Empanelment of Valuation Agencies Government of West Bengal- 10.7.2019

The validity of the panel of Valuation Agencies issued vide notification no. 3739-F(Y) dated 11.06.2018 has expired on 10.06.2019. Now, Governor is pleased to extend the validity of panel of Valuation Agencies as per Annexure-I for one year w.e.f. 11.06.2019.

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Empanelment of Valuation Agencies Government of West Bengal

GUIDE LINES FOR VALUATION OF IMMOVABLE PROPERTIES

VALUATION CELL
INCOME TAX DEPARTMENT
MINISTRY OF FINANCE
GOVERNMENT OF INDIA
2009



AGOVT OF WEST BENGAL

Unit Area Method of Assessment
 WEST BENGAL
Property Tax is one of the main sources of internal revenue of the Urban Local Bodies. As the property tax is determined on the basis of annual valuation of lands and buildings, the entire process of determining property tax is solely dependent on assessment of lands and buildings.

PRESENT SYSTEM OF ASSESSMENT OF LAND AND BUILDINGS:
Presently in the Urban Local Bodies of this State the following two systems of assessment of lands and buildings are followed:

  1. Annual Rental Value (ARV) System: In this system tax is calculated on annual rent that is actually or reasonably be fetched by a property. Here Annual Rent (AR) = Monthly actual or reasonable rent X 12. In this system Annual Value (AV) = AR minus x% (in case of Kolkata Municipal Corporation value of this x is 10%) statutory deduction for maintenance. A percentage of AV is determined as the annual Property Tax. In case of Kolkata Municipal Corporation this tax = (AV /600 + 10)% of the AV subject to minimum of 11% and a maximum of 40%.
  2. Capital Value Method: In this system tax is calculated on Annual Value derived from cost of construction added to cost/ market value of the land. Here AV = (Construction cost + Market value or cost of the land) X a percent as laid down in the statute minus statutory deduction. Annual Tax = AV X a percentage of AV. In Kolkata Municipal Corporation AV of vacant land is determined at 7% of the market value of the land.

FLAWS IN THE EXISTING SYSTEM OF VALUATION:

Since enactment of the Calcutta Municipal Act, 1923 these two systems are being followed for assessment of lands and buildings in the municipal areas. With growing rate of urbanization and change in the socio-economic scenario the flaws in these two systems are being surfaced, and due to these flaws the system of assessment of lands and buildings is getting more complex and as a fall out the rate of collection of Property Tax is dwindling and simultaneously the scope of tax management is growing. These flaws are as follows:

Flaws in Annual Rental Value (ARV) System:

  • Subjectivity: “Reasonable Rent” is a completely subjective term, and creates considerable scope for using discretion at even lower level.
  • Discrepancy: This system creates wide spread discrepancy by placing similar properties in dissimilar tax pattern.
  • Non transparency: Non transparency of this system leads to mutual mistrust and misunderstanding. Apart from this the system creates ample scope of tax management and entry of middleman in the system.
  • Wastage of time of officials: Officials remain busier in arguing with the tax payers, cumbersome and lengthy hearing process and file / document management, than to do the duty related to tax administration.
  • Non reflection of actual revenue potential: Subletting, subdivision and collusive rent have been hiding the actual revenue potential. Apart from long term tenancy and Rent Control properties lead to low valuation for low rent.

Flaws in Capital Value (CV) System:

  • Limited availability of sales data and unregistered instruments.
  • Under reporting of Transaction Price especially for old buildings.
  • Freezing of Tax base.
  • Need for qualified staff to assess cost.
  • Uncertainty of what assets should be covered.
  • Scope for subjectivity and discretion and hence non transparency.
  • Inequity between similarly placed properties assessed at different points of time.
    Subjective element of these systems leads to non-transparency, wastage of time of the civic personnel in cumbersome processes, and above all difference of opinion leading to excessive litigations, and thus wastage of efforts of civic personnel and fund in fighting the court cases.
    In this situation to ensure a dynamic process of a transparent tax administration a decision has been taken to switch over the system of valuation of properties in Urban Local Bodies to Unit Area System of assessment.

Design of Unit Area System:

  • One time in-house work in every five years to bring equality at macro level at first.
  • Determination of valuation by an independent Committee namely the Municipal Valuation Committee.
  • Division of all wards in varying number of sub-wards/ blocks depending on basic infrastructure, in broad based manner, after considering the views of general citizens.
  • Categorization of such sub-wards/ blocks on the basis of available infrastructures and defined factors.
  • Grouping the sub-wards/ blocks of identical and similar in nature of whole area of the Urban Local Body in same set.
  • Putting Base Unit Area Value, i.e. Base annual value per sq. ft. to properties within a grade of sub ward/block with the help of revenue simulation taking into consideration the existing revenue base. In this way similarly located all properties will have similar Base Unit Area Value. This will be publicly communicated.
  • Fixing predefined and publicly proclaimed multiplicative factors (from 0.5 to 8) to determine the actual value of the property, by increasing or decreasing the Base Unit Area Value depending of condition of individual property. For fixing multiplicative factors the mandatory parameters of type of location, use, age structure and occupancy status shall bed considered, and apart from this there exist provision for considering such other parameters as may be considered necessary by the Municipal Valuation Committee.
  • Publication of the scheme, after considering the views of general citizens, for the purpose of specifying Base Unit Area values of lands and buildings under all classes of areas within the Corporation.
  • In this system the annual value of a land or building shall be the amount arrived by multiplying the total area of land and/ or building by the Base Unit Area value of such land and/ or building.
  • A percentage of such annual value shall be fixed as the annual Property Tax.
Assessment of Premises
Assessment of Property Tax in Kolkata :

Unit Area Assessment (UAA) System for determination of property tax is commenced, at present, for the Ward Number 001 to 141, with the final publication of Scheme in Official Gazette on 1st April, 2017. From 1st quarter of 2017, all properties within such wards have come under the new system and are required to be reassessed as per provisions of UAA System. However, if there is any assessment pending for the previous effective quarters with respect to any property, such assessment may be completed under the Annual Rateable Value (ARV) method of assessment that was prevalent prior to final publication of Scheme. A brief idea of two different systems for determination of property tax is as follows:-

(A) Annual Rateable Value (ARV) method of assessment of Property Tax : 

• Determination Of Annual Valuation(AV) :

a) If the property is used by the owner himself, “Reasonable Rental Method” is applied, i.e. from our database and comparing with similar premises, expected reasonable rent per month, which the property is capable of fetching, is determined. Then it is multiplied by 12 to arrive at Annual Rental Value and a 10% statutory allowance for maintenance is subtracted to arrive at the Annual Valuation (rounded off to nearest ten rupees)

b)If the property is tenanted, the actual monthly rent (including service charges and / or maintenance charges, if any) is multiplied by 12 less 10% statutory allowance to arrive at the Annual Valuation.

c) In case of Theatre/Cinema halls 7.5% of the Gross Annual receipts (excluding taxes) is fixed as Annual Value for the Hall.

d) In case of vacant unconstructed land, the Annual Value w.e.f 3rd August 2008 – 2009 will be 2.5% and 7% of estimated market value for land measuring upto and above 5 cottah respectively. For effective assessment period before March 2008-09, the rate is 7% for all cases irrespective of the land area.

• Rates of Taxes :

a) If the Annual Valuation as fixed above, does not exceed Rs.600/-, the rate of tax is 11% of the Annual Value i.e. if A.V. is Rs.500/- the property tax per year will be Rs.55/- plus Howrah bridge tax . To get quarterly gross amount of the property tax, annual property tax, is divided by 4 and rounded off to the nearest rupee. Rebate @ 5% on the quarterly tax is allowed if deposited within specified date. Net amount of property tax after rebate will also be rounded off to the nearest rupee.

b) If the Annual Valuation as fixed above, exceeds Rs.600/- but does not exceed Rs.18000/, annual tax rate is the percentage of the A.V., worked out by dividing the A.V. of the premises by 600 and adding 10 to the quotient, the sum thus worked out being rounded off to the nearest first place of decimal. Say, if A.V. of premises is Rs.1300/-; such quotient will be 1300/600=2.16% and property tax rate will be 2.16+10=12.2% (rounded off). So gross tax of such property per year will be Rs.158.60/- plus Howrah Bridge tax @ 0.5% or 0.25%, as the case may be, of AV. To get quarterly gross amount of tax this should be divided by 4 and rounded off to the nearest rupee. A rebate of 5% or the quarterly tax is allowed if deposited within specified date. Net amount of property tax after rebate will also be rounded off to the nearest rupee.

c) If the Annual Valuation as fixed above exceeds Rs.18000/-, the rate of tax is 40% of the Annual Value. That is if A.V. is Rs.20000/- the property tax per year is Rs.8000/- plus Howrah Bridge tax @ 0.5% or 0.25%, as the case may be, of A.V. and a further rebate of 5% of the quarterly tax is allowed, if deposited within specified date.

d) Howrah Bridge Tax percentage is 0.5% (for Ward No.1-65, 68-88, 90), 0.25% (for Ward No.66,67,89,91-100, 115-141), 0% (for Ward No.101-114).

e) In case of general flats / apportioned units, tax rate percentage is calculated on a cumulative Annual Value of all the flats within that premises and should be applied on individual Annual Value for respective flats to get the amount of gross property tax.

f) For Bustee and some statutory organizations, the rate of property tax is different. For Bustee the maximum tax rate is 18% on Annual Value.

g) For commercial/non-residential property, normally a surcharge @ not exceeding 50% of property tax is applicable to such property or portion of such property under non residential or commercial use and is levied additionally.
h) No property tax is payable if AV does not exceed Rs.300 (three hundred).

