Common Oral Order

Ilesh J. Vora, J.

1. These Municipal Tax Appeals arise out of common factual background and involve the common question of law between the same parties and therefore, they have been disposed of by this common judgment and order.

2. These appeals are filed by the Ahmedabad Municipal Corporation challenging the judgment of Small Causes Court, Ahmedabad, whereby, the Municipal Valuation Appeal filed by the respondent against the revised assessment of property tax retrospectively for the F.Y. 2018-2019 to 2021-2022, came to be allowed.

3. Brief facts necessary for adjudication of these appeals are as follow:

          (i) The property of the respondent - Mahagujarat Iron and Steel Pvt. Ltd., situated in Odhav GIDC, Ahmedabad (survey No. 328/1, 328/2, 329/1/P and 330/P; plot No. H37 to H41), The property is used for business purpose and was assessed as workshop on the record of AMC under Tenement No. 0431-05-0820-0002-N.

          (ii) On 18.01.2022, the appellant AMC revised the Tax Assessment of the property with retrospectively for the F.Y.2018-19 to 2021-22, whereby, the tax amount was increased. The assessment was made without prior notice to the respondent, which violates the procedural requirement under sub-clause (2) of Section 15 of Schedule (A) of the Gujarat Provincial Municipal Corporation Act, 1949 (now referred as 'GPMC Act').

          (iii) Aggrieved by the aforesaid assessment, the respondent had filed Municipal Valuation Appeal under Section 406 of the GPMC Act before the Small Causes Court, Ahmedabad, mainly on the ground that:-

          (a) usage factor is erroneously assessed because the subject property having been used only for the purpose of godown,

          (b) without notice, the appellant AMC has no authority to assess tax retrospectively,

4. In the aforesaid facts and circumstances, vide judgment and order dated 21.12.2024, the Small Causes Court, by allowing the Municipal Appeal, held and observed that, the AMC has committed an error in determining the user factor of the subject property 'as service station'. On the aspect of revised assessment of tax is concerned, the Small Causes Court, Ahmedabad has observed that, the recovery of property tax cannot be anti-dated by more than one year of the special notice, unless the information about any change in the property was not made without the knowledge of the Commissioner.

5. Being aggrieved by and dissatisfied with the judgment and order, the appellant Ahmedabad Municipal Corporation is before this with this First Appeal filed under Section 411 of the GPMC Act, 1949.

6. Mr. Maulin Raval, learned Senior Counsel appearing for Raval and Trivedi Associates, while assailing the impugned judgment and order made the following submissions:

          (i) That the impugned judgment and order is contrary to the facts and applicable law and rules thereunder, as the property in question was inspected by the appellant AMC and it was found that, there was commercial usage, contrary to the claim of the respondent, as a result, the assessment was made as commercial property as per the policy.

          (ii) That, the assessment was done considering the usage of the premises and the Commissioner is having power to re-assess the property taxes in accordance with the provisions of GPMC Act and Rules framed thereunder and in the present case, due process as contemplated under the GPMC Act and Rules thereunder, having been followed.

          (iii) That, the trial Court erred in interpreting the Rule 20, 21(A) and 21(B) of the Chapter VIII of the Schedule of GPMC Act, 1949, while holding that the Commissioner can make chances in the entry only during the official year itself. The Rules clearly state that the Commissioner has by special written notice, power to amend the assessment book by increasing or reducing the amount of any ratable value and of the assessment based thereupon and further alter the assessment on any land or building, which has been erroneously valued or assessed through fraud, accident or by mistake. Thus, the learned trial Court misdirected itself while interpreting the power of the Commissioner as it is not necessary to prepare new assessment book every year and it is within the power of the commissioner to adopt the entries in the last preceding year book with such alteration as it thinks fit.

7. In such circumstances, as referred to above, Mr. Maulin Raval, learned Senior Counsel has submitted that the Corporation had followed the proper procedure as prescribed and the assessment in question has been rightly revised and therefore, the Corporation was justified in reassessment of the property taxes and has not committed any error in determining of the user factor of the property and demand is valid demand. Thus, it has been urged that, the judgment and order under challenge is passed contrary to the facts on record and provisions of the GPMC Act and Rules framed thereunder, which does require interference and same is liable to be set aside.

