Gauhati High Court holds GMC property-tax reassessment effective only from date of intimation, disallows retrospective demands

A single-judge bench of Justice Davashis Baruah heard a writ petition challenging reassessment notices issued by the Guwahati Municipal Corporation (GMC) that sought to alter annual ratable values retrospectively to the second quarter of 2008-09. The petition arose from reassessments communicated to the owner’s family in March 2015, following notices served in December 2014.

The Court held that the reassessment could not be made retrospective to 2008-09 and was to take effect only from the date on which the petitioner was informed of the amendment. The Court observed that the statutory scheme under Section 158 of the Guwahati Municipal Corporation Act, 1971 conferred power to amend assessment lists but contained safeguards limiting retrospective liability and requiring notice and opportunity to object. The Court, in its reasoning, observed: “In the backdrop of the above, the question therefore arises is can there be reassessment of the assessment list made retrospectively from the 2nd quarter of 2008-09 that to when the notices were issued on 04.12.2014 in respect to the three holdings and the original petitioner after filing the objections was duly informed on 11.03.2015 about the reassessment. The answer to the same can be found from the perusal of the Section 158 of the Act of 1971 which empowers the Commissioner with approval of the Committee to amend the assessment list at any time. This power which has been conferred under Sub-section (1) of Section 158 includes the power of increasing or reducing for adequate reasons, the amount of any ratable value and also and of the assessment thereupon. The proviso to Sub Section (1) of Section 158 of the Act of 1971 further mandates that no person shall by reasons of such amendment become liable to pay any tax or increase of the tax in respect of any period prior to the commencement of the year in which the amendment is made. Sub section (2) of Section 158 of the Act of 1971 is very relevant taking into account that an obligation has been cast upon the Commissioner before making any amendment to give notice to the person affected by the amendment, of not less than one month that he proposes to make the amendment and after considering any objections which may be made by such person, make any amendment if deemed, so necessary.” The Court further declared that “the reassessment so made has to be made applicable only w.e.f. 11.03.2015 and not prior to that,” and directed the GMC to issue demand notices only on that basis.

Background The original owner, Kanak Choudhury (now deceased), held three properties in Ward No. 22(Old)/32(New) of the GMC. The Annual Ratable Values (ARV) assessed circa 1990 were Rs. 17,550, Rs. 9,675 and Rs. 7,810 for the respective holdings. A communication dated 12.09.2008 from the Commissioner proposed fresh assessments to reflect substantially increased land values for A. K. Azad Road and adjoining by-lanes. Despite that communication, notices under Section 158(2) were issued only on 14.12.2014 proposing vastly higher ARVs; the petitioner filed objections on 03.01.2015 and the GMC informed the petitioner on 11.03.2015 of the reassessment and directed payment of tax accordingly. The petitioner challenged the reassessment by filing WP(C)/4637/2015.

The respondent GMC maintained by affidavit that objections were permitted and the reassessment was "lawful" as made in accordance with the 2008 order. The principal legal question before the Court was whether Section 158 permitted reassessment with retrospective effect to the second quarter of 2008-09 when the statutory notice and objection process occurred only in late 2014/early 2015. The Court examined Sub-section (1) and its proviso and Sub-section (2) of Section 158, noting that the proviso barred liability for any period prior to the commencement of the year in which the amendment was made and that a notice of not less than one month and consideration of objections were prerequisites to amendment.

The Court concluded that, given the timing of notices and the date of intimation of reassessment, the reassessment was effective only from 11.03.2015. It declared that any demand notices issued for periods prior to 11.03.2015 on the basis of the reassessment could not be given effect, while granting liberty to the GMC to issue demand notices consistent with the declaration. The writ petition was disposed.

Case No.: WP(C)/4637/2015 Case Title: VIKRAM AHAND CHOUDHURY AND 2 ORS. v. THE GUWAHATI MUNICIPAL CORPORATION AND 2 ORS. Appearances: For the Petitioner(s): Mr. M. K. Choudhury, Senior Counsel; Mr. P. Bharadwaz, Counsel For the Respondent(s): Mr. S. Bora, Standing Counsel, Guwahati Municipal Corporation