Commissioner of Income Tax, Mumbai v. Anjum M Ghaswala

Petition Under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend the impugned Tax demand notice vide Ng.GPN/ Notice/ 195/2017-18, dt. 6-1 -2018, pending disposal of the writ petition. Counsel for the Petitioner : SRI SRINIVASA RAO MADIRAJU Counsel for the Respondent No.1 : GP FOR PANCHAYAT RAJ AND RURAL DEVELOPMENT Counsel for the Respondent No.2 : SRI G.NARENDER REDDY The Court made the following ORDER THE HON'BLE THE CHIEF JUSTICE ALOK ARADHE AND THE HON'BLE SRI JUSTTCE SUJOY PAUL WRIT PETITION No.4147 OF 2012 $[p(. lr.r rhe Hon'ble the Chief Justice Atok Aradhe) Mr. M. Surender Rao, Ieamed Senior Counsel, representing Mr. Srinivasa Rao Madiraju, leamed counsel for the petitioners. Mr. Mohammed Imran Khan, learned Additional Advocate General for the State.

2. In this writ petition, the petitioners have assailed the validity of Rules 4, 5 and 7 notified by G.O.Ms.No.30, PR and RD & R dated 20.01 . I 995 framed in exercise of powers under Section 268(2) ofthe Andhra Pradesh Panchayat Raj Act, 1994 (hereinafter referred to as 'the 1994 Act'). The petitioners have also assailed the validity of the demand notices dated 03.02.2012 by which house tax was levied on the property belonging to the petitioners.

3. Facts giving rise to filing of this writ petition, briefly stated, are that petitioner No.l is a society registered under the A.P (Telangana Area) Public Societies Registration Act, 1350 Fasli. Petitioner No.l society has purchased an extent of 2 50 acres of land at Mangalpally Village and Gram Panchayat, Ibrahimpatnam Mandal, Ranga Reddy District. Thereafter, petitioner No. I after obtaining permission from the authority concerned has constructed the building wherein petitioner No.2 institution, namely Bharat Institute of E)ngineering and Technology, is being run. In the aforesaid institution, education in several engineering courses is imparted.

4. Notices dated 03.02.2012 were issued by the Gram Panchayat, Mangalpally wherein the petitioners were asked to make payment of the house tax as well as library cess. The petitioners thereupon have filed this writ petition in which the validity of the aforesaid demand notices is under challenge. A Bench of this Court by an order dated 16.02.20i2 entertained the writ petition and granted interim orders, subject to the oondition that the petitioners shall deposit 50% ofthe amount demanded and shall also furnish a bank guarantee in respect of the remaining 50o/, of the amount. It is not in dispute that the petitioners have complied with the aforesaid interim order. 3

5. At the outset, learned Senior Counsel for the petitioners confined his challenge in the writ petition only to validity of the demand notices issued by the Gram Panchayat. While inviting the attention of this Court to Section 60 of the 1994 Act,, leamed Senior Counsel submitted that the Gram Panchayat has the authority to levy the house tax enumerated therein. Leamed Senior Counsel while referring to Section 61(3) of the 1994 Act submitted that the impugned demand notices are contrary to Sections 60 and 61 of the Act, inasmuch as neither maximum nor minimum rates have been prescribed under the Rules by G.O.Ms.3O dated

20.01.1995. It is therefore contended that the demand notices are liable to be quashed.

6. On the other hand, learned Additional Advocate General has invited the attention of this Court to the rules framed under Section 268(2) of the 1994 Act and has submitted that under the rules, it is permissible for the Gram Panchayat to issue the demand notlces. 7 . We have considered the rival submissions of leamed counsel for the parties and have perused the record. 4

8. The 1994 Act is an Act to provide for the constitution of Gram Panchayats, Mandal Parishads and Zilla Parishads and for matters connected therewith or incidental thereto. Sectir:n 2(30) defines the expression "prescribed" to mean, prescribed by the Governmenl. by rules made under the Act. Chapter ttl of the 1994 Act contains Section 60 which empowers the Gram Panchayat to levy taxes enumerated therein, including the house tax. Section 61 deals with levy of house tax.

