Cantonment Board, Ambala vs The state of punjab. Chandigarh and others

R.S. Narula, J.—This appeal under Clause 10 of the Letters Patent is directed against the judgment and order of a learned Single Judge of this Court dismissing the Appellant''s Civil Writ Petition No. 107 of 1964, wherein the assessment of tax on the Appellant Board under the Punjab Urban Immovable Property Tax Act, 1940 (hereinafter called the Act) in respect of the tonga stands, vegetable etc. stalls and teh bazari had been impugned. Section 3 (1) of the Act provides for the levy and payment of an annual tax on buildings and lands situated in the rating area shown in the schedule to the Act. It is not disputed that the impugned imposition relates to the properties situate within the rating area mentioned in the schedule to the Act. Exemption from payment of the tax under the Act in regara to the three sets of properties has been claimed by the Appellant Board, which is a local authority, u/s 4(1)(b) of the Act. The relevant part of that provision reads as follows:

(1) The tax shall not be leviable in respect of the following properties, namely:

(a) * *

(b) Buildings and lands.........owned or administered by a local authority.......... when used exclusively for public purposes and not used or intended to be used for purposes of profit.

Objections of the Appellant Board in respect of the imposition of tax on tonga stands, vegetable etc. stalls and teh-bazari having been rejected by the order of the Assessing Authority, Ambala, dated February 21, 1960 (Annexure ''B'' to the writ petition), and the said order having been maintained in the Cantonment Board''s appeal (copy of the grounds of appeal being Annexure ''D'' to the writ petition) by the order of the Additional Deputy Excise and Taxation Commissioner, Punjab, dated September 4, 1961 (copy of which order is Annexure ''C'' to the writ petition), the Appellant Board went up in revision to the Joint Excise and Taxation Commissioner, Punjab, Patiala, who dismissed the same by his order, dated June 22, 1963 (Annexure ''E''). In the writ petition filed by the Appellant Board for quashing the order of assessment, the appellate order and the revisional order it had been contended (i) that the levy of the tax in question was illegal as tax could be levied under the Act in respect of only such propeitits which fetched rent, which expression (rent) meant payment made by a tenant to the landlord for a demised property, and since the licence fees which were charged by the Appellant Board were not paid by a tenant to a landlord but were payments in the nature of mere fees, the impugned assesment was liable to be struck down ; and (ii) if a property was not fetching any rent, then under the Act its annual value could not be determined and no tax could be levied in respect of the same.

Somewhat different arguments appear to have been advanced at the hearing of the writ petition before the learned Single Judge who dismissed the same by his order, dated September 13, 1965, on the following findings -

(a) the tax under the Act is not on gains or profits derived from lands or buildings but is levied on lands and buildings the quantum thereof alone being calculated on the basis of annual rental value contemplated by Section 5 ;

(b) the rent actually charged or recovered for lands or buildings is not the basis for the levy of the tax;

(c) the properties in question being admittedly situate within the rating area defined under the Act, it was for the Cantonment Board, who claimed an exemption u/s 4(1) (b) of the Act, to establish its claim before the authorities by adducing appropriate evidence;

(d) the Cantonment Board did rot bring any material before the Assessing Authority or the appellate authority to show that in fact the lands which were the subject-matter of teh bazari were used exclusively for public purpose and were not used or intended to be used for purposes of gain or profits;

(e) the tonga stands are not for any public purpose and the fees charged in respect thereof are in reality rents charged for the sheds provided for the tongas; and

(f) there was no apparent error of law in the impugned orders of the Assessing Authority under the Act.

Not satisfied with the judgment of the learned Single Judge, the Cantonment Board has come up in appeal. Mr. C.D. Dewan who appears before us on behalf of the Cantonment Board has again pressed his client''s claim for exemption u/s 4(1) (b) of the Act though he has confined its claim in this respect to the levy in respect of teh-bazari alone. Counsel submitted that teh bazari is charged from poorer class of shopkeepers like hawkers etc. in order to provide them with space for carrying on some business for earning their living and that license-fee known as teh-bazari is not charged by the Cantonment Board for the purpose of earning a profit. We are unable to find any force in this contention for more than one reason. No such plea has been taken up in the writ petition. The plea involves a question of fact which cannot be allowed to be raised for the first time in appeal It cannot be held that teh-bazari is charged from the licensees for their benefit. It may be a consideration for bestowing certain benefits on the licenees Mr. Dewan then submitted that when fees such as the license-fees are charged, they are only recovered for the services rendered and have a quid pro quo with the services and can never be said to be realised for earning a profit. We are unable to hold that this sweeping proposition must universally be correct. Counsel is probably thinking of certain observations made in the course of judicial pronouncements relating to the validity of levy of fees in contradistinction to taxes. There is no evidence on the record as it stood before the Assessing Authority or even as it stands before us to show that the entire amount recovered by the Cantonment Board by way of teh-bazari is expended exclusively for the services rendered to the licensees and that no part of it goes to the coffers of the Cantonment Board as a profit. Nor is there any evidence to show that no part of the teh-bazari fees recovered from the licensees is intended to be used for the purposes of profit by the Board. No such plea was taken before the Assessing Authority. Even in the grounds of appeal (Annexure ''D'') against the order of the Assessing Authority no such point wes taken up, This contention also involves a disputed question of fact and cannot be allowed to be raised for the first time in this appeal.

The second submission of Mr. Dewan was that the manner in which the gross annual rent has been calculated in respect of teh bazari u/s 5 of the Act is contrary to that provision. Section 5 reads:

The annual value of any land or building shall be ascertained by estimating the gross annual rent at which such land or building together with its appurtenances and any furniture that may be let tor use or enjoyment with such building might reasonably be expected to let from year to year, less...

The fault found with the manner of assessment is that the total amount of license-fees recovered by the Cantonment Board were taken as the basis for the assessment whereas according to counsel each unit should have been taken and assessed separately. It appears from the record that relevant figures were provided by the Cantonment Board itself to the Assessing Authority and no such objection was taken regarding the combined assessment of the various units. It is significant that not only was an objection to that effect not taken before the assessing, appellate or revisional authorities, but no such question was raised even before the learned Single Judge. We are not inclined to allow a new point of this type being raised for the first time in an appeal under Clause 10 of the Letters Patent.

The last submission of the learned Counsel for the Appellant was that the Assessing Authority has proceeded contrary to the requirements of Section 5 to assess tax on the amount of the license-fees recovered by the Appellant whereas the proper course which should have been adopted by the Assessing Authority was to base the assessment on the rent which the Board might reasonably be expected to recover for the properties in dispute. There is no force in this contention because the assessing authorities have come to a finding of fact on the question that the rent of the properties in dispute was not less than the license-fee which was in fact being recovered by the Appellant. Counsel frankly conceded that it is no more his argument that the properties which are not actually rented out cannot be subjected to tax under the Act. Even if counsel had so contended we would not have agreed with him, in view of the clear phraseology of the charging section in the Act. The gross annual rent on which the tax has to be calculated is not the rent at which the land or building is let out, but is the rent at which the land or building in question might reasonably be expected to be let. There is no material on the record before us to suggest that the rent at which the land and buildings in dispute might reasonably be expected to have been let from year to year was lesser than the amount determined by the assessing authorities. As already stated it was for the Appellant to give evidence in support of its claim in this behalf before the Assessing Authority and it was for the authorities under the Act to determine the disputed question of fact relating to the gross annual rent at which the properties in question might reasonably be expected to have been let. We are unable to find any error in the decision of the learned Single Judge to the effect that it is not for this Court to interfere in such findings.

No other point having been argued before us, the appeal fails and is dismissed with costs.