JUDGMENT
P.S. Narayana, J.
1. The unsuccessful defendant in different suits, instituted by the respondents-plaintiffs in all these matters had preferred these second appeals. The suits were filed by the respective plaintiffs for declaration that the enhancement of vacant land tax in respect of the respective plaint schedule sites in all the suits as illegal, arbitrary and capricious and against the provisions of the A.P. Municipalities Act, 1965 (hereinafter in short referred to as ‘Act’). The respective plaintiffs are the owners of the plaint schedule properties, the house sites, within the municipal limits of Nandyala town and it is also pleaded that these plots were acquired by them as members of Srinivasa Co-operative House Building Society, Nandyal, which were allotted to them and the appellant-Nandyal Municipality, hereinafter referred to as ‘Municipality’ in short, had assessed these vacant sites to vacant land tax. But however, without assigning any reason whatsoever the appellant-defendant Municipality issued
special notices proposing to enhance the said tax in an arbitrary fashion and several other details also had been narrated in the suits filed by different plaintiffs-respondents in all these appeals.
2. The appellant herein-defendant Municipality had taken a stand that this is in a posh area and the market rate of the house-sites in this area will range between Rs.4,000/- to Rs.5,000/- per cent and hence the Municipality after verifying the records in the Sub-Registrar’s Office, Nandyal, had fixed the market value on the site in question at Rs.150/- per square yard and basing upon the entries in the Basic Value Register, the appellant-defendant Municipality fixed the capital value of the site and hence, the enhancement is proper and justified.
3. On the strength of the respective pleadings of the parties, the following issues were settled:
(1) Whether the enhancement of tax by the defendant is arbitrary, capricious and illegal?
(2) To what relief?
On behalf of the parties, the evidence was let in and PW1 and DW1 were examined and Exs. A1 to A3 and Exs. B1 to B3 were marked and on appreciation of both oral and documentary evidence, the suits were decreed. Aggrieved by the same, the Municipality had preferred the appeals on the file of Subordinate Judge, Nandyal, and the appeals were dismissed and aggrieved by the same, the Municipality preferred the present second appeals.
4. Sri Gummala Vijaya Kumar, the learned standing Counsel representing the appellant-Municipality had raised the following substantial question of law to the effect that “Whether the Courts below are justified in decreeing the suits despite the
specific provisions of Section 85(3)(a) of the A.P. Municipalities Act, 1965?”
5. The learned Counsel had contended that both the Courts below had totally erred in appreciating the relevant provisions of the A.P. Municipalities Act, 1965. The learned Counsel also had taken me through the relevant provisions of the A.P. Municipalities Act, 1965, both Sections 85 and 81 of the Act. The learned Counsel also had contended that the Courts below erred in arriving at a conclusion that there was non-compliance of the provisions of Section 81 of the Act and had submitted that it should be presumed that the official acts had been performed in view of Section 114 of the Indian Evidence Act. The learned Counsel also had taken me through the findings recorded by both the Courts below and had submitted that these findings are illegal and unsustainable and hence, the suits filed by the respondents-respective plaintiffs are liable to be dismissed. On the contrary, Sri Seetaram, the learned Counsel representing Sri Sadasiva Reddy, had made the following submissions:
6. The learned Counsel had taken me through the different provisions of the Act and had contended that unless the procedure is followed, there cannot be enhancement especially on the basis of the capital value. The learned Counsel also contended that Section 85 read with Section 81 of the Act had been well interpreted by both the Courts below and hence, inasmuch as concurrent findings had been recorded by both the Courts below, the question of law raised by the Counsel for the appellant has to be answered in the negative.
7. Heard both the Counsel.
8. In this batch of appeals, the respective pleadings of the parties and also the issues, which had been framed arc virtually the same and the question involved
also is the same and hence all these appeals are being disposed of by this common judgment.
9. The respondents-plaintiffs in the respective suits are assailing the correctness and validity of the proposed enhancement of property tax in respect of the plaint schedule vacant sites several of the facts are not in dispute and the only question is whether the appellant-defendant Municipality is justified in levying the vacant site tax by causing special notices proposing to enhance the property tax on the vacant site in an exorbitant way especially basing on the capital value. The stand taken by the appellant-defendant Municipality is that the Valuation Officer had fixed the capital value of the vacant site taking into consideration the valuation given by the Sub-Registrar’s Office, Nandyal and the same was adopted in arriving at the capital value of the vacant site and hence the method adopted by the appellant-defendant Municipality is the proper and correct method. Part IV Chapter-I of the Act deals with Taxation and Section 81(l)(a) says that even council shall be resolution levy the following taxes namely, and one of the said provisions deals with ‘property tax’. Section 81(2) also may be relevant for our purpose and Section 81(2) of the said Act reads as follows:
“Any resolution of a council determining to levy a tax shall specify the rate at which and the date from which any such tax shall be levied.
Provided that, before passing a resolution imposing a tax for the first time or increasing the rate of an existing tax, the council shall publish a notice in at least one newspaper published in the main language of the district having circulation in the municipality, on the notice board of the municipal office and in such other places within municipal limits as may be specified, by the council land by beat of drum, of its intention, fix a reasonable period not being less than one
month for submission of objections and consider the objections if any, received within the period specified.
