\ IN THE HIGH COURT OF DELtii CIVIL REViSiON NO. 311 OF 2001 CAi. 311/2001 JudgmentReservedon Januai-y8, 2003 Date of decision ; Febniary 7,2(X)3 M/s. Ansal Hotels Limited — — —Petitioner through ; Mr. H.L.Narula with Mr. D.R. Bhatia, Advocates - VERSUS - MunicipalCorf^orationofDelhi ... ... ...Respondent through ; Ms. Amita Gupta, Advocate. CORAM; HON'BLH MR-JUSTICE SANJAY KISHAN KAUL 1. Whether the Reportei-sof local paper's may be allowedto see thejudgment? ^ 2. To be referredto Reporterornot? \ 3. Whether the judgment should be reported in the Digest? KON'BLB MR. JUSTiC^H SANJAY KISHAN KAUL 1. A company under the name and style of M/s. Ganapati Ansal Hotel Pvt. Ltd. purchaseda hotel plot in District Centr-e, Saket, New Delhi in pursuance to a perpetual lease deed executed on 16.04.1996 in its favour by the Delhi Development Authority (DDA) for a consideration of Rs.36 crores. The possession of the plot was handed over on 12.04.1996. Signing Date:28.10.2024 17:04:47 Certify that the digital and physical file have been compared and the digital data is as per the physical file and no page is missing. Signature Not Verified // 2 C.R. 311/2001 2. The nameof M/s. Ganapati Hotel Pvt. Ltd. was changedto M/s. ChancellorClub Pvt. Ltd. and thereafter to M/s. Ansals Hotels Ltd., the present petitioner. 3. The respondentCorporationissued a notice of assessmentdated 15.03.1995to M/s. Qiancellor Club Pvt. Ltd. under Section 126 of the Delhi Municipal CorporationAct, 1957 ( hereinafterto berefen"edas, 'the said Act' ) protx>singa rateable value of Rs.1.8 crores for the year 1995-96. The petitioner filed objectionsthereto on 26.04.1995 and the petitionerwas called upon to furnish certain documents by tlieres[X)ndentCorporation. 4. The petitionerclaims that it received a notice of demanddated 30.12.1999without r<3ceiptof anv bill of demand. This notice of demand was i^eived on 10.01.20(X) and it is stated that the petitioner did not receive a copy of the assessment order priortothe said date. The petitionerfiled an appealbeforethe appellateaudiority against the said notice of demand and obtained a copy of the assessment order dated 10.03.1998duringthe pendencyof theappealbeforetheappellateauthority. 5. The appellateauthoritydismissedthe appeal of the petirionei-on 18.11.20(X)and thepetitioneraggrievedbythe samehasprefen-edthepresentwrit petition. 6. The petitionerbefore tlie appellateauthorityhad contendedthat the said noticeof demanddated 15.03.1995was illegal since the petitionerat that stage of time had no right, title or interest in the property in question. It was further contended before the appellate authority that no notice had been issued under Section 124 or 3 C.K. 311/2001 126 of the said Act for the year 1996-97. The petitioneralso made a grievance aboutthe non-receiptof any assessmentorderor bill of demand. 7. The appellateauthorityconsideredthe otxierof the assessingauthorityand noted that theassessingauthorityhad appliedtherateablevalue totheplotin question@ 5% on the basis of the considerationpaid for the plot amounting to Rs.1.8 crores w.e.f. 12.04.1996,i.e., the date of handing over of the possessionof the plot. The rateablevalue was subsequentlysoughtto be enhancedin pursuanceto tlie notice dated 19.03.1998 to Rs.2.7 crores w.e.f. 01.04.1997. The receipt of this notice was notdisputedby the petitionerand, thus,theAppellateTribunalfoundit difficultto believe that the petitioner was unaware of the assessment oider fixing the rateable value of the property at Rs.1.8 crores. 8. The appellateauthoritynoted that the petitionerhad challengedthe very basis of the said assessment order since the initial assessment proceeded on the basis of the notice dated 15.03.1995. The appellate authority wasof the view that there was no differencebetv/eenthe provisionsof Sections124 and 126 of the said Act insofar as a newly-acquiredplot was concerned and the real difference was in the consequences of the notices. A notice under Section 124 of tlie said Act imposes liabilitytopay thepropsitytax from the beginningof the followingfinancialyear, while a notice under Section 126 thereof imposes liability to pay the property tax from thebeginningof the currentyearin which the noticeis issued. The appellate authority,thus,construedthe noticedated 15.03.1995to be a noticeunder Section 124 of the said Act, though purportedto be issued under Section 126 of the said act. It wasnotedthat theassessingauthorityhad acceptedthe pleaof the petitioner 4 C.lt 311/2001 for determining the rateable value of the land on the undisputed cost of land w.e.f 12.04.1996 only. Tlie appellate authority was of the view that the notice dated 15.03.1995 was only a proposal for the finst assessment of the plot and dismissed the appeal. 