Appeal No 141 of 1965
Appeal by special leave from the judgment and order dated December 7 1963 of the Madhya Pradesh High Court Indore Bench in Second Appeal No 378 of 1961
BP Jhandharia PC Bhartari JB Dadachanji and OC Mathur for the appellant
WS Barlingay VG Tambvekar and AG Ratnaparkhi for respondents Nos 1 2 and 4 to 7
The Judgment of the Court was delivered by Shelat J
This appeal by special leave is directed against the judgment and order of the High Court of Madhya Pradesh in Second Appeal No 378 of 1961
The respondents as trustees of a charitable trust are the owners of certain houses situate in Indore City
Prior to January 26 1954 the Indore Municipality was governed by the Indore City Municipal Act 4 of 1909
By virtue of the power conferred on it by that Act the Municipality used to levy and collect house tax 127 at the rate of 7 of the gross annual letting value of these houses and the trustees duly paid such tax
After the formation of the State of Madhya Bharat the legislature of that State passed the Madhya Bharat Municipalities Act 1954 which came into force on January 26 1954
The 1954 Act repealed amongst other Acts the Indore City Municipal Act 1909
The Indore Municipality however purported to levy the house tax on the basis of the gross annual letting value at the rate of 7 of such value for the financial years 1953 54 and 1954 55
This was objected to by the respondents on the ground that under the 1954 Act the tax could be assessed on the basis of gross annual letting value less 10 statutory allowance in
lieu of costs of repairs or on any other account whatsoever
The difference came to Rs 1461 and of this the trustees claimed refund on the ground that the Municipality had collected the excess from them under pain of distress The Municipality having refused to refund the excess the respondents filed the suit to recover it on the ground that the excess amount was illegally recovered
The Trial Court decreed the suit and the appeals filed by the Corporation in the District Court and the High Court were dismissed
To appreciate the stand taken by the appellant Corporation it is necessary to examine some of the provisions of the two Acts Sec
21 of the Indore City Municipal Act authorised the Municipal Council to impose tax on houses buildings or lands within the municipal limits at a rate not exceeding 12 12 of the gross annual letting value
As aforesaid this Act amongst other Acts was repealed by the Madhya Bharat Municipalities Act 1954
2 of the 1954 Act which contains both a repealing and saving provisions repealed the several Acts set out therein
Clause a however provides that such repeal shall not affect the validity or invalidity of anything already done under any of the said enactments
Clause c of sec
2 provides that all rules orders byelaws notifications and notices taxes and rates made passed framed issued or imposed or deemed to have been made passed framed issued or imposed shall so far as they are not inconsistent with this Act be deemed to have been made passed framed issued or imposed as the case may be under this Act
69 authorises a Municipality to impose the several taxes set out therein including the tax on houses buildings or lands or both
70 lays down the procedure which the municipality would have to follow before it imposes any one of those taxes
73 provides that when a tax on buildings or lands or both is imposed the Chief Executive Officer shall cause an assessment list of all buildings or lands in the municipality to be prepared containing the particulars therein set out
Amongst such particulars are the valuation based on capital or annual letting value as the case may be on which the property is assessed
Sub sec
2 provides that in 128 assessing the tax on buildings or lands where the valuation determined under clause d of sub section 1 is the annual letting value a sum equal to 10 of such valuation shall be deducted therefrom in lieu of allowance for costs of repairs or on any account whatsoever
75 provides for the publication of the assessment list and the
right of the owner or occupier of properties included in the list to take inspection thereof and to make extracts therefrom
76 provides for a public notice of time fixed for lodging objections to such assessment list and the hearing of such objections
Sub sec
4 of sec
76 provides for the authentication of the list
Sub section 6 lays down that subject to such alterations as may be made therein under sec
77 and to the result of any appeal or revision made under sec
190 in the case of City Municipality and
under sec
90 in the case of other municipalities the entries in the assessment list so authenticated shall be accepted as conclusive evidence for the purposes of all municipal taxes of the valuation or annual letting value of buildings
and lands to which such entries respectively refer and for the purposes of the tax for which such assessment list has been prepared of the amount of tax leviable on such buildings or lands in any official year in which such list is in force
 Sec
791 provides that it would not be necessary for a Municipality to prepare a new assessment list for every year
