BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 01/08/2006 CORAM: THE HONOURABLE MR.JUSTICE K.MOHAN RAM Writ Petition No.650 of 2004 Mrs.Sethu Parvatham .... Petitioner Vs The Commissioner, Corporation of Madurai, Madurai. .... Respondent PETITION under Article 226 of The Constitution of India praying for the issuance of a Writ of Declaration declaring the levy, demand and collection of vacant site tax in Madurai City Municipal Corporation Act, 1971, Schedule II Section 8 of the power vested with the Commissioner from the petitioner at RS.No.178/2 of Karpagam Nagar IV Street in Ward NO.4 as a condition precedent for grant of planning permission/building permit as illegal, ultra vires the provisions of the District Municipalities Act and unconstitutional and consequently direct the respondent to process the application filed by the petitioner in S.No.2855 dated 28.5.2004 pending before the respondent and grant planning permission/building permit without insisting upon the payment of vacant site tax. !For Petitioner ... Mr.R.Suriyanarayanan ^For Respondent ... Mr.P.Srinivas :ORDER
By consent, the writ petition itself is taken up for final disposal.
2. It is the case of the petitioner that plot NO.750, 4th Street, Karpaga
Nagar, K.Pudur, Madurai measuring about 2400 sq.ft. and situated in R.S.NO.178/2
Tallakulam Village, Madurai was purchased by the petitioner from one Mr.Meyyappa
Chettiar under a registered document bearing No.186 of 2003 executed by one
Mr.S.Subramanian as power of attorney agent of the vendor – the said Mr.Meyyappa
Chettiar on 3.6.2003. Pursuant to the purchase, the petitioner applied to the
respondent for a building permission and the application was registered as
S.NO.2855 on 28.5.2004. Immediately thereafter, the respondent caused a demand
notice dated 27.5.2004 under Section 168 of the Madurai City Municipal
Corporation Act (hereinafter referred to as the Act) read with Rule 9 of the
Taxation Rules contained in Schedule II of the Act demanding payment of vacant
site tax for the following periods :
i. from 1.10.1998 onwards; and
ii. from 1.4.2003 onwards.
Aggrieved by the said demand, the above writ petition has been filed seeking for
the issuance of a Writ of Declaration.
3. The contention of the petitioner is that the demand of vacant site tax
as a condition precedent for grant of building licence/planning permission is ex
facie illegal; there is no provision in the Act empowering the Municipalities to
levy tax directly on vacant land at any point of time including at the time of
sale of vacant land or at the time when the vacant land is sought to be
developed by applying for the planning permission or building licence or when
the sub.division of the vacant land or plot is sought for. It is further
contended that there cannot be a tax on vacant land and the vacant site tax and
property tax cannot both co-exist and that the vacant site tax has no
correlation to any services rendered and is without any authority of law.
4. A detailed counter affidavit has been filed by the respondent
contending that it is the duty of the petitioner to verify as to whether the
vacant land is assessable for vacant site tax and any arrears are there and
also to find out as to whether the area in which the site is located comes under
the planning permission area. It is further contended by the respondent that
Section 168 of the Act permits to assess and collect the tax for six years from
the date of assessment and the respondent came to know about the purchase of the
site by the petitioner only when she came to the Corporation seeking planning
permission. It is the contention of the respondent that under Section 120(4)(a)
of the Act, the Corporation can collect the vacant site tax and though the said
provision authorises the respondent to levy the vacant site tax not exceeding 6%
of the capital value of the property, the Corporation has levied only 2%. It is
further contended by the respondent that the vacant site tax is a tax and not a
fee and therefore, it does not require any quid pro quo. It is also contended
that when the statute provides for levy of vacant site tax, the petitioner
cannot challenge the demand alone without challenging the charging provision
contained in the Act. It is further contended that it is open to the respondent
to demand the arrears of vacant site tax before granting planning permission.
5. Heard both.
6. Learned counsel for the petitioner submitted that the respondent has
demanded the vacant site tax at Rs.3,600/- per half year for the periods from
1.10.1998 to 31.3.2003 and at Rs.5,270/- per half year from 1.4.2003 to
27.5.2004. Learned counsel for the petitioner further submitted that the
petitioner purchased the house site on 3.6.2003 and applied for planning
permission on 28.5.2004 and the impugned notice of demand was issued
containing the date as 27.5.2004. According to him, the petitioner, as a
transferee, is liable to pay tax under Section 127(4)(a) of the Act only from
the date of purchase and not for the periods earlier to that. Learned counsel
for the petitioner also submitted that the demand of tax from 1.10.1998 is
illegal and the respondent is not authorised to demand arrears of vacant site
tax as a condition precedent for granting planning permission.
