High Court
Legal Reasoning
1 wp 3160.16IN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABADWRIT PETITION NO. 3160 OF 2016Super Agricultural Produce MarketCommittee, Aurangabad,Shri Chatrapati Shivaji MaharajBazar Sankul Sevabhavi Sanstha,Jadhavwadi, Aurangabad,Through its Secretary.. PetitionerVersus1.The Municipal Corporation,Aurangabad through itsMunicipal Commissioner.2.The Tax Assessor and Collector,Municipal Corporation, Aurangabad... RespondentsShri S. S. Thombre, Advocate for the Petitioner.Shri J. R. Shah, Advocate for the Respondent Nos. 1 and 2.WITHCIVIL APPLICATION NO. 4533 OF 2019Super Agricultural Produce MarketCommittee, Aurangabad,Through its Secretary.. ApplicantVersus1.The Municipal Corporation,Aurangabad through itsMunicipal Commissionerand another.. RespondentsShri S. S. Thombre, Advocate for the Applicant.Shri J. R. Shah, Advocate for the Respondent Nos. 1 and 2.
Legal Reasoning
2 wp 3160.16WITHCIVIL APPLICATION NO. 833 OF 2024INCIVIL APPLICATION NO. 4533 OF 2019INWRIT PETITION NO. 3160 OF 20161.The Municipal Corporation,Aurangabad through itsMunicipal Commissionerand another.. ApplicantsVersusSuper Agricultural Produce MarketCommittee, Aurangabad,Through its Secretary.. RespondentShri J. R. Shah, Advocate for the Applicants.Shri S. S. Thombre, Advocate for the Respondent.CORAM :S. G. MEHARE ANDSHAILESH P. BRAHME, JJ.CLOSED FOR JUDGMENT ON:26.02.2025JUDGMENT PRONOUNCED ON:20.03.2025JUDGMENT (Per Shailesh P. Brahme, J.) :-.Rule. Rule is made returnable forthwith. Heard both sidesfinally with their consent at the admission stage.2.Petitioner has invoked jurisdiction of this Court underArticle 226 of the Constitution of India for challenging thenotices and order dated 11.03.2016 charging the tax for six salehalls recoverable from the petitioner.3.Against the impugned notices and order appeal is 3 wp 3160.16maintainable U/Sec. 406 of the Maharashtra MunicipalCorporation Act, 1949 (hereafter referred as to the ‘CorporationAct’ for the sake of brevity and convenience). The presentpetition was entertained and interim directions were issued on16.03.2016 to the petitioner to deposit Rs. 25,00,000/-. Theamount was deposited. Thereafter, notices were issueddemanding property tax from the petitioner and itsadministrative office was also sealed on 30.03.2019. Petitionerpreferred Civil Application No. 4533 of 2019 for unsealing theoffice. In that civil application order was passed on 02nd April,2019 directing the petitioner to deposit Rs. 50,00,000/- in twoinstallments. Thus, the petition was being entertained on meritssince its filing. Due to interim directions amount is deposited inthis Court. Under these peculiar circumstances, we find that itwould be inappropriate to relegate the parties to the alternateremedy. Though, the respondent corporation persistentlyobjecting the maintainability of the petition, we deem it fit tohear the matter on merits.4.The petitioner is incorporated U/Sec. 11 of theMaharashtra Agricultural Produce Marketing (Development andRegulation) Act, 1963 (for the sake of brevity and conveniencehereinafter referred as to the “Market Committee Act”). It’smarket is located at Jadhavwadi, Chhatrapati Sambhajinagar.The controversy is in respect of liability to pay property tax offive sale halls located in the market committee. There areconstructed shops inside the committee’s premises, which areallotted to different traders. The traders are being charged 4 wp 3160.16property tax by the corporation. They are paying the said tax tothe respondents/corporation. The space in between the shops isthe disputed premises for which the corporation has leviedproperty tax. Admittedly, the open space between the shops isenclosed by tins. It is used by the agriculturists to store theirgoods or agricultural produce free of costs. This is a facilityextended by market committee to the agriculturists withoutcharges. According to the petitioner this is not a building and notax can be leviable for the same.5.The respondents issued demand notices of the property taxto the petitioner. Petitioner submitted reply to the demandnotices on 23.01.2016. After hearing the stake holders, therespondent No. 2 passed order overruling the objection of thepetitioner for leving property tax. It was held that the tax wasvalidly levied U/Sec. 127, 128 and 129 of the Corporation Act anddirected the petitioner to pay the same. Against the notices andorder dated 11.03.2016, present petition is filed.6.By order dated 02.04.2019, the respondents wererestrained from taking coercive action against the petitioner onthe basis of demand notices.7.Mr. Siddheshwar Thombre, learned counsel for thepetitioner submits that imposition of property tax for six salehalls amounts to double taxation and there is no sanctity for thetax. He would submit that the sale halls are not incurring anyprofit or revenue to the petitioner. Those are being used free of 5 wp 3160.16cost and it’s a facility extended to agriculturists and, therefore,no tax is leviable. It is further submitted that sale halls areactually open space between two shops and it is not a building soas to incur any tax. He would further submit that petitioner is alocal body and its market funds can be utilized for the purposesenumerated in Sec. 37 of the Market Committee Act. Thepayment of taxes is not covered by the said provision and,therefore, it is not liable to pay any tax.8.Per contra, Mr. J. R. Shah, learned advocate for therespondents repels the submissions of the petitioner on the basisof affidavit in reply. He would submit that the petitioner and itsrepresentatives were extended opportunity of hearing. By orderdated 11.03.2016 the objection of the petitioner was alsooverruled. The petitioner is liable to