Calcutta HC Upholds 50% Interest Waiver on Property Tax | Saila Ghosh Case

Saila Ghosh Vs State of West Bengal & Ors. (Calcutta High Court)

The Calcutta High Court’s judgment in the case of Saila Ghosh vs. State of West Bengal & Ors. addresses a dispute over the payment of property tax arrears and the subsequent interest imposed by the Bally Municipality. The appellant, Saila Ghosh, challenged the notice of demand issued by the municipality for the years 2011-2012, 2012-2013, and 2013-2014, along with current dues till the fourth quarter of 2014-2015, which included surcharge and interest.

Background: Saila Ghosh is one of the owners of premises No.1, Kailash Chandra Singha Lane, Bally, Howrah. The property tax for this premise was initially set at Rs. 165 per quarter in 1998. In 2004-2005, this amount was increased to Rs. 1115 per quarter, which the appellant claimed to have paid regularly. Despite this, the municipality issued a demand notice in 2014 for arrear taxes and current dues, including surcharge and interest. Ghosh sought permission to pay the arrears in installments, which the municipality denied, prompting her to approach the court.

Proceedings: The learned Single Judge of the Calcutta High Court initially upheld the demand notice but granted a waiver of 50% on the interest demanded. Both Ghosh and the municipality contested this decision. Ghosh argued that no bills were issued for the enhanced property tax during the disputed period (2011-2014), thus making the interest demand invalid. She expressed her willingness to pay the arrears in installments. Conversely, the municipality contended that the appellant had not raised this issue previously and that the municipality had no scheme to waive interest on property taxes.

Court’s Analysis

The Division Bench of the Calcutta High Court examined the following key points:

1. Non-receipt of Bills: Ghosh’s claim that no bills were raised for the enhanced property tax during the disputed period was not substantiated. The court noted that this argument was absent in her previous representations and writ petition. The municipality maintained that bills were issued more than a decade ago, and as per legal requirements, they only need to keep records for three years, making the original bills unavailable.
2. Representation Before Municipality: The appellant’s primary plea before the municipality was to allow payment of arrears in installments due to financial difficulties, without mentioning the non-receipt of bills.
3. Interest Waiver: The municipality challenged the Single Judge’s decision to waive 50% of the interest, arguing it was unjustified. The court observed that the interest had been charged at the highest rate, but as per law, the Board of Councillors had the discretion to reduce the amount. Noting that the Board was now managed by an administrator, the court upheld the 50% interest waiver granted by the Single Judge.

Judgment

The Division Bench dismissed both the main appeal by Saila Ghosh and the cross-appeal by the municipality, thereby affirming the order of the Single Judge. The key points of the judgment were:

• The argument of non-receipt of bills for the enhanced property tax was deemed unfounded and was not allowed to be raised at the appellate stage.
• The waiver of 50% interest on arrears, as ordered by the Single Judge, was upheld, considering the municipality’s authority to reduce such amounts.
• The municipality was directed to issue a fresh notice of demand reflecting the adjusted amount within seven days. Ghosh was instructed to pay this amount within a fortnight, failing which a 10% interest would be applied until the full amount was paid.

Conclusion

The Calcutta High Court’s ruling in Saila Ghosh vs. State of West Bengal & Ors. highlights the importance of timely and accurate tax billing by municipal authorities and the judicial discretion in granting relief to taxpayers under financial distress. The judgment underscores that new arguments cannot be introduced at the appellate stage without prior substantiation in lower proceedings. The decision to uphold a 50% interest waiver demonstrates the court’s balanced approach in ensuring fair treatment for taxpayers while maintaining municipal authority over tax collection processes.

FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT

1. Appellant as well as Bally Municipality have assailed the order dated 18th May, 2023 whereby the learned Single Judge modified the notice of demand dated 5th April, 2014 raised by the Municipality towards payment of arrear property tax for the years 2011-2012, 2012-2013 and 2013-2014 and current dues till the 4th quarter of 2014-2015 with surcharge and interest by directing waiver of 50% of the interest amount. Factual matrix leading to the dispute is as follows:-

2. Appellant is one of the owners of premises No.1, Kailash Chandra Singha Lane, Bally, Howrah. In 1998 the property tax of the presmies was fixed at Rs.165/- per quarter. Appellant contends he has been regularly paying the property tax at the said rate. In 2004-2005 the property tax was enhanced to Rs.1115/- per quarter and it is the appellant’s case that he had paid the tax regularly. Notwithstanding such fact, by the impugned notice of demand arrear tax for the years 2011­2012, 2012-2013 and 2013-2014 and current tax upto 4th quarter of 2014-2015 with surcharge and interest was raised upon him. He made representations before the Municipal authorities to permit him to pay the arrear tax in instalments. Municipality having declined such prayer, he moved before the learned Single Judge.

3. Upon considering the submissions of the appellant, learned Single Judge while upholding the notice of demand waived 50% of the interest demanded from the appellant. This order has been assailed by the appellant as well as by the Municipality.

4. Mr. Sandip Ghosh for the appellant contends no bills with regard to the enhanced property tax was raised upon his client for the years 2010-2011, 2011-2012 and 2013-2014 In view of the aforesaid, interest cannot be demanded on the arrear amount. He is ready and willing to pay the outstanding arrears in instalments.

5. In response Mr. Banerjee for the Municipality submits appellant has made out a new case in appeal. Neither in the representation before the Municipality nor in the writ petition did the appellant contend bills had not been raised upon him for the arrear period. On the other hand, he pleaded that he would pay the arrear tax in installments. Mr. Banerjee also contends municipality does not have any scheme to waive interest on property tax. Hence, the impugned order to the extent it waives 50% of interest liable to be set aside.

6. We have considered the materials on record. Appellant claims no bill was raised upon him claiming enhanced property tax for the arrear period namely 2010-2011, 2011-2012, 2012-2013 and 2013-2014. But neither in the representation nor in the pleadings in the writ petition did the appellant make out such a case.

7. On query Mr. Banerjee submits that the bills were raised more than a decade ago. At no stage appellant had raised a plea that the bills had not been served on him. As per law municipality is required to maintain records for three years. The relevant bills presently are not available.

8. It appears that the appellant has raised the issue of non-service of bills belatedly at the appellate stage to avoid his liability. He cannot be permitted to do so.

9. On the other hand, in his representation before the municipality the appellant did not whisper that the bills had not been served upon him. His only prayer was to pay the arrear tax by way of instalments due to financial stringency.

10. In view of the aforesaid facts we are of the opinion the plea that the bills claiming enhanced property tax had not been raised during the arrear period is wholly unfounded and appellant ought not to be permitted to raise it at the appellate stage.

11. With regard to the prayer of the Municipality that the learned single judge was unjustified in waiving 50% of the interest demanded on the arrear dues, we note that the interest had been charged at the highest rate and as per law the Board of Councillors had discretion to reduce the amount. We are informed, Board of Councillors has been supervened by an administrator.

12. In such circumstances waiver of 50% of interest demanded by the learned single judge does not call for interference. Impugned order is upheld.

13. Accordingly, appeal, connected application and cross appeal are dismissed.

14. There shall be no order as to costs.

15. Municipality shall raise a notice of demand upon the appellant to pay an amount fixed by the learned single judge within seven days from date and the appellant shall pay the same within a fortnight thereof failing which the amount shall carry an interest of 10% till the amount is realized.

16. Photostat certified copy of this judgment, if applied for, be given to the parties on compliance of all formalities.

I agree.