Supreme Court of India
CALCUTTA GUJRATI EDUCATION SOCIETY AND ANR.versusCALCUTTA MUNICIPAL CORPORATION AND ORS.
- Citation
- 2003 INSC 415
- Decided
- 25 August 2003
- Disposal
- Dismissed
- Bench
- M B SHAH
Holding
Tenants, sub‑tenants and occupiers are ‘persons liable’ who must be given notice, may participate in assessment, and have a right of appeal on their proportionate share of the consolidated rate; non‑issuance of notice only invalidates the process if serious prejudice is proved, and Section 231’s legal fiction is valid.
Summary
The Supreme Court examined the Calcutta Municipal Corporation Act, 1980, which imposes a consolidated property tax on owners and occupiers. Tenants, sub‑tenants and occupiers argued that they were denied participation in valuation, notice of assessment, and a meaningful right of appeal, especially where they were required to deposit the whole tax for the entire building. The Court held that, because a substantial portion of the tax burden falls on these occupiers, they are entitled to public and written notices, to submit returns, and to object to assessments. Non‑issuance of notice does not invalidate the assessment unless serious prejudice is shown. The right of appeal is available on the proportionate share of the tax, not the whole amount, and Section 231’s treatment of tax as rent is a permissible legal fiction that does not conflict with the West Bengal Premises (Tenancy) Act. The appeals were dismissed.
Issues considered
- The extent to which tenants, sub‑tenants and occupiers are entitled to participate in the valuation and assessment of the consolidated rate under the Act.
- Whether failure to serve public or written notice to persons primarily liable invalidates the assessment.
- The requirement of depositing the entire consolidated rate for filing an appeal and whether it makes the right of appeal illusory for occupiers.
- The validity of recovering tax from occupiers under Section 195 when there is a rent dispute.
- The constitutionality of Section 231 treating tax as rent and its compatibility with the West Bengal Premises (Tenancy) Act.
- Whether the tax structure imposes a disproportionate burden on tenants compared to landlords.
- Whether the Act discriminates between tenants covered by the Tenancy Act (rent < Rs 3,000) and those not covered.
Legislation cited
- Bombay Provincial Municipal Corporation Act, 1949s. 194, s. 195, s. 196
- Calcutta Municipal Corporation Act, 1980s. 171, s. 174, s. 178, s. 181, s. 184, s. 186, s. 188, s. 189, s. 193, s. 194, s. 195, s. 196, s. 230, s. 231
- West Bengal Premises Tenancy Act, 1956
Subjects
property taxconsolidated ratemunicipal corporationtenant rightsnoticeright of appealapportionmentlegal fictionreading downWest Bengal Tenancy Actassessmentsurcharge
Judgment
CALCUITA GUJRA TI EDUCATION SOCIETY AND ANR. A
v.
CALCUITA MUNICIPAL CORPORATION AND ORS.
AUGUST 25, 2003
[M.B. SHAH AND D.M. DHARMADHIKARI, JJ.] B
Calcutta Municipal Corporation Act, 1980:
Section 194 read with section 230 and sections 181, 184, 186-
Consolidated rate-Determination of-Process of valuation, assessment, C
revision or amendment of assessment-Participation of tenants, sub-tenants
and occupiers-Held: Tenants, sub-tenants and occupiers share appreciable
extent of burden of tax, thus entitled to an opportunity to participate in the
process-They are entitled to public and written notices-However non-
issuance or non-service of notices to persons primarily liable does not D
invalidate the proceedings unless serious prejudice is caused to the persons
aggrieved.
----~> Section I 95-Providingfor recovery ofconsolidated rate from occupiers
by attaching rent payable by them on failure to recover the same from person
primarily liable-Tenant pleading that the Corporation would collect E
whatever landlord declares to be the rent-Held: If there is a dispute between
landlord and tenant regarding rent, tenant can raise it before the competent
authority-However, the finalisation of assessment cannot be made to wait
till then. '
Sections 184, 186 and 174-/ncrease oftax based on market valuation- F
Hearing for assessment-Non-participation of owner/landlord-Effect of-
Held: Even though the landlord remains inactive by not contesting the
assessment proposed, tenant or occupier bearing the burden of tax has to be
vigilant and has right to raise objections pursuant to notices.
Section I 89(5) and (6)-Right of appeal-Grant of-Held: Tenant, G
sub-tenant or occupier share burden ofan appreciable portion ofconsolidated
rate on the property-Hence, have right of appeal on pre-deposit of portion
of tax levied and made recoverable from them-To demand deposit of whole
consolidated rate for the entire building for maintaining tenant's appeal is
915 H
916 SUPREME COURT REPORTS [2003) SUPP. 2 S.C.R.
A unreasonable-Interpretation of statutes.
Section 178(6)-Municipal assessment code-Furnishing of necessary
information regarding apportionment of consolidated rate on land or building
by authorities to parties liable to pay' tax-Whether obligatory-Held: On
payment of the requisite fee, authorities are under statutory obligation to
B provide necessary information otherwise parties can take recourse to remedies
in law.
Section 231-Mode of recovery-Portion of tax payable by the owner-
Recovery from the occupier as rent-Justification of-Held: The provision
creates a legal fiction by which the tax apportioned on the tenant would be
C treated as rent and would be recoverable as such-Further, there is no
conflict between Act of 1980 and the Tenancy Act-Both are to be applied
harmoniously-Interpretation of statutes-West Bengal Premises (Tenancy)
Act, 1956.
D Section 171-Consolidated rate on lands and buildings-Whether tax
liability higher on tenants, sub-tenants or occupants than on landlords-
Held: Tax liability not disproportionately higher.
Sections 230 and 231-Apportionment and mode of recovery of tax-
Tenants of rented premises covered by Tenancy Act, and others not covered-
£ Whether treatment discriminatory-Held: Act does not make any
discrimination -West Bengal Premises (Tenancy) Act, 1956.
Calcutta Municipal Act, 1951 levied equal tax on owner and occupier
of the lands and buildings within the municipal area. Occupant's share of tax
was collected from the tenant. However, in the case of premises having more
F than one occupier, the taxes would be paid by the owner, but in turn, he was
competent to ·collect half of the total taxes paid i.e. occupier's share
proportionately from each occupier. The taxes were charged on the rent payable
and the rate was also low. This resulted in development of a system where the
occupier's share of tax was included in the rent by the owner and both the
shares were paid by the owner to the municipality instead of owner paying
G the taxes and then pursuing remedies against the' tenants for collection of
the portion of tax imposed by the Act on the tenant or occupier. The revenue
collected through property tax was limited by the fair rent fixed under the
tenancy law. With the ever-increasing population of Calcutta, requirement
was felt for increasing and improving the civic.amenities for which it is found
H necessary to increase property tax particularly on lands and buildings which
CALClITTA GUJRATI EDUCATION SOCY. 1•. CALClfITA MUNICIPAL CORPN. 917
are being put to use within the municipal area for non-residential and A
commercial purposes. To augment revenueofthe Corporation for increasing
and maintaining the civic amenities it was felt necessary that a separate
'Surcharge' should be levied on properties occupied for non-residential or
commercial purposes. The Calcutta Municipal Corporation Act, J980 provided
for valuation on the basis of market rate of rent and higher rate of tax by
introducing a consolidated rate of tax combining the tax on owners and tax on B,
occupiers. Surcharge .·leviable on the occupiers of properties for non-
residential/commercial use was included in the consolidated rate. It provides
for collection of the entire tax named as consolidated rate inclusive of owner's
and occupier's share from the owner with the right being given to the owner
to make recovery of unpaid surcharge from the occupier or the tenant as rent C
Writ petitions were filed in the High Court challenging the validity and
interpretation of the provisions of the 1980 Act relating to taxes on property.
The order of High Court is challenged by the tenants, sub-tenants and the
landlords in the present appeals.
Appellants contended that although, a major portion of the tax is D
actually levied on the tenants, sub-tenants and the occupants, they are denied
opportunity in the method of valuation and assessment; that ifthe landlord
does not pay the consolidated rate or surcharge, it is recoverable under Section
195 from the tenants by attaching rents payable by them and in tile event of
any dispute regarding the rent, the tenant is helpless because the Corporation E
will collect from the tenant what the landlord declares to be the rent; that if
the actual rent realised does not suffer any change, the entire increase of tax
based on market valuation is to be borne by the tenant and the owner not being
affected at all may choose not to attend the hearing at the time of assessment;
that the pre-condition of maintaining the appeal by the tenant is to deposit the
entire consolidated rate demanded for the property even though he is occupying F
only a portion of the building; that the tenant is liable to pay only a portion of
tax leviable on him to the owner for which he receives neither bills nor demand
notices and so the right of appeal is available only to the owner/lessor as the
'person primarily liable'; that the tenants, sub-tenants and occupiers even on
formal demand on payment of fees are not being supplied the neces:.ary details
of tax and its apportionment for filing returns, raising objections and filing G
appeals; that section 231 which deems 'tax' as 'rent' for the purpose of
recovery by the landlord where he has already paid the whole amount of tax,
creates a situation whereby although the apportionment and quantum of
demand is disputed by the tenant, he has to face proceedings for recovery of
tax as 'rent' and face the danger of eviction under the Tenancy Act; that the H
918 SUPREME COURT REPORTS [2003) SUPP. 2 S.C.R.
A tax structure under section 171 has been made in such a manner that although
a tenant may be occupying a small portion of rented premises with normal
rent but on valuation in relation to the entire building fetching rent exceeding
Rs. 18,000 for the purpose of determination of tax, the resultant liability
works out higher on the tenant compared to the landlord; and that the
B provisions of the Act create a discriminatory situation between tenants paying
rent less than Rs. 3,000 per month, covered by Tenancy Act and tenants paying
more than 3000 per month, not covered by Tenancy Act.
