Calcutta High Court
Indian City Properties Ltd. And Anr vs The Kolkata Municipal Corporation And … on 10 April, 2026
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION 2026:CHC-OS:119
ORIGINAL SIDE
RESERVED ON: 15.12.2025
DELIVERED ON: 10.04.2026
PRESENT:
THE HON'BLE MR. JUSTICE GAURANG KANTH
WPO 362 OF 2024
IA No: GA/2/2025, GA/3/2025
INDIAN CITY PROPERTIES LTD. AND ANR.
VERSUS
THE KOLKATA MUNICIPAL CORPORATION AND ORS.
Appearance: -
Mr. Arindam Banerjee, Sr. Adv.
Ms. Arpita Saha, Adv.
Mr. Asish Kr. Mukherjee, Adv.
Mr. Saurabh Prasad, Adv.
.............. for the Petitioners
Mr. Jaydip Kar, Sr. Adv.
Ms. Piyali Sengupta, Adv.
Mr. Swapan Kr. Debnath. Adv. ....... For the KMC
Mr. Kishore Datta, Ld. A.G.
Mr. Sirsanya Bandyopadhyay, Adv.
Mr. Vivekananda Bose, Adv.
Ms. Anjusri Mukherjee, Adv.
Ms. Susmita Biswas Chowdhury, Adv. .............. for the State
JUDGMENT
Gaurang Kanth, J. :-
1. The Petitioner has preferred the present writ petition seeking a declaration
that Section 232B and proviso to Section 180(2) of the Kolkata Municipal
Corporation Act, 1980 are ultra vires to Articles 14, 19, and 300A of the
Constitution of India and are therefore, void and inoperative under Article
13 thereof. The Petitioner has further prayed for quashing and setting
aside the memo dated 08.01.2024, along with thirteen other notices dated
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04.01.2024, issued for the purpose of retrospective revaluation of PremisesNo. 25, Brabourne Road (presently known as Biplabi Trailokya Maharaj
Sarani), Kolkata-700001.
2. At the outset, it is pertinent to note that this Court, by its judgment dated
24.03.2026 in WPO No. 1220 of 2024, in Sahujain Charitable Society &
Anr. v. The Kolkata Municipal Corporation & Ors., held that Section
179(2)(d) of the Kolkata Municipal Corporation Act, 1980, as substituted
by Section 3 of the Kolkata Municipal Corporation (Amendment) Act, 2022,
shall be operative without the opening non-obstante clause and without
sub-clause (ii) whereas sub-clause (i) shall be enforced as enacted,
permitting revision of annual valuation within six year from the expiration
of the relevant period.
3. Before adverting to the facts of the case, it is necessary to elucidate the
statutory framework of the KMC Act and trace the evolution of its
amendments, which together form the legal genesis underpinning the
challenge to Section 232B and the Proviso to Section 180(2).
Legal Genesis underpinning the Challenge to Section 232B and the Proviso
4. The Kolkata Municipal Corporation Act, 1980 (hereinafter ‘KMC Act, 1980‘)
was enacted to repeal the Calcutta Municipal Act, 1951, and came into
force on 04.01.1984.
5. From its inception, the assessment of annual valuation under the KMC
Act, 1980 was governed by Section 174 pursuant to the Annual Rateable
Value (‘ARV’) system.
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6. The Kolkata Municipal Corporation (Amendment) Act, 2006 (‘2006 Act’),
which came into effect on 01.05.2007, introduced substantial amendments
to Part IV of the KMC Act and replaced the ARV system with the Unit Area
Assessment (‘UAA’) system. Consequently, the provisions governing the
ARV system were repealed, and new provisions pertaining to the UAA
system were incorporated.
7. It was soon realized, however, that significant preparatory work was
necessary to operationalize the UAA system, making its immediate
implementation unfeasible.
8. To address this transitional difficulty, the Kolkata Municipal Corporation
(Amendment) Act, 2008 (‘2008 Act’), effective from 01.04.2008, inserted
Section 174(3), providing that until annual valuations under the UAA
system were determined, the valuation of land and buildings would
continue to be carried out under the pre-2006 ARV provisions.
9. Subsequently, the Kolkata Municipal Corporation (Amendment) Act, 2011
(‘2011 Act’), effective from 01.01.2012, introduced Section 232A,
stipulating that certain pre-2006 provisions of the KMC Act would
continue to operate until the final publication of the Scheme under Section
174(1).
10. The UAA Scheme was ultimately published with effect from 01.04.2017.
Accordingly, the ARV system remained applicable until 30.03.2017, after
which the UAA system formally came into force from 01.04.2017.
11. Thereafter, Section 232B was inserted by the Kolkata Municipal
Corporation (Amendment) Act, 2022 (‘2022 Act’), clarifying that Sections
171(1), (2), (3), (8), and (9); Section 174(1); and Sections 175, 179, 180,
182A, and 185, as they existed immediately prior to the 2006 amendment,
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along with Section 174(3), would continue to be applicable for any action
relating to the assessment of annual valuation, levy of property tax, or any
connected proceedings for any period prior to the publication or
enforcement of the Scheme under Section 174(1) read with Section
179(2)(a) of the KMC Act, as amended in 2006.
12. In addition, a proviso was added to Section 180(2), stipulating that
revisions of annual valuation would ordinarily be undertaken within six
year of the occurrence of the relevant circumstances, except where the
owner or person liable to pay property tax fails to submit a return under
Section 182 or suppresses the occurrence of such circumstances.
13. The principal challenge to these amendments is that the expression ‘any
period’ in Section 232B, coupled with the absence of a prescribed
limitation in the second limb of the proviso to Section 180(2), purportedly
empowers the Respondents to impose retrospective and indefinite liability.
