# CITY MUNICIPAL COUNCIL, MANGALORE & ANR. · v. FREDERICK PAIS ETC

- **Citation:** [1970] 2 S.C.R. 751
- **Court:** Supreme Court of India
- **Decided:** 1969-10-13
- **Bench:** J. M. Shelat, C. A. Vaidialingam Ako I. D. Dua
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/city-municipal-council-mangalore-anr-v-frederick-pais-etc-4944
- **Pages:** 9

## Headnote

Mysore Municipalities Act (Mys. Act 22 of 1964), s. 382(1)-Assessment registers prepared under Madras District Municipalities Act
(5 of
1920)--Registers to have currency for 5 years-Mysore Act coining into
force meanwhile-Property tax ilnposed under 1\1/adras Act t1'1ereafterValidity-lf saved under s. 382(1) and prorisos of Mysore Act a:i· amended by Mysore Act 34 of 1966.
The first respondent was the owner o'f some buildings within
the
appellant-Municipality. The appellant was governed by the Madras District Municipalities Act, 1920, till April 1, 1965, when the. Mysore Municipalities Act, 1964 came into force and thereafter by the Mysore Act.
For the year 1966-67 the appellant issued notices df demand for payment
of property tax under the Madras Act. The tax was higher than under
the Mysore Act. The first respondent challenged the levy by a writ petition,
and the appellant justified the levy under s. 382(1) of the Mysore Act and
its provisos.
The High Court quashed the demand notices.
In appeal to this Court,
HELD : Under the second and third provisos to s. 382( 1) of the
Mysore Act if a property tax has been imposed by the Madras Act, even
though the rate of such tax is higher than that under the Mysore Act, the
higher tax could be collected. The provisions of Madras Act namely ss.
78, 81, 82, 124 and r. 8 of Schedule IV rlf the Act, show that the municipal tax is an annual tax leviable
fo·r a particular official year and the
assessment list on the basis of which the tax is assessed is for such official
year. Though, ordinarily, the Municipality
would have
to prepare a
fresh assessment list every year, r. 8 of Schedule IV of the Madras Actwhich, by virtue of s. 124 has to be read as part of Chapter VI of the
Act dealing with Taxation and Finance-permits the Municipal Council to
continue the same assessment list for the next 4 succeeding years and to
r~vise it once. every 5 years. But, in order to enable the Municipal Council to levy and collect a lax, under s. 78 it has to pass a resolution determining to levy a tax, the rate at which such tax has to be levied as also
the date from which it shall be levied. In the present case. no such resolution was passed by the Municipal Council. Therefore, by merely preparing the assessment registers nn~er the Madras Act ori April 1, 1964,
which will have currency for a penod of 5 years till March 31, 1969
it
cannot be said that a tax or that a tax at a higher rate had been imp.;.ed.
No such tax having been imposed under the Madras Act, the provisos to
s. 382(1) of the Mysore Act do not apply and the demands for payment
of the property tax were not ju,tified. [757 E-H; 758 D-H; 759 A]
Municipal Corporation v. Hiralal, [1968] 2 S.C.R. 125, followed;

## Text

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751
CITY MUNICIPAL COUNCIL, MANGALORE & ANR. ·
v.
FREDERICK PAIS ETC.
October 13, 1969
[J. M. SHELAT, C. A. VAIDIALINGAM AKO I. D. DUA, JJ.J
Mysore Municipalities Act (Mys. Act 22 of 1964), s. 382(1)-Assessment registers prepared under Madras District Municipalities Act
(5 of
1920)--Registers to have currency for 5 years-Mysore Act coining into
force meanwhile-Property tax ilnposed under 1\1/adras Act t1'1ereafterValidity-lf saved under s. 382(1) and prorisos of Mysore Act a:i· amended by Mysore Act 34 of 1966.
The first respondent was the owner o'f some buildings within
the
appellant-Municipality. The appellant was governed by the Madras District Municipalities Act, 1920, till April 1, 1965, when the. Mysore Municipalities Act, 1964 came into force and thereafter by the Mysore Act.