Respondent-Corporation contended that it is impractical in a
metropolitan city like Calcutta where there are several multi-storeyed
C buildings to grant opportunity of participation in determination of valuation
and assessment of 'consolidated rate' to all and at every stage; that the
provisions of the ~ct do provide a reasonable safeguard to the tenants, sub-
tenants or occupiers to object to the assessment or revised assessment, having
right to file return, file objections and prefer appeals; that the right of appeal
to tenlfnts, sub-tenants or occupiers on pre-deposit of tax for the entire
D property or premises is not inequitable and not virtual denial of the right;
that the lands and buildings in metropolitan town of Calcutta are mostly
occupied on meagre rents from the landlords, yet, in those tenanted premises
commercial and non-residential activities are going on a scale which requires
more and more civic amenities to be provided by the Corporation and so a tax
E structure under section 171 is justified.
Dismissing the appeals, the Court
HELD: 1. In view of specific provisions of the Calcutta Municipal
Corporation Act, 1980 the burden of tax to an appreciable extent is imposed
F on the tenant, sub-tenant and occupiers and the tax is liable to be recovered
from them through the landlord or directly by attachment of rent or other
coercive modes. Therefore, the tenants, sub-tenants and occupants are entitled
to an opportunity to participate in the process of valuation and assessment.
They are entitled to written notices apart from public notice for assessment,
revision of assessment or amendment of assessment of the 'consoiidated rate'
G or tax. Pursuant to the public notice or written notice, the returns submitted
by the tenant, sub-tenant or occupier, with regard t~ determination of annual
value, would be considered by the Corporation. The same procedure would be
followed in revision of the annual valuation. Non-issuance of public notice or
notices and /or non-service of written notices to the 'persons primarily liable'
H would not necessarily invalidate the proceedings of assessment or
CALCUTIA GUJRATI EDUCATION SOCY. v. CALCUTIA MUNICIPAL CORPN. 919
reassessment or amendment of the valuation for consolidated rate unless it A
is established by the party aggrieved that a serious prejudice was caused to it
for want of notice. [945-H; 946-A-D]
India Automobiles Ltd. v. Calcutta Municipal Corporation, (20021 3
SCC 388 and Assistant General Manager, Central Bank of India v.
Commissioner Municipal Corporation, (1995) 4 sec 696 - referred to. B
2. If there is dispute about rent, the tenant is entitled to raise that dispute
before the competent authority under the provisions of the Act for its decision
in the course of valuation and assessment of consolidated rate and also get
its adjudication through the competent court. Merely because there is a
dispute regarding rent, the Municipal authorities cannot in law be made to c;
wait for finalising assessment till the dispute of rent is decided by some other
forum. (935-B, CJ
3. It is true that burden of tax based on valuation in the assessment is
to be borne by the tenant or occupier, even though the landlord remains D
inactive by not contesting the assessment proposed. Therefore, the tenants
or occupants who shoulder major portion of the tax burden have to be vigilant
and raise objections pursuant to public and written notices and contest the
assessments on valid grounds in their own interest. (935-F, G)
4.1. Under section 189(5) and (6) of the Act since the tenant, sub-tenant E
or occupier have to share burden of an appreciable portion of "consolidated
rate" exclusive or inclusive of 'surcharge' in relation to the properties used
for non-residential and commercial purposes and as the Act provides for
opportunity of participation to them pursuant to a public notice and written
notice in assessment and reassessment of tax, they have a right of appeal
provided under the Act It is made clear that tenant, sub-tenant and occupiers F '
held liable for payment of a portion of tax have a right of appeal on pre-deposit
of portion of tax levied and made recoverable from them. Any other
interpretation would frustrate the very object of providing right of appeal to'
'person liable' with the 'person primarily liable'. This is how.the provision
has to be reasonably interpreted and read down. The submission that where G
the tenant is occupying only a portion of the building and his liability towards
'consolidated rate' or 'surcharge' is proportionately restricted to that portion,
for exercising right of appeal, to make it compulsory for him to deposit the
entire consolidated rate assessed and levied on the whole building, is
inequitable. If the right of appeal is available to them on payment of the entire
H
920 SUPREME COURT REP.ORTS [2003] SUPP. 2 S.C.R.
A tax levied on the whole building even though they occupy only a portion of it,
the remedy of appeal would be highly onerous and virtually denied.
(936-C, D; 936-Hl
Assistant General Manager, Central Bank of India v. Commissioner,
Municipal Corporation, (19951 4 SCC 696, distinguished.
B
4.2. The rule of "reading down" a provision of law is now well
recognized. It is a rule of harmonious construction in a different name. It is
resorted to smoothen the crudities or ironing the creases found in a statute
to make it workable. In the garb of 'reading down', however, it is not open to
read words and expressions not found in it and thus venture into a kind of
C judicial legislation. The rule of reading down is to be used for the limited
purpose of making a particular provision workable and to bring it in harmony
with other provisions of the statute. It is to be used keeping in view the scheme
of the statute and to fulfil its purposes. 1437-C, DI
D BR Enterprises v. State of UP, (1999) 9 SCC 700, referred to.
5. To enable the tenant, sub-tenant or occupier as 'person liable' to pay
'consolidated rate' they have a right to obtain necessary information on
assessment and apportionment of tax on payment of requisite fee in accordance
with Section 178 and Corporation authorities are legally bound to furnish
E such requisite information, otherwise the aggrieved parties can take recourse
to the remedies provided in law. (946-G; 941-F, GJ
6. A large number of properties in the metropolitan city of Calcutta
are in occupation of tenants, sub-tenants or occupants on a comparatively small
amount of rent or lease money. In such situation to impose entire burden of
F tax on the owner or lessor, would be inequitable, more so when the tenancy
law does not allow increase in rent beyond a particular limit and the right of
eviction of the landlord is restricted to the grounds under the Tenancy Act.
Under section 231 of the Act, the legislature has thought of apportioning the
tax burden between owner or the lessor as one party and the tenant, sub-tenant
G or occupier as the other parties. The whole amount of tax is recoverable from
the lessor and may also be recovered from the tenant or sub-tenant through
attachment of' the rent. Therefore, Section 231 creates fiction that the 'tax'
apportioned on the tenant would be treated a~. 'rent' and would be recoverable
as such. This is necessitated because in the absence of such a fiction in Section
231, the landlord would be compelled to pay the whole amount of tax which is
H recoverable from him under the Act and would be left to an expensive and
CALCUTIA GUJRATI EDUCATION SOCY.1" CALCUTIA MUNICIPALCORPN. 921
cumbersome remedy of filing a civil suit for recovery of such tax paid on behalf A
of the tenant, sub-tenant or occupant. Further such a fiction is required
because a private party cannot recover tax. The fiction created by the
legislation has to be taken to its logical conclusion. The Act of 1980 and the
Tenancy Act both are State legislations. No question arises of legislative
incompetence. There does not appear any inter se conflict between the two
Act!'. Both have to be read and applied harmoniously to achieve the legislative B
intent in the two enactments. [942-H; 943-A, B, C; F-H)
Puspa Sen Gupta vs. Susma Ghose, (19901 2 SCC 651, referred to.
7. Since the landlords are getting only small rents and the occupants
are actually putting the premises to more beneficial use sometimes generating C
huge incomes, a just tax structure should put lesser burden of tax on the
landlord than on the tenants who are in actual occupation. Therefore, the
submission that the tax burden is much higher on the tenants, sub-tenants or
occupants than on landlords is not legitimate and is no ground to assail section
171 of the Act. (944-E, F) 0
8. In apportioning the burden of tax on landlord and tenant a tax
structure has been evolved under the Act on the basis of actual and notional
rental value of the premises. The liability of the landlord towards tax is limited
to the valuation based on actual rent received and the assessment made of the
tax based on letting value of the premises is the liability of the tenant/sub- E
tenant or occupier. Merely because Tenancy Act is attracted to
accommodations with rent less than Rs.3,000 per month and not to other
accommodations having higher rent, does not create any dissimilar situation
in application of the Act to various categories of tenants paying rent more or
less than Rs. 3,000. The portion of tax liable to be paid by the occupant or f
tenant is not directly recovered by the Corporation from them but is
recoverable through the landlord and the landlord has been given rigllt of
reimbursement by demanding it from the tenant, sub-tenant or the occupant.
For recovering such portion the tax payable by the tenant, sub-tenant or
occupant, which has been paid by the landlord, is deemed to be "rent" only
for the limited purpose of its recovery. The modes of recovery are by a demand G
notice under the Tenancy Act and if necessary by filing an eviction suit. Resort
to remedy before the regular court is also not prohibited. On this aspect of
apportionment of tax and mode of recovery of tax, the Act does not make any
discrimination between tenants of premises covered by the Tenancy Act and
others not covered by the Act. (945-C-Fl
922 SUPREME COURT REPORTS [2003) SUPP. 2 S.C.R.
A CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5203 of2000.
