Shibji Khestshi Thacker Vs.
Commissioners of Dhanbad Municipality & Ors  INSC 55 (28 February
SARKARIA, RANJIT SINGH SARKARIA, RANJIT SINGH
CITATION: 1978 AIR 836 1978 SCR (3) 404 1978
SCC (2) 167
Bihar and Orissa Municipality Act, 1922, S.
106, construction of, whether mandatory or directory-Holding excluded from
quinquennial revision at assessment, whether previous valuation and assessment
The Commissioner of Dhanbad Municipality,
instituted a suit against the appellant and respondents 2 to 5, for the
recovery of holding tax and latrine tax, as arrears of Municipal Taxes for the
first quarter of 1950-1951 to the third quarter of 1953-54, in respect of a
'holding' owned by them. The Trial Court dismissed, the suit inter alia on the
ground that during a general revision of assessments u/s 106 of the Bihar and
Orissa Municipality Act, in 1950-51, the Dhanbad Municipality had failed to
revise the original assessment of the defendants holding and had thereby
committed a breach of the mandatory provisions of S. 106.
The old assessment on the basis of which the
demand had been raised, had lapsed and there being no revised assessment of the
holding, the Municipality was not entitled to realise any tax from the
defendants with effect from April 1, 1950.
The High Court allowed an appeal by the
Commissioners of Dhanbad Municipality, but granted a certificate u/Art.
133(1)(b)(c) of the Constitution.
Dismissing the appeal the Court,
HELD : 1. The language of S. 106 is flexible
enough to enable the Commissioners to leave out for some good reason, any
holding from the revision of the valuation and assessment lists. The word
"ordinarily", tones down the force of "shall" which immediately
precedes it, and indicates that the requirements with regard to revision of the
assessment in every five years and to include all the holdings, are not
absolute but only directory, and can be departed from in extraordinary
circumstances, or in the case of particular holdings for good reasons. [409
2. In the case of a holding which is excluded
from the quinquennial revision of assessments, the old valuation and assessment
list do not lapse, but continue to remain in force till they are altered or
amended in accordance with the procedure laid down in the Act, and when a new
list is completed, then till the 1st day of April following such completion is
reached. [409 F-G]
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 1230 of 1968.
(From the Judgment and Decree dt. 19-2-65 of
the Patna High Court in First Appeal No. 514 of 1958).
Niren De and Sukumar Ghose for the Appellant.
Bishan Narain & S. K. Sinha for the
The Judgment of the Court was delivered by
SARKARIA, J. This appeal, on certificate, is directed against a judgment and
decree, dated February 19, 1965, of the High Court of Patna. It arises out of
405 At all material times, holding No. 594,
Ward No. 3 in the area of the urban Municipality, Dhanbad, was owned by the
appellant and respondents /2, 3, 4 & 5. On this holding, a Cinema House
known as "Ray Talkie" was constructed in March, 1948.
On March 31, 1948, the Commissioners of
Dhanbad Municipality served a notice on the appellant and the respondents 2 to
5, under Section 1. 15(2) of the Bihar and Orissa Municipality Act, 1922
(hereinafter referred to as the Act) demanding a sum of Rs. 900/- as quarterly
The appellant and respondents 2 to 5, applied
for review of the assessment. Thereupon, the Review Committee reduced the,
Municipal Tax to Rs. 8 10/- per quarter, i.e. Rs. 488/- as holding tax and Rs.
465/as latrine tax.
Aggrieved, the assessees instituted a Title
Suit No. 17/144 of 1949 in the Court of Munsif, Dhanbad, inter alia, praying
for a declaration that the assessment was ultra vires and illegal inasmuch as
it was not made under Section 9 8 (2), but under Section 9 8 (1 ) of the said
Act The Munsif dismissed the Suit and tie) dismissal was upheld in appeal by
the District Judge, Purulia, under a judgment, dated June 17, 1952. A further
appeal to the High Court by the assessees was dismissed on December 4, 1957.
Default having been committed by the
assessees in paying the tax, a demand notice, dated March 6, 1951, was served
upon them requiring them to pay all arrear taxes then due, but they put off
payment on one objection or the other.
Subsequently, by their letter dated March 3,
195 1, the assessees raised,an objection on the ground that no assessment was
made in respect of the holding in question.
This letter- was considered by the
Commissioners at a meeting held on November 19, 195 1. Through the Finance
Committee, the assessment of holding tax was confirmed in the said meeting.
Intimation of this confirmation was given to the assessees by a letter, dated December
Thereafter, demand notices were issued to the
assessees, calling upon them to pay the tax in arrears, but they failed to do
On the preceding facts, the Commissioners of
Dhanbad Municipality, instituted Suit No. 203 of 1953 in the Court of
Subordinate Judge Dhanbad, against the appellant and respondents 2 to 5, for
recovery of Rs. 12,655/- for the first quarter 1950-51 to third quarter 1953-54
in respect of the holding tax and latrine tax, as arrears of Municipal Taxes,
in respect of holding No. 616, Ward No. 3, Dhanbad Municipality.
