Municipalities Amendment Act  1966 Mysore Act XXXIV of 1966
According to the appellants as necessarily the imposition of property tax under the Mysore Act after following the procedure contained therein will take time the Legislature had made consequential provisions in section 382 with a view to enable the imposition of property tax under the repealed enactments during the interim period
The High Court has by and large accepted the contentions of the first respondent
According to the High Court although 754 the higher rate of tax under the Madras Act is preserved by proviso 3 to section 3821 of the Mysore Act the provision for the determination of the annual value under section 822 of the Madras Act is not saved
The High Court is further of the view that the second proviso to section 3821 of the Mysore Act only continues the old impost and the third proviso preserves the old rates and that they do not continue the old annual value
The net result of the decision of the High Court is that the Municipal Council has to determine the annual ratable value of the building as provided by section 10 1 2 of the Mysore Act and to assess the property tax at the rate at which it is assessed under the Madras Act
Finally the High Court quashed the demand notices issued by the appellants
The learned Solicitor General appearing for the appellants urged that the High Court was in error in interpreting the second and third provisos to section 3821 of the Mysore Act
it was urged that as the levy of property tax after adopting the procedure indicated in the Mysore Act will take time the Legislature had by incorporating the necessary provisions in section 382 particularly the second and third provisos to sub section
1 preserved the right of the Municipal Council concerned to adopt not only the annual value but also the rate of property tax payable according to the assessment registers maintained under the Madras Act till they are superseded by anything done under  the Mysore Act
The learned Solicitor General further urged that the view of the High Court that the annual ratable value has to be determined under the Mysore Act and the computation of the rate of tax has to be under the Madras Act was anomalous and was not warranted by the provisions of the Mysore Act
On the other hand Mr Veerappa learned counsel appearing for the first respondent in all the appeals has supported the view taken by the High Court and urged that a proper interpretation had been placed on section 382 of the Mysore Act
According to the learned counsel normally after the coming into force of the Mysore Act no assessments could be made under  the Madras Act but section 382 of the Mysore Act repealing the Madras Act had made certain special provisions the existence of which alone would attract certain actions taken under the Madras Act
In order to appreciate the contentions noted above it is necessary to refer broadly to the scheme of the two Acts relating to the levy of property tax
We shall first advert to the Madras Act
Under section 781 power given to the Municipal Council to levy among other taxes a property tax
Under sub section
3 a resolution of a municipal council determining to levy a tax has to 755 specify the rate at which such tax is to be levied and the date from which it shall be lived
Section 811 provides that it a Council by resolution determines that a property tax shall be levied such tax shall be levied on all buildings and lands within the municipal limits save those exempted by the statute or by any other law
Sub section 2 states that the tax shall be levied at such percentages of the annual value or the buildings or lands as may be fixed by the Municipal Council Subject to section 78
under this section we are informed that 25  has been fixed as the maximum rate
Sub section
2 of section 82 provides that the annual value of the lands and buildings shall be deemed to be the gross annual rent at which they may reasonably be expected to be let from month to month or from year to year less a deduction in the case or buildings or ten per cent of that portion of such annual rent which is attributable to buildings alone
it further provides that the sale deduction shall be in lieu or all allowance for repairs or on any other account
Section 86 provides that the property tax shall be levied every halt year and shall excepting as otherwise provided in schedule IV be paid lay the owner within thirty days of the commencement of the half year
Section 124 provides that the rules and tables embodied in Schedule IV shall be read as part of Chapter VI dealing with Taxation and Finance
Schedule IV deals with Taxation and Finance Rules
Rule 2 provides for the preparation and maintenance of assessment books showing the persons and property liable to taxation under the Act and the assessment books being made available for inspection by the tax payers
Rule 6 provides for the value of any land or building for purposes of property tax being determined by the executive authority
Under rule 7 the executive authority has to enter in the assessment books the annual or capital value of all lands and building and the tax payable thereon
Rule 81 states that the assessment books shall be completely revised by the executive authority once in every five years
Sub rule 2 thereof provides for amending the assessment books at any time between one general revision and another in the manner indicated therein
A perusal of the provisions referred to above shows that under the Madras Act the property tax is levied on the annual value of buildings which is deemed to be the gross annual rental value less a deduction of ten per cent of that portion of annual rent is attributable to the buildings alone
