Rent Is Not A Tax, Cannot Be Recovered As Arrears Of Land Revenue U/S 173-A Of UP Municipalities Act: Allahabad High Court

The Allahabad High Court has held that the U.P. Municipalities Act, 1916 does not empower any Municipality to recover arrears of rent for a shop as arrears of land revenue under Section 173-A of the Act.

Bunch of writ petitions were filed challenging recovery certificates issued by Executive Officer of Nagar Palika Parishad of Bareilly to recover the arrears of rent, allegedly due on the petitioners and consequential recovery citations issued by the Collector under Section 173-A (Recovery of taxes as arrears of land revenue) of the Act.

Counsel for petitioners contended that any alleged arrears of rent due on any shopkeeper in possession of a shop allotted to him by the Municipality can be recovered only under Section 292 (Recovery of rent of other immovable property) read with Chapter-VI of Act, 1916. Rent is not due on the land and thus cannot be recovered as land revenue under Section 173-A or Section 291, which empowers the Collector to collect rent on land as land revenue, it was argued.

According to procedure laid down in Chapter-VI (Recovery of Municipal claims) of the Act, 1916, bills were to be raised under Section 167. Failure of the petitioner to satisfy the said bill within a period of 15 days, demand notice could be issued under Section 168. Thereafter, any failure would attract Section 169, i.e., issue of warrant, which can be executed in the manner prescribed u/s 170, 171 and 172 of the Act, 1916.

In the petitions before the Court, no bills had been raised prior to issuance of recovery certificates and consequential recovery citation under Section 173-A.

The bench comprising of Justices Salil Kumar Rai and Arun Kumar Singh Deshwal quashed the recovery certificates and recovery citations issued by the Collector as being without jurisdiction. It held that the U.P. Municipality Act, 1912 does not empower the Municipality to recover arrears for rent of a shop as arrears of land revenue. Fifteen day period is provided to the defaulter for payment of any dues. Only after he fails to fulfil his