9. Section 61, which is relevant for the purpose of the controversy involved in this writ petition, is extracted belo,v for the facility of reference: "61. House-tax - (1) The house-tax referred to in clause (a) of sub-section (1) of section 60 shall, subject to such rules as may be prescribed, be levied on all houses in the village on any one of the following basis, namely: (a) annual rental value, or (b) capital value. or (c) such other basis as may be prescribed: Provided that no house tax shall be levied r:n poultry sheds and annexes thereto which are essential for running the poultry farms. (2) The house-tax shall, subject to the prior payment of the land revenue, if any rjue to the 5 Govemment in respect of the site of the house be a first charge upon the house aM upon the movable property, if any, found within or upon the same and belonging to the person liable to pay such tax. (3) The house-tax shall be levied every year and shall, save as otherwise expressly provided in the rules made under sub-section (1) be paid by the owner within thirty days of the commencement of the year. It shall be levied at such rates as may be fixed by the gram panchayat, not being less than the minimum rates and not exceeding the maximum rates, prescribed in regard to the basis of levy adopted by the gram panchayat. (4) The Government may make rules providing for- (i) the exemption of special classes of houses from the tax; (ii) the manner of ascertaining the annual or capital value of houses or the categories into which they fall for the purposes of taxation; (iii) the persons who shall be liable to pay the tax and the giving of notice of transfer of houses; (iv) the grant of exemptions from the tax on the ground of poverty; (v) the grant of vacancy and other remissions; (vi) the circumstances in which, and the conditions subject to which houses constructed, reconstructed or demolished, or situated in areas included in, or excluded from the village, during any year, shall be liable or cease to be liable to the whole or any portion of the tax. (5) If the occupier of a house pays the house- tax on behalf of the owner thereof. such occupier shall 6 be entitled to recover the same from the owner and may deduct the same from the rent then or thereafter due by him to the owner".

10. It is lrite law that if the statute provides a procedure for doing a particular thing in a particular manner, that thing has to be done in the manner prescribed. lSee: Commissioner of Income Tax, Mumbai vs. Anjum M Ghaswala, (AIR 2001 SC 3868), Commissioner of Income Tax, Chandigarh vs. Pearl Mechanical Engineering and Foundry lAorks (P) Ltd. (2004) 4 SCC 597), Tata Chemicals Limited us. Commissioner of Customs (Preventive), Jamnagar (2015) 11 SCC 628) and The Goa Foundation vs. Sesa Sterlite Ltd. and others (2018) 4 SCC 218)1. 1L From a close scrutiny of Section 61(3) of the 1994 Act, it is evident that the house tax has to be levied at such rates as may be fixed by the Gram Panchayat, not being less than the rninimum rates and not exceeding the maximum rates, prescribed tn regard to the basis of levy adopted by the Gram Panchayat. Thus, the minimum and maximum rates have to be prescribed by the State Govemn-rent by framing th<: rules under the Act. Thus, the sine qua non for 1 exercise of power to levy the house tax is the prescription of maximum and minimum rates of house tax by the rules under the State Government. In the instant case, in exercise of powers under Section 268(2) of the 1994 Act, the State Government has framed the rules with regard to levy and collection of house tax. Rules 4, 5 and 7 provides for assessment of house tax. In purported exercise of powers, Rules 4, 5 and 1 of the rules framed under the Act, the Gram Panchayat has issued the impugned demand notices.

12. However, it is pertinent to note that the aforesaid rules do not prescribe for minimum and maximum rates. Therefore, the condition precedent for invocation of power of the Gram Panchayat to fix the rate of house tax has not been fulfilled under the Act.