For the year 1966-67 the appellant issued notices df demand for payment
of property tax under the Madras Act. The tax was higher than under
the Mysore Act. The first respondent challenged the levy by a writ petition,
and the appellant justified the levy under s. 382(1) of the Mysore Act and
its provisos.
The High Court quashed the demand notices.
In appeal to this Court,
HELD : Under the second and third provisos to s. 382( 1) of the
Mysore Act if a property tax has been imposed by the Madras Act, even
though the rate of such tax is higher than that under the Mysore Act, the
higher tax could be collected. The provisions of Madras Act namely ss.
78, 81, 82, 124 and r. 8 of Schedule IV rlf the Act, show that the municipal tax is an annual tax leviable
fo·r a particular official year and the
assessment list on the basis of which the tax is assessed is for such official
year. Though, ordinarily, the Municipality
would have
to prepare a
fresh assessment list every year, r. 8 of Schedule IV of the Madras Actwhich, by virtue of s. 124 has to be read as part of Chapter VI of the
Act dealing with Taxation and Finance-permits the Municipal Council to
continue the same assessment list for the next 4 succeeding years and to
r~vise it once. every 5 years. But, in order to enable the Municipal Council to levy and collect a lax, under s. 78 it has to pass a resolution determining to levy a tax, the rate at which such tax has to be levied as also
the date from which it shall be levied. In the present case. no such resolution was passed by the Municipal Council. Therefore, by merely preparing the assessment registers nn~er the Madras Act ori April 1, 1964,
which will have currency for a penod of 5 years till March 31, 1969
it
cannot be said that a tax or that a tax at a higher rate had been imp.;.ed.
No such tax having been imposed under the Madras Act, the provisos to
s. 382(1) of the Mysore Act do not apply and the demands for payment
of the property tax were not ju,tified. [757 E-H; 758 D-H; 759 A]
Municipal Corporation v. Hiralal, [1968] 2 S.C.R. 125, followed;
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1302 to
19@6 Of 1968.
752
SUPREME COURT REPORTS
[1970] 2 S.C.R.
Appeals by special leave from the judgment and. orders dat~d
September 26, 27 and 29, 1967 of the ~ysore H~gh Court m
Writ Petitions Nos. 907, 1004, 1005, 117) and 124' of 1967.
Jagadish Swarup, Solicitor-General, C. R. Somasekharan and
R. B. Datar, for the appellants (in all the appeals).
M. Veerappa and G. Narayana Rao, for respondent No. 1 ·(in
all the appeals).
S. S. Javali and S. P. Nayar, for respondent No. 2 (in all the
appeals).
The Judgment of the Court was delivered by
Vaidialingam, J. These five appeals, by speci;il leave, by the
City Municipal Council, Mangalore and the Commissioner of the
City Municipal Council, are directed against the orde~passed by
the Mysore High Court in Writ Petitions Nos. 907, 1004, 1005,
1175 and 1245 of 1967, quashing the demand notices issued by
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the appellants against the first respondent in each of these appeals
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for payment of property tax for the half-year ending September
30, 1966.
As the grounds of attack levelled against the demand
notices by the said respondents are common, we will only refer to
the averments contained in Writ Petition No. 907 of 1967 out of
which Civil Appeal No. 1302 of 1968 arises.
buildings situated in Ward II and Ward XX, within Mangalore
Municipality in the South Canara District, which originally
formed part of the Madras State and which, on reorganisation of
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the States, became part of the State of Mysore. The Mysore
Municipalities Act, 1964 (Act XXII . of 1964)
(hereinafter
referred to as the Mysore Act J came into force from April 1,
1965 as per the notification, dated September 23, 1965 issued
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by the State Governtl}ent. Certain sections 'had already come
into
force.
Till the Mysore Act came ·· into . force,
the Mangalore Municipality was governed · by the Madras
District
Municipalities Act,
1920
(Act V of
1920)
(hereinafter called the Madras
Act).- The Madras Act had
Jlrovided for levy of property tax, the procedure to be adopted
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for the same and as to how the ann.ual value of a building was to
be arrived at as well as the percentage at which the property tax
was to be levied.
