JUDGMENT
1. Heard the learned Counsel for the appellant. There is no representation on behalf of the respondent.
2. This second appeal is directed against the judgment passed in AS No.30 of 1984 dated 7-3-1989 by the III Additional District Judge, Chittoor at Tirupati, under which the decree passed by the Principal Subordinate Judge, Tirupati, in OS No.91 of 1979 dated 26-3-1984 decreeing the suit of the plaintiff was reversed.
3. The relevant facts may be stated briefly as follows: The Tirumala Timpati Devasthanams (TTD) plaintiff filed the suit in OS No.91 of 1979 for declaration that the order of the defendant municipality dated 30-8-1978 enhancing the assessment of property tax from Rs.278.69 Ps. to Rs.6,165.91 Ps., for half year was illegal and not binding on Ihe plaintiff, and for permanent injunction restraining the defendant from enforcing the said assessment. It is averred that the plaintiff is the owner of the plaint schedule property and was paying hitherto a sum of Rs.278.69 Ps., per half year as property tax to the defendant municipality. While so, the defendant sent special notice to the plaintiff enhancing the property tax from Rs.278.69 Ps., to Rs.7,161/- per half year with effect from 1-10-1977. The said notice does not disclose the reasons for enhancing the property tax at abnormal rate, nor does it mention the basis for such enhancement. A revision was preferred before the defendant questioning the proposed enhancement, but the defendant, without considering the material before him, arbitrarily disposed of the revision petition by assessing the property tax at Rs.6,444.60 Ps. for half year. It is averred that the said enhancement is in clear violation of the procedure and Rules under the Andhra Pradesh Municipalities Act, 1965 (for short ‘the Act’), and it was also opposed to the principles of natural justice.
It is also stated that the building is owner-occupied and the relevant rules have not been complied with by the defendant municipality in assessing the property tax.
4. On behalf of the defendant Municipality, a written statement was filed admitting the fact of tax originally levied and its subsequent enhancement. It is denied that the special notice does not disclose reasons for enhancement of the property tax. It is stated that the property tax was assessed at a very low level earlier and the defendant served a special notice to the plaintiff in that regard. It is further stated that the officers of the plaintiff gave evidence before the revision authority and categorically admitted that the building in question was leased out to the employees of the plaintiff on concessional rate of rent. It is also stated that the plaintiff insisted that the concessional rents form the basis of assessment, which is not tenable. It is stated that considering the nature of the building and its location, its rental value was correctly assessed and the property tax was levied on that basis. It is further stated that if the plaintiff was aggrieved by the order of assessment, it ought to have filed an appeal before the Appellate Commissioner. The plaintiff is not entitled to question the assessment of the property tax before the Court. It is stated that the provisions of the Act and Rules made thereunder have been substantially followed in respect of assessment of property tax on the plaintiffs property and the assessment of the property tax is in accordance with the rules.
5. On these pleadings, the trial Court framed the following issues:
1. Whether the suit is barred by time?
2. Whether the impugned order of defendant dated 30-8-1978 is not valid?
3. Whether the enhancement of tax is illegal, arbitrary, or ultra vires the power of defendants?
4. To what relief?
6. On behalf of the plaintiff, a Clerk of TTD was examined as PW1 and Exs. A1 to A3 have been marked. On behalf of the defendants, two employees of the Municipality were examined and Ex. B1 has been marked.
7. On this evidence, the learned Subordinate Judge held on issues 2 and 3, which relate to the validity of the property tax imposed that under Section 87 of the A.P. Municipalities Act and the relevant rules, the tax in respect of the suit property ought to have been assessed on the basis of capital value and not on its rental value. This is on the basis of a finding that it was a self-occupied building and was not leased out to tenants. In fact, the learned Subordinate Judge has mentioned in Para (9) of his judgment that there was no dispute regarding the fact that the building in question was under self-occupation of the plaintiff-TTD. He refers to the evidence of DW1, who was examined on behalf of the defendant municipality and who admitted that the suit property was previously used as a stable and later it was converted into office and godown buildings. Learned Subordinate Judge also refers to Ex. A3, which is the annexure to the special notice Ex.A1 issued by the defendant municipality.
8. It is pointed out that even according to the plaintiffs own document, the building in question was being used for engineering and other offices and stores of the plaintiff. There is no mention in it that the building in question was leased out to any one. Thus relying on this material, the learned trial Judge came to a finding of fact that the building in question was self-occupied and was not leased out to tenants
and that tax on it ought to have been assessed on the basis of its capital value and not on rental value and that inasmuch as the defendant municipality has assessed the tax on the basis of its rental value, the trial Court held the assessment to be bad and in violation of the relevant provisions of the A.P. Municipalities Act. The trial Court accordingly granted the declaration and injunction as sought for by the plaintiff in respect of the impugned assessment of tax.