It further provides that subject to the condition that such assessment list shall be completely revised not less than once in every 4 years the Municipality may adopt the valuation and assessment contained in the list for any year with such alterations as may be necessary for the year immediately following
But sub section 2 lays down that the provisions of section 75 and section 76 shall be applicable every year as if a new assessment list has been completed at the commencement of the official year
These provisions show that though by sec
2 the new Act repealed the Indore City Municipal Act 1909 along with other Acts the legislature by sec
2c saved certain things done under the repealed Acts viz rules bye laws orders notifications and notices taxes and rates made framed passed or imposed or deemed to have been made framed passed or imposed under the repealed Acts and added a fiction that so far as they are not inconsistent with the new Act they shall be deemed as if they were made framed passed or imposed as the case may be under this Act
We are informed by Counsel that under the rules made under the repealed Indore City Municipal Act 1909 the Municipality had imposed the tax on houses at the rate of 7 of their gross annual letting value that an assessment list on that basis was prepared for the year 1952 53 and that the Municipality has been levying tax at the said rate on the basis of the said assessment list for the two subsequent years
129 Counsel for the appellant Corporation argued that the Corporation was entitled to levy the house tax at the rate of 7 of the gross annual letting value and that it was not bound to deduct the 10 allowance provided by sec
732 from such gross annual letting value
The argument was firstly that the appellant Corporation could do so because the rules made under the Indore Act are saved by sec
2c and therefore the rate of 7 of the gross annual letting value at which the tax was levied also has been saved and secondly that under sec
791 of the 1954 Act the Corporation need not prepare a fresh assessment list every year that it has to prepare a fresh assessment list only once in every 4 years that the Corporation therefore can and in fact has adopted the said list for the two years in question and that being so the list so adopted was
in force during the years in question and has to be accepted under section 766 as conclusive evidence of the annual letting value as also for the amount of tax leviable on the buildings or lands or both
He contended that being  the position the respondents were debarred from objecting to the annual letting value and the quantum of tax based on it as entered against the respondents  properties in the said assessment list
We are not impressed with these contentions as in our view they are not warranted on the true construction of the provisions of the Act
The Indore Municipal Act being no longer in force as from January 26 1954 obviously no tax could be levied or imposed thereunder after that date
The rules made and the taxes imposed under the repealed Act are no doubt amongst other things saved and are deemed to have been made framed passed or imposed under the new Act but cl
c of sec
2 it must not be forgotten lays down an important qualification that they are to be deemed to have been made or imposed etc under the new Act to the extent that they are consistent with the provisions of the Act
73 read with sec
69 provides that a tax on houses or buildings shall be levied on the annual letting value and that in assessing such tax a sum equal to 10 of such letting value shall be deducted therefrom
The tax levied under the old Act and the rules framed thereunder on the basis of the gross annual letting value is obviously inconsistent with the provisions of section 73 of the Act
The saving and the deeming provisions in section 2c can only apply if the tax is assessed in the manner consistent with the provisions of section 73 that is if it is assessed on the net and not the gross annual letting value after deducting 10 statutory allowance in lieu of the costs of repairs or any other account whatsoever
If the construction of sec
2c as suggested by Counsel were tobe accepted it would render sec
73 2 nugatory for the Municipal Corporation in that case can go on imposing the tax on the basis of the gross annual letting value for ever despite the express provision for levying tax on the basis of net annual 130 letting value ie the value arrived at after deducting 10 of the gross annual letting value
The second part of the contention is equally unacceptable because if accepted it will be contrary to the provisions of sections 7576 and 79 of the Act
After going through the procedure laid down in sections 70 71 and 72 sec
enjoins upon the Chief Executive Officer to have an assessment list made containing inter alia valuation or annual letting value at which the property is assessed and the amount of tax assessed on the basis of such valuation or annual letting value
Under sections 75 and 76 when the assessment list is prepared in accordance with the provisions of sec
73 it has to be published and time has to be fixed for lodging objections against the entries therein