The defendants-assessees in their written
statements, inter alia, pleaded that the Municipality was not entitled to
recover the tax demanded, because the original assessment made on the annual
value of the holding in question, was illegal inasmuch as the assessment should
have been made on persons and not the annual value of the holding. The other
objection raised was that although a general provision under Section 106 of the
Act had been undertaken by the Municipality in 406 1950-51, the assessment of
the holding of the defendants had not been revised with a mala fide and
improper motive. The defendants did not get the advantage of a fresh assessment
and as the old assessment and valuation lapsed on April 1, 1950, no tax could
be realised from them on the basis of this lapsed assessment. They further
pleaded that the alleged confirmation of the assessment of the holding on
November 19, 1951 by the Commissioners, was illegal and without jurisdiction
because no prior intimation about the alleged confirmation was given to them
before issue of letter No. 1624/VII-2, dated December 18, 1951.
The Trial Court by its judgment dated May 24,
1958, dismissed the Suit, inter alia, holding, that the failure, of the Municipality
to revise the original assessment on the defendants holding during the general
revision of assessments in 1950-51, was a breach of the mandatory provisions of
Section 106 of the Act. As a result, the old assessment on the basis of which
the demand had been raised bad lapsed and there being no revised assessment of
the holding in question, the Municipality was not entitled to realise any tax
from the defendants with effect from April 1, 1950.
Against that judgment, the Commissioners of
Dbanbad Municipality preferred an appeal to the High Court at Patna, which
allowed the appeal, holding- (i) that the defendants had been rightly assessed
on the annual value of the holding and therefore the defendants liability under
Section 100 in that respect could not be disputed;
(ii) that the defendants had not been left
out from the genera., assessment of 1950-51 with any mala fide or incorrect
(iii) that from a proper construction of the
relevant provisions of the Act, particularly the) word "list" used in
singular in sub- section (2) of Section 105, and the expression 'completion of
a new list" in subsection (2) of Section 1.06, the intention was clear
that if the valuation and assessment of a particular holding is not revised for
any good reason, then the assessment entered in the previous valuation and
assessment list in respect of that holding will remain in force.
It is only when a now list of valuation and
assessment in respect of a particular holding, is complete, the assessment of
that list will substitute the previous assessment based on the previous list.
Since the defendants holding was left out from the general revision of 1950-51
for a valid reason, the suit demand based on the previous lists of valuation
and assessment in respect of suit holding, could not lapse on April 1, 1950.
On the application of the, assessees, the
High Court ;,ranted a certificate under Article 133 (1) (b) and (c) of the
Constitution. Hence, this appeal.
Mr Niren De, learned counsel for the
appellant has canvassed before us two posts First, under the scheme of the Act
a general revision of 407 assessment must take place quinquennially and such
general revision must cover all the holdings within the Municipality. If a
particular holding is left out from the revised general assessment, then, on
the coming into force of the revised general assessment, the old assessment in
respect of that holding also lapses. Since the appellants' holding was excluded
from the five-yearly revision of assessment, the Municipality cannot legally
recover tax in respect of it on the basis of the old assessment which had
lapsed on April 1, 1950. Second in any case, enhancement of the rate of tax by
the Municipality on the holding of the appellant, can-not be supported because
in doing so, they have not followed the procedure prescribed by the Act; that
they have not issued any proper notice or given any opportunity of being heard
with regard to the enhancement, to the appellant, nor was any new assessment
list, as required by Section 106, prepared.
Before dealing with these contentions, it
will be proper to have a short look at the relevant provisions of the Act.
Section 101 provides that "when it has
been determined to impose any tax to, be assessed on the annual value of
holdings, the Commissioners, after making such inquiries as may be necessary,
shall determine the annual value of all holdings within the municipality as
hereinafter provided and shall enter such value in a valuation list".
Section 102 speaks of the procedure for
preparing the valuation list. It, inter alia, provides that the Commissioners
may by notice, require the owners or occupiers of all holdings to furnish them
with returns of the rent or annual value thereof.
Section 103 provides for penalty for default
in furnishing return.
Section 104 deals with the determination of
rate of tax on holdings. The material part of the Section reads as follows
"Subject to the provisions of clause (iii) of the proviso. to sub-section
( 1 ) of section 82 and to the provisions of sections 84 to 88 inclusive, the
Commissioners, at a meeting to be held before the close of the year next
preceding the year to which any tax which is assessed on the annual value of
holdings will apply, shall determine the percentage on the valuation of holdings
at which the tax shall be levied, and the percentage so fixed shall remain in
force until the order of the Commissioners determining such percentage shall be
rescinded, and until the Commissioners at a meeting shall determine some other
percentage, on the valuation of holdings at which the tax will be levied from
the beginning of the next year :
Provided......... further that the
Commissioners shall not without the previous sanction of the State Govt.,
decrease the rate of any tax levied by them." Section 105 provides for
preparation of assessment list. It lays down that "as soon as possible
after the percentage to which the tax is 408 to be levied for the next year has
been determined under the last preceding section the Commissioners shall cause
to be prepared an assessment list", containing particulars enumerated in
clauses (a) to (h) of that Section.
