Writ Petition No. 904 of 2012

26th September, 2012

Petitioner Counsel: Mr. Pradip Sancheti,Ms. Yasmin Bhansali
Respondent Counsel: Mr. Suresh Pakale,Ms. K.H. Mastakar

Cases Cited:
MARS Enterprises Vs. Mumbai Municipal Corporation, 2007 (4) Bom. C.R. 752 [Para 5]
Wallace Flour Mills Co. Ltd. & Anr. Vs. Municipal Corporation of Greater Mumbai & Ors., W.P. No. 514/2002, Dt.19/12/2002 [Para 5]
Harish Lamba Vs. Municipal Corporation of Greater Mumbai, W.P. No. 120/1999, Dt.21/11/2006 [Para 5]

JUDGMENT

-The petitioners carry on business as builders. In the year 1995, they purchased the land in question alongwith the structures/buildings standing thereon. The dispute raised in the present petition relates to the property taxes payable in respect of the land to respondent no.1-Municipal Corporation. Respondents no.2 to 5 are the officers of respondent no.1.

2. For the purpose of its development, whenever the petitioners demolished the structures standing on the land in question, the assessment of property taxes in respect thereof had been revised in view of the demolitions. Later, when the petitioners submitted the building construction plans for approval to respondent no.2, they had paid sewerage charges. They had also been paying water taxes separately. Therefore, they had contended before the respondents that they were not liable to pay water tax and sewerage tax included in the property tax bill and requested for deletion of the two taxes. The contention of the petitioners was accepted by the respondents and by the letter dated 5th June, 2010, they informed the petitioners of sanction of deletion of sewerage taxes for the period 1st July, 2005 to 21st January, 2007 and both the taxes for the period 22nd January, 2007 to 10th November, 2009. However, the subsequent bills of the respondent continued with the demand for the two taxes. The petitioners, then made payment of property taxes to the respondents by unilaterally deleting water tax and sewerage tax from the property tax bills. On account of non-payment of the property taxes in full, the respondents have initiated recovery proceedings against the petitioners by attaching the land in question.

3. According to the petitioners, in view of the deductions allowed earlier, the respondents cannot levy water tax and sewerage tax on the land in question. One more reason for deleting water tax from the property tax bills, according to the petitioners, is that there is no more water supply to the land, it having been disconnected without the petitioner's consent. As regards the sewerage tax, since the petitioners had paid sewerage charges at the time of sanctioning of the plans, until the construction of the building is complete and occupation certificate is granted, the petitioners are not liable to pay that tax. It has also been submitted across the bar by Mr. Sancheti, the learned Senior Counsel for the petitioners, that since the respondents are recovering compounding charges, inclusion of these two taxes in the property bills would be double taxation. On these grounds, the petitioners seek a writ of certiorari for quashing and setting aside the warrant of attachment of the property in question and the writ of mandamus for direction to respondent no.4 to issue future property tax bills without adding water tax and sewerage tax.

4. The petition is opposed by the respondents on the ground of its maintainability, as also, the merits. The respondents allege that the petitioners have suppressed several material facts from the Court and also that there are several disputed facts involved in the petition. Further, there is alternate remedy available to the petitioners of filing an appeal under Section 217 of the Mumbai Municipal Corporation Act (hereinafter referred to as 'the M.M.C. Act') to the Court of Small Causes.

5. Mr. Sancheti, initially submitted that the dispute in the present petition is covered by the decision in MARS Enterprises V/s. Mumbai Municipal Corporation, reported in 2007 (4) Bom. Cases Reporter page 752, by which a Single Judge of this Court has made a reference to a larger bench on the point, Whether under Section 140 of the M.M.C. Act, the Corporation can levy water tax only on actual supply of water. While making the reference, the learned Single Judge had found that there is a direct conflict in respect of the judgments given by two Division Benches of this Court i.e. the judgments in the case of Wallace Flour Mills Co. Ltd and anr. V. Municipal Corporation of Greater Mumbai and Others in Writ Petition No. 514 of 2002 delivered on 19th December, 2002 and Harish Lamba V. Municipal Corporation of Greater Mumbai in Writ Petition No. 120 of 1999 delivered on 21st November, 2006. In the case of Wallace Flour Mills (supra), the Division Bench of this Court held that, water tax can be levied irrespective of the fact, whether water was supplied or not, whereas, in the case of Harish Lamba (supra), it was held that Municipal Corporation was not entitled to levy water tax, unless water was actually consumed by the consumer. Perusal of the facts of the case, which will be discussed in detail hereinafter, will show that the question arising in the present petition is different. The main question arising herein is, whether after grant of deduction of these taxes for some period from the property taxes, the Corporation can seek to recover the same for the subsequent period.

