Supreme Court of India
M.C.D. & ANR.versusM/S. MEHRASONS JEWELLERS (P) LTD.
- Citation
- 2015 INSC 560
- Decided
- 11 August 2015
- Disposal
- Disposed off
- Bench
- A K SIKRI
Holding
Assessments post‑1994 are governed solely by the 1994 bye‑laws, and under Section 116G(2) and Section 169 an assessee may seek determination on the basis of annual value (or unit‑area method) for pending or unfinalised assessments, with such appeals to be transferred to the Municipal Taxation Tribunal.
Summary
The Supreme Court examined two sets of appeals filed by the Municipal Corporation of Delhi (MCD) against Mehrsons Jewellers concerning the determination of rateable value for property tax. The first issue was whether assessments made after the 1994 Delhi Municipal Corporation (Determination of Rateable Value) Bye‑Laws should be governed solely by those bye‑laws, rendering the earlier Supreme Court principles in Balbir Singh and P.R. Chaudhary inapplicable. The Court held that the 1994 bye‑laws indeed supersede those earlier principles for post‑1994 assessments. The second issue concerned the effect of Section 116G(2) and the third proviso to Section 169 of the Delhi Municipal Corporation Act, 1957, on pending or unfinalised assessments, particularly whether an assessee could seek determination on the basis of annual value (or the unit‑area method) even for assessment years prior to 2003. The Court affirmed that such a right exists, that pending appeals must be transferred to the Municipal Taxation Tribunal, and that the High Court’s decision was correct. Consequently, the appeals were dismissed and the matter remanded for resolution of ancillary issues before the High Court.
Issues considered
- Whether assessments made after the 1994 Delhi Municipal Corporation (Determination of Rateable Value) Bye‑Laws are to be governed exclusively by those bye‑laws, excluding the principles laid down in Balbir Singh and P.R. Chaudhary cases.
- Whether, under Section 116G(2) and the third proviso to Section 169 of the Delhi Municipal Corporation Act, an assessee can demand determination of tax on the basis of annual value (or unit‑area method) for assessments that are not finalised or are pending appeal, including assessments for years prior to 2003.
- Interpretation of the term “finalised assessment” within the context of Section 116G(2).
Legislation cited
- Delhi Municipal Corporation Act, 1957s. 116, s. 116E, s. 116F, s. 116G, s. 1238, s. 123A, s. 126, s. 169, s. 2(1A)
- Delhi Municipal Corporation (Amendment) Act, 2003
Subjects
property taxrateable valueannual valueDelhi Municipal Corporation Actbye‑lawsassessmentself‑assessmentunit‑area methodappealMunicipal Taxation Tribunalfinalised assessment
Judgment
(2015] 8 S.C.R. 944
A M.C.D. & ANR.
v.
MIS. MEHRASONS JEWELLERS (P) LTD.
(Civil Appeal No. 6718 OF 2004)
B
AUGUST 11, 2015
[A. K. SIKRI AND R. F. NARIMAN, JJ.]
Delhi Municipal Corporation Act, 1957:
c s. 116- Determination of ratable value of lands and
buildings assessable to properly taxes -Assessment years
post 1994 - Municipal Corporation framing its own Bye-Laws
of 1994 whereby Delhi Municipal Corporation took upon itself
D determination of ratable value of lands and buildings
according to the principles laid down therein - Determination
of annual value - Held: Assessments made after the 1994
bye-laws came into existence, would be governed by these
bye- laws alone and the principles laid down in the two
E Supreme Courl judgments-Balbir Singh's case and P.R.
Chaudhary's case, would no longer apply since they were
applied in a situation where MCD did not itself lay down how
annual value was to be determined - Delhi Municipal
Corporation (Determination of Ratable Value) Bye-Laws,
F 1994.
ss. 169, 116G - Determination of annual value of
covered space of building and of vacant land -Assessment
years prior to 2003 - By 2003 amendment tax regime
G replaced by ss. 123A and 123B by self assessment
procedure based on unit area method - Pending appeals
on the date of 2003 amendments to be decided in
accordance.with the old substantive law or the new procedure
- Held: An assessment that has not been finalized in all cases
H where an appeal is pending before the District Judge as also
944
M.C.D. & ANR. v. M/S. MEHRASONS JEWELLERS (P) 945_ ·
LTD.
in all cases which have not become ''final" and after 2003 are A
remanded back for fresh determination, in respect of an
assessment ofproperty tax prior to 2003, would all_be covered
by the language of s. 116G(2)- Thus, even at an appellate
stage, an assessee is empowered to ask for a decision on
the basis of the annual value of the property. B
·Disposing of the appeals, the Court_ i ,..
HELD: 1.1 Having regard to the statement of law
that where the premises are not controlled by any rent c
control legislation, the annual rent can be taken as the
annual rateable value of the property for the assessment ·
of property tax, the municipal corporation 'is entitled to
revise the rateable value of the properties which have
been freed from rent control on the basis of annual rent D
actually received, unless the owner satisfies the
municipal corporation that there are other
considerations which have affected the quantum of rent,
the Division Bench ofthe High Court in *Daruwala's case
is not correctly decided for the simple reason that this E
appeal falls within the exception created by the Central
Bank judgment, namely, cases where the Municipal
Corporation of a particular State itself lays down as to
how annual value is to be determined. Therefore, for
assessments made after the 1994 bye-laws came into F
existence, such assessments shall be g.overned by these .
bye-laws alone and the principles laid down in **Balbir
•
Singh's case and ***P.R. Chaudhary's case, would have
no relevance in such a situation. [Paras ~3,14] (962-G-
H; 963-B-D]
G .
2.1 The holding by the Division Bench of the Delhi
High Court in ****Major General lnderpal Singh Kahai's
case is that it is clear from the third proviso to Section
169(1) of the Delhi Municipal Corporation Act, 1957 that H
946 SUPREME COURT REPORTS [2015] 8 S.C.R.
A even where an assessment is finalized, but an appeal is
pending, an assessee is entitled to ask for a decision in
the appeal on the annual value basis. In other words,
even at an appellate stage, an assessee is empowered
to ask for a decision on the basis of the annual value of
B the property, is the correct view of the law.[Para 21] (974-
F-H; 975-A]
2.2 Under Section 169 3rd proviso, appeals that
are pending before the Court of the District Judge are to
C be transferred to the Municipal Taxation Tribunal to be
set up under the 2003 Amendment for disposal, if
requested by the applicant, for the settlement thereof on
the basis of annual value. This proviso means that an
appeal pending before a District Judge is to be
D transferred compulsorily to the Taxation Tribunal (after
it is set up) if an applicant requests for disposal of the
appeal on the basis of annual value. Obviously, the word
"settlement" would not in this context means a
consensual arrangement between both parties but
E would only mean a determination to be made by the
tribunal on the basis of annual value. Once this position
becomes clear, the impugned judgment cannot be
faulted. It is clear then that even at the appellate stage
F an applicant can opt to apply for the new unit area
method provided for in Section 116E so that his property
tax assessment may be decided in accordance with the
said method even though it pertains to an assessment
year prior to 2003. [Para 22] [977-D-G]
G 2.3 The second proviso to Section 16.9 would
apply in cases where, after the Taxation Tribunal is set
up, there is no request by any applicant to determine his
case on the basis of annual value. In such cases also,
H the Tribunal, once set up, may take up the appeal of such
person with the approval of the earlier appellate
M.C.D. & ANR. v. M/S. MEHRASONS JEWELLERS (P) 947
LTD.