It is contended that such provisions could enable the Kolkata Municipal
Corporation to reopen past assessments without temporal restriction,
leaving them perpetually unsettled, and confer an unfettered executive
power. The Petitioner asserts that such unconstrained authority offends
Article 14 of the Constitution and infringes the property rights guaranteed
under Article 300A.
14. It is also to be noted that the by the said Amendment Act, 2022, Section
179(2)(d) was substituted with an entirely new clause. This Court vide
separate Judgement dated 24.03.2026 in WPO No. 1220 of 2024, in
Sahujain Charitable Society & Anr. v. The Kolkata Municipal
Corporation & Ors. held that Section 179(2)(d) of the Kolkata Municipal
Corporation Act, 1980, as substituted by Section 3 of the Kolkata
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Municipal Corporation (Amendment) Act, 2022, shall be operative without
the opening non-obstante clause and without sub-clause (ii) whereas sub-
clause (i) shall be enforced as enacted, permitting revision of annual
valuation within six year from the expiration of the relevant period.
15. In this context, it is pertinent to refer to the judgment of this Court in
Sahujain Charitable Society & Anr. v. Kolkata Municipal
Corporation & Ors., reported as 2018 SCC OnLine Cal 4793, which
examined the legal framework governing annual valuation prior to the
introduction of the UAA system. In that case, the petitioners challenged
the constitutional validity of the second proviso to Section 179(2)(d) of the
KMC Act, contending that the expression “at any time” conferred upon the
Municipal Commissioner an unguided and unrestricted authority to revise
valuations retrospectively, thereby exposing taxpayers to unlimited
liability. This Court held that such uncanalised powers, being unlimited in
point of time and scope, violated Article 14 and read down the proviso by
prescribing a limitation, restricting retrospective revision to three years
preceding the date of the revising order. The judgment was subsequently
challenged before the Hon’ble Supreme Court via Special Leave Petition,
which was dismissed. A Review Petition before this Court was also
dismissed, and a further SLP by the Municipal Corporation was similarly
dismissed, thereby affirming the three years limitation on retrospective
revisions.
16. The present challenge to Section 232B and the proviso to Section 180(2) of
the KMC Act, 1980 arises from the grievance that the 2022 amendments, if
interpreted in an unqualified manner, could revive an unbounded and
unguided power of retrospective assessment, contrary to the safeguards
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recognized in Sahujain Charitable Society (supra), and potentially
expose taxpayers to arbitrary or indefinite liability.
17. In this backdrop, it is important to examine the facts of the present case.
Facts of the present case
18. Petitioner No. 1 is the owner of the aforesaid commercial premises,
constructed between 1962 and 1965, comprising a basement, ground floor
and ten upper floors. The property stands assessed for municipal tax
under Assessee No. 110450400154.
19. The annual valuation of the premises was last determined with effect from
the fourth quarter of 2004-2005 at Rs. 47,48,070/-, and the Petitioner has
been regularly paying municipal taxes up to date.
20. On 29.03.2023, the Petitioner received a notice from the Assistant
Assessor-Collector (North), Division XV, Kolkata Municipal Corporation,
calling upon it to furnish particulars of all tenants along with copies of
rent agreements relating to the said premises. In response, the Petitioner,
by its letter dated 15.06.2023, submitted the requisite details and the
available rent agreements.
21. Thereafter, the Petitioner received the impugned notice dated 08.01.2024
issued under Sections 184 and 185 of the Kolkata Municipal Corporation
Act, 1980, proposing to revise the annual valuation of the premises
retrospectively from the first quarter of 2005-2006 up to the third quarter
of 2016-2017 by undertaking thirteen intermediate revaluations under
Section 180(2), applying the ARV system. The said notice further proposed
eight additional intermediate revaluations under the UAA scheme for the
period commencing from the first quarter of 2017-2018 to the third
quarter of 2022-2023. In addition, the Petitioner received thirteen separate
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notices dated 04.01.2024 corresponding to each of the proposed
intermediate revaluations.
22. The Petitioner, by its reply dated 09.02.2024, objected to the
maintainability of the impugned notices and set out detailed submissions
in opposition thereto. A Hearing Officer was thereafter appointed, and
proceedings commenced before him. From the reply filed by the
Respondent Corporation before the Hearing Officer, it became evident that
the Respondent sought to justify its proposed actions by relying upon
Section 232B and the proviso to Section 180(2) of the Kolkata Municipal
Corporation Act, 1980.
23. As the Hearing Officer does not possess the jurisdiction to adjudicate upon
the constitutional validity of statutory provisions, the Petitioner preferred
the present writ petition challenging the constitutional validity of the said
provisions.
Submission on behalf of the Petitioner
24. Mr. Arindam Banerjee, learned Senior Counsel for the Petitioner,
commenced his submissions by placing an alternative construction for
consideration, notwithstanding that the principal challenge in the present
writ petition concerns the constitutional validity of Section 232B and the
second proviso to Section 180(2) of the Kolkata Municipal Corporation Act,
1980.
25. Learned Senior Counsel submitted that under the erstwhile second
proviso to Section 179(2)(d), the Municipal Commissioner was empowered
to undertake a general revaluation after the expiry of six years and to
make retrospective adjustments “at any time.” The Hon’ble Division Bench
of this Court in Sahujain Charitable Trust (supra) read down the
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expression “at any time” to restrict retrospective revision to a period 2026:CHC-OS:119
of
three years prior to the revising order.
With the final publication of the UAA Scheme with effect from
01.04.2017, the second proviso to Section 179(2)(d) stood repealed, and
the substituted provisions under the UAA regime came into force.