From the Judgment and Order dated 13.10.99 of the Calcutta High Court
in Matter No. 5410 of 1987.
WITH
B C.A.Nos. 5204, 5960/2000, 1572 and 2212 of200l.
P.N. Mishra, Ranjit Kumar, Bhaskar P. Gupta, Mahendra Anand, Tapash
Ray, Abhijit Sengupta, Anand, D. Bharat Kumar, Rana Mukherjee, Siddharth
Goutam, Goodwill Indeevar, Rana Mukherjee, A. Kiran, Ms. Sumita Mukherjee,
Ms. Sonat Tripathi, Ms. Sumita Mukherjee, Ashok Dasadhikari, L.C. Agarwala,
C Pankaj Agarwal, Avijit Bhattacharjee, Atanu Saikia and Ms. Madhumita
Bhattacharjee for the appearing parties.
The Judgment of the Court was delivered by
DHARMADHIKARI, J.The present appeal along with other connected
D appeals is on the question of validity and proper interpretation of impugned
provisions of Calcutta Municipal Corporation Act I 980 (hereinafter referred
to as the 'Act' for short), which are contained in Part IV Chapter XII under
the Heading ."Powers of Taxation and Fixation of Consolidated Rates .
. The three Judges' s·pecial Bench of the High Court of Calcutta on a
E reference made by the Division Bench of the said Court, on the validity and·
interpretation o~ the impugned provisions of the Act relating to taxes on
property has delivered a common judgment in different Writ Petitions, which
has been assailed by tenants, sub-tenants and_ landlords by separate appeals
which are being decided by this common judgment. It is not in dispute that
the State Legislattire is comp~tent to make a law conferring authoritY on the
F · local bodies to impose property tax to generate revenue for providing civic
amenities like supply of water, drainage, sewerage, collection, removal and
disposal of solid waste, fire prevention and fire safety, maintenance o.f streets
a~d public places and other allied services in the municipal areas where lands
or buildings are situated. A bri.ef survey of the history of the legislation is
G necessary.
The repealed Act Le. Calcutta Municipal Act of 1951 levied equal tax
on owner and occupier of the lands and buildings within the municipal area.
It provided for issuance of two separate Bills where the premises are occupied
only by one tenant. The occupant's share of tax was collected from the tenant
H as the occupier's Bill. However, in the case of premises having more than one
CALCUTTAGUJRATIEDUCATIONSOCY.1•.CALCl.ITTAMUNICIPALCORPN.[DHARMADHIKARl,J.]923
occupier, the 1951 Act had provided that the taxes under both the Bills i.e. A
the owner's and the occupier's Bill, would be paid by the owner, but in turn,
he was competent to collect half of the total taxes paid i.e. occupier's share
proportionately from each occupier. The taxes were charged on the rent
payable and the rate was also low. The working of the above provision of the '
Act of 1951 resulted in development of a system where the occupier's share B
of tax was included in the rent by the owner and both the shares were paid
by the owner to the municipality instead of owner paying the taxes and then
pursuing remedies against the tenants for collection of the portion of tax
imposed by the Act on the tenant or occupier.
In conformity with the above mentioned provisions of the Municipal C
Act 1951, the West Bengal Premises Tenancy Act 1956 (shortly referred to as
'Tenancy Act') provides that 50% of the total property tax can be included
in the "Fair rent."
According to the Corporation, with the ever-increasing population of
Calcutta and requirement felt of increasing and improving the civic amenities, D
it is found necessary to increase property tax particularly on lands and
buildings which are being put to use within the municipal area for non-
residential and commercial purposes. The earlier system which existed under
the Municipal Act of 1951, the revenue collected through property tax was
limited by the "Fair rent" fixed under the tenancy law. To augment revenue
of the Corporation for increasing and maintaining the civic amenities it was ~
felt necessary that a separate 'Surcharge' should be levied on properties
occupied for non-residential or commercial purposes.
The present Act was enacted in 1980 providing for valuation on the
basis of market rate of rent and higher rate of tax by introducing a consolidated F
rate oftax combining the tax on owners and tax on occupiers. The 'surcharge'
leviable on the occupiers of properties for non-residential/commercial use was
included in the "consolidated rate." The present Act by the impugned
provisions provides for collection of the entire tax named as "consolidated
rate" inclusive of owner's and occupier's share from the owner with the right
being given to the owner to make recovery of unpaid 'surcharge' from the G
occupier or the tenant as 'rent'.
For appreciating the nature of various challenges made to specific
provisions of the Act, it would be necessary to examine generally the scheme
of the Act under Chapter XII on subject of Power of taxation and fixation
H
924 SUPREME COURT REPORTS [2003) SUPP. 2 S.C.R.
A of "consolidated rates." Under Section 2(60) the word "Occupier" is defined
to include an owner living in or otherwise u·sing his building and a tenant or
any person for the time being paying or liable to pay to the owner the 'rent'
or any portion of the rent. Section 2(62) defines the word 'owner' to include
person for the time being receiving the rent of the property on his own
account or as agent or trustee. Section 170 is a charging section which
B empowers the Corporation amongst other taxes to levy tax on consolidated
rate on lands and buildings. Section 171 and 171 (2) provide that such
consolidated rate shall be 11 % where the annual value of the property does
not exceed Rs. 600. Where the annual value exceeds Rs. 600 but does not
exceed Rs. 18,000 the percentage or annual value is worked out on a
C mathematical formula which is specified thus "by dividing the annual value
by 600 and then adding l 0 to the quotient. The sum thus worked out being
rounded off to the nearest first place of the decimal." Where the annual value
exceeds Rs. 18,000 the consolidated rate would be 40% of the annual value."
Sub-section (4) of Section 171 which is mainly attacked by the appellants
D provides that "where any land and building or hut or portion thereof is used
for commercial or non-residential purpose, the Corporation may levy a
surcharge on the consolidated rate on such land or building or hut or
portion thereof at such rate not exceeding 50% of the consolidated rate as
the Corporation may from time to time determine." It further provides that
E "where only a portion of the land or building or hut is used for such purposes
i.e. other than residence, the amount of the consolidated rate payable in
respect of the said portion shall be separately calculated while fixing the
consolidated rate."
Section 174 lays down the method of determination of 'annual valuation.'
p The said section provides that for the purpose of assessment of consolidated
rate the annual value of any land or building shall be deemed to be the gross
annual rent including service charges, if any, at which such land or building
might, at the time of assessment, be reasonably expected to let from year to
year, less an amount of 10% for the cost of repairs and other expenses
necessary to maintain such land or building in a state to command such
G 'gross rent.'
Sub-section 4A of Section 171 lays down an alternative mode of
determination of annual valuation for consolidated rate where this gross
annual value on the basis of rent, likely to be fetched, is unascertainable. By
H the alternative mode 'gross annual rent of such land or building shall be
CALCUTTAGUJRATI EDUCATION SOCY. '" CALCUTTAMUNICIPALCORPN. [DHARMADHIKARI, J.J925
deemed to be 7.5% of the value of the building obtained by adding the A
estimated cost of erecting building at the time of assessment less a reasonable
amount to be deducted on account of depreciation to the estimated present
market value of the land.' Section 178 enables State Government to frame rules
for determining value of any land and building in Calcutta and the rules so
framed and regulations thereunder are to constitute the Municipal Assessment B
Code.
This Court in the case of India Automobiles ltd v. Calcutta Municipal
Corporation, [2002] 3 SCC 388 dealing with the provisions of the Act, has
indicated all relevant factors which have to be taken into account for
determination of annual letting value and assessment of tax on properties. In C
such determination, the relevant circumstances are amongst others actual rent
received, hypothetical standard rent, the rent paid by sub-tenant, if any, the
prevalent rate of rent of lands and building in the vicinity of the property
being assessed. The relevant observations of this Court in the case of India
Automobiles Ltd, (Supra) reads thus :-
D
"The argument that the rent actually received by the owner should
always be deemed to be reasonable rent in the absence of fraud,
collusion and other extraneous consideratbns is too general and
broad proposition of law which cannot be accepted for the purpose
of determining the annual value of the property for the purposes of
Section 174 of the 1980 Act. In the light of clear and unambiguous E
provisions of Section 174 of the 1980 Act, it cannot be held that the
amount realised by a tenant from a sub-tenant cannot, at all be taken
into consideration for the purposes of determining the gross annual
rent in the absence of extraneous considerations. There is no substance
in the submission of the learned counsel appearing for the appellant F
that allowing the municipal corporations to assess the annual rateable
value on the basis of the income of a tenant from the property would
be grossly unfair and would have the effect of rendering the rate
provisions of the Act unreasonable, arbitrary and unconstitutional.
