Judgment:
C.Y. Somayajulu, J.
1. Since both these appeals arise out of a common judgment, they are being disposed of by a common judgment.
2. A.S.NO. 1934 of 1989 arises out of O.S. No. 138 of 1985 and A.S.No. 1935 of 1989 arises out of O.S.No. 200 of 1985 on the file of the Court of Subordinate Judge, Srikalahasti. The aforesaid O.S.No. 138 of 1985 was instituted as O.S.No. 115 of 1983 and O.S.No. 200 of 1985 was instituted as O.S.No. 243 of 1984 on the file of the Court of Subordinate Judge, Tirupathi, for recovery of the property tax due and payable by the appellant in respect of his building bearing Old Assessment No. 7093, corresponding New Assessment No. 10141, described in the Schedules appended to theplaints (hereinafter referred to as the building) to the respondent Municipality. After the constitution of the Court of Subordinate Judge at Srikalahasti the said suits were transferred to that Court from Tirupathi and were renumbered as O.S. Nos. 138 and 200 of 1985.
3. The case of the respondent (plaintiff) is that the appellant (defendant), who completed the construction of the building during the 1st half year 1980-81, had let it out to A.P. State Seeds Development Corporation (APSSDC) on a monthly rent of Rs. 6,974-10 Ps. from 1.10.1980. Therefore, after issuing a special notice, the property tax in respect of the building was fixed at Rs. 11,521-05 Ps. per half year commencing from the second half year of 1980-81. On a revision filed by the appellant on 19.3.1981, the tax was reduced to Rs. 9,601-47 ps. Appellant who did not question the quantum fixed during revision, failed to pay the said amount of tax in spite of issuance of a notice of demand. During general revision of property tax taken up in 1981-82, a special notice proposing to enhance the tax in respect of the building from Rs. 9,601-47 Ps to Rs. 11,521-05 Ps was issued to the appellant. Since the appellant did not file a revision objecting the proposed enhancement of tax, tax for the building was fixed at Rs. 11,521-05 Ps, and accordingly a Notice of Demand for payment of tax was issued to the appellant. But appellant did not pay the tax demanded. Hence, the suits for recovery of the amounts due as tax in respect of the building.
4. The case of the appellant is that the basis of assessment, levy and demand of house tax on the building is illegal and arbitrary and was made without following the procedure prescribed by the A.P. Municipalities Act, 1965 (the Act) and since, the rent for the building is Rs. 4,647-40 Ps. per month, and since an amount ofRs. 2,324-70 ps. per month is being received towards the amenities provided to the tenant, respondent cannot assess tax on the building on the rental value of Rs. 6,974-10 Ps. per month, and such assessment of tax per se is arbitrary and is in violation of the provisions of the Act and in any event suit for recovery of the amount of tax demanded is not maintainable.
5. As stated earlier, both the suits were tried together. Respondent examined one witness as P.W.1 and marked Ex.A.1 to A.7 on its behalf. Son of the appellant, who is said to be his power of attorney, was examined as D.W.1 on behalf of the respondent (sic appellant) and Exs.B.1 to B.3 were marked on his behalf. The Trial Court held that the assessment, levy and demand of property tax in respect of the building is in accordance with the provisions of the Act, and that it has jurisdiction to entertain the suit for recovery of tax, and that the respondent is entitled to recover the amount covered by the suits with interest at 12% p.a. from the date of suits till realization and decreed both the suits. Hence these appeals by the defendant in the suits.
6. The point for consideration is whether the respondent is entitled to recover the amount of tax levied and demanded on the building of the appellant?
7. The main contention of the learned Counsel for the appellant is that since Ex.B3 letter clearly shows that Rs. 4,649-40 Ps. is the rent for the building and Rs. 2,324-50 Ps is being paid by the tenant towards amenities, assessment of tax on the basis that the appellant is receiving rent of Rs. 6,974-10 Ps. per month is arbitrary. It is his contention that since the tenant, by its Ex.B.2 letter, requested the appellant to provide certain amenities, appellant provided amenities to his tenant and is receiving of Rs. 2,234-60 Ps towards the value of amenities provided and as the amount received towards amenities is not rent, it cannot be taken into consideration for assessing the building to tax and so the respondent assessing the building on a rental value of Rs. 6,974,10 Ps., per month on the basis of Ex.A.7 declaration said to have been given by the tenant of the appellant, is arbitrary and illegal, and is in violation of the provisions of the Act. It is his contention that though the appellant failed to question the assessment of tax by filing a revision, he has a right to question the validity of the levy and demand of tax on the building as a defence, when he is able to establish that the assessment, levy and demand of tax are contrary to the provisions of the Act, by relying on Shantilal Bazaz v. Visakhapatnam Municipality, : AIR1983AP199 . He also contended that a suit for recovery of tax is not maintainable in view of Rule 30 in Schedule II of the Act. The contention of the learned Counsel for the respondent is that since the appellant failed to question the assessment of the tax in respect of the building by filing a revision, he cannot question the same by way of defence in a suit filed by the respondent for recovery of the tax demanded.