authority, namely, the District Judge. Thus, it is clear that A
the logic of the Division Bench of the High Court cannot
be faulted. [Para 23] [977-H; 978-A-B]
2.4 An assessment that has not b~el\finalized in
all cases where an appeal is pending before the District B
Judge as also in all cases which have not become "final"
in the sense that the appellate authority or the High Court
or Supreme Court (after 200.3), in respect of an
assessment of property tax p;ior to 2003,,remands the
matter for fresh determination, would all be covered by C
the language of Section 116G(2). Therefore, the High
Court is correct [Para 24] [978-C-D]
3. In the appeal which dealt with the first question,
various other points were raised in the writ petition filed o
before the Delhi High Court which were not adjudicated
upon as Daruwala's case was followed. Having set aside
Daruwala's case, such other points that have been raised
by the petitioners in the writ petition filed before the Delhi
High Court may now be agitated by them before the High E
Court and a remand is made of this case for
determination of such questions by the High Court. [Para
25] [978-E-F]
•••• Municipal Corporation of Delhi v. Major General F
lnderpal Singh Kahai &Anr. 169 DLT 352 (2010) (DB)
-approved.
**Dr. Balbir Singh & Ors. Etc. Etc. v. Municipal
Corporation, Delhi & Others 1985 (2) SCR 439: (1985)
1 SCC 167; ***Lt. Col. P.R. Chaudhary (Retd.) v.
Municipal Corporation of Delhi 2000 (3f sc·R 607 :
(2000) 4 SCC 577 - Held inapplicable. ,
*Municipal Corporation of Delhi v. Dhunishaw Framroz
H
Daruwala 100 DLT 679 (2002)- disapproved.
948 SUPREME COURT REPORTS (2015] 8 S.C.R.
A Municipal Corporation of Delhi v. Delhi Urban House
Owners' Welfare Association 1997 (4) Suppl.
SCR 418:(1997) 8 SCC 335; The Corporation of
Calcutta v. Padma Debi & Others 1962 SCR (3) 49;
Municipal Corporation, Indore & Others v. Smt. Ratna
B Prabha & Others 1996 (2) Suppl. SCR 295 : (1996) 4
SCC 622; Assistant General Manager, Central Bank of
India & Others v. Commissioner, Municipal Corporation
for the City of Ahmadabad & Others 1995 (1) Suppl.
SCR 63: (1995) 4 SCC 696; East India Commercial
c Company Private Limited v. Corporation of Calcutta
1998 ( 2 ) SCR 543 :(1998) 4 sec 368; The
Commissionerv. Griha Yajamanula Samkhya & Others
2001 (3) SCR 392: (2001) 5 SCC 651; Government
Servant Cooperative House Building Society Limited
D
& Others v. Union of India & Others, 1998 (3) SCR
996 : (1998) 6 sec 381 - referred to.
Case Law Reference
E 1997 (4) Suppl. SCR 418 referred to. Para 7
1962 SCR (3) 49 referred to. Para 9
1996 (2) Suppl. SCR 295 referred to. Para 10
1995 (1) Suppl. SCR 63 referred to. Para 11,12, 14
F 1998 (2) SCR 543 referred to. Para 11, 12
2001 (3) SCR 392 referred to. Para 12
1998 (3) SCR 996 referred to. Para 13
100 DLT 679 (2002) disapproved. Para 14
1985 (2) SCR 439 held
G
inapplicable. Para 14
2000 (3) SCR 607 held
inapplicable. Para 14
169 DLT 352 (2010) (DB) approved. Para 22
H
M.C.D. & ANR. v. M/S. MEHRASONS JEWELLERS (P) , 949 .
LTD.
CIVILAPPELLATE JURISDICTION: Civil Appeal No. A
6718 of2004
From the Judgment and Order dated 30.04.2003 of the
High Court of Delhi at New Delhi in CWP No. 1769 of 2001
B
WITH
C. A. Nos. 8340, 8341 and 8342 of 2011
C. A. Nos. 632 of 2013 and 6064 of 2015
c
Madhu Tiwatia, Ujjal Banerjee, P. Parmeswaran,
Praveen Swarup, Rakesh KumarfortheAppellants.
Kirti Uppal, Ch.irag M. Shroff, Swati Vaibhav, Bhaskar
Das, B. B. Jain, Balbir Singh Gupta, Shish Pal Laler, Abhay D
Jain, Abhay Kumar, Tenzing Tsering, Arun K. Sinha, Rakesh
Singh, Manjeet Chawla for the Respondent.
The Judgment of the Court was delivered by
R. F. NARIMAN, J. 1. Leave granted. E
2. In this batch of appeals there appear to be two
distinct groups dealing with two separate questions that have
been raised by counsel for the Municipal Corporation of Delhi.
Civil Appeal No. 6718 of 2004 raises a question as to the F
correctness of the judgment of the Division Bench of the Delhi
High Court in Municipal Corporation of Delhi v. Dhunishaw
Framroz Daruwala, 100 DLT 679 (2002), decided on
23.7.2002, whereas the other appeals raise a question as to
the correctness of the judgment of the Division Bench of the G
Delhi High Court dated 21.4.2010 in Municipal Corporation
of Delhi v. Major General lnderpal Singh Kahai & Anr., 169
DLT 352 (2010) (DB).
3. The first question raised by counsel for the MCD in . H
950 SUPREME COURT REPORTS (2015] 8 S.C.R.
A the present appeals concerns itself with a post 1994 scenario
- that is after the Delhi Municipal Corporation came out with
the "Delhi Municipal Corporation (Determination of Rateable
Value) Bye- Laws, 1994" published in the gazette on
24.10.1994. By these bye-laws, the Delhi Municipal
B Corporation has taken upon itself the determination of rateable
value of lands and buildings according to principles laid down
therein.
4. Under Section 116(1) of the Delhi Municipal
C Corporation Act, 1957, the Corporation is to determine the
rateable value of any lands or buildings assessable to property
taxes at the annual rent at which such land or building might
reasonably be expected to let from year to year. The said
provision reads as follo~s:
D
"116. Determination of rateable value of lands and
buildings assessable to property taxes.
(1) The rateable value of any land or building assessable
to property taxes shall be the annual rent at which such
E
land or building might reasonably be expected to let from
year to year less-
(a) a sum equal to ten per cent of the said annual rent
which shall be in lieu of all allowances for costs of repairs
F
and insurance, and other expenses, if any, necessary to
maintain the land or building in a state to command that
rent, and
(b) the water tax or the scavenging tax or both, if the rent
G is inclusive of either or both of the said taxes:
Provided that if the rent is inclusive of charges for water
supplied by measurement, then, for the purpose of this
section the rent shall be treated as inclusive of water tax
H on rateable value and the deduction of the water tax shall
M.C.D. & ANR. v. MIS. MEHRASONS JEWELLERS (P) 951
LTD. [R. F. NARIMAN, J.]
be made as provided therein: A
Provided further that in respect of any land or building
the standard rent of which has been fixed under the Delhi
·and Ajmer Rent Control Act, 1952 (38 of 1952), the
rateable value thereof shall not exceed the annual amount B
of the standard rent so fixed.
