Civil Writ Petition No. 3108 of 1984 [1] --- M/s. The New Picture Company Pvt. Ltd. and others Versus The State of Haryana and another ... PRESENT: Mr. Ashish Chopra, Advocate for the petitioners. Mr. Sidharath Sarup, Assistant Advocate General, Haryana for respondent No.1. Mr. Vikram Aggarwal, Advocate for respondent No.2. ... Ajay Kumar Mittal, J. In this petition under Articles 226 and 227 of the Constitution of India, the petitioners, who are owners of Khushwant Cinema House, Radhika Cinema House and Raj Picture Palace respectively, situated within the municipal limits of town Rewari, have prayed for the issuance of a writ in the nature of certiorari, quashing notices dated 15.3.1982, 16.1.1984, 6.2.1984, Annexures P-6, P-8 and P-9 respectively, issued by the Municipality, Rewari - respondent No.2. The petitioners have also prayed for quashing notification dated 24.6.1980 (Annexure P-10) issued by the Government of Haryana, Local Government Department published in Haryana Government Gazette on 5.8.1980 and for the refund of show tax illegally Civil Writ Petition No. 3108 of 1984 [2] --- recovered by respondent No.2 and for issuance of a writ of prohibition restraining respondent No.2 from charging show tax at a rate beyond Rs. 2/- per show. The petitioners have averred in the writ petition that it was for the first time that vide notification dated 6.3.1967, Annexure P-1, show tax at the rate of Rs. 2/- per show was imposed on the cinema houses owned by the petitioners. Thereafter various moves made by the respondents to enhance the rate of show tax from time to time were dropped, the same being thwarted by the petitioners by filing objections or otherwise opposing to the same. In the meantime, it is further averred in the petition, that respondent No.1 asked the Municipality, Rewari by letter dated 24.5.1969 to maintain a uniform rate of show tax depending upon the category of the Municipality. Since the respondent- Municipality fell in category of 2nd class, imposition of show tax at the rate of Rs.4.50 per show was proposed, but this demand had also to be dropped on a resistance made by the petitioners. Ultimately, respondent No.1 vide letter dated 2.9.1976 asked all the Municipalities in the State of Haryana including the respondent- Municipality, to revise the rates of show tax to augment the income of the municipalities whereby the show tax at the rate of Rs.8/- per show was proposed in the case of Municipalities of Class-I, Rs. 7/- per show in the case of Class-II Municipalities and Rs.4/- per show in the case of Notified Civil Writ Petition No. 3108 of 1984 [3] --- Area Committees. The objections made by the petitioners to the proposed enhancement were said to have been rejected without assigning any reason and without affording any opportunity of hearing. No notification was, however, issued effecting enhancement and the petitioners went on demanding a copy of the notification, if any, issued in that behalf, but somehow the petitioners started paying the tax at the enhanced rate under protest or if said in their own words, "under a mistake of law and fact." The matter did not rest here and the petitioners received a letter dated 6.12.1979 from the respondent-Municipality saying that Municipality, Rewari has been brought in the category of Class-I, in terms of the notification of the State Government and therefore, show tax at the rate of Rs.8/- per show be paid with effect from 18.4.1979. Copy of letter dated 6.12.1979 is available on record as Annexure P-4. The petitioners objected to this enhancement as well on the ground that proper procedure for imposition of tax as contained in the Act had not been followed. However, with a view to run the cinema houses without any interruption from this corner, the petitioners started paying the show tax even at the rate of Rs.8/- per show, pending their grievance that the tax had not been imposed in accordance with law as there was no notification issued in that regard. The Civil Writ Petition No. 3108 of 1984 [4] --- petitioners ultimately, received a notice Annexure P-6 from the Administrator, Municipality, Rewari requiring them to pay the amount of difference in tax to be calculated at the rate of Rs.8/- per show pertaining to the period from 18.4.1979 to 7.12.1979, and in the event of default in deposit, the matter was to be referred to the Deputy Commissioner for taking proceedings under the Cinemagraph Act. This notice was duly replied to by the petitioners wherein primarily, the petitioners repeated their grouse for supply of copy of notification under which the rates were enhanced. The respondent- Municipality by its letter dated 