After such objections are heard and disposed of the assessment list has to be authenticated as provided by sec
766
Sub sec
6 of sec
76 lays down that such assessment list when authenticated becomes conclusive evidence for purposes of all taxes
of the valuation or annual letting value and of the amount of tax leviable on such buildings or lands or both in any official year in which such list is in force
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 each such official year
This is supported by the words such assessment list and of the amount of tax leviable in any official year in which such list is in force in sec
766
Ordinarily therefore the Municipal Corporation has to prepare a fresh assessment list every year
The legislature however has empowered by sec
79 as other State legislatures have similarly done in several Municipal Acts to adopt the valuation and assessment contained in the assessment list prepared in an earlier year provided however that it prepares a fresh list oncein every 4 years
But sub sec
2 of sec
79 provides expressly that when such a previous list is adopted for a particular official year it can be done subject to the provisions of sections 75 and 76
In other words an assessment list being for a particular official year even when an assessment list prepared in an earlier year is adopted it becomes the list for such subsequent year subject to the procedure laid down in secs
75 and 76
The list so adopted has therefore to be published has to invite objections and has to be authenticated in the manner prescribed by sec
76 6 after disposing of the objections if any and it is then only that it becomes conclusive evidence of the valuation and the tax assessed thereon for that particular official year
If it were otherwise the annual letting value or the value estimated on a particular building or house would be static for 4 years during which the Corporation can go on adopting the assessment list prepared in an earlier year and the owner or the occupier of the building would 131 be deprived of the right to object to the valuation or the annual letting value or the tax assessed thereon for at least 4 years even though the valuation or the annual letting value thereof may have decreased for one reason or the other
In order to prevent such a result the legislature has provided by sub section 2 of sec
79 that where a municipality adopts a previously prepared list for any subsequent year the provisions of sections 75 and 76 shall be applicable as if a new assessment list has been completed at the commencement of that particular official year
The word if appearing in sub sec 2 of sec
79 is obviously a mistake and must be read as as if because the word if standing by itself makes no sense at all
79 therefore has to be construed to mean that though a Municipality need not prepare a fresh assessment list every year and need prepare such list once in every 4 years and can adopt an earlier assessment list such an adopted list becomes the assessment list for that particular year as if it was a new list and to which sections 75 and 76 apply
The result of the foregoing discussion is that the appellant Corporation was entitled to adopt the assessment list prepared for the year 1952 53 for the two assessment years 1953 54 and 1954 55 under sec
79 and therefore that list became the assessment list for each of the 2 years in question
That fact however does not entitle the appellant Corporation to impose the house tax on the basis of the gross annual letting value as such imposition is inconsistent with sec
73 under which the annual letting value would be the gross annual letting value less 10 statutory allowance
But the contention was that the tax imposed on the basis of  the gross annual letting value was saved by sec
2c and that saving coupled with the fact that the assessment list prepared for 1952 53 was adopted for the years in question made the entries in the assessment list so adopted conclusive evidence of the annual letting value and the amount of tax assessed thereon and entitled the Corporation to collect the tax assessed on the gross annual letting value
Therefore it  was argued both the annual letting value and the amount of tax shown in that list were conclusive evidence and could not be assailed
Counsel however forgets that even on the footing that the resolution passed by the Indore Municipality to levy the tax at 7 of the gross annual letting value and on the strength of which the list for 1952 53 was prepared was saved and was deemed to have been made under the 1954 Act it can be deemed to have been so made in so far as it is consistent with the provisions of the Act
Therefore to the extent that it is inconsistent with sec
73 it is neither saved nor deemed to have been made under the Act and has to be adjusted in the light of the provisions of sec
732
It follows that the appellant Corporation was not entitled to demand the tax assessed 132 on the gross annual letting value
The High Court therefore was right in decreeing the suit and to order refund of the
said excess amount against the appellant Corporation
