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Judgment
Kanakaraj, J.—The Petitioners claim to be the owner of the property situated at 29/17, ''A'' Block, Ritherdon Road, Vepery, Madras-7. In
the year 1990 a multi-storied construction was built in the said property. The Petitioners-Trust owns 3240 square feet and the deponent of the
affidavit owns 1325 Sq. feet in respect of the third floor of the building. On 20.1.1992, the Respondents issued a notice under Rule 1A and Rule
3A of Schedule IV to the Madras City Municipal Corporation Act, 1919 (hereinafter called ""the Act"") proposing to assess the property for levying
property tax. The annual value of the property was fixed at Rs. 2,33,142/-. Objections were called for from the Petitioners. After considering the
objections the assessment was confirmed on 3.2.1992 and a demand notice was issued. On a revision petition filed by the Petitioners, a hearing
date was given on 30.3.1992 and by an order dated 24.7.1992 the revision petition was partly allowed reducing the annual value to Rs.
1,39,885/-. The cause of action for the writ petition is the issuance of a property tax demand card in the form of a booklet dated 12.3.1992. The
conditions of the said card are as follows:
Conditions:
This card is a demand under Rule 20 Schedule IV part VI Section 138 of the M.C.M.C. Act, 1919 commencing from 1.4.91.
Tax to be paid in full for the respective half year in April and October.
No separate Demand Notice will be issued.
This card shall be produced to the officials of the Revenue Department, Madras Corporation with identity card for verification.
Owner should intimate the Revenue Department as and when alterations and additions to the existing building take place.
Change in usage of the building also to be intimated as and when it takes place.
The booklet contains several leaves, where provision is made for entering the property tax arrears upto 31.3.1991. It starts from Second Half
year 1987-88 and ends up with Second Half year 1990-91. Thereafter provision is made for entering the current property tax commencing from
the first half year 1991-92. There is a provision for payment of property tax upto the second half year 1995-96. Then there are four pages for
incorporating the details of enhancement/reduction of property tax. The last page is for recording any transfer of the property and incorporating the
name of the purchaser. Apparently, this booklet has been thought of by the Corporation and issued, to minimise the work of the clerical staff of the
Madras Corporation. But as rightly pointed out by the Learned Counsel for the. Petitioners, there does not appear to be an application of mind to
certain statutory provisions before issuing such a booklet. While I do see that the book-let serves a good purpose and will also facilitate the
payment of property tax, the legal aspects of the case and the statutory requirements should have also been kept in mind by the Respondents-
Corporation. While issuing the booklet in this case the demand is made for payment of property tax for the second half years 1990-91 to second
half year 1991-92 at the rate of Rs. 27,860.50 for each half year. The writ petition is to quash the said demand notice dated 12.3.1992 contained
in the booklet for the half-years 2/90-91 to 2/91-92. The main argument of the Learned Counsel for the Petitioners is that if the notice demanding
the half yearly tax is not served in the half-year in which the tax becomes due or at least in the succeeding half year, the tax for the half year first
mentioned, shall not be demanded. This is the basis of Rule 20(3) of the Rules contained in Schedule IV, Part VI of the Act. It has to be
remembered that Rule 20 relates to the collection of taxes and the procedure for invoking provisions of Rule 21. It is in this context that Sub-rule
(3) of Rule 20 says that the tax shall not be demanded if notice is not given within the half year or atleast during the next half year. Rule 21 provides
for collection of taxes by the issue of distraint order and sale of immovable property of the defaulter. Therefore, it is only for the purpose of Rule
21, that the above bar contained in Rule 20(3) will apply. I have no difficulty in understanding the scope of the Rules as above.
It is, however, necessary to refer to the entire scope of the levy, assessment and collection of property tax under the Act so that it will be useful
for appreciating the legal submissions. Since Rule 20(3) seems to impose a very heavy restriction and liability on the Corporation I am impelled to
go into the entire scope of the levy and collection of property tax. Rule 20(3) as such is as follows:
(3) Where a notice (or bill) referred to in Sub-rule (1) has not been served or given either in the half-year in which the tax became due or in the
succeeding half-year the tax for the half-year first mentioned in this sub-rule shall not be demanded.