The Act itself has taken care by making sufficient provision in Sections
193 and 194 regarding the liability to pay the rent and apportionment G
of such liability when the premises are assessed, let or sub-let. On
proof of creation of sub-tenancy, the owner of the building may also
be entitled to seek eviction of their tenants under the relevant
provisions of the Rent Acts applicable in the State where the land or
property is located. We find some substance in the submission of the H
926 SUPREME COURT REPORTS (2003] SUPP. 2 S.C.R.
A learned counsel for the appellant that permitting the· municipal
authorities to assess the annual value only on the basis of the rent
paid by the sub-tenant to the tenant and fixing its liability on the I
owner may adversely affect the owners of the buildings who have let ~
their premises at a time when rents were meagre and who under the
rent control statutes are deprived of getting possession back of the
B lands and buildings from their tenants. The I 980 Act, therefore, requires
application of mind by the municipal authorities to determine the rents
on the basis of reasonableness by keeping into account all relevant
circumstances including the actual rent received by the owner,
h~pothetical standard rent, the rent being received by the tenant from
c his sub-tenant and other relevant consideration, such as prevaient
rate of rent of lands and building in the vicinity of the property being
assessed. Only because the owner of the building is not getting the
same rent which the sub-tenant is paying to his lessor, cannot be
made a basis to deprive the corporations from determining the annual
valuation and taxing the land or building on th~t basis. If such a plea
D is accepted, it would be against the provisions of the statute which
has been enacted to provide civic services in the form of water,
drainage, sewerage, collection, removal and disposal of solid waste,
fire prevention and fire safety maintenance of street and public places
etc., in the municipal area where such land or building is situate.
E .................. We are of the view that the basis for determination of
annual rent value has to be the standard rent where the Rent Control
Act is applicable and in all other cases reasonable determination of
such rent by the municipal authorities keeping in view various factors
as indicated herein earlier, including the rent which the tenant is
F getting from his sub-tenant. In appropriate cases the owner of the
property may be in a position to satisfy the authorities that the gross
annual rent of the building of which the annual valuation was being
determined cannot be more than the actual rent received by such
owner from his tenant. The municipal authorities shall keep in mind
the various pronouncements of this Court, the statutory provisions
G made in the specified Municipal Acts, keeping in mind the applicability
or non-applicability of the Rent Act and the peculiar circumstances of
each case, to find out the gross annual rent of the building including
service charges, if any, at which such land or building might, at the I-
time of assessment, be reasonably expected to let from year to year
H in terms of Section 174 of the 1980 Act".
CALCUITAGUJRATI EDUCATION SOCY. 1·. CALClJITAMUNICIPALCORPN. [DHARMADHIKARI,J.)927
Further, sub-section (6) of section 178 obligates the Municipal A
Commissioner to supply on payment necessary information to owner, lessee
or occupier about the apportionment of the "consolidated rate" of such
property among several occupiers of such land or building. Furnishing of
such information, however, does not preclude the Corporation from recovering
I
the dues from any of such persons owning or occupying land or building.
Section 180 provides for revision of the assessment of valuation for B'
consolidated rate and enables owners and occupiers of the property to submit
returns pursuant to public notice for revision of assessment of annual value.
Section 182 obligates the owner or occupier to submit returns in the prescribed
time. The assessment list or the revised assessment list is open to inspection
and a public notice for that purpose shall be issued in accordance with C
Section 184. Before revising the annual valuation, public notices as also
written notices will be given to the owners and occupiers and they will be
heard by the Municipal Commissioner. This is the requirement of sub-section
(I) to (4) of Section 184. Where the assessments are amended, a fresh notice
is required to be issued to owners, lessees and occupiers for consideration
of the proposed amendment. Section 186 gives a right of filing objections D
against valuation or assessment, to the owner as also to any person liable
to pay the consolidated rate. Under Section 188, the objector will have an
opportunity of hearing on his objection before the competent authority.
Section 189 provides for an appeal against the assessment to Assessment
Tribunal. The appeal can be preferred by the owner or person liable to pay E
consolidated rate. The pre-condition of hearing of the appeal is deposit of
consolidated rate determined. Section 193 specifies the persons on whom
'primarily' consolidated rate is leviable. The persons specified include the
'lessor,' where the land or building is let; the 'superior lessor,' where the land
or building is sub-let and 'owner' or the person in whom the right to let such
land. or building vests, where the land or building is unlet. F
The most controversial provision the validity of which is questioned
by the appellant is Section 194 providing for apportionment of liability or
"consolidated rate" between owner, tenant, sub-tenant or occupier. Sub-
section (I) of Section 194 lays down that where annual valuation exceeds the G'
amount calculated on the basis of actual rent the person on whom the
"consolidated rate" is 'primarily' leviable shall be entitled to receive from the
tenant the difference between the amount of the consolidated rate and amount
which would be leviable if the "consolidated rate" were calculated on the
basis of the 'rent' payable to him. The object of this provision is that
consolidated rate calculated on the basis of rent fetchable from the premises H
928 SUPREME COURT REPORTS [2003] SUPP. 2 S.C.R.
A should not be a sole burden on the lessor or the owner. His burden of tax
is limited to the consolidated rate to be calculated on the basis of actual
rent received by him. The additional burden of "consolidated rate" is shared
by the tenant or occupier including 'surcharge' where the property is being
used· for non-residential/commercial purposes. The same method is to be
adopted in accordance with sub-section (2) of Section 194 where the
B accommodation is sub-let. In that eventuality, the burden of tax on tenant
would be proportionate to consolidated rate calculable on the basis of actual
rent received by him and the remaining which is to b.e calculated on the basis
of likely rent would be shared by the sub-tenant.
C Section 195 of the Act lays down the mode of recovery of the
'consolidated rate'. Under sub-section ( 1) of the said section, the primary
liability would be of the 'lessor,' 'superior lessor' or 'the owner.' If the 'person
primarily liable' to pay the "consolidated rate," fails to pay, it will be recoverable
from the occupier by attachment of his rent in proportion to the sum due
against him. On such recovery from the occupier, the occupier would be liable
D to adjustment of his dues to the lessor, superior lessor or the owner. Apart
from the above, there are other modes of recovery by a service of Bill and
notice of demand and coercive method under Bengal Public Demands
Recovery Act, 1913. On failure of the person to pay the tax on demand under
section 219, recovery can be made by distress and sale of his movable
E property. Section 225 empowers the Municipal Commissioner to recover the
consolidated rate from the occupier by attachment of his rent. 9n failure of
occupier to pay such rent, the amount will be recovered as arrears for tax.
The other controversial provision, which is forcefully attacked by the
appellant, is contained in Section 230 providing for apportionment of
F "consolidated rate" by the 'person primarily liable to pay' i.e. the lessor,
superior lessor or the owner of the land or building. This provision empowers
'the person primarily liable' to recover the consolidated rate to the extent of
half from the occupier, if there is only one occupier of the property. If there
are more than one occupier, he can recover from each occupier 'half of such
sum as bears to the entire amount of rate so paid by the owner-the same
G proportion as the value of the portion of the land or building in the occupation
of such occupier bears to the entire value of such land or building.' It further
provides that if there are more than one occupier 'such half of the amount
may be apportioned and recovered from each occupier in such proportion as
the annual value of the portion occupied by him bears to the total annual
H v.alue of such land or building.'
CALCUITAGUJRATIEDUCATIONSOCY.1•.CALCUITAMUNICIPALCORPN.(DHARMADHIKARI,J.)929
With regard to the 'surcharge' included in the 'consolidate rate' which A
is levied on properties used for non-residential/commercial purposes, clause
(b) of Section 230 empowers the 'person primarily liable' to recover entire
amount of surcharge from the occupier and if there are more than one such
occupier, the surcharge is to be apportioned and recovered in such proportion
as the annual value of the portion occupied by him bears to the total annual
value of such property. B
Section 231 is also a provision to which serious exception has been
taken by the appellant. It provides that the 'person primarily liable' to pay any
consolidated rate is entitled to recover portion of the consolidated rate
including surcharge from the occupier of the property and for that purpose C '
'the person primarily liable' shall have the same rights and remedies as if such
sum were 'rent' payable to him by the person from whom he is entitled to
recover such sum.
The learned counsel appearing for the appellant in this batch of petitions
in their own way and different status of their clients, have mainly challenged D
the provisions of sections 184, 189, 194, 230, 23 l and 234A. It is contended
in common that they are unworkable, impractical and hence unconstitutional.
It is submitted that although, a major portion of the tax is actually levied on
the tenants, sub-tenants and the occupants, there is no proper machinery,
method and mode of assessment by involving this class of persons. They are,
thus, denied opportunity in the method of valuation and assessment. There E
are no legal and constitutional safeguards against illegal determination of
consolidated rate before effecting recovery by coercive action of attachment
of rent or distress and sale of the property on which tax is imposed.
We have also heard learned counsel appearing for the respondent- F
Corporation, who has taken us through the various provisions of the Act. He
strenuously urged that the alleged ground of unworkability of the provisions
is a total misconception of the provisions and their misinterpretation. It is
submitted that primary liability to pay tax is on the owner of the property but
in cases where the property has been let or sublet, the burden of tax is
apportioned between the owner as lessor and the lessee or sub-lessee as the G 1
occupants. It is submitted that it is impractical in a metropolitan city like
Calcutta where there are several multi-storeyed buildings to grant opportunity
of participation in determination of valuation and assessment of 'consolidated
rate' to all and at every stage. It is also submitted that the provisions of the
Act do provide a reasonable safeguard to the tenants, sub-tenants or occupiers H
930 SUPREME COURT REPORTS [2003] SUPP. 2 S.C.R.
A to object to the assessment or revised assessment. They have right to file
return, file objections and on deposit of fax determined, prefer appeals. It is
submitted that none of the provisions can be said to be unworkable and, in
f~ct, they have satisfactorily worked so far. It is submitted that if there are
any grievances against the action of any of the Authorities under the Act,
it is open to the aggrieved party to. approach the appellate forum or the
B regular courts in accordance with law.
