The Palayamkottai Municipality vs G.N. Kantayya and another

Veeraswami, J.—Palayamkottai Municipality, which was the first defendant in the suit, is the appellant in this second appeal. The suit was to

recover a sum of Rs. 522-8-6. The basis of the claim was that this amount had been illegally collected from the plaintiff as property tax, and that

the Municipality was bound to refund the amount. In 1944, the plaintiff purchased the second defendant-inamdar''s interest in 1-7 acres out of a

larger extent of 25-25 acres of land and also acquired subsequently in about 1945 the kudiwaram interest in the 1-7 acres. The Municipality

claimed that the plaintiff was liable to pay tax for the property from 1st October 1948 to 31st March 1952 even in respect of the remaining extent

of 25-25 acres not transferred to him. As the plaintiff had to stand as a candidate for the municipal election and if the tax was not paid, the

Commissioner, as the election officer, threatened to reject his nomination, the plaintiff was compelled to pay the tax under protest. The plaintiff''s

case was that whatever might be the liability of the transferor to the property tax for the entirety of the property consequent upon the fact that he

failed to give notice within the time prescribed by the statute, his liability to tax was only confined to the property transferred to him. The property

that was transferred to him, viz., 1-7 acres was a defined area described by boundaries and extent. The defence for the Municipality was that

inasmuch as the second defendant transferor failed to give notice of the transfer within the time prescribed by S. 88 (1) of the District Municipalities

Act, both the transferor and the transferee of a portion of the property would be liable to property tax for the entirety of the property. There were

other defences also raised by the Municipality such as that the Court had no jurisdiction, that the suit was barred by limitation and that the payment

of tax by the plaintiff was a voluntary one. Both the lower Courts repelled everyone of them and decreed the suit. In this Court, the only point

argued on behalf of the first defendant was about the liability of the plaintiff to pay property tax even in respect of the property not transferred to

him by the second defendant. Sri B. V. Viswanatha Aiyar, the learned Counsel for the Municipality, contends that it being common ground that no

notice was given by the second defendant of the transfer of 1-7 acres to the plaintiff as required by S. 88 (1) of the District Municipalities Act, not

only the transferor but also the transferee of the 1-7 acres would be liable for the tax for the whole of the property under S. 88 (4) of the Act. The

learned Counsel contends that the property tax levied on the entire property of an extent of 25-25 acres was one and indivisible and that so long as

the provisions of Sub-S. (1) of S. 88 were not complied with, the liability of the transferor to pay the entire tax notwithstanding the transfer of a

portion of the property, continued and that by virtue of the non-obstante clause in Sub-S. (4) of S. 88 the transferee also became liable for the

entire tax. It seems to me that this contention is based upon a complete misunderstanding of the true scope of Ss. 88(1) and (4). The liability to pay

property tax arises under S. 81. The method of assessment of property is provided for by S. 82. S. 85 provides that the property tax shall be a

first charge upon the relative property. S. 88 (1) runs :

Whenever the title of any person primarily liable to the payment of property tax on any premises to or over such premises it transferred and the

person whose title is transferred and the person to whom the same shall be transferred shall within three months after the execution of the

instrument of transfer or after its registration if it be registered or after the transfer is effected, if no instrument be executed, give notice of such

transfer to the executive authority.

Section 88 (4) runs:

Every person who makes a transfer as aforesaid without giving such notice to the executive authority shall in addition to any other liability which he

incurs through such neglect, continue liable for the payment of property tax assessed on the premises transferred until he gives notice or until the

transfer shall have been recorded in the municipal registers but nothing in this section shall be held to affect-

(a) the liability of the transferee for the payment of the said tax.........

For the purpose of this second appeal it is not necessary to set out Cl. (b) of Sub-S. (4) of that sub-section. It is clear from the terms of Sub-S.

(4) that it only provides for the transferor''s continued liability in the event of his failure to notify the Municipality within the time specified in Sub-S.

(i) of the transfer effected by him. The penalty as it were, for not complying with the provision of Sub-S. (1) is that notwithstanding the transfer

made by him of a portion of the property, his liability to pay the entire tax in respect of the whole of the property including the portion transferred

would continue until a change in the registry is effected in the books of the Municipality. The contention of Sri B.V. Viswanatha lyer, however, is

that the words in Sub-S. (4) but nothing in the section shall be held to affect......(a) the liability of the transferee for the payment of the said tax

indicated that the transferee was equally liable to pay the entire tax which, according to him, is one and indivisible. Sub-S. (4) has obviously

provided for no such liability and the words relied on by the learned Counsel do not justify such a construction. The liability to pay property tax

does not arise under Sub-S. (4) of S. 88. The liability arises under the other charging provision of the Act. The Sub-S. (4) of S. 88 is not a

charging provision. Its purpose is mainly to safeguard the revenues of the Municipality and with that object in view, it provides that so long its the

registry continues in the name of the transferor by reason of his default in notifying the transfer within time, he should continue to be liable to pay the

property tax in respect of the transferred property as well. But Sub-S. (4) of S. 88 at the same time takes care to provide that the fact that the

transferor should be deemed to continue to be liable to pay the entire tax, should not be understood to involve the consequence that the transferee

is relieved of his liability to pay the property tax on that part of the property transferred to him. The transferee by virtue of the latter clause in Sub-

S. (4) cannot plead that because the transferor is made liable by that provision for the entire tax, he would not at the same time be liable to pay

properly tax in respect of the property transferred to him. In my view that is all the effect of Sub-S. (4) of S. 88. I cannot, therefore, accept the

contention of the Municipality that the plaintiff was liable to pay property tax even in respect of the property not transferred to him. In the

circumstances therefore, the suit was rightly decreed. This second appeal fails and is dismissed with costs. No leave.