9- Learned counsel for the petitioner has contended that the said oitier of the apf^llate authority is contrary to law and liable to be quashed. lO.Leamed counsel has referred to the judgment of the learned Single Judge of this Court in Agmrwal Juneja Associates i'. Municipal Corporcition of Delhi <& Ors. reported as 89 (2001) DLT 623 and contended that the notice issued for the previous year under Section 126 of the said Act could not form the basis of the assessment for the subsequent year. Leai'ned counsel has assailed the findings of the appellate authority while dealing with the provisions of Sections 124 and 126 of the said Act where the Tribunal was of the view that the difference between the two is only of consequences in respect of the assessment of a newly-acquired plot. It was contended that since the Legislature had drawn a distinction betv.'een the U two provisions, the same could not be obliterated. Learned counsel for the petitioner placed reliance on the judgment of the Supreme Court in Municipal Coworation of DeUii v. Children Book Trust reported as AIR 1992 SC 1456 and contended that in para 46 of the said judgment, the Supreme Court had laid down that the local authorities do not act as Legislature when they impose a tax, but they do so as the agent of the State Legislature and the powers and the extent of these powers must be found in the Statute, which creates them with such powers. 5 C.K. 311/2001 11.Learned counsel for the petitioner refen-ed to the judgment of the Division Bench of this Court in M/s. Tin Can Manufocturmg: Co., Delhi r. Municipal Corporation ofDelhi reported as AIR1981 DELHI 179 to contend that once the assessment yeai" has gone bye, no demand can be raised for the said assessment year in the absence of a notice, since assessment is a matter of year-to-year. 12.LeaxT]edcounsel for the petitioner referred to the judgment of tlie Karnataka High Court in N.S. Mankale & Ors. r. The Town Municipal Council, Sasar reported as 1975 TAX. LR. 1613.. which dealt with the provisions of Sections 103 and 106 of the Kamataka Municipalities Act, 1964, which has the same effect as Sections 124 and 126 of the said Act respectively- It was held that an enhanced demand would be invalid if the procedure under these Sections had not been followed. O.Leamed counsel also refertisd to the Full Bench judgment of this Court in Shyam Kishore & Ors. v. Municipal Corporation of Delhi & Anr. reported as 48 (1992) DLT 277 iSC) to contend that an assessee cannot be called upon to pay a demand disputed by tlie assessee before an appeal is heard, if no demand has been made for tlie said assessment year and the notice of demand has only been received in respect of the previous ,assessment yeai*. This judgment was also relied utx^n by tlie learned Single Judge of this Court in A^mrwal Juneja Associates's case (Supra). 14.Leamed counsel also referced to another Full Bench judgment of this Court in Lok Kalyan Sainiti, New Delhi v. Municipal Corporation ofDelhi reported as AIR 1978 DELHI 189 (FB). In the said judgment while dealing with the provisions of 6 an 311/2001 Section 126 of tlie said Act, it was held that the liability to pay any property tax or increaseof such propeity tax would acciue in the year in which the notice foi proposalwas issued. It was held that even if a noticeis givenduiingthe currency ofafinancialyear,buttheamendmentinfact is completedlateron aftertheexpiiy ofthe iinancialyear, the amendedlist will still have theeffect reti-ospectivelyfor the financial year during which the noticeofincreasev/as given and the liability for propertytax,accordingto tiie amendedlist, will accruein the year in whichthe notice for proposal was issued. IS.Leamedcounselalso refen'edto anotherjudgmentof the FullBenchof this Court in MimicwalCoroorationof Delhi i'. ShaskankSteel Industries(P) Ltd. reported as 100 (2002) DLT 66 (FB), where it was held tliat property tax is leviable in respect of land, which is otherwise capable of being built upon and where constructionis permissible.Tlie primai'vliabilityin respectof thevacantland was of the lessor in a case wheie possession was not handed over and the land was not capableof being builtupon. 16.1have considereddie submissiotisadvancedby the learnedcounselfor the parties. n.Tlie factual matrix of the case is limited inasmuch as the matter in dispute relates to the assessment year of 1996-97, but the notice was initially issued for the assessmentyear 1994-95. The contentionofthe learnedcounselfor the petitioner flows from the plea tliat the notice, which was issued, was for the assessmentyear 1994-95and was dated 15.03.1995. At the stageof issuance of the said notice,tlie propertywas not capableofbeingbuiltupon in viewofthefact tliatthe possession 7 C.R. 311/2001 of die plot was handed over to the petitioner on 12.04.1996 and the perpetual lease deed was executed on 16.12.1996 onlj/. It was the contention on behalf of the petitioner that the said notice dated 15.03.1995 issued under Section 126 of the said Act was applicable only for the said assessment year and since the said assessmentyear expiied on 31.03.1995,till that date there was no liability to pay the property tax and the respondentcould not have recovered any property tax without issuing a fresh notice in accordance with law. The further contention is tliat the subsecjuentnotice seeldng to revise the rateable value from Rs.1.8 crores to Rs.2.7 crores was based on the earlier notice dated 15.03.1995 and since that notice, which is the substi-atum of the subsequent notice, was not in accordance with law, the subsequent order of assessment could not have been passed. IS.The assessment order dated 10.03.1998took into account the objectionsof the petitionerand in fact granted relief to the petitionerby acceptingthe contention tliat the liabilityto pay propertytax would arisefrom 12.04.1996. Subsequently, die rateable value was sought to be enhanced in terms of the notice dated 19.03.1998 w.e.f. 01.04.1997. 