However, by the subsequent insertion of Section 232B, provisions of the
ARV system were revived to the extent necessary for completing
assessments pertaining to periods prior to the introduction of the UAA
system. According to learned Senior Counsel, this revival necessarily
includes the second proviso to Section 179(2)(d) as judicially interpreted
in Sahujain Charitable Trust (supra). Consequently, what stands
revived is not the original unqualified provision, but the read down
version limiting retrospective revision under the ARV system to three
years.
With respect to the second proviso to Section 180(2), learned Senior
Counsel submitted that no such proviso existed prior to the introduction
of the UAA system and that it was inserted for the first time vide
notification dated 04.05.2023. The proviso prescribes an ordinary outer
limit of six years for undertaking intermediate revaluations. It was
contended that this proviso is applicable solely to the UAA regime and
cannot operate to reopen ARV based assessments beyond the inception of
the UAA system. Therefore, even under this alternative interpretation, the
Respondent would be precluded from travelling back beyond 01.05.2007.
26. Turning to the principal constitutional challenge, learned Senior Counsel
for the Petitioner submits that, if the language employed in Section 232B
and the second proviso to Section 180(2) is interpreted as authorising
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retrospective revaluation of annual value under the erstwhile ARV system
for an indefinite and unlimited period in the past, such an interpretation
would render both provisions unconstitutional. It is urged that conferring
unbounded and temporally unrestricted power upon the municipal
authority is manifestly arbitrary and, therefore, violative of Article 14 of the
Constitution of India. Learned Senior Counsel places reliance on the
principles laid down in Santosh Kumar Shivgonda Patil v. Balasaheb
Tukaram Shevale, reported as (2009) 9 SCC 352; State of Gujarat v.
Patil Raghav Natha, reported as (1969) 2 SCC 187; Pune Municipal
Corporation v. State of Maharashtra, reported as (2007) 5 SCC 211;
State of H.P. v. Rajkumar Brijender Singh, reported as (2004) 10 SCC
585; and Md. Kavi Md. Amin v. Fatmabai Ibrahim, reported as (1997) 6
SCC 71, to contend that statutory powers which are unguided,
uncanalised, or susceptible to arbitrary exercise must be struck down as
offending the equality mandate under Article 14.
27. In regard to Section 232B, it is submitted that the provision is, by its very
nature, transitory and was intended to exhaust itself upon the final
publication of the UAA Scheme, which brought about the repeal and
replacement of the ARV system. It is urged that citizens had acquired
vested rights and settled benefits under the ARV regime, and for more than
six years have been governed exclusively by the UAA framework. Reliance
is placed on the principle that vested rights cannot be divested except
through clear legislative mandate that passes constitutional scrutiny, a
principle reiterated by the Hon’ble Supreme Court in Rai Ramkrishna v.
State of Bihar, reported as 1963 SCC OnLine SC 31, and again in
Janapada Sabha Chhindwara v. Central Provinces Syndicate Ltd.,
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reported as (1970) 1 SCC 509. At this stage, the revival of the ARV
mechanism through Section 232B is said to result in the deprivation of
these vested benefits without any rational justification.
28. It is further argued that Section 232B would empower the Corporation to
undertake multiple retrospective revisions of annual valuation for any
point of time under the erstwhile ARV system, thereby artificially inflating
the entry-level tax liability under the UAA regime. Such retrospective
imposition, according to the Petitioner, would impose serious financial
prejudice upon owners and persons primarily liable for property tax.
Owing to the long lapse of time, it would become impossible for owners to
meaningfully contest the factual foundations of such assessments, since
material evidence may no longer be available. The Petitioner submits that
the inability to recover proportionate amounts from tenants or occupiers
after such extended periods would result in manifest unfairness. The
conferment of an unrestricted authority to reopen the past, it is argued, is
ex facie violative of the rule in Sahu Jain Charitable Society (supra),
which held that unguided retrospective revaluation is contrary to Article
14.
29. With respect to the second proviso to Section 180(2), learned Senior
Counsel submits that the use of the expression “ordinarily” while
prescribing a six-year limit for retrospective intermediate revaluation
introduces vagueness into the statutory framework. No parameters or
guidelines are provided to determine when such limitation must apply, and
when it may be disregarded. A fiscal provision that leaves essential
conditions to the unguided discretion of the executive, it is argued, is
arbitrary and violative of Article 14. In this regard, reliance is placed on
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Municipal Corporation of Ahmedabad v. New Shrock Spg. & Wvg.
Co., reported as (1970) 2 SCC 280, which emphasises that taxation
statutes must provide clear standards to prevent arbitrary application, and
Krishna Bhatt v. State of Karnataka, reported as (2001) 4 SCC 227,
which recognises that uncertain tax burdens violate constitutional
safeguards.
30. It is further submitted that the proviso authorises unlimited retrospectivity
where there is non filing of returns under Section 182 or suppression of
taxable events under Section 180(2). However, under the ARV regime, filing
of returns was not mandatory. The proviso, introduced long after the
repeal of the ARV system, now treats non-filing of returns as a basis for
severe adverse consequences. Reliance is placed on Bakhtawar Trust v.
M.D. Narayan, reported as (2003) 5 SCC 298, and Hari Singh v.
Military Estate Officer, reported as (1972) 2 SCC 239, which hold that
retrospective imposition of burdens that were not capable of compliance at
the relevant time violates fairness and reasonableness under Article 14. It
is therefore argued that non-filing of returns during a period when such
filing was not required by law cannot now be equated with suppression of
material facts. Unlimited retrospectivity, it is submitted, would also defeat
the statutory right of recovery conferred under the same enactment.
