Bima Office Premises Co Operative Society and Etc Vs Kalamboli Village Panchayat and ors Etc - Citation 360332 - Court Judgment

Judgment:

V.C. Daga, J.

1. The Demand Notices issued by the respective Gram Panchayats demanding property taxes from the respective petitioners and consequent warrants of attachment issued for recovery thereof have given rise to the present petitions.

2. The parties are different, but the issues involved are identical and so a single judgment will dispose of all the petitions.

BACK GROUND FACTS

3. The facts, necessary to appreciate rival contentions, taken from writ petition No. 2946/2000, may be stated as under :

4. Petitioners are incorporated under the provisions of Indian Companies Act, 1956, and is inter alia, engaged in Shipping related activities. The respondent No. 1 herein is a Gram Panchayat of Pagote village, Taluka Uran, District Raigad. The respondent No. 2, the City and Industrial Development Corporation of Maharashtra Limited (hereinafter referred to as the CIDCO, for the sake of brevity), is a subsidiary company of the State Industrial and Investment Corporation of Maharashtra, a company owned and controlled by the State declared to be the New Town Development Authority for the area comprised in the site of New Bombay, in exercise of the powers conferred by Subsection (3-A) of Section 113 of the Maharashtra Regional and Town Planning Act, 1966 (hereinafter referred to as 'MRTP Act', for short). The respondent No. 3 is the State of Maharashtra.

5. The petitioners, have constructed Container Freight Station on the lands in question, for warehousing activities. The respondent No. 1 -- Gram Panchayat, Pagote issued a notice under Sections 129(1) and 129(2) of the Bombay Village Panchayats Act, 1958 (hereinafter referred to as 'BVP Act', 1958, for short), claiming property taxes from the petitioners for the period commencing from March, 1994 to 31stMarch, 1998 in respect of lands and buildings falling within the jurisdiction of respondent No. 1 Gram Pahchayat, Pagote.

6. The petitioners were also threatened with warrant of attachment in the event of their failure to pay amount of property taxes demanded by the respondent No. 1 -- Gram Panchayat.

7. The petitioners have taken exception to the Demand notices and to the warrants of attachment issued by the respondent No. 1 -- Gram Panchayat. According to the petitioner, the State Government, in exercise of powers conferred by Sub-section (1) of Section 113 of MRTP Act, 1966, has notified the area of village Pagote as the site for development of new town, by name 'New Bombay' and the respondent No. 2 -- CIDCO has been appointed as a new Planning and Development authority in exercise of powers under Sub-sections (1) and (3A) of Section 113 of the MRTP Act, 1966; as such powers of Gram Panchayat to assess and levy tax on lands and buildings standing thereon had been eclipsed by operation of statute namely Section 113(5) of the MRTP Act, 1966.

8. The petitioners have placed on record agreements, marked as Annexures C, C-1 and C-2 to the petition, and on the basis of the recitals contained therein, contended that the State Government, pursuant to Section 113-A had acquired the lands described in the agreement and transferred the same in favour of CIDCO for development and disposal. The CIDCO in turn has consented to grant to the petitioners lease of the lands, in question, for the purpose of constructing building or buildings for commercial use on the terms and conditions incorporated therein. The petitioners further claimed that the area falling within the jurisdiction of the respondent No. 1 -- Gram Panchayat being a part of new town, pursuant to the notification issued by the State Government, the respondent No. 1 Gram Panchayat has ceased to exist as such, it has lost its authority to levy tax on the lands and buildings owned by the petitioners.

9. The learned Counsel appearing for the respondent No. 1 -- Gram Panchayat, submitted that it is not in dispute that the lands and buildings belonging to the petitioners are situated within the jurisdiction of the respondent No. 1 -- Gram Panchayat, Pagote and so long as no notification is issued by the State Government under Section 124(6)of the BVP Act, 1958, Gram Panchayat is entitled to levy tax on the lands and buildings owned by the petitioners as such levy of tax is perfectly legal, valid and justified. It is further contended that bare reading of Section 124(2) makes it clear that the tax referred to in Clause (i) under Sub-section (1) of the Act is leviable on the lands and buildings and the same is recoverable from the owners or occupiers thereof. The petitioners being occupiers of the lands and buildings, are liable to pay tax. Failure on their part to pay, the respondent No. 1 -- Gram Panchayat is entitled to recover the same by executing warrant of attachment against the properties of the petitioners. The respondent No. 1 in the above premise tried to support its demand for taxes as well as action for recovery thereof.

POINTS FOR DETERMINATION

10. The main question which falls for determination in this petition is as under:--whether the powers and functions of any other local authority immediately existing before the Constitution of the New Town Development Authority would cease to exist by operation of law, no sooner the New Town Development Authority for the area is constituted under Sub-section (3-A) of Section 113 of MRTP Act, 1966.

RIVAL CONTENTIONS

11. The learned Counsel appearing for the petitioners contended that the CIDCO has been declared as New Town Development Authority under the provisions of Section 113 (3A) of the MRTP Act. pursuant to the notification issued by the State Government dated 20th March, 1971, by the said notification a new town, by name, 'New Bombay' was designated. Having regard to the complexity and magnitude of the work involved in developing the area, comprised in the site of new town the State Government entrusted the work of development of the said site of new Bombay to the respondent No. 2 CIDCO, and, declared the said subsidiary company to be known as Town Development Authority for the area comprising the site of New Bombay.