16.1.1984 (Annexure P-8) clarified that notification had been issued bringing the respondent- Municipality within the category of Class-I and not with regard to the fixation of rates of show tax and again the demand of tax as raised in terms of Annexure P-6, was repeated. Similar demand notice, Annexure P-9 was issued to petitioner No.1 also. The petitioners were, ultimately able to lay hands to the notification, Annexure P-10, which had been published way back in the Haryana Government gazette dated 5.8.1980 in exercise of powers of the Government conferred by clause (b) of sub-section (9) of section 74 of the Haryana Municipal Act, 1973 (for short "the 1973 Act") whereby cinema show tax at the rate of Rs. 8/- was imposed. It was also stated that the tax so imposed shall come into effect after the expiry of a period of one month from the date of publication of the Civil Writ Petition No. 3108 of 1984 [5] --- notification. It is, this notification and aforesaid three notices which have been challenged in this petition. The respondents filed separate replies. It was stated in the written statement filed on behalf of respondent No.1 that the petition suffered on account of delay and laches and the petitioners have approached this Court without first exhausting alternative remedy available to them by way of appeal and revision under sections 99 and 100-A of the Act. The Government had already issued notification dated 24.6.1980 (Annexure P-10), which was published on 5.8.1980 in the official gazette of the Haryana Government, imposing revised rates of cinema show tax and therefore, it does not lie in the mouth of the petitioners to say that no notification was issued. All that is further said is that the tax had been imposed after following the procedure contemplated under the relevant provisions of the Act. Respondent No.2 in its reply stated that objections to the enhancement of the tax were duly considered and decided and there was no provision in the Act to afford personal hearing before passing the final order in that regard. The procedure laid down under section 74 of the Act for imposing tax was followed by the Municipality. On 17.1.1977, the Government issued a letter directing the Municipality to enforce the new rates under section 74(6) of the Act and on these directions, the Municipality vide its resolution No.134, dated Civil Writ Petition No. 3108 of 1984 [6] --- 28.1.1977 enforced the tax with effect from 5.3.1977. It was further stated that tax payable in the area covered by the Municipal Committee is Rs. 8/- per show and notice was given to the petitioners on 6.12.1979 conveying that since the respondent- Municipality had become Class-A Municipal Committee, tax payable would be Rs. 8/- per show. A copy of directions of the Government regarding enhancement of tax was attached as Annexure R-1 with the reply. It was further stated that the tax of the nature of show tax is imposable under the Municipal Act and the enhancement of tax already levied is only enhancement of the rate of tax and this is not the imposition of new tax and, therefore, the provision as contained in section 74 of the Act is relevant at the initial stage of the imposition of the tax and the enhancement of the rates of tax made vide resolution No.327 dated 18.1.1980 was perfectly valid. Mr.Ashish Chopra, learned counsel for the petitioners very strenuously contended that notification issued by respondent No.1 in exercise of its powers under section 74(9)(b) of the Act whereby the rate of show tax was enhanced from Rs. 2/- per show to Rs. 8/- per show was published in the official gazette on 5.8.1980 and, therefore, recovery for the period prior thereto is illegal, arbitrary and void. It was then next contended that the respondents while issuing notification Annexure P-10 have failed to follow the procedure as prescribed Civil Writ Petition No. 3108 of 1984 [7] --- under section 74 of the Act as no resolution had been passed by respondent No.2 proposing to enhance the rate of show tax at the rate of Rs.8/- per show and consequently, the objections were not at all invited from the petitioners and others likely to be affected and thus, the levy of show tax at the rate of Rs. 8/- per show with effect from 5.8.1980 is legally unsustainable as the respondents have failed to follow the mandatory procedure provided under the Act. Learned counsel for the petitioners then argued that detailed procedure for imposing/ recovering the taxes provided under section 70 of the Act, is contained in Section 74 of the Act. According to him, the taxes enumerated in section 70 become operative after following the procedure under section 