6. Mr. Sancheti, submits that since the respondents had already granted deduction of water taxes and sewerage taxes by their letter dated 5th June, 2010 for the periods specified therein, there can be no question of the respondents again levying the taxes and recovering the same from the petitioners. Further, in view of payment of one time sewerage tax at the time of sanction of building construction plans, as long as the development is still in process, the petitioners are not liable for any sewerage tax till the building is complete and occupation certificate is granted. Mr. Pakale, the learned counsel appearing for the respondents, on the other hand, seeks to argue that water tax/sewerage tax are totally different from water charge/sewerage charge. Water tax and sewerage tax are imposed under Section 140 of the M.M.C. Act, whereas, water charge is recovered under Section 169 of that Act. Water tax is part of the property taxes and has no connection with actual supply of water. The tax leviable depends upon rateable value of the property being a certain percentage of the same. He also argues that tax and charge have completely different characteristics and therefore they cannot be confused with each other. Tax is a compulsory extraction of public money for public purposes enforceable by law without reference to any specific benefit to be conferred upon the payer of the tax, whereas, the charge is generally defined to be a charge for a special service to be rendered to individuals by some government agency. The amount of charge levied has a direct connection to the expenses incurred by the government in rendering the service, though in some cases, costs are arbitrarily assessed. Further, the municipal taxes fall on those, who have properties within the municipality. The persons who do not have properties within the municipalities do not have to pay those taxes.

7. For the purpose of appreciating the dispute raised in the petition, it will be necessary to take a look at the relevant provisions in the M.M.C. Act. The different components of the property taxes have been stated at Section 140 of the M.M.C. Act which include water tax and sewerage tax. Sections 141 and 142 describe the premises on which the water tax and sewerage tax, respectively, can be levied. Sections 169 and 170 provide for rules for water taxes and charges and sewerage taxes and charges respectively. Sections 140, 141 and 169 read as follows :

"S.140. (Property taxes leviable on rateable value or on capital value, as the case may be, and at what rate.--

[(1) The following taxes shall be leviable on buildings and lands in Brihan Mumbai, namely :-

(a) (i) the water tax of so many per centum of their rateable value, (or their capital value, as the case may be,) as the (Standing Committee) may consider necessary for providing water supply;

(ii) an additional water tax which shall be called 'the water benefit tax' of so many per centum of their rateable value, (or their capital value, as the case may be,) as the (Standing Committee) may consider necessary for meeting the whole or part of the expenditure incurred or to be incurred on capital works for making and improving the facilities of water supply and for maintaining and operating such works;

(Provided that all or any of the property taxes may be imposed on a graduated scale.)

(b) (i) the sewerage tax of so many per centum of their rateable value, as (the Standing Committee) may consider necessary for collection, removal and disposal of human waste and other wastes;

(ii) an additional sewerage tax which shall be called the " sewerage benefit tax" of so many per centum of their rateable value, as the (Standing Committee) may consider necessary for meeting the whole or a part of the expenditure incurred or to be incurred on capital works for making and improving facilities for the collection, removal and disposal of human waste and other wastes and for maintaining and operating such works;]

General tax.-

(c) a general tax of not less than eight and not more than (fifty-six) per centum of their rateable value, (or not less than 0.1 and not more than 1 per centum of their capital value, as the case may be,) together with not less than one-eighth and (not more than five per centum) of their rateable value (or not less than 0.01 and not more than 0.2 per centum of their capital value, as the case may be,) added thereto in order to provide for the expense necessary for fulfilling the duties of the corporation arising under clause (k) of Section 61 and Chapter XIV;

Education cess.

[(ca) the education cess leviable under Section 195E;]

[(cb) the street tax leviable under Section 195G.]

[(d) betterment charges leviable under Chapter XII-A.]

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[(2) Any reference in this Act or in any instrument to a water tax or a halalkhor tax shall after the commencement of the Bombay Municipal Corporation (Amendment) Ordinance, 1973, be construed as a reference to the Water tax or the water benefit tax or both, or the sewerage tax or the sewerage benefit tax, or both as the context may require.]

(***)"

"S.141. Water taxes on what premises to be levied.-

(1) Subject to the provisions of Section 169, the water tax shall be levied only in respect of the premises-

(a) to which a private water supply is furnished from or which are connected by means of communication pipes with, any municipal water works; or

(b) which are situated in a portion of (Brihan Mumbai) in which the Commissioner has given public notice that sufficient water is available from the municipal water works for furnishing a reasonable supply to all the premises in the said portion."

[(2) Subject to the provision of Section 1 69, the water benefit tax shall be levied in respect of all the premises situated in (Brihan Mumbai.]"

