MUNICIPAL COUNCIL TENALI Vs. RAMA TALKIES TENALI

JUDGEMENT

(1.) Both these appeals arise out of O.S. No. 21 of 1955 on the file of the Subordinate Judge's Court, Tenali. The plaintiff has preferred Appeal No. 536 of 1956 in so far as his suit was dismissed in regard to the refund of property-tax for the years 1951 to 1953. Appeal No. 434 of 1956 was filed by the Municipal Council, Tenali, in so far as the suit was decreed for the refund of property-tax for the second half-year 1950-51 and for the year 1953-54. The plaintiff contended that the Municipality erred in levying the property-tax on the basis of the rents agreed to be paid under Exhibits A-9 and A-4 and that he was consequently entitled to a refund of the property-tax illegally collected from him. The Municipality pleaded that the enhancement of the property-tax was in accordance with the provisions of section 82 of the District Municipalities Act, hereinafter referred to as ' the Act' and that the suit was barred under section 354 (2) of the Act. It was further contended that as the payments for the years 1951 to 1953 were not made under protest, the plaintiff was not entitled to recover those amounts. The Subordinate Judge of Tenali held that the enhancement of the assessment was illegal and arbitrary and that the provisions of the Act have not been in effect complied with. The learned Subordinate Judge further found that as the payments for the years 1951 to 1953 were not made under protest but voluntarily, the plaintiff was not entitled to a refund of the property-tax for those two years. The plaintiff and the defendant have consequently preferred the above appeals.

(2.) The main question that arises for consideration in the appeal is whether the suit is barred under section 354 (2) of the Act, and whether the provisions of section 82 (1) of the Act read with the Taxation Rules in Schedule IV have been complied with. The second question that arises is whether the plaintiff is not entitled to a refund of the property-tax for the years 1951-53 on the ground that he made the payments voluntarily and not under protest. In order to appreciate the legal contentions, it is necessary to set out a few relevant facts.

(3.) The plaintiff, Sri Rama Talkies, Tenali, is the owner of the cinema-house situate in Ward No. XVIII, Tenali Municipality. The assessment number of the building is No. 8662. The site on which the cinema-house was constructed belonged to two owners and the plaintiff was bound to pay them a ground rent of Rs. 1,400. The plaintiff was carrying on a cinema business in the building and for the year 1950-51, the annual value of the building was fixed at Rs. 6,600. As there were quarrels between the partners of Sri Rama Talkies, O.S. 85 of 1949 was filed on the file of the Subordinate Judge's Court, Tenali, and a Receiver was appointed to manage the cinema business. Under the instructions of the Court, the cinema hall along with the equipment and furniture contained therein was auctioned and D.W. 1 was the highest bidder. The cowle kabuliat executed by D.W. 1 in favour of the Receiver is marked as Exhibit A-9 and it is dated 14th March, 1951. The lease was to take effect from 16th October, 1950 and the rent agreed to be paid both for the building and the cinema equipment was a sum of Rs. 2,295 Per month. The lessee agreed to pay the ground rent separately to the owners thereof. As soon as the Commissioner was informed of the lease, he called upon the Receiver to let him know the exact rate of monthly rent which D.W. 1 had to pay him. The Receiver informed him that the rent that was stipulated was a sum of Rs. 2,295 Per month. Exhibit B-19 contains the office-notes from 27th August, 1951 to 1gth September, 1951. The note proceeds on the footing that the sum of Rs. 2,295 was agreed to be paid by D.W. 1 the plaintiff without reference to the machinery. On 31st August, 1951, the Tenali Municipal Council passed a resolution that under rule 4 of Schedule IV to the Act, the annual value of the building should be increased from Rs. 6,600 with effect from 1st October, 1950. A notice marked as Exhibit A-6 was issued to the plaintiff. The notice is headed as 'Special notice of property-tax'. The notice purports to have been issued under rules 9 and 10 of Schedule IV to the Act. It recites that by virtue of the power vested in the executive authority under rule 8 of Schedule IV to the Act, the assessment shown therein will be collected from the half-year commencing from 1st October, 1950. The annual value was proposed to be fixed at Rs. 27,540 and the assessment of Rs. 3,221-11-6 for a half-year was proposed to be collected from the plaintiff from 1st October, 1950. The notice was received by the plaintiff on 15th February, 1951. Thereupon the Receiver filed a revision petition to the Commissioner, marked as Exhibit B-4. The tax was confirmed by the Commissioner. An appeal was filed to the Municipal Council, Tenali, marked as Exhibit B-7. The Municipal Council held that as there was no sufficient machinery for the Sri Rama Talkies, the value of the machinery might be fixed at Rs. 2,840. The annual value was fixed at a sum of Rs. 25,000 and the tax was proposed to be assessed on the amount. The concluding sentence of the order of the Municipal Council as translated is as follows :- "It is therefore resolved to impose a tax on Rs. 25,000 being the rental value of the building including the site, and to reduce the tax in excess of it."