Similarly the Mysore Act had also provided
for levy of property tax; prescribing the ascertainment of annual
ratable value and also the rate at which the tax was to be levied.
Althoμgh the Mysore Act came into force from April 1, 1965
the appellanis issued demand notices for property tax under the
said Act for the assessment year 1965-66. In those
demand
notices, the Municipal Council determined the ratable annual
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MT,JN!C. COUNCIL v. FREDERICK ( Vaidialingam, !. ) 7 5 3
value. under s. 101 ( 2) of the Mysore Act and assessed the tax on
the basis of that annual ratable value, but at rates under the
Madras Act.
The tax
was paid as per the
demand notices.
'But on March 16, 1967 the appellant issued the impugned notices
of demand under the Madras Act for payment of property tax for
the year 1966'67. The fax demanded on the basis of the Madras
Act was considerably higher than that orjginally demanded and
paid under. the Mysore Act for the assessment year
1965-66.
Notwithstanding the protest made by the first
respondent, the
appellants threatened to collect the tax as per the demand notices
and hence the first respondent filed Writ Petition No. 1907 of
1967 challenging the demand notices.
The main grounds of
attack against the demand notices, as raised in the said Writ
Petition were that after the passing of the Mysore A~t the appellants had no power to levy property tax under the Madras Act and
therefore the demands were illegal. · The demand notices were .
further attacked on the ground that s. 382 of the Mysore Act,
which related to the repeal of many Acts including the Madras
Act and the saving provisions contained therein did not justify
the issue of the demand notices.
The first respondent accordingly
prayed for quashing the demand notices issued under the Madras
Act.
He had also raised certain contentions regarding the levy
of health cess included in the notices; but it is unnecessary to
refer to those averments as the High Court has held against the
first respondent and .that question does not arise in these appeals.
The appellants pleaded that under the Mysore Act property
tax, among other things, has been imposed after following the
procedure prescribed in ss. 95 to 97 therein and the imposition of
tax has come into force from April 1, 1967, but for the period in
question viz., the year 1966-67 the demands were legal and valid
in view of the provisions contained in s. 382 of the Mysore Act.
Notwithstanding the repeal of the Madras Act, the provisions
contained in s. 382 of the Mysore Act clearly saved the right of
the appellants to levy property tax under the Madras Act to adopt·
both the annual value as well as the rate of tax as per the a!sessment registers maintained under the said Act.
In particular, the
appellants relied. upon the second proviso in s.
382(1) of the
Mysore Act and the Uiird proviso inserted in th11 said section with
retrospective effect, by the Mysore Municipalities (Amendment)
Act, 1966 (Mysore Act XXXIV of 1966). According to the appellants, . as necessarily . the imposition of property tax under the
Mysote Act, after following the procedure contained therein will
take time, the Legislature had made consequential provisions in
s. 382 with a view to enable the imposition of property tax under
the repealed enactments during the interim perioci.
The High Court has, by and large, accepted the contentions
of the first respondent. According to the High Court, although
754
SUPREME COURT REPORTS
[1970] 2 S.C.R.
the higher rate of tax under the Madras Act is preserved by A
proviso 3 to s. 382(1) of the Mysore Act, ·the provision for the
determination of the annual value under s. 82(2) of the Madras
Act is not saved. The High Court is further of tlie view that the
second proviso to s. 382(1) of the My~ore Act only continues the
old impost and the third proviso preserves the old rates and that
they do not continue the old annual value.
The net result of the
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decision of the High Court is that 'the Municipal Council has to·
determine the annual ratable value of the building as provided
bys. 101(2) of the Mysore Act and to assess the property tax at
the rate at which it is assessed under the Madras Act.
Finally
the High Court quashed the demand notices issued by the
appellants.
The learned Solicitor General, appearing for the appellants,
urged that the High Court was in error in interpreting the second
and third provisos to s.
382(1) of the Mysore Act.
It was
urged that as the levy of property tax after adopting the procedure
indicated in the Mysore Act will take time, the Legislature had,
by incorporating the necessary provisions in s. 382, particularly
the second and third provisos to sub-s. ( 1), preserved the right
of the Municipal Council concerned to adopt not only the annual
value but also the rate of property tax payable according to the
assessment registers maintained under the Madras Act, till they
are superseded by anything done under' the Mysore Act.