• Hearing on Proposed Annual Value :

There is no system of Self-Assessment in this method and generally Kolkata Municipal Corporation, on proposing any Annual Value gives hearing to the tax-payers and finally determine the Annual Value and property tax after hearing process is over.

(B) Unit Area Assessment (UAA) System of determination of Property Tax :
•  As a first step to implement Unit Area Assessment System Ward No.001 to 141 have been subdivided into 293 blocks and categorized under seven categories from ‘A’ to ‘G’. Final Notification on Blocks and Categories defining boundaries of such blocks has already been published in Official Gazette.

•  Corporation has also published the ‘Scheme’ for UAA System in Official Gazette on 1st April, 2017 that comprises the following :

1. Base Unit Area Value i.e. Annual Value per sq.ft. of covered space of building or land comprising building or any vacant land of    respective categories.
2. Multiplicative Factors, which are property specific.
3. Rate of property Tax
4. Taxable vacant land when there is a construction
5. Manner relating to submission of Self Assessment Form

•  Also, on 1st April, 2017, Final Notifications on following Rules & Regulations have been published in Official Gazette :

1. The Kolkata Municipal Corporation (Self-Assessment System, Manner and Forms) Rules, 2017.
2. The Kolkata Municipal Corporation (Covered Space) Regulations, 2017.
3. The Kolkata Municipal Corporation (Unit Area Assessment – Tax Capping) Regulations,2017.

For having a basic idea on the new system, please refer to page Brief Account of Unit Area Assessment System.

For further detail please refer to
Final Notification on Blocks & Categories,
Scheme for Unit Area Assessment System &
Relevant Rules & Regulations with regard UAA system as referred above.

• Self-Assessment of Property Tax :

As per provision of the Scheme and relevant Rules and Regulations as well as provisions of the Kolkata Municipal Corporation Act, 1980 (as amended time to time), the owner or lessee or sublessee or person liable to pay property tax of a property is required to submit Return in duly filled in Self-Assessment Form (SAF) within sixty days from date of publication of Scheme. Forms are available from website or helpdesks of different offices of Assessment-Collection departments common collection centres & e-Kolkata citizens service Centres. Forms can be submitted offline at such offices and demand under UAA will be generated after entry of data given in the form. There is also provision of online submission of SAF and payment in online mode.
The forms so submitted will be checked later randomly and property tax will be calculated by the Kolkata Municipal Corporation by its own mechanism. In case forms are not submitted in time, KMC will assess the property suo-motu. In both the cases, before final determination of Annual Value and Property Tax by the Municipal Commissioner or his representative, a one month notice will be served to the tax-payer allowing him to give objection, if any. In case there is any objection, submitted within stipulated period, notice for Hearing will be issued and the tax will be determined after hearing process is over.
It will be pertinent to note here that Annual Valuation (AV) of different portions of a property having single assessee no. with different types of age or occupancy or structure or usages are to be assessed separately for respective portions in the relevant format mentioning them in different rows. Thereafter, on the total Annual valuation the payable tax is to be calculated as per relevant tax rate. Annual Valuation of Car parking space (if any) is also to be assessed separately as per relevant MF and added to the total Annual Value for calculation of payable tax.
In case of a property/flat/unit/apartment in a multiple flat building with different flat owners, proportionate common area for individual flat is to be calculated and assessed separately as per relevant MF and added to the Annual Value of the flat(s)/units(s)/apartment(s) for deriving the total annual Value for calculating payable tax as per relevant tax rate.

• Please note that for location MF road width is the criterion. Road width includes footpath and carriageway. 

• Continuance of making payment of existing property tax under the old (ARV) System: So long the property tax under UAA system is not finally determined and paid, the tax-payers are required to make payment of property tax so determined under the old (ARV) system. Property Tax Bill under ARV System for the year 2017-18 is already raised and tax-payers are requested to make payment of such tax. If demand against all four quarters are paid at a time within rebate period of first quarter, additional 5% rebate will be allowed for 2nd, 3rd & 4th quarters, in addition to normal rebate of 5%.
If there is any difference in property tax under new system compared to the existing demand under ARV system, so paid for the year 2017-18 or so; the same will be duly adjusted or taken care of at the time of raising demand under new system.

• How to learn outstanding dues in respect of Property Tax:
Please procure an LOI from Computer Section of respective units of Assessment Collection Department and get it verified from the concerned division/ unit and if the LOI is found correct that is your O/S. [see sample]

• Functions of Municipal Assessment Tribunal : 
Each assessee is given liberty to appear before a Hearing Officer if there is any objection against the valuation proposed by KMC (Section 184(3), 184(4), 185, 186 and 187 of KMC Act, 1980 may be referred). Hearing Officer determines such objections and fixes the Annual Valuation in respect of the premises of the assessee as per provisions under section 188 of KMC Act, 1980. The assessee is also given a further chance to appeal against such valuation as determined under section 188 if he prefers to. He can appeal before Municipal Assessment Tribunal (under section 189) consisting of a Chairman and a number of other members. However no appeal will be entertained by the said tribunal if the disputed tax is not deposited. Provisions of Limitation Act, 1963 is applicable relating to such appeal before tribunal. Valuation as determined by the Tribunal is final and no proceeding shall lie in any Civil Court against the valuation as determined by the Tribunal.

• Information sheet for recovery of Property Tax through other penal measures:
Sections 217-221B, 223, 225 and Section 275 -(1)(aa) of Calcutta Municipal Act, 1980 deals the situation as mentioned above.
a) Provision for interest and penalty for non-payment of property tax (Section 217)
b) Issuance of Warrant of Distress and sale of movable property (Sections 220-221)
c) Attachment and sale of immovable property (Section 221A and sale of property distrained or attached (Section 221 B)
d) Recovery under Bengal Act III, 1913 (Section 223)
e) Attachment of rent of the tenant(s) [Section 225]
f) Disconnection of water supply line (Section 275 –(1) (aa))

The West Bengal Valuation Board Act, 1978

the State of West Bengal

This Act was first enacted as the West Bengal Central Valuation Board Act, 1978 in order to set up a Central Valuation Board for valuation and assessment of properties within the Urban Local Body areas for imposition of property tax. Prior to enactment of this Act the valuation of buildings in municipal areas were used to be done either by the employees of the Urban Local Body concerned, or by the assessors appointed by the Municipalities. In this situation this Act was enacted with a view to constitute a Central Valuation Board to ensure uniformity in valuation, objectivity in assessment and securing a higher yield of municipal revenue throughout the State. Later the name of the Act has been changed to the West Bengal Valuation Board Act, 1978.

Two rules have been framed under the said Act, which are as follows:

  1. The West Bengal Valuation Board (Valuation of Lands and Buildings) Rules, 1984.- In this rule the manner of preparation of valuation list, procedure for handling review applications have been detailed.
  2. The West Bengal Valuation Board (Registration of Valuers and Surveyors) Rules, – In this rule the detailed procedure for registration of Valuers and Surveyors, for the purpose of assisting the Valuation Board in their work, have been stated.

 


The West Bengal Valuation Board Act, 1978

West Bengal Act 57 of 1978

[Dated 5th February, 1979]


1. Short title, extent and commencement.
 – (1) This Act may be called the West Bengal  Valuation Board Act, 1978.

(2) It extends to the whole of West Bengal.

(3) It shall come into force in such area and on such date as the State Government may, by notification, appoint and different dates may be appointed for different areas.Assent of the Governor was first published in the Calcutta Gazette, Extraordinary of the 5th February, 1979.