The Municipal Council has to pass a resolution determining to levy the property tax and that resolution should also specify the rate at which such tax is to be levied as also the date from which it shall be levied and the tax is levied every half year
The executive authority has to maintain the assessment books containing entries regarding the annual value as well as the tax payable thereon
The executive authority is under an obligation to completely revise the assessment once in very five years
L5SupCI 3 756 There is no controversy that the Madras Act was applicable to the City of Mangalore even after it formed part of the Mysore State on me reorganization of the States
The Madras Act as we have mentioned earlier was repealed by the Mysore Act which came into force with effect from April 1 1965
Coming to the Mysore Act Chapter VI deals with Municipal Taxation
section 94 enables a municipal council to levy a tax on buildings or lands or both situated within the municipality after complying with tile procedure indicated therein and subject to any general or special orders of Government and at rates not exceeding those specified in Schedules I to VII
The maximum rate has been fixed at 24  of the annual ratable value
Section 21 defines annual retable value  as the gross annual rent for which any building or land exclusive of furniture or machinery might reasonable be expected to be let from month to month or year to year
Section 95 deals with the procedure to be adopted preliminary to imposing a tax
Section 10 1 2 provides that the annual ratable value of a building shall be the gross annual rent as defined in cl 1 of section 2 less a deduction of sixteen and two thirds per cent of such annual rent
It further states that the said deduction shall be in lieu of all allowances for repairs or on any other account whatsoever
Section 103 deals with the preparation of an assessment list
Section 3821 repeals the various enactments referred to therein including the Madras Act
The first proviso which saves certain matters does not come into the picture in this case
The second proviso as well as the third proviso introduced by the Mysore Municipalities Amendment Act 1966 are relevant for our purpose and they ire as follows 2 Provided further that subject to the preceding proviso anything done or any action taken including any appointment or delegation made tax fee or cess imposed notification order instrument or direction issued rule regulation form bye law or scheme framed certificate obtained permit or licence granted or registration effected under the said laws shall be deemed to have been done or taken under the corresponding provisions of this Act and shall continue to be in force accordingly unless and until superseded by anything done or any action taken under this Act  3 Provided further that notwithstanding anything contained in the preceding proviso where any tax duty fee or cess other than a duty on transfers of immovable properties has been imposed under the said laws at a rate higher than the maximum rate permissible under this Act
such tax
fee or cess may continue to be 757 imposed and collected at such higher rate unless and Until superseded by anything done or any action taken under this Act
 The third proviso has been introduced with retrospective effect by the Amending Act
It is not really necessary for us to consider more elaborately the scheme of the Mysore Act because
even according to the appellants the procedure indicated therein whatever may be the procedure about which we express no opinion has not been taken before the issue of the demand notices which were under challenge before the High Court
On the other hand the appellants have exclusively relied on the second and third provisos to section 382 1 of the Act
The learned Solicitor General has urged that the assesment books under the Madras Act were prepared on April 1 1964 and if so under the second and third provisos to section 3821 the property tax can be levied and collected as per the provisions of the Madras Act
In particular the learned Solicitor General placed reliance upon the provisions of the Madras Act relating to the maintenance of assessment books and the assessment books having to be revised only once in every five years and pointed out that in this case the assessment books having been prepared on April 1 1964 they will have currency for a period of five years till March 31 1969
The second proviso to section 3821 no doubt saves any tax which had been imposed under the Madras Act
Similarly under the third proviso the Municipal Council will have authority to collect tax even at a rate higher than the maximum rate permissible under the Mysore Act but the essential requisite for attracting the two provisos is that the tax should have been imposed under the Madras Act as per the second proviso and tax at a higher rate should have been imposed again under the Madras Act as per the third proviso
We are not inclined to accept the contention of the learned Solicitor General that by merely preparing the assessment registers under the Madras Act on April 1 1964 it can be stated that a tax has been imposed under the second proviso or a tax at a higher rate has been imposed underthe third proviso
We have already referred to the material provisions of the Madras Act relating to the  levy of property tax
Those provisions show that the municipal tax is an annual tax leviable for a particular official year and the assessment list on the basis of which the tax is assessed is for such official year
This was the view expressed by this Court in Municipal Corporation vs Hiralal1 while interpreting certain provisions of the Madhya Bharat Municipalities Act 1954