I will, therefore, briefly refer to the provisions of law relating to the levy of property tax. Section 98 enumerates the kinds of tax which can be
levied by the Corporation. Section 99 provides for levy of property tax on all buildings and lands within the City save which are exempted under
the Act. The property tax comprises of (a) a tax for general purposes; (b) drainage tax, (c) a lighting tax. Sub-clause (2) says that the property tax
shall be levied at such percentages of the annual value of buildings and lands. The proviso fixes the maximum and the minimum percentage within
which the rate of property tax should be levied. Therefore, the crucial question for determining the property tax is the annual value of the building or
land. Section 100 prescribes the method of determining the annual value of the lands and building. Section 104 is relevant for our case because it
says that property tax shall be levied every half year and be paid by the owner of the assessed premises within 15 days after commencement of the
half-year. This is subject to the provisions of the Rules contained in Schedule IV. Section 107 is also relevant for this case because it says that the
owner is under an obligation to give notice of any construction or reconstruction and property. Section 137-B provides for assessment of building
which had escaped from assessment. Section 138 says that the Rules and tables embodied in the Schedule IV shall be read as part of the Chapter
relating to taxation.
Schedule IV contains several parts. Part I relates to all taxes in general. It is necessary to notice a few of the Rules in Part I. The Commissioner
is expected to prepare and keep assessment books and they are open for inspection by any person, who pays tax to the Corporation. Rule 1-A
says that the Commissioner shall determine the tax to which each property or person is liable. Rule 1-B provides for the grant of a receipt for
payment of tax. Part 1-A relates to assessment of property tax. Rule 1-C is a very important rule which should be kept in mind by all persons
owning property. On the Commissioner issuing a notice, all owners of property are obliged to file a return within the prescribed period containing
the particulars set out in Rule 1-C. If no return is filed it is open to the Commissioner to send a Bill Collector to make an inspection of the
assessable, item and prepare a return. The Commissioner shall then assess the property and fix the property tax payable by the owner. Rule 4
provides for a property tax demand card containing the details to be supplied to every owner or occupier who had filed the return. Tax paid shall
be entered in the property tax demand card. Part V. of the schedule provides for revision of assessment and constitution of a Tax Appeal Tribunal.
Against the order of the Tribunal there is a further appeal to the Principal Judge, City Civil Court. It is then that we get part VI containing Rules 20
to 29-C. Rule 20 says that, where any tax is due from any person, the Commissioner shall cause to be served upon such a person a bill for the sum
due before proceeding to enforce the provision of Rule 21. In other words, if tax is not paid in accordance with Section 104 of the Act, the mode
of collection is indicated in Rule 20. Rule 20(3) which I have already extracted above says that such a notice should be given in the half year in
which tax becomes due or at least in the succeeding half year before enforcing the provision of Rule 21. In other words, it is only for the purpose
of invoking the Rule 21 that the Corporation is obliged to issue a notice under Rule 20 within the half year or atleast in the next half year. This
requirement should not be confused with the liability of the owners to pay property tax within 15 days after the commencement of the half year.
We have already noticed the fact that the property tax is levied every half year, but it is contained in a property tax demand card issued under Rule
4 of Part 1-A. The assessment is done by the Commissioner on the basis of a return which are incorporated in the property tax demand card. If
we now look at the conditions in the card, the first condition says that the card itself is a demand under Rule 20, Schedule IV, Part VI of the Act.