7. Learned counsel for the respondent referred to the following provisions
:
i. Section 120(4)(a);
ii. Section 127(4)(a); and
iii. Section 168 of the Act, which read as follows :
“Section 120(4)(a) :-
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, buildings, levy the property tax on
the capital value of such lands at such percentages as it may fix which shall
not exceed six percent of their capital value;
Section 127(4)(a) :-
Every person who makes a transfer as aforesaid without giving such notice
to the Commissioner shall in addition to any other liability which he may incur
through such neglect continue liable for the payment of the property tax
assessed on the premises transferred until he gives notice or until the transfer
shall have been recorded in the municipal registers, but nothing in this section
shall be held to affect
(a) the liability of the transferee for the payment of the said
tax.
Section 168 :
Notwithstanding anything to the contrary contained in this Act or the
rules made thereunder, if for any reason any person liable to pay any of the
taxes or fees leviable under this Chapter has escaped assessment in any half
year or year has been assessed in any half year or year at a rate lower than the
rate at which he is assessable or, in the case of property tax has not been duly
assessed in any half year consequent in the building or land concerned having
escaped proper determination of its annual value, the Commissioner may at any
time within six years from the date of which such persons should have been
assessed, serve on such person a notice assessing him to the tax or fee due and
demanding payment thereof within fifteen days from the date of such service; and
the provisions of this Act and the rule made thereunder shall so far as may be
apply as if the assessment was made in the half year or year to which the tax or
fee relates.”
8. Relying upon the said provisions, learned counsel for the respondent
submitted that the respondent Corporation is entitled to levy property tax on
the capital value of the land at a rate not exceeding 6% of the capital value
and the Corporation has levied the tax only at 2%. He further submitted that the
petitioner, as the transferee of the site, is liable to pay the tax. Learned
counsel also submitted that the respondent is entitled to demand arrears of
vacant site tax within a period of six years as provided for in Section 168 of
the Act.
9. As rightly contended by the learned counsel for the respondent, the
petitioner cannot question the legality or validity of the levy or demand of
vacant site tax without challenging the provisions of Section 120(4)(a) of the
Act, which is the charging section for levying the vacant site tax. Admittedly,
the petitioner has not challenged the validity of the said provision. Therefore,
the challenge regarding the legality of the demand has to fail.
10. The contention of the learned counsel for the petitioner that the
respondent Corporation cannot demand the arrears of vacant site tax for the
periods prior to his purchase i.e. for the periods from 1.10.1998 to 31.3.2003
has to fail, in view of the provisions contained in Section 168 of the Act. As
per the provisions contained in Section 168 of the Act, the Corporation is
entitled to claim and demand arrears of tax for a period of six years prior to
the date of demand. The contention of the learned counsel for the petitioner
that the petitioner, as the transferee of the vacant site, is liable to pay tax
only from the date of purchase and not earlier to that has also to be rejected
in view of the provisions contained in Section 127(4)(a) of the Act.
11. A reading of the said provision clearly shows that every person, who
makes transfer of the property, shall continue to be liable for payment of
property tax assessed on the premises transferred until he gives notice or until
the transfer shall have been recorded in the municipal registers. It is also
provided that nothing in that section shall be held to affect the liability of
the transferee for payment of the said tax. Therefore, it is very clear that
the contention of the learned counsel for the petitioner that the transferee is
liable to pay tax only from the date of purchase has to be rejected.
12. Learned counsel for the petitioner further contended that the value of
the vacant site in urban areas is spiralling day by day and therefore, the
quantum of tax levied is too high and on that ground, submitted that the
impugned proceedings should be quashed.
13. If the petitioner is aggrieved by the quantum of tax levied, she ought
to have filed an appeal to the competent Appellate Authority provided for under
the Act and without doing so, it is not open to the petitioner to question the
quantum of tax levied in this writ petition.
14. The next contention of the petitioner that the respondent is not
entitled to demand arrears of vacant site tax as a condition precedent for the
grant of planning permission is without substance. When the petitioner is liable
to pay vacant site tax and when she is seeking the planning permission from the
respondent to put up a building in the site, in respect of which, she is in
arrears of vacant site tax, the respondent is well within its right in demanding
the payment of arrears before granting planning permission. No provision of the
Act prevents the respondent from demanding the same before granting the planning
permission. When the arrears of property tax/vacant site tax is the first charge
on the property, it is legal on the part of the respondent to demand arrears of
tax before granting the planning permission. Therefore, the contention of the
learned counsel for the petitioner fails and the same is rejected.
15. For the above said reasons, the writ petition fails and is dismissed.
No costs.
To
The Commissioner, Corporation of Madurai, Madurai.