Explanation.-The expression "water tax" and
"scavenging tax" shall mean such taxes of that nature as
may be levied by an appropriate authority." c
5. The fleshing out of the skeleton contained in Section
116(1) is thereafter done by bye-law 3 of the 1994 bye-laws
which provides as under:-
"3. Determination of rateable value of lands and buildings- D
(1) For the purposes of sub-section (1) of Section 116 of
the Act, the annual rent shall be determined as under:
(a) where the premises are on rent, the rent actually
realised or realisable, unless the same is collusive or E
concessional, shall be the annual rent. Where the tenancy
.commences on or after the 1st day of April, 1995 and
where the commissioner has reason to believe that the
declared rent does not represent the prevalent rent of
the year of letting and the difference between declared F
rent and the prevalent rent is more than twenty five
percent of the declared rent; the annual rent shall be the
prevalent rent;
Explanation-For the purposes of this clause the prevalent G
rents shall be determined by a Panel of Assessors to be ·
appointed by the Commissioner. ~uch. Panel shall
include a representative from the Government, a
representative of the Corporation, a representative of any
Taxation Department (other than the Corporation) or a H
952 SUPREME COURT REPORTS [2015] 8 S.C.R.
A Valuer and a representative of the property owners of
the zone of which the prevalent rents are to be
determined.
(b) in the case of the premises which are sub-let, the rent
B paid or payable by the occupier shall be the annual rent.
Explanation-For the purposes of clause (a) and clause
(b ), it is immaterial whether the building and the fixtures
and fittings affixed to the building and the land let for use
c and enjoyment therewith, are let by the same contract or
by different contracts, and if by different contracts, whether
made simultaneously or at different times;
(c) in case premises are used and occupied or are lying
vacant for use and occupation by the owner himself:
D
(i) where the building has been erected or land which is
on rent and no premium has been paid, the annual rent
or the building or part thereof shall be the aggregate of
the annual rent of the land paid or payable in the year or
E assessment and an amount calculated at ten percent of
the cost of construction of the building, cost of fixtures
and fittings and cost of additions, alterations and
improvements;
F ii) where the building or part thereof, is used or to be
used as a banquet hall, cinema hall, club, guest house,
hotel, nursing home or as house for marriages and such
other functions, the annual rent shall be the amount
calculated at ten percent of the market price of land in
G the year of assessment and the cost of construction of
the building, cost of fixtures and fittings and cost of
additions, alterations and improvements, or the prevalent
rent, whichever is higher;
H iii) where the premises are not covered by sub-clause (i)
M.C.D. & ANR. v. M/S. MEHRASONS JEWELLERS (P) 953
LTD. [R. F. NARIMAN, J.]
and (ii) above, the annual rent shall be the amount A
.calculated atten percent of the cost of the premises upto
the year of assessment or the prevalent rent, whichever
is lower;
Provided that where the premises are used for residential B
purposes and cost of the premises is determined under
Bye-law 2(1)(b)(iv), the annual rent of the portion of the
building completed upto the year 1993-94 shall not be
more than the annual rent determined forthe year 1993-
94; c
(d) where the building or part thereof, is lying vacant for
letting, the annual rent of such building or part thereof,
shall be ten percent of the cost of the premises;
D
(e) in respect of the properties in the unauthorised
colonies, regularised unauthorised colonies, on plot
allotted under Economically Weaker Section and Low
Income Group schemes and in respect of flats used for
residential purposes upto a covered area of 75 sq. mts., E
where the Commissioner feels that determination of value
of land, cost of construction or the prevalent rent is difficult,
he may determine the annual rent by Unit Area Method.
Explanation I-Where the premises has an illuminated or
F
non-illuminated advertisement on the walls, hoardings,
posts or structures affixed to the premises, the annual
rent of the premises shall include the rent from such
advertisement.
Explanation 11-Forthe purposes of this bye-law, the annual G
rent of the premises includes the annual rent of the land ·
and building thereon, and such other fixtures and fittings
as are considered necessary for the use and enjoyment
of the land and building for the purpose for which they
H
954 SUPREME COURT REPORTS [2015) 8 S.C.R.
A are intended to be used and shall include lifts, elevators,
storage tanks, pipelines, railways lines, runways,
underground cables, air-conditioning plant in centrally air-
conditioned bu_ildings, swimming pools, chairs and
screen in cinema halls, theatres and auditoria, cost of
B insulations and racks in cold storage buildings, but, save
• as aforesaid, no account shall be taken of the value of
any fixtures and fittings contained or situated in or upon
any land or building.
C (2) Where the premises, as per prevalent practice, are
let or transferred by charging pugree or through some
other arrangement on nominal rents, the Commissioner
may estimate the annual rent of the premises after taking
into consideration the rents paid or payable by public
D undertakings or the government organisations or the
premises let by such undertakings or organisations either
in the same locality or in the nearby similar locality.
(3) In the case of premises to which rent restriction
E legislation is applicable, the annual rent determinable
under sub-bye-law (1) above, shall not be more than the
rent realised or realisable under the rent restriction
legislation.
F (4) Where the annual rent of the building is determinable
under more than one clauses of sub-bye-law (1), the
annual rent of the building shall be the aggregate of the
annual rent determined under various clauses of that sub-
bye-law.
G
(5) Where the premises have been provided with any
fixtures and fittings, the deduction for the maintenance of
such premises shall be fifteen per cent of the annual rent
and not ten per cent of the annual rent as provided under
H sub-section ( 1) of Section 16 of the Act.
M.C.D. & ANR. v. M/S. MEHRASONS JEWELLERS (P) 955
LTD: [R. F. NARIMAN, J.]
(6) When any land is purchased or new building is erected . A
or any building is rebuilt or enlarged or where there is
change in the ownership of the land or building, change
in tenancy or increase in rents, after the 31st of
December of the year the increase in the rateable value
shall be effective from the commencement of the B
succeeding year."
6. In Daruwala's case (supra), a Division Bench of the
Delhi High Court following Dr. Balbir Singh & Ors. Etc. Etc.
v. Municipal Corporation, Delhi & Others, (1985) 1 SCC C
167, and Lt. Col. P.R. Chaudhary (Retd.) v. Municipal
Corporation of Delhi, (2000) 4 SCC 577 has held that
notwithstanding the advent of the 1994 bye-laws, "annual value"
has still to be determined on the principles laid down in these
two judgments. The bone of contention is that, according to D
learned counsel for the Municipal Corporation of Delhi, once
the MCD lays down its own bye-laws, principles laid down in
the two Supreme Courtjudg ments referred to no longer apply,
as they were applied in situations where the MCD did not itself
lay down how annual value was to be determined. Secondly, E
these judgments were confined to fact situations in which the
Delhi Rent Control Act, 1958 applied. Per contra, learned
counsel for the assessees contended that the impugned
judgment of the Delhi High Court was correct and that equitable F
principles had been laid down which are required to be followed
even after the Municipal Corporation's own bye-laws have been
framed by it.
