IN THE PUNJAB & HARYANA HIGH COURT AT CHANDIGARH
Date of Decision: 02.11.2011
C.M.No.4600 of 2011 in
LPA No.452 of 2011
Municipal Corporation & others ...Appellants
Versus
St. John's High School and others ...applicant-Respondents
Present: Ms. Lisa Gill, Advocate for appellant No.1.
Mr. Sanjay Kaushal & Mr. Sanjiv Ghai, Advocates, for
U.T.Chandigarh-appellant No.2.
Mr. M.L.Sarin, Sr. Advocate, with
Ms. Alka Sarin, Advocate, for applicant-respondent No.1.
C.M.No.5351 of 2011 in
LPA No.147 of 2011
Municipal Corporation & others ...Petitioners
Versus
St. Xavier's Sr. Sec. School and others ...applicant-Respondents
Present: Ms. Lisa Gill, Advocate for appellant No.1.
Mr. Sanjay Kaushal & Mr. Sanjiv Ghai, Advocates, for
U.T.Chandigarh-appellant No.2.
Mr.I. William Gosain, Advocate, for applicant-respondent
No.1.
C.M.No.5313 of 2011 in
LPA No.437 of 2011
Municipal Corporation & others ...Petitioners
Versus
Vivek High School ...applicant-Respondent
Present: Ms. Lisa Gill, Advocate for appellant No.1.
Mr. Sanjay Kaushal & Mr. Sanjiv Ghai, Advocates, for
U.T.Chandigarh-appellant No.2.
C.M.No.4600 of 2011 in 2
LPA No.452 of 2011
Mr. Inderjit Kaushal, Advocate, for applicant-respondent.
CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA
HON'BLE MR. JUSTICE G.S.SANDHAWALIA
HEMANT GUPTA, J.
This order shall dispose of aforementioned three applications
for vacation of an ex parte order dated 06.04.2011. Vide the said order,
Letters Patent Appeals against the order passed by the learned Single Judge
of this Court on 24.09.2010 were admitted and the operation of the said
order was stayed.
In CWP No.6651 of 2007, the petitioner challenged
notification dated 22.11.2004 (Annexure P-8) and the impugned bills dated
01.04.2008 and 01.04.2009, whereby the Property Tax was levied on
commercial, industrial and institutional lands and buildings in Chandigarh.
In brief, the contention of the writ petitioner is that there is no resolution of
the Municipal Corporation to levy tax on institutional lands and buildings,
therefore, notification dated 22.11.2004 is without jurisdiction and is not in
compliance with the provisions of the Punjab Municipal Corporation Act,
1976, as extended to U.T. Chandigarh. It is the said argument, which has
found favour with the learned Single Judge.
Mr. Sarin, learned counsel for the applicant has argued:
(i) that the order of stay of the impugned judgment is ex
parte and such ex parte order should not be granted in
view of the judgment reported as Balwant Singh and
others Vs. Mood Chand and others AIR 1971 SC 129;
(ii) that the Division Bench while admitting the writ petition
has stayed the impugned notification, therefore, after the
C.M.No.4600 of 2011 in 3
LPA No.452 of 2011
writ petition has been allowed, the writ petitioner cannot
be made liable to pay tax, when tax not payable by the
writ petitioners during the pendency of the writ petition;
(iii) that the judgment of learned Single Judge is exhaustive,
therefore, by virtue of short order, the benefit of
judgment cannot be denied to the writ petitioners;
(iv) that if the writ petitioners are made to pay tax on the
lands and buildings, it will amount to undue enrichment
of the State, as the tax has to be collected from the
numerous students, which cannot be refunded to them in
the event the appeals are dismissed;
(v) that during pendency of the appeal, the respondent
should not be called upon to pay huge amount of tax.
Reliance is placed upon M/s Polar Industries Ltd. Vs.
The Commissioner of Central Excise, Meerut and
others AIR 2000 SC 3503; and
(vi) lastly, it is submitted that appeal itself be heard at an
early date.