8. On the other hand, Mr.Prabhakar Upadhyaya, learned counsel appearing for the respondents herein has submitted that the tax assessment having been revised for the financial year 2018-2019 to 2021-2022, on 18.01.2022, long after expiry of respective official years and therefore, as per the rules, demand of taxes on the basis of revised ratable value with retrospective effect is invalid and without jurisdiction. In support of the contentions, heavy reliance is being placed on the judgment, Sushilaben Veljibhai Shah Vs. Jamnagar Municipal Corporation passed in Special Civil Application No.8323 of 2019, dated 19.08.2023, to contend that the procedure for assessment and levy of property tax is required to be completed before expiry of official years and no assessment can be made after the official year has ended. It is further submitted that in the facts of the present case, the appellant corporation has demanded tax without making any amendment entries made in the assessment book, without issuing any notice as required under Rule 20 - Taxation Rules, mentioned in Chapter-VIII of Scheduled - A of the Act 1949 and therefore, retrospective demand of tax for the period from 2019-2020 to 2021-2022 is contrary to the provisions to the Act and Rules thereunder.

9. In such circumstances, Mr.Prabhakar has submitted that the retrospective demand is barred under the rules and it can be made within a period of one year from the date of knowledge of new or additional change in the usages of the property. In such circumstances, the retrospective demand of tax is beyond the scope of Rule 21B of the Rules and without any evidence, an inquiry, the corporation appellant presumed that the property has been used for commercial purpose. Thus, it is submitted that the Small Causes Court, while dealing with the municipal valuation appeal, has rightly held that the appellant corporation has committed an error in determining the user factor of the subject property as service station and assessment made for the official years are invalid.

10. We have heard at length learned advocates for the respective parties and perused the impugned judgment and order as well as the case records and proceedings.

11. Having regard to the facts and circumstances of the present case, the issue arise for consideration as to whether the Small Causes Court, Ahmedabad, was justified in declaring the assessment as invalid ?

12. Before adverting to the issue, we deem it fit to refer the necessary and relevant statutory provisions relating to the levy of tax by the Municipal Corporation. Section 127 of the Gujarat Municipal Corporation Act, 1949 (for short "the Act 1949") authorizes the Municipal Corporation to levy taxes which includes property tax, either under Section 129 or Section 141AA. The manner and method of levy of tax is being prescribed in Taxation Rules (Chapter VIII of Scheduled-A of the Act 1949). Rule 20 of the Taxation Rules empowers the Commissioner of any Municipal Corporation to amend the assessment book either upon representation of any concerned person or upon any other information at any time during the official years to which the assessment book relates. The said Rules further says that if the amendment has the effect of imposing any liability on a person, special written notice as provided under Rule 15(2) shall be given and the procedure as laid down in Rule 16, 17 and 18 shall be followed. We may also refer Rule 21A, which provides that if any new building erected without any notice, the Commissioner may within one year from the date on which the relevant facts came to his notice, may proceed to fix or refix ratable value of such building. In such circumstances, the provisions of the Act 1949 and Rules thereunder, it is mandatory for the corporation to issue notice to the concerned before amending the assessment book and any amendment to entry in the assessment book is to be authenticated in the same official year to which the assessment book relates.

13. In the facts of the case, the premises of the respondents were assessed in the fiscal year 2017-2018 with user factor recorded as "workshop". The property in question were used for the purpose of godown. The appellant corporation has failed to prove that when such commercial activities as alleged having been commenced. Thus, the allegation of usages of property as commercial activities having not been proved and established and on this issue, the Trial Court has assigned sufficient reasons, more particularly in Para-6 of the impugned judgment and order.

14. So far as the issue of validity of assessment tax is concerned, the appellant corporation raised the bill for the year 2018-2019 to 2021- 2022 in the year 2022-2023. On other words, the revision and/or assessment of the property for the year 2018-2019 to 2021-2022 being assessed in the year of 2022-2023 which can be said to be retrospectively. In our opinion, this issue is fully covered by the judgment of this Court in the case of Sushilaben Veljibhai Shah (supra). In the cited case, the corporation had issued a demand towards the property tax for the period from 1993-2006. The Division Bench of this Court held and observed that the corporation could not have raised a demand with retrospective effect for the period from 1993-2006 in the year 2015, as a result, demand of property tax having been declared contrary to the provisions of the Act 1949 and the corporation had no jurisdiction to demand the tax retrospectively.

