Holding

Each bungalow is a separate building under the Act and must be assessed individually for house tax.

Summary

The Bhakra Management Board constructed a series of separate bungalows for its employees in Nangal township. The Notified Area Committee began treating each row of adjoining bungalows as a single "building" for house‑tax purposes, applying a 15% tax rate based on the combined annual rental value. The Board argued that each bungalow, having its own boundary and house number, should be assessed individually and, if its rental value was below Rs. 840, would be exempt from tax. The Supreme Court examined the definition of "building" in Section 3(2) of the Punjab Municipal Act, 1911, concluding that a "building" includes any house intended for human habitation, regardless of common walls. Consequently, each bungalow qualifies as a separate building and must be valued separately for tax assessment. The Court held that the Committee’s practice of clubbing the bungalows together was unjustified and dismissed the appeals, affirming the High Court’s decision in favor of the Board.

Issues considered

Whether a row of adjoining bungalows can be treated as a single "building" for the purpose of levying house tax under the Punjab Municipal Act, 1911.

Legislation cited

Punjab Municipal Act, 1911s. 242(1)(a), s. 3(2), s. 63, s. 84(1)
Punjab Reorganisation Act, 1966s. 79

Subjects

building definitionhouse taxmunicipal taxPunjab Municipal Actproperty tax assessmentstatutory interpretationexemption threshold

Judgment

NOTIFIED AREA COMMITTEE NANGAL TOWNSHIP A
v.
BHAKRA MANAGEMENT BOARD, CHANDIGARH AND ORS.

AUGUST 4, 1999

[D.P. WADHWA AND M.B. SHAH, JJ.] B

Municipalities:

Punjab Municipal Act, 191I-Section3(2)-Property Tax-'Building'-
Annual rental value of a row of bungalows adjoining each other in one block C
taken as a 'building' for levying house tax-Jn appeal-Held- 'Building'
includes any house meant for human habitation-Each bungalow is a
'building' and is assessable to tax separately.

The respondent-Board constructed a number of residential houses for D
accommodation of its employees. Different blocks have row of houses
adjoining each other, but each bungalow has separate boundary walls with
distinct house numbers and are allotted to different employees.

Earlier, each house was assessed by the appellant-Committee to house
tax on the basis of annual value worked out separately for each house. E
'However, from 1977-78, the appellant-Committee treated the entire block as
one 'building' and imposed ad va/orem rate of house tax at 15% of the
annual rental value of the 'building', under the Punjab Government
Notification dated 23.1.1976.

The respondent-Board contended before the Committee that it was F
exempt from house tax since the annual rental value of each house/unit was
below the taxable amount specified in the Notification. However, the Committee
rejected the objections, and the appeal filed before the Deputy Commissioner
was dismissed.
G
Single Judge of the High Court allowed the writ petition of the Board
and the order was confirmed by the Division Bench of High Court in appeal.

In this appeal, the appellant-Committee contended that there was only
one building which was sub-divided and since there was one titleholder, the
17
H
18 SUPREME COURT REPORTS [1999] SUPP. 1 S.C.R.

A house tax was correctly levied.
Dismissing the appeals, this Court

HELD: 1.1. The appellant-Committee was not justified in clubbing all
bungalows in a row in one block together and terming that as a 'building'
B for the purposes of fixing the annual rental value for determination of house
tax. Each bungalow for the residence of an employee would fall within the
definition of a 'building' and be valued separately for the purposes of levying
house tax. [il-B-C-D]

1.2. 'Building' means any house intended for human habilitation. Simply
C because some bungalows have a common boundary wall, though each
separating the other and, each is allotted to separate employees, it would not
mean that a bungalow ceases to be a house. [21-A-B)

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 3830-34 of
1990 Etc.
D
From the Judgment and Order dated 14.12.89 of the Punjab & Haryana
High Court in C.W. Nos. 5528-30, 5487-88of1989.

Ms. Kamini Jaiswal for the Appellant.

E Dhruv Mehta. S.K. Mehta. Fazlin Anam and Ms. Shobha for the
Respondents.

The Judgment of the Court was delivered by

D.P. W ADHW A, J. The question that falls for consideration in these
F appeals is if the appellant - Notified Area Committee - was legally correct in
assessing the annual value of row of quarters in one block as a 'building' for
the purpose of"levying house tax under the Punjab Municipal Act, 1911 ('Act'
for short). This question arises on the interpretation of the word 'building'
in the Act.
G 'Building' is defined under clause (2) of Section 3 of the Act to mean
"any shop, house, hut, outhouse, shed or stable, whether used for the
purpose of human habilitation or otherwise and whether of masonry, bricks,
wood, mud, thatch, metal or any other material whatever and includes a wall
and a well".