9. The learned Additional District Judge, in appeal, has reversed the trial Court’s judgment. The point for consideration framed by the learned Additional District Judge was : “Whether the impugned order of defendant-Municipality dated 30-8-1978 is valid, and “Whether the respondent was entitled for declaration and injunction as prayed for”. Unfortunately, the real question that arose for consideration was not formulated as point for consideration.
10. The learned Judge, however, came to the conclusion that the property tax in respect of the building in question was required to be assessed on the basis of its rental value and not on capital value, as seen from his observations in Para 6(b) of his judgment, which is as follows:
“The observation made by the Lower Court that the building has to be assessed on the basis of the capital value cannot stand for reasoning since the TTD authorities have let out the premises and collecting rent in turn at a concessional rate from its employees.”
11. On this basis, the learned Judge allowed the appeal holding that the assessment of property tax on the basis of rental value made by the defendant municipality by its order dated 30-8-1978 does not suffer from any infirmity.
12. The question that arises for consideration in this second appeal is whether the finding of the first appellate Court that the assessment of tax in respect of the building in question on the basis of its rental value as against on the basis of its capital value cm be sustained in the light of the provisions in Section 87 of the Act and the relevant rules governing the assessment of property tax.
13. Mr. M. Adinarayana Raju, learned Counsel for the appellant, assails this finding by pointing out that in respect of question of fact arrived at by the trial Court, the first appellate Court reversed it on an assumption which is not warranted by the material on record. It is pointed out that the learned Additional District Judge found that the TTD authorities had let out the premises in question and were collecting rent at concessional rate from its employees. The learned Counsel invites the attention of the Court to the evidence of DW1 and also Ex.A3. As pointed out by the trial Court, DW1, an employee of the defendant-municipality, in his evidence admitted that the premises in question was formerly used as tables and subsequently they began to be used for godowns and stores.
14. It may be mentioned that there was no suggestion in the cross-examination of PW1 examined on behalf of the plaintiff that the building in question was let out to the employees of the plaintiff. There is nothing in the evidence of the two witnesses examined on behalf of the defendants 1 and 2 that the building in question was let out to the employees of the plaintiff. On the other hand, as noted by the trial Court, the annexure to the special notice regarding enhancement of tax, which has been marked as Ex.A3, itself mentions the ground and reasons for enhancement proposed. There is a specific admission in Ex.A3 that ‘the buildings are
used for engineering and other offices and stores’. What was sought to be made out was that the original assessment of tax was at a very low level and if let out, the building in question would fetch a rent of Rs.5,000/- per month, and on this basis the enhancement was proposed by the defendant-municipality.
15. It is pointed out by the learned Counsel for the appellant that the rules prescribing the mode of estimation of value of buildings for the purpose of assessment of property tax on capital value and on annual rental value were issued in G.O. Ms. Nos.41 and 677. The provisions in Section 87 read with these rules would clearly indicate that two modes of assessment of property tax have been prescribed. One, the applicable in respect of buildings occupied by the owner himself and the other, buildings, which have been leased out to tenants. Where, it is shown that the building is occupied by the owner, assessment of the property tax on the basis of rental value of the building would be clearly in violation of the applicable statutory provision under Section 87 of the A.P. Municipalities Act, 1965 and the statutory Rules under the Act.
16. The finding of the learned Additional District Judge that the assessment of the tax in this case arrived at on the basis of rental value was justified is based on his finding that the building was leased out to tenants. This finding arrived at by the learned Additional District Judge reversing the finding of the trial Court on this question does not appear to be supported by any evidence on record. On the other hand, this finding is arrived at in the teeth of the record to the contrary. The learned Additional District Judge has not referred to any piece of evidence supporting his finding that the building was leased out to the employees of the plaintiff on concessional rate.
17. As rightly pointed out by the learned Counsel for the appellant, the High Court in a second appeal would be justified in interfering with the findings of the first appellate Court on a question of fact when the said finding is not based on any evidence on record at all. Under the circumstances of the case, there can be no hesitation to hold that the judgment of the learned appellate Judge in holding that the building in question was leased out to tenants is not supported by any evidence on record.
18. As to the question of jurisdiction of the trial Court to entertain the suit in regard to the assessment of tax, the learned Counsel for the appellant rightly points out that when the grievance is that the provisions of relevant law have not been substantially complied with, the jurisdiction of the civil Court is not ousted as seen from Section 376 of the Act. In support of his contention, he cites the Division Bench judgment of this Court reported in Shantilal Bazaz v. Municipal Council, Visakhapatnam, . In this case, what has been challenged is not the quantum of the tax, but the mode of assessment as contemplated under the Act, Thus, there is no question that the trial Court’s jurisdiction is not effected in terms of Section 376 of the Act.
19. In the result, this appeal is allowed. The judgment of the first appellate Court is set aside and the judgment of the trial Court is affirmed, under which the suit has been decreed. With costs.