The
learned Solicitor General, further urged that the view of the High
Court that the annual ratable value has to be determined under
the Mysore Act and the computation of the rate of •ax has to be
under the Madras Act, was anomalous and was not warranted by
the provisions of the Mysore Act.
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On the oiher hand, Mr. V ee•appa, learned counsel appearing
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for the first respondent in all the appeals, has supported the view
taken by the High Court and urged that a proper interpretation
had been placed on s. 382 of the Mysore Act.
According to the
learned counsel,
normally, after the coming into force of the
Mysore Act, no assessments could be made under the Madras
Act, but s. 382 of the Mysore Act, repealing the Madras Act, had
made certain special provisions the . existence of which
alone
would attract certain actions taken under the Madras Act.
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In order to appreciate the contentions, noted above, it is
necessary to refer broadly to the scheme of the two Acts relating
to the levy of property tax.
We shall first ,advert to the Madras
Act.
Under s. 78 (1) power given to the Municipal Council
to levy, among other taxes, a property tax.
Under sub-s. (3), a
resolution of a municipal council determining to levy a tax has to
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ll(!JNlC. COUNCIL v. FREDERICK ( Vaid1alingam, J.)
7 5 5
specify the rate at which such tax is to be . levied and the date
u-om wh1cn It shall oe 'ev1ea. . ~t10il. 81 ( l) provides u1at 11 a
"-uu_ilcu, oy resoiuuon, . detenrunes tbat a property tax shall be
leVled, sucn tax shall oo levied on all bu11dillgs anu iands w1thm
tne mumc1pai 1mms save tnqse exempted by tne statute or by any
other 1aw.
11uo-sect1on (.t) staces mat the tax shall be levied m
such percentages of the annual vaiue or me ouildmgs or lands as
may oe bxed oy the Mumcipal Councu, subject to s. 18.
under
this section, we are infonnea that 25 % has been fixed as the milXl·
mum rate. Sub-s. (2) of s. 82 provides that the annuai value ol
the lands and bulldmgs shall be deemed to be the gross annual
rent at which thl:y may reasonably be expected to be let from
month to month or trom year to year less a deduction in the case
of buildmgs, of ten per cent of mat portion of such annual rent
which ls attributable to buildings alone. It further provides that
the said deauction shall be in heu ol aJI allowance 'for repairs or
on any Other account. Section 86 provides tbat tbe property tax
shall be levied every halt year and shall, excepting as otherwise ·
provided in Schedule l V, be paid by the owner witbin thirty days
of the commencement of the hall-year. Section 124 provides that
the rules and tables embodied in Schedule IV shall be read as
part of Chapter Vi, dealing with Taxation and .Finance. Selle·
dule IV deals with Taxation and Finance Rllies. Rule 2 provides
for the preparation and maintenance of assessment books showing
the persons and property liable to taxation under the Act and the
assessment books being. made available for in&pection by the tax
payers. Rule 6 provides for the value of any· land or building
for purposes. of the property tax being determined by the executive authority. Under rule 7, the executive authority has to enter
in the assessment books the annual or capital value of all lands
and building and the tax payable thereon.
Rule 8 (1) states that
the assessment books shall be completely revised by the executive
authority once in every five years.
Sub-rule (2)
thereof pro·
vides for amending the assessment books at any time between om
general revision and another. in the manner indicated therein. A
perulial of the .provisions referred to above, shows that under the
Madras Act the property tax is levied. on the annual value of
buildings which is deemed to b.~ the gross annual rental vaiue Jess
a deduction of ten per cent of that portion of annual rent which
is attribuiable to the buildings alone. · The Municipal Council
has to pass. a resolution deter ,i.ning to levy the property tax and
that resolution should also spec"y the rate at which such tax is to
be levied as also the date from which it shall be levied and the
ta~ is levied every half year. The executi<e auinority jias to main··
tam the assesslllent books containing entries regarding the annual
yalue as Well a.s the tax payable thereon .. The executive authndty
1s under "an obliga:tlort to completely revise· the assessment books
once- in 'ev~ry fi;ve'0 year~.
