1 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 13.10.2011 CORAM: THE HONOURABLE MRS.JUSTICE ARUNA JAGADEESAN SA(MD)No.111/2008 Tirunelveli Municipal Corporation by its Commissioner, S.N.High Road, Tirunelveli .. Appellant/Respondent/Defendant Vs. M.Ramakrishnan .. Respondent/Appellant/Plaintiff Prayer:- This Second Appeal is filed against the Judgement and Decree dated 12.06.2007 passed in AS.No.264/2006 by the learned Principal Subordinate Judge, Tirunelveli, reversing and modifying the Judgement and Decree dated 18.08.2006 passed in OS.No.143/2006 by the Principal District Munsif Court, Tirunelveli. For Appellant : Mr.S.P.Maharajan For Respondent : Mr.J.Ashok JUDGEMENT This Second Appeal is filed by the unsuccessful Defendant/ Tirunelveli Municipal Corporation against the Judgement and Decree dated 12.06.2007 passed in AS.No.264/2006 by the learned Principal Subordinate Judge, Tirunelveli, reversing and modifying the Judgement and Decree dated 18.08.2006 passed in OS.No.143/2006 by the learned District Munsif Court, Tirunelveli. 2. For the sake of convenience, the parties are arrayed as they were arrayed in the suit. 3. The case of the Plaintiff/respondent herein, as set out in the plaint, is as follows:- a. The Plaintiff is the owner of the suit residential buildings and they are in his own use and occupation. After the construction completion report, in 1998, none of the Officials of the Defendant Corporation either inspected the buildings or took measurement of the same to assess the property tax. When the Plaintiff contacted the Defendant, in connection with water tap connection, he was directed to pay Rs.1486/- orally to each building as property tax per half year. In so far as the assessment of the new buildings is concerned, a special notice with reasons is to be served on the assessee, as per the Corporation Act and the assessee must be served with a copy of the working sheet to establish that the fair rent principles have been followed to arrive at the tax. But, no such documents had been https://hcservices.ecourts.gov.in/hcservices/ 2 served on the Plaintiff. Finally, when the Plaintiff insisted upon for the special notice, on 15.6.1998, the Defendant served two separate special notices for Door Nos.11 and 11A with assessment Nos.14547 and 14528 after getting the signature of the Plaintiff. The said notices are with effect from 01.04.1998 as shown in them. The Defendant has shown the rental value as Rs.1200/- without following the fair rent principles and shown the half yearly tax as Rs.1486/- to each building. Any how, no reasons have been mentioned in the notices. No copy of the working sheets were supplied along with the said notices. The fair rent principles were not followed in fixing the tax. The information regarding filing of appeal and limitation were erroneously mentioned in the said notices. In short, the said notices are not in accordance with law and hence, they are invalid under law. Under the said circumstances, the fixation of property tax at Rs.1486/- to each building is arbitrary, which is liable to be set aside. b. Along with the above said special notices, the Defendant gave two quin-quinnial revision notices with assessment Nos.50386 and 50387 for the period from 01.10.1998. As per the said notices, the property tax revised to be paid by the Plaintiff is Rs.572/- to each building. But, the Defendant Corporation served upon the Plaintiff two additional notices for the quin- quinnial revision of the tax, directing the Plaintiff to pay the original wrong assessment amount of Rs.1486 to each of the buildings. Following the said special notices, the Defendant Corporation sent a demand notice dated 02.12.1998 to the Plaintiff claiming property tax for 1997-1998/I and II and 1998-99/I period to a tune of Rs.5944/-. When the Plaintiff contacted the Defendant for clarification, the Defendant advised him to pay the above said demanded tax and then to file a revision petition to the Defendant. Hence, the Plaintiff paid the said tax with protest and filed a revision petition on 21.6.1999. But, till date no hearing was given and no order was passed on the said revision petition. The tax amount to the next Door NO.12, which is bigger than Door No.11 and 11A, jointly is very low i.e. 1/3rd of this tax. c. No addition of building has been put up. The employees of the Defendant Corporation attempted to collect the new tax by force. Hence, the Plaintiff filed a suit in OS.No.178/2001 before the I Additional District Munsif, Tirunelveli for declaration that the notices with assessment numbers seeking to collect the tax is illegal, null and void and the said suit was decreed in favour of the Plaintiff on 31.12.2003 and no appeal has been filed as against the same and hence, the decree made in the said suit has become final. Thereafter, suddenly, the Defendant Corporation issued a notice dated 31.12.2004 stating that a new tax Rs.9725/- was levied for Door Nos.11 and 11A from 01.10.1998 and that the new tax has been arrived at as per the direction given in the earlier suit and the said notice