2003(4) ALL MR 653
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
R.M.S. KHANDEPARKAR, J.
All India Soverdia Sangam Trust Vs. Municipal Corporation Of Greater Bombay & Ors.
Writ Petition No.143 of 2000
2nd July, 2003
Petitioner Counsel: SARVASRI R. M. NAKHAWA,V. B. DHAVAN
Respondent Counsel: Ms. S. AJIT KUMAR
Mumbai Municipal Corporation Act (1888), S.143(1)(a) - Exemption from educational cess - Society registered as Trust and for charitable purpose - Society entitled for the benefit of exemption from educational cess. 1995(1) Bom.C.R. 328 - Followed. (Paras 7, 8)
The Municipal Corporation of Greater Bombay Vs. M/s. Polychem Ltd., AIR 1974 SC 1779 [Para 2,3]
Christian Children Fund Inc. Vs. Municipal Corporation of Delhi, (1994)4 SCC 337 [Para 2,6]
Christ The Kind Cathedral Vs. John Ancheril, (2001)6 SCC 170 [Para 2,6]
The Municipal Council, Ahmednagar Vs. Bhaskar Pandurang Hivale, 1995(1) Bom.C.R. 328 [Para 2,7]
Nalva Metal and Alloys Ltd. Vs. Municipal Corporation of Greater Mumbai, W.P. No.1142/1999, Dt.: 12-7-1999 [Para 4]
2. The petitioners are challenging the orders and the notices issued by the respondents in relation to demand of tax as well as the warrant of attachment pertaining to the property of the petitioners as well as the order of cancellation of exemption from payment of property tax on two grounds, namely, that the rateable value has been assessed in contravention of the order of the Apex Court in the matter of The Municipal Corporation of Greater Bombay Vs. M/s. Polychem Ltd., reported in AIR 1974 SC 1779 in as much as the same is on the basis that the land is under construction and not a vacant land, and secondly, that the exemption from payment of tax has been revoked, firstly, in contravention of the basic principles of natural justice, and secondly, that the same is contrary to the provisions of law as well as the ruling of the Apex Court in the matters of Christian Children Fund Inc. Vs. Municipal Corporation of Delhi and others, reported in (1994)4 SCC 337 and Christ The King Cathedral Vs. John Ancheril and another, reported in (2001)6 SCC 170, and it is also challenged on the ground that even the educational cess is not payable by a Charitable Trust and the petitioners being a Charitable Trust is not liable to pay the same and in that regard reliance is sought to be placed in the decision in the matter of The Municipal Council, Ahmednagar Vs. Bhaskar Pandurang Hivale, reported in 1995(1) Bom.C.R. 328. The demand for the tax as well as the order pertaining to the rateable value is sought to be justified on the ground that the authorities have taken into consideration the vacant land and not the land under construction, and secondly, that the old building having been demolished and the new building yet to be completed and yet to be occupied by the petitioners, presently the land is not in occupation and use of the petitioners, and therefore, the petitioners are not entitled to claim exemption from tax under Section 143 of the Mumbai Municipal Corporation Act, 1888, hereinafter called as "the said Act".
3. The law on the point of fixation of the rateable value in relation to the land under construction is well-settled by the decision of the Apex Court in the case of The Municipal Corporation of Greater Bombay Vs. M/s. Polychem Ltd. (supra) wherein the Apex Court has held as under:-
"The abovementioned authorities of this Court, which were @ page-SC 1787 cited before us, enable us to hold that the mode of assessment in every case must be directed towards finding out the annual letting value of land which is the basis of rating, of land and, by definition, "land" includes land which is either built upon or has been built upon. Nevertheless a reference to the provisions of the Act shows that, after a building has been completed, the letting value of the building, which becomes part of land, will be the primary or determining factor in fixing the annual rent for which the land which has been built upon "might reasonably be expected to be let from year to year". All that Section 154 seems to contemplate, by mentioning "land or building", is that land which is vacant or which has not been built upon may be treated for purposes of valuation on a different footing from land which has actually been built upon. But, relevant provisions of the Act do not mention and seem to take no account, for purposes of rating of any building which is only in the course of being constructed although Section 3(r) of the Act makes it clear that land which is being built upon is also "land". Hence, so long as a building is not completed or constructed to such an extent that atleast a partial completion notice can be given so that the completed portion can be occupied and let, the land can, for purposes of rating, be equated with or treated as vacant land. It is only when the building which is being put up is in such a state that it is actually and legally capable of occupation that the letting value of the building can enter into the computation for rating "Rebus sic stantibus". Although, the definition of land, which is rateable, covers three kinds of "land", yet, for the purpose of rating Section 154 recognises only two categories. Therefore, all "land" must fall in one of these two categories for purposes of rating and not outside."