12. It is further contended by the petitioners that in view of the aforesaid notification, now no village called Pagote exist. The same has now become the part of new township, by name, New Bombay. After development of new township by the respondent No. 2 CIDCO. the respondent No. 1 -- GramPanchayat has ceased to exist for the said area. Therefore, it has no power or authority to levy tax on the lands and buildings situated within its jurisdiction. Now it has only power to levy taxes other than referred to in Section 124(1)(i) of the BVP Act, i.e. on other than lands and buildings.

13. It is further urged by the learned counsel appearing for the petitioners that the function of the Gram Panchayat to levy tax is not the sovereign function. It is the function exercised on the authority given by the State Legislatures. In view of the provision contained in Section 113(5) of the said Act the said function of respondent No. 1 Gram Panchayat stands taken away on the designation of the respondent No. 2--CIDCO as New Town Development Authority and, therefore, in the submissions of the petitioners, the impugned demand notices issued by the respondent No. 1 Gram Panchayat and served upon the petitioners followed by warrants of attachment, both are liable to be quashed and set aside holding it to be bad, illegal and without authority of law.

14. The learned Counsel appearing for the petitioners, referring to the provisions of Article 243-Q(2) of the Constitution and relying upon the decision of the Apex Court in Saij Gram Panchayat v. State of Gujarat, : [1999]1SCR263 , submitted that the area of new town known as New Bombay will have to be treated as a 'transitional area' and further went on to submit that such a area cannot be said to be an area within the domain of Gram Panchayat.

15. It is urged by the learned Counsel for the petitioners that in view of the provisions contained in Article 243-Q of the Constitution it is necessary for the State to constitute Nagar Panchayat for said transitional area of New Bombay. The learned counsel relying upon the provisions contained in Article 243N and 243ZF contended that the laws relating to the Panchayat being inconsistent with the Part IX-A of the Constitution of India has ceased to apply after expiry of one year commencing from 1-6-1993 and, therefore, the respondent No. 1--Gram Panchayat cannot exercise powers under Section 124(1)(i) of the BVP Act. The impugned Demand and the notices issued by the respondent No. 1 Gram Panchayat, are contrary to the aforesaid constitutional provisions and, therefore, liable to be quashedand set aside. The petitioners in support of the aforesaid submissions have relied upon the decision in the case of Saij Gram panchayat v. State of Gujarat : [1999]1SCR263 (supra). On the basis of this decision. It is contended on behalf of the petitioners that respondent No. 1 Gram Panchayat cannot levy tax.

16. The petitioners further contended that the agreements incorporated at Exhibits C, C-1 and C-2 prescribed payment of service charges and the petitioners are required to pay the same to the respondent No. 2 -- CIDCO on yearly basis for maintaining and/or providing civic amenities, such as roads, water, drainage, conservancy etc. Thus, according to the petitioners, as per the terms and conditions of the above agreements, the petitioners are required to pay to the New Town Development Authority i.e. respondent No. 2 -- CIDCO, all such rates, taxes and service charges. This being the position, in the submission of the petitioners, if they are driven to pay rates, taxes and service charges even to respondent No. 1 --Gram Panchayat for the services admittedly not rendered by respondent No. 1 then it would amount to double taxation and would virtually amount to dual control and shall impede the growth and development of the petitioners.

17. In reply to the aforesaid contentions, the learned Counsel appearing for the respondent No. 1 Gram Panchayat, contended that Section 124 of BVP Act specifically empowers respondent No. 1 to levy tax on the lands and buildings, situated within its jurisdiction. There is no dispute that the building and the lands belonging to the petitioners are situated within the jurisdiction of the respondent No. 1 -- Gram Panchayat. According to the respondent No. 1, from the reading of Section 124(2) it is clear that the tax under Clause (i) of Subsection (1) of the said section is on the lands and buildings and same is required to be paid by owner or occupier. The petitioners, being occupiers of the lands and buildings, are bound to pay the taxes levied by the Gram Panchayat on the said lands and buildings.

18. The respondent No. 1 -- Gram Panchayat, in order to borrow support to the aforesaid submissions, relied upon the provisions of the Constitution (Seventy-Third Amendment) Act, 1992 and sought to borrow assistance from the provisions of Article 243H of the Constitution, which specifically provides that the Legislature of the State may, by law shall authorise a Panchayat to levy, collect and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such limits, as may be specified in the law. The respondent No. I -- Gram Panchayat, therefore, submitted that the power conferred upon the respondent No. 1 Gram Panchayat, under Section 124(1)(i) has a constitutional mandate.

19. The respondent No. 1 further urged that unless the State Government, by notification issued in the Official Gazette, provides that the taxes levied by the respondent No. 1 are unfair in its incidenpe, or that the levy thereof, or any part thereof is obnoxious to the interest of the general public or violates any promises made or undertakings given by the State Government or adversely affects the development of the village or any part thereof, the respondent No. 1 -- Gram village or any part thereof, the respondent No. 1 -- Gram Panchayat No. 1 further submitted that no such notification has ever been issued by the State Government in exercise of its power under Section 124(6) of the BVP Act and, therefore, there is no abridgement of the powers of respondent No. 1 to levy tax on the lands and buildings and, therefore, it was urged that the levy of tax is legal and justified.