It also says that no separate demand notice will be issued. There is a clear contradiction between the property tax card and Rule 20(3). The
property tax demand card is not issued during the half years, but it is issued for the entire period from the second half-year 1987-88 upto the
second half-year 1995-96. Therefore, it is definitely, impossible to comply with Rule 3 which requires a notice to be served in the half-year in
which tax becomes due or atleast in the next half year. The compliance with Rule 20(3) is absolutely important for invoking Rule 21 relating to
distraint of property. The authorities have not kept in mind, the salutary purpose in insisting on a notice under Rule 20(3) before a man''s properties
are distrained and sold. One can easily understand that the issuance of the property tax demand card is limited to the levy of property tax for the
purpose of Section 104 of the Act. One can also assume that the issuance of a property tax demand card will fasten a liability on the owners to
pay property tax within 15 days after the commencement of each half year. Beyond this, the property tax demand card cannot be utilised for
distraining the properties of an owner or occupier. In my opinion, this is the only reasonable interpretation that can be given to the Rules. In other
words, I hold that before the Respondents proceed to collect the tax in accordance with Part VI of Schedule IV they have to necessarily give a
notice in accordance with Rule 20(3). In the absence of such a notice the distraint proceedings or other methods mentioned in Part VI of Schedule
IV cannot be undertaken. I make it clear that the liability of the owners to pay property tax is not taken away by Rule 20(3). It will always be open
to the Corporation to collect the property tax by filing a civil suit within the period of limitation and Rule 20(3) cannot be an answer to refuse to
pay property tax so long as the suit is filed within the prescribed time.
Having understood the scope of the levy and collection of property tax, if we now come to the facts of the present case it must be noticed that
the Respondents have not so far taken any proceedings under Rule 21 of Part VI Schedule IV. Even before the Respondents could take any such
action the Petitioner has come forward with this writ petition saying that in respect of the property tax for the half-years 2/91, 1/91-92 and 2/91-
92 the same cannot be demanded together, and at the same time threatening to invoke Part VI of the Schedule IV of the Act. The confusion has
been created because of condition No. 1 contained in the property tax demand card. To this extent the Petitioner is justified in saying that in
respect of three half-years mentioned in the property tax demand card no action can be taken for distaining the properties of the Petitioner.
Reference is made to an unreported judgment dated 17.2.1987 in W.P. Nos. 408 and 447 of 1977 rendered by a Division Bench of this Court. In
that case action was taken under Rule 29 of Part VI against an occupier of a building. While considering the validity of proceedings against
occupier the Division Bench has also consider the scope of Rules 20 and 21. Observed the Division Bench:
It may be seen from this decision that for invoking the power of distraint conferred on the Commissioner, the requirements of Rule 20(1) and (3)
relating to service of notice shall have to be complied with if it is not so served, the tax for the particular half year cannot be demanded or
recovered by distraint and sale of the movables under Rule 21.
The Division Bench also notice the fact that if all the arrears are not recoverable from the sale of the distrained properties it was always open to the
Corporation to file a Civil Suit. Division Bench also held that Rule 29 can be invoked only after exhausting remedy under Rule 21.
An analysis of the various provisions of the Act leaves the with the impression that the property tax demand card can never be considered as a
demand and notice under Rule 20 Schedule IV Part VI of the Act. In other words, the property tax demand card which is an innovation
introduced in Part-1-A by G.O. Ms. No. 1178 Municipal Administration and Water Supply dated 10.12.1987 can only serve as a document to
prove the assessment of the property and the annual value determined by the Commissioner. It also shows the property tax payable by the owner
or the occupier. As and when the property tax demand card is amended, based on subsequent revision or appeals or based on change of
ownership, the liability will arise as per the altered terms. Beyond this, the property tax demand card cannot serve any purpose. If for any reason
the Respondents seek to invoke Part VI of the Schedule IV, they must necessarily issue a separate notice under Rule 20. This, in my opinion, will
be the proper and harmonious interpretation of the Rules. This interpretation will also safeguard the interest of the citizens and the tax payers
without in any way prejudicing the right of the Corporation to collect the property tax. At the risk of repetition I make it clear that the liability of the
owner or occupier to pay property tax can never be put an end to, by the failure to give notice under Rule 20 of the Act. In other words, the
Corporation can always recover the property tax by filing a Civil Suit subject to the bar of limitation. If they seek to invoke Part VI Schedule IV of
the Act they must give separate notice strictly in accordance with Rule 20. Therefore, the writ petition is allowed and I hold that in respect of the
amounts mentioned in the property tax demand card dated 12.3.1992 the Respondents cannot invoke the coercive procedure prescribed under
Part VI Schedule IV of the Act. The writ petition is allowed in the above terms. There will, however, be no order as to costs.