An Act to provide for a  Valuation Board and Valuation Authorities for the purpose of valuation of lands and buildings in West Bengal.Whereas it is expedient to establish a [****] Valuation Board and Valuation Authorities for the purpose of valuation of lands and buildings in West Bengal;It is hereby enacted as follows :-

2. Definitions. – (1) In this Act, unless there is anything repugnant in the subject or context,

[(aa) “Administrator or Board of Administrators” has the same meaning as in sub-section (3) of section 14 of the West Bengal Municipal Act, 1993.]

[***********]

(b) “Board” means the [****] Valuation Board established under section 4;

[(bb) “Board of Councillors” means the Board of Councillors of a Municipality;]

[***********]

[(e) “Councillor” means a Councillor of a Corporation or Municipality;]

[***********]

[(f) “Corporation” means the Kolkata Municipal Corporation constituted under the Kolkata Municipal Corporation Act, 1980, the Howrah Municipal Corporation constituted under the Howrah Municipal Corporation Act, 1980, and other Municipal Corporations constituted under the West Bengal Municipal Corporation Act, 2006;]

(g) “Fund” means the [****] Valuation Board Fund referred to in section 20;

[(h) “Howrah” means Howrah as defined in the Howrah Municipal Corporation Act, 1980;]

(i) “Land or building” [includes a bustee];

[(ii) “municipal area” includes a notified area;]

[(j) “Municipality” means a Municipality as defined in the West Bengal Municipal Act, 1993, and includes a Notified Area Authority;]

(k) “Notification” means a notification published in the Official Gazette;

[(kk) “Property tax” means the property tax on the annual value of lands and buildings determined and leviable under the Howrah Municipal Corporation Act, 1980, [the Calcutta Municipal Corporation Act, 1980,] [the West Bengal Municipal Corporation Act, 2006,] or the West Bengal Municipal Act, 1993, as the case may be;]

(l) “prescribed” means prescribed by rules made under this Act;

(m) “regulations” means regulations made under section 29;

[(n) “valuer-surveyor” means the valuer-surveyor Grade I, or the valuer-surveyor Grade II, registered as such under section 8B.]

[(2) Words and expressions used in this Act but not defined shall have the same meaning as in the Howrah Municipal Corporation Act, 1980 or the Calcutta Municipal Corporation Act, 1980 or [the West Bengal Municipal Corporation Act, 2006,] or the West Bengal Municipal Act, 1993.]

3. Act to override other laws. – With effect from the date [of notification referred to in sub-section (1) of section 9,] the [provisions of the Howrah Municipal Corporation Act, 1980 or the Calcutta Municipal Corporation Act, 1980] or [the West Bengal Municipal Corporation Act, 2006) or the West Bengal Municipal Act, 1993,] or any other law relating to any of the matters provided for in this Act shall be deemed, in respect of such area, to have been modified to the extent of the provisions made in this Act.

4. Establishment of the Board. – (1) The State Government may, by notification, establish, for the purposes of this Act, a Board to be called the ‘*** Valuation Board.

(2) The Board shall be a body corporate with perpetual succession and a common seal and may sue or be sued in its corporate name and shall be competent to acquire, hold and dispose of any property, both movable and immovable, to enter into contracts and to do all things necessary for the purposes of this Act.

5. Members of the Board. – (1) The Board shall consist of a Chairman and [four] other members to be appointed by the State Government.

(2) The Chairman shall be a person who is or has been an officer of the State Government [not below the rank of Secretary including ex officioSecretary [***].]

[(3) [The four other members shall include the Director of Local Bodies, Government of West Bengal, who shall be the ex officio member of the Board, and such other officers of the State Government or non-official experts] having knowledge and experience in the field of Judiciary, Engineering, Valuation and Assessment of Properties, Economics or Social Science as the State Government may determine.]

(4) The Chairman and the other members of the Board shall hold office for such period not exceeding [four years] as the State Government may determine and the terms and conditions of their service, including salaries and allowances shall be such as may be prescribed.

[(5) The Board shall have a Member-Secretary who shall be appointed by the State Government from amongst the members referred to in subsection (3) and shall be the Chief Executive Officer of a Board.]

[5A. Validation. – Notwithstanding anything contained elsewhere in this Act, no action of the Board shall be invalid or otherwise called in question merely on the ground of the existence of any vacancy (initial or subsequent) in the office of the members of the Board.]

[6. Officers and employees. – (1) The Board may create such posts of officers and employees and fill up such posts as may be approved by the State Government.]

(2) The terms and conditions of service including salaries and allowances of the officers and employees appointed under sub-section (1) shall be determined by regulations.

7. Employment of staff of the State Government. – (1) The Board may take over and employ such staff of the State Government as the State Government may make available.(2) During the period of such employment all matters relating to pay, allowances, leave, retirement, pension, provident fund and all other terms and conditions of service of the staff so made available and taken over shall be regulated by the West Bengal Service Rules or such other rules on the subject as may, from time to time, be made by the State Government for its employees.(3) Subject to the provisions of sub-sections (2) and (4) every person so taken over and employed shall be subject to the provisions of this Act and the regulations.(4) All permanent Government employees taken over and employed under sub-section (1) shall have a lien on their post in the service of the State Government and the period of their service under the Board shall, on reversion to the service of the State Government, be counted for the purpose of their promotion, increments, pension and other matters relating to their service.

[8. Expenditure incurred on account of salaries and allowances including contingencies. – (1) The expenditure incurred by the Board for meeting the salaries and allowances including contingencies of the Chairman and the Member-Secretary serving under the Board shall be defrayed out of the Fund to be provided by the State Government.(2) The expenditure incurred by the Board for meeting the salaries and allowances including contingencies in respect of all the officers and employees serving under the Board shall be defrayed out of the Fund to be provided by the State Government.(3) The expenditure towards contingencies for maintaining normal financial activities shall be met out of the Fund so provided by the State Government.]

8A. Maintenance of register’ of registered valuer-surveyors [Grade I and registered valuer-surveyors Grade II.]. – The Board shall maintain in the prescribed manner a register of registered valuer-surveyors [Grade I and registered valuer-surveyors Grade II..

8B. Registration of valuer-surveyor [Grade I and registered valuer-surveyors Grade II.]. – Every person who possesses such qualifications as may be prescribed shall, subject to such terms and conditions, and on payment of such fee, as may be prescribed, be entitled to have his name entered [as a valuer-surveyor Grade I or valuer-surveyor Grade II] in the register of registered valuer-surveyors Grade I and registered valuer-surveyors Grade II..

9. Determination of valuation and its duration. – (1) The State Government shall, from time to time by notification, specify the area where, the general valuation of lands and buildings shall be made by the Board, in accordance with the [provisions of the Howrah Municipal Corporation Act, 1980 or the Calcutta Municipal Corporation Act, 1980] or [the West Bengal Municipal Corporation Act, 2006) or the West Bengal Municipal Act, 1993,] or any other law for the time being in force in such area, as the case may be [, in so far as they relate to the determination of annual valuation :

[Provided that the Board may, in accordance with a resolution in this behalf adopted at a meeting of the Board and with the previous approval of the State Government, require any valuer-surveyor to make, subject to such conditions as may be prescribed, the general valuation of lands and buildings in the area as aforesaid or in any part thereof under the superintendence, direction and control of the Board on payment of such remuneration as the Board may determine, and every such valuation shall be deemed to have been made by the Board.]

(2) The valuation made by the Board shall become operative with effect from the date specified in section 11 and shall remain in force in respect of such area for a period of five years and may be revised thereafter at the termination of successive periods of five years :

Provided that [notwithstanding anything contained in the foregoing provisions of this section, in Calcutta and Howrah and in any municipality,] the valuation shall remain in force in such groups of Wards and for such period as may be prescribed and such valuation may be revised thereafter at the termination of successive periods of [five years] from the expiry of the period so prescribed:

Provided further that the valuation of lands or buildings in any area made in accordance with the provisions of [the West Bengal Municipal Act, 1993] or any other law, shall remain in force for the period for which it was made under [the West Bengal Municipal Act, 1993] or any other law, as the case may be.

[(3) Notwithstanding anything contained in sub-sections (1) and (2), if, during the currency of any period referred to in sub-section (2), any new building is erected, or any existing building is reconstructed or substantially altered or improved, in any area, the determination of valuation of such premises shall be subject to the same criteria as has been fixed by the Board for such premises, and its valuation shall be covered by such procedure as may be determined by the Board for its immediate valuation with prior mandatory filing of statement of particulars under section 16 by the owner or occupier. The valuation so made shall remain in force from the quarter intimated by the Municipality or Corporation for the unexpired portion of the period referred to in sub-section (2).