8. I do not find force in the contention of the learned Counsel for appellant that a civil suit for recovery of tax demanded is not maintainable. Rule 30 of Schedule-II of the Act, relied on by the learned Counsel for appellant, enables the Commissioner to recover the tax by taking recourse to distraint proceedings of attaching movables, etc., but does not preclude the Commissioner or Municipal Council from filing a suit for recovery of the amount due as tax through Court. In view of Section 9 of Code of Civil Procedure, unless and until the jurisdiction of a Civil Court is excluded either expressly or by necessary implication, civil Courts do have jurisdiction to entertain all suits of civil nature. Since suitfor recovery of tax is but a suit of civil nature and since the Act does not either expressly or by implication oust the jurisdiction of Civil Courts to pass a decree for recovery of the tax demanded from a tax payer, suit for recovery of tax by a Municipality against the tax payer is maintainable. In fact, as per Section 90 of the Act, the property tax of buildings and lands shall, subject to prior payment of land revenue, if any, due to the Government thereon, will be a first charge upon the said buildings or lands and upon the movable property, if any found, within or upon the same and belonging to the person liable to such tax. Since charge can be enforced only through a Court of Law, it is clear that jurisdiction of Court is, in fact, saved by Section 90 of the Act. Therefore, a civil suit for recovery of the tax demanded by the Municipality and not paid by the owner, from whom it is due, is maintainable.
9. In Shantilal Bazaz v. Visakhapatnam Municipality (supra), relied on by the learned Counsel for appellant, it is held that in a suit for recovery of tax by the Municipality, it is open to the defendant to plead that levy and collection of tax are illegal, by establishing that the assessment, levy and demand of property tax against him are not in accordance with the provisions of the Act. Therefore, it has to be seen whether the evidence on record establishes that the assessment, levy and demand of property tax are not in accordance with the provisions of the Act.
10. Section 376 of the Act lays down that when assessment or demand of tax is made in compliance with the provisions of the Act, either in effect or in substance, such assessment cannot be challenged or questioned by a tax payer in a Court of Law. So, it has to be seen whether the respondent has in effect and substance complied with the provisions of the Act for assessing and levying property tax on the building.
11. The procedure for assessment and levy of property tax in respect of buildings situated within a Municipality is laid down in Schedule-II of the Act. Rule 6 of Schedule-II lays down that the value of any land or building, for the purpose of property tax, shall be determined by the Commissioner after giving an opportunity of making representation to the owner of the land or building. As per Section 87 of the Act, a building in the Municipality shall be assessed to tax on its annual rental value. The annual rental value of buildings in the Municipality shall be deemed to be the gross annual rent at which they may reasonably be expected to let from month to month or from year to year with reference to their location, type of construction, plinth area, age of the building, nature of use to which they are put, and such other criteria as may be prescribed. Since construction of the building was completed in 1980, at the time when it was assessed to tax for the first time in the second half year of 1980-81, it was a new construction and so the provisions of the A. P. Buildings (Lease, Rent and Eviction) Control Act, 1960 do not apply to it and so it has to be assessed to tax on the basis of rent which it is reasonably expected to fetch, as contemplated by Section 87 of the Act.
