Case Note & Summary
The dispute arose under the Delhi Municipal Corporation Act, 1957 concerning the levy of property tax on three flats in a multi-storeyed building constructed by Saket Properties Private Limited on Plot No.21, Yusuf Sarai Community Center, New Delhi. The respondent, a private limited company, was allotted flats Nos.302, 303 and 305 on the third floor under a letter of allotment dated February 29, 1984, subject to terms and conditions, and paid Rs.2,35,000 as earnest money. Possession was claimed to have been handed over on February 23, 1986, though the respondent later asserted February 23, 1987; the assessment order mentioned April 1, 1985 as the date of offer of possession. No sale deed was executed or registered, a general practice in Delhi. Neither the builder nor the respondent intimated the Corporation of the allotment or delivery of possession, an admitted fact. The Corporation issued call letters for hearing of objection under Section 126 of the Act on July 11, 1990 and August 10, 1990, but the respondent's representative did not attend. On August 30, 1990, the Deputy Assistant Assessor and Collector made an ex-parte assessment order fixing rental value at Rs.3,37,800 and rateable value at Rs.3,04,020, holding liability from April 1, 1985 as per terms of agreement between builder and respondent. The respondent sought rectification by letter dated September 17, 1990, disputing the date of possession and the quantum of rental value, stating possession was on February 23, 1987 and flats were let out at Rs.16,800 per month, but did not dispute liability. On appeal, the Additional District Judge allowed the respondent's appeal on September 9, 1992, quashing the assessment on grounds that de jure title had not passed without a registered sale deed and that no notice under Section 126 had been served on the transferee, making the assessment bad in law. The Corporation filed a writ petition in the Delhi High Court, which was dismissed at admission. The High Court held that Section 126 mandates notice to every person affected by amendment of assessment list and prohibits tax for any period prior to such notice; it further observed that if no intimation of transfer is given under Section 128(4), the liability to pay property tax continues with the original owner and the transferee cannot be taxed without compliance with Section 126. The Corporation appealed to the Supreme Court, contending that the High Court view was inconsistent with the Act, that notices had been given to the builder in 1985, that the respondent in its rectification application had admitted liability, and that clause (12) of the agreement made the transferee liable to pay taxes. The Supreme Court heard arguments but the provided judgment text ends before the final operative order; therefore, the Supreme Court's final decision is not contained in the excerpt.
Headnote
A) Property Tax - Assessment of Transferee - Sections 120, 126 Delhi Municipal Corporation Act, 1957 - Property tax is primarily liability of lessor, but transferee who enters agreement and takes possession may be liable even without registered sale deed - High Court held that transferee cannot be assessed without separate notice under Section 126 and no liability prior to notice, while Corporation contended transferee steps into shoes of original owner and notice to builder suffices - Issue of separate notice and tax period remains core dispute. B) Statutory Notice - Amendment of Assessment List - Section 126 proviso Delhi Municipal Corporation Act, 1957 - No person shall become liable to pay any tax or increase of tax for period prior to commencement of order in which notice under sub-section (2) is given; notice of not less than one month required to person affected - High Court emphasized mandatory nature of notice to person affected and quashed assessment made without such notice to transferee. C) Transfer of Property - Duty to Intimate Transfer - Section 128(4) Delhi Municipal Corporation Act, 1957 - Transferor obliged to intimate transfer; failure punishable; if no intimation given, liability continues to be of owner and Corporation's interest protected by penalty on owner - High Court observed that mere failure to intimate does not entitle Corporation to recover tax from transferee without complying with Section 126. D) Assessment Procedure - Ex-parte Assessment and Rectification - Sections 126, 128 Delhi Municipal Corporation Act, 1957 - Assessment made ex-parte after call letters ignored; transferee sought rectification on grounds of date of possession and quantum but not liability - Additional District Judge quashed assessment on grounds of no notice to transferee and no registered sale deed; High Court dismissed Corporation's writ petition; Supreme Court heard appeal but final order not included in provided text.
Issue of Consideration
Whether property tax can be assessed on a transferee who has purchased a flat by agreement to sell and taken possession, but no registered sale deed executed, without serving notice under Section 126 of the Delhi Municipal Corporation Act, 1957; whether notice under Section 126 served on the builder/original owner can be deemed sufficient notice to the transferee; whether liability for property tax can be imposed for period prior to service of notice under Section 126 on the transferee; whether failure to intimate transfer under Section 128(4) affects liability of transferee or transferor
Final Decision
Not mentioned - the provided judgment text ends during arguments before final order
Law Points
- Section 120 Delhi Municipal Corporation Act
- 1957 makes property tax primarily liability of lessor
- Section 126 requires notice to person affected by amendment of assessment list and prohibits tax for period prior to notice
- Section 128(4) obligates transferor to intimate transfer and failure punishable
- mere agreement to sell and possession may make transferee liable for property tax even without registered sale deed
- notice to builder under Section 126 may be deemed sufficient if transferee steps into shoes of original owner
- no person can be taxed for period prior to service of notice under Section 126