The appeal fails and is dismissed with costs
The costs of this appeal as also those in the next appeal No 383 of 1965 are to be taxed on the footing of one hearing fee
GC Appeal dismissed


Summary:
The Madhya Bharat Municipalities Act 1954 came into force January 26 1954
The Indore City Municipal Act 1909 which had till then governed the Indore Municipality was thereby repealed
Under the repealed Act the Indore Municipality used to levy and collect house tax at the rate of 7 of the gross annual letting value
Under section 732 of the 1954 Act house tax was to be assessed on the basis of the gross annual letting value less 10 statutory allowance for repairs etc
However even for the period after the passing of the new Act the Municipal Corporation purporting to act under section 79 1 of the 1954 Act
adopted the latest assessment list prepared under the old Act and levied house tax at the old rate of 7 of the gross
annual letting value
The respondents who were trustees of certain house property filed a suit challenging the levy on the basis of the gross annual letting value when section 732 of the 1954 Act required the tax to be assessed on the net value after deduction of the statutory allowance
The suit was decreed by the Trial Court and the appeals filed by the Corporation before the District judge and the High Court were dismissed
The Corporation by special leave came to this Court and urged i that the levy at 7 of the gross annual letting value prescribed under the rules of the Indore Act was saved by section 2c of the 1954 Act ii that under section 791 the Corporation was required to prepare a fresh assessment list only once in four years that it was therefore entitled to adopt for the years in question the latest assessment list prepared under the old Act
and the said assessment list having been so adopted was conclusive evidence as to the annual rental value of houses and the house tax imposed thereon
HELD i While section 2c saves the rules and taxes
imposed under the old Act it saves them only to the extent that they are consistent with the new Act
The saving and deeming provisions of section 2c can only apply if the tax is assessed in the manner consistent with the provisions of section 73 that is if it is assessed on the net and not the gross annual letting value after deducting 10 statutory allowance
The Corporation could not be allowed to go on imposing the tax on the basis of the gross annual letting value for ever despite the express provision in section 73
The tax imposed by the Corporation at the rate of 7 of the gross annual letting value was not therefore saved by section 2c
129E H ii Ordinarily the Municipal Corporation has to prepare a fresh assessment list every year
The legislature has however by section 791 empowered the Corporation to adopt the valuation and assessment contained in the assessment list prepared in an earlier year provided however that it prepares a fresh list once in every 4 years
But sub section
2 126 of section 79 provides expressly that when such a previous list is adopted for a particular official year it can be done subject to the provisions sections 75 and 76
The list so adopted has therefore to be published has to invite objections and has to be authenticated in the manner prescribed by section 766 after disposing of the objections if any and it is then only that it becomes conclusive evidence of the valuation and the tax assessed thereon for that particular official year
If it were otherwise a house owner would have no opportunity to object to the assessment for four years even though the value of his house may have decreased for some reason or the other
Section 79 has therefore to be construed to mean that though a Municipality need not prepare a fresh assessment list every year and need prepare such list once in every 4 ears and can adopt an earlier assessment list such an adopted list becomes the assessment list for that particular year as if it was a new list and to which sections 75 and 76 apply
130E 131C Accordingly the Corporation was entitled to adopt for the official years in question the latest list prepared under the old Act and under section 79 that list would become the assessment list for the said years provided that the provisions of sections 75 and 76 are followed
Even then the appellant Corporation would not be
entitled to impose house tax on the basis of the gross annual letting value as such imposition would be inconsistent with section 73 under which the annual letting value would be the gross annual letting value less 10 statutory allowance
131D Even on the footing that the resolution passed by the Indore Municipality to levy the tax at 7 of the gross annual letting value and on the basis of which the last list under the old Act was prepared was saved and was deemed to have been made under the 1954 Act it could be deemed to have been so made in so far as it was consistent with the provisions of the Act
Therefore to the extent that it was inconsistent with section 73 it was neither saved nor deemed to have been made under the Act and had to be adjusted in the light of the provisions of section 732
131G H