13. For the aforementioned reasons, the impugned demand notices dated 03.02.2012 cannot be sustained in the eye of law. They are accordingly quashed. ) I I , 8

14. The petitioners. have deposited 50%o of the amount of demand in pursuance ofthe interim order dated 16.02.2012 passed by a Bench of this Court. The petitioners shall be entitled to adjustment of the aforesaid amount towards dues which may be payable by tl.rern on account of house tax in future. There shall be no order as l.o costs. I 5. However, liberty is reserved to the State Government to notify the rninimum and maximum rates for levy of house tax under the rules, in view of the mandate contained in Section 6l of the 1994 Act.

16. Accordingly, the writ petition is disposed of. Tl.rere shall be no order as to costs As a sequel, miscellaneous petitions, pending if any, stand closed. //TRUE COPY/I SD/.A. SRINIVASA REDDY ASSISTANT REGISTRAR N,\-_ - lJ ' secnou oFFlcER To \

1. The Secretary, Panchayat Raj and Rural Development Department' . ' S;ilt"ri;i Biiroingi, Siate of Telangana at Hvderabad-22'The Panchavat S"ii"iirv, e*mpa"ncnayat Nagaram, (qqg?gJg!d'1, R R' Districl. .- . .. . z i*iic-c,ii"cp ron pdr.tcHninr RR.t Rr.to RURAL DEVEL.oPMENT, Hish Court for the State of Telangana at Hyderabad. [OUI 3. oil Ca t; sRl sRlNlvASA-RAo MA'DIRAJU, Advocate [oPL'lcl +. On" CC to SRI G.NARENDER REDDY, Advocate (OPUC) 5. Two CD Copies SA BS "kD' --t-- -4,1 \i_ I E :itAI \r i,,3 11 t,lnn zuz5 '3 +i \\ )/ * s 'i:t) HIGH COURT DATED:0910112025 ORDER WP.No.10817 ot 2018 DISPOSING OF THE W.P WITHOUT COSTS. ,.

Petition Under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend the impugned Tax demand notice vide Ng.GPN/ Notice/ 195/2017-18, dt. 6-1 -2018, pending disposal of the writ petition. Counsel for the Petitioner : SRI SRINIVASA RAO MADIRAJU Counsel for the Respondent No.1 : GP FOR PANCHAYAT RAJ AND RURAL DEVELOPMENT Counsel for the Respondent No.2 : SRI G.NARENDER REDDY The Court made the following ORDER THE HON'BLE THE CHIEF JUSTICE ALOK ARADHE AND THE HON'BLE SRI JUSTTCE SUJOY PAUL WRIT PETITION No.4147 OF 2012 $[p(. lr.r rhe Hon'ble the Chief Justice Atok Aradhe) Mr. M. Surender Rao, Ieamed Senior Counsel, representing Mr. Srinivasa Rao Madiraju, leamed counsel for the petitioners. Mr. Mohammed Imran Khan, learned Additional Advocate General for the State.

2. In this writ petition, the petitioners have assailed the validity of Rules 4, 5 and 7 notified by G.O.Ms.No.30, PR and RD & R dated 20.01 . I 995 framed in exercise of powers under Section 268(2) ofthe Andhra Pradesh Panchayat Raj Act, 1994 (hereinafter referred to as 'the 1994 Act'). The petitioners have also assailed the validity of the demand notices dated 03.02.2012 by which house tax was levied on the property belonging to the petitioners.

3. Facts giving rise to filing of this writ petition, briefly stated, are that petitioner No.l is a society registered under the A.P (Telangana Area) Public Societies Registration Act, 1350 Fasli. Petitioner No.l society has purchased an extent of 2 50 acres of land at Mangalpally Village and Gram Panchayat, Ibrahimpatnam Mandal, Ranga Reddy District. Thereafter, petitioner No. I after obtaining permission from the authority concerned has constructed the building wherein petitioner No.2 institution, namely Bharat Institute of E)ngineering and Technology, is being run. In the aforesaid institution, education in several engineering courses is imparted.