12. In Shantilal Bazaz case (supra), relied on by the learned Counsel for the appellant, various decisions of this Court and the Supreme Court, where it was held that if a building was let out to a tenant, the rent being paid by the tenant can form the basis for fixing the rental value, were referred to and relied on. The facts in that case, i.e., Shantilal Bazaz (supra) are Visakhapatnam Municipality filed a suit against-Shantilal Bazaz for recovery of Rs. 34,305.04 being the house tax due from him. The Defendant Shantilal Bazaz filed a written statement contending that the basis of assessment itself was wrong and the same was not made as per the provisionsof the Act, and so he need not pay the tax demanded. He contended that he let out his premises to M/s Bajaj Hotels (Private) Limited, on an annual rent of Rs. 9,000/- for running a hotel, and so the assessment and levy of tax on the basis of the rent being received by the tenant i.e., M/s. Bajaj Hotels (Private) Limited is unsustainable. The contention of the Visakhapatnam Municipality was that Shantilal Bajaj has a major share holding in M/s. Bajaj Hotels (Private) Limited, and that the rent fixed for the building between the landlord (Shantilal Bajaj) and the tenant (M/s. Bajaj Hotels (P) Ltd) is only nominal. The Trial Court decreed the suit filed by the Municipality. On appeal to this Court holding that M/s. Bajaj Hotels (P) Ltd. the tenant of the Shantilal Bajaj, being a limited company registered under the provisions of the Companies Act, has a distinct personality, and inasmuch as Section 87 (2) (b) of the Act contemplates rent received bv the landlord, but not the tenant, being taken as the basis for assessment of house tax, and since the Act does not enable the Municipality piercing the corporate veil, the rent being received by the tenant is not and cannot form the basis for assessment and levy of property tax, and since Shantilal Bazaz is not questioning the quantum of assessment but is questioning the very basis of assessment, and since the basis of assessment, i.e., determining the tax on the basis of the rent being received by the tenant of a premises but not on the basis of rent received by the owner from his tenant is not in accordance with the provisions of the Act, upheld the contention of the owner and allowed the appeal and dismissed the suit.
13. The ratio in Guntur Town Ratepayers' Association v. Guntur Municipal Council, 1978 (1) APLJ (HC) 356, referred to in para-13 of Shantilal Bazaz (supra) is that if a premises to be assessed to tax is governed by a Rent Control Act, the hypothetical rent receivable by the owner as per theprovisions of the Rent Control Statute has to be determined, and tax has to be levied on such rent, but not on the rent actually being received by the owner, and in respect of buildings which are not controlled by Rent Control Statute, rent actually being received by the owner can form the basis for levy of property tax.
The ratio in Guntur Municipality v. Gadde Subba Rao, 1968 (2) An.WR 94, referred to in para-15 of Shantilal Bazaz (supra), is that the rent being received by the owner can be the basis, for determining the annual rental value of a building. In Commissioner, Kakinada Municipality v. K.Venkateswar Rao, 1991 (2) ALT 37 (NRC), it was held that if Rent Control Law does not apply to a premises the, agreed rent could, prima facie be treated as fair rent, and if Rent Control Law applies to a premises, irrespective of the rent actually being received by the owner fair rent as per the Rent Control Law should form the basis for assessment of tax. As stated earlier the building in this case is not governed by the provisions of the A.P, Buildings (Lease, Rent and Eviction) Control Act, 1960. So, the rent actually being received by the appellant for the building can form the basis for assessing it to tax. Since the respondent assessed the building of the appellant to tax on the basis of rent being paid to him by his tenant it cannot be said that the basis of assessment is wrong. The contention that part of the amount being paid by the tenant is not rent for the building, but represents the charge levied for the amenities provided to this tenant, even if true, does not mean that the assessment made by the respondent is not in accordance with the provisions of the Act. It means that quantum of assessment is being questioned but not the basis of assessment. In K.Ramaiah Etc. v. Guntur Municipal Council, 1988 (2) ALT 131, it was held that Civil Court cannot go into the correctness of quantum of annual rentalvalue and can only go into the question whether the assessing authority correctly followed the procedure prescribed by the Act for making the assessment or not. In Vizianagaram Municipality v. Bhaskara Rao, : AIR1965AP326 , it was held that jurisdiction of Civil Court can be invoked only if the provisions of the Act are not followed in effect or in substance, but not otherwise. The fact that appellant is receiving Rs. 6,974-10 Ps. from his tenant for the building is not denied or disputed. Tax was levied taking that amount as rent for the building. The appellant who contends that part of that amount is towards amenities, but not rent, has to establish that fact. If the appellant felt that the quantum of tax sought to be levied as per the Special Notice was high, he ought to have filed a revision when a Special Notice proposing to enhance the tax was served on him. He did not even move his little finger even after receipt of demand notice for payment of tax levied. So, appellant cannot be heard to say, as a defence in the suit filed by the respondent for recovery of tax against him, that the tax levied on his building is on high side and so he would not pay the tax demanded.