20. In reply to the contention of the petitioners, that by virtue of notification having been issued under the MRTP Act, the village Pagote has ceased to exist, respondent No. 1 -- Gram Panchayat has further urged that merely because of the notification issued under Section 113-A, it cannot be said that the Gram Panchayat constituted under BVP Act, has ceased to have existence for the area of village Pagote. The respondent No. 1 -- Gram Panchayat further urged that so long as the local area of the village declared under Section 4(1) is not excluded by a notification issued under Sub-section (2) of Section 4, the village Pagote cannot be said to have ceased to exist. In the submissions of the respondent No. 1, it is possible only by notification under Section 4(2) in the manner prescribed under the said section, by the State Government, which provides for inclusion and exclusion of any local area or limits of any village or any local area. Since there isno such notification the respondent No. 1 has not ceased to be a Gram Panchayat within the provisions of the said Act. On the pedestal of this submission, learned Counsel appearing for the respondent No. 1 Gram Panchayat stoutly refuted all the contentions urged by the petitioners.

21. In the submissions of respondent No. 1, respondent No. 1 -- Gram Panchayat continues to exist as Gram Panchayat. It is empowered and has a right to levy tax on the lands and buildings situated within its jurisdiction and consequently, the action of the respondent No. 1 -- Gram Panchayat, calling upon the petitioners to pay tax, was well within its jurisdiction, right and power and, is, therefore, required to be upheld.

22. While replying to the contentions of the petitioners, based on the terms and conditions of the agreement, at Exhibits C, C-1 and C-2, the respondent No. 1 contended that the reading of the agreement itself makes a clear distinction under item (e) which speaks of rates, taxes, charges and payment of service charges, wherein it is provided that the petitioners shall pay to the respondent No. 2-- CIDCO an yearly payment for maintaining civic amenities, such as roads, water, drainage, conservancy etc. and contribution to the cost of establishing and maintaining civic amenities to the extent of benefit derived from such amenities. It is sought to be pointed out that with regard to the taxes, it is specifically made clear in the agreement itself that the petitioners will pay all rates, taxes, charges, claims and outgoings chargeable against an owner and occupier in respect of the lands and any buildings erected thereon. The respondent No. 1 also pointed out that it is the contention of the respondent No. 2 CIDCO that whatever payments are made by the petitioners and received by the respondent No. 2 CIDCO, the same are nothing but development charges and, therefore, fee is levied by CIDCO only to the extent it is empowered under the provisions of the MRTP Act. Therefore, in the submission of respondent No. 1 Gram Panchayat, by no stretch of imagination, it can be said that CIDCO is recovering any taxes from the petitioners. At any rate, CIDCO submitted that CIDCO is not entitled to recover taxes specified under Section 124 of the BVP Act.

23. The respondent No. 1 -- Gram Panchayat in conclusion, contended thatthe powers conferred on the respondent No, 1 under Section 124 can only be curtailed via Sub-section (6) of the said section. In absence of any such notification. Gram Panchayat can levy and collect taxes so long at it does not cease to exist in view of the provisions contained in Section 4 of the BVP Act. Thus, it cannot be said that respondent No. 1 has no power to levy and recover tax on lands and buildings, situated within its jurisdiction.

24. In order to substantiate the above submissions, the learned Counsel for respondent No. 1 took us through the provisions of Chapter VI-A of MRTP Act, which empowers the Development Authority to levy and recover development charges. The assistance was borrowed from the provisions of Section 124-L of the said Chapter which clearly provides that power to levy and recover development charges is notwithstanding anything inconsistent therewith contained in the said Act or any other law for the time being in force. Based on this, the learned Counsel appearing for the respondent No. 1 contended on the text of the said section that it makes further more clear that the power conferred upon respondent No. 2 -- CIDCO to levy and recover development charges is in addition to and not in derogation of any other provisions of the said Act or any law relating to municipal corporation, municipal council or other local authority. According to him, it clearly establishes that what is levied and recovered by the New Town Development Authority is a fee and not tax and power to levy fee has been conferred upon it under the provisions of the MRTP Act. There is no provision contained in the MRTP Act, conferring power to levy tax and, therefore, there is no substance in the contention of the petitioners that they are made to pay double taxes and are subjected to dual control resulting in creation of impediment to the growth and development of the petitioners. The learned Counsel appearing for the respondent No. 1 on the canvass of the aforesaid submission prayed for dismissal of the petition with costs.

SCHEME UNDER THE CONSTITUTIONAL FRAMEWORK

25. Before proceeding to consider rival contentions, it would be proper to review the relevant provisions of law in this regard.

The Panchayat Raj is the foundation of Indian democracy. We have accepted democratic form of Government through our Constitution and consequently, village panchayat is the lowest administrative unit of local self-Government. Article 40 falling in Part IV of the Constitution providing for Directive Principles of State Policy, reads as under :--

'40. Organisation of Village Panchayats:--The State shall take steps to organise village panchayats and endow them with such powers and authority as may be necessary to enable them to function as units of self-Government.'

Accordingly, Article 40 of the Constitution requires every State to organise village Panchayats and endow them with such powers and authority as may be necessary to enable them to function as unit of self-Government. In pursuance of the said Directives, the Bombay Village Panchayats Act, 1958 was enacted. The Parliament found that these institutions have not been able to acquire the status and dignity of viable and responsive people's bodies due to number of reasons including lack of financial resources. In view of such shortcomings. Parliament considered it necessary to enshrine in the Constitution certain basic and essential features of Panchayat Raj institutions to provide certainly, continuity and strength to the system of local self-Government. Accordingly, the Parliament has enacted the Constitution (Seventy-Third Amendment) Act, 1992, which came into force with effect from 24th April, 1993, the relevant provisions of which, read as under :--

'243. Definitions.-- in this Part unless the context otherwise requires,--

(a) to (c) .....