is illegal, unjust and arbitrary and against the provisions of the Municipal Corporation Act. d. The Defendant Corporation, under the wrong impression that the court gave a direction to assess a new tax, has come forward with a new notice demanding to pay a new tax, which is more https://hcservices.ecourts.gov.in/hcservices/ 3 than the earlier tax. The demand notice is purported to have been issued under Section 2(h) and Section 8 of the Tirunelveli Municipal Corporation Act and under Section 168 of the Act read with Rules 5 to 9 of the Second Schedule appended to the rules of the Act. The impugned notice is not at all in accordance with any provisions. The Defendant Corporation sent a final notice dated 06.12.2005 stating that the amount of tax from 01.10.10.1998 to 2005-2006/II to the tune of Rs.1,45,875/- should be paid within three days, failing which water connection would be disconnected. In such circumstances, the suit has been filed to pass a Judgement and Decree, declaring that the special notice bearing No.43404 dated 31.12.2004 for the suit building under assessment No.50842 issued by the Defendant Corporation seeking to collect the new tax through the impugned notice from the Plaintiff is illegal, arbitrary and unenforceable in law and for permanent injunction restraining Defendant Corporation from collecting new tax for the suit building through the said notice from the Plaintiff in any manner and declaring the tax amount of Rs.1144 (572+572) for the schedule building as mentioned in the special notices under assessment Nos.50386 and 50387 and to collect the tax amount of Rs.1144 (572+572) for the schedule building as mentioned in the special notices under assessment Nos.50386 and 50387 from 01.10.1998 from the Plaintiff. 4. The case of the Defendant, as set out in the Written Statement, is as follows:- The tax was fixed on the rental value determinable under fair rent formula in accordance with the decree in OS.No.178/2001 taking note of various decisions of the Honourable Supreme Court and High Court. The Defendant contended that the assessment was made in compliance of the provisions of the Coimbatore City Municipal Corporation Act and it cannot be impeached in the civil court. 5. On the pleadings of both the parties, necessary issues were framed by the Trial Court. Before the Trial Court, on the side of the plaintiff, Exs.A1 to A8 were marked and PW.1 was examined. On the side of the defendant, DW.1 was examined. 6. On consideration of the oral and documentary evidence adduced in the case, the Trial Court, holding that there was no basis or the basis adopted for assessing the property tax was against the provisions of the Act, decreed the suit declaring that the impugned notice dated 31.12.2004 issued by the Defendant Corporation is illegal and unenforceable, but in so far as the relief sought for by the Plaintiff to direct the Defendant to collect the tax amount of Rs.1144/- as mentioned in the special notices under assessment Nos.50386 and 50387 is concerned, the Trial Court declined to grant the said relief. However, the Trial Court observed that the Defendant can issue fresh notice to the Plaintiff and cause inspection of the premises and after giving such opportunity determine the tax payable in accordance with the provisions of the Act. 7. Being aggrieved by the Judgement and Decree of the Trial Court, the Plaintiff filed an appeal in AS.No.264/2006 before the Principal Subordinate Judge, Tirunelveli. The lower Appellate https://hcservices.ecourts.gov.in/hcservices/ 4 Court confirmed the findings of the Trial Court and further granted the relief of declaration directing the Defendant Corporation to recover the tax as per the assessment made in the special notices under assessment Nos.50386 and 50387 and thus, decreed the suit in toto. Being aggrieved by that, this second appeal has been filed. 8. While admitting this second appeal, the following substantial questions of law have been formulated:- 1. Whether the suit as framed is maintainable? 2. Whether the Judgement and Decree of the first appellate court is erroneous on account of its misconstruction of documents exhibited on the side of the Respondent? 9. I have heard the learned counsel for the parties and examined the judgement of the courts below and other materials placed on record including the oral and documentary evidence. 10. Mr.S.P.Maharajan, the learned counsel for the Appellant submitted that the lower Appellate Court exceeded its jurisdiction in granting the relief of declaration and mandatory injunction by directing the Appellant to recover the tax as per the claim of the Plaintiff, which is contrary to law. He would submit that the assessment was made, following the provisions and the rules prescribed under the Coimbatore City Municipal Corporation Act, 1981 and in accordance with the decree passed in OS.No.178/2001 with regard to the assessment of tax for the buildings owned by the Plaintiff. 