4. Notices dated 03.02.2012 were issued by the Gram Panchayat, Mangalpally wherein the petitioners were asked to make payment of the house tax as well as library cess. The petitioners thereupon have filed this writ petition in which the validity of the aforesaid demand notices is under challenge. A Bench of this Court by an order dated 16.02.20i2 entertained the writ petition and granted interim orders, subject to the oondition that the petitioners shall deposit 50% ofthe amount demanded and shall also furnish a bank guarantee in respect of the remaining 50o/, of the amount. It is not in dispute that the petitioners have complied with the aforesaid interim order. 3

5. At the outset, learned Senior Counsel for the petitioners confined his challenge in the writ petition only to validity of the demand notices issued by the Gram Panchayat. While inviting the attention of this Court to Section 60 of the 1994 Act,, leamed Senior Counsel submitted that the Gram Panchayat has the authority to levy the house tax enumerated therein. Leamed Senior Counsel while referring to Section 61(3) of the 1994 Act submitted that the impugned demand notices are contrary to Sections 60 and 61 of the Act, inasmuch as neither maximum nor minimum rates have been prescribed under the Rules by G.O.Ms.3O dated

20.01.1995. It is therefore contended that the demand notices are liable to be quashed.

6. On the other hand, learned Additional Advocate General has invited the attention of this Court to the rules framed under Section 268(2) of the 1994 Act and has submitted that under the rules, it is permissible for the Gram Panchayat to issue the demand notlces. 7 . We have considered the rival submissions of leamed counsel for the parties and have perused the record. 4

8. The 1994 Act is an Act to provide for the constitution of Gram Panchayats, Mandal Parishads and Zilla Parishads and for matters connected therewith or incidental thereto. Sectir:n 2(30) defines the expression "prescribed" to mean, prescribed by the Governmenl. by rules made under the Act. Chapter ttl of the 1994 Act contains Section 60 which empowers the Gram Panchayat to levy taxes enumerated therein, including the house tax. Section 61 deals with levy of house tax.

9. Section 61, which is relevant for the purpose of the controversy involved in this writ petition, is extracted belo,v for the facility of reference: "61. House-tax - (1) The house-tax referred to in clause (a) of sub-section (1) of section 60 shall, subject to such rules as may be prescribed, be levied on all houses in the village on any one of the following basis, namely: (a) annual rental value, or (b) capital value. or (c) such other basis as may be prescribed: Provided that no house tax shall be levied r:n poultry sheds and annexes thereto which are essential for running the poultry farms. (2) The house-tax shall, subject to the prior payment of the land revenue, if any rjue to the 5 Govemment in respect of the site of the house be a first charge upon the house aM upon the movable property, if any, found within or upon the same and belonging to the person liable to pay such tax. (3) The house-tax shall be levied every year and shall, save as otherwise expressly provided in the rules made under sub-section (1) be paid by the owner within thirty days of the commencement of the year. It shall be levied at such rates as may be fixed by the gram panchayat, not being less than the minimum rates and not exceeding the maximum rates, prescribed in regard to the basis of levy adopted by the gram panchayat. (4) The Government may make rules providing for- (i) the exemption of special classes of houses from the tax; (ii) the manner of ascertaining the annual or capital value of houses or the categories into which they fall for the purposes of taxation; (iii) the persons who shall be liable to pay the tax and the giving of notice of transfer of houses; (iv) the grant of exemptions from the tax on the ground of poverty; (v) the grant of vacancy and other remissions; (vi) the circumstances in which, and the conditions subject to which houses constructed, reconstructed or demolished, or situated in areas included in, or excluded from the village, during any year, shall be liable or cease to be liable to the whole or any portion of the tax. (5) If the occupier of a house pays the house- tax on behalf of the owner thereof. such occupier shall 6 be entitled to recover the same from the owner and may deduct the same from the rent then or thereafter due by him to the owner".