(d) 'Panchayat' means an institution (by whatever name called) of self-Government constituted under Article 243B, for the rural areas;

(e)to(f) ...

(g) 'village' means a village specified by the Governor by public notification to be a village for the purposes of this Part and includes a group of villages so specified.'

'243B. Constitution of Panchayats,--

(1) There shall be constituted in every State, Panchayats at the village, intermediate and district levels in accordance with the provisions of this Part.'

'243H. Powers to impose taxes by, and Funds of, the Panchayats. The Legislature ofa State may, by law,--

(a) authorise a Panchayat to levy, collect and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such limits;

(b) assign to a Panchayat such taxes, duties, tolls and fees levied and collected by the State Government for such purposes and subject to such conditions and limits;

(d) provide for constitution of such Funds for crediting all moneys received, respectively, by or on behalf of the Panchayats and also for the withdrawal of such moneys therefrom, as may be specified in the law.'

26. On the aforesaid backdrop, relevant provisions of the BVP Act, 1958, also need consideration to appreciate rival contentions advanced by the parties to the petition. The BVP Act, 1958 extends to the whole of the State of Maharashtra, except the areas falling within the limits of a municipal corporation, municipality or cantonment established by or under any law for the time being in force.

Section 3 of the said Act is the Index providing for various definitions. The relevant definitions for the purposes of this petition are extracted hereinbelow :--

'(14) 'panchayat' means a panchayat established or deemed to have been established under this Act;

(23) 'tax' means a tax, cess, rate or other impost leviable under this Act, but does not include a fee;

(24) 'village' and 'a group of villages' means the village or, as the case may be, a group of villages specified in the notification issued under Clause (g) of Article 243 of the Constitution of India.

Section 4 provides for declaration of village, the same reads as under :--

4. Declaration of village-

(1) Every village specified in the notification issued under Clause (g) of Article 243 of the Constitution of India shall be known by the name of that village specified in that notification.

Provided that, where a group of revenuevillages or hamlets or other such administrative unit or part thereof is specified in that notification to be a village, the village shall be known by the name of the revenue village, hamlets or, as the case may be, administrative unit or part thereof, having the largest population.'

Section 51 enables State Government to vest tn the Panchayat, open sites, waste, vacant or grazing lands or public roads and streets, bridges, ditches, dikes and fences, wells, river beds, tanks, streams, lakes, nallas canals water courses, trees or any other property in the village vesting in the Government. Section 51 has been amended to provide that the lands vested in the Panchayats by Government should be available to the Government when they are required for the purpose of National or State Development Plans or for any other public-purpose, without payment of compensation. Section 52 makes a provision and gives powers to the Gram Panchayat to control the erection or re-erection of buildings within its jurisdiction. No person can erect or re-erect any building without previous permission of the Panchayat or contrary to the conditions imposed by the Panchayat and Panchayat has power to stop erection or re-erection or require such person to alter or demolish erected or re-erecting building contrary to the permission of the Panchayat.

27. Section 124 of the said Act deals with power to levy taxes and fees by Panchayat. The relevant part of the said section relevant for the purpose of this petition, reads as under :

'124. Levy of taxes and fees by Panchayats-

(1) Subject to the minimum and maximum rates which may be fixed by the State Govt. and in such manner and subject to such exemptions as may be prescribed, a Panchayat shall levy taxes referred to in Clauses (i) and (i-a) of this sub-section and where the panchayat has taken over any water supply schemes under Sub-section (1) of Section 45, it shall also levy taxes referred to in Clauses (viii) and (xii) of this sub-section and the panchayat may levy all or any of the taxes and fees referred to in the remaining clauses of this sub-section.

(i) a tax on buildings (whether subject to payment of agricultural assessment or not) and lands (which are not subject to payment of agricultural assessment), within the lim-its of the village;

(6) if at any time it appears to the State Government on complaint made or otherwise, that any tax or fee leviable by a Panchayat is unfair in its incidence, or that the levy thereof, or any part thereof is obnoxious to the interests of the general public or violates any promises made or undertakings given by the State Government or adversely affects the development of the village or any part thereof, the State Government may require the said Panchayat, within such period as it fixes in this behalf, to take measures for removing any objection which appears to it to exists to the said tax or fee. If, within the period so fixed, such requirement is not carried into effect to the satisfaction of the State Government, the State Government may, after giving the Panchayat an opportunity to give an explanation, by notification in the Official Gazette, suspend the levy of such tax or fee, or such part thereof, until such time as the objection thereto is removed.'

Section 146 of the Act provides for dissolution and reconstitution of panchayat on alteration of limits of village, whereas Section 148 deals with the effect in the event of exclusion of area from the village itself. Section 148 reads as under :

'148. Effect of area being excluded from village.-- Where under Section 4 any local area forming part of a village is excluded from such village, and such area is not included in or declared to be a village, so much of the village fund and other property vesting in the Panchayat of the village of which such area formed part, as the Commissioner may by order in writing direct, shall vest in the Collector to be utilized for the benefit of the area as the Collector may think fit.'