14. Ex.B3, sheet anchor of the case of the appellant, is a certificate dated 26-5-1989 issued by the Regional Manager, APSSDC Limited, Srikalahasti, i.e., tenant of the appellant addressed to 'whomsoever it may concern', reads:
'Sub: Hiring of godown measuring 15498 Sq.ft. of Sri B.G. Subbarami Reddy, Urandur, Srikalahasti at the rate of Rs. 0.45 per Sq.ft, which includes service charges - Regarding.
The above godown bearing No. 16-88/89 at Panagal was occupied by APSSDC from 18.9.1980 onwards at the following rates per month: Rent paid .... Rs. 4,649.40Amenities .... Rs. 2,324.70Total paid for month .... Rs. 6,974.IO'
Ex.B.3, being a document which came into existence long subsequent to the suit, need not and cannot be taken into consideration for deciding the suit. That a part, Ex.B.3 which has to be proved like any other document, by examining the person who issued it, is not proved by examining its author. Thus, Ex.B.3 remained unproved. For that reason also it need not be taken into consideration. It is relevant to state that the details mentioned in Ex.B.3 are not mentioned in Ex,A.7.
During his cross-examination DW1 stated that as per the agreement of lease between the appellant and his tenant the total amount of rent was shown as 0.46 Ps per Square Feet including service charges, (without giving details of service charges) and that the said agreement is for eleven months and no further agreement was written. When a written instrument evidencing the terms of a contract is in existence, the agreement alone has to be looked into to ascertain its terms, and oral evidence in respect of the terms therein, cannot be permitted as per Section 91 of Evidence Act. The reasons for non-production of the lease agreement between the appellant and his tenant are not explained by DW.l. When as per the evidence of DW.l a consolidated amount of 0.46 ps per square feet only is mentioned in the agreement as the rent payable for the building how the break-up between the amenities and rent paid is mentioned in Ex.B.3 can be explained only by the person who issued Ex.B.3. Non-examination of the author of Ex.B3 entiles an adverse inference being drawn. So, Ex.B.3 has no evidentiary value.
15. Ex.B.2 letter addressed by the tenant of the appellant to the appellant, contain a request to provide the following amenities: (1) barbed wire fencing, (2) drinking water, (3) lavatories, (4) lighting, (5) cleaning and levelling the premises and(6) providing a small shed by the side of the godown with four windows to locate the office, and to provide holes in the walls of the godown for exhaust duct passage. Except providing drinking water and lighting, other requirements sought would not be 'amenities', because when those requirements are met they would become part of, or additions to, the building. It is not known whether electric motor, tube lights and streetlights, as requested, were provided or not, because DW.1 did not speak about the same. Thus, there is no admissible evidence on record to show that the tenant is paying more than Rs. 2,300/- from out of the total amount of Rs. 6,975-10 Ps. towards amenities to the appellant.
16. Admittedly the tenant of the appellant is paying Rs. 6,976-10 Ps. per month for the building of the appellant. In the absence of proof to show that some part thereof is being received by the appellant towards 'amenities' provided by him to his tenant, since the written lease between appellant and his tenant admitted by DW1 is not produced, respondent assessing the building of the appellant to tax on the basis of the rent mentioned by the appellant in Ex.A.7 cannot be said to be not in accordance with the provisions of the Act.
17. As seen from the plaint in O.S. No. 138 of 1985, tax at Rs. 11,521.05 Ps. was fixed and demanded for the second half of the assessment year 1981-82 and two half years of the assessment year 1982-83. But surprisingly in the second suit, i.e., O.S.No. 200 of 1985, the amount demanded is Rs, 12,939.55 per half year for two half years of 1983-84. Respondent has not explained as to how it is entitled to collect Rs. 12,939-55 Ps. when the tax fixed was Rs. l 1,521-05 Ps for both half years of 1983-84. Therefore respondent is entitled to recover only Rs. 11,521-05 Ps per half year from the appellant, but not at Rs. 12,939-55Ps. Thus, the respondent is entitled to a decree for the amount claimed in O.S.No. 138 of 1985 and to Rs. 23,042.10 Ps., only but not for Rs. 25,829.10 Ps as claimed in O.S.No. 200 of 1985. The point is answered accordingly,
18. In the result, A.S.No. 1934 of 1989 is dismissed and A.S.No. 1935 of 1989 is allowed in part and the decree of the Trial Court in O.S.No. 200 of 1985 is modified and a decree for recovery of Rs. 23,042.10 Ps with interest at 12% p.a. from the date of suit till the date of recovery is passed in favour of respondent. Parties are directed to bear their own costs in both the Appeals.