No doubt the wording in the Madhya Bharat Act in section 76 dealing with assessment list was slightly different but in our opinion the 1  758 principle enunciated in that decision regarding the municipal tax being an annual tax leviable for a particular official year and the assessment list on the basis or which the tax is assessed having currency for each such official year is applicable also to the interpretation of the Madras Act
No resolution passed by the Municipal Council regarding the levy of the property tax and the rate at which it is to be levied having currency for the year 1966 67 has been brought to our notice
The learned Solicitor General has drawn our attention to the minutes dated September 15 1966 as well as the Council s resolution No 1280 dated December 20 1966 relating to the levy of property tax in the City of Mangalore for the period in question under the Mysore Act
Those proceedings will not assist the appellant as the necessary procedure under the Mysore Act has not been followed and therefore that resolution cannot have any legal validity so as to justify the imposition of tax
Normally the municipal council will have to prepare a fresh assessment list every year
By virtue of section 124 of the Madras Act the rules and tables embodied in Schedule IV have to be read as part of Chapter VI dealing with Taxation and Finance
Though ordinarily the Municipality would have to prepare a fresh assessment list every year rule 8 of Schedule IV permits the Municipal Council to continue the same assessment list for the next four succeeding years and to revise it once every five years
But in order to enable the Municipal Council to levy and collect a tax it has to pass a resolution determining to levy a tax the rate at which such tax has to be levied as also the date from which it shall be levied
That the tax is an annual tax is also borne out by sub section
2 of section 82
If the contention of the learned Solicitor that the assessment list once prepared has to be adopted for five years is accepted it will result in the annual value on a particular building or house being static for five years during which a municipal council can go on adopting the assessment list prepared in an earlier year and the owner or occupier of the building being deprived of the
right to object to the valuation regarding the annual value or the tax assessed thereon
This will be the result even though the annual value may have decreased for one reason or the other
It follows that the contention that the preparation of the assessment books amounts to imposing of a tax so as to justify the issue of the demand notice cannot be accepted
Having due regard to the second and third provisos to section 3821 and the other material provisions of the Mysore Act the position is that a property tax must have been imposed by the Madras Act and even though the rates of such tax were higher than under the Mysore Act the said higher tax could be collected
But no such tax having been imposed under the Madras Act the 759 second and third provisos to section 3821 do not apply and hence the demands for payment of property tax for the period are not justified
Though we are not in agreement with some of the reasons given by the High Court for issuing the writ the conclusion arrived at by the High Court that the second and third provisos to section 3821 of the Mysore Act do not justify the issue of the demand notices for the period in question is correct
The result is that the appeals fail and are dismissed with costs
There will be only one hearing fee


Summary:
The first respondent was the owner of some buildings within the appellant Municipality
The appellant was governed by the Madras District Municipalities Act 1920 till April 1 1965 when the Mysore Municipalities Act 1964 came into force and thereafter by the Mysore Act
For the year 1966 67 the appellant issued notices of demand for payment of property tax under the Madras Act
The tax was higher than under the Mysore Act
The first respondent challenged the levy by a writ petition and the appellant justified the levy under section 3821 of the Mysore Act and its provisos
The High Court quashed the demand notices
In appeal to this Court HELD  Under the second and third provisos to section 3821 of the Mysore Act if a property tax has been imposed by the Madras Act even though the rate of such tax is higher than that under the Mysore Act the higher tax could be collected
The provisions of Madras Act namely sections 78 81 82 124 and r 8 of Schedule IV of the Act show that the municipal tax is an annual tax leviable for a particular official year and the assessment list on the basis of which the tax is assessed is for such official year
Though ordinarily the Municipality would have to prepare a fresh assessment list every year r 8 of Schedule IV of the Madras Act which by virtue of section 124 has to be read as part of Chapter VI of the Act dealing with Taxation and Finance permits the Municipal Council to continue the same assessment list for the next 4 succeeding years and to revise it once every 5 years
But in order to enable the Municipal Council to levy and collect a tax under section 78 it has to pass a resolution determining to levy a tax the rate at which such tax has to be levied as also the date from which it shall be levied
In the present case no such resolution was passed by the Municipal Council
Therefore by merely preparing the assessment registers under the Madras Act on April 1 1964 which will have currency for a period of 5 years till March 31 1969 it cannot be said that a tax or that a tax at a higher rate had been imposed
No such tax having been imposed under the Madras Act the provisos to section 3821 of the Mysore Act do not apply and the demands for payment of the property tax were not justified
757 E H 758 D H 759 A Municipal Corporation vs Hiralal   followed