28. In order to determine the questions raised in the above petition, it is also necessary to consider the provisions of Maharashtra Regional and Town Planning Act, 1966 which is based on two famous maxims 'Salus populi est supreme lex' means the welfare of the people is the supreme law and 'necessities publican major est quam privata', which means 'public necessity is greater than private', with the advent of social and industrial progress in India coupled with the abnormal growth of population, the necessityof a special legislation for making better provision for the Development Plan, Town Planning Schemes, and creation of new towns, has fortified the fitness of enacting the MRTP Act. It ensures the implementation of plans and schemes under this Act, and provides for compulsory acquisition of land required for public purposes in respect of plans and schemes formulated under the said Act. In this Legislation, very elaborate and specific provisions are made regarding the formalities to be gone through, by a local authority. State Government and by other authorities concerned, in the matter of preparation and finalisation of the plans and schemes. Chapter VI deals with 'New Towns'. Section 113 provides for designation of site for new town. Relevant part of Section 113. relevant for the purpose, to deal with the question raised in the petition, reads as under :

'113. Designation of site for new town:--

(1) if the State Government is satisfied that it is expedient in the public interest that any area should be developed as a site for a new town as reserved or designated in any draft or final Regional Plan it may, by notification in the Official Gazette, designate that area as a site for the proposed new town. The new town shall be known by the name specified in the notification.

(2) to (4) ...

(5) On the constitution of, or on the declaration of any corporation or company as, a Development Authority for any new town, the local authority or authorities functioning, within the area designated under this Act as a site for the new town, immediately before such constitution or declaration shall cease to exercise the powers and perform the functions and duties which the said Development Authority is competent to exercise and perform under this Act.

(6) to (7) ...

(8) A Development Authority shall have all the powers and shall carry out all the duties of a Planning Authority under this Act (including all powers and duties under Chapters III and IV and also under other provisions of this Act as may be relevant for carrying out of its object and all the provisions in respect of procedure under this Act shall apply so far as may be necessary in this behalf.'

Section 113-A deals with the power of theState Government to acquire land for Corporation or Company declared to be New Town Development Authority, whereas objects of the Development Authority are to be found under Section 114 of the said Act. The provisions of Section 113-A read as under :

'113A. Power of State Government to acquire land for Corporation or Company declared to be New Town Development Authority.

Notwithstanding anything contained in this Act, or in any law for the time being in force, where any corporation or company is declared to be the New Town Development Authority under Sub-section (3-A) of Section 113, the State Government shall acquire either by agreement or under the Land Acquisition Act, 1894 (and such acquisition may have been commenced before the coming into force of this section) any land within the area designated under this Act, as the site of the new town, any land adjacent to that area which is required for the purposes connected with the development of the new town, and any land whether adjacent to that area or not, which is required for the provisions of services or amenities for the purposes or the new town; and vest such land in such Authority for the purposes of this Chapter by an order duly made in that behalf.'

'114. Objects of Development Authority.- (1) The objects of a Development Authority shall be to secure the laying out and development of the new town in accordance with proposals approved in that behalf under the provisions of this Act, and for that purpose every such Authority shall subject to the provisions of Section 113A have power to acquire, hold, manage and dispose of land and other property to carry out buildings and other operations, to provide water, electricity, gas, sewerage and other services, amenities and facilities and generally to do anything necessary or expedient for the purpose of the new town or for purposes incidental thereto.'

Section 123 of the MRTP Act provides for transfer of undertaking of Development Authority. The said section is as under :--

'123. Transfer of undertaking of Development Authority-

(1) Without prejudice to the power of a Development Authority under this Act to dispose of any of their property, a Develop-ment Authority may by an agreement made with any local authority, or Planning Authority and approved by the State Government transfer to that local authority or Planning Authority any part of the property of the Development Authority upon such terms as may be prescribed by the agreement:

Provided that, before approving such agreement, the State Government shall publish in the Official Gazette and in one or more local newspapers a notice stating that the agreement has been submitted for approval and describing the general effect of the agreement.

(2) if the State Government is satisfied that it is expedient, having regard to any agreement made or proposed to be made under Sub-section (1) that the liability of the Development Authority in respect of advances made to it under this Act should be reduced, the State Government may, by an order reduce that liability, to such extent as may be specified in the order.

(3) The payment of any sums payable by a local authority or Planning Authority for the purposes of an agreement under this section shall be a purpose for which that authority may, notwithstanding anything contained in any law constituting such authority, borrow money.'

Section 159A makes special provisions relating to New Town Development Authority and Special Planning Authority and makes provision in the form of Schedule forming part of the Act. The provisions incorporated in the schedule are special provisions relating to New Town Development Authority and Special Planning Authority, referred to in Section 40 of the Act. Sub-clause (1) of the said Schedule, reads as under :--

'7. Lump sum contribution by relevant authority in lieu of taxes levied by local authorities.-

(1) Subject to rules, if any, that may be made under this Act, and regard being had to the fact that the relevant authority Itself provides in the area within the jurisdiction of the local authority all or any of the amenities which the local authority provides, the relevant authority shall not be liable to pay the taxes Including property taxes, if any, but it shall be lawful to the local authority to arrive at an agreement with the relevant authority with the prior sanction of the State Government to receive a lump sum contribution from the relevant authority in lieu of all or any of the taxes levied or services rendered by the local authority.

(2) Where no such agreement, as is referred to in Sub-section (1) can be reached or there is any dispute regarding any matter referred to in the aforesaid sub-section, the matter may be referred to the State Government in such manner as the State Government may determine, and the State Government may, after giving to the local authority or the relevant authority or both a reasonable opportunity of being heard, decide the amount of such contribution. The decision of the State Government, shall be binding on the local authority and the relevant authority.