7. It has been pointed out by learned counsel for the
Municipal Corporation that in Municipal Corporation of Delhi G
v. Delhi Urban House Owners' Welfare Association, (1997) ·
8 sec 335, the bye-laws as a whole have been upheld and
that, therefore, it is important that once these are framed they
are followed in letter and spirit.
H
956 SUPREME COURT REPORTS [2015] 8 S.C.R.
A 8. We are of the view that the counsel for the MCD
appears to be correct. Both Balbir Singh's case and P.R.
Chaudhary's case were judgments dealing with a situation
where the Delhi Rent Control Act applied to premises governed
by the said Act, and the context of both judgments was that the
B principle of parity evolved in Balbir Sing h's case would apply
only because annual rent in those cases had to be fixed regard
being had to the maximum that could possibly be fixed in a
situation where standard rent under the Delhi Rent Control Act
C would be the ceiling above which the amount fixed as per
parameters under the Delhi Rent Control Act could not be
exceeded. This becomes clear from the following paragraphs
in P.R. Chaudhary's case:-
"4. We are concerned in these appeals with the law as it
D existed prior to the amendment of the Rent Act in 1988.
By the Act 57 of 1988 the Rent Act was not to apply to
certain premises as provided in Section 3 of the Rent
Act.
E 5. In Dr. Balbir Sing h's case this Court was concerned
with the determination of rateable value in respect of
properties situated in Delhi and governed by the
provisions of the Delhi Municipal Corporation Act, 1957
and the Punjab Municipal Act, 1911. The Court
F considered four different categories of properties, namely
(1) where the properties are self-occupied, that is,
occupied by the owners; (2) where the properties are
partly self-occupied and partly tenanted; (3) where the
land on which the property is constructed is leasehold
G land with a restriction that the leasehold interest shall not
be transferable without the approval of the lessor; and
(4) where the property has been constructed in stages.
Under the provisions of the Delhi Municipal Corporation
Act as well as the Punjab Municipal Act, the criterion for
H
determining rateable value of the building is the annual
. ;::.;
M.C.D. & ANR. v. MIS. MEHRASONS JEWELLERS (P) 957
LTD. [R. F. NARIMAN, J.]
rent at which such building be reasonably expected to let A
from year to year. The word "reasonably" in the definition
is very important. What the owner might reasonably
expect to get from a hypothetical tenant, if the building
were let from year to year, affords the statutory yardstick
for determining the rateable value. Now what is B
reasonable is a question of fact and it depends on the
facts and circumstances of a given situation: The Court
considered various provisions of the Delhi Municipal
Corporation Act and the Punjab MunicipalAct as well as
that of the Delhi Rent Control Act, 1958. Delhi Rent c
Control Act was amended in 1988 when certain
properties were taken out of the purview of that Act. The
four categories have been considered at pages 461, 466,
468 and 473 of the Report. We quote the statement of
D
law laid down by this Court after considering various
statutory provisions made in respect of the first category:
(SCC pp. 186-187 para 11).
'•
"The rateable value of the premises, whether residential
or non-residential, cannot exceed the standard rent, but, E
as already pointed out above, it may in a given case be
less than the standard rent. The annual rent which the
owner of the premises may reasonably expect fo get if
the premises are let out would depend on the size,
F
situation, locality and condition of the premises and the
amenities provided therein and all these and other
relevant factors would have to be evaluated in determining
the rateable value, keeping in mind the upper limit fixed
by the standard rent. If this basic principle is borne in G
mind, it would avoid wide disparity between the rateable
value of similar premises situate in the same locality,
where some premises are old premises constructed
many years ago when the land prices were not high and
the cost of construction had not escalated and others H
958 SUPREME COURT REPORTS [2015] 8 S.C.R.
A are recently-constructed premises when the prices of land
have gone up almost 40 to 50 times and the cost of
construction has gone up almost 3 to 5 times in the last
20 years. The standard rent of the former category of
premises on the principles set out in sub-section
B (1)(A)(2)(b) or (1)(8)(2)(b) of Section 6 would be
comparatively low, while in case of latter category of
premises, the standard rent determinable on these
principles would be unduly high. If the standard rent were
to be the measure of rateable value, there would be huge
c disparity between the rateable value of old premises and
recently-constructed premises, .though they may be
similar and situate in the same or adjoining locality. That
would be wholly illogical and irrationaL Therefore, what
is required to be considered for determining rateable
D
value in case of recently-constructed premises is as to
what is the rent which the owner might reasonably expect
to get if the premises are let out and that is bound to be
influenced by the rent which is obtainable for similar
E premises constructed earlier and situate in the same or
adjoining locality and which would necessarily be limited
by the standard rent of such premises. The position in
regard to the determination of rateable value of self-
occupied residential and non-residential premises may
F thus be stated as follows: the standard rent determinable
on the principles set out in sub-section (2)(a) or (2)(bj or
(1 )(A)(2)(b) or (1 )(B)(2)(b) of Section 6, as may be
applicable, would fix the upper limit of the rateable value
of the premises and within such upper limit, the assessing
G authorities would have to determine as to what is the rent
which the owner may reasonably expect to get if the
premises are let to a hypothetical tenant and for the
purpose of such determination, the assessing authorities
would have to evaluate factors such as size, situation,
H locality and condition of the premises and the amenities
M.C.D; & ANR. v. M/S. MEHRASONS JEWELLERS (P) 959
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therein provided. The assessing authorities would also A
have to take into account the rent, which the owner of
similar premises constructed earlier and situate in the
same or adjoining locality, might reasonably expect to
receive from a hypothetical tenant and which would
necessarily be within the upper limit of the standard rent B
of such premises, so that there is no wide disparity
between the rate of rent per square foot or square yard
which the owner might reasonably expect to get in case
of the two premises. Some disparity is bound to be there
on account of the size, situation, locality and condition of c
the premises and the amenities provided therein. Bigger
size beyond a certain optimum would depress the rate .
of rent and so also would less favourable situation or
locality or lower quality of construction or unsatisfactory
D
condition of the premises or absence of necessary
amenities and similar other factors. But after taking into
accountthese varying factors, the disparity should not
be disproportionately large." (Paras 4 & 5).
9. This Court has dealt with three different groups of E
cases that have come before it dealing with property tax
legislation in the various States of this country. Tfle"first group
is a group of cases where the Municipal Acts gf the States
define annual value to be the hypothetical rent that a landlord
could reasonably be expected to receive if hisproperty was F
let out to a hypothetical tenant. It is in this situation that this
' I
Court held that such hypothetical rent could not exceed the
standard rent fixed or fixable under the rent control statute which
obtained in that State. This was laid down in The .~orporation G
of Calcutta v. Pad ma Debi & Others, 1962 SCR (3) 49 and
followed in a number of judgments, which include Balbir
Singh's case and P.R. Chaudhary's qase.