It is Section 106, the construction of which
is in question in the instant case. It runs as under "Revision and
duration of list.-(1) New valuation and assessment lists shall ordinarily be
prepared, in the same manner as the original lists, once in every five years.
(2)Subject to any alteration or amendment
made under section 107 and to the result of ,'any application under Section
116, every valuation and assessment entered in a valuation or assessment list
shall be valid from the date on which the list takes effect in the municipality
and until the first day of the April next following the completion of a new
list." Section 107 gives powers to the Commissioners to alter or amend
'the assessment list from time to time in any of the ways enumerated in clauses
(a) to (g) of sub-section (1).
Two of such ways, as provided in clauses (c)
and (e), are as under :- "(c) By enhancing the valuation of, or assessment
on, any holding, which has been incorrectly valued or assessed by reason of
fraud, misrepresentation or mistake." "(e) Where the percentage on
the annual value at which any tax is to be levied has been altered by the
Commissioners under the provision of section 104, by making a corresponding
alteration in the amount of tax payable in each case."' Then, sub-section
(2) of this Section makes it obligatory on the Commissioners to give at least
one month's notice to any person interested, of any alteration which they
propose to make under clause. (a), (b), (c), (d) or (dd), of sub- section (1),
and of the date on which the alteration will be made. It is to be noted that
clause (e), extracted above, has. not been referred to in sub-section (2).
Section 115 speaks of publication of notice
It says that when the assessment list
mentioned 'in' section 89 or section 105 has been prepared or revised, the
Chairman shall sign the same, and shall give public notice, by beat of drum and
by placards. posted up in conspicuous places through the municipality, of the
place where the said list may be inspected. Sub-section (2) further requires
that in all cases in which any property is for the first time assessed or the
assessment is increased, notice shall be given thereof to the owner or occupier
of the property, if known.
Having perused the various relevant
provisions referred to by Mr. Niren De, we are of opinion that under the scheme
of the Act, the old assessment does not come to an end in respect of a holding
409 the moment new valuation and assessment lists are ordered to be prepared by
the Commissioners of the Municipality; nor is there anything to show that if a
holding is left out from the general revisional assessment for any good reason,
then, in respect thereof, the old assessment comes to an end after five years
ending on the first day of the April next following the completion of a new
Mr. Niren De placed emphasis on the word
"all", immediately preceding the word "holdings" in the latter
part of Section 102, and submitted that it indicates that no holding can be
left out from the preparation of valuation list.
It is nobody's case that the appellants'
holding was left out from the old assessment. So far as the revised assessment
is concerned. Section 102 has to be read not in isolation but in conjunction
with Section 106. The language of Section 106 is flexible enough to enable the
Commissioners to leave out for some good reason, any holding from the revision
of the valuation and assessment lists.
The Word "ordinarily", tones down
the force of "shall' which immediately precedes it, and indicates that the
requirements with regard to revision of the assessment in every five years and
to include all the holdings, are not absolute but only directory and can be
departed from in extraordinary circumstances, or in the case of particular
holdings for good reasons. This being the correct import of the word
"ordinarily", it follows there from that in the case of a holding
which is excluded from the quinquennial revision of assessment. the old
valuation and assessment lists do not lapse but continue to remain in force
till they are altered or amended in accordance with the procedure laid down in
the Act. This position of the law is clear from a reading of the last clause of
sub-section (2) of Section 106, which provides that every valuation and
assessment entered in a valuation or assessment list shall be valid from the
date on which the list takes effect in the municipality and until the first day
of the April following the completion of a new list. The key word repeatedly
occurring in the sub-section is "list" which appears to have been
advisedly used in singular, in contradistinction to "lists' employed in
plural, in sub-section (2) such distinctive use of the word "list" in
these sub-sections, puts it beyond doubt that in respect of a holding which,
for some reason, is not included in the five-yearly revision, the old valuation
or assessment list continues till a new Est is completed and the 1st day of
April following such completion is reached.
In this view of the matter, the High Court
was right in holding that the demand based on the previous list of valuation
and assessment of the suit holding, did not lapse on the first of April 1950
for the mere reason that a general revision of valuation and assessment lists
in the Municipality was undertaken and the appellant's holding was not
subjected to that revision.
410 The first contention of Mr. De is
accordingly rejected.- In regard to the second contention of Mr. De, we find
that this plea was not taken at any stage before the Courts below. It was not
even faintly adumbrated in the written statement filed by the
defendant-appellant in the Suit. No issue was framed on this point, nor was any
such argument advanced before the High Court. It is a mixed question of law and
fact. It cannot be allowed to be raised at this stage, for the first time, in
special appeal, as the plain- tiff-respondent had no opportunity to lead
evidence to show that the requirements of the law had been complied with before
increasing the assessment. We are told that similar suits have been filed by
the Municipality against the appellant for recovery of tax pertaining to
subsequent periods. If that be so, the appellant is at liberty to raise this
objection in these Suits in a proper manner.
But, in this case, for reasons already
stated, we refuse to entertain this plea raised for the first time in this
No other point has been pressed into
arguments on behalf of the appellant. The appeal fails and is dismissed with no
order as to costs.
M. R. Appeal dismissed.