Administrator, Municipal Corporation, Bilaspur v. Dattatraya Dahankar, Advocate and Anr.

The Judgment of the Court was deliverect by K.JAGANNATHA SHETTY, J.-The question raised in this appeal ,,. . / relates to .the construction of Section 127 A of the Madhya Pradesh Municipali- E ties Act, 1961, ('The Act'). The relevant portion of section 127A reads: (i) (ii) "127 A. Imposition of Property Tax-{l) Notwithstanding any­ thing contained in this Chapter, as and from the financial year 1976-77, there shall be charged, levied and paid for each financial F year a tax on the lands or buildings or both situate in a Municipality other than· class IV Municipality at the rate specified in the table below: TABLE Where the annual letting 6 per centum ofthe GI value exceeds Rs. 1800 but annual letting value does not exceed Rs. 6000 Where the annual letting 81/3 per centum value exceeds Rs. 6000 · of the annual but does not exceed letting value E Rs. 12000 114 (iii) (iv) (v) SUPREME COURT REPORTS [1991] SUPP. 3 S. C.R . Where the annual letting 10 per centum of the value exceeds Rs. 12000 but annual letting does not exceed Rs. 18,000 value Where the annual letting 15 per centum of the value exceeds Rs. 1800 but annual letting does not exceed Rs. 24,000 value Where the annual letting 20 per centum of the value exceeds Rs. 24,000 annual letting value 2. The property tax levied under sub-section (1) shall not be leviable in respect of the (ollowing properties, namely : (a) buildings and lands owned by or vesting in­ (i) the Union Govefnmcnt; (ii) the State Govemme.nt; (iii) the Council; (b) buildings and lands the annual letting value of which does not exceed eighteen hundred rupees : Provided that if any such building or land in the ownership of a person who owns any other building or land in the same Munici­ pality, the annual letting value of such building or land shall for the purpose of this clause, be deemed to be the aggregate annual letting value of all b~ildings or lands owned by him in the Munici­ pality." Sub-section (1) of section 127 A is the charging section. Sub-section (2) provides for exemption. Clause (b) thereof provides that buildings and lands the annual letting value of which does not exceed eighteen hundred rupees arc G exempt from taxation. The proviso thereunder States that if any such building or land in the ownership of a person who owns any other building or land in the same municipality, the annual letting value of such building or land for the purpose of clause (b) shall be deemed to be the agrregate annual letting :value of all buildings or lands owned by him in the Municipality. H The High Court has pointed out that under. the scheme of the Act for the j MUNICIPALCORPN. v. DAITATRAYADAHANKAR [SHEITY, J.] 115 purpose of imposition of property tax under sub-section ( l) of section 127 A, A ~ each tenement has to be seprately assessed and no tax can be levied for a building with annual letting value up to rupees eighteen hundred. The aggre­ gation of annual letting value of all buildings owned by a single individual could be applied only for exemption and not for taxation. The unit of tax is a building (property) and not a person. If a person owns more than one building within the urban area to which the Act is applicable, the aggregate annual B letting value of all the buildings cannot be taken into consideration for assessment of tax. If the quarters are let out to different persons, each quarter has to be valued as a separate unit. If the annual letting value of each quarter does not exceed the limit prescribed by . the Act, it will be exempt from assessment The High Court relied upon the previous decisions construing the corresponding provisions in the M.P.Sampatti Kar Adhiniyam, 1964. (See: Om C Parkash Agganval ,Indore v. Deputy Property Tax Commissioner, M.P .Gwalior and Ors., 1973 M.P.L.J. 918;National Coal Development Corporation v. State of Madhya Pradesh, 1975 M.P.L.J. (NOC) 88; andNihalkaran v, State of M.P. 1977 JL.J. 712). ·It seems to us that the High Court had a mechanical approach to D construction.The mechanical approach to construction is altogether out of step with the modem positive approach. The modem positi:ve approach is to have:t .. a puroseful construction that is to effectuate the object and purpose of the Act. · · · \. Section 127 A must, therefore, receive a purposeful construction. Sub-section (1) contains a table for taxation. There is no provision for taxation in respect of a building having annual letting value less than rupees eighteen hundred. E Clause (b) of sub-section (2) expressly exempts buildings and lands, the annual letting value of which does not exceed eighteen hundred rupees. The proviso permits adding up of annual letting value of all such buildings or lands owned by a single individual in theMµnicipality. The proviso no doubt states that the annual letting value aggregated shall be deemed to be "for the purpose of this F clause" meaning thereby for the purpose of clause (b), that is for exemption. But the purpose of the proviso is to deny exemption to buildings or lands owned by the same person and of which the .total annual letting value exceeds rnpees eighteen hundred. It is quite true that each building is a unit for the purpose of taxation and G there is no provision for taxation of building and land of which the annual letting value is tip to rupees eighteen hundred. But when aggregation of annual letting value of all buildings or lands is permitted, then, all such buildings or lands have to be taken as one unit for the purpose of taxation. Any other -'I construction would render the proviso nugatory arid defeat the object of the Act The Legislature could not have intended that all buildings or lands owned H 116 SUPREME COURT REPORTS (1991) SUPP. 3 S. C.R. A by a single individual should get exemption from taxation even if their total letting value exceeds ru~ eighteen hundred .. The decisions of the High Court taking contrary view cannot be said to have laid down the law correctly. · B In the result we allow the appeal and set aside the impugned judgment of the High Court. We, however, direct that this decision should be given affect prospectively and there shall not be recovery from or refund to any person with regard to the period antecedent hereto. No costs. GN. Appeal allowed. \ ..