4. In the case in hand, undisputedly, the rateable value was calculated by order dated 9-6-1998. A copy of the said order stated to have been furnished to the petitioners by the respondent-Corporation is placed on record at Exhibit-1 at page 66. Though the respondents have filed a detailed affidavit in relation to the said order, apart from contending that while revising the rateable value, there is a change in the identity of the property and the same being a buildable land and therefore the land under construction was taken into consideration by the assessing authority, the respondents have not placed on record a copy of any order as such having been passed by the assessing authority in that regard. Bare reading of the copy of the order at page 66 nowhere discloses the basis on which the rateable value had been fixed. It is not the case of the respondents that the officer who has filed the affidavit on behalf of the respondents was the same officer who had carried out the exercise of fixation of the rateable value on 9-6-1998. Apparently, it was not to the personal knowledge of the deponent on behalf of the respondents as to what factors were considered by the assessing authority. Once the order dated 9-6-1998 apparently does not disclose the grounds on which the rateable value was fixed, merely because the officer of the respondents states that it was on the basis of buildable land, it cannot lead to the conclusion that in fact the assessing authority had considered the same factor while fixing the rateable value. Besides, plain reading of the affidavit does not reveal that the assessing authority had not taken into consideration the construction carried out in the property while arriving at the rateable value. Apparently therefore, the petitioners are justified in contending that the order dated 9-6-1998 does not appear to be in consonance with the decision of the Apex Court in M/s. Polychem's case in as much as it does not disclose as to whether the rateable value has been fixed on the basis of land with building or mere vacant land. Hence, the demand for higher tax based on such an order cannot be sustained and, therefore, the impugned notices as well as the impugned orders are liable to be set aside and the matter to be remanded to the authorities to decide the issue afresh, as was ordered by the learned single Judge of this Court in an unreported decision in the matter of Nalva Metal and Alloys Ltd. & Ors. Vs. Municipal Corporation of Greater Mumbai & Ors. in Writ Petition No.1142 of 1999, decided on 12-7-1999, and relied upon by the learned Advocate for the petitioners.
5. As regards the second group of challenge, Section 143 of the said Act apparently discloses that the land and building belonging to a Charitable Trust are exempted from the payment of such tax when they are occupied and used for public worship or by a society or body for a charitable purpose. It is not in dispute that the property in question was subjected to such exemption from the payment of tax by the petitioners.
6. The order dated 19-8-1999 apparently discloses that the respondents, merely because the old building in the property was demolished, have concluded that the property has ceased to be in occupation and use of the petitioners for charitable purposes. In that regard, the learned Advocate for the petitioners is justified in placing reliance in the decision in the matter of Christian Children Fund Inc. Vs. Municipal Corporation of Delhi and others (supra) wherein the Apex Court has ruled thus:-
"There is no dispute that the appellant-organisation is a charitable organisation and that the purpose for which the appellant-organisation is established and run is a charitable one within the meaning of the said provision. However, the only ground on which the appellant is denied the exemption is that the premises in question are being used by the appellant for its office, which according to the municipal authorities and the High Court cannot be said to be used for charitable purpose. We are afraid that both the municipal authorities and the High Court have committed an obvious error of interpreting the provisions of Section 115(4) narrowly and unrealistically. Every organisation established for a charitable purpose requires some premises to run its administration. Without an administrative office, it is not possible for an organisation to run and manage its charitable activities. The extent of the premises required to run the administrative office would depend upon the nature and the size of its activities. Hence the premises required by an organisation for its administrative office are an essential and an integral part of its charitable activities. Sometimes the administrative office of such organisations may be located where the charitable activity or activities are carried on and sometimes it is located away from such place depending upon the availability of the premises and convenience. So long as the premises in which the administrative office of the charitable organisation is carried on are exclusively used and occupied by its office, the premises would be ones covered by the exemption provided under the said provisions. To hold otherwise, viz., that it is only the premises where actual charitable activity is carried on alone is qualified for the exemption is to be irrational. The interpretation placed by the municipal authorities and also unfortunately by the High Court on the said provisions has, therefore, to be rejected."
Undisputedly, the provision of law contained in Section 115(4)(a) of the Delhi Municipal Corporation Act, 1957 is in pari materia with the provisions of law contained in Section 143(1)(a) of the said Act. Similarly the decision of the Apex Court in Christ The King Cathedral Vs. John Ancheril and another (supra) also supports the contentions on behalf of the petitioners.
7. The learned Advocate for the petitioners is also justified in placing reliance in the decision of the learned single Judge in the matter of The Municipal Council, Ahmednagar Vs. Bhaskar Pandurang Hivale (supra) wherein it has been held that a society registered as Trust and for charitable purpose is entitled for the benefit of exemption from educational cess. The findings in that regard are to be found in para 9 thereof, the relevant portion whereof reads thus:-
"In the present case the plaintiff society has been registered under the Societies Registration Act and also under the Bombay Public Trusts Act and its dominant object is charitable purpose to advance education. It is well settled by now that an object beneficial to a section of the people is an object of general public utility to serve a charitable purpose. It is not necessary that the object should be an object to the whole of mankind or all persons in particular country or State. It is sufficient if the intention was to benefit a section of the public as distinguished from a specified individual is present."
8. Apparently the authorities have cancelled the exemption without considering the said decision and effect thereof on the point in issue and without even hearing the petitioners. Being so, the impugned order is contrary to the basic principles of natural justice as well as passed ignoring the law laid down by the Apex Court on the point in issue and on that count the order dated 19-8-1999 is also liable to the set aside.
9. In the result, therefore, the petition succeeds. The order dated 9-6-1998 in relation to the revision of the rateable value as well as the order dated 19-8-1999 in relation to cancellation of exemption from the payment of tax are hereby quashed and set aside along with all the consequential notices and orders issued by the respondents and the matter is remanded to the concerned officer of the respondents to decide the above issues afresh, in accordance with the provisions of law. All the issues, other than those decided herein, are kept open. The respondents, after hearing the parties, shall dispose of the matter as expeditiously as possible and in any case within a period of three months from today. Meanwhile, the amount which has been deposited by the petitioners shall continue to remain deposited in the Court. However, the Registry shall invest the same in any nationalised bank for a period of four months. The rule is made absolute accordingly with no order as to costs.