INDORE MUNICIPAL CORPORATION versus GUJARAT CO-OPERATIVE HOUSING SOCIETY LTD. & ANR.

Citation: [1991] SUPP. 3 S.C.R. 11 · Decided: 28-11-1991 · Supreme Court of India · Bench: K. JAGANNATHA SHETTY · Disposal: Dismissed
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Judgment (excerpt)

INDORE MUNICIPAL CORPORATION 
A 
V. 
!'--
GUJARAT CO-OPERATIVE HOUSING SOCIETY LTD. & ANR. 
r 
NOVEMBER 28, 1991 
[K. JAGANNATHA SHETTY AND YOGESHWAR DAYAL, JJ.] 
B 
Madhya Pradesh Municipal Corporation Act, 1956: Sections 132, 
133,143, 429 and 431. 
'Sanitary Cess', 'Water tax', 'Lighting rate' and 'Drainage tax'-Levy 
and collectio~Validity of-'Premises'~cope of 
C 
Madhya Pradesh Sthawar Sampatti Kar Adhiniyam, 1964. 
Levy of taxes under M.P.Municipal Corporation Act, 1956-Determina-
tion of annual letting value under the provision of 1964 Adhiniyam-Permis-
sibility of 
Indore Municipal Corporation Drainage Tax (Assessment, Collection 
D 
1 
and Refund) Bye-law~. 1975-Bye-law No. 4-Scope of 
, 
Indore Municipal Lighting Rate (Assessment, Collection and Refund) 
Bye-laws, 1974-Bye-law No. 4--Scope of 
The appellant-Corporation issued a bill dated 26 October, 1971 and 
a demand notice dated 14.8.1973 to the respondent demanding paym~nt of·. 
lighting rate and drainage tax. In the bill the demand related to lighting 
E 
rate and drainage tax for the yearl971-72, while the demand notice related 
F 
to lighting rate and drainage tax in respect of arrears and current dues up 
to 31.3.1974. These taxes were levied by the Corporation under section 132 
of the Madhya Pradesh Municipal Corporation Act, 1956 but the assess-
ment was made on the basis of annual letting value of the property 
calculated under the provision of Madhya Pradesh Sthawar Sampatti Kar 
Adhiniyam, 1964. The assessment was challenged. By an order dated 
G 
2.3.1979 a single judge of the Madhya Pradesh High Court quashed the 
demand by holding that the drainage tax and lighting rate was to be 
assessed in accordance with the annual letting value determined under 
section 138 of the Act and that the assessment with reference to the annual 
value determined under the 1964 Adhiniyam was illegal. Against the 
decision of the single judge of the High Court, the Indore Municipal Cor-
H 
poration filed an appeal (C.A.No. 2377 of 1980) in this Court. 
11 
12 
SUPREME COURT REPORTS 
[1991) SUPP. 3 S. C.R. 
A 
In the connected appeal (C.A.No. 2378/80) a writ petition was filed 
-'t 7 
to quash a demand No. 855 dated 8.2.1974 levying general sanitary cess on 
the respondent for the period commencing from 1973-74. The general 
sanitary cess was levied at the rate of 2 per cent on the annual letting value 
of the house property under Section 132(1)(c) of the M.P.Municipal 
Corporation Act. In this case also the annual letting ''alue was determined 
B in accordance with the provisions of the 1964 Adhiniyam and not in ac-
cordance with the mode prescribed under section 138 of the Act. By an 
order dated 2.3.1979 a single judge or the High Court quashed the 
demand. Against the decision of the single judge, the Indore Municipal 
~ 
Corporation filed an appeal in this Court. 
c 
The connected petition (SLP (C) No.10376of1981) has been tiled by 
a Cloth Market Merchants Association against the judgment of a Division 
Bench of the Madhya Pradesh High Court dated 25.7.1981. In the im-
pugned order the learned Division Bench was concerned with the legality 
of the demand for drainage tax and lighting rate, general sanitary cess and 
the validity of graduated flat rate. The Division Bench held the general 
D sanitary cess in force with effect from 24.8.1973, till 31st March 1976 to be 
illegal. Consequently, the division bench quashed the demand for general 
s~nitary cess. However, it upheld the demand for drainage tax and lighting 
rate as well as graduated flat rate. To the extent the division bench 
declined the relief, the petitioners have filed the Special Leave Petition 
E 
F 
challenging the decision relating to the drainage tax, lighting rate and the 
graduated flat rate. 
Disposing the appeals, this Court, 
HELD: 1. Property tax is one of the taxes which the Corporation can 
impose under Section 132(1)(a) of the Madhya Pradesh Municipal Corpo-
ration Act, 1956. The imposition of this tax is regulated by sections 135 to 
159. The rate of property tax is relatable to annual value which is defined 
in section 138.[22-H] 
2. The bye-laws are framed under section 427 of the Act, and Section · 
G 431 provides that all bye-laws shall be published in the Gazette. The effect 
of these provisions is that_ the bye-laws become part of the Act. Thus the 
Corporati~n while providing the system of assessment for various taxes 
can propose a basis but after the bye-laws provided t
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