The learned Single Judge held that the draft bye-laws approved
by the Municipal Corporation in its Meeting held on 29.01.2003 were
considered by the Committee consisting of Secretary, Local Government;
Commissioner, Municipal Corporation, Chandigarh and the Legal
Remembrancer. The Commissioner, Municipal Corporation was asked to
rectify the bye-laws for consideration of sub committee by modification of
the heading to cover tax on commercial, industrial and institutional lands
and buildings. It was thereafter, modified building bye-laws along with
self-assessment scheme ware approved by the Administrator under Section
C.M.No.4600 of 2011 in 4
LPA No.452 of 2011
401 of the Punjab Municipal Corporation Act as applicable to Chandigarh
(for Short “the Act”). In the self-assessment scheme, the word “institutional
buildings” was defined for the first time such as the schools and that in the
absence of word “institutional land” in the resolution, the notification issued
in exercise of the powers under Section 90(3) of the Act is not tenable.
Clause 9 of the Agenda is in respect of rates of taxes if self-
assessment is opted. Note 1 appended to Clause 10 is to the effect that
Group V will cover buildings/sites other than SCOs, SCFs or Booths, which
have been allocated for a specific purpose/trade i.e. Cinema Houses, Private
Schools/Colleges, Theatres, Barat Ghars & Marriage Palaces etc. The rate
proposed was Rs.14 per sq. foot. Such Agenda was considered in 61st
Meeting of the Municipal Corporation held on 29.01.2003 and it was
resolved to levy tax on all commercial lands and buildings including
industrial units, residential houses used for commercial purposes. It was
further resolved that levy of house tax on residential lands and buildings
used for residential purpose is dropped.
Prima facie, we find that the order of the learned Single Judge
may not be sustainable. Firstly, the expression ‘commercial lands and
buildings’ has not been explained in the Minutes recorded. The said
expression is used in relation to the buildings, which includes industrial
units and residential buildings used for commercial purposes. There is no
exemption for self-occupied buildings and portions of the residential
buildings used for commercial purposes. The resolution further specifically
excluded the levy of house tax on residential lands and buildings used for
residential purposes. Meaning thereby, that except lands and buildings
which are being used for residential purposes, there is a resolution of the
Municipal Corporation for levy of tax on all lands and buildings. Still
C.M.No.4600 of 2011 in 5
LPA No.452 of 2011
further, vide the aforesaid resolution, the Corporation has approved the draft
bye-laws. May be the procedure of promulgation of draft of the bye-laws
has not come to an end with the resolution of the Municipal Corporation,
but the fact remains that in such draft bye-laws, there is specific mention of
the private schools and colleges. Therefore, from the Minutes recorded and
the draft bye-laws approved in 61st Meeting of the Municipal Corporation
held on 29.01.2003, the tax was proposed on all lands and buildings except
the lands and buildings used for residential purposes alone. The resolution
of the Municipal Corporation has to be read as a whole to find out the intent
and purpose of the resolution. Therefore, we find that the order passed by
the learned Single Judge may not be sustainable more so in view of the
judgment of the Hon’ble Supreme Court in Municipal Committee, Patiala
Vs. Model Town Residents Association and others (2007) 8 SCC 669,
wherein the challenge to the amendment in the Punjab Municipal Act, 1911
between premises occupied by the tenants on one hand and those occupied
by the owner himself was found to satisfy the requirements of permissible
classification.
In Balwant Singh’s case (supra), the Court has recognized the
power of the High Court to grant an ex parte stay, but it was observed that
the proper and just course was to hear the appellants. This Court hearing
appeals in exercise of appellate power has right to pass an order of stay of
operation of the impugned judgment. It is open to the writ petitioner to seek
vacation of the order, but to say that the Court is not possessed of
jurisdiction to pass an ex parte order of stay of the impugned judgment is
misconceived. After an ex parte order of stay is granted, the affected
parties have a right to seek variation in the order and the Court on being
satisfied with the contentions raised, can modify such order in such a
C.M.No.4600 of 2011 in 6
LPA No.452 of 2011
manner, as it consider appropriate. In view of the said fact, we are unable to
agree with the argument raised by the learned counsel for the applicants that
this Court in letters patent appeal has no jurisdiction to pass an ex parte
order of stay of judgment impugned.
