Case: Municipal Board, Saharanpur Vs. Imperial Tabacco of India Ltd

2. During the relevant period from 1.10.1959 to 31.3.1960, the respondent company was sought to be taxed by the appellant Municipality by way of water- tax levied under Section 128, sub-section (1)(x) of the Act. The case of the appellant was that the respondent company had erected a factory with a large number of ancillary buildings and residential houses occupied by its officers and staff within the municipal limits of the appellants Board and that the entire complex of buildings owned by the respondent company was surrounded by a high wall for security reasons. The appellant Board raised the bills of water-tax on 13th August, 1959 calling upon the respondent to note that as a result of a public water stand pipe, the companys property, bearing all factory buildings situated on Cigarette Factory Khalasi Line, being within a radius of 600 feet from the said pipe had come within the taxable area with effect from the month of May, 1959 for the purpose of imposition of water-tax. The respondent-company, by its communication dated 19th December, 1959 objected to the said imposition to water-tax and submitted that the company was not liable to pay water-tax bills for the period from 1.10.1959 to 31.3.1960, as according to the respondent company, the bills were incorrectly made out in that they included all residential and factory buildings. It was further submitted that these buildings were not in a "common compound" and the residential bungalows should be treated as separate units in the same way as they have been treated as separate units in the case of house tax assessment. The respondent-company further submitted that water-tax bills might be reissued for only those buildings of the company that fell within the radius of 600 feet from the water stand pipe and the company was objecting to pay water-tax on buildings which did not fall within a radius of 600 feet from the water stand pipe. The aforesaid communication by the respondent-company did not find favour with the appellant. The appellant, by its letter dated 29th December, 1959, informed the respondent that in view of Explanations (a) and (b) of Section 129 of the Act, all "buildings" and "common compounds" were assessable to water-tax and, therefore, the bills had been correctly worked out against the company and the tax was payable.3. This resulted into an appeal by the respondent under Section 160 of the Act to the District Magistrate, who was the appellate authority. The appellate authority, after hearing the parties, came to the conclusion that the respondents houses situated in the companys complex could not be said to have been situated in a "common compound" as the term `building defined in Explanation (a) to Section 129 of the Act required a `compound to be a common appurtenance of several buildings. On the aforesaid reasoning, it was found that the whole plot of land of the company containing number of factory buildings and residential buildings could not be treated as one unit for the purpose of water-tax and that only these buildings and plots of land which came within the radius of 600 feet of the nearest water stand pipe from where water was made available to public by the Board could bear the burden of water-tax and accordingly, only three bungalows which came within the radius of 600 feet could be assessed to water-tax by the appellant Board and not all the residential bungalows and factory buildings which were outside the radius of 600 feet from the water stand pipe. The companys appeal was, accordingly, allowed and the appellant was directed to issue fresh water-tax bills in the lights of that order. This resulted into a writ petition by the appellant before the High Court, who heard the writ petition, after hearing the contesting parties, came to the conclusion that all the buildings belonging to the respondent-company were standing in a "common compound" (even though that the company might be subdivided into different sections), because the entire complex was surrounded by a common wall. Relying on the map which was supplied by the respondent-company, it was held that the said map clinched the arguments of the appellant which showed that inside the residential area there was one road which was undeniably appurtenant to the factory, since it led from the main municipal road to the gate of the factory proper, and there was another road which provided access to the various residential houses and was, therefore, a common appurtenance of all those houses. The first of these roads consequently had to be treated as the "compound" of the factory, as defined in section 2(5) of the Act; and similarly the second road was the compound of the residences. Both these roads started from a point quite close to the municipal stand pipe; and a substantial portion of both the roads was lying well within the radius of 600 feet measured from the stand pipe. Hence, the appellant was entitled to raise the water-tax bills connected with all the structures situated within the compound. The writ petition, was accordingly, allowed and the order of the learned District Magistrate was set aside.4. This decision of the learned single Judge was challenged in Special Appeal by the respondent-company before a Division Bench of the High Court. The Division Bench allowed the said Special Appeal by holding that the road lying in the entire compound was not appurtenant to the residential bungalows situated within the same and consequently, it could not be said that all these buildings were situated within the radius of 600 feet from the water stand pipe. The Division Bench of the High Court came to the said conclusion heavily relying upon the definition "compound" in Section 2(5) of the Act. It also observed that the learned District Magistrate found that only three of the residential bungalows fell within 600 feet limit of the nearest water standpipe and that he was justified in relying upon the materials before him and hence, his order could not be said to be suffering from any error apparent or jurisdictional error. Therefore, both on merits as well as on the ground that there was no occasion for the learned single Judge to interfere with the decision rendered by the learned District Magistrate, the Special Appeal was allowed; that order of the learned single Judge was set aside and the writ petition of the appellant was dismissed with costs. Subsequently, on the request of the appellant, leave to appeal to this Court was granted by the Division Bench and a certificate of fitness was issued under Article 133 of the Constitution of India as noted earlier and that is how the appellant is before us in this appeal.5. By an order dated 30th November, 1976, this Court granted stay pending disposal of appeal and ordered expedition of this appeal.

