Indian City Properties Ltd. And Anr. Vs Kolkata Municipal Corporation And Ors. (Calcutta High Court)
Conclusion: The constitutional validity of Section 232B and the proviso to Section 180(2) of the Kolkata Municipal Corporation Act, 1980 was upheld while setting aside specific retrospective tax notices issued by the Kolkata Municipal Corporation(KMC) to a property owner as they neither suffer from manifest arbitrariness nor violate Articles 14, 19 or 300A.
Held: Assessee challenged the constitutional validity of Section 232B and the proviso to Section 180(2) of the Kolkata Municipal Corporation Act, 1980 as being ultra vires Articles 14, 19 and 300A of the Constitution, contending that the provisions enabled retrospective and indefinite reopening of property tax assessments, thereby conferring unguided and arbitrary power upon the municipal authorities. The challenge arose in the context of notices issued for retrospective revaluation of assessee’s premises spanning multiple years under both the erstwhile Annual Rateable Value (ARV) system and the subsequent Unit Area Assessment (UAA) regime. Assessee relied on earlier judicial pronouncements, including Sahujain Charitable Society, to argue that unlimited retrospective revision had already been read down as unconstitutional and that the impugned provisions effectively sought to revive such unbounded powers. The State and the Municipal Corporation opposed the petition, contending that the impugned provisions constituted valid fiscal legislation within the legislative competence of the State under Entry 5 of List II read with Part IX-A of the Constitution, and were merely clarificatory and procedural in nature, intended to preserve continuity of assessment during the transition from the ARV to the UAA system. It was further argued that property tax was a continuing statutory liability attached to the property and that retrospective operation, in the sense of applying the law to past periods, did not amount to creation of new liability. The Court, upon analysing the statutory framework and the evolution of amendments, held that Section 232B was a transitional and saving provision designed to preserve the applicability of pre-UAA provisions for periods prior to the enforcement of the new regime. It did not revive repealed provisions as independent sources of power nor confer any unfettered or indefinite authority to reopen past assessments. The Court rejected the contention that the provision legislatively overruled prior judgments, holding instead that it merely addressed transitional gaps without nullifying judicial findings. With respect to the proviso to Section 180(2), the Court held that it operated prospectively from its commencement in June 2023 and did not reopen concluded assessments or impose retrospective burdens. The prescription of a six-year limitation, coupled with an exception in cases of non-filing of returns or suppression of material facts, was found to be based on a rational classification and not violative of Article 14. Accordingly, the Court upheld the constitutional validity of both provisions, holding that they neither suffer from manifest arbitrariness nor violate Articles 14, 19 or 300A. However, the impugned notices issued for retrospective revaluation were set aside on the ground that they were not in consonance with the legal position clarified in the judgment.
1. The Petitioner has preferred the present writ petition seeking a declaration that Section 232B and proviso to Section 180(2) of the Kolkata Municipal Corporation Act, 1980 are ultra vires to Articles 14, 19, and 300A of the Constitution of India and are therefore, void and inoperative under Article 13 thereof. The Petitioner has further prayed for quashing and setting aside the memo dated 08.01.2024, along with thirteen other notices dated 04.01.2024, issued for the purpose of retrospective revaluation of Premises No. 25, Brabourne Road (presently known as Biplabi Trailokya Maharaj Sarani), Kolkata–700001.