15. In the facts of the present case, admittedly, demand notice were served after the completion of the concerned official year and as per the Rule 21B, the assessment must be completed in the concerned official year ending on 31th March. For further clarity, it is necessary to refer Rule 20, 21A and 21B (Taxation Rules) of the Chapter VIII of the Schedule of Act 1949 which reads as under:

          "20. Assessment-book may be amended by the Commissioner during the official year.- (1) Subject to the provisions of sub-rule (2), the Commissioner may upon the representation of any person concerned or upon any other information at any time during the official year to which the assessment-book relates amend the same--

          (a) by inserting therein the name of any person whose name ought to be so insertedor any premises previously omitted;

          (b) by striking out the name of any person not liable to the property tax;

          (c) by increasing or reducing the amount of any rateable value and of the assessment based thereupon;

          (d) by altering the assessment on any land or building [or premises] which has been erroneously valued or assessed through fraud, accident or mistake;

          (e) by inserting or altering an entry in respect of any building erected, re-erected, altered, added to or reconstructed in whole or in part after the preparation of the assessment-book ;

          (f) by making or cancelling any entry exempting any premises from liability to any property tax.

          (2) Where any amendment is made under sub-rule (1) which has the effect of imposing on any person any liability for the payment of property taxes which would not be incurred but for such amendment or which has the effect of increasing the rateable value of any premises as stated in the assessment book, a special written notice as provided in sub-rule (2) of rule 15 shall be given by the Commissioner and, as far as may be, the procedure laid down in rules 16, 17 and 18 shall be followed.

          (3) Every such amendment shall be deemed to have been made, for the purpose of determining the liability or exemption of the person concerned in accordance with the altered entry, from the earliest day in the current official year when the circumstances justifying the amendment existed.

          21A. Assessment etc. of tax in the event of failure to give notice under rule-5.- Whenever it is noticed by the Commissioner that a new building has been erected or a building has been rebuilt or enlarged or any building which was vacant has been reoccupied or the user of any building has been changed and that the person primarily liable for the property taxes on such building has failed to give notice as required by subrule(1) of rule 5, the Commissioner may, within a period of one year from the date on which the aforesaid relevant facts came to his notice, proceed to fix or refix the rateable value of such building and assess or reassess the property taxes on such building in accordance with the provisions of this Act and these rules with reference to the period commencing from the year during which the building was newly erected or the building was rebuilt or enlarged or was reoccupied or the change of user took place and accordingly the taxes so assessed may be levied, collected and recovered and the provisions of this Act and these rules shall so far as may be, apply to such levy, collection and recovery.

          21B. Circumstances in which assessment book may be prepared, completed, etc., after the expiry of year to which it relates. - Nothing in the foregoing provisions of this Chapter shall affect the preparation and completion of the assessment-book or of any part thereof or of any entry therein after the expiry of the year to which it relates, if such preparation or completion was not possible before the expiry of the year on account of any order of a court or any other competent authority, and the levy, collection and recovery of any tax based on such assessment-book, part or as the case may be entry shall not be called in question merely on the ground that the assessment book, part or as the case may be, entry was not prepared or completed during the year to which it relates."

16. Mr.Maulin Raval, learned Senior Counsel appearing for the appellants, has relied on the judgment of this Court (State Bank of India Vs. Municipal Corporation, City Rajkot (2015 (0) AIJEL-High Court 234428) & Laddeve Sampat Somani Vs. Jamnagar Municipal Corporation (2025(0) AIJEL- High Court 250689, to contend that the retrospective application in the context of assessment is not applicable as assessments were duly recorded within time lines. In our opinion, on factual aspect, as well as on law, the authority relied is not applicable to the facts of the present case. In the case of Lado Sampat, the assessments were framed before the end of each official year and bills were served accordingly and in that view of the matter, the Single Bench of this Court held that the levy of property tax and demand therein are not without jurisdiction. In the case of SBI Vs. Municipal Corporation, Rajkot, there was no intimation to the Commissioner and therefore, it was held that the corporation was well within its rights to revise the tax within a period of one year from the date on which, it has noticed. Thus, therefore, having regard to the peculiar facts of the present case, the authority relied would not rescue to the case of the appellants herein.

17. For the reasons recorded, we are of the view that while dealing with the Municipal Valuation Appeal, the Small Causes Court, Ahmedabad has not committed any error either on facts or on law while coming to the conclusion that the corporation appellant has committed an error in determining the user factor of the subject property as "service station" and assessment made by the corporation for the official years 2018-2019 to 2021-2022 with retrospective effect is unauthorised and illegal. The Trial Court has rightly interpreted the applicable provision of Act 1949 and rules thereunder. In such circumstances, we do not find any perversity in the impugned judgment and order and we are in agreement with the view of the Court-below.

18. Accordingly, the three first appeals viz. 1945/2026, 1946/2026 and 1981/2026, along with the connected Civil Applications stand dismissed.