Court's reasoning:
The learned senior counsel for the respondent company, Shri Nariman rightly invited our attention to the various decisions taking the view that for taxing purpose, if two views are possible on the construction of the provisions, the view which supports the case of the tax-payer should be preferred as compared to the view which support the taxing authority. However, on the express language of Section 129 Explanation (a) it must be held that no two views are possible, but only one view is possible, namely, that the connotation of the term "common compound" is entirely different and wider in nature as compared to the connotation of "compound" as defined in Section 2, sub-section (5) as seen earlier. It is unfortunate that this express provisions in all its aspect was not noticed by any of the courts below, though the Explanation to Section 129 was referred to both by the learned single Judge as well as the Division Bench of the High Court. We may mention at this stage that it was not the case of the respondent company at any time that the occupants of the buildings situated in the Bungalow Park Area or factory area had no common right to pass and re-pass from or to use the open land in which the said structures were situated or that the occupants of the residential bungalows could not use the common childrens park or swimming pool or kitchen etc. Their only contention was that because this common area was not an adjunct of or an area appurtenant to each of these buildings, the buildings that came within the radius of 600 feet from water stand pipe only attracted the water- tax levy. As we have discussed earlier, it is not possible to agree with this contention canvassed by learned senior counsel of the respondent company on the scheme of the Act. As a result of the aforesaid discussion, point No. 1 has to be answered in the affirmative, and point No. 2 in the negative. Thus, the answers on both these points shall be in favour of the appellant and against themere look at the reasoning of the appellate authority shows that it suffered from a patent error of law; while considering Explanation (a) to Section 129 which defines "building" the second part of the Explanation was completely ignored by the appellate authority. As seen earlier, the second part goes beyond the question of "compound" and embraces a wider field, namely, "common compound". As that part of the Explanation was completely ignored and as the appellate authority wrongly concentrated on the definition of the term "compound" as found under Section 2, sub-section (5), the entire reasoning adopted by the learned appellate authority became patently erroneous in law. The said glaring error of law, therefore, was rightly required to be set aside in writ jurisdiction by the learned single Judge. Once this conclusion is reached, the preliminary objection of Shri Nariman to the certificate issued by the High Court does not survive. The question also about the correct connotation of the term "common compound" would certainly give rise to a substantial question of law. However, we may mention that the reasoning adopted by the learned single Judge for upsetting the finding of the appellate authority is not accurate as the learned single Judge also wrongly involved the restricted definition of the term "compound" as found in Section 2, sub- section (5) and assuming that this definition applied, he went in search of appurtenant land being attached to such bungalows. Such exercise was not necessary on the clear scheme of second part of the Explanation (a) to Section 129 as seen earlier. However, by a wrong process of reasoning, ultimately the learned single Judge reached the correct conclusion that a part of the "common compound" land which was to be termed as "building", for the purpose of Section 129, belonging to the respondent company was within the permissible limits of 600 feet from the water stand pipe so as to entitle the appellant Municipality to impose water-tax on the entire complex of the buildings situated in common land belonging to the respondent company. This point for consideration is, therefore, to be answered in the affirmative in favour of appellant and against the respondent.This point for consideration strictly does not arise out of the certificate issued by the High Court in favour of the appellant Municipality. We, therefore, do not deem it fit to consider this point. We are inclined to take this view for a more substantial and practical reason, namely, that this appeal is pending since 1976 in this Court on the Certificate of fitness granted by the High Court. Even assuming that the learned counsel for the appellant is right that the special appeal was not maintainable under the Letters Patent applicable to the High Court of Judicature at Allahabad, respondent would be entitled to urge before us that they may be permitted to challenge the order of the learned single Judge directly before us under Article 136 of the Constitution since the entire period spent by them in the High Court and this Court up till now will get excluded under Section 14 of the Limitation Act. Consequently, at this late stage, we do not deem it fit to allow the appellant to take up this contention for voiding the decision of the Division Bench. Point No. 4, is, therefore, disposed of as not entertained and, therefore, notthe disputed assessment is for a period after 12th September, 1958, the objection raised by Shri Nariman about any inconsistency regarding date of the rules pales into insignificance. Shri Nariman, learned senior counsel for the respondent then submitted that the Gazette Notification is still not produced and only a booklet is produced. But when we turn to the printed booklet, we do not find that what is printed at page 9 of the booklet does refer to the relevant Notification as in terms the number of the relevant notification has been mentioned. There is nothing to indicate that the said notification would not have been gazetted in the same form in which it is printed in the booklet. Presumption under Section 114 of the Indian Evidence Act regarding the performance of Officials Act therefore, would clearly get attracted in the facts of the present case. Nothing was pointed out to us by learned senior counsel for the respondent to indicate that there was any contrary gazette notification or that the gazette notification was laying down any different scheme as compared to the one which is printed in the booklet of 1973 which has stood the test of time for all these years. Consequently, point No. 5 is answered against the respondent and in favour of the appellant by holding that the notification of 12th September, 1958 also brought the factory premises of the respondent company within the tax net of water-tax and the said notification did not cover only the residential buildings. This point is, therefore, answered in favour of the appellant and against the respondent.As a result of the aforesaid finding on the relevant points, we set aside the order of the Division Bench and confirm the order of the learned single Judge and allow the writ petition of the appellant Municipality on the reasoning indicated herein-above. It is held that the impugned levy of water-tax on residential and non-residential buildings of the respondent company was perfectly justified in the facts and circumstances of the case. As the levy of the water-tax for the relevant period is found to be well sustained there will remain no question of refunding any amount collected by the appellant towards the said levy from the respondent.