(4) The Corporation and [the Board of Councillors] shall in each year and within such time as may be prescribed send to the Board a list of all new buildings erected and also all existing buildings reconstructed or substantially altered or improved within their respective jurisdiction [together with suggested valuation in terms of Board’s guidelines for finalization and approval of valuation by the Board].

9A. Publication of draft valuation list. – (1) When the valuation under section 9 of the lands and buildings in any area has been completed, the Board shall cause such valuation list and the amount of property tax thereon to be entered in a list.]

(2) The Board shall publish the draft valuation list, prepared under subsection (1), in such manner, as may be prescribed and shall specify a date within which an application for objection to the draft valuation list may be filed.

(3) After the expiry of the date specified in sub-section (2) and within such period thereafter as may be prescribed, the objection of any entry in the draft valuation list shall be determined after giving the applicant an opportunity of being heard [************.]

[(4) The Board shall, with the approval of the State Government, appoint such officer of officers, having such experience and qualification, and on such terms and conditions as the State Government may by order determine, to hear and determine the objections to the draft valuation list, and the objection shall be determined in such manner as may be prescribed.]

Explanation.-For the purposes of this section the term ‘previous valuation’ means the Valuation made under the Bengal Municipal Act, 1932 and in force on the date immediately before the commencement of the West Bengal Municipal Act, 1993, and under the West Bengal Municipal Act, 1993.

10.[************]

[11. Publication of final valuation list. – When the application under sub-section (2) of section 9A, if any, has been determined, the Board shall prepare a final valuation list and shall give public notice of the place or places where such list may be inspected, and such valuation list shall be the final valuation list, and shall become operative from the date or quarter succeeding last date or quarter upto which the previous valuation list was valid.]

12.[************]

[12A. Alteration or amendment of [**] valuation list. – (1) Notwithstanding anything contained in section 11, the Board may at any time before[the date specified for filing the applications under sub-section (2) of section 9A] and for reasons to be recorded in writing, direct any alteration or amendment of the [**] valuation list-

(a) by inserting therein the name of any person whose name ought to be inserted; or

(b) by inserting therein any land or building previously omitted together with the valuation thereof; or

(c) by striking out the name of any person or any land or building not liable for payment of [property tax; or]

(d) by increasing or decreasing the annual valuation of any holding which, in the opinion of the Board, has been substantially undervalued or over-valued by reasons of fraud, misrepresentation, [mistake, error or subsequent construction or inadvertence;] or

[(e) by correcting any patent error or omissions.]

SEC 13-15 [*****]

16. Owner or occupier to file statement. – Every owner or occupier of any land or building shall file a statement before the Board in such manner and within such time and specifying such particulars as may be prescribed.

[18. Power to enter into land or building. – [(1) Any officer of the Board, or any person or an Agency authorised by the Board in this behalf, in writing, may enter into any land or building and make an inspection or survey, or take measurements, thereof for the purpose of valuation.](2) If such entry is refused, or any objection to such entry is made, the officer authorised under sub-section (1) may give notice in writing to the owner or the occupier of such land or building of his intention to enter into such or land building, and the owner or the occupier of such land or building shall, upon such notice being duly served on him, extend all facilities as may reasonably be expected of him to such officer [, person or the agency, as the case may be,] for entering into such land or building and for making inspection or survey, or for taking measurements, thereof as the case may be, for the purpose of valuation.]

17. Production and inspection of accounts and documents. – The Board or any of its officer authorised by the Board may, subject to such conditions as may be prescribed, require the owner or the occupier of any land or building to produce before the Board or such officer within such time as the Board or such officer may fix any accounts, registers or documents or to furnish any information relating thereto as may be considered necessary for the purpose of this Act and the owner or the occupier shall comply with such requisition.

19. Corporation and [Municipalities] to make payment to the Board. – (1) [The Calcutta Municipal Corporation, the Howrah Municipal Corporation,] [the Siliguri Municipal Corporation, the Asansol Municipal Corporation, the Chandernagore Municipal Corporation, the Municipality or other local authority of any area,] as the case may be, in respect of which notification under sub-section (1) of section 9 has been made, [may in each year pay] to the Board such proportion of the expenditure incurred by the Board on account of the valuation and assessment, as the annual value of [holdings in Calcutta, Howrah,] [Siliguri, Asansol or Chandernagore or within the jurisdiction of the Municipality or the other local authority,] as the case may be, bears to the aggregate of the annual value of the total number of holdings in the concerned area.(2) The Board shall calculate the amount payable by the Corporation, [the Municipality or the local authority] under sub-section (1) and may require the concerned body to pay the amount withing such time as may be prescribed.(3) If the amount is not paid within the prescribed time, the Board may refer the matter to the State Government and the State Government may pay the amount to the Board after deducting the same from any grant payable by the State Government to the Corporation, [the Municipality or such other local authority,] as the case may be.

[19A. Functions of the Board. – (1) The Board may render such advice on valuation and rating to a Corporation or a [Municipality] as the State Government may, from time to time, require it to do or as the Board may consider necessary for carrying out the purposes of the Act.

(2) The Board may also discharge such other functions in the field of valuation including development of expertise in valuation of land and building and training of [officers and employees of a Municipality] as the State Government may direct or as the Board may consider necessary for carrying out the purposes of this Act.]

20. Fund of the Board. – (1) The Board shall have a fund to be called the Central Valuation Board Fund to which shall be credited-

(a) such moneys as may be paid to the Board by [the Corporations, the Municipalities and the other local authorities] under section 19, and

(b) such other moneys as may be paid to the Board by the State Government or any other authority or agency.

(2) All moneys received by the Board shall be deposited in the [State Bank of India] or in one or more nationalised banks.

[21. Grants or loans to the Board. – The State Government may extend grants or loans to the Board on such terms and conditions as that Government may determine.]

22. Expenditure and accounts. – [(1) The Board shall have the same financial powers as are exercisable by the Secretary of a Department of the State Government. Matters beyond such financial powers shall be referred by the Board to the State Government for decision.][(2) The Board shall keep accounts of all receipts and expenditure, and prepare annual accounts, in a regular manner as per standard accounting norms or in such manner as may be prescribed.]

23. Audit. – (1) The Board shall cause its accounts to be audited annually by an auditor to be appointed by the State Government and the auditor so appointed shall have the right to demand the production of books, accounts, documents and other papers of the Board.[(2) The annual accounts prepared as per provisions of sub-section (2) of section 22 shall be placed to the auditor for audit. As soon as the accounts have been audited, the Board shall send a copy thereof together with a copy of the report of the auditor to the State Government.](3) The Board shall comply with such directions as the State Government may, after perusal of the report of the auditor, think fit to issue in this behalf.(4) The Board shall pay out of the Fund such sum as may be determined by the State Government by way of fees [, if any,] for such audit.

24. Budget. – (1) The Board shall prepare each year in such form and within such time as may be prescribed a budget in respect of the financial year next ensuing, showing the estimated receipts and expenditure and shall forward a copy of the same to the State Government for approval.(2) The State Government may, in according such approval, make such additions, alterations and modifications therein as it thinks fit:Provided that before making such additions, alterations or modifications the State Government shall give the Board an opportunity to express its views thereon within such period as may be prescribed.

25. Penalty. – Any person who-

(a) fails to file the statement referred to in section 16 within the prescribed period, or files a false statement, or

(b) fails to produce the accounts, registers or documents or to furnish the information relating thereto when so required under [section 17, or]

[(c) fails to comply with the provisions of section 16,]

shall be punishable with simple imprisonment which may extend to six months or with fine which may extend to one thousand rupees or with both and when the offence is a continuing one, with a daily fine not exceeding fifty rupees per day during the period of continuance of the offence.

26. Employment of staff. – The Board may employ such members of the staff [of the Corporation or the Municipality or any other local authority, as the case may be,] having jurisdiction over the area specified in the notification under sub-section (1) of section 9, [for the purpose of collection of field data for determining valuation of properties under this Act,] on such terms and conditions of service as may be determined by regulation :Provided that the terms and conditions of service of the persons so employed shall not be varied to their disadvantage :[Provided further that notwithstanding anything contained in this section, the Board may engage private agency or any other person with sufficient experience, on such terms and conditions as the State Government may, by order, determine, in the work of valuation of properties.]

[26A. Delegation of powers and functions by Board. – [(1) The Board may delegate any of its powers and functions including financial powers to the Chairman of the Board except the power under sub-section (1) of section 6.](2) The Board may also delegate any of its powers or functions to any other officer of the Board by a resolution adopted by it in this behalf.]

