In a recent judgement, the Bombay High Court has ruled that no appeal shall be allowed to the Deputy Commissioner or Commissioner under Section 406(8) of the Maharashtra Municipal Corporation Act (MMCA) without first depositing the disputed property tax.
Mr. Shinde, representing the respondent, sought additional time, stating that he had only received the brief the day before. However, Mr. Sridharan pointed out that the petition had been served as far back as March 2024 and committed to filing an affidavit of service. Given this and considering that the issue was limited to the interpretation of the Maharashtra Municipal Corporation Act, 1949, and the Maharashtra Municipal Corporation (Local Body Tax) Rules, the court decided that the matter could be resolved without granting the respondent any further time to file a reply.
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The petitioner challenged an order dated February 22, 2024, particularly the section that stipulated, under Section 406(6)(i)(ii) of the Maharashtra Municipal Corporation Act, that no appeal would be entertained unless the appellant deposited the disputed tax amount along with interest and penalties with the Commissioner. Notably, the term “disputed tax” is not explicitly defined in the Act. The primary issue before the court was the interpretation of “disputed tax” as mentioned in Section 406(8) of the Maharashtra Municipal Corporation Act. According to the petitioner, the phrase “disputed tax” refers only to the principal tax amount and does not include interest and penalties. Conversely, the respondents argued that the deposit of both the disputed tax and any associated interest and penalties is a prerequisite for an appeal under the said section.
The court then addressed the core question: whether, under Section 406(8) of the Maharashtra Municipal Corporation Act, the term “disputed tax” encompasses interest and penalties. In its analysis, the court reviewed the scheme of LBT, which distinguishes between the levy of tax, interest, and penalties. While Rule 5 of the LBT Rules outlines the liability to pay LBT along with any applicable interest and penalties, Rule 27 allows for lump-sum payment for registered dealers with small turnovers.
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During the proceedings, the petitioner argued that precedents cited by the respondents did not apply to the present case, highlighting instead the relevance of the judgment in C.G. International P. Ltd., which supported their position. The respondents chose not to contest these submissions, leaving the matter to the court’s discretion.
The court emphasized that judgments should be considered in the context of their specific facts and that precedents are not universally binding if the underlying circumstances differ. This principle was evident in the case of Chennai Network Infrastructure Limited, where the issue concerned the payment of penalties as a condition for appealing under Section 406 of the Maharashtra Municipal Corporation Act In that case, the court concluded that penalties, though described as such, should be treated as “tax” for the purposes of Section 406, thus requiring payment for the appeal to be entertained.
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However, the court noted that the present case differed as it involved the levy of LBT under Section 127 Maharashtra Municipal Corporation Act , not property taxes or penalties under Sections 128-A, 129, and 267-A. Therefore, the provisions cited in the respondents’ argument were not applicable to the petitioner’s case.
In its ruling, the Division Bench of Justice Jitendra Jain and Justice K.R. Shriram concurred with the petitioner, referencing the single Judge’s decision in C.G. International P. Ltd., which distinguished between tax, interest, and penalties. The Bench concluded that, for the purpose of entertaining an appeal, only the “disputed tax” needed to be deposited, excluding interest and penalties.
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Consequently, the court quashed the impugned order dated February 22, 2024, and remanded the matter for reconsideration. The appellate authority was directed to dispose of the appeal in accordance with the law, ensuring that a personal hearing is granted, with notice provided at least five working days in advance. The petitioner was also granted the opportunity to file written submissions following the hearing, and any final order was required to be reasoned and detailed, addressing all of the petitioner’s submissions.
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