11. Per contra, Mr.J.Ashok, the learned counsel for the Respondent submitted that despite specific direction by the court in the earlier suit in OS.No.178/2001, the Defendant failed to follow the procedures as contemplated in Sections 121, 122 and 123 of the Coimbatore City Municipal Corporation Act, 1981 and the courts below have rightly pointed out that the basis adopted for assessing the property tax is incorrect and accordingly, set aside the assessment. 12. I have carefully considered the submissions made by the learned counsel on either side and the relevant provisions of law. It has to be pointed out that the Plaintiff challenged the assessment made by the Defendant Corporation under the special notice dated 15.6.1998 in assessment Nos.14547 and 14528 and additional special notice No.50386 and 50387 in OS.No.178/2001 and the said assessments were held to be invalid and unsustainable by the I Additional District Munsif, Tirunelveli by Judgement and Decree dated 31.12.2003. The same has not been challenged by the Appellant and it has become final. The learned I Additional District Munsif, Tirunelveli, in the said suit, however, observed that there was no bar for the Defendant to make assessment after following the procedure as contemplated under the Act. 13. According to the Plaintiff, the Defendant Corporation again issued special notice determining the tax without following the procedures as contemplated under the Act and merely said in the special notice in assessment No.50842 dated 31.12.2004 that revised tax is demanded in accordance with the decree in OS.No.178/2001 and on the basis of fair rent determined by the Corporation. https://hcservices.ecourts.gov.in/hcservices/ 5 14. As per Section 8 of the Municipal Corporation Act for the City of Tirunelveli (Act 28 of 1994), the provisions of the Coimbatore City Municipal Corporation Act (Act 25 of 1981), including the provisions relating to levy and collection of any tax or fee stood extended to and apply to the Corporation of Tirunelveli. It is pertinent to note that the provisions in Sections 121 to 132 of Act 25 of 1981 have been substituted by Section 9 of the Tamil Nadu Act 45 of 1997 and new procedure has been prescribed relating to levy of property tax in Section 121. It reads as follows:- "121. Levy of Property Tax:- (1) The property tax shall be levied on all buildings and lands within the city. (2) (a) In relation to any building newly constructed or where any addition or alteration has been made to any existing building the owner or occupier of such building. (b) where the title of any building or land is transferred, such transferee. (c) in relation to any building or land, in the event of death of the person primarily liable to the payment of property tax, the person on whom the property is transferred, shall furnish to the Commissioner within such dates as may be prescribed, a return for such building or land containing such details as may be prescribed for the assessment or reassessment of the property tax to the said building or land. (3) In the case of reassessment or general revision of any property tax leviable under this Act, the owner or occupier of any building or land shall furnish to the Commissioner within such time as may be prescribed, a return in such form containing such details as may be prescribed for the assessment of property tax to such building or land. (4) If any owner or occupier of any building or land fails to furnish a return as required under sub section (2) of sub section (3) or furnishes an incomplete or incorrect return, the Commissioner or any person authorised by him in this behalf, shall cause an inspection to be made and also to make such local enquiries as may be considered necessary and based on such inspection and information collected, shall prepare a return and a copy of the return shall be furnished to the owner or occupier of the building or land. (5) On receipt of a return under sub section (2) or sub section (3) or on the basis of the return prepared by the Commissioner under sub section (4) and after considering the objections, if any, received, the https://hcservices.ecourts.gov.in/hcservices/ 6 Commissioner shall determine the tax payable in accordance with the provisions of this Act and shall send an intimation to that effect to the person concerned. (5A) In the case of failure to furnish a return under sub section (2) or sub section (3), the Commissioner, in addition to the tax determined under sub section (5) direct the owner or occupier of any building or land to pay by way of penalty, a sum of rupees two hundred and fifty or five per cent of the tax determined under sub section (5) whichever is higher. (6) For the purpose of assessment of property tax for any building or land in the City, the Commissioner or any officer authorised by him in this behalf may enter, inspect survey and measure any building or land, after giving due notice to the owner or occupier before such inspection and the owner or occupier shall be bound to furnish necessary information required for this purpose. (7) The property tax on building and land shall, subject to the prior payment of the land revenue, if any due to the Government thereon, be a first charge upon the said building or land and upon the movable property if any found within or upon such building or land and belonging to the person liable to pay tax." 15. Sub section (2) says that in relation to any building newly constructed or where any addition or alteration has been made to any existing building, the owner or occupier of such building shall furnish to the Commissioner within such time as may be prescribed, a return in such form containing such details as may be prescribed for the assessment or reassessment of the property tax to the building. 