High Court of Calcutta Affirms 50% Interest Waiver in Property Tax Arrears Case, Highlights Need for Timely Claims

The High Court of Calcutta, in a recent judgment delivered on June 14, 2024, upheld the waiver of 50% interest on arrear property tax dues for the appellant, Saila Ghosh, as directed by the learned Single Judge. The Division Bench, comprising Hon’ble Justices Joymalya Bagchi and Gaurang Kanth, emphasized the significance of timely raising issues related to the service of demand notices and reinforced the discretionary powers of the Board of Councillors in waiving interest.

Saila Ghosh, one of the owners of premises No.1, Kailash Chandra Singha Lane, Bally, Howrah, contested a notice of demand dated April 5, 2014, issued by Bally Municipality. The notice demanded arrear property tax for the years 2011-2012, 2012-2013, and 2013-2014, along with current dues up to the fourth quarter of 2014-2015, including surcharge and interest. Ghosh argued that no bills were raised for the arrear period and sought permission to pay the dues in installments, a plea the Municipality rejected. Subsequently, the Single Judge waived 50% of the interest, prompting cross-appeals from both parties.

The appellant contended at the appellate stage that no bills had been served for the arrear period. However, the court noted, “Neither in the representation before the Municipality nor in the writ petition did the appellant make out such a case.” The court rejected this belated claim, emphasizing, “The plea that the bills claiming enhanced property tax had not been raised during the arrear period is wholly unfounded and appellant ought not to be permitted to raise it at the appellate stage.”

The Division Bench upheld the Single Judge’s discretion to waive 50% of the interest on arrears. The court observed, “The interest had been charged at the highest rate, and as per law, the Board of Councillors had the discretion to reduce the amount.” Given that the Board of Councillors is currently administered by an administrator, the court found the waiver justified under the circumstances.

The judgment reinforced the principle that issues related to the service of notices should be raised promptly. It also highlighted the discretionary powers vested in municipal authorities regarding interest waivers. The court directed the Municipality to issue a revised demand notice to the appellant and stipulated a timeline for compliance to avoid additional interest charges.

Justice Joymalya Bagchi remarked, “In view of the aforesaid facts, we are of the opinion the plea that the bills claiming enhanced property tax had not been raised during the arrear period is wholly unfounded and appellant ought not to be permitted to raise it at the appellate stage.”

The High Court’s dismissal of both the appeal and the cross-appeal underscores the importance of timely legal claims and the validity of discretionary interest waivers in property tax matters. This judgment provides clarity on the procedural expectations for taxpayers and municipal authorities, potentially influencing future cases involving similar disputes over arrear property tax and interest waivers.

Date of Decision: June 14, 2024