Explanation:-- in this section, 'local authority' has the meaning assigned to it by Clause (26) of Section 3 of the Bombay General Clauses Act, 1904.'

29. At this juncture, it is necessary to reiterate that with effect from 1-6-1993 the Constitution (Seventy-Fourth Amendment) Act, 1992, also came into effect along with Seventy-Third Amendment, as a result, Part IX-A was added in the Constitution, which deals with constitution of municipalities. Article 243Q referred to hereinbefore reads as under :

'243-Q. Constitution of Municipalities-

(1) There shall be constituted in every State,--

(a) a Nagar Panchayat (by whatever name called) for a transitional area, that is to say, an area in transition from a rural area to an' urban area;

(b) a Municipal Council for a smaller urban area; and

in accordance with the provisions of this part:

Provided that a Municipality under this clause may not be constituted in such urban area or part thereof as the Governor may, having regard to the size of the area and the municipal services being provided or proposed to be provided by an industrial establishment in that area and such other factors as he may deem fit, by public notification, specify to be an industrial township.

(2) in this article, 'a transitional area', 'a smaller urban area' or 'a larger urban area'means such area as the Governor may, having regard to the population of the area, the density of the population therein, the revenue generated for local administration, the percentage of employment in non-agricultural activities, the economic importance or such other factors as he may deem fit, specify by public notification for the purposes of this part.'

Article 243ZF provides that any provision of any law relating to municipalities in force in a State immediately before the commencement of the Constitution (Seventy-Fourth Amendment) Act, 1992, inconsistent with the provisions of this Part, shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until the expiration of one year from such commencement, whichever is earlier. Article 243 reads as under :--

'243ZF. Continuance of existing laws and Municipalities.'

Notwithstanding anything in this part, any provision of any law relating to Municipalities in force in a State immediately before the commencement of the Constitution (Seventy-fourth Amendment) Act, 1992, which is inconsistent with the provisions of this part, shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until the expiration of one year from such commencement, whichever is earlier:

Provided that all the Municipalities existing immediately before such commencement shall continue till the expiration of their duration, unless sooner dissolved by a resolution passed to that effect by the Legislative Assembly of that State or, in the case of a State having a Legislative Council, by each House of the Legislature of that State.'

30. The Maharashtra Municipal Councils, Nagar Panchayats and Industrial Township Act, 1965 (hereinafter referred to as 'Municipalities Act' for short) also came to be amended on 30-5-1994 to fall in line with Seventy-fourth Constitutional Amendment Act, 1992. In order to meet the requirement of Article 243Q, every State has to constitute Nagar Panchayats for a transitional area, i.e. to say, an area in transition from rural area to an urban area, Section 341A was introduced in the MunicipalitiesAct, which now reads as under :--

'341A. Specification of a transitional area and incorporation of a Nagar Panchayat.

(1) The State Government may, having regard to the factors mentioned in Clause (2) of Article 243Q of the Constitution of India, specify, by notification in the Official Gazette, an area in transition from a rural to an urban area to be a transitional area:

Provided that, no such area shall be so specified as a transitional area unless,--

(a) such area has a population of not less than ten thousand and not more than twenty-five thousand; and

(b) such area is not more than twenty kilo meters away from the territorial limits of any Municipal Corporation or a 'A class Council and the percentage of employment in non-agricultural activities in such area is not less than twenty-five per cent; or

(c) such area is more than twenty kilo meters away from the territorial limits of any Municipal Corporation or a 'A' Class Council but the percentage of employment in non-agricultural activities in such area is not less than fifty per cent.

(2) For every transitional area so specified under Sub-section (1), there shall be constituted a Nagar Panchayat as provided in Section 341-B which shall be known by the name of. ..... .Nagar Panchayat. Everysuch Nagar Panchayat shall be a body corporate and shall have perpetual succession and a common seal with power to acquire, hold and dispose of property and to enter into contract and may by the said name sue and be sued.'

Thus, as a result of this amendment to the Municipalities Act, the area in transition from rural area to urban area is required to be notified by a notification in the Official Gazette subject to compliance of the conditions stipulated therein. It is not in dispute that no such area in this behalf has yet been notified.

CONSIDERATION OF THE RIVAL SUBMISSIONS

31. The Constitution mandates that no tax shall be levied or collected except by authority of law. It is well established that tax is in the nature of compulsory extraction of money by a public authority for the public purpose to meet general expenses of the State or authority without reference to any special advantage to be conferred upon payers of the tax which is clear from the law laiddown by the Apex Court in the case of Ratilal Gandhi v. State of Bombay, reported in : [1954]1SCR1055 in the following words (At p. 395) :--

'..... .A tax is undoubtedly inthe nature of a compulsory extraction of money by a public authority for public purposes, the payment of which is enforced by law. But the other and equally important characteristic of tax is, that the imposition is made for public purpose to meet the general expenses of the State without reference to any special advantage to be conferred upon the payers of the tax.

It follows, therefore, that although a tax may be levied upon particular classes of persons or particular kinds of property, it is imposed not to confer any special benefit upon individual persons and the collections are all merged in the general revenue of the State to be applied- for general public purposes. Tax is a common burden and the only return which the tax-payer gets is participation in the common benefits of the State.'