Having thus examined the schem~ of the Act as also broadly the
grounds urged, ~e shall now deal with specific provisions of the Act which
have been assailed by the counsel appearing for the appellants. .
C Challenge to Section 194 read with Section 230:
In assailing the provisions of Section 194 read with 230 of the Act it
is argued that although, the owner is liable to the extent only of 50% of the
property tax, he is authorised to collect the entire 'surcharge' as well as water
D tax/other charges from the tenants who are ultimately liable. The liability of
landlord is confined only to 50% of the property tax on the basis of the actual
rent received while the remaining portion of the 'consolidated rate' inclusive
of, surcharge, water tax and· other charges are recoverable from the tenants.
For determination of the 'consolidated rate' even though the liability of the.
landlord is limited to 50%·ofthe property tax, all requisite notices for valuation
E and assessment are given to the landlords who may not bother to seriously
contest the case before the competent authority because their liability is
limited and rest of the liability is on the tenant.
We have examined the provisions contained in sections 194 and 230 of
the Act and other relevant provisions. We find that the grievance raised is
F not borne out from the provisions contained in Chapter XII of the Act which
indicate various steps for determination of 'consolidated rates.' We have
examined the sclieme in detail and we find that at the time of determination
of valuation, assessment, revision of assessment and amendment of the
assessment, public and written notices are required to be given to all concerned
G parties including owner, tenant, sub-tenant and occupier' on tax and 'surcharge'
proposed to be levied for commercial or non-residential user of the properties,.
The tenants, sub-tenants· and occupiers are entitled to written notices. The
provisions contairi a detailed procedure under which the tenants, sub-tenants
or occupiers pursuant to a public notice and written notice, are entitled to
participate in the process of valuation and assessment of consolidated rate
H by filing returns and objections. See section 181, 184 and 186 of the Act which
CALCUITAGUJRATIEDUCATIONSOCY.v.CALCUTIAMUNICIPALCORPN.[DHARMADHIKARl,J.]9J l
read thus :- A
"181. Submission of returns and inspection of lands and buildings
for purposes of assessment. - (1) The Municipal Commissioner may,
with a view of enabling him to determine the annual value of any land
or building [in any ward or part thereof] and the person primarily liable
for the payment of any consolidated rate on such land or building, ~[by B
a public notice,] require the owner or the occupier of such land or
building or portion thereof to furnish a return in such form, within
such period and in accordance with such procedure as may be
prescribed
(2) The Municipal Commissioner may, [by a public notice,] require the C
owner or the occupier of any land or building [in any ward or part
thereof] used for public cinema shows or theatrical performances or
as a place of similar public recreation, amusement or entertainment to
furnish a return in such form, within such period and in accordance
with such procedure as may be prescribed. D
(3) Every owner or occupier [of any land or building referred to in the
public notice] under sub-section (l) or sub-section (2) shall be bound
to comply with such noti~e and to furnish a return with a declaration
that the statement made therein is correct to the best of his knowledge
and belief. :i;:,
(4) [ • • • • • * * ]
(5) [*********** ]
(6) [ • * * * * * * ]
F
(7)
"/84. Public notice and inspection of assessment list.-(l) When the
annual valuation under sub-section (2) of section 179 or a general
revaluation under sub-section (I) of section 180 in any ward of the
Corporation or part thereof, as the case may be, has been completed, G
the Municipal Commissioner shall cause the respective valuation to
be entered in an assessment list in such form and containing such
particulars with respect to each land or building as may be prescribed.
(2) When the assessment list has been prepared the Municipal
Commissioner shall give public notice thereof and of the place where H
932 SUPREME COURT REPORTS [2003] SUPP. 2 S.C.R.
A the list or a copy thereof may be inspected, and every person claiming
to be the owner, lessee, sub-lessee or occupier of any land or building
include in the list and any authorised agent of such person shall be
at liberty to inspect the list and to take ~xtracts therefrom free of
charge.
B (3) The Municipal Commissioner shall give public notice of the place,
time and date, not less than one month after the preparation of the
assessment list as aforesaid when he will proceed to consider the
annual valuations of lands and buildings entered in the assessment
list, and in all cases in which any land or building is for the first time
assessed, or the annual value of any land or building is increased,
c he shall also give writien notice thereof to the owner or to any
lessee, sub-lessee or occupier of such land or building and shall also
specify in the notice the place, time and date, not less than one month
thereafter, when he will proce~d to consider such valuation.
D (4) When a revision in the annual valuation of any land or building
has been made under sub-section (2) of section 180, the Municipal
Commissioner shall cause the respective valuation to be entered in the
assessment list and shall give a written notice thereof to the owner
or to any lessee, sub-lessee or occupier of such land or building, and
shall also specify in the notice the place, time and date, not less than
E one month thereafter, when he will proceed to consider such
valuation".
"186. Objections against valuation of assessment.- Subject to the
provisions of section 181 or section 182, any objection to the annual
value of a land or building as entered in the assessment list shall be
F made by the owner or the person liable to pay the consolidated rate,
in writing, to the Municipal Commissioner before the date fixed in the
notice under Section 184 [or section 185] and shall state in what
respect the annual value is disputed". [Underlining for ·emphasis]
Learned counsel appearing for the Corporation submits that in the city
G of Calcutta, there are such large number of multi-storeyed buildings that
service of individual notice to each tenant, sub-t(;lnant as also on all the
occupants of such buildings and give them opportunity of hearing at every
stage would not only be a marathon exercise involving insunnountable practical
difficulties and bottlenecks but would make the whole process highly
H cumbersome, if not, impossible in finalising the assessment within a reasonable
CALCUTIAGUJRATIEDUCATIONSOCY.1•.CALCUTTAMUNICJPALCORPN.[DHARMADHIKARI,J.J933
time. It would also put the Corporation to such a colossal establishment A
expenditure which may be more than the actual amount of tax that might be
levied and found recoverable.
Such argument cannot be accepted. The underlined portion of the
provisions of the Act is required to be followed and it grants effective
participation to tenants, sub-tenants and occupants who, pursuant to public B
notice or written notices, approach the competent authority by raising
objections and claim opportunity of hearing in the course of proceedings. We,
therefore, find that the provisions of the Act allow full and effective participation
to the tenants, sub-tenants or oci:upants in the process of assessment of
consolidated rate.
c
Taking into consideration, however, the practical difficulties particularly
concerning multi-storeyed buildings occupied by several tenants, sub-tenants
and occupants, a mere non-issuance and/or service of public and written
notices to all concerned individuals who are 'persons primarily liable or
liable', would not be treated by concerned authorities and courts as invalidating D
the consolidated rate determined and apportioned on various persons
regarding such building/ buildings unless a serious prejudice is found to have
been caused to the persons aggrieved.
Somewhat similar provisions in Bombay Provincial Municipal Corporation
Act, 1949, were examined and similar challenges made to them, on behalf of E
tenants and occupants, were rejected by this Court in the case of Assistant
General Manager, Central Bank of India v. Commissioner, Municipal ,
Corporation, [1995] 4 SCC 696. See paragraph 14 of the said judgment which
reads as under:
"We are inclined to ho!d that in the scheme of the Municipal · F
Corporations Act read with Section l 0 of the Bombay Rent Act, the ,
tenant does possess the requisite locus standi to file a complaint ,
pursuant to public notice issued under Rule 15(1) or pursuant to,
special written notice issued under Rule 15(2) as well as to right to,
file an appeal an appeal under section 406. This should be more so,, G
if there is an agreement between the landlord and tenant whereunder
the obligation to discharge and pay the property taxes is cast upon
the tenant. It is true that this is a private arrangement between the
parties and cannot form the basis of a legal right but it is certainly an
additional factor conferring the requisite locus standi upon the tenant,
Even where the Bombay Rent Act is not applicable to a particular H
934 SUPREME COURT REPORTS [2003] SUPP. 2 S.C.R.
A building, the existence and proof of such an agree111ent would enable
the tenant to claim the requisite locus standi. Holding otherwise
would be grossly unjust to the tenant. While he is made liable,
statutorily or by private treaty, for the enhancement in the property
taxes, he is not being allowed to question the ·same. It is true, as
contended by the learned counsel for the Corporation, that no prudent
B owner of a building will allow the assessment to be enhanced
unreasonably just to spite the tenant, it cannot at the same time be
said that the tenant has no right to file an appeal against the assessment
or enhancement, as the case may be, when he is a· person directly
affected by such assessment/enhancement. There is yet another
c circumstance: any person proposing to file an appeal under Section
406 has to deposit the disputed tax as contemplated by Section
406(2)(e) as a condition for entertaining the appeal; since the landlord
can pass on the enhance~· burden to the tenant according to the
Bombay Rent Act and also where"there is a stipulation between him
and the tenant where under the liability to pay the property taxes is
D exclusively placed upon the tenant, the landlord would not be minded
to take the trouble of filing the appe_al since he would. be obliged t~
deposit tile disputed tax; he may think - and probably legitimately -
why should he deposit the disputed tax and file the appeal when the
burden of the said tax is no~ falling upon him. This is also a relevant
circuJ?lstance in favour of reading a right (to object and appeal) in the
E
tenant. At the same time, it cannot be predicated that the special
notice contemplated by Rul.e 15(2) has necessarily to be served upon
the tenant. No such right can be claimed by the tenant nor such an
obligation to cast upon the Corporation. The tenant has to be vigilant.