H The question crops· up in the fo11owing circumstances.
NOTIFIED AREA COMMITTEE v. BHAKRA MANAGEMENT BOARD [D.P. WADHWA, J.) 19

Respondent Board (Bhakra Management Board) is constituted by the A
Central Government under Section 79 of the Punjab Reorganisation Act, 1966.
The Board was so constituted for administration, maintenance and operation
of various works as described in the section. These works included Bhakra
dam and reservoir and power houses. For the construction, maintenance and
operation of the works entrusted to the Board under the Punjab Reorganisation B
Act, the Board constructed number of residential houses at Nangal township
for providing residential accommodation to its officers, staff and workers
employed in the power houses. Residential accommodation consisted of
different types of bungalows and quarters for the officers and employees of
different categories. Each of the bungalows and quarters have separate
boundary walls and it is a compact unit with distinct and separate house C
numbers and allotted to each of the officers and employees of the Board.
Different blocks have row of quarters/ bungalows each adjoining to one and
another but with a separate identification mark and a complete unit in itself.

Earlier each of the bungalow/quarter has been assessed to the house
tax on the basis of annual value worked out separately for these bungalows/ D
quarters as provided in Section 3 of the Act. However, the Committee raised
annual value for purposes of house tax for the year 1977-78 treating the entire
block as one building and imposed ad va/orem rate of house tax @ 15% of
the annual rental value in accordance with Section 63 of the Act. For the
subsequent years also the Committee raised bills on the Board on similar E
basis.

Under Notification dated January 23, 1976 of the Local Government
Department of the Punjab Government issued under clause (a) of sub-section
(1) of Section 242 of the Act, the Government of Punjab imposed within the
limits of the Notified Area Committee, Nangal township a tax payable by the F
owner of the building at the rate specified in the schedule. This schedule is
as under :

S. No. Description of property Rate of Tax
G
1. Building and lands having annual rental value -
(i) not exceeding Rs. 840 No Tax
(ii) exceeding Rs. 840 but not exceeding
Rs. 1,800 12+ per cent H
20 SUPREME COURT REPORTS [1999] SUPP. l S.C.R.

A (iit) exceeding Rs. 1,800 15 per cent
Now when the Committee raised bill for house tax clubbing quarters or
bungalows adjoining to each other as one building, the Board objected to .the
same contending that each individual quarter/bungalow occupied by its
employees has to be treated as separate and that the building having annual
B rental valpe not exceeding Rs. 840 would be exempt from house tax. The
objections of the Board were rejected by the Committee. The Board thereafter
filed an appeal under Section 84(1) of the Act before the Deputy Commissioner,
Ropar for setting aside and quashing the demand bill and for the refund of
the excess tax recovered from the Board. The Board had made the payment
under protest. This appeal was, however, dismissed by the Deputy
C Commissioner.

Board then filed a writ petition in the Punjab & Haryana High Court
challenging the assessment by the Committee. A learned si~gle Judge allowed
the writ petition. He was of the view that each separate residential unit would
be a building and would have to be treated as such for the purpose oflevying
D house-tax and in doing so annual rental value of every separate unit would
have to be taken into consideration. Now it was the Committee that felt
aggrieved and filed Letters Patent Appeal in the High Court. This was dismissed
by the impugned judgment and the order of the learned single JUdge was
confirmed. Still aggrieved the appellant filed this appeal after obtaining leave
E of this Court.

It certainly suits the Committee to consider all quarters or bungalows
of one block as one building as that would raise the annual value resulting
in higher amount of house tax as per the schedule above mentioned. It was
contended by Ms. Jaiswal, learned counsel for the Committee, that there is
F only one building which has been sub-divided though let out to various ......
persons. She said even though there were different occupiers, ultimate source
of title-holder was the Board and the Committee was justified in imposing
house tax collectively on the building. She said it was for the Committee to
decide if block of quarters constituted one building or not. Lastly, it was
G submitted that the Board itself was not the owner of the building as ownership
vested in the State of Punjab and the Board was merely an occupier of the
building which had been given to it for occupation of its staff and their being
one occupier, whole block could be assessed as one building treating it as
one unit.

H We do not think that the Committee is right in its approach. If we may
NOTIFIED AREA COMMITTEE 1•. BHAKRA MANAGEMENT BOARD [D.P. WADHWA, J.) 21

refer to the definition of the 'building', it means any house used for the A
purpose of human habilitation. The term 'house' in the present case would
mean a dwelling house intended for human habilitation. It is not disputed that
each quarter or bungalow is allotted to a separate employee who lives therein
with his family. Simply because some quarters or some bungalows have
common wall separating each other would not mean that that quarter or
bungalow ceases to be a house. A house is a place of dwelling or habilitation. B
It is difficult to accept the proposition that quarters in one row having
common wall though each separating the other would mean one building for
. ,,, the purpose of arriving at the annual value. We do not think that any
argum~t is needed for us to hold that each such quarter or bungalow for the
residence of employees of the Board would fall within the definition of C
'building'. Stand of the Committee appears to us is rather incongruous. Just
to get more revenue, the Committee could not change its stand and put
interpretation on the tenn 'building' which is incomprehensible. The Committee
was not justified in clubbing all the quarters/bungalows in one block together
and term that as 'building'.
D
These appeals are accordingly dismissed with costs. Judgment of the
High Court is affirmed. When leave was granted by this Court, there was stay
of the operation of the impugned judgment of the High Court. With dismissal
of these appeals, stay stands vacated and if in the meanwhile any excess
amount have been paid by the Board to the Committee, it shall be refunded
by the Committee to the Board within two months.
E

S.K. Appeals dismissed.

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