1O. The second group of cases is where the language H
of the particular Municipal Corporation Act contains a non
960 SUPREME COURT REPORTS [2015) 8 S.C.R.
A obstante clause owing to which the standard rent under the
particular rent statute of that particuiar State could not be taken
to be the maximum rent which could possibly be fetched by~
hypothetical landlord from a hypothetical tenant. This clas:.. of
cases is contained in Municipal Corporation, Indore &
8 Others v. Smt. Ratna Prabha & Others (1996) 4 SCC 622
and the judgments that follow it.
11. Another group of cases is contained in the judgment
of this Court in Assistant General Manager, Central Bank
C of India & Others v. Commissioner, Municipal Corporation
for the City of Ahmedabad & Others, (1995) 4 SCC 696.
This was a case where the Ahmedabad Municipal Act itself
provided the mode of determination of the annual value, so
that it became unnecessary to go to the provisions of the Rent
D Act of that State. The law thus laid down by this Court is
· summarized in East India Commercial Company Private
Limited v. Corporation of Calcutta, (1998) 4 SCC 368 as
follows:-
E "17. From the aforesaid decisions, the principle which is
deducible is that when the Municipal Act requires the
determination of the annual value, thatAct has to be read
along with Rent Restriction Act which provides for the
determination of fair rent or standard rent Reading the
F two Acts together the ratable value cannot be more than
the fair or standard rent which can be fixed under the
Rent Control Act. The exception to this rule is that
whenever any Municipal Act itself provides the mode of
determination of the annual letting value like the Central
G Bank of India case relating toAhmedabad or contains a
non obstante clause as in Ratnaprabha case then the
determination of the annual letting value has to be
according to the terms of the Municipal Act." (at Para
17).
H
. M.C.D. & ANR. v. M/S. MEHRASONS JEWELLERS (P) 961
LTD. [R. F. NARIMAN, J.]
12. In The Commissioner v. Griha,Yajamanula A
Samkhya & Others, (2001) 5 SCC 651, this Court disposed
of a batch of writ petitions involving assessment of property
tax of buildings located within the limits of different Municipal
Corporations in the State of Andhra Pradesh. After referring
to various judgments of this Court including the judgment in B
the Central Bank case and East India Commercial
·Company's case, this Court held:-
"From the statutory provision& noted above, it is clear
that the Act provides that the tax shall be levied at such c
percentages of the rateable value as may be fixed by the
Corporation. It further provides the method and manner
of determination of the rateable value. The determination
of the annual rental value which is the basis for calculation
of the rateable value is also provided in the Act and the D
Rules. The Act mandates that the Commissioner shall
determine the tax to be paid by the person .concerned in
the manner prescribed under the statute and the rules. It
is our view that the Act and the Rules provide a complete
code for assessment of the property tax to be levied for E
the buildings and lands within the municipal corporation.
There is no provision in the statute that the fair rent
determined under the Rent Control Act in respect of a
property is binding on the Commissioner. The legislature
F
has wisely not made such a provision because
determination of annual rental value under the Act
depends on several criteria. The criteria for such
determination provided under the Act may not be similar
to those prescribed under the Rent ControlAct. Further G
the time when such determination was made is also a
relevant factor. If in a particular case the Commissioner
finds that there has b?.en a recent determination of the
fair rent of the property by the authority under the Rent
Control Act he may be persuaded to accept the amount H
962 SUPREME COURT REPORTS [2015] 8 S.C.R.
A as the basis for determining the annual rental value of
the property. But that is not to say that the Commissioner
is mandatorily required to follow the fair rent fixed by the
authority under the Rent Control Act. The High Court
therefore did not commit any error in holding that the
B determination of fair rent under the Rent Control statute
will not be binding on the Commissioner for the purpose
of assessment of property tax under the Act." (at Para
35)
C 13. The present appeals before us refer to assessment
years post 1994 and are said to be in a factual scenario where
after the amendment of 1988 to the Delhi Rent Control Act, the
Delhi Rent Control Act does not apply either for the reason
that the rent fixed is more than Rs.3,500/- per month or that the
D property has been newly constructed and is exempt from its
provisions for a period of 10 years. In situations such as the
above, an instructive judgment of this Court is contained in
Government Servant Cooperative House Building
Society Limited & Others v. Union of India & Others, (1998)
E 6 SCC 381. In this judgment, this Court noticed the 1988
amendment to the Delhi Rent Control Act and various
judgments referred to hereinabove and concluded as under:
"8. Therefore, the annual rent actually received by the
F landlord, in the absence of any special circumstances,
would be a good guide to decide the rent which the
landlord might reasonably expect to receive from a
hypothetical tenant. Since the premises in the present
case are not controlled by any rent control legislation,
G the annual rent received by the landlord is what a willing
lessee, uninfluenced by other circumstances, would pay
to a willing less.or. Hence, actual annual rent, in these
circumstances, can be taken as the annual rat~able value
of the property for the assessment of property tax. The
H
municipal corporation is, therefore, entitled to revise the
, M.C.D. & ANR. v. MIS. MEHRASONS JEWELLERS (P) 963
LTD. [R. F. NARIMAN, J.]
rateable value of the properties which have been freed A·
from rent control on the basis of annual rent actually
received unless the owner satisfies the,,municipal
corporation that there are other considerations which
have affected the quantum of rent." (at Para 8).
B
14. Having regard to the aforesaid statement of law,
we are of the opinion that the Division Bench of the Delhi High
Court in Oaruwala's case (supra), is not correctly decided
for the simple reason thatthis app=al falls within the exception
created by the Central Bank judgment, namely, cases where C
the Municipal Corporation of a particular State itself lays down
as to how annual value is to be determined. We, therefore,
hold that for assessments made after the 1994 bye-laws came
into existence, such assessments shall be governed .by these
bye- laws alone and the principles laid down in Balbir Sing h's · D
case and P.R. Chaudhary's case, would have no relevance
in such a situation. We answer question number 1 accordingly.
15. In order to determine the answer to question number
2, it is necessary to first extract two Section~ .of the Delhi
1
E
Municipal Corporation Act, both inserted with,_effect from
1.8.2003. Section 116G of the said Act reads as follows:
~· -
"116G. Transitory provisions.-Notwithstanding anything
contained in this Act, as amended by the Delhi Municipal F
Corporation (Amendment) Act, 2003, a tax on vacant
., land
or covered space of building or both, levied under this
Act immediately before the date of coming into force of
the Delhi Municipal Corporation (Amendment) Act, 2003,
shall, on the coming into force of the DelhiMunicipal G
Corporation (Amendment) Act, 2003, be deemed to be
the tax on such vacant land or covered space of building
or both, levied under this Act as amended by the Delhi
Municipal Corporation (Amendment) Act, 2003, and shall
continue to be in force until such tax is revised in H
964 SUPREME COURT REPORTS [2015] 8 S.C.R.
A accordance with the provisions of this Act, as amended
by the Delhi Municipal Corporation (Amendment) Act,
2003.