There will be a public notice under Rule 15( l) wherever an enhancement
F is proposed. Even the special notice under Rule 15(2) may, in the
normal course, be served upon him because he is in occupation of the
premises but that may or may not happen. (In a given case, the
landlord may be residing in a portion of the same building; there may
be more than one tenant in the buildlng and so on.) Even ifthe special
notice is not served upon him, he has to file the complaint within the
G time prescribed by the notices and the Rules". i
Challenge to Section 195:
The next ground urged is that if the landlord . does not pay the
H consolidated rate or surcharge the same is made recoverable under Section
CALCUTIAGUJRATIEDUCATIONSOCY.1'.CALCUTIAMUNICJPALCORPN.[DHARMADHIKARl,J.]935
195 from the tenants by attaching rents payable by them. It is argued that in A
the event of any dispute regarding the rent between the landlord and the ·
tenant, the tenant is helpless because the Corporation will collect from the
tenant what the landlord declares to be the rent from the tenant.
This ground is also speculative. If there is dispute about rent, the
tenant is entitled to raise that dispute before the competent authority in the B
course of assessment and also get its adjudication through the competent
Court. Merely because there is a dispute regarding 1ent, the Municipal
authorities cannot in law be made to wait for finalfoing assessment till the
dispute of rent is decided by some other forum. In the event of a dispute
regar.ding rent, it is open to the tenant to raise suitable objection before the i C
competent authority under the provisions of the Act for its decision in the
course of valuation and assessment of 'consolidated rate.'
Non-participation by Owner:
It is next urged that if the actual rent realised does not suffer any D
change, the entire increase of tax based on market valuation is to be borne
by the tenant and the owner is not affected at all. These circumstances are
such that an owner, since he is not affected by increasing valuation, may
choose not to attend the hearing at the time of assessment, as he knows that
he is entitled to receive the entire increase in the property tax from the tenant~
or occupiers and his individual liability based on actual rent remains unchanged. E
The aforesaid ground also does not seem to be acceptable. It is true,
that burden of tax based on valuation in the assessment is to be borne by'
the tenant or occupier but as we have examined the provisions, even though
the landlord remains inactive by not contesting the assessment proposed, the
tenant or occupier has to be vigilant and has right to object to the samel F
pursuant to the public and written notices. The tenants or occupants who
have to shoulder major portion of the tax burden, therefore, have to be
vigilant and raise objections pursuant to public and written notices and,
contest the assessments on valid grounds in their own interest.
Right of Appeal illusory: G
The next ground urged is that the right of appeal so far as the tenant,
sub-tenant or occupant is concerned is illusory. It is contended that the pre-
condition of maintaining the appeal is deposit of consolidated rate demanded,
for the property. The provision of the Act make the tenant liable to pay only H
936 SUPREME COURT REPORTS [2003] SUPP. 2 S.C.R.
A a portion of tax leviable on him to the owner. The tenant receives neither Bills
nor demand notices. In such circumstances, the right of appeal is available
only to the owner/lessor as the 'person primarily liable.' The tenant although
has to share the major burden of tax, is denied the right of appeal. Even
though, he is occupying only a portion of the building it is unreasonable to
B demand of him to deposit whole consolidated rate for the entire building for
maintaining his appeal. ·
We have examined the provisions of the Act. We find that the provisions
do allow the right of appeal as and when there is a demand of proportionate
consolidated rate or surcharge from tenants, sub-tenants or occupants. There
C is great force in the submission made that where the tenant is occupying only
a portion of the building and his liability towards 'consolidated rate' or
'surcharge' is proportionately restricted to the portion of the building in his
occupation, for exercising right of appeal, to make it compulsory for .him to
deposit the entire consolidated rate assessed and levied on the whole building,
is inequitable. The relevant provision contained in Section 189 (5) and (6) read
D thus:
"(5) Any owner or person liable to payment of consolidated rate may,
if dissatisfied with the detennination of objection under section 188
appeal to the Tribunal:
E _ Provided that such appeal shall be presented to the tribunal within
forty-five days from the date of service of [a copy of the order] under
section 188 and shall be accompanied by a copy of the said order.
(6) No appeal under this section shall be entertained unless the
consolidated rate in respect of any land or bui.lding for the period
F ending on the date of presentation of the appeal on the valuation
detennined under section 188 has been deposited [in the office of the
Corporation] and the appeal shall abate unless such consolidated rate
is continued to be deposited till the appeal is finally disposed of."
As we had examined the provisions, since the tenants, sub-tenants or
G occupiers have to share the burden of tax to an appreciable extent, right of
appeal cannot be denied to them. If the right of appeal is held to be available
to them on payment of the entire tax levied· on the whole building even
though they occupy only a portion of it, the remedy of appeal would be
highly onerous and virtually denied.
:,
H
CALCUTIAGUJRATIEDUCATIONSOCY.1•.CALCtrITAMUNICIPALCORPN.[DHARMADHIKARl,J.]937
In the aforesaid circumstances, on examination of provisions of the Act A
and as reasonably construing Section 189(6) of the Act, we find that the 'right
of appeal' as an effective remedy has to be given to a tenant, sub-tenant or
occupant who is a 'person liable' with 'person primarily liable' for payment
of 'consolidated rate' and it would be available only on payment of the
'consolidated rate' as apportioned as his liability and held payable by him. B
Any other interpretation, would frustrate the very object of providing righ~
of appeal to 'person liable' with the 'person primarily liable' This is how the
provision has to be reasonably interpreted and read down.
The rule of "reading down" a provision of law is now well recognised.
It is a rule of harmonious construction in a different name. It is resorted tp C
smoothen the crudities or ironing the creases found in a statute to make it
workable. In the garb of 'reading down', however, it is not open to read words
and expressions not found in it and thus venture into a kind of judicial
legislation. The rule of reading down is to be used for the limited purpose of
making a particular provision workable and to bring it in harmony with other
provisions of the statute. It is to be used keeping in view the scheme of t~e D
statute and to fulfil its purposes. [See the following observations of this Court
in the case of BR Enterprises v. State of VP., [1999] 9 SCC 700] :-
"First attempt should be made by the courts to uphold the charged
provisions and not to invalidate it merely because one of the possible
interpretation leads to such a result, howsoever attractive it may be. E
Thus, where there are two possible interpretations, one invalidatfrtg
the law and the other upholding, the latter should be adopted. For
this, the courts have been endeavouring, sometimes to give restrictive
or expansive meaning keeping in view the nature of legislation, rnay
be beneficial, penal or fiscal etc. Cumulatively, it is to sub-serve the F
object of the legislation. Old golden rule is of respecting the wisd~m
of legislature, that they are aware of the law and would never have
intended for an invalid legislation. This also keeps courts within their
track and checks individual zeal of going wayward. Yet in spite of this,
if the impugned legislation cannot be saved the courts shall not
hesitate to strike it down. Similarly, for upholding any provision, if it G
could be saved by reading it down, it should be done, unless plain
words are so clear to be in defiance of the Constitution. These
interpretations spring out because of concern of the courts to salvage
a legislation to achieve its objective and not to let it fall merely
because of a possible ingenious interpretation. The words are not H
938 SUPREME COURT REPORTS (2003] SUPP. 2 S.C.R.
A static but dynamic. This infuses fertility in the field of interpretation.
This equally helps to save an Act but also the cause of attack on the
Act. Here the courts have to play a cautious role of weeding out the
.wild from the crop, of cours.e, without infringing the Constitution. For
doing this, the courts have taken help from the Preamble, Objects, the
scheme of the act, its historical ba<;:kground, the purpose for enacting
B such a provision, the mischief, if any which existed, which is sought
to be eliminated. The principle of reading down, however, will not be
available where the plain and literal meaning from a bare reading of
any impugned provisions clearly shows that it confers arbitrary,
uncanalised or unbridled power."
c On behalf of the Corporation learned coun.sel placed heavy reliance on
paragraph 16 of the 1!-Jdgement .of this Court in Central Bank of India (supra).
It is argued th.at comparable provisions of Bombay Act were examined and
contention was rejected that right of appeal to tenants, sub-tenants or occupiers
on pre-deposit of tax for the entire property or premises is in~quitable and
D virtual denial of right of' appeal.
We have care(ully gone through the decision of this court in the case
of Central Bank of India, (supra) which arose out of Bombay Provincial
Municipal Corporation Act 1949 (for short the "Bombay Act"). The provisions
relevant on this aspect. are contained in Sections 194 to 196 of the Act and
E read as under:
. .