74 of the Act and become recoverable after the same is notified in the official gazette from a date not less than one month from the date of notification. Mr. Vikram Aggarwal, learned counsel appearing for the Municipal Committee- respondent No.2 and Mr. Sidharath Sarup, learned counsel appearing for respondent No.1 with equal vehemence controverted the claim of the petitioners and raised a preliminary objection regarding maintainability of the present petition on the ground of alternative remedy and argued that the petitioners have alternative, effective and efficacious remedy by way of appeal under section 99 and then by way of revision under Civil Writ Petition No. 3108 of 1984 [8] --- section 100-A of the Act and, therefore, this Court should not entertain the present petition on this short ground alone. Controverting the claim of the petitioners on merits, they submitted that as far as enhancement of show tax to Rs. 7/- per show is concerned, an order was passed by the State Government on 17.1.1977 directing respondent No.2 to enforce new rates of show tax and respondent No.2 vide resolution dated 28.1.1977 enforced the tax w.e.f. 5.3.1977 and, therefore, levy at the rate of Rs. 7/- per show was justified. The same was subsequently enhanced to Rs. 8/- per show. The said enhancement was on the directions of the Government contained in Annexure R-2/1 dated 2/9.8.1976, on respondent No.2 - Municipal Committee having been declared to be Class 'A' Municipality and, therefore, the enhancement in show tax is legal and valid. He also submitted that no fresh show tax has been levied. In fact, it is only an enhancement of the existing show tax which had been imposed earlier in 1967. They further submitted that enhancement of tax is dealt under section 75 of the Act and the procedure as provided thereunder has been duly followed. It was next submitted that though in the notification, Annexure P-10, the mention is to the provisions of section 74(9)(b) of the Act but the same has been erroneously mentioned. In case the Government or the Municipal Committee have the power under the Act, mentioning of wrong provisions in notification Annexure P-10 shall not take away the power of the respondents to Civil Writ Petition No. 3108 of 1984 [9] --- issue the said notification and it shall not render the notification unlawful on that count alone. For this proposition that in the case of enhancement, the procedure as envisaged under section 75 is only to be followed and not under section 74 of the Act, learned counsel for the respondents placed reliance on Citizens' Welfare Council, S.A.S. Nagar and others Versus State of Punjab and another, 1994 P.L.J. 649; Notified Area Committee, Uchana Versus Dhanpat Rai, 1991 P.L.J. 137; M/s. Naranjan Dass Doomra Rice and General Mills and others Versus The State of Punjab and others, 1991 P.L.J. 685; M/s. V.P. Theatre, Kurali Versus The State of Punjab and another, 1990 P.L.J. 282; Kehar Singh and others Versus Municipal Committee, Rajpura and others, 1976 P.L.J. 563 and Shri Krishan Kumar Sanan and others Versus The Punjab State and another, 1972 P.L.R. 149. Learned counsel for the petitioners while replying to the submissions of the respondents, then submitted that for the first time without there being any whisper in the pleadings or the contention raised now that enhancement of the tax has been done under section 75 of the Act and not under section 74 of the Act cannot be allowed to travel beyond their pleadings. The counsel submitted that it has nowhere been pleaded that notification Annexure P-10 has been issued in exercise of powers under section 75 of the Act. Civil Writ Petition No. 3108 of 1984 [10] --- According to the learned counsel, the perusal of sub section (1) of Section 75 of the Act shows that the said provision gives powers to the Government in respect of taxation to require the committee to impose any tax mentioned in Section 70 of the Act which is not already imposed and further requires the committee to fix the rate and the time period in which the same is to be imposed. It gives power to the Government to require the committee to modify the rate of tax which is already imposed and correspondingly it casts duty upon the committee to modify the tax as required, within the time, which may be fixed by the State Government. Sub-sections (1) and (2) of section 75 of the Act do not dispense with the requirement of the procedure provided under section 74 of the Act. According to the learned counsel, the committee is under legal obligation to follow the prescribed procedure while imposing any tax or while modifying the rate of tax. Sub section (3) of Section 