pay property tax, which is inconsonance with Sec. 127, 128 and 129 of the Corporation Act. Itis further submitted that the petitioner is not entitled to anyexemption. Neither there is provision in the Market CommitteeAct, nor the Corporation Act to absolve the petitioner from theliability of the property tax. It is further submitted that thepetitioner is consistent defaulter. Due to the interim orderpassed on 02.04.2019, respondents were unable to take anyaction against the petitioner. It is submitted that as of March2023 the outstanding arrears were Rs. 3,37,04,074/-.9.Having heard both sides, what needs to be decided is as towhether the sale halls of the petitioner are chargeable forproperty tax under the Corporation Act or not. There is no 6 wp 3160.16dispute that the petitioner has constructed shops in the premisesof Market Committee at Jadhavwadi. The open space betweenthe shops is enclosed by tin shed and it is been called as salehalls. It is being used by the agriculturists free of costs forkeeping or storing their goods or the agricultural produce. Thetraders to whom the shops are allotted are paying individualproperty taxes to the respondents.10.It would be relevant to refer to few provisions of theCorporation Act.The Maharashtra Municipal Corporation Act, 19491.…..2.…..127. (1) For the purposes of this Act, the Corporation shallimpose the following taxes, namely :— (a) property taxes ; (b) a tax on vehicles, boats and animals. (2) In addition to the taxes specified in sub-section (1) theCorporation may for the purposes of this Act and subject tothe provisions thereof impose any of the following taxes,namely :—1 ** * 2** * * * * * * * * (c) a tax on dogs ;(d) a theatre tax ; 7 wp 3160.16(e) a toll on animals and vehicles, 3 ** * * * entering theCity ; * [(f) any other tax 4 [(not being a tax on profession, trades,callings and employments),] which the 5[State] Legislaturehas power under the 6 [Constitution] to impose in the 5[State].The Corporation Act empowers the corporation to impose theproperty tax vide Sec. 127(1)(a). The corporation is entitled tolevy property tax which is provided by Section 128-A of theCorporation Act.11.Section 128A of the Corporation Act is as follows :The Maharashtra Municipal Corporation Act, 19491.…..2.…..[128A. (1) Property taxes leviable on buildings and lands inthe City under this Act shall include water tax, water benefittax, sewerage tax, sewerage benefit tax, general tax,education cess, street tax and betterment charges. (2) For thepurposes of levy of property taxes, the expression “ building” includes a flat, a gala, a unit or any portion of the building.(3) All or any of the property taxes may be imposed on agraduated scale. (4) Save as otherwise provided in this Act,it shall be lawful for the Corporation to continue to levy allor any of the property taxes on the rateable value ofbuildings and lands until the Corporation adopts levy of anyor all the property taxes on such buildings and lands on thecapital value thereof under sub-section (2) of section 129.] 8 wp 3160.1612.The definition of building is as follows :The Maharashtra Municipal Corporation Act, 19491.…..2.…..2(1)…..(5) “ building ” includes a house, out-house, stable, shed,hut, and other enclosure or structure whether of masonry,bricks, wood, mud, metal or any other material whatever,whether used as a human dwelling or otherwise, and alsoincludes verandahs, fixed platforms, plinths, doorsteps,walls including compound walls and fencing and the like ;13.It is the case of the petitioner that open space between theshops is enclosed by tin shed and that is being called as sale halland the corporation is demanding property tax for the same. Thedefinition of building clearly covers shed. There is no provisionpointed out by the petitioner from the Corporation Act grantingexemption to agricultural produce market committee frompaying taxes for the shed. We therefore find that the respondentcorporation has legal sanctity to charge property tax for the salehalls of the petitioner. They are justified in demanding the tax.14.The market committee is permitted to spent market fundsfor the purpose enumerated in Section 37 of the MarketCommittee Act. It is permitted to spent market fund as perSection 37(1)(b) Market Committee Act for maintenance,improvement and development of the market. Although there is
Decision
9 wp 3160.16no specific clause regarding payment of taxes to the local body.However, the same is covered by Section 37(1)(b) of the Act. Wehave not been pointed out any provision from the concern Act toshow that petitioner has been granted any exemption frompayment of property tax. Therefore, we do not approve thesubmissions of the petitioner in this regard.15.The activity which is being conducted in the sale hall is forthe benefit of the agriculturists and that is free of charge. Justbecause the premises is being used free of charge cannot bedecisive factor for granting exemption to the petitioner frompayment of property tax. The traders who are allotted shops inthe premises of the committee are paying taxes to thecorporation. Those taxes are not being paid by the petitioner.Therefore, it cannot be said that imposing property tax on salehall amounts to double taxation.16.For the reasons stated above, we find no substance in thepetition. The petitioner is liable to pay arrears of taxes since2015-2016. The amount deposited in this Court by the petitionerneeds to be released in favour of the respondents with accruedinterest. We therefore, pass following order.O R D E R(I)The writ petition is dismissed.(II)Rule stands discharged. 10 wp 3160.16(III)The civil applications also stand disposed of.[ SHAILESH P. BRAHME, J. ] [ S. G. MEHARE, J. ]bsb/March 25