31. Learned Senior Counsel further contends that the impugned provisions
amount to a legislative attempt to nullify or overrule binding judicial
decisions rendered against the State particularly the judgment in Sahu
Jain (supra), which had placed a temporal cap on retrospective revision. It
is submitted that while the legislature may enact laws to remove the basis
of a judicial decision, it cannot simply override the judgment or re-enact
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an invalid provision in substance. Reliance is placed on Shri Prithvi
Cotton Mills Ltd. v. Broach Borough Municipality, reported as (1969) 2
SCC 283; State of Tamil Nadu v. M. Rayappa Gounder, reported as
(1971) 3 SCC 1; and S.R. Bhagwat v. State of Mysore, reported as
(1995) 6 SCC 16, which collectively affirm that legislative overruling of
judicial decisions is unconstitutional when it seeks to defeat judicial
pronouncements without curing the underlying defect.
32. To further substantiate his submissions, learned Senior Counsel relies
upon Tata Motors Ltd. v. State of Maharashtra, reported as (2004) 5
SCC 783; R.C. Tobacco (P) Ltd. v. Union of India, reported as (2005) 7
SCC 725; and Medical Council of India v. State of Kerala, reported as
(2019) 13 SCC 185, to contend that fiscal legislation cannot impose
arbitrary, uncertain, or retrospective burdens that fail the test of manifest
reasonableness. According to him, the impugned provisions confer
unrestricted and unguided power upon the executive to reopen
assessments indefinitely, thereby offending Article 14 and rendering the
provisions constitutionally invalid.
33. In conclusion, the learned Senior Counsel for the Petitioner prays that the
impugned provisions be declared unconstitutional. In the alternative, he
requests that they be interpreted in a manner that does not confer upon
the Municipal Commissioner an unfettered and unlimited power to reopen
or revise past assessments.
Submissions on behalf of the State of West Bengal
34. Appearing on behalf of the State of West Bengal, the learned Advocate
General, Mr. Kishore Datta, submitted that the power of the State
Legislature to legislate on municipal taxation, including the assessment
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and recovery of property tax, is traceable to Entry 5 of List II of the
Seventh Schedule to the Constitution of India. This power, it was
contended, must be read in conjunction with Part IX-A of the Constitution,
introduced with effect from 20.04.1993, which accords constitutional
status to municipalities as institutions of self-government. A conjoint
reading of Entry 5 of List II and Part IX-A, it was argued, makes it clear
that legislative competence in matters of municipal taxation vests
exclusively with the State Legislature, subject only to the condition that
such legislation must not transgress the constitutional framework under
Part IX-A. Unless the impugned legislation is shown to be ultra vires Part
IX-A, no other constitutional restriction can be invoked to invalidate it.
Reliance in this regard was placed on State of Rajasthan v. Ashok
Khetoliya, reported as (2022) 12 SCC 185.
35. The learned Advocate General submitted that the impugned amendment
forms part of a community-based municipal fiscal framework governing
local taxation. Being an incident of sovereign taxing power exercised at the
municipal level, such legislation cannot be tested on the anvil of Articles
14, 19, or 300-A of the Constitution in the manner suggested by the
petitioners, in the absence of manifest arbitrariness or lack of legislative
competence.
36. It was contended that the Amendment Act does not create any new or
additional tax liability. It merely regulates the procedure and mechanism
for assessment and recovery of an existing statutory levy which inheres in
the property under the parent enactment. Property tax, it was submitted,
is a continuing charge attached to the property and does not depend upon
the timing of assessment or revaluation.
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37. The learned Advocate General further submitted that the impugned
amendment is not retrospective in the legal sense. A statute does not
become retrospective merely because certain facts or conditions relevant to
its operation pertain to a period antecedent to its enactment. The absence
of assessment or recovery for a particular period does not confer a vested
right upon an assessee to claim immunity from taxation once the law
provides otherwise. The levy or recovery of property tax with reference to
an earlier period does not impose a fresh liability upon a past transaction,
but merely enforces an existing statutory obligation. The permissibility of
such operation of fiscal statutes, it was submitted, stands recognised by
the Hon’ble Supreme Court in D.G. Gose & Co. (Agents) Pvt. Ltd. v.
State of Kerala, reported as (1980) 2 SCC 410.
38. It was further submitted that, in any event, the concept of retrospective
operation is inherent in the statutory scheme of the Kolkata Municipal
Corporation Act, 1980. The Act casts an initial obligation upon the
assessee to file returns, following which the Corporation is empowered to
undertake assessment or revaluation. Upon completion of such process,
any differential amount becomes recoverable as arrears. Property tax,
being a recurring and continuing liability attached to the property,
continues to accrue irrespective of the time taken to complete assessment
or revaluation.
39. Addressing the issue of limitation, the learned Advocate General submitted
that although Section 573 of the KMC Act prescribes a three-year
limitation for recovery of certain dues, such as charges, costs, expenses,
fees, rates, rents, or other accounts, the provision consciously excludes
tax, building tax, or property tax from its ambit. Property tax is levied and
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recovered under Chapter XVI of the Act, which constitutes a complete and
self-contained code providing a distinct mechanism for its assessment and
realisation. Consequently, Section 573 has no application to recovery of
property tax. In support of this submission, reliance was placed on
Calcutta Municipal Corporation v. Abdul Halim Gaznavi Molla,
reported as AIR 1998 Cal 345; Nepal Chandra Kar v. Calcutta
Municipal Corporation, reported as 2003 (1) CHN 380; and Nazim’s
Restaurant Pvt. Ltd. v. Kolkata Municipal Corporation, reported as
2023 SCC OnLine Cal 5723.
40. It was further contended that the Division Bench decision in Sahujain
charitable Society (supra) was rendered without taking into
consideration earlier binding Division Bench judgments on the same issue
and, therefore, does not lay down the correct position of law. According to
the learned Advocate General, the judicial reading of a limitation period
into the statute, where the Legislature has consciously chosen not to
prescribe one, amounts to impermissible judicial legislation.