19.There is no doubt diat the Legislature had provided a distinction between the provisions of Sections 124 and 126 of die said Act dealing with die issue of 'Assessment Lisf and 'Amendment of the Assessment Lisf. There is, howeA'er,no doubt alsoabout the propositionthat die differencebetweenthe two provisionsis really in respsct of die consequences of the notices issued under the said two sections. A noticeissuedunderSection124of the saidAct canresultin a liability to pay property tax only from die followitig financial year, while in the case of a 'V 8 C.K 311/2001 notice issued under Section 126 of the said Act the liability arises from the currencyof the year in question. The appellateauthorityhas sought to ti"eat the notice under Section 126 of the said Act as a notice under Section 124 of the said Act. NoiTBallv,the respondentCorporationshouldissuean appropriatenotice to an assessee. In the presentcase, the notice was for a newly-acquiredplot, which was sought to be included in the assessment list. The ^tual effect of the property not being subject to tax when the notice issued dated 15.03.1995 should result in a situation where the petitioner should not be held liable for that year in question. That is what has happenedin the presentcase and the plea of the petitionerwas a:ceptedby the assessingautliority. Tlie assessingauthorityin fact acceptedthe objections of the petitioner that the liability to pay property tax would arise only from 12.04.1996. This liability was never impugned or challenged. 20.The subsequent notice and liability is sought to be challenged only on the basis tiiat the earlier notice dated 15.03.1995 was not in accordance with law. 21.Thenumerousjudgmentscited by the learnedcounselfor the petitioneronly seek to bring forth the principles of imposition of liability in a case of an assessee and that a notice is mandatory. Tlie present case has to be dealt with taking into considerationthe general principal,but applicableto its ownfacts being a case of initial assessment of a plot in question. I am of the considered view tliat the petitionercannot be permittedto evade liabilityto pay the propertytax from the date when the petitionerhimselfadmits the liability to pay such tax. The plea of the petitioner, in fact, was tliat the liability would arise only from 12.04.1996. Merely because the notice was issued purportedly under Section 126 of the said 9 C.R. 311/2001 Act on 15.03.1995 while the liability to pay property tax arise from 12.04.1996 cannot the basis to defeat the liability of the petitionei"for payment of such tax as also for tlie subsequent years, which is sought to be denied only on the ground that the notice was issued in the previousyear. I am unable to accept the contentionof tlie leai'ned counsel for the petitioner tliat the effect of issuance of the notice dated 15.03.1995 and the subsequent order is that for the said assessment year, tliere would be 'nil' liability and, thus, for the subsequent assessment year's also, in the absence of any proper notice, the same liability is liable to be adopted, which would be 'nil'. 22.1n fact, in Smt. Santosh Chandhk v. Municival Corvoration of Delhi 1972 R.LR. (N) 98, it was held that so far an assessment of a newly-erected building is concerned, there is no difference between the provisions of Sections 124 and 126 governing the issue of notice, but the real difference lies in the legal consequences flowing from it; if a notice is issued under Section 124, the liability to pay the tax arises with effect from the beginning of the following financial yeai", while in the case of a notice issued under Section 126, the liability to pay the tax arises with effect from beginning of the current year. Though the notice was stated to be a notice under Section 126 of the said Act, the effect of not treating it as so would be that the liability would not arise from the current year, which in any case the petitioner was not liable to pay in view of the fact that the liability was applicable only from 12.04.1996. Tlie effect of the notice under Section 124 of the said Act is to apply it only from the next financial year. This is what is sought to be done in the present case. 10 C.R. 311/2001 23.1n viewof the aforesaidposition,I am of the consideredview that tliepetitioneris liableto pay the propertytax, as demandedfi-om the petitionerand the impugned orders of the assessing authority and the appellate authority are not liable to be quashed. 24.The revision petition is dismissed leaving the paities to bear their own costs. February7, 2003 S^VNJAY .KAUL,J am