(2) Notwithstanding anything contained in sub-section (1 ),
B where assessment has not been finalized in respect of a
vacant land or covered space of a building or both, on
the date of the commencement of the Delhi Municipal
Corporation (Amendment) Act, 2003 the assessee may
have such land or building or both, as the case may be,
C assessed on the basis of the annual value."
Section 169 after the amendment of 2003 reads as
follows:
"169. Appeal against assessment, etc.-(1) An appeal
D
against the levy or assessment or revision of assessment
of any tax under this Act shall lie to the Municipal Taxation
Tribunal constituted under this section:
Provided that the full amount of the property tax shall be
E paid before filing any appeal:
Provided further that the Municipal Taxation Tribunal may,
with the approval of the District Judge of Delhi, also take
up any case for which any appeal may be pending before
F the court of such District Judge:
Provided also that any appeal pending before the court
of such District Judge shall be transferred to the Municipal
Taxation Tribunal for disposal, if requested by the
G applicant for the settlement thereof on the basis of annual
value.
(2) (a) The Government shall constitute a Municipal
Taxation Tribunal consisting of a Chairperson and such
H other members as the Government may determine:
M.C.D. & ANR. v. M/S. MEHRASONS JEWELLERS (P) 965
. I •·
LTD. [R. F. NARIMAN, J.)
Provided that on the recommendation of the Government, A
· the Chairperson may constitute one or more separate
Benc~es, each Bench comprising two members, one of
whom shall be a member of the Higher Judicial Service
of a State or a Union territory and the other member from
the higher administrative service, and may transfer to any B
such Bench any appeal for disposal or may withdraw from
any Bench any appeal before it is finally disposed of.
(b) The Chairperson, and not less than half of the other
members, of the Municipal Taxation Tribunal shall be c
persons who are or have been the member of the Higher
Judicial Service of a State or a Union territory for a period
of not less than five years, and the remaining members,
if any, shall have such qualifications and experience as
the Government may by rules determine. D
(c) The Chairperson and the other members of the
Municipal Taxation Tribunal shall be appointed by the
Government for a period of five years or till they attain
the age of sixty-five years, whichever is earlier. E
(d) The other terms and conditions of service of the
Chairperson and the other members of the· Municipal
Taxation Tribunal, including salaries and allowances, shall
be such as may be determined by rules by the F
Government.
(e) The salaries and allowances of the Chairperson and
the other members of the Municipal Taxation Tribunal shall
be paid from the Municipal Fund. G
(3) In every appeal, the costs shall be in the discretion of
the Municipal Taxation Tribunal or the Bench thereof, if
any. H
966 SUPREME COURT REPORTS [2015] 8 S.C.R.
A (4) Costs awarded under this section to the Corporation
shall be recoverable by the Corporation as an arrear of
tax due from the appellant.
(5) If the Corporation fails to pay any costs awarded to
B an appellant within ten days from the date of the order for
payment thereof, the Municipal Taxation Tribunal may
order the Commissioner to pay the costs to the appellant."
16. Assailing the Division Bench judgment of the Delhi
c High Court in Municipal Corporation of Delhi v. Major
General lnderpal Singh Kahai &Anr., learned counsel for
the Municipal Corporation referred us to these two Sections
and"argued that Section 116G is only a transitory provision
which is meant to tide over difficulties felt in enforcement of a
D new regime of property tax - what is called the unit area
method. Learned counsel argued that earlier, under Section
124 of the Delhi Municipal Corporation Act, the Corporation
could revise rateable value of any property after giving a notice
and hearing objections to the same. Post August 2003, this
E tax regime has been replaced by Sections 123A and 1238 by
a self-assessment procedure based on what is called the unit
area method laid down under Section 116E of the said Act.
According to teamed counsel, Sec~ion 116G being a transitory
provision therefore seeks to deal only with assessments that
F have not been finalized in respect of property tax just before
the 2003 amendment has come into force and would refer only
to assessments not finalized at the initial stage before the
assessing authority itself. This would become clear from a
correct reading of the third proviso of Section 169 which states
G that applicants in appeal can only apply for "settlement" on the
basis of annual value as defined in the 2003 amendment. Since
such settlement does not refer to adjudication but is only
consensual, it is obvious that all appeals pending at the date
H of 2003 amendments would have to be decided in accordance
M.C.D. & ANR. v. M/S. MEHRASONS JEWELLERS (P) 967
LTD. [R. F. NARIMAN, J.]
with the old substantive law and no option could be given to A
assessees to opt for the new procedure and levy of prop_erty
tax post 2003 in respect of assessment years prior to 2003.
Counsel, therefore, argued thatthe basis of the Division Bench
judgment was wholly incorrect and therefore ought to be set
aside. Per contra, learned counsel for the assessees has B
maintained that the impugned judgment is absolutely correct
and that even where an assessment has been finalized at the
initial stage but an appeal is pending, an assessee is entitled
to ask for an appellate decision on the basis of "anhual value"
as newly defined by the 2003 amendment Since counsel on' C
both sides have referred us to provisions other than Sections
116G and 169 as well, we set them out in order to better
understand their arguments.
17. Bythe2003AmendmentActtotheDelhiMunicipal D
Corporation Act, Section 2(1A) was added which reads as
follows:
"2 (1A) "Annual value" means the annual value of any
vacant land or covered space of any building determined E
under section 116E;"
18. Section 116E says:
"116E. Determination of annual value of covered space
F
of building and of vacant land -(I) The annual value of any
covered space of building in any ward shall be the amount
arrived at by multiplying the total area of such covered .
space of building by the final base unit area value of such,,
covered space and the relevant factors as referred to in 1~
clause (b) of sub-section (2) of section 116A. -- G
Explanation-"covered space", in relation to a building,,.::.1.
shall mean the ·total floor area in all the floor thereof,
including the thickness of walls, and shall include the
H
968 SUPREME COURT REPORTS [2015] 8 S.C.R.
A spaces of covered verandah and courtyard, gangway,
garrage, common service area, staircase, and balcony
including any area projected beyond the plot boundary
and such other space as may be prescribed.
B (2) The Corporation may require the total area of the
~covered space of building as aforesaid to be certified
by an architect registered under the Architects Act, 1972
(20 of, 1972), or any licensed architect, subject to such
conditions as may be prescribed.
c.
(3) The annual value of any vacant land in any ward shall
be the amount arrived at by multiplying the total area of
such vacant land by the final base unit area value of such
land and the relevant factors as referred to in clause (b)
D of sub-section (2) of section 116A.
(4) If, in the case of any vacant land or covered space of
building, any portion ,thereof is subject to different final
base unit area values or is not self-occupied, the annual
E value of each such portion shall be computed separately,
and the sum of such annual values shall be the annual
value for such vacant land or covered space of building,
as the case may be."
F 19. Section 126(4)(b) as it obtained prior to 2003 read
as follows:
"126. Amendment of assessment list - (4) No
amendment under sub-section (1) shall be made in the
assessment list in relation to -
G
(a) xxx
(b) the year commencing on the 1•1 daxofApril 1988, or
any other year thereafter, after the expiry of three years
H from the end of the year in which the notice is given under
M.C.D. & ANR. v. MIS. MEHRASONS JEWELLERS (P) 969
r .- -...