41. The learned Advocate General further submitted that hardship or
administrative inconvenience cannot constitute a ground for striking down
a fiscal statute. Several fiscal enactments, including those under the
SARFAESI Act and the DRT framework, impose onerous consequences, yet
have consistently been upheld in the absence of constitutional infirmity.
42. It was finally submitted that there is neither any challenge to the
legislative competence of the State Legislature nor any violation of Article
14 of the Constitution. None of the recognised grounds for invalidating
legislation, such as lack of competence, manifest arbitrariness, or
unreasonableness, are attracted in the present case. The petitioners’
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grievance, at its highest, relates only to alleged hardship, which cannot
furnish a legally sustainable basis for striking down a fiscal provision. The
learned Advocate General accordingly prayed for dismissal of the writ
petition.
Submissions on behalf of the Respondent (Kolkata Municipal Corporation)
43. Per contra, Mr. Jaydip Kar, learned Senior Counsel appearing for the
Respondent Municipal Corporation, submits that the challenge to the
constitutional validity of Section 3 of the Kolkata Municipal Corporation
(Amendment) Act, 2022 is wholly misconceived and devoid of merit. It is
contended that the impugned provision squarely falls within the legislative
competence of the State Legislature and constitutes an integral part of a
rational and comprehensive statutory framework governing municipal
taxation.
44. The Respondent Corporation submits that the impugned amendment
represents a valid exercise of legislative power to enact retrospective fiscal
legislation, particularly for the purpose of curing defects which had
rendered the earlier statutory regime unenforceable. It is well settled that
the Legislature is competent to enact laws with retrospective effect,
including validating statutes, provided the basis of the judicial declaration
of invalidity is removed by an appropriate statutory cure. Learned Senior
Counsel submits that the Hon’ble Supreme Court has consistently
recognised the power of the Legislature to neutralise the foundation of a
judicial decision through retrospective legislation. In the present case, the
amendment expressly addresses the deficiencies noted in the earlier
judgment and, therefore, satisfies the constitutional parameters of a valid
validating enactment. Reliance in this regard is placed on Rai
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Ramakrishna v. State of Bihar, reported as 1963 SCC OnLine SC 31;
Amarendra Kumar Mohapatra v. State of Orissa, reported as (2014) 4
SCC 583; and Katikara Chintamani Dora v. Guntreddi Annamanaidu,
reported as (1974) 1 SCC 563.
45. It is further submitted that the Legislature is not precluded from
retrospectively modifying fiscal provisions when such modification is
founded upon a rational policy objective and is accompanied by a statutory
correction addressing the defect identified by the Court. The impugned
amendment, it is urged, is remedial and curative in nature and seeks to
protect municipal revenue, which is essential for effective local governance
and public administration.
46. Placing reliance on the Constitution Bench decision in Commissioner of
Income Tax (Central)-I v. Vatika Township Pvt. Ltd., reported as (2015)
1 SCC 1, the Respondents submit that while retrospective fiscal legislation
must be clear, certain, and unambiguous, the present enactment meets
these requirements inasmuch as it clearly delineates the manner, extent,
and temporal operation of the enhancement. Further reliance is placed on
State Bank of India v. V. Ramakrishnan, reported as (2018) 17 SCC
394; Union of India v. V.F. Ltd., reported as (2020) 20 SCC 57; and
Ghanshyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset
Reconstruction Co. Ltd., reported as (2021) 9 SCC 657, to submit that
the Legislature is vested with wide latitude to enact retrospective laws in
public interest, including fiscal measures intended to protect revenue,
ensure administrative continuity, and clarify legislative intent, subject only
to constitutional limitations.
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47. Learned Senior Counsel further submits that fiscal statutes routinely
provide for extended periods of assessment or reassessment, particularly
in cases involving non-filing or suppression of material facts. By way of
illustration, reference is made to Section 11A of the Central Excise Act,
1944; Section 73 of Chapter V of the Finance Act, 1994 (Service Tax);
Section 74 of the CGST/SGST Act, 2017; and Section 147 of the Income
Tax Act, 1961. It is submitted that under the KMC Act, Section 179
provides for regular periodic assessment, while the proviso to Section
180(2) specifically enables reassessment proceedings subject to fulfilment
of prescribed statutory conditions.
48. The Respondents further submit that the Petitioners’ plea of lack of
legislative competence is entirely misconceived. The impugned amendment
does not seek to override a judicial verdict by a bare declaration, but
introduces substantive statutory modifications to correct the very basis on
which the earlier provision was invalidated. It rationalises the method of
valuation, clarifies the temporal scope of enhancement, and expressly
validates earlier assessments, thereby satisfying the settled tests for a
curative and validating statute. It is further contended that any individual
hardship or practical difficulty faced by taxpayers or landlords in
recovering amounts from tenants cannot constitute a ground for
invalidating an otherwise constitutionally valid fiscal enactment. Reliance
in this regard is placed on Shrimate Tarulata Shyam v. Commissioner
of Income Tax, reported as (1977) 3 SCC 305. The Respondents
accordingly submit that the amendment is intra vires, constitutionally
valid, and essential for safeguarding the municipal revenue framework.
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49. In view of the aforesaid submissions, learned counsel for the Respondent
Municipal Corporation prays for dismissal of the writ petition.
