Municipal Corpn. of Greater Mumbai vs Harish Lamba of Bombay, Indian Inhabitant & Ors.

1.2 Section 169 is an enabling provision which empowers the standing committee to make rules for supply of water and for charging for the supply of water and for any fittings, fixtures or services rendered by the corporation. The extent to which such charges can be levied has been delineated in Section 169 of the Act. This provision envisages levy of charges for the supply of water and further that if such supply materialises, water charges be levied in lieu of a tax (water tax/water benefit tax) prescribed under Section 140 of the Act. Concededly, the primary liability to pay property tax in the form of water benefit tax is co-extensive with meeting the whole or part of the expenditure incurred or to be incurred on capital works for making and improving the facilities of water supply and for maintaining and operating such works, as the case may be in terms of Sections 140 and 141 of the Act. The levy towards property tax fructifies on fulfilment of conditions stipulated therefor in Section 139 read with Sections

140 and 141 of the Act. The extent of such levy is also predicated in Sections 140 and 141 of the Act. It is a compulsory imposition. [Para 19][1021-C-E]

1.3 If it is a compulsory imposition, the fact that the water is de facto utilised by the occupants or the owners of the building becomes insignificant. Water Tax or Water Benefit Tax, in law, is a property tax and described by the legislature as being one of the component of property tax. That becomes payable as soon as the owner/occupant of the premises is in a position to avail of water connection to his premises in the prescribed manner. That liability is inevitable in terms of Section 141 of the Act, even if the water supply/water meter is later on disconnected. [Para 20][1021-F-H]

1.4 However, in case of disconnection of water supply/water meter the corporation cannot recover water charges under Section 169 of the Act. For, the water charges can be recovered commensurate to the quantity of water actually supplied and consumed from the connection of communication pipes or municipal water works to the premises concerned. [Para 21][1022A-B]

1.5 On a bare perusal of the demand notices issued by the appellant, it is amply clear that the demand is towards property tax in the form of water benefit tax and sewerage benefit tax. It is not a notice for payment of water charges ascribable to Section

169 of the Act as such. [Para 17][1017-F]

1.6 The High Court misread the impugned demand notices as being under Section 169 of the Act, when in fact the same were for recovery of property tax in the form of water benefit tax under Section 139 read with Sections 140 and 141 of the Act. The liability to pay such tax arises irrespective of disconnection of water supply/water meter including due to non-payment of taxes, being a compulsory imposition. However, if the owner/occupant of the premises were to utilise the water supply facility made available to the premises through connection by means of communication pipes or municipal water works, as the case may be, the liability would be to pay only water charges on the basis of the quantity of water actually consumed, in lieu of property tax in the form of water tax or water benefit tax by virtue of Section 169 of the Act and in particular sub-section (2) thereof. [Para 24][1024D-F] Municipal Corporation of Greater Bombay v. M/s. Nagpal Printing Mills and Another (1988) 2 SCC 466 : [1988] 3 SCR 274 – distinguished.

2. The challenge on the ground of limitation is limited to period prior to 10th January, 1994, i.e., between 1st October, 1993 to 9th January, 1994. This period falls within the official year 199394 (from 1st April, 1993 to 31st March, 1994). In that sense, the amount towards property tax had become due and payable upon completion of official year 1993-94 i.e., 31st March, 1994. Three years limitation period, therefore, would have expired on 30th March, 1997. However, the impugned demand notice(s) have been issued on 10th January, 1997. Thus, the challenge to the impugned demand notice(s) being barred by limitation, is devoid of merits. No other averment is found in the writ petition filed before the High Court to reinforce the plea under consideration. Resultantly, the challenge to the impugned demand notice(s) being barred by limitation or having the effect of retrospective tax demand, is rejected. [Para 26][1025-D-G]

Kalyan Municipal Council and others v. Usha Paper Products (P) Ltd. and another (1988) 3 SCC 306 : [1988] 3 SCR 832; Municipal Corporation of City of Hubli v. Subha Rao Hanumatharao Prayag and Others (1976) 4 SCC 830 : [1976] 3 SCR 883 – held

inapplicable.

Sumer Builders v. Municipal Corporation of Greater Mumbai 2012 (114) BOM. L.R. 3400; State Bank of India v. Brihanmumbai Municipal Corporation of Greater Bombay and Others 2004 (4) Mh.L.J. 773 – referred to.

3.1 The respondents may be relieved from the liability to pay statutory interest for the period spent by them in pursuing the proceedings in good faith before the High Court and thereafter before this Court. Inasmuch as, time so spent is not attributable to the inaction or neglect of respondents in making payment; more so because of the interim orders operating in favour of the respondents during the pendency of writ petition before the High Court and also because the impugned demand notices were set aside by the High Court. [Para 27][1025-H; 1026-A-B]

3.2 It would be appropriate to quantify the interest component at the rate of 18% per annum on the outstanding principal tax amount or the statutory interest as may have been prescribed under the extant Regulations, whichever is less, for the period during the pendency of writ petition and the present appeal, as the case may be. For rest of the default period, from the date of demand notices until payment of the outstanding amount mentioned therein, the respondents shall be liable to pay interest at the rate as prescribed in the extant Regulations applicable in that regard. This would meet the ends of justice. [Para 27][1026-C-D]

State of Rajasthan and Another v. J.K. Synthetics Limited and Another (2011) 12 SCC 518 : [2011] 10 SCR 993; Kanoria Chemicals and Industries Ltd. and Others v. U.P. State Electricity Board and Others (1997) 5 SCC

772 : [1997] 2 SCR 844 – relied on.

3.3 The impugned demand notice(s) were issued on 10th January, 1997, when the principal tax amount had become due and payable forthwith. The interest at the statutory rate, therefore, would commence from that date. However, for the period from the date of filing of the writ petition on 21st April, 1999 till the judgment of the High Court dated 21 st November, 2006, the interest be reckoned as aforestated. Similarly, for the period during pendency of special leave petition in this Court from 27 th August, 2007 till the pronouncement of this judgment. Except these two periods, the rate of interest payable by the respondents for the delayed payment would be as prescribed in the governing Regulations. [Para 28][1026-E-G]