75 provides that in the case of failure on the part of the Committee to carry out the orders passed by the Government under sub sections (1) or (2), the Government is empowered to pass suitable order and notify the same in the gazette, imposing or modifying the tax as required by it under sub sections (1) or (2) of Section 75 of the Act respectively. This order, as per the provisions of sub section (3) of Section 75 shall operate as if it was a resolution duly passed by the Committee and as if the proposal was sanctioned in Civil Writ Petition No. 3108 of 1984 [11] --- accordance with the procedure contained in section 74 of the Act. According to him, sub-section (3) makes it abundantly clear that the committee while passing any order in pursuance to the directions of the State Government under sub-sections (1) and (2) of Section 75 of the Act, is required to pass the orders in accordance with the procedure contained in section 74 as otherwise, the last two lines of sub section (2) of Section 75 would be rendered redundant. It was further stated that it is only when the order is passed by the Government under sub-section (3) and is notified in the official gazette under this very sub-section that the procedure under section 74 of the Act is deemed to have been followed. It was further submitted that the notification published in the official gazette showing the same to be issued in exercise of the particular powers under a statute, is deemed to have been issued under the provisions of the said section only and, therefore, the notification having been issued under section 74(9)(b) of the Act cannot be deemed to have been issued in exercise of powers under sub-section (3) of section 75 of the Act. It was then submitted that the judgments relied upon by the counsel for the respondents do not apply to the facts of the present case. I have heard learned counsel for the parties at length and have gone through the provisions of the Act and the relevant case law on the subject. Chapter V of the Civil Writ Petition No. 3108 of 1984 [12] --- Act deals with taxation. The provisions relevant for the decision of this case are contained in section 70 which deals with taxes that may be imposed. Section 74 provides the procedure for imposing taxes and section 75 relates to the powers in respect of taxation. Sections 70, 74 and 75 of the 1973 Act as under:- "70. Taxes that may be imposed.-(1) Subject to any general or special orders of the State Government in this behalf and to the rules, a committee may from time to time, for the purposes of this Act, impose in the whole or any part of the municipality any of the following taxes, tolls and fees, namely:- (i) to (iv) xxx xxx xxx (v) a show tax; (vi) to (xv) xxx x xx xxx xxx (2) The rates of any tax, toll or fee under sub-section (1) except that under clause (viii) thereof shall be determined by the committee; Provided that such rates shall not exceed the maximum limits which the State Government may, from time to time, by notification, specify in this behalf." Civil Writ Petition No. 3108 of 1984 [13] --- 74. Procedure to impose taxes.-(1) A committee may, at a special meeting, pass a resolution to propose to imposition of any tax under section 70. (2) When such a resolution has been passed, the committee, shall publish a notice, defining the class of persons or description of property proposed to be taxed, the amount or rate of the tax to be imposed, and the system of assessment to be adopted. (3) Any inhabitant objecting to the proposed tax may, within thirty days from the publication of the said notice, submit his objection in writing to the committee; and the committee shall at a special meeting take his objection into consideration. (4) If the committee decides to amend its proposals or any of them, it shall publish amended proposals, along with a notice indicating that they are in modification of those previously published for objection. Civil Writ Petition No. 3108 of 1984 [14] --- (5) Any objections to the amended proposals which may be received within thirty days of their publication shall be dealt with in the manner prescribed in sub-section (3). (6) When the committee has finally settled its proposals, it shall, if the proposed tax fails under clause (i) to clause (xiv) of sub-section (1) of section 70, direct that the tax be imposed, and shall forward a copy of its order to that effect through the Deputy Commissioner, to the State Government and if the proposed tax falls under any other provision, it shall submit its proposals together with the objection, if any, made in connection therewith to the Deputy Commissioner. (7) If the proposed tax