Legal Analysis
50. This Court has heard the arguments advanced by the learned Counsel for
the parties and examined the records and analysed the Judgments relied
upon by the parties.
51. The Petitioner, by way of the present writ petition, assails Section 232B
and the proviso to Section 180(2) of the Kolkata Municipal Corporation
Act, 1980, contending that they are ultra vires Articles 14, 19, and 300A of
the Constitution of India and are therefore void and inoperative under
Article 13. It is urged that the impugned provisions effectively dilute the
constitutional safeguards recognised in Sahujain Charitable Society
(supra) and expose assessees to limitless retrospective fiscal liability.
52. At the outset, it must be emphasised that the challenge in the present writ
petition is not directed against the legislative competence of the State
Legislature, but is confined to the constitutional validity and temporal
operation of Section 232B and the second proviso to Section 180(2) of the
Kolkata Municipal Corporation Act, 1980. The power of the State
Legislature to enact laws relating to municipal taxation is traceable to
Entry 5 of List II of the Seventh Schedule to the Constitution and is further
reinforced by Part IX-A thereof, which accords constitutional status to
municipalities as institutions of local self government. As held by the
Supreme Court in State of Rajasthan v. Ashok Khetoliya (supra), fiscal
legislation enacted within the legislative field enjoys a strong presumption
of constitutionality, and judicial interference is warranted only where the
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enactment suffers from manifest arbitrariness, lack of legislative
competence, or violation of constitutional limitations.
53. It is equally well settled that hardship, inconvenience, or perceived
unfairness in the operation of a fiscal statute does not, by itself, constitute
a valid ground for striking it down, Shrimate Tarulata Shyam (supra).
Courts must, therefore, exercise circumspection and restraint, and confine
judicial scrutiny to determining whether the impugned provisions
transgress constitutional boundaries.
54. As discussed hereinbefore, the Kolkata Municipal Corporation
(Amendment) Act, 2006, which came into force on 01.05.2007, substituted
the erstwhile ARV system with the UAA regime and, in the process,
repealed the ARV based provisions governing valuation. However, owing to
the absence of requisite preparatory and infrastructural arrangements
necessary for the immediate operationalisation of the UAA Scheme, its
implementation could not be effectuated forthwith. To address this
transitional difficulty, the Legislature introduced Section 174(3) with effect
from 01.04.2008, providing that annual valuation would continue to be
governed by the pre 2006 ARV framework until publication of the Scheme
under Section 174(1). Thereafter, by the Amendment Act of 2011, Section
232A was enacted to clarify that certain pre 2006 provisions would
continue to remain operative until final publication of the UAA Scheme.
Ultimately, the UAA Scheme was notified and brought into force on
01.04.2017, with the result that the ARV system continued to govern
assessments up to 30.03.2017.
55. It is in this statutory and historical backdrop, and with a view to clarifying
and validating the legal framework governing assessments relating to
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periods preceding the commencement of the UAA regime, that the
Legislature enacted the Kolkata Municipal Corporation (Amendment) Act,
2022. By this Amendment, notified on 31.05.2023 and brought into effect
from 09.06.2023, Section 232B and the second proviso to Section 180(2)
were introduced.
Whether Section 232 B of the Kolkata Municipal Corporation Act, 1980 is
unconstitutional
56. Section 232B, as inserted by the Kolkata Municipal Corporation
(Amendment) Act, 2022, reads as follows:
“Notwithstanding anything contained in this Act, the
provisions of sub-sections (1), (2), (3), (8) and (9) of
section 171, sub-section (1) of section 174 and sections
175, 179, 180, 182A, 185 which were in force
immediately prior to the commencement of the Kolkata
Municipal Corporation (Amendment) Act, 2006 and sub-
section (3) of section 174 shall continue to be
enforceable in respect of any action as to be taken for
the purpose of assessment of annual valuation and
levying of property tax or any step relating thereto for
any period prior to publication or enforcement of the
Scheme under sub-section (1) of section 174 read with
clause (a) of sub-section (2) of section 179 of this Act as
amended by the Kolkata Municipal Corporation
(Amendment) Act, 2006.”
57. The legislative object underlying Section 232B is to remove doubts arising
from the repeal of the ARV based provisions by the Amendment Act of
2006 and to preserve continuity in the assessment framework governing
periods preceding the enforcement of the UAA Scheme. The provision is
intended to ensure that actions relating to assessment of annual valuation
and levy of property tax for such earlier periods are not rendered invalid
merely on account of the statutory transition.
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58. Learned Senior Counsel for the Petitioner contends that Section 232B
revives the unamended Section 179(2)(d) and thereby resurrects
unbounded retrospective powers earlier curtailed by the Division Bench in
Sahujain Charitable Society (supra), rendering the provision
unconstitutional. The Respondent Corporation, on the other hand,
submits that Section 232B is clarificatory in nature and is intended only to
address transitional ambiguities.
59. The submission of the learned Counsel for the Petitioner, though
attractive, proceeds on the assumption that Section 232B effects a
wholesale revival of repealed provisions in their entirety. This Court is
unable to accept that construction. It is well settled that a saving or
validating provision does not, by itself, revive repealed provisions unless
such revival is expressly provided or necessarily implied. Section 232B
neither re-enacts the second proviso to Section 179(2)(d), nor employs
language indicative of a legislative intent to resurrect a repealed provision
as an independent source of substantive power. Rather, it preserves the
continuity of proceedings relatable to pre UAA periods so that such
proceedings are not rendered otiose by the change in valuation regime.