The argument that the Division Bench has earlier granted stay
of the notification and, therefore, in appeal, this Court should not stay the
order of the learned Single Judge, is again not tenable. Mere fact, earlier a
bench has granted stay at the time of motion hearing is no reason to allow
stay of recovery of tax imposed in terms of a statute. The order passed by
this court granted stay on 11.10.2007 reads as under:
“C.M.No.16055 of 2007
The petitioner contends that being a private unaided school, they
have exemption from payment of municipal taxes.
This ground was not urged in extensor when previous order
declining the stay was passed on May 28, 2007. However, it had been
recorded therein that the stay was being declined “at that stage”.
We think that the case requires to be heard at length, as it relates to
an educational institution providing education to school children and there
are other weighty grounds as well. Grant of exemption by Punjab in 1975
(Annexure P-16) and its continued application to Chandigarh raise
estoppel against the Municipal Corporation.
CWP No.6651 of 2007
Admitted.
Operation of Annexure P-13 is hereby stayed.
To be heard in the first week of December.”
The exemption to schools in Punjab has nothing to do with levy
of tax on the schools in Chandigarh. Still further, schools are imparting
education to children is again cannot provide any binding precedent on this
Bench. Prima-facie, we do not find that there is any procedural irregularity
in imposing tax. The levy and recovery of tax serves public purpose. Interim
order at the time of motion hearing is not a precedent to be followed in
C.M.No.4600 of 2011 in 7
LPA No.452 of 2011
appeal. We have reservation in respect of the reasoning given by the learned
Single Judge. It may be noticed that one of the writ petitioners i.e. in CWP
No.6651 of 2007 was present at the time of hearing of bunch of appeals and
interim order was passed after hearing the parties present including the said
applicant in LPA No.147 of 2011.
The argument that the judgment is exhaustive is not a ground
on the basis of which this Court loses its jurisdiction to stay the operation of
the order. Since the issue is short regarding interpretation of the Minutes of
the Meeting of the Municipal Corporation, prima facie we find that the
findings recorded by the learned Single Judge may not be correct.
Therefore, mere fact that the learned Single Judge has passed a long
judgment will not be a ground to vacate the interim order.
The argument that the payment of tax at this stage will amount
to undue enrichment is again not tenable. The tax has been levied in terms
of the statutory provisions and after complying with the procedure. It is for
the writ petitioners to device means of payment of tax. Since the levy of the
tax is, prima facie, legal, the vacation of the order passed by this Court will
lead to stay of the levy of tax. We do not find that payment of such tax will
lead to undue enrichment of the State Government. But still to safe guard
the interest of the writ petitioners, it is ordered that the amount of tax, if
deposited, shall be kept in a separate account and in the event, the appeal is
dismissed, the same shall be refunded to the applicants.
The judgment in M/s Polar Industries case (supra) is not
helpful to the arguments raised by the learned counsel for the applicants.
The said case arises out of an appeal filed under the Central Excise Act,
1944. Section 35 of the said Act deals with pre-deposit of the amount of tax
C.M.No.4600 of 2011 in 8
LPA No.452 of 2011
before an appeal is entertained. The said judgment has no applicability even
remotely with the issues arising in the present case.
Therefore, we do not find any merit in the argument raised for
vacation of stay order passed by this Court. The payment of tax neither
causes irreparable loss or injury or the balance of convenience is in favour
of the applicant-respondents. Since the issue is payment of money, we do
not find that any ground is made out for vacation of stay, which will lead to
stay of the tax imposed.
Thus, we do not find that the order passed by this Court on
06.04.2011 requires any modification except to the extent that the
administration will keep the account of the tax deposited and shall refund
the same, in the event, the appeal is dismissed.
Consequently, the present applications are dismissed.
However, any observation made in the order, is only for the
purpose of deciding the present applications for vacation of stay. It shall
not be taken into consideration while deciding the appeals on merit.
The appeals have already been ordered to be heard within a
period of one year on 06.04.2011. Since the issue is short, we are of the
opinion that the interest of justice warrants that the present appeals be
posted for final hearing in the month of January, 2012 high-up in the list.
(HEMANT GUPTA)
JUDGE
02.11.2011 (G.S.SANDHAWALIA)
Vimal JUDGE