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SUPREME OOURT REPOR"!S
[1970] 2 S.C.R.
There is no controversy that the Madras Act was applicable
to the C11y ot Mangalore, even after it formed part of the Mysore
:state on tne reorgamzation of the States.
The Madras Act, as
we have mentionea eaIJ1er, was repealed by the Mysore Act,
which came mto force with effect from April 1, 1965.
Coming to the Mysore Act, Chapter VI deals with Municipal
Taxation. ;secuon 94 enables a municipal council to levy a tax
on bmldmgs or 1anas or both situated within the municipality,
after complying with the procedure indicated therein and subject
to any general or special orders of Government and at rates not
exceeding thost: specified in Schedules I to VII.
The maximum
rate has been fixed at 24 % of the annual ratable value. Section
2 ( l) defines 'annual retable value' as the gross annual rent for
which any building or land exclusive of furniture or machinery
might reasonably be expected to be let from month to month or
year to year. Section 9 5 deals with the procedure to be adopted
prelimnary to imposing a tax. Section 101 ( 2) provides that the
annual ratable value of a building shall be the gross annual rent
as defined in cl. ( 1) of section 2, less a deduction of sixteen and
two-thirds per cent of such annual rent.
It further states ;;1at
the said deduction shall be in lieu of all allowances for repairs
or on any other account whatsoever.
Section 103 deals with the
preparation of an assessment list.
Section 382 (I) repeals the
various enactments referred to therein, inc1udfng the Madras Act.
The first proviso, which saves certain matters, does not come into
the picture in this case.
The second proviso as well as the third
proviso, introduced by the Mysore Municipalities (Ame11dment)
Act, 1966 are relevant for our puroose and they are :;, iollows :
"(2) Provided further that subject to the preceding
proviso anything done or any action taken
(including
any appointment or delegation made, tax, fee or cess
imposed, notification, order,
instrumeni, or direction
issued, rule, regulation,
form,
bye-law or scheme
framed, certificate obtained, permit or licence granted
or registration effected) under the said laws shall be
deemed to have been done or taken under ihe corres·
ponding provisions of this Act and shall continue to be
in force accordingly unless and until sullerseded by
anything done or any action taken under this Act :
( 3) Provided further that noiwithstanding anything
contained in the preceding proviso where any tax, duty,
fee or cess other than a duty on transfers of immovable
properties has been imposed under the said laws at a
rate higher than the maximum rate permissible under
this Act. such tax. duty. fee or cess may continue to be
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MUNJC. COUNCIL \', FREDERICK \Vaidialinga111, J.)
757
imposed and collected at such higher rate unless and
until superseded by anything done or any action taken
under this Act."
The third proviso has been introduced with retrospective effect
by the Amending Act.
It is not reaUy necessary for us to consider more elaborately the scheme of the Mysore Act. because.
even according to the appellants, the procedure indicated therein-whatever may be the procedure, abOut which we express n0
opinion-has not been taken before the issue of the demand
notices wh;:;h were under challenge before the High Court. On
the other hand, the appellants have exclusively relied on the
second and third provisos to s. 382( I) of the Act
The learned Solicit1Jr General has urged that the assessmen
books under the Madras Act were prepared on April 1, 1964
and, if so, under the second and third provisos to s. 382(1), the
property tax can be levied and collected as per the provisions ol
the Madras Act.
In particular, the learned Solicitor General
placed reliance upon the provisions of the Madras Act relating to
the maintenance of assessment books and the assessment oooks
having to be revised only once in every five years and pointed
out that in this case the assessment books having been prepared
on April 1, 1964 they wiU have currency for a period of five
years till March 31, 1969. The second proviso to s. 38"2 ( 1) no
doubt saves any tax which had been imposed under the Madras
Act.