LTD. [R. F. NARlMAN, J.]
sub-section (2) or sub-section (3), as the case may be: A
Provided that nothing contained in this sub-section shall
apply to a case where the Commissioner has to amerid
the Assessment list in consequence of or to give effect
to any direction or order of any court." B
1
/20. 'section 123A and Section 1238, post the
amendment of 2003, read as follows:
"123A. Submission of returns-(1) The Commissioner
shall, with a view to determining the annual values of c
vacant land and covered space of building in any ward
and the person primarily liable for the payment of property
tax, by public notice, or by notice, in writing, require the
owner and the occupier of such vacant land or covered
D
space of building or any portion thereof, including such
owner or the person computing the tax due under the
provisions of section 1238, to furnish a return in such
form as may be prescribed by bye-laws and within such
time, not being less than thirty days from the date of E
publication of such notice, as may be specified therein,
containing the following particulars, namely:-
(a) the name of the owner and the occupier;
(b) the number of the ward, the name of the colony, and F
the numb.er and the sub-number of the premises of such · ·
vacant land or covered space of building, as the case
maybe;
(c) whether the building is pucca, semi-pucca or katcha: G
(d) year bf completion of construction of the building, 6r
year or years of part construction thereof, as the cas~
maybe;
..• H
970 SUPREME COURT REPORTS [2015] 8 S.C.R.
A (e) the use with reference to the provisions of clause (f)
of sub-section (1) of section 116A to which such vacant
land or covered space of building is put or intended to
be put;
B (f) the area of the vacant land and the covered space of
the building with break-up of the area under various uses;
(g) whether wholly owner-occupied or wholly tenanted,
or partly owner-occupied and partly tenanted, and the
c areas thereof; and
(h) such other particulars as may be prescribed by bye-
laws. ·
(2) (a) Every owner and every occupier as aforesaid shall
D be bound to comply with such notice and to furnish a return
with a declaration that the statement made therein is
correct to the best of knowledge and belief of such owner
and occupier.
E (b) Whoever omits to comply with such requisition, shall
in addition to any penalty to which he may be liable, be
precluded from objecting to any assessment made by
the Commissioner in respect of such land or building.
F (3) The Commissioner or any person subordinate to him
and duly authorized by him in this behalf, in writing, or
any licensed architect, may, with or without giving any
previous notice to the owner or the occupier of any land
or building, enter upon, and make any inspection or
G survey, and take measurement of such land or building
with a view to verifying the statement made in the return
for such lam:! or building or for collecting the particulars,
referred to in sub-section (1) in respect of such land or
building:
H
M.C.D. & ANR. v. M/S. MEHRASONS JEWELLERS (P) 971
LTD. [R. F. NARIMAN, J.)
Provided that no such entry shall be made except between A
the hours of sunrise and sunset.
1238. Self-assessment and submission of return -(I) After·
the coming into force of the Delhi Municipal Corporation
(Amendment) Act, 2003, any owner of any vacant land or B
covered space of building or any other person liable to ·
pay the property tax or any occupier in the absence of .
such owner or person, shall file a return of self
assessment within sixty days of the coming into force of
the aforesaid Act. C
(2) Such owner or other person or occupier, as the case
may be, shall, thereafter, file the annual return only in those
cases where there is a change in the position as
compared to the previous return, within three months after D
the end of the financial year in which the change in
position has occurred.
(3)Any owner of any covered space of building or vacant
land or any other person liable to pay the property tax, or E
any occupier in the absence of such owner or person
shall compute the tax due under section 114A or section
114C, as the case maybe, and pay the same in equated
quarterly instalment by the 30th day of June, 30th day of
September, 31st day of December and 31st day of March F
of the financial year for which tax is to be paid. In the
event of tax being paid in one lump sum for the financial
year by the 30th day of June of the financial year, rebate
of such percentage riot exceeding fifteen per cent as may
be notified by the Corporation, of the total tax amount "" G
due shall be allowed.
(4) Any owner of any vacant land or covered space of~,
building or any other person liable to pay the property tax
or any occupier in the absence of such owner or person, H
972 SUPREME COURT REPORTS [2015] 8 S.C.R.
A . who computes such property tax un~er this section, shall,
on such computation, pay the property tax on such vacant
land or covered space of building, as the case may be,
together with interest, if any, payable under the provisions
of this Act on-
B
(a) any new building or existing building which has not
been assessed; or
(b) any existing building which has been redeveloped or
c substantially altered or improved after the last
assessment, but has not been subjected to revision of
assessment consequent upon such redevelopment or
alteration or improvement, as the case may be.
(5) Such owner or person, as the case may be, shall
D
furnish to the Commissioner a return of self-assessment
in such form, and in such manner, as may be specified in
the by-laws and every such return shall be accompanied
by proof of payment of property tax and interest, if any.
E (6) In the case of any new building for which an occupancy
certificate has been granted, or which has been
occupied, after the coming into force of the Delhi
Municipal Corporation (Amendment) Act, 2003, such
payment shall be made, and such return shall be
F
furnished, within thirty days of the expiry of the quarter in
which such occupancy certificate is granted or such
building is occupied, whichever is earlier.
Explanation.-For the removal of doubt, it is hereby
G declared that occupancy certificate may be provisional
or final and may be for the whole or any part of the building
and occupancy may be of the whole or any part of the
building.
H (7) After the determination of the annuatvalue of vacant
/
//
/
M.C.D. & ANR. v. M/S. MEHRASONS JEWELLERS (P) 973
/ LTD. [R. F. NARIMAN, J.)
land or coveted space of building under section 116E or A
section 116F or revision thereof under section 123C has
been made, any amount paid on self-assessment under
this section shall be deemed to have been paid on
account of such determination under this Act as amended
by the Delhi Municipal Corporation (Amendment) Act, B
2003.
.,
~
(8) If any owner or other person as aforesaid, liable to
pay the property tax under this Act, fails to pay.~e same
together with interest thereon, if any, in accordance with c
the provisions of this section, he shall, without prejudice
to any other action to which he may be subject, be
deemed to be a defaulter in respect of such property tax,
or interest, or both, remaining u"npaid, and ?II the
provisions of this act applicable to such defaulter shall D
apply to him accordingly.
(9) If after the assessment of the annual value of any land
· or covered space of building finally made under this Act,
the payment on self-assessment under this section is E
found to be less that than of the amount payable by the
assessee, the assessee shall pay the difference within
two months from the date of final assessment, failing
which recovery shall be made in accordance with the
provisions of this Act, but, after the final assessment, if it F
is found that the assessee has paid excess amount, such
excess amount shall be refunded:
Provided that in any case where the amount of tax
determined in the final assessment is more than the G
amount of tax paid under self-assessment, and the
difference in the amount of tax is, in the opinion of the
Commissioner, the result of wilful suppression offacts
as defined irfthe bye-laws, the Commission~r may levy
. a penalty not exceeding thirty per cent of such difference H
974 SUPREME COURT REPORTS [2015] 8 S.C.R.
A in the tax besides the interest thereon:
Provided further that the levy of such penalty shall be in
addition to any other punishment provided for under this
Act:
B
Provided also that the procedure for sending of notice,
hearing of objection and determination of tax and
penalties shall be such as may be specified in the bye-
laws.
c (10) Where no notice is sent by the Commissioner under
section 123C within twelve months after the year to which
such self-assessment relates, such self assessment shall
be regarded as assessment made under this Act:
D Provided that in any case, where there has been wilful
suppression of facts, penalty up to thirty per cent of the
tax due may be imposed:
Provided further that the procedure for sending of notice,
E hearing of objection and determination of tax and
penalties shall be such as may be specified in the bye-
laws."