27.[************]


28. Power to make rules.
 – (1) The State Government may, by notification, make rules for carrying out the purposes of this Act.(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the matters which may be or is required to be prescribed.

[27A. Members, officers and employees to be public servants. – Every Member of the Board or every officer or employee of the Board shall, when acting or purporting to act under the provisions of this Act, be deemed to be a public servant within the meaning of section 21 of the Indian Penal Code.]

29. Power to make regulations. – (1) The Board may, with the previous approval of the State Government, make regulations consistent with the provisions of this Act and the rules made thereunder for carrying out the purposes of this Act.(2) The State Government may, in according such approval, make such additions, alterations and modifications therein as it thinks fit:Provided that before making such additions, alterations or modifications the State Government shall give the Board an opportunity to express its views thereon within such period not exceeding two months as may be specified by the State Government.(3) All regulations approved by the State Government shall be published in the Official Gazette.

[30. Validation and saving. – Notwithstanding anything contained in this Act, with effect from the date of coming into force of the West Bengal Valuation Board (Amendment) Act, 2009, any property tax levied on annual value of land and building, or any valuation published under this Act or any assessment list published under the West Bengal Municipal Act, 1993, or the West  Bengal Municipal Corporation Act, 2006 shall remain in force till a new valuation list is brought into effect.]


SUPREME COURT CASES

Bidhannagar (Salt Lake) Welfare Vs Central Valuation Board and Ors [SC 2007]

Bidhannagar (Salt Lake) Welfare Vs Central Valuation Board and Ors[SC 2007]

KEYWORDS: Valuation-Assessment of property tax

SC INDEx

The person affected must have reasonable opportunity of being heard and the hearing must be a genuine hearing and not an empty public relations exercise.

AIR 2007 SC 2276 : (2007) 7 SCR 430 : (2007) 6 SCC 668 : JT 2007 (8) SC 118 : (2007) 7 SCALE 546

(SUPREME COURT OF INDIA)

Bidhannagar (Salt Lake) Welfare Association

Versus

Central Valuation Board and OTHERS

(Before : S. B. Sinha And Markandey Katju, JJ.)

Civil Appeal Nos. 5519-5520 of 2007, Decided on : 18-05-2007.

West Bengal Municipal Act, 1993—Sections 106, 106(1A), 110—West Bengal Central Valuation Board Act, 1978—Sections 9(1), 10, 11, 12, 14 and 15– Constitution of India, 1950—Article 14.

Counsel for the Parties:

Bhaskar P. Gupta, Sr. Advocate, Rana Mukherjee, Siddharth Gautam, Goodwill Indeevar, Advocates with him for Appellant

R. Mohan, ASG, Altaf Ahmad, Sr. Advocate, H. K. Puri, Ujjwal Banerjee, S. K. Puri, Ms. Priya Puri, V. M. Chauhan, Advocates with them for Respondents.

Judgment

S. B. Sinha, J—Validity or otherwise of certain provisions of the West Bengal Central Valuation Board (Amendment) Act, 1994 (for short “the Amendment Act”) is in question in these appeals which arise out of a judgment and order dated 24.12.2003 passed by a Division Bench of the High Court of Calcutta dismissing the writ petition filed by the appellant herein and, thus, upholding the impugned provisions thereof.

2. Members of the appellant association are occupiers of lands and buildings situated within the territorial limits of the Bidhannagar Municipality. Annual valuation of lands and buildings for the purpose of assessment of municipal tax indisputably is governed by the provisions of the West Bengal Municipal Act, 1993 (for short “the Municipal Act”). In terms of Section 110 thereof, the annual valuation of lands and buildings is required to be determined by the Central Valuation Board (for short “the Board”). The Board was established under the provisions of the West Bengal Central Valuation Board Act, 1978 (for short “the 1978 Act”).

3. Valuation of the holdings used to be governed by Sections 10, 11 and 12 of the 1978 Act. Before we embark upon a detailed analysis of the provisions thereof, we may notice that they provided for publication of the draft valuation list, publication of the final valuation list and amendment of valuation of the list by the Board respectively.

4. Principles of natural justice were to be complied with in terms of sub-section (3) of Section 10 insofar as upon publication of the draft valuation list, objections were invited and objections, if filed, were required to be considered by the Board for determination thereof upon giving an opportunity of being heard in that behalf. Section 11 provided for publication of the final valuation list together with the amount of consolidated rate payable after determination of the objections filed under Section 10. The final valuation list, so arrived, could be subject to further review in terms of Sections 14 and 15 of the Act.

5. By reason of the impugned amendment, alterations on three principal fields were made, i.e., the provisions relating to publication of the draft valuation list of lands and buildings and finalization thereof, upon hearing objections thereto were deleted. The West Bengal Central Valuation Board (Valuation of Lands and Building) Rules, 1984 (for short “the 1984 Rules”) framed under the 1978 Act were also amended by a notification dated 30.03.1984 wherein provisions pertaining to filing objection petitions against the draft annual valuation and determination thereof were deleted. The effect of the said amendment was that the valuation made by the Board was made final, subject to review as provided for under Sections 14 and 15 of the 1978 Act.

6. Contending that the said Amendment Act is violative of Article 14 of the Constitution of India as it deprived the citizens of being heard which is the essence of the principles of natural justice as also lead to procedural unfairness, a writ petition was filed by the appellant. The said writ petition was allowed by a learned Single Judge of the High Court. In arriving at its conclusion, the learned Judge took notice of the contentions raised by the respondents in their counter-affidavits as also other factors relevant for determination thereof at some details. An intra-court appeal was preferred thereagainst in terms of Clause 15 of the Letters Patent Appeal of the Calcutta High Court and by reason of the impugned judgment dated 24.12.2003, the said appeal has been allowed.

7. The High Court opined:

(i) The requirements of compliance of principles of natural justice have not completely been taken away.

(ii) No case of substantive unreasonableness has been made out.

(iii) In the matter of collection of debt for the purpose of arriving at a general valuation as also for the purpose of determining the objections by the owners and occupiers of the lands and the buildings, the restrictions put on the power of the Review Committee as also the extent to which such power can be exercised do not lead to procedural unfairness; and

(iv) Validity of constitution of the Review Committee cannot also be faulted with.

8. Mr. Bhaskar P. Gupta, learned senior counsel appearing on behalf of the appellant would submit that the Division Bench of the High Court committed a serious error in construing the provisions of the impugned Amending Act insofar as it failed to take into consideration the following:

(i) The valuation list prepared by the Board and produced in course of the hearing before the learned Single Judge clearly showed that no reason had been assigned in support thereof, and in any event, the same did not bear any real nexus with the factors to be taken into account in the matter of determination of annual valuation as provided under Section 106 of the Municipal Act.

(ii) It may be true that the Amending Act did not exclude the rules of audi alteram partem completely and sought to provide an opportunity of hearing only at the stage of review. However, the provisions thereof would clearly indicate that there is no procedural or substantive observance of the principles of natural justice in the process of determination of annual valuation. (iii) Opportunity of hearing at the stage of review of the assessment being a post-decisional one, the same does not compensate for the requirements of a pre-decisional hearing.

9. Mr. R. Mohan, learned Additional Solicitor General appearing on behalf of the State of West Bengal and Mr. Altaf Ahmad, learned senior counsel appearing on behalf of the Central Valuation Board, on the other hand, would submit that the procedural fairness as also the principles of natural justice being capable of being read in the provisions of the Amendment Act, the High Court cannot be said to have committed any error in passing the impugned judgment.

10. Assessment of property tax used to be governed by the Bengal Municipal Act, 1932. However, the State of West Bengal enacted the 1978 Act inter alia for constitution of a Central Valuation Board and Valuation Authorities for the purpose of valuation of lands and buildings in West Bengal. By reason of the said provision, the exclusive jurisdiction of the Municipal Committees to make valuation of the lands and buildings which were exigible to levy of property tax was taken away.

11. A Comparative table showing relevant provisions of the 1978 Act and the impugned Amendment Act is as under:

12. The 1978 Act, as noticed hereinbefore, was amended in the year 1994. By reason of the said Amendment Act, a proviso was added to Section 9 which is in the following terms:

“Provided that the Board may, in accordance with a resolution in this behalf adopted at a meeting of the Board and with the previous approval of the State Government, require (a Valuer-Surveyor Grade I or Valuer-Surveyor of Grade II) to make, subject to such conditions as may be prescribed, the general valuation of lands and buildings in the area as aforesaid or in any part thereof under the superintendence, direction and control of the Board on payment of such remuneration as the Board may determine, and every such valuation shall be deemed to have been made by the Board.”