10. It is lrite law that if the statute provides a procedure for doing a particular thing in a particular manner, that thing has to be done in the manner prescribed. lSee: Commissioner of Income Tax, Mumbai vs. Anjum M Ghaswala, (AIR 2001 SC 3868), Commissioner of Income Tax, Chandigarh vs. Pearl Mechanical Engineering and Foundry lAorks (P) Ltd. (2004) 4 SCC 597), Tata Chemicals Limited us. Commissioner of Customs (Preventive), Jamnagar (2015) 11 SCC 628) and The Goa Foundation vs. Sesa Sterlite Ltd. and others (2018) 4 SCC 218)1. 1L From a close scrutiny of Section 61(3) of the 1994 Act, it is evident that the house tax has to be levied at such rates as may be fixed by the Gram Panchayat, not being less than the rninimum rates and not exceeding the maximum rates, prescribed tn regard to the basis of levy adopted by the Gram Panchayat. Thus, the minimum and maximum rates have to be prescribed by the State Govemn-rent by framing th<: rules under the Act. Thus, the sine qua non for 1 exercise of power to levy the house tax is the prescription of maximum and minimum rates of house tax by the rules under the State Government. In the instant case, in exercise of powers under Section 268(2) of the 1994 Act, the State Government has framed the rules with regard to levy and collection of house tax. Rules 4, 5 and 7 provides for assessment of house tax. In purported exercise of powers, Rules 4, 5 and 1 of the rules framed under the Act, the Gram Panchayat has issued the impugned demand notices.

12. However, it is pertinent to note that the aforesaid rules do not prescribe for minimum and maximum rates. Therefore, the condition precedent for invocation of power of the Gram Panchayat to fix the rate of house tax has not been fulfilled under the Act.

13. For the aforementioned reasons, the impugned demand notices dated 03.02.2012 cannot be sustained in the eye of law. They are accordingly quashed. ) I I , 8

14. The petitioners. have deposited 50%o of the amount of demand in pursuance ofthe interim order dated 16.02.2012 passed by a Bench of this Court. The petitioners shall be entitled to adjustment of the aforesaid amount towards dues which may be payable by tl.rern on account of house tax in future. There shall be no order as l.o costs. I 5. However, liberty is reserved to the State Government to notify the rninimum and maximum rates for levy of house tax under the rules, in view of the mandate contained in Section 6l of the 1994 Act.

16. Accordingly, the writ petition is disposed of. Tl.rere shall be no order as to costs As a sequel, miscellaneous petitions, pending if any, stand closed. //TRUE COPY/I SD/.A. SRINIVASA REDDY ASSISTANT REGISTRAR N,\-_ - lJ ' secnou oFFlcER To \

1. The Secretary, Panchayat Raj and Rural Development Department' . ' S;ilt"ri;i Biiroingi, Siate of Telangana at Hvderabad-22'The Panchavat S"ii"iirv, e*mpa"ncnayat Nagaram, (qqg?gJg!d'1, R R' Districl. .- . .. . z i*iic-c,ii"cp ron pdr.tcHninr RR.t Rr.to RURAL DEVEL.oPMENT, Hish Court for the State of Telangana at Hyderabad. [OUI 3. oil Ca t; sRl sRlNlvASA-RAo MA'DIRAJU, Advocate [oPL'lcl +. On" CC to SRI G.NARENDER REDDY, Advocate (OPUC) 5. Two CD Copies SA BS "kD' --t-- -4,1 \i_ I E :itAI \r i,,3 11 t,lnn zuz5 '3 +i \\ )/ * s 'i:t) HIGH COURT DATED:0910112025 ORDER WP.No.10817 ot 2018 DISPOSING OF THE W.P WITHOUT COSTS. ,.