"194. Apportionment of liability for consolidated rate on land or
· building when the premises assessed are let or sublet. -(l) If the
a~nual valu~tion of any land or building exceeds the amount calculated
on the basis of the rent of such land or building payable to the person
F upon whom the consolidated rate on such land or building is leviable
under Section 193, such person shall be entitled to receive from his
tenant the difference between the amount of the consolidated rate on
such land or building and the' amount which would be leviable if the
·consolidated rate on such .land or building were. calcu.lated on the
G basis of the rent payable to him,- ·
(2) If the annual valuation of any land or building which is sublet
exceeds the amount calculated on· the basis of rent of such land or
building payable to the tenant by his sub-tenant or to the sub-tenant
by'the person holding under him, the tenant or the sub-tenant shall
H be entitled to receive from his sub-tenant or the person holding under
CALCUITAGUJRATIEDUCATIONSOCY.1•.CALCUITAMUNICIPALCORPN.(DHARMADHIKARl,J.J939
him, as the case may be, the difference between any sum recovered A
under this Act from such tenant or sub-tenant and the amount of
consolidated rate on such land or building which would be leviable
,, if the annual valuation of such land or building were calculated on the
basis of rent payable to the tenant by his sub-tenant or the sub-
tenant by the person holding under him. B
"195. Recovery of consolidated rate on lands and buildings frohi
occupiers.-(l) On the failure to recover any sum due on account <;>f
consolidated rate on any land or building from the person primarily
liable therefor under section 193, [the Municipal Commissioner shall,
notwithstanding anything contained in the West Bengal Premises C
Tenancy Act, 1956 or in any other law for the time being in force,
recover] from every occupier of such land or building, by attachment
of the rent payable by such occupier, a portion of the total sum due
which bears, as nearly as may be, the same proportion to that sum as
the rent annually payable by such occupier bears to the total amount
of rt'.nt annually payable in respect of the whole of such land or D
building.
(2) An occupier, from whom any sum is recovered under sub-section
(l ), shall be entitled to be reimbursed by the person primarily liable
for the payment of such sum, and may, in addition to have recourse
to other remedies that may be open to him, deduct the amount so E
recovered from the amount of any rent becoming due from time to time
from him to such person.
"/96. Payment of consolidated rate on lands and buildings. - (l)
Save as otherwise provided in this Act, the consolidated rate on any
land or building under this Chapter shall be paid by the person liable F
for the payment thereof in quarterly instalments and, for the purposes
of this section, each quarter shall be deemed to commence on the fir~t
day of April, first day of July, first day of October, and first day qf
January, of a year. I
(2) The Municipal Commissioner shall cause to be presented to the G
person liable for payment of the consolidated rate a comprehensive
bill in respect of such rate to be paid in quarterly instalments, showing
separately the amount of the consolidated rate due against each
quarter and the date on which the consolidated rate for each quarter
is due. Such bill shall be sent by post under certificate of posting or H
940 SUPREME COURT REPORTS [2003] SUPP. 2 S.C.R.
A by courier agency to the person liable for payment of the consolidated
rate, not later than the 31st day of May."
It is true that various provisions of Bombay Act and the Act under
consideration before us applicable to Calcutta, are somewhat similar. However,
some of the most out-standing features of Calcutta Act are not to be found
B in the Bombay Act. In the Act applicable to Calcutta which is for consideration
before us, the tenant, sub-tenant or occupier have to be involved by Public
notice and individual written notices in the course of valuation and assessment ·-'
of the "consolidated rate" or tax. Pursuant to the aforesaid public alid individual
notices, they have a right to object to the proposed valuation and assessment.
C They can also submit returns in response to the above notices. The annual
value is determined on the basis ·of actual rent and market rent and is
apportioned between the owner and lessor, as the person "primarily liable"
and the tenant, sub-tenant or occupier, who are described as "persons liable."
The provision of sub-section (6) of Section 178 creates an obligation on the
municipal Commissioner to supply information, on payment of fee, to the
D person "primarily liable" and to "persons liable" regarding the apportionment
of the "consolidated rate" or tax on the properties among the several occupiers.
The "consolidated rate" so determined for a property is recoverable only from
I
the "person primarily liable" who is given a right of reimbursement from the .\
other "persons liable." The consolidated rate is also made recoverable from
E the 'persons liable' by attaching their rents payable to the "person primarily
liable" and giving corresponding rights to the parties to claim adjustment of
the tax paid from the quantum of rent.
The Act applicable to Calcutta also imposes a 'surcharge' as part of
"consolidated rate" or tax of which the whole burden is on the tenant, sub-
F tenant or occupier who is putting the premises to non-residential or commercial
use. The burden of this 'surcharge' as part of "consolidated rate" is only on
the person putting the premises to non-residential or commercial use. The
imposition of this surcharge for properties in use for non-residential and
commercial purposes with apportionment of that liability only on persons
using the property in the manner aforesaid, is a special feature of the Act.
G applicable to Calcutta and which makes this provision as also other provisions
to a great extent different from the provisions of Bombay Act which were
considered and the right of appeal in that case was held to be allowable only
on full deposit of property tax for the whole property or building which is
treated to be one unit for valuation and assessment of tax.
H
CALCUTIAGUJRATIEDUCATIONSOCY.1·.CALCUTIAMUNICIPALCORPN.[DHARMADHIKARI,J.J94}
We have noticed the distinguishing features and the scheme of the Act A
applicable to Calcutta before us for interpretation and the Act applicable to
Bombay. We have resorted to a reasonable interpretation of the provisions
of Act applicable to Calcutta. We have come to the conclusion that as tenant,
sub-tenant and occupants are "persons liab!e" with owner or lessor being the
'persons primarily liable', the former category of 'persons liable' have a right B
to prefer appeal against proposed valuation and assessment of "consolidated
rate" by deposit of that portion of "consolidated rate" or surcharge which is
found leviable and payable by them. Such portion of "consolidated rate" and
'surcharge' is separately determined and ascertainable from the order of
ass¢ssment and the demand bills and notices for recovery, if any, issued to
the persons "primarily liable" or "persons liable." The decision of this Court C
1
in the case of Central Bank of India (supra) on the provisions of Bombay Act,
therefore, in our opinion, is distinguishable. In the case before us, the tenants,
sub-tenants and occupiers as "persons liable" have to be recognised as
aggrieved parties with independent right of appeal to them on pre-deposit of
portion of a "consolidated rate" or surcharge, found leviable and recoverable
from each of them. D
Other Grievances:
Incidentally, a grievance was also raised that the tenants, sub-tenants
and occupiers even on a formal demand on payment of fees, are not being
supplied the necessary details ·of tax and its apportionment for filing returns, E
raising objections and filing appeals. We may only observe that there can be
no general direction for redressing such grievances. We have found from the
provisions, as construed by us, that they create an obligation on the concerned
authorities of the Corporation to provide necessary information on assessment
and apportionment of tax between 'persons primarily liable' and 'persons p
liable.' If there is in a given case refusal on the part of Corporation authorities
to discharge their statutory liability in the matter of furnishing requisite
information to the persons liable to pay the tax, the aggrieved parties have
to take recourse to the remedies provided in law for compelling compliance
of the provisions of the Act.
G
Challenge to Section 231:
The appellants have also challenged the applicability of the provisions
contained in Section 231 of th~ Act . it is contended that Section 231 creates
a legal fiction by which "tax' is to be treated as a 'rent'. If the tax is treated
as rent with the right given to the landlord to recover it as rent, the provisions H
942 SUPREME COURT REPORTS [2003) SUPP. 2 S.C.R.
A of Tenancy Act would get attracted without their being any mention of
applicability of Tenancy Act to the provisions of the Act under consideration.
It is submitted that a provision which deems 'tax' as 'rent' for the purpose
of recovery by the landlord for payment to the Corporation or for his own
reimbursement where he has already paid the whole amount of tax, creates a
B situation whereby although the apportionment and quantum of demand is
disputed by the tenant, he has to face proceedings for recovery of tax as
'rent' and face the danger of eviction under the provisions of the Tenancy
Act.
I_t is submitted that the provisions of the Act under consideration do
C not contain any guidelines to indicate as to what extent the provisions of the
Tenancy Act would be attracted to portion of tax leviable on the tenant which
is fictionally treated as 'rent'.
We have to examine the provisions of Section 231 of the Act in the light
of the scheme of the Act. Section 231 of the Act reads thus:
D "Mode of recovery - If any person primarily liable to pay any
consolidated rate on any land or building and is entitled to recover
any sum from an occupier of such land or building, he shall have, for
t
recovery thereof, the same rights and remedies as if such sum were
rent payable to him by the person from whom he is entitled to recover
E such sum."