13. The effect of the said amendments is inter alia to take away the right of an assessee of a pre-decisional hearing. The provisions of the Amendment Act only provide for a review of the valuation made by the Board as pre-decisional hearing is not required to be given. A review contemplated under the 1978 Act is for all intent and purport in the nature of an appeal. The proviso appended to Section 9 of the 1978 Act is an enabling provision in terms whereof general valuation of lands and buildings in the area as aforesaid or in any part thereof made by a Valuer-Surveyor Grade I or Valuer-Surveyor of Grade II, however, shall be under the superintendence, direction and control of the Board. Admittedly, no such exercise had been undertaken.

14. Valuation of lands and buildings is a complex exercise. It requires certain amount of expertise. Valuation is made upon obtaining data prepared from a scientific study. Valuation of a land or building would depend upon several factors. Several methods of valuation may be applied for determination thereof. It is for the expert ordinarily to arrive at a decision as to which mode of valuation having regard to a particular set of factors would entail a correct evaluation. However, in determining the valuation of a land or building, it is not expected of a statutory authority to take recourse to the course of action which may be arbitrary, unscientific or haphazard in nature. Although the proviso appended to Section 9 of the 1978 Act, provided for certain safeguards and as thereby a legal fiction has been created, the same, as noticed hereinbefore, is optional. The Board is not bound to take recourse thereto. Who would be the surveyors eligible for carrying out the survey requires prior approval of the State. The learned Single Judge in his judgment noticed that in stead and place of appointing experts in the field, only casual employees were recruited by the Municipality, who made door to door survey of the properties situated within the area of Bidhannagar Municipality and collected the purported datas of the concerned premises in a field book wherefrom an inspection book was prepared and only on the basis thereof valuation was determined by the Board. Such a course of action was not contemplated by law.

15. Section 9(1) of the 1978 Act provides for survey in specific areas. We may notice that the appellants in their writ petition and in particular Paragraphs 16 to 24 thereof categorically stated in regard to the mode and manner in which the valuation is required to be done and had in fact been conducted. Paragraph 23 thereof is as under:

23. The Central Valuation Board had no infrastructure of its own in survey the building to ascertain the reasonable valuation and they depended entirely upon what the Municipality had conveyed to them which in turn was based on surmise and conjecture is the Municipality did not and/ or could not carry out any house to house survey of all the 17070 holdings in Salt Lake.”

16. In their counter-affidavits, the respondents inter alia stated:

“18. The allegations made in paragraph 23 of the said application are categorically denied and disputed and it is stated that it is on the advice of the Central Valuation Board that the Municipal authority engaged casual staff who, undertook door to door survey of the holdings on being exhaustively trained by the competent officer are of Central Valuation Board. The basic data thus collected have been transferred to the Inspection Book. Central Valuation Board prepared the valuation list on such data and the Municipality thereafter despatched notices signed by the Member Secretary of Central Valuation Board to owner/ occupier etc.”

17. The Board, therefore, delegated its power to the Municipality which was impermissible in law. It had no control over the recruitments made by the Municipality. Probably it even did not have any control over their work. Who had been supervising the job of the said casual employees has not been disclosed.

18. The result of such an unscientific study may produce a disastrous result and in fact from the pattern of increase in demands by the Bidhanagar Municipality it appears that the increase in the valuation ranges from 3954%, i.e., 39.5 times to 137%, i.e., 1.4 times. Such exorbitant increase in the tax on the public is, in our opinion, itself indicative of arbitrariness, and hence, violative of Article 14 of the Constitution. In a democracy, the people are supreme, and all authorities must function for the public welfare. Excessive increase in the tax burden on the public is surely not for the public welfare. Also, in the aforementioned context, in our opinion, the very method applied by the Municipality and the Central Valuation Board must be held to be arbitrary in nature and hence violative of the Constitution. In Maneka Gandhi v. Union of India [AIR 1978 SC 597], it was held that arbitrariness may be violative of Article 14 of the Constitution.

19. No person was appointed who had an expertise in the field. The casual employees appointed were not trained personnel. Their qualifications are not known. On what basis they could determine the valuation of the buildings and lands has also not been disclosed. They, being not government servants, ordinarily would not have the power to enter into the premises of persons so as to infringe the right of privacy which is otherwise granted to an authority under the 1978 Act.

20. In view of the mode and manner in which the general valuation had been prepared without giving an opportunity of hearing and/or in any event without even asking the residents of the area in general to have their say, the provisions of the 1978 Act are required to be construed.

21. Section 11 of the 1978 Act makes such general valuation final. Section 10 has been deleted but the finality clause attached to Section 11 has been retained. By reason of the Amendment Act, the finality clause has been converted to a conclusive one, subject of course to the provisions of Sections 14 and 15 of the 1978 Act. The provision has been made for giving notice only to the lessees and sub-lessees who were occupiers of the buildings where valuation is intended to be made for the first time or the valuation is sought to be increased.

22. Section 12 of the 1978 Act which provided for certain safeguards insofar as it empowered the Board to make amendment of the valuation list has been omitted. Section 13 had been omitted in the year 1984. It is in the aforementioned backdrop, that the provision for review contained in Section 14 is required to be taken into consideration. Before, however, we resort thereto, it may be noticed that in terms of an unamended provision of Section 14, a Review Committee was constituted in terms of Section 15 of the 1978 Act.

23. Under the unamended provision of Section 15, the State Government was to constitute a number of Review Committees which were required to hear applications presented under sub-section (1) of Section 14. Such Review Committees consisted of two members, out of whom the President was required to be appointed by the State Government on such terms and conditions and who was to possess such qualifications which were prescribed and the other member was to be one of the Councillors concerned. The said provision has no application in the instant case. Sub-section (3) of Section 15 of the Unamended Act had a plenary power to confirm, reduce, enhance or annul the valuation of land or building. The Review Committee had the jurisdiction to make further enquiry as it thought fit and proper. It was only the decision of the Review Committee which was made final.

24. Under the amended provisions, however, the power of the State which was an independent authority, has been taken away. Power to constitute Review Committee has been conferred upon every Corporation or Municipality, as the case may be. Every Review Committee was to be presided by the Chairman or the Vice-Chairman of the Municipality and would consist of two Councillors of the Municipality and an officer of the Board having knowledge in the assessment of municipal valuation.

25. From the plenary and unlimited power of such Review Committee, its power has been curtailed only to 25% in the year 2002. The rule of majority has been taken away. The decision under the amended provision is required to be unanimous. In case of difference of opinion, the matter is required to be referred back to the Board.

26. The provisions, in our opinion, are per se unreasonable and arbitrary. The Review Committee is not independent of the Municipality or the Board. Whereas under the 1978 Act, a person having the requisite knowledge was to be appointed by the State Government as Chairman of the Review Committee, the affairs of the Review Committee are controlled only by the Municipality concerned and the Board under the Amendment Act. The Municipality essentially is interested in increase in valuation of lands and buildings as it would fetch more income to its coffers. It is unthinkable that although the power to make annual valuation is not to be preceded by an opportunity of being heard to the person who would be affected thereby, the power of the Review Committee has been curtailed to 25% of the valuation made by the Board. The members are not independent person and each one of them is, in one way or the other, interested in the matter. Even the officer nominated by the Board who is said to be an expert might have something to do with the annual valuation of the area in question. In any event, the effect of the amendment is that annual valuation is to be made by the Board, then the objections are to be heard by a Committee which again consists of members of the Municipality and the Board, and in the event, the decision is not unanimous, the matter again goes back to the Board.

27. This provision is akin to the well-known doctrine of Caesar to Caesar. It per se contravenes the values attached to the principles of natural justice. We must also take notice of the fact that even the jurisdiction of civil court is barred and, thus, the only remedy which would be available to the taxpayer would be to take recourse to judicial review. Its application in the matter of this nature where disputed questions of fact may arise for its determination, would be very limited. It is unfortunate that the Division Bench opined, although there was no provision therefor, that in case of any final decision of the Board, the taxpayer can go back to the Review Committee.

28. The proviso appended to Section 14 of the 1978 Act makes the situation worse inasmuch as before taking recourse to the review provision a pre-deposit is to be made in terms thereof. A statute which provides for civil or evil consequences must conform to the test of reasonableness, fairness and non-arbitrariness.

29. Ordinarily an order entailing civil consequences should be preceded by an opportunity of being heard. [See Rajesh Kumar and Ors. v. D.C.I.T. and Ors., (2007) 2 SCC 181] The impugned Act, however, has taken away such a provision which existed in the earlier one.