"169. Rules for water taxes and charges.--

(1) Notwithstanding anything contained in Section 128, the (Standing Committee) shall, from time to time, make such rules as shall be necessary for supply of water and for charging for the supply of water and for any fittings, fixtures of services rendered by the Corporation under Chapter X and shall by such rules determine-

(i) the charges for the supply of water by a water tax and a water benefit tax levied under Section 140 of a percentage of the rateable value (or the capital value, as the case may be,) of any property provided with a supply of water; or

(ii) a water charge in lieu of a water tax, based on a measurement or estimated measurement of the quantity of water supplied; or

(iii) combined charges under clauses (i) and (ii); or

(iv) a compounded charge in lieu of charges under clauses (i) and (ii).

(2) A person who is charged for supply of water under clause (ii) or (iv) of sub-section (1) shall not be liable for payment of the water tax, but any sum payable by him and not paid when it becomes due shall be recoverable by the Commissioner as if it were an arrear of property tax due.

[(3) Notwithstanding anything contained in Section 146, the water taxes and charges shall be primarily recoverable from person or persons actually occupying the premises.]"

Sections 142 and 170 relating to the sewerage taxes are similar to Section 141 and 169 and hence need not be quoted separately.

8. Conjoint reading of the above provisions and Sections 142 and 170 is required, to understand levy of the two taxes and charges by respondent no.1. Section 140 of the M.M.C. Act states different components of the property taxes. They are, water tax, water benefit tax, sewerage tax, sewerage benefit tax, general tax, education cess, street tax and betterment charges. The water tax/ sewerage tax and water benefit/sewerage benefit tax are quantified by certain per centum of the rateable value of the property on which the property taxes are to be levied. The rateable value of any property is to be determined under Section 154 of the M.M.C. Act. As stated in that provision, the factors relevant for determination of the rateable value are (i) nature and type of land and structure of the building, (ii) area of the land or carpet area of the building, (iii) the different categories of use of the property, (iv) the age of the building and (v) such other factors as may be specified by the rules made for the purpose. It is obvious from Section 140 that water tax or sewerage tax payable under it, has no connection whatsoever with the actual supply of the services therefor. Another aspect that becomes clear from the provision is that the water/sewerage taxes run along with the property, whether constructed upon or not, also whether put to actual use or not. Even an open piece of land is subject to property tax, the components of which include water/sewerage tax, water benefit/sewerage benefit tax. Sections 141 and 142, though refer to only water/sewerage taxes, as such, make it clear that the same are subject to the provisions of Section 169 and 170 respectively. Therefore, Sections 169 and 170, the controlling sections would be the most relevant provisions. They provide for rules for water/sewerage taxes and water/sewerage charges and to determine the charges. They empower the Standing Committee of the Municipality to make such rules as may be necessary for, supply and for charging for the supply of water etc.,and for supply of service of removing human wastes, polluted matters, effluents etc. Sections 169 and 170 provide for four modes of payment of the charges. The first mode is by payment of water/sewerage tax and water/sewerage benefit tax under Section 140 by way of a percentage of a rateable value. The second mode is payment of water/sewerage charge in lieu of water/sewerage tax based on measurement or estimated measurement of the quantity of the water supplied or of the quantity of water discharged from the premises. The third mode is of combined charges under the first two modes i.e. partly by way of taxes and partly by way of charges. The fourth mode is a compounded charge in lieu of the first two modes i.e. a fixed sum to be paid in lieu of the taxes and charges. These modes, in particular the first and the second mode, make it very clear that water/sewerage charges are not synonymous with water/sewerage taxes and there is no scope for confusing one for the other. Therefore, I find substance in the submission of Mr. Pakale that even if there is no water supply given to the property for which no charges can be recovered by the Municipality, there is no escape from payment of water taxes/ sewerage taxes by a property owner, which is solely dependent upon the rateable value of the property fixed.

9. In the facts of this case, in view of payment of water charges and sewerage charges for specific period, respondent no.1 had granted deduction of water and sewerage taxes for those periods based on Section 169 and 170 of the M.M.C. Act. That deduction was relevant only for the specific periods. Therefore, the contention of the petitioners that in view of the deductions granted earlier, respondent no.1 could not have levied water/sewerage tax upon the petitioners, cannot be accepted. The petition therefore must be dismissed. If the petitioners have any dispute as regards the property taxes determined in respect of the property, the petitioners are required to approach the Court of Small Causes at Bombay by resorting to Section 217 of the M.M.C. Act. Hence, the petition is dismissed.

10. At the request of the learned Counsel for the petitioners, the interim order dated 24th April, 2012 is extended for a period of 6 weeks from today.

Petition dismissed.