We find that the machinery provisions for assessment and recovery of
tax basically involve the owner or the lessor who is 'primarily liable' for the
tax on property although in the course of assessment and recovery of portion
of tax from the tenants, sub-tenants or occupants, their involvement is also
F directed. It is with the purpose to make procedure of recovery of tax simpler
that the owner or the lessor is proceeded against as the "person primarily
liable." The owner or lessor of the property is 'primarily' required to satisfy
the· demand towards tax with right to recover it from the tenant, sub-tenant
or the occupant If the landlord or the owner is obliged to make payment of
G whole amount of tax inclusive of his own share and share of the tenant, sub-
tenant or the occupant, the owner or lessor has to be conferred with power
to recover the portion of tax payable by the tenant, sub-tenant or occupant
who is actually enjoying the property and putting it to use for commercial or
non-residential purpose. The legislature has taken note of the fact that a large
number of properties in Metropolitan city of Calcutta are in occupation of
H tenants, sub-tenants or occupants on a comparatively small amount of rent
CALCUTTAGUJRATI EDUCATION SOCY. r. CALCUTIAMUNICIPALCORPN. [DHARMADHIKARI, J.J 943
or lease money. In such situation to impose entire burden of tax on the owner A
or-lessor, would be inequitable, more so when the tenancy law does not allow
increase in rent beyond a particular limit and the right of eviction of the
landlord is restricted to the grounds under the Tenancy Act. By the impugned
provisions of the Act, therefore, the legislature has thought of apportioning
the tax burden between owner or the lessor as one party and the tenant, sub-
tenant or occupier as the other parties. The whole amount of tax is recoverable B
from the lessor and may also be recovered from the tenant or sub-tenant
through attachment of the rent. In case where the lessor or landlord has paid
the whole tax including the portion of tax payable by the tenant or sub-tenant,
the landlord has to be equipped with power to get himself reimbursed by
recovery of the portion of tax paid by him on behalf of the tenant. Section C
231 of the Act, therefore, creates fiction that the 'tax' apportioned on the
tenant would be treated as 'rent' and would be recoverable as such. The word
'rent' has not been defined in the tenancy law and this court has taken note
of this legal position in the case of Puspa Sen Gupta v. Susma Ghose, [1990]
2 SCC 651 which arose out of the provisions of Tenancy Act applicable to
West Bengal. Rent is a compendious expression which may include lease D
money with service charges for water, electricity and other taxes leviable on
the tenanted premises.
The provisions of the Tenancy Act merely enable the landlord to make
a demand of arrears of rent and in default of the payment of the same sue E
the tenant for recovery of rent or eviction on the ground of non-payment of
rent despite demand. The tenant can get protection against eviction on the
ground of arrears of rent only if he makes requisite deposit of the arrears in
the manner laid down in the provisions of the Tenancy Act. A provision to
fictionally treat 'tax' as 'rent' is necessitated because in the absence of such
a fiction in Section 231 of the Act, the landlord would be compelled to pay F
the whole amount of tax which is recoverable from him under the Act and
would be left to an expensive and cumbersome remedy of filing a civil suit
for recovery of such tax paid on behalf of the tenant, sub-tenant or occupant.
Such a fiction is required to be incorporated under Section 231 of the Act
because a private party cannot recover tax. If a lessor is obliged to pay a
portion of tax leviable on the tenant, the landlord can recover the same not G
as 'tax' but only as part of 'rent.' The fiction created by the legislation in
Section 231 to treat 'tax' as 'rent' has to be taken to its logical conclusion.
The Act under consideration and the Tenancy Act both are State Legislations.
No question arises of legislative incompetence. There does not appear any
inter se conflict between the two Acts. Both have to be read and applied H
944 SUPREME COURT REPORTS [2003] SUPP. 2 S.C.R.
A hannoniously to achieve the legislative intent in the two enactments. The
contention based on Section 231 of the Act, therefore, also does not commend
to us and is rejected.
Disproportionate Tax Liability:
B In the course of hearing some calculation charts for illustration were
placed before us to demonstrate that tax structure under Section 171 has been
made in such a manner that although a tenant may be occupying a small
portion of rented premises with normal rent but on valuation in relation to the
entire building fetching rent exceeding Rs. 18,000 for the purpose of
detennination of tax, the resultant liability works out higher on the tenant and
C much lower on the landlord because latter's liability is restricted to valuation
based on actual rent from the premises. It is argued that such a result, based
on tax structure with a much higher burden on the tenant compared to the
landlord being the 'person primarily liable' for payment of tax, is inequitable
and unjust. It is also against the concept of imposition of property tax on
D owners of properties in the local area.
We have already taken note of the stand of the Corporation that premises
i.e. lands and buildings in metropolitan town of Calcutta are mostly occupied
on meagre rents from the landlords, yet, in those tenanted premises commercial
and non-residential activities are going on a scale which, requires more and
E more civic amenities to be provided by the Corporation. Since the landlords
are getting only small rents and the occupants are actually putting the
premises to more beneficial use sometimes generating huge incomes, a just
tax structure should put lesser burden of tax on the landlord than on the
tenants who are in actual· occupation. The grievance, therefore, raised that the
F tax burden is much higher on the tenants, sub-tenants or occupants than on
landlords, according to us, is not legitimate and is no ground to assail the
impugned provision.
Discriminatory treatment of rented premises governed by West Bengal
!Tenancy! Act and others:
G One additional ground raised on behalf of the appellants is that
provisions of the Tenancy Act are not attracted to all tenanted properties and
only properties of which rent is less than Rs. 3,000 per month are covered by
Tenancy Act. On the above legal position the contention advanced is the
rented premises for which the Tenancy Act is applicable, property tax can be
H included in "Fair rent" as defined under the Tenancy Act but to
-~
CALCUITAGUJRATIEDUCATIONSOCY.1•.CALCUITAMUNICIPALCORPN.[DHARMADHIKARI,J.J945
accommodations and premises not covered by Tenancy Act, Property tax is ~
not included in rent and there is no obligation on such landlords occupying
tenanted premises on rent which is more than Rs. 3,000 per month, to pay
property tax directly or through the landlord in accordance with the Tenancy
Act. It is, thus, contended that the provisions of the Act create a discriminatory
situation between tenants paying less than Rs. 3,000 per month rent and B
covered by Tenancy Act and tenants paying more than Rs. 3,000 per month
rent and falling llUt side the provisions of the Tenancy Act.
We have examined the scheme of the Act and we find that in apportioning
the burden of tax on landlord and tenant a unifonn scheme or tax structure
has been evolved under the Act on the basis of actual and notional rental C
value of the premises. The liability of the landlord towards tax is limited to
the valuation based on actual rent received and the assessment made of the
tax based on letting value of the premises is the liability of the tenant/sub-
tenant or occupier. Merely because Tenancy Act is attracted to
accommodations with rent less than Rs. 3,000 per month and not to other
accommodations having higher rent, does not create any dis-similar situation D
in application of the Act to various categories of tenants paying rent more
or less than Rs. 3,000 The portion of tax liable to be paid by the occupant
or tenant is not directly recovered by the Corporation from them but is
recoverable through the landlord and the landlord has been given right of
reimbursement by demanding it from the tenant, sub-tenant or the occupant. E
For recovering such portion the tax payable by the tenant, sub-tenant or
occupant, which has been paid by the landlord, is deemed to be "rent" only
for the limited purpose of its recovery. The modes of recovery are by a
demand notice under the Tenancy Act and if necessary by filing an eviction
suit. Resort to remedy before the regular court is also not prohibited. On this
aspect of apportionment of tax and mode of recovery of tax, the Act does not F
make any discrimination between tenants of premises covered by the Tenancy
Act and others not covered by the said Act.
Conclusion:
As a result of the discussion aforesaid, we find no vice in any of the G
provisions of the Act although we have considered it necessary to interpret
the provisions harmoniously for better application of the provisions of the
Act and the Tenancy Act. The various legal provisions assailed before us
have been interpreted by us and our conclusions_ are as under:
H
946 SUPREME COURT REPORTS [2003] SUPP. 2 S.C.R.
A (l) In view of specific provisions of the Act and as the provisions of
the Act impose burden of tax to an appreciable extent on the tenant,
sub-tenant and occupiers and the tax is liable to be recovered from
them, through the landlord or directly by attachment of rent or other
coercive modes, the tenants, sub~tenants and occupants are entitled
. to. an opportunity to participate in the process ~f valuation and
B assessment. They are entitled, therefore to written notices apart from
public notice for assessment, revision or'assessment or amendment of
assessment of the 'consolidated rate' or tax. It is also made clear that
pursuant to the public notice or written notice, the returns submitted
by the tenant, sub-tenant or occupier, with ·regard to determination of
c annual value shall be considered by the corporation. The same
procedure would be followed in revision of the annual valuation.
(2) It is further made clear that non-issuance. of public notice or
notices and /or non-service of written notices to the 'persons primarily
liable' would not necessarily invalidate the proceedings of assessment
D or reassessment or amendment of the valuation for consolidated rate
unless it is established by the party aggrieved that a serious prejudice
was caused to it for want of notice.
(3) Under the provisions of the Act since the tenant, sub-tenant or
occupier have' to share burden of an appreciable portion of
E "consolidated rate" exclusive or inclusive of 'surcharge' in relation to
·properties used for non-residential and commercial purposes and as
. the Act provides for opportunity of participation to them pursuant to
a public notice and written notice in assessment and reassessment of
tax, they have a right of appeal provided under the Act. It is made
clear that tenant, sub-tenant and occupiers held liable for pay~ent of
F a portion of tax have a right of appeal on pre-deposit of portion of
tax levied and made recoverable from them.·
(4) It is also made clear that to enable the tenant, sub-tenant or
occupier as 'person liable' to pay 'consolidated rate' they would have
a right to obtain necessary information on payment of requisite fee in
G accordance with Section 178 of the Act and Corporation authorities
are legally bound to furnish Such requisite information.
In the result of the detailed discussion aforesaid, we maintain the
judgment of the High Court with the clarification and observations made
H above. This is further clarified that the legal position explained by us in this
CALClJITAGUJRATI EDUCATIONSOCY. ''- CALClJITAMUNICIPALCORPN. [DHARMADHIKARI,J.J 947
judgment would have application to pending and future proceedings but not A
to proceedings under the relevant chapter of the Act which have already been
concluded.
Consequently, the appeals fail and are dismissed. We leave the parties
to bear their own costs.
B
N.J. Appeals dismissed.
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