Punjab State Warehousing Corporation vs Municipal Committee

Paramjeet Singh, J.—Instant writ petition has been filed under Articles 226/227 of the Constitution of India for issuance of writ in the nature of certiorari for setting aside the impugned order dated 10.02.1987 (Annexure P-3) passed by respondent No. 1 whereby demand of house-tax has been made and the order dated 02.08.1988 (Annexure P-5) passed by respondent No. 2 whereby appeal preferred by the petitioner has been dismissed. Shorn of unnecessary details, the facts relevant for disposal of the instant petition are to the effect that the petitioner constructed godowns (warehouses) at "Faridkot for the preservation and storage of foodgrains and other agricultural produce, implements fertilizers and commodities notified by the Government from time to time. The Municipal Committee, Faridkot issued a notice to the petitioner Corporation to show cause why the proposed assessment of annual value of the petitioner''s godowns for the period 1987-88 be not confirmed. The petitioner filed objections to the said notice, but without affording any opportunity, the assessment authority passed the impugned order dated 10.02.1987 (Annexure P-3) whereby the amount has been assessed and demand raised. Feeling aggrieved by the order dated 10.02.1987, the petitioner preferred an appeal before the competent authority which has been dismissed vide impugned order dated 2.8.1988 (Annexure P-5). The petitioner has already deposited the tax amount in view of the condition precedent for filing the appeal. It is further pleaded that the Municipal Committee, Faridkot has not followed the procedure laid down under Sections 62 to 66 of the Punjab Municipal Act, 1911 for the imposition of the house-tax on the property of the petitioner. Therefore, the petitioner claims that the assessment order as well as the demand raised by the Municipal Committee, Faridkot vide annexure P-3 and the order (Annexure P-5) passed by the appellate authority are not sustainable in the eyes of law. Hence, this writ petition.

In the written statement, it is averred by respondent No. 1 that the tax has been assessed in accordance with law. The Municipal Committee, Faridkot is entitled to recover the tax in view of provisions of Section 3 of the Punjab Municipal Act, 1911 whereby the annual rental value is assessed. It is further averred that there is no illegality or perversity in the impugned orders (Annexures P-3 and P-5).

I have heard learned counsel for the parties and perused the record.

In support of his pleadings, learned counsel for the petitioner has relied upon Budh Ram Vs. Municipal Committee and Another, , Pooran Singh Vs. The Municipal Committee, Sunam and another, and Punjab State Electricity Board Vs. The Municipal Committee and Another, .

From the perusal of documents on record, it is clear that only value of the property has been fixed by the Municipal Committee, Faridkot under the provisions of the Punjab Municipal Act, 1911, however, in determining the rent the provisions of the East Punjab Urban Rent Restriction Act, 1949 have not been followed. Similar situation arose before the Hon''ble Supreme court in Bhagwant Rai and others Vs. State of Punjab and others, wherein the matter was remanded to the ''Municipal Committee, Abohar to redetermine the tax on the basis ''of the observations of the Hon''ble Supreme Court. The Hon''ble Supreme Court in the above decision referred to its earlier decision in Dr. Balbir Singh and Others Vs. M.C.D. and Others, , wherein, it has been held as under:

The ratable value of a building, whether tenanted or self-occupied is limited by the measure of standard rent arrived at by the assessing authority by applying the principles laid down in the Rent Act and cannot exceed the figure of the standard rent so arrived at by the assessing authority. The standard determinable on the principles set out in the Rent Act is the upper limit of the rent which the landlord may expect to receive from a hypothetical tenant, but it may in a given case be less than the standard rent having regard to various attendant circumstances and considerations.

It is further observed in Bhagwanti Rai''s case (supra) as follows:--

Thus, it is settled law that the actual rent received from a tenant is not the measure for determination of the annual ratable value, but the reasonable standard rent expected to be received under the relevant Rent Act The view taken by the authorities is therefore, clearly illegal.

It is contended by the respondent that in view of the admission by the appellants in their letter that they are prepared to pay the tax on the basis of the actual rent received from the Bank, they are estopped to go back from the admission and the respondents are right to adopt that as a measure of assessing ratable value. We fail to appreciate the contention as there is no estoppel against the statute. When the statute prescribes particular mode to determine the annual rental value it has to be done in that manner. Admission wrongly made by the landlord or the owner would not be a ground to deny the statutory benefit.

The appeal is accordingly allowed. The orders of the assessing authority and the appellate authority are set aside and they are directed to determine the amount of tax, as indicated hereinabove.

In view of above decision, this Court is of the opinion that the Municipal Committee, Faridkot is required to determine the annual value of the property for the purpose of determining the amount of tax in accordance with the provisions of the Punjab Municipal Act, however, the rate of tax assessed must be based on fair rent determined in accordance with the provisions of the East Punjab Urban Rent Restriction Act, 1949. In view of above, the instant writ petition is allowed, impugned orders dated 10.02.1987 (Annexure P-3) and 02.08.1988 (Annexure P-5) are set aside and the case is remanded to the Municipal Committee, Faridkot for re-determination of the annual value and thereafter impose-tax in accordance with law. Parties through their counsel are directed to appear before the Municipal Committee, Faridkot on 17.09.2013.

No order as to costs.