32. As already found hereinabove in pursuance of the Directive Principles of the State Policy, the Bombay Village Panchayats Act, 1958 was enacted and in order to make democracy meaningful for common people of the State and to ensure their direct participation in the administration, the Panchayat Raj was introduced and to make the village Panchayat, the primary unit of self-Government viable and independent. Seventy-Third Constitution Amendment was introduced in the Constitution and Section 243-H was brought on the statute which especially provides that Legislature of a State of law, shall authorise a Panchayat to levy, collect and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such limits. The respondent No. 1 -- Gram Panchayat, therefore, was perfectly justified in contending that the powers conferred upon respondent No. 1 under Section 124(1)(i) have been recognised by Constitution as recently as in the year 1993. The respondent No. 1 is further justified in contending that so long as no notification is issued by the State Government in exercise of powers under Section 124(6) of the BVP Act, they are entitled to levy and collect taxes on the lands and buildings and, therefore, the levy of tax and demand thereof is legal and justified.

33. At this juncture, it will be worthwhileto notice that Section 4 of the BVP Act provides for declaration of village. Every village specified in the notification issued under Clause (g) of Article 243 of the Constitution of India is known by the name of that village specified in that notification and where the circumstances so require, provision is made to include or exclude any local area from the local area of a village or to alter the limits of a village or to take away that local area from the concerned village by the notification issued, in the like manner, after consultation with the Standing Committee and upon such declaration local area is either included or excluded shall form the village. With the publication of such notification, the local area is either included or excluded and the limits of the village, accordingly, stand altered. Upon exclusion of the local area of the village, it ceases to be a village under the BVP Act. In the light of the said provisions, we agree with the submissions advanced by respondent No. 1 that so long as notification is not issued under Subsection (2) of Section 4, the respondent No. 1 Gram Panchayat cannot be said to have ceased to exist. In absence of any such notification by the State, the respondent No. 1 -- Gram Panchayat cannot be said to have ceased to be a Gram Panchayat within the provisions of the said Act. It is, therefore, clear that there is no substance in the contention raised by the petitioners that in view of the constitution of a site for new town under Section 113 of the MRTP Act, the respondentNo. 1 Gram Panchayat has ceased to exist and, therefore, respondent No. 1 --Gram Panchayat has no right to levy tax on the petitioners. In our view, so long as respondent No. 1 continue to exist as a Gram Panchayat, it has a right to levy tax on the lands and buildings situated within its jurisdiction and, consequently, action of respondent No. 1 -- Gram Panchayat, levying, assessing and calling upon the petitioners to pay tax, cannot be said to be bad and illegal.

34. The submissions addressed on behalf of the petitioners even though considered on the pedestal of the provisions of MRTP Act, no different conclusion, other than conclusion already drawn by us, can be reached. The object and purpose of the enactment of MRTP Act is to make provision for planning and development and use of land in Regions established for that purpose and to provide therefor constitution of Regional Planning Boards; to make better provi-sion for preparation of Development Plan with a view to ensure that town planning schemes are made in a proper manner and their execution is made effective; to provide for creation of new towns by means of Development Authority and to make provisions for compulsory acquisition of land required for public purposes connected with the said matters. As already pointed out hereinabove that in view of the provision of Article 265 of the Constitution no tax can be levied without authority of law. There is absolutely no provision in the MRTP Act conferring any such power on the Development Authority so as to enable it to levy tax. If the legislation, under which respondent No. 2 CIDCO was designated as Town Development Authority, does not have power to impose and recover tax then in that event the authority designated under the Act, cannot claim such power and as a fact, no such power has been claimed by respondent No. 2 -- CIDCO. Having taken into account the various provisions extracted hereinabove, it is clear that once the Development Authority is designated under Section 113(5) of the MRTP Act, then such authority has to function and exercise powers under the legislation under which it was designated i.e. under the MRTP Act only. The effect of the notification Issued under Section 113 of the MRTP Act is to take away right to control development, erection or re-erection of buildings by the Gram Panchayat and District Collector, vested in Section 52 of the BVP Act. By virtue of subsection (5) of Section 113 of the MRTP Act, all such powers with the publication of the notification in the Official Gazette stands transferred from Gram Panchayat to the authority designated under Section 113(3-AJ'of the MRTP Act. Therefore, what is taken away by Sub-section (5) is the power of respondent No. 1 -- Gram Panchayat, or other local authority to have control on erection or re-erection of buildings. This is obviously done with the specific purpose to permit the Development Authority designated under MRTP Act to develop new town in a planned and systematic manner. Consequently, authority vested in the local authority inclusive of Municipal Council or Panchayat under the relevant provisions of the Municipal Law or Local Panchayat Law, is taken away so as to permit planned development of the new towns. Therefore, effect of publication of notification under Section 113 of the MRTP Act is only to take awaypowers of the Gram Panchayat under Section 52 of the Act and nothing more.

35. Perusal of provision contained in Chapter VII of the MRTP Act clearly establishes that sanction of the Legislature to create a Development Authority was with a view to establish a new town and to authorise such Development Authority including Corporation or a company if so required to acquire, hold, transfer the land situated within the area or jurisdiction of the new town or site to be established. For the aforesaid purpose the powers conferred upon the Development Authority for acquisition of land via Section 116 of the MRTP Act. The object of the Development Authority is to be found in Sub-section (3) of Section 114 of the MRTP Act, which reads as under :--

'(3) For avoidance of doubt, it is hereby declared that the provisions of Sub-section (1) with respect to the powers of Development Authorities relate only to their capacity as statutory corporation; and nothing in this section shall be construed as authorising the disregard by a Development Authority of any enactment or rule of law.'

