A single judge bench of the Madras High Court comprising of Mr. Justice G.R. Swaminathan held that merely because demand by the Corporation Commissioner is labeled as a “fee”, that will not take it out of the sweep of Article 265 of the Constitution of India. Further, Justice Swaminathan reiterated that demand for payment of tax or fee cannot be based on Council Resolutions. There has to be express statutory authorization for any demand.
Brief Facts:
The petitioner is engaged in the business of the hospitality industry and in developing a star hotel near Airport in Madurai. The petitioner has applied to the first respondent corporation for issuance of building permit. The petitioner had already obtained planning permission on 15.02.2022 itself. At this stage, the impugned demand came to be issued calling upon the petitioner to pay a sum of Rs.2,45,33,400/-. The demands had been raised under as many as 11 heads for the arriving at the said figure. The petitioner had objection to pay only rain water harvesting charges, material storage fee and security deposit by cash. The petitioner had no issue as regards payment of fee under the remaining heads. Challenging the demand by the corporation for payment under the aforesaid three heads, the present writ petition came to be filed.
Contentions of the Petitioner:
The learned Senior Counsel appearing for the petitioner reiterated all the contentions set out in the affidavit filed in support of the writ petition. Heavy reliance is placed on the decision of the Hon'ble Supreme Court reported in Commissioner of Income Tax v. MCDOWELL & Co. ltd. (2009) 10 SCC 755. The learned Senior Counsel called upon this Court to quash the impugned demand and direct the first respondent to issue building permit.
Contentions of the Respondents:
The stand of the first respondent was that the impugned demand was anchored on Council Resolution passed by the Madurai Corporation and that therefore, the petitioner was obliged to comply with the same for obtaining a building permit. He called upon this Court to dismiss this writ petition.
Observations of the Court:
The court perused the judgment of the Supreme Court in Commissioner of Income Tax v. MCDOWELL & Co. Ltd. (2009) 10 SCC 755 and reiterated that demand for payment of tax or fee cannot be based on Council Resolutions. There has to be express statutory authorization for any demand. Merely because the impugned demand has been labeled as “fee”, that will not take it out of the sweep of Article 265 of the Constitution of India.
Therefore, the court came to the conclusion that the demand under the head “rainwater harvesting” was illegal and without jurisdiction. This demand presupposes utilization of public streets or roads by builders. The court remarked that as rightly pointed out by the learned Senior Counsel appearing for the petitioner, this would amount to administrative acquiescence of temporary encroachment of public streets. In the case on hand, the court ruled that it was specifically undertaken by the petitioner that they would not leave any of their construction material on the public road.
Decision of the Court:
The demands mentioned in the petition were quashed and the first respondent was directed to issue building permit forthwith and without any delay subject to fulfilment of any other formalities
Case Title: Vindhya Real Estates Pvt Ltd vs The Corporation Commissioner and anr.
Coram: Mr. Justice G.R. Swaminathan
Case No.: W.P(MD)No.3430 of 2023 and WMP(MD)Nos.3188, 3192 & 3193 of 2023
Advocate for the Petitioner: Mr. Sathish Parasaran
Advocate for the Respondent:
Mr. V. Raghavachari (For R1)
Mr. A.K. Manikkam (For R2)
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