30. It may be that the legislature thought that while preparing the general valuation, it may not be possible to give an opportunity of hearing as such and, an opportunity of hearing may be given at a later stage. It is true that an order of assessment under the Act is conclusive subject to Sections 14 and 15 of the Act but keeping in view the limited power conferred upon the Revenue Committee thereunder in terms whereof a part of demand is beyond the pale thereof, it is possible that in a given case the entire exercise of review may end in futility. What, thus, was necessary was to provide for an independent and impartial body constituted for the general redressal of the grievance of the taxpayers.

31. The Committee should not have consisted of the authorities of the Municipality and the officers of the Board alone. Section 15 does not provide for any expertise on the part of the Councillors to determine the objections. As many Committees as the Municipality likes may be constituted. Rationality in the decision is, thus, not guaranteed.

32. In Swadeshi Cotton Mills v. Union of India [(1981) 1 SCC 664], this Court held:

“44. In short, the general principle – as distinguished from an absolute rule of uniform application – seems to be that where a statute does not, in terms, exclude this rule of prior hearing but contemplates a post-decisional hearing amounting to a full review of the original order on merits, then such a statute would be construed as excluding the audi alteram partem rule at the pre-decisional stage. Conversely, if the statute conferring the power is silent with regard to the giving of a pre-decisional hearing to the person affected and the administrative decision taken by the authority involves civil consequences of a grave nature, and no full review or appeal on merits against that decision is provided, courts will be extremely reluctant to construe such a statute as excluding the duty of affording even a minimal hearing shorn of all its formal trappings and dilatory features at the pre-decisional stage, unless, viewed pragmatically, it would paralyse the administrative progress or frustrate the need for utmost promptitude. In short, this rule of fair play “must not be jettisoned save in very exceptional circumstances where compulsive necessity so demands”. The court must make every effort to salvage this cardinal rule to the maximum extent possible, with situational modifications. But, to recall the words of Bhagwati, J., the core of it must, however, remain, namely, that the person affected must have reasonable opportunity of being heard and the hearing must be a genuine hearing and not an empty public relations exercise.”

33. This Court in Calcutta Gujarati Education Society and Another v. Calcutta Municipal Corpn. and Others [(2003) 10 SCC 533], held:

“30. The aforesaid ground also does not seem to be acceptable. It is true that burden of tax based on valuation in the assessment is to be borne by the tenant or occupier but as we have examined the provisions, even though the landlord remains inactive by not contesting the assessment proposed, the tenant or occupier has to be vigilant and has the right to object to the same pursuant to the public and written notices. The tenants or occupants who have to shoulder major portion of the tax burden, therefore, have to be vigilant and raise objections pursuant to public and written notices and contest the assessments on valid grounds in their own interest.

50. We have examined the scheme of the Act and we find that in apportioning the burden of tax on landlord and tenant a uniform scheme or tax structure has been evolved under the Act on the basis of actual and notional rental value of the premises. The liability of the landlord towards tax is limited to the valuation based on actual rent received and the assessment made of the tax based on letting value of the premises is the liability of the tenant/sub-tenant or occupier. Merely because the Tenancy Act is attracted to accommodations with rent less than ` 3000 per month and not to other accommodations having higher rent, does not create any dissimilar situation in application of the Act to various categories of tenants paying rent more or less than ` 3000. The portion of tax liable to be paid by the occupant or tenant is not directly recovered by the Corporation from them but is recoverable through the landlord and the landlord has been given right of reimbursement by demanding it from the tenant, sub-tenant or the occupant. For recovering such portion the tax payable by the tenant, sub-tenant or occupant, which has been paid by the landlord, is deemed to be “rent” only for the limited purpose of its recovery. The modes of recovery are by a demand notice under the Tenancy Act and if necessary, by filing an eviction suit. Resort to remedy before the regular court is also not prohibited. On this aspect of apportionment of tax and mode of recovery of tax, the Act does not make any discrimination between tenants of premises covered by the Tenancy Act and others not covered by the said Act.

51. As a result of the discussion aforesaid, we find no vice in any of the provisions of the Act although we have considered it necessary to interpret the provisions harmoniously for better application of the provisions of the Act and the Tenancy Act. The various legal provisions assailed before us have been interpreted by us and our conclusions are as under:

“(1) In view of specific provisions of the Act and as the provisions of the Act impose burden of tax to an appreciable extent on the tenants, sub-tenants and occupiers and the tax is liable to be recovered from them through the landlord or directly by attachment of rent or other coercive modes, the tenants, sub-tenants and occupants are entitled to an opportunity to participate in the process of valuation and assessment. They are entitled, therefore, to written notices apart from public notice for assessment, revision of assessment or amendment of assessment of the ‘consolidated rate’ or tax. It is also made clear that pursuant to the public notice or written notice, the returns submitted by the tenant, sub-tenant or occupier, with regard to determination of annual value shall be considered by the Corporation. The same procedure would be followed in revision of the annual valuation.

(2) It is further made clear that non-issuance of public notice or notices and/or non-service of written notices to the ‘persons primarily liable’ would not necessarily invalidate the proceedings of assessment or reassessment or amendment of the valuation for consolidated rate unless it is established by the party aggrieved that a serious prejudice was caused to it for want of notice.

(3) Under the provisions of the Act since the tenant, sub-tenant or occupier have to share the burden of an appreciable portion of ‘consolidated rate’ exclusive or inclusive of ‘surcharge’ in relation to properties used for non-residential and commercial purposes and as the Act provides for opportunity of participation to them pursuant to a public notice and written notice in assessment and reassessment of tax, they have a right of appeal provided under the Act. It is made clear that tenants, sub-tenants and occupiers held liable for payment of a portion of tax have a right of appeal on pre-deposit of a portion of tax levied and made recoverable from them. (4) It is also made clear that to enable the tenant, sub-tenant or occupier as ‘person liable’ to pay ‘consolidated rate’, they would have a right to obtain necessary information on payment of requisite fee in accordance with Section 178 of the Act and corporation authorities are legally bound to furnish such requisite information.” [See also Paras 32 to 34 and 40].

34. The 1978 Act or even the Amending Act have not provided any guidelines. Guidelines are provided in the Municipality Act. When a statute does not provide for procedural fairness, it may be ultra vires.

35. In Dr. Balbir Singh and Others v. M/s. M.C.D. and Others [(1985) 1 SCC 167], this Court held:

“It is indeed strange that the assessing authorities should have declined to assess the rateable value of 494 properties in South Delhi on the basis of standard rent determinable on the principles laid down in sub-section (1)(A) (2)(b) or (1)(B)(2)(b) of Section 6, merely on the ground that in the opinion of the assessing authorities “the assessees failed to produce the documentary evidence as regards the aggregate amount of reasonable cost of construction and the market price of land comprised in the premises on the date of commencement of the construction”. If the assessees failed to produce the documentary evidence to establish the reasonable cost of construction of the premises or the market price of the land comprised in the premises, the assessing authorities could arrive at their own estimate of these two constituent items in the application of the principles set out in sub-section (1)(A) (2)(b) or (1)(B)(2)(b) of Section 6. But on this account, the assessing authorities could not justify resort to sub-section (4) of Section 9. It is only where for any reason it is not possible to determine the standard rent of any premises on the principles set forth in Section 6 that the standard rent may be fixed under sub-section (4) of Section 9 and merely because the owner does not produce satisfactory evidence showing what was the reasonable cost of construction of the premises or the market price of the land at the date of commencement of the construction, it cannot be said that it is not possible to determine the standard rent on the principles set out in sub-section (1)(A) (2)( b ) or (1)(B)(2)(b) of Section 6. Take for example a case where the owner produces evidence which is found to be incorrect or which does not appear to be satisfactory; can the assessing authorities in such a case resort to sub-section (4) of Section 9 stating that it is not possible to determine the standard rent on the principles set out in sub-section (1)(A)(2)(b) or (1)(B)(2)(b) of Section 6. The assessing authorities would obviously have to estimate for themselves, on the basis of such material as may be gathered by them, the reasonable cost of construction and the market price of the land and arrive at their own determination of the standard rent. This is an exercise with which the assessing authorities are quite familiar and it is not something unusual for them or beyond their competence and capability. It may be noted that even while fixing standard rent under sub-section (4) of Section 9, the assessing authorities have to rely on such material as may be available with them and determine the standard rent on the basis of such material by a process estimation.”