Similarly, under the third proviso, the Municipal Council
will have authority to collect tax even at a rate higher than the
maximum rate permissible under the Mysore Act; but the essential requisite for attraciing the two provisos is that the 'tax should
have been imposed under the Madras Act, as per the second proviso and tax at a higher rate should have been imposed again
under the Madras Act as per the third proviso. We are not inclined to accept ,the contention of the learned Solicitor General
that by merely preparing the assessment registers under the
Madras Act on April : , 1964 it can be stated that a tax has been
imposed under the second proviso or a tax at a higher rate has been
imposed under the third proviso.
We have already referred to th~
material provisions of the Madras Act relating to the levy of property tax.
Those provisions show that the municipal tax is an
annual tax leviablc for a particular official year and the assessment list on the basis of which the tax is assessed is for such official year. This was the view expressed by this Court in Municipal Cor1,oration v. Hiralal'.'), while interpreting certain provisions of the Madhya Bharat Municipalities Act, 1954. No doubt
the wording in the Madhya Bharat Act in ~. 76, dealing with
asses5ment list was slightly different, hut, in our opinion, the
(1) [1968). 2 S.C.R. 125.
758
mPRBME COUR1 RBPOR1S
(1970] 2 S.C.R.
principle enunciated in that decision regarding the municipal tax
oeing an annual tax leviable for a parucular official year and the
assessm.:nt list, on the basis or which 1he tax is assessed having
currency tor each such otlicial year, is applicable also to the interpretanon of the Madras Act. No resolution passed by the Municipal Co11nc11 regardmg the levy ot the prnperty tax and the rate
al which ii is to be levied, having currency for the year 1966-67,
has been brought to our notice.
The learned Solicitor General has drawn our attention to the
minutes, dated September 15, 1966 as well as the Co\llcil's resolution No. 1280 dated December 20, 1966 relcting to the levy of
prope1ty tax in the Cay of Mangalorc for the period in question,
under the Mysore Act. Those proccedmgs w1il not assist the
appellant as the necessary procedure, unoer the Mysore Act, has
not been followed and therefore that resO!lllion cannot have any
legal validily, so as to justify lhc imposition of tax. Nonnally,
the municipal council will have to prepare a fresh
assessment
list, every year.
By virtue of s. 124 of the Madras Act, the rules
and tables ~mbodied m Schedule IV have to be read as part of
Chapter VI
dealing with
Taxatiou and
Finance.
Though,
ordinarily, the Municipality would hav0 to prepare a fresh
assessment list every year, rule 8 of Schedule l V permits the
Municipal Council to continue 1he same assessment list for the
next four succeeding years and to revise it once every five years.
Hut, in order to enable the Municipal Council to levy and collect
a tax, it has to pass a resolution determining to levy a tax, the
rate at which such tax has to be levied as also the date from which
it shall be levi~d. That the tux is an annual tax is also borne out
by sub-s. ( 2) of s. 82.
If the contention of the learned Solicitor
that the assessment list, once prepared, has to be adopted for five
years, is accepted, it will result in the annual value on a particular
building or house being static for tive years, during which a
municipal council can go on adopting the assessment list prepared
in an earlier year aud the owner or occupier of the buildin~ being
deprived of the right to object to the valuation regarding the
annual value or the tax assessed thereon.
This will be the result
even though the annual value may have decreased for one reason
or the other. It follows that the contention that the preparation
of the assessment books amounts to imposing of a tax so as to
justify the issue of tl)e demand notice. cannot be accepted.
Having due regard lo .the second and third provisos to s.
382(1) and the other material. provisions of the Mysore Act, lhc
position is tliat a property tax must have been imposed by the
Madras Act and even though the rates of su.ch tax were higher than
under the Mysore Act, the said higher tax could be collected. But
no such tax having been imposed under the Madras Act, the
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MUN!C. COUNCIL v. FREDERICK (Vaidialingam, J.) 759
second and third provisos to s. 382( 1) do not apply and hence the
demands for payment of property tax for the
period are not
jtlstified.
Though we are not in agreement with s.01ue of the reasons
given by the High Court for issuing the writ, the conclusion arrived at by the High Court that the second and third provisos to
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s. 382( 1) of the Mysore Act do not justify the issue of the demand
notices for the period in question, is correct.
The result is that the appeals fail and are dismissed with costs.
There will be only one hearing fee.
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V.P.S.
Appeals dismissed