SURENDER KUMAR Vs. STATE OF PUNJAB

JUDGEMENT

(1.) The admitted facts are as follows : The petitioners completed the construction of their chain of nine godowns within the Municipal limits of Ferozepur City on 6th Oct., 1979. These were leased out of the tenant, Food Corporation of India, on 19th Oct., 1979. In fact, these had been constructed in accordance with a scheme formulated by the Corporation whereby the private parties were encouraged to build godowns at their cost--raising of loans from the Nationalised Banks for this purpose was also facilitated by the Corporation--ultimately to be leased out to the Corporation at scheduled rates of rent. Respondent No.2, Municipal Committee, Ferozepure, sent a notice under Sections 65/67/68 of the Punjab Municipal Act, 1911(for short, the Act) calling upon the petitioners to file objections regarding the proposed house-tax assessment of these godowns at an annual value of Rs. 1,72,800/- . Since the petitioner did not choose to file any objections, the said assessment was finalised and in pursuance thereof demand notices issued to the assessees that they made the due payments. Copy of one such notice for the period Jan., 1980 to Dec., 1980 is Annexure P-1. Again, another notice Annexure P-2 was issued to some of the petitioners (Concededly, similar notices were issued to others also) under the same sections for the period 1st Jan., 1980 to 31st March, 1981, for the assessment of the house-tax on the proposed annual value of Rupees 5,58,576/- and the petitioners were called upon to file objections within a period of one month. The petitioners did choose to contest the assessment this time but ultimately their objections were rejected by the Tax Sub-Committee vide its order dated 30th Dec., 1980(Annexure P3). The petitioners preferred an appeal to the Deputy Commissioner, Ferozepore, but there too they failed vide order dated 3rd July, 1981(Annexure P-5). This assessment was contested, inter alia, on the grounds, (I) that the house-tax was determinable on the basis of the fair rent that could possibly be fixed under the East Punjab Urban Rent Restriction Act, 1949, which Act was admittedly operative in the area concerned and not on the basis of the actual or contractual rent, and (ii) that no tax was at all leviable in view of the exemption granted vide notification dated 20th July, 1967(Annexure P-6). It is again on the basis of these very grounds that the orders Annexure P-3 and P-5 are presently impugned.

(2.) The precise defence of respondent Nos. 2 and 3 is that they were well- justified in assessing the house-tax on the basis of the actual rental or annual value as no fair rent of the building in question could possibly be determined under S. 4 of the East Punjab Rent Restriction Act as the godowns were not even in existence prior to Oct., 1979. No exemption under the notification Annexure P-6 is available to the petitioners as the godowns in question are commercial buildings. Having heard the learned counsel for the parties I find that the stand of the respondent-authorities is not devoid of merit.

(3.) It is, no doubt, true that in the light of the observation of their Lordships of the Supreme Court in Devan Daulat Rai Kapur v. New Delhi Municipal Committee AIR 1980 SC 541 and Mrs. Shiela Kaushik v. Commr. of Income-tax, Delhi, AIR 1981 SC 1729, the annual value of a building under S. 3(1)(b) of the Act has to be determined in the light of the provisions of the Rent Control legislation applicable to the building on the basis of what a landlord might reasonably except to get as rent from a hypothetical tenant if the building were let out from year to year and not on the basis of the rent being realised by the landlord. To this extent the stand of the respondent-authorities obviously has to be negatived. But they appear to be well justified in asserting that in the instant case the actual rent being received by the petitioners has to be taken as the fair rent for the reasons; firstly, no fair rent can be determined for the buildings in question under the provisions of S. 4 of the East Punjab Rent Restriction Act, and, secondly, these godowns as also their godowns have been taken on lease by the Food Corporation of India on the basis of a particular scheme referred to above on the scheduled rates of rent which obviously would mean that in the absence of the criterion applicable to the fixation of fair rent under S. 4 of the East Punjab Urban Rent Restriction Act the said rent would be the fair rent.