In the aforesaid backdrop, it cannot be said that the Development Authority has any right to levy taxes and made recovery thereof.

36. If we turn to Chapter VI of the MRTP Act, it only authorises the Development Authority to levy and recover development charges, Section 124C falling in the said Chapter clearly provides that power to levy and recover development charges is notwithstanding anything inconsistent therewith contained in the said Act or any other law for the time being in force. Further it makes clear that the power conferred upon respondent No. 2 CIDCO, to levy and recover development charges, is in addition to and not in derogation of any other provisions of this Act or any law relating to municipal corporation, municipal council or other local authority. This clearly establishes that what is levied and recovered by the Development Authority is a fee and not tax and power to levy fee has only been conferred under the provisions of the said Act, There is no provision contained in the said Act conferring power to levy tax and, therefore, there is no substance in the contention of the petitioners that since they are making payment to respondent No. 2 -- CIDCO, tax cannot be levied on them by respondent No. 1 -- Gram Panchayat. What is levied byrespondent No. 2 is a fee which is distinct from tax levied and recovered by respondent No. 1 -- Gram Panchayat and, therefore, the contention advanced in this behalf by the petitioners needs to be outrightly rejected.

37. Now, turning to the provisions of schedule with regard to the special provisions relating to New Town Development Authority, it is clear from Clause 7, the text of which is already extracted above, that New Town Development Authority subject to the rules, if any, that may be framed under the Act and considering the fact that the New Town Development Authority itself provides within the jurisdiction of the local authority or any of the amenities which the local authority provides then the relevant authority is not liable to pay taxes including property taxes, if any, but it is lawful for the local authority to arrive at any agreement with the relevant authority with the prior sanction of the State Government to receive a lump sum contribution from the relevant authority in lieu of all or any of the taxes levied or services rendered by the local authority. It is, therefore, clear that the Gram Panchayat can very I much levy and collect tax even from the New Town Development Authority subject to the provisions incorporated in Clause 7 of the said Schedule. Whatever benefits are given by Clause 7 of the said Schedule are given to the Development Authority in respect of the property owned by them. Such Development Authority also has to pay taxes, may be in the form of lump sum contribution. Under these circumstances, we are of the considered view that respondent No. 1 -- Gram Panchayat was perfectly justified in assessing, imposing and recovering the taxes from the petitioners notwithstanding the designation and establishment of New Town Development Authority under Section 113(3-A) of the MRTP Act.

38. The submissions made by the learned counsel for the petitioners based on the decision of the Apex Court in Saij Gram Panchayat v. State of Gujarat : [1999]1SCR263 (supra), that the area of the new town known as 'New Bombay' has to be treated as a transitional area under Article 243Q(3) of the Constitution, cannot be accepted in absence of any public notification issued under the signature of the Governor of the State. In Saij Gram Panchayat v. State of Gujarat (supra). It is clear from the text of paragraph 13 of thesaid judgment that by notification dated 14-4-1994 issued by the Gujarat Government in exercise of powers conferred by Clause (2) of Article 243Q of the Constitution, Gujarat Government had specified certain areas comprised in the gram or nagar and had declared them to be the transitional areas. Under Sub-clause (2) of Article 243Q of the Constitution, Governor has to issue public notification considering the population of the area, density of the population therein with other factors mentioned in the said Article 243Q(2) of the Constitution. No such notification has been issued by the governor of the State; at any rate no material in this behalf is produced before us. Under these circumstances, the submissions made in this behalf are devoid of any substance. The same cannot be accepted. In the result, the challenges set up by the petitioners must fail.

39. The remedy of appeal against the respective demand notices is available with the petitioners, which the petitioners can avail. We in the interest of Justice and considering the fact that the petitioners were agitating their rights in the above petitions, make it clear and direct that in the event, the remedy of statutory appeal provided under the BVP Act is availed by the petitioners on or before 31-12-2000, then, the competent appellate authority shall entertain the same without raising any question of delay in presenting the appeal or appeals and the respondents shall not be entitled to raise the question of delay and the appeal shall be decided by the appellate authority on its own merits as early as possible, at any rate, on or before 31st March, 2001.

40. Both the petitions are dismissedsubject to above directions with no order asto costs.

Subject	Civil
Court	Mumbai High Court
Decided On	Nov-23-2000
Case Number	Writ Petn. Nos. 2701 and 2946 of 2000
Judge	A.P. Shah and ;V.C. Daga, JJ.
Reported in	AIR2001Bom83; 2001(1)MhLj806
Acts	Bombay Village Panchayats Act, 1959 - Sections 4, 4(2), 52, 124 and 129; Maharashtra Regional and Town Planing Act, 1966 - Sections 113, 113(3A), 113(5), 113A and 124; Constitution of India - Article 243Q(2)
Appellant	Bima Office Premises Co-operative Society and Etc.
Respondent	Kalamboli Village Panchayat and ors., Etc.
Appellant Advocate	Abhay S. Oka, ;S.G. Anne and ;V.B. Naik, Advs., i/b., ;Crawford Bayley and Co.
Respondent Advocate	C.G. Gavnekar and ;R.M. Sawant, Advs., ;V.S. Gokhale and ;A.M. Desai, A.G.P.
Disposition	Petitions dismissed

Bima Office Premises Co-operative Society and Etc. Vs. Kalamboli Village Panchayat and ors., Etc. - Court Judgment