60. Importantly, Section 232B does not confer an unfettered or indefinite
power to reopen the past. Its operation is confined to enabling completion
of proceedings relatable to pre UAA periods, subject to the substantive and
procedural safeguards contained in the Act and the constitutional
limitations governing fiscal legislation. The apprehension of unlimited
retrospectivity, therefore, does not arise. The provision neither nullifies
Sahujain Charitable Society (supra) nor seeks to legislatively overrule it
in the manner proscribed by Shri Prithvi Cotton Mills Ltd. (supra) or
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S.R. Bhagwat (supra). The Legislature has not declared the judgment
ineffective, but has enacted a distinct transitional mechanism operating in
a different statutory context.
61. The Kolkata Municipal Corporation (Amendment) Act, 2022 was notified on
31.05.2023 and brought into effect from 09.06.2023. There is nothing to
indicate that the Legislature intended the substitution of Section 179(2)(d)
by the said Amendment Act to operate retrospectively. Consequently, the
substituted provision applies prospectively with effect from 09.06.2023.
62. For the period prior to 09.06.2023, Section 232B operated only to preserve
the applicability of the statutory provisions governing annual valuation as
they stood at the relevant time. The provision did not create a new source
of power, nor did it enlarge the scope of revision beyond what was
permissible under Section 179(2)(d) as it then stood. Accordingly, during
the interregnum period, revisions of annual valuation were governed by
Section 179(2)(d) in its unamended form, subject to the limitations
imposed by the Division Bench in Sahujain Charitable Society (supra).
The extended six years period introduced by the Amendment Act of 2022
operates prospectively from 09.06.2023.
63. Viewed thus, Section 232B is in the nature of a transitional and saving
provision. It does not independently confer or enlarge the power of
assessment, nor does it create new liabilities. Its operation is confined to
preserving continuity in the statutory framework governing pre-UAA
assessments. So construed, Section 232B does not transgress Articles 14,
19, or 300A of the Constitution of India.
24
Whether Section 180(2) of the Kolkata Municipal Corporation Act, 1980 2026:CHC-OS:119
is
unconstitutional
64. The next issue that arises for consideration is whether the proviso to
Section 180(2) of the Kolkata Municipal Corporation Act, 1980 is
unconstitutional. The proviso was inserted into the Act pursuant to a
notification dated 31.05.2023, and was brought into force through a
subsequent notification dated 08.06.2023, with effect from 09.06.2023.
The proviso reads as follows:
“Provided that such revision of annual valuation of any
land or building shall ordinarily be made with in six
years from the date of occurrence of any of the above
circumstances, but such period shall not apply where
the owner or the person liable to pay property tax fails
to submit return under Section 182 or suppresses the
occurrences of any such circumstances.”
65. The proviso to Section 180(2) lays down that, as a general rule, any
revision of annual valuation must be undertaken within six years from the
date on which any of the specified events triggering such revision occur.
This six year limitation, however, does not apply where the owner or the
person liable to pay property tax either fails to submit the statutory return
under Section 182 or suppresses the occurrence of any such event. In
those situations, the Kolkata Municipal Corporation is not constrained by
the six year period and may proceed to revise the annual valuation without
being bound by the ordinary limitation.
66. The proviso was brought into force only with effect from 09.06.2023 by the
notification dated 08.06.2023, and nothing in its language, either
expressly or by necessary implication, indicates any legislative intent to
give it retrospective effect or to reopen concluded assessments. It simply
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prescribes a normative time frame for future revisions and carves out an
exception in cases of nondisclosure or suppression by the assessee.
Applying the settled presumption articulated in Vatika Township Pvt.
Ltd.(supra), fiscal provisions affecting substantive rights must be
construed prospectively unless the legislature clearly provides otherwise.
In the absence of clear statutory language mandating retrospectivity, the
settled principle applies that fiscal and substantive provisions are
presumed to operate prospectively. Accordingly, the proviso must be
construed as operative only from 09.06.2023 onwards and as having no
application to assessments or valuation periods preceding its
commencement.
67. The Petitioners’ argument that the use of the expression “ordinarily”
renders the provision vague and unguided cannot be accepted. The proviso
does not leave the matter to uncanalised discretion. The exception to the
six year norm is clearly circumscribed by objectively verifiable conditions,
namely non-filing of statutory returns or suppression of relevant events.
Such classification between compliant and non compliant assessees bears
a rational nexus to the object of ensuring accurate valuation and cannot
be characterised as arbitrary under Article 14. The decisions in Santosh
Kumar Shivgonda Patil (supra) and Patil Raghav Natha (supra), which
caution against unguided discretion, are distinguishable, as the proviso
here provides intelligible standards for its application.
68. The principal objection of the learned Senior Counsel for the Petitioner to
this proviso is that the filing of a return was never mandatory under the
ARV regime. Even under the UAA regime, although Section 182
contemplates the filing of a return, no adverse civil consequence was ever
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attached to its non filing. It is only through this newly inserted proviso
that, for the first time, non filing of the return is treated as a circumstance
attracting adverse consequences. According to the Petitioner, treating non
filing of a return, hitherto a directory requirement, as “suppression of fact”
is manifestly unjust, arbitrary, unreasonable, and wholly disproportionate.
The apprehension expressed is that the proviso, in effect, retrospectively
converts what was always a directory obligation into a mandatory one,
thereby retrospectively subjecting citizens to adverse civil consequences for
periods during which the law, as it then stood, imposed no such
consequences and did not treat non-filing as a culpable act warranting
penal or disabling outcomes.
69. This Court is unable to accept the objection advanced on behalf of the
Petitioner. The contention that the proviso retrospectively converts a
previously directory requirement into a mandatory obligation, thereby
imposing adverse civil consequences for past noncompliance, is
misconceived for more than one reason.