falls under clause (xv) or sub-section (1) of Section 70, the Deputy Commissioner shall submit the proposals and objections with his recommendation to the State Government. (8) The State Government on receiving proposals for taxation under sub-section (2) may sanction or refuse to sanction the same, or return them to the committee for further consideration. Civil Writ Petition No. 3108 of 1984 [15] --- (9) When - (a) a copy of order under sub-section (6) and (7) has been received; or (b) a proposal has been sanctioned under sub-section (8) the State Government will notify the imposition of the tax in accordance with such order or proposal and shall in the notification specify a date not less than one month from the date of the notification, on which the tax shall come into force. (10) A tax leviable by the year shall come into force on the first day of January or on the first day of April or on the first day of July or on the first day of October in any year, and if it comes into force on any other than the first date of the year by which it is leviable shall be leviable by the quarter till the first day of such year then next ensuing. (11) A notification of the imposition of a tax under this Act be conclusive evidence that the tax has been imposed in accordance with the provisions of the Act. Civil Writ Petition No. 3108 of 1984 [16] --- 75. Power of Government in respect of taxation.-(1) The State Government may, by special or general order notified in the Official Gazette, require a committee to impose any tax mentioned in Section 70 not already imposed at a such rate and within such period as may be specified in the notification and the committee shall thereupon act accordingly. (2) The State Government may require a committee to modify the rate of any tax already imposed and thereupon the committee shall modify the tax as required within such period as the State Government may direct. (3) If the committee fails to carry out any order passed under sub-section (1) or sub-section (2), the State Government may, by a suitable order notified in the Official Gazette, impose or modify the tax. The order so passed shall operate as if it were a resolution duly passed by the committee and as if the proposal was sanctioned in accordance with the procedure contained in Section 74. Civil Writ Petition No. 3108 of 1984 [17] --- In view of section 70 of the 1973 Act, certain taxes can be imposed by the municipality within the municipal limits and show tax is one of the taxes, imposable under section 70(1) of the Act. The procedure for imposing taxes contemplated by section 70 is contained in Section 74 and the imposition of taxes under section 70 become operative and recovery effected after the same is notified in the official gazette. Section 75 of the Act deals with the power of the Government in respect of taxation. Sub-section (2) of Section 75 empowers the State Government to modify the rate of any tax already imposed and thereupon the committee shall modify the tax as required within such period as the State Government may direct. Sub-section (3) thereof provides that where the committee fails to comply with any order passed under sub sections (1) and (2), the State Government can by a suitable order notified in the official gazette, impose or modify the tax and the said order shall operate as if it was a resolution duly passed by the committee and as if the proposal was sanctioned in accordance with the procedure contained in section 74. Now adverting to the facts of the present case, it deserves to be mentioned at the very outset that undisputedly, the Khushwant Cinema House, Radhika Cinema House and Raj Picture Palace fall within the municipal limits of Rewari. The Municipal Committee, Rewari in Civil Writ Petition No. 3108 of 1984 [18] --- exercise of its powers under sub-section (2) of Section 61 of the Punjab Municipal Act, 1911, as applicable to the State of Haryana at that time, proposed to levy a tax on Cinema shows etc. at the rate of Rs. 2/- per show. On this proposal being sanctioned by the Governor of Haryana, a notification dated 6.3.1967 (Annexure P-1) was issued by the Government of Haryana, notifying the imposition of show tax. It was directed that the imposition of tax will come into effect with effect from 15.4.1967. Admittedly, the petitioners started paying the said tax without raising objections of any kind. Thereafter, as per petitioners' own case, certain enhancements were sought to be made from time to time in the rates of show tax by the Municipal Committee, Rewari and accordingly notices were issued to the petitioners inviting objections in terms of section 62 of the 1911