21. Since what is being assailed is the correctness of
F the judgment in Major General lnderpal Singh Kahai's case
(supra) passed by the Division Bench of the Delhi High Court,
it is important to set out its reasoning. The Division Bench,
after referring to Sections 116G and 169, then stated:
G
"9. It is clear from the third proviso to Section 169(1) of
the DMC Act that even where an assessment is finalized,
but an appeal is pending, an assessee is entitled to ask
for a decision in the appeal on the annual value basis. In
other words, even at an appellate stage, an assessee is
H
M.C.D. & ANR. v. M/S. MEHRASONS JEWELLERS (P) 975
LTD. [R. F. NARIMAN, J.]
empowered to ask for a decision on the basis of the A
annual value of the property.
10. Therefore, three situations are postulated:
Firstly, where an assessment has been finalized and no
B
appeal is filed against it, then the assessment will
continue to be operative until it is revised.
Seconi:Hy, where an assessment has been finalized but
an appeal has been filed against it, then as per the third
proviso to Section 160( 1) of the DMC Act, the assessee c
can ask for an assessment on the basis of the.annual
value of the property.
Thirdly, where the assessment is riot finalized, then as
per Section 116-G(2) of the DMC Act, the assessee can D
ask for an assessment on the basis of the annual value
of the property.
11. It appears to us that the intention of the Legislature
was to commence the levy of property tax with effect from E
1•1April, 2004 on a clean slate - in respect of all pending
assessments and in respect of all appeals pending
against finalized assessment orders. All assessments
in such cases would be made after 1•1April, 2004 on the
option of the assessee, on the basis of the annual value F
of the property. If the statutory amendment is read and
understood in this light, it is clear that Section 116-G(2)
of the DMCAct not only entitles an assessee to seek an
assessment on the annual value basis, in an assessment
not yet finalized, but it also empowers the assessee in G .
making such a demand as a matter of right. ··
12. Lookedatfromanotherpointofview, if Section 116-
G(2) of the DMC Act does not so empower an assessee, .
H
976 SUPREME COURT REPORTS [2015] B s:c.R.
A then not only would the purpose of that Section be lost,
but a rather strange and anomalous situation would be
created - namely, that in a pending appeal against a
finalized assessment, an assessee can demand an
assessment on the basis of the annual value of the
B property (third proviso to Section 169( 1) of the DMC Act)
but in a pending assessment, the assessee cannot
demand an assessment on the basis of the annual value.
/
Surely, such an odd situation is not postulated by the law
or by the Legislature.
c
15. In our opinion, there is an error in the submission
made by learned counsel for the Municipal Corporation.
The error is in appreciating the term 'finalized'
assessment. An assessment in the context of Section
D 116-G(2) of the DMC Act means an assessment that has
been accepted by the assessee and is not the subject
matter of a statutory appeal. It does not include an
assessment set aside in appeal nor does it include an
assessment challenged by way of a statutory appeal. This
E being so, the assessment made by the Joint Assessor
and Collector and set aside by the learned Additional
District Judge by his order dated 1•1April, 2002 is not a
'finalized' assessment within the meaning of Section 116-
G(2) of the DMC Act. The assessment in the case of the
F
respondents having been setaside and remanded back
for re-determination of the rateable value by the learned
Additional District Judge clearly indicates that the
assessment was wide open. In that sense, it was not
'finalised' in so far as the provisions of Section 116-G(2)
G
of the DMCAct are concerned.
/
16. According to learned counsel for the Municipal
Corporation, notwithstanding this, once the assessment
is made by the Joint Assessor & Collector, it must be
H
M.C.D. & ANR. v. MIS. MEHRASONS JEWELLERS (P) 977
LTD. [R. F. NARIMAN, J.]
taken to be' finalized for the purpose of Section 116-G(2) A
of the DMC Act. This submission would be correct if the
assessment order is accepted by the assessee or is not
challenged in appeal, but in the present case where the
assessment order itself has been set aside with a
direction by the learned Additional District Judge to re- B
determine the rateable value (and no fresh order has been
passed by the Joint Assessor and Collectorlh terms of
the directions given by the Additional District Judge) it
·no f
cannot be said that the assessment has been finalized ·
at least at the hands of Joint Assessor andCollector." c
22. We are of the opinion that this is a ·correct view of
the law. Under Section 169 3rd proviso, appeals that are
pending before the Court of the District Judge are to be
transferred to the Municipal Taxation Tribunal tobe set up under D
the 2003 Amendment for disposal, if reque_sted by the
applicant, forthe settlement thereof on the basis of annual value,
This proviso means that ari appeal pending before a District
I Judge is to be transferred compulsorily to the Taxation Tribunal
(after it is set up) if an applicant requests for disposal of the E
appeal on the basis of annual value. Obviously, the word
"settlement" would not in this context means a consensual
arrangement between both parties but would only mean a
determination to be made by the Tribunal on the basis of annual
F
value. Once this position becomes clear, the impugned
judgment cannot be faulted. It is clear then that even at the
appellate stage an appHcant can opt to apply for the new unit
area method provided for in Section 116E so that his property
tax assessment may be decided in accordance with the said G
method even though it pertains to an assessmentyear prior to
2003.
23. The second proviso to Section 169 would apply in
cases where, after the Taxation Tribunal is set"up'; there is no
H
978 SUPREME COURT REPORTS [2015] 8 S.C.R.
A request by any applicant to determine his case on the basis of
annual value. In such cases also, the Tribunal once set up may
take up the appeal of such person with the approval of the
earlier appellate authority, namely, the District Judge. Thus
understood, it is clear that the logic of the Division Bench of
B the High Court cannot be faulted.
24. This being the position in law, an assessment that
has not been finalized in all cases where an appeal is pending
before the District Judge as also in all cases which have not
C become "final" in the sense that the appellate authority or the
High Court or Supreme Court (after 2003), in respect of an
assessment of property tax prior to 2003, remands the matter
for fresh determination, would all be covered by the language
of Section 116G(2). We are, therefore, of the view that the High
D Court is correct and this group of appeals, therefore,
consequently stands dismissed.
25. We have been informed that in the appeal which
dealt with the first question decided by us, various other points
E were raised in the writ petition filed before the Delhi High Court
which were not adjudicated upon as Daruwala's case was
followed. Having set aside Daruwala's case, such other points
that have been raised by the petitioners in the writ petition filed
before the Delhi High Court may now be agitated by them
F before the High Court and a remand is made of this case for
determination of such questions by the High Court. As this is
an old writ petition, we request the High Court to take up this
writ petition at an early date.
G NidhiJain Appeals disposed of.
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