In a major relief to Rockline Entertainments, the Karnataka High Court ruled that non-providing of Accountant General report on which, property tax is demanded amounts to natural justice violation
The petitioner, M/s Rockline Entertainments Pvt Ltd, filed the writ petition under Article 227 of the Constitution of India questioning the correctness and legality of order dated 24.05.2021 in Miscellaneous Appeal No.26/2015 by which, appeal filed by the petitioner under Section 108A(5) read with Section 113(3) of the Karnataka Municipal Corporations Act, 1976 (“1976 Act”) and Rule 7-B(19) of 1976 Act and Schedule-III of Taxation Rules is rejected and petitioner has further challenged notices issued under Section 108A(3) and (12) of 1976 Act wherein the respondent demanded property tax from the petitioner.
The petitioner is said to have paid the property tax from 2012-13 onwards under Self-Assessment Scheme (SAS) since the building is put to use from the said year in its entirety. The SAS was based on the usage and occupancy of the building. Notices were issued under Section 108A (3) and (12) of 1976 Act alleging short/under-assessment of property tax for the years 2011-12 to 2014-15 and demanded differential tax and penalty amounting to Rs.2,63,74,254/- along with 2% interest per month.
The senior counsel for the petitioner, MS Shyam Sundar, submitted that the Trial Court held that the re-assessment was based on audit report of the Accountant General, but the copy of the same was not made available to the petitioner which amounts to violation of principles of natural justice.
The Counsel for the respondent, Jagadeeswara.N.R, submitted referring to sub-Sections (3) and (13) of Section 108A of 1976 Act that the BBMP is empowered to levy and collect the property tax and also re-assess the property tax, if the Authorized Officer has reason to believe that there is under-assessment. The counsel also referred to Section 112A of 1976 Act with regard to SAS.
A Court of Justice SG Pandit observed that “It is seen that the respondents calculated and demanded the property tax based on Accountant General report. If the respondent has placed reliance on the Accountant General report, the same ought to have been provided to the petitioner.
“Non-providing of Accountant General report on which, the tax demand is based as could be found from the impugned order passed in Miscellaneous Appeal, would amount to violation of principles of natural justice. Any document which is relied upon by respondent-BBMP to determine the tax liability ought to be furnished to the assessee, so that the assessee would be in a position to answer the same” the Court concluded.
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