36. In R.K. Kaura v. Municipal Commr., MCD and Others [(2005) 11 SCC 524], this Court held:

“6. It is true that the order of the respondent-Authorities dated 14-11-1996 records that the appellant had appeared and requested for rectification of ex parte assessment dated 9-11-1993 and had also produced documents. However, it appears that the basis for arriving at the market price of the land had not in fact been disclosed to the appellant nor was the appellant given any opportunity of meeting the same. Accordingly, we set aside the impugned order dated 14-11-1996 and direct the authorities concerned to redetermine the rateable value for the period from March 1989 to 31-3-1994.”

37. When a substantive unreasonableness is to be found in a statute, it may have to be declared unconstitutional.

38. In C.B. Gautam v. Union of India and Others [(1993) 1 SCC 78], emphasising the need to comply with principle of natural justice, it was held:

“…….Although Chapter XX-C does not contain any express provision for the affected parties being given an opportunity to be heard before an order for purchase is made under Section 269-UD, not to read the requirement of such an opportunity would be to give too literal and strict an interpretation to the provisions of Chapter XX-C and in the words of Judge Learned Hand of the United States of America “to make a fortress out of the dictionary”. Again, there is no express provision in Chapter XX-C barring the giving of a show-cause notice or reasonable opportunity to show cause nor is there anything in the language of Chapter XX-C which could lead to such an implication. The observance of principles of natural justice is the pragmatic requirement of fair play in action. In our view, therefore, the requirement of an opportunity to show cause being given before an order for purchase by the Central Government is made by an appropriate authority under Section 269-UD must be read into the provisions of Chapter XX- C. There is nothing in the language of Section 269-UD or any other provision in the said Chapter which would negate such an opportunity being given. Moreover, if such a requirement were not read into the provisions of the said Chapter, they would be seriously open to challenge on the ground of violations of the provisions of Article 14 on the ground of non-compliance with principles of natural justice. The provision that when an order for purchase is made under Section 269-UD-reasons must be recorded in writing is no substitute for a provision requiring a reasonable opportunity of being heard before such an order is made.

31. The recording of reasons which lead to the passing of the order is basically intended to serve a two-fold purpose:

(1) that the “party aggrieved” in the proceeding before (sic the appropriate authority) acquires knowledge of the reasons and, in a proceeding before the High Court or the Supreme Court (since there is no right of appeal or revision), it has an opportunity to demonstrate that the reasons which persuaded the authority to pass an order adverse to his interest were erroneous, irrational or irrelevant, and

(2) that the obligation to record reasons and convey the same to the party concerned operates as a deterrent against possible arbitrary action by the quasi-judicial or the executive authority invested with judicial powers.

39. In Krishna Mohan (P) Ltd. v. Municipal Corporation of Delhi and Ors. [(2003) 7 SCC 151], this Court held:

“51. In the result, we allow the appeals and hold as under:

(1) Section 116(3) is declared invalid as it delegates unguided and uncanalised legislative powers to the Commissioner to declare any plant or machinery as part of land or building for the purpose of determination of the rateable value thereof……”

[See also Dewan Daulat Rai Kapoor and Others v. New Delhi Municipal Committee and Others [(1980) 1 SCC 685].

40. In a case of this nature, provision for review was in effect and substance a provision for appeal. But, when a provision for appeal has been laid down, the same should, for all intent and purport, must provide for an effective remedy.

41. This Court in Union of India and Anr. etc. vs. Tulsiram Patel etc. [AIR 1985 SC 1416], held:

“The second condition necessary for the valid application of clause (b) of the second proviso is that the disciplinary authority should record in writing its reason for its satisfaction that it was not reasonably practicable to hold the inquiry contemplated by Article 311(2). This is a constitutional obligation and if such reason is not recorded in writing, the order dispensing with the inquiry and the order of penalty following thereupon would both be void and unconstitutional.”

42. The said dicta was affirmed by a three-judge Bench of this Court in Chief Security Officer and Ors. v. Singasan Rabi Das [(1991) 1 SCC 729], stating that principle of natural justice cannot be dispensed with on mere ipse dixit. [See also Tarsem Singh v. State of Punjab and Ors. (Civil Appeal No.1489 of 2004), decided on 25th January, 2006; Prithipal Singh v. State of Punjab and Ors., (2006) 11 SCALE 28 and Indian Airlines Ltd. v. Prabha D. Kanan [(2006) 12 SCALE 58]

43. Principles of natural justice are based on two basic pillars:

(i) Nobody shall be condemned unheard (audi alteram partem)

(ii) Nobody shall be judge of his own cause (nemo debet esse judex in propria sua causa)

44. Duty to assign reasons is, however, a judge made law. It is considered to be a third pillar. [See Reliance Industries Ltd. v. Designated Authority and Others, 2006 AIR SCW 4911]

45. A Review Committee being a quasi judicial body was required to fulfill the requirements of the three conditions. There is furthermore no reason whatsoever as to why the power of Review Committee was curtailed only to the extent of 25%. It is furthermore beyond any logic as to why rule of simple majority in a multi-member committee could not be applied.

46. In the case of AM (Serbia) and Ors. v. Secretary of State for the Home Department [2007] EWCA Civ 16, before the impugned amendment came into force, the Immigration and Asylum Adjudication System had taken the form of a right to appeal against a decision of the Secretary of State to an adjudicator, with a further right of appeal with leave to the Immigration Appeal Tribunal. The jurisdiction of the IAT was not limited to points of law. By the Nationality, Immigration and Asylum Act 2002, appeals from an adjudicator to the IAT were restricted to appeals on points of law (section 101(1)) and conventional judicial review of a refusal of leave to appeal to the IAT was replaced by statutory review of the leave decision (section 101(2)). The words “fairly, quickly and efficiently” formed the crux of the debate which were derived from under section 106(1A) of the 2002 Act. The court, while finding fault with the impugned amendment, observed:

“I have come to the conclusion that Rule 62(7) is fundamentally flawed. The significance of Robinson is in its demonstration of the role of the courts and the Tribunal in ensuring that the United Kingdom does not fall foul of the Refugee Convention, even where an obvious point of Convention law has been missed by the practitioners. It surely applies on the same basis to the ECHR, where the argument is even stronger because, by section 6 of the Human Rights Act, 1998, it is unlawful for a public authority to act in a way which is incompatible with an ECHR right and Courts and the Tribunal are “public authorities” for this purpose: section 6(3)(a). There is then a further logical stage in the argument. If it is incumbent upon the IAT to consider and decide Robinson obvious points which have not been advanced by the appellant notwithstanding Rule 62(7), given the rationale of Robinson there is no rational basis for excluding and deciding points of equal force which the appellant draws to the attention of the Tribunal, even though they were not embraced in the grounds of appeal sanctioned by the IAT. For these reasons, I consider that, when he promulgated Rule 62(7), the Lord Chancellor fell into legal error and the Rule cannot survive the Wednesbury challenge.”

47. We, therefore, for the aforementioned reasons have no other option but to hold that the provisions for review conferred in terms of the statute for all intent and purport are illusory ones and do not satisfy the test of Article 14 of the Constitution of India. No statute which takes away sombody’s right and/or imposes duties, can be upheld where for all intent and purport, there does not exist any provision for effective hearing.

48. It is one of those statutes where a decision is rendered by a body which may have an institutional bias although same is not ordinarily contemplated in the case of an individual member being a part of a body.

49. In Dr. Bonham’s case [8 Co Rep 113 at 118], Coke, CJ declared a statute ultra vires where a body empowered to impose a levy was itself to be benefited thereby. The said decision was rendered despite the doctrine of parliamentary sovereignty existing in the United Kingdom.

50. We may notice that even this Court in Mithu v. State of Punjab [(1983) 2 SCC 277] has applied the test of non-arbitrariness while striking down Section 303 of the Indian Penal Code. Although the Court may not go into the question of a hardship which may be occasioned to the taxpayers but where a fair procedure has not been laid down, in our opinion, the validity thereof cannot be upheld. [See Smith v. Kvaerner Cementation Foundations Ltd. (Bar Council intervening), (2006) 3 All ER 593].

51. For the reasons aforementioned, the judgment of the Division Bench of the High Court is set aside and that of the learned Single Judge is restored. The impugned Act is declared unconstitutional being violative of Article 14 of the Constitution. These appeals are allowed. No costs.


  • Mithu v. State of Punjab [(1983) 2 SCC 277] has applied the test of non-arbitrariness while striking down Section 303 of the Indian Penal Code.
  • Dr. Bonham’s case [8 Co Rep 113 at 118], Coke, CJ declared a statute ultra vires where a body empowered to impose a levy was itself to be benefited thereby. The said decision was rendered despite the doctrine of parliamentary sovereignty existing in the United Kingdom.