16. As per sub section (4), in case the owner fails to furnish a return as required under sub section (2) the Commissioner or any person authorised by him in this behalf, shall cause an inspection to be made and also to make such local enquiries as may be considered necessary and based on such inspection and information collected, shall prepare a return and a copy of the return shall be furnished to the owner of the building. 17. Sub section (6) authorised the Commissioner or any Officer authorised by him in that behalf to enter, inspect, survey and measure any building or land, after giving due notice to the owner before such inspection and the owner is bound to furnish necessary information required for this purpose. 18. Section 122 deals with minimum and maximum basic property tax, additional basic property tax etc. to be levied and Section 123 deals about the determination of basic property tax or additional basic property tax etc. by council for assessment and calculation of property tax. Section 124 prescribes the mode of calculation. https://hcservices.ecourts.gov.in/hcservices/ 7 19. It is fundamental that once a procedure is prescribed under the Rules relating to assessment of property tax, the same has to be followed. In the present case, it is apparent that no such procedure has been followed in making assessment of property tax. The Plaintiff assertively stated that no inspection was made by the Officials of the Corporation before determination of property tax and also denied the fact of issuance of notice to the Plaintiff before such inspection. The learned counsel for the Plaintiff would submit that the Defendant Corporation issued the special notice Ex.A7 demanding revised tax without following the procedures as contemplated under the Act. 20. At this juncture, it is useful to refer to the evidence of DW.1, the Assistant Revenue Officer in the Defendant Corporation who has admitted that no document or material was placed before the court to show that any inspection was made by the authority before determining the tax payable by the Plaintiff. The relevant portion in his evidence is extracted below:- @epaha thlif eph;zak ; bra;a [k ; Kd;g [ thjpf;F mwptpg;g [ bfhLf;fg ;gl ;ljh vd;W bjhpahJ/ thjpapd; tPl;il brd;W ghh;itapl;ljw;F Mtzk; Bfhh;l ;oy ; jhf;fy ; bra;atpy;iy/ epaha thlif eph;zak ; bra;tjw ;F xU fzf;F gotk; cs;sJ/ epahathlif kjpg;gPL mwpf;if Bfhg;gpy ; cs;sJ/ mij jhf;fy ; bra;ayhk; kjpg;gPL mwpf;ifgo fl;olj ;jpd; g[y vz; vd;d vd;W Bfhg;ig ghh;f ;f Btz;Lk ;. vt ;tst [ fhypkid nUf;fpwJ vd;gija[k ;. vt;tst [ nlj;jpy; fl;Lkhdk; cs;sJ vd;gija[k ; Bfhg;gpid Ma;t bra;Jjhd; brhy;y Koa[k ;/ vdf;F Kd;g [ ,Ue;j Ma ;thsh; fl;olj ;ij Bgha; mse;jpUg;ghh;. ve;j Bjjp vd;W Bfhg;ig ghh;j ;Jjhd; brhy;yKoa[k ;. 21. Admittedly, no such document or file was produced, though it was admitted by DW.1 that the same was available with the Office. Therefore, it is evident that the Defendant has not followed the procedures and rules as contemplated under the Act before making assessment and determination of property tax to the building owned by the Plaintiff. The courts below were right in holding that the impugned notice dated 31.12.2004 issued by the Defendant Corporation is unsustainable. However, it has to be pointed out that the lower Appellate Court erred in determining the tax amount of Rs.1144/- for the schedule building vide assessment No.50386 and 50387 and consequently directing the Defendant Corporation to collect the said amount from the Plaintiff. In so far as the said finding is concerned, the lower Appellate Court has committed an error, thus calling for interference by this court. 22. In the result, this second appeal is allowed. The Judgement and Decree of the lower Appellate Court is set aside and Judgement and Decree of the Trial Court is restored. The Defendant Corporation shall pass assessment orders afresh for the period in question after giving an opportunity of hearing to the Plaintiff as per the provisions of the Act and in the light of the observations made above. However, in the circumstances of the case, there will be no order as to costs. Sd/- Assistant Registrar /True Copy/ Sub Assistant Registrar https://hcservices.ecourts.gov.in/hcservices/ 8 To: 1.The Principal Subordinate Judge, Tirunelveli 2.The District Munsif, Tirunelveli 3.The Record Keeper, VR Section, Madurai Bench of Madras High Court, Madurai srcm ssk/07.12.2011 /4c -8p/- Judgement in SA(MD)No.111/2008 13.10.2011 https://hcservices.ecourts.gov.in/hcservices/