70. First, the proviso to Section 180(2) came into force only on 09.06.2023.
There is nothing in its language, either express or by necessary
implication, that suggests an intention to operate retrospectively or to visit
past conduct with new liabilities. It is a settled principle that unless the
statute clearly provides otherwise, fiscal and substantive provisions are
presumed to be prospective. The proviso merely regulates the future
exercise of the Corporation’s power to revise annual valuations by
prescribing a six year time frame and carving out an exception where the
assessee fails to file a return or suppresses material events. It does not
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reopen closed assessments, nor does it impose any penalty or consequence
for past omissions.
71. Second, the argument that nonfiling of returns was previously without
consequence does not assist the Petitioner. The proviso does not penalise
past nonfiling, it merely states that if, after its commencement, the
assessee fails to file a return or suppresses relevant facts, the Corporation
shall not be constrained by the six year limitation for revision. The
provision, therefore, operates prospectively and only in relation to revisions
undertaken after 09.06.2023. The legislative choice to link the availability
of the six year limitation to compliance with statutory obligations cannot
be characterised as arbitrary, especially when the filing of returns has
always been a statutory requirement under Section 182, irrespective of the
enforcement rigour in earlier regimes.
72. Third, the classification made by the proviso, between assessees who
comply with statutory obligations and those who withhold or suppress
material information, is rational, founded on an intelligible differentia, and
bears a direct nexus to the objective of ensuring fairness and accuracy in
property taxation. A taxpayer who voluntarily furnishes returns stands on
a different footing from one who withholds information necessary for
determining annual valuation. The Legislature’s decision that such
suppression should not yield the benefit of a limitation period cannot be
said to be manifestly arbitrary or unreasonable.
73. For these reasons, the apprehension of retrospective prejudice or the
creation of new liabilities for past conduct is unfounded. The proviso
operates purely prospectively and withstands constitutional scrutiny. The
proviso does not retrospectively penalise past conduct, it merely regulates
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the availability of a limitation benefit in future proceedings undertaken
after its commencement. As recognised in several fiscal enactments, such
as extended limitation provisions under tax statutes, non disclosure or
suppression justifies differential treatment. The proviso therefore does not
offend the principles enunciated in Bakhtawar Trust (supra) or Hari Singh
(supra), which deal with retrospective imposition of burdens incapable of
compliance at the relevant time.
74. In view of the foregoing, this Court finds that the second proviso to Section
180(2) of the Kolkata Municipal Corporation Act, 1980 is constitutionally
valid. The proviso, effective from 09.06.2023, merely prescribes a
normative time frame of six year for ordinary revisions of annual valuation,
while creating an exception where the assessee fails to file a return or
suppresses material facts. There is no indication, express or implied, that
the legislature intended the proviso to operate retrospectively or to reopen
assessments completed prior to its commencement. Its operation is
therefore prospective, and it does not attach adverse consequences for
periods when no such statutory obligation existed. Consequently, the
objection raised by the Petitioner regarding arbitrariness,
unreasonableness, or retrospective enforcement is unsustainable, and the
proviso must be upheld as valid and enforceable.
Conclusion
75. Having considered the rival submissions, the statutory amendments, and
the governing constitutional principles, this Court is unable to accept the
contention that the impugned provisions amount to an impermissible
legislative overruling of the decision in Sahujain Charitable Society
(supra). The Legislature has neither reenacted the statutory language that
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was previously read down by this Court, nor has it sought to render the
said judgment ineffective by a declaratory legislative device. What has been
introduced is a distinct statutory framework operating within a different
valuation regime, accompanied by transitional and procedural provisions
intended to preserve continuity in municipal taxation. It is well settled that
such curative or validating legislation is constitutionally permissible where
it seeks to remove the basis of an earlier infirmity without directly
overruling a judicial pronouncement, as recognised in Amarendra Kumar
Mohapatra (supra) and Katikara Chintamani Dora (supra).
76. Upon a careful consideration of the statutory scheme, the rival
submissions, and the principles laid down in the decisions cited by the
parties, this Court holds as follows:
(i) Section 232B is a transitional and enabling provision intended to
preserve and complete proceedings relating to periods prior to the
introduction of the UAA regime. It does not revive repealed
provisions as independent sources of power, nor does it confer an
unfettered or unlimited authority to reopen past assessments. Its
operation does not violate Articles 14 or 300-A of the Constitution.
(ii) The second proviso to Section 180(2), effective from 09.06.2023,
operates prospectively. It prescribes a normative six-year period for
revision while carving out a clearly defined exception in cases of
non-filing of returns or suppression of material facts. The proviso is
founded on a rational classification, is neither vague nor arbitrary,
and does not retrospectively impose burdens for past conduct.
(iii) The impugned provisions do not amount to an unconstitutional
legislative overruling of judicial decisions, nor do they suffer from
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manifest arbitrariness or lack of legislative competence.
Consequently, the constitutional challenge to Section 232B and the
second proviso to Section 180(2) of the Kolkata Municipal
Corporation Act, 1980 fails.
77. In view of the above conclusions, the memo dated 08.01.2024 and the
thirteen notices dated 04.01.2024 issued in relation to the retrospective
revaluation of Premises No. 25, Brabourne Road (Biplabi Trailokya
Maharaj Sarani), Kolkata-700001, are also set aside. The Respondents
shall, however, be at liberty to initiate fresh proceedings, if necessary,
strictly in accordance with law and subject to the interpretation and
limitations affirmed in this judgment particularly the clarification w.r.t
Section 179 (2)(d) of the Act.
78. With the above directions, the writ petition stands disposed of.
79. All pending applications, if any, stand disposed of.
(Gaurang Kanth, J.)
SAKIL AMED (P.A)