Provided further that any resolution abolishing an existing tax or reducing the rate at which a tax is levied shall be immediately reported to the Government; and in municipalities which have an outstanding loan either from the Government or from* the public or from any banking, insurance or financial corporation or from any other local authority, such abolition or reduction shall not be carried into effect without the sanction of the Government.”
The first proviso specified supra makes it clear that before passing a resolution imposing a tax for the first time or increasing the rate of an existing tax, the council shall publish a notice in at least one newspaper published in the main language of the district having circulation in the municipality, on the notice board of the municipal office and in such other places within municipal limits as may be specified, by the council land by beat of drum, of its intention, fix a reasonable period not being less than one month for submission of objections and consider the objections if any, received within the period specified. It is pertinent to note that pleading of the Municipality in this regard is silent and hence it can be taken that the Municipality had not followed the mandatory provisions of the publication and also calling for objections and considering the objections in this regard. Hence, inasmuch as there is no plea and further no evidence had been placed before the Court that the appellant-defendant Municipality had followed the procedure before issuing the special notices marked as Ex.A3 while calling upon the respective plaintiffs to pay the proposed enhancement of the property tax, the Courts below had rightly decreed the suits. The learned Counsel for the appellant had placed strong reliance on Section 85 (3)(a) of the Act and also on Section 87 of the Act. Section 85 of
the Act deals with levy of property tax and Section 85 (3)(a) reads as follows:
“Save as otherwise provided in Clause (b), the council shall, in the case of lands which are not used exclusively for agricultural purposes and are not occupied by, or adjacent and appurtenant to, building, levy these taxes, at such percentages of the capital value of the lands or not such rates with reference to the extent of the lands as may be fixed by the council:
Provided that such percentages or rates shall not exceed the maxima, if any, fixed by the Government and mat the capital value of such lands shall be determined in such manner as may be prescribed.”
Likewise, Section 87 of the Act deals with method of assessment of property tax. The learned Counsel with all vehemence had contended that inasmuch as in view of these provisions, the tax can be levied on the capital value, the Courts below had totally erred in decreeing the suits. The learned Counsel also had placed strong reliance on V.Ramayya v. State of A.P., 1973 (1) An WR 241, for the purpose of substantiating his stand that there can be levy of taxes on capital value. In Lokmanya Mills v. Barsi Borough Municipality, , while dealing with the assessment of house tax and water tax under the Bombay Municipal Boroughs Act, the Apex Court was pleased to observe at page 1360:
“By Section 78, Sub-section (1), Clause (d) and Explanation to Section 75, the rate to be levied on lands and buildings may be assessed on the valuation of the lands and buildings based on capital or the annual letting value. By the rules in operation prior to April 1, 1947, house-tax and water-tax were levied as rates in respect of all lands, buildings and non-agricultural lands on the annual letting value (except Government buildings). Even under the new rules, house-tax and water-tax continued to be levied in respect of all buildings and non-agricultural lands as rates: but the rate in respect of buildings falling
within Rule 2-C was assessed on a valuation computed on the floor area of the structures, and not on the capital value nor on the annual rent for which the buildings may reasonably be expected to let. This was clearly not a tax based on the annual letting value, for, “annual letting value” postulates rent which a hypothetical tenant may reasonably be expected to pay for the building, if let, A rate may be levied under the Act oft valuation made on capital or on the annual letting value. If the rate is to be levied on the basis of capital value, the building to be taxed must be valued according to some recognised method of valuation : if the rate is to be levied on the basis of the annual letting value, the building must be valued at the annual rental which a hypothetical tenant may pay in respect of the building. The Municipality ignored both the methods of valuation and adopted a method not sanctioned by the Act. By prescribing valuation computed on the area of the factory building, the Municipality not only fixed arbitrarily the annual letting value which bore no relation to the rental which a tenant may reasonably pay, but rendered the statutory right of the tax-payer to challenge the valuation illusory. An assessment list prepared under Section 78, before it is authenticated and finalised, must be published and the tax-payers must be given an opportunity to object to the valuation. By the assessment list in which the valuation is not based upon the capital value of the building or the rental which the building may fetch, but on the floor area, the objection which the tax-payers may raise is in substance restricted to the area and not to the valuation.”
It is, no doubt, true that by virtue of Section 85(3)(a) there can be levy of property tax of vacant land on the basis of the capital value. But, here is a case where findings had been recorded that the procedure had not been followed and there is no material placed on record to show that such procedure had been followed and when the mandatory provisions had not been complied with, the appellant-defendant
Municipality cannot fall back on Section 114 of the Indian Evidence Act and contend that it can be presumed that the procedure had been followed. As already observed by me, there is no plea and no evidence was let-in in this regard and hence both the Courts below had recorded a finding that there is non-compliance of the procedure and in my opinion this is a finding of fact, which, cannot be disturbed in a second appeal.
10. Hence, viewed from any angle, these second appeals filed by the Municipality are devoid of merits and according all the second appeals are bound to fail and dismissed. In the facts and circumstances of the case, this Court makes no order as to costs.