Mr. Varadarajan vs State of Tamil Nadu and The Dharapuram Municipality

Vinod K. Sharma, J.—The Petitioner, who is the Ward Member of Municipal Council of Dharapuram Municipality, seeks a writ in the

nature of Mandamus, directing the second and third Respondents to accept the resolution No. 1285 dated 31.08.2009 and Resolution No. 1571

dated 12.05.2010, passed by the Dharapuram Municipality Council, quo the property tax.

In the affidavit to the writ petition, it has been pleaded that the Petitioner is an elected Ward Member and resident of Dharapuram municipality.

The first Respondent passed G.O. No. 150 dated 12.11.2007 to revise property tax of all municipalities. The Government order was followed

by another G.O. No. 110 dated 23.06.2008, wherein, the Government issued guidelines to the municipalities to revise property tax. In the

Government order No. 110, it was specifically provided that municipality shall not increase tax beyond,

i) 25% for residential buildings

ii) 100% for Industrial Establishments, and

iii) 150% for Commercial Establishments.

The third Respondent, i.e. Dharapuram Municipality, passed resolution dated 30.06.2008, vide which, it was decided to increase property tax

for residential buildings by 25% and 50% for Industrial and Commercial Establishments. u/s 78 of the Tamil Nadu District Municipalities Act, the

power is vested with Municipality with regard to levying of taxes.

Section 78 of the Tamil Nadu District Municipalities Act, 1920, reads as under:

Enumeration of ordinary taxes and powers of control of State Government - (1) Every municipal council may levy,

(a) property tax;

(b) a profession tax;

(c) a tax on carriages and animals;

(d) a tax on carts;

(dd) a tax on advertisement other than advertisements published in the newspapers and advertisements broadcast by radio or television.

(2) A hill station municipal council may also levy a tax on servants.

(3) Any resolution of a municipal council determining to levy a tax shall specify the rate at which any such tax shall be levied and the date from

which it shall be levied.

Provided that before passing or resolution imposing a tax for the first time or increasing the rate of an existing tax on advertisement other than

advertisements published in the newspapers and advertisements broadcast by radio or television, the council shall publish a notice in at least one

vernacular newspaper, on the notice board of the municipal office and in such other places within municipal limits as may be specified by the

council and by beat of drum, of its intention fix a reasonable period not being less than one month for submission of objections and consider the

objections, if any, received within the period specified;

Provided also that any resolution abolishing an existing tax or reducing the rate at which a tax is levied shall be immediately reported to the State

Government and in municipalities which have an outstanding loan either from the Government or from the public or any other local body, such

abolition or reduction shall not be carried into effect without the sanction of the State Government.

Provided also that, where any resolution under this Section has taken effect for a particular year, no proposals to alter the rates or date fixed in

such resolution so far as that year is concerned shall be taken into consideration by the Council

The case of the Petitioner is that as no action was taken on the resolution, passed by Dharapuram Municipality, the representations were sent by

the Petitioner to the Ministry of Local Administration, with copies to Respondents.

The case pleaded by the Petitioner is that vide proceedings in Na. Ka. No. 64310/2008/R-1 dated 29.12.2008, second Respondent, i.e. The

Director Municipal Administration, refused to accept and ratify resolution dated 27.11.2008, on the ground that property tax was being calculated

at the first revised rate.

The order, passed by the second Respondent, was challenged by the Petitioner vide W.P. No. 1593 of 2009 and the writ petition was

disposed of by this Court on 06.07.2010 by observing that since financial year had commenced and tax had been calculated at the revised rate,

the Municipal Council would be at liberty to take steps for reduction of tax as per law.

It was in pursuance to observation, made by this Court, the third Respondent passed resolution No. 1285 dated 31.08.2009, giving effect to

the reduced rate with effect from 01.04.2010. Thereafter, resolution No. 1571 was also passed on 12.05.2010, confirming reduction of property

tax. Resolutions were also brought to the knowledge of the second and third Respondents.

In addition, the Petitioner made number of representations to levy tax as per resolution passed by the municipality. However, without

considering the resolution of the Municipal Council, third Respondent is collecting tax at old rate, which is in violation of the resolution of Municipal

Council, passed u/s 78 of the Act.

On notice, counter has been filed by the first Respondent, wherein, it has been stated as under:

It is submitted that based on the above instructions a resolution was passed by the council on 30.06.2008 to revise the property tax. As per the

tax fixed and collected as noted for various expenditure involved in the Municipality Tax was fixed and collected as per the revised basic rates.

While so, the Petitioner sent a representation dated 06.11.2008 to the Chairman, Dharapuram, Municipality, pursuant to resolution No. 1046

dated 27.11.2008 was passed revising the Property Tax as 15% to the residential building and 30% for an Industrial and Commercial

Establishment which cannot be implemented as per Section 78(3) of said Act, 1920, without the sanction of the Government since the Municipality

is in deficit and not in a position to repay various loans and also to contribute to the various essential services like Water Supply, Road, Street

Light, Sanitation etc., for which Municipality is to increase the income of the Municipality.

In view of averments made in Paragraph No. 5 of the affidavit, the Petitioner cannot question the action of third Respondent in collecting tax at

old rate, as resolution passed by Municipality is required to be approved by the State Government, as the third Respondent is shown to be under

debt to the local bodies, regarding payment of certain tax and duties.

However, at the same time, the first Respondent is, under statutory obligation, to take decision on the resolution passed by the Municipal

Council in view of proviso to Section 78 of the Tamil Nadu District Municipalities Act, 1920.

Till time resolution is approved by the State Government, it cannot have force of law, therefore, third Respondent is justified in claiming tax on

the basis of old rates.

As the first Respondent has failed to perform its statutory duty, this writ petition is disposed of, by directing the first Respondent to take a

decision on the resolution, passed by the second Respondent, reducing tax. The decision be taken within a period of three months from the date of

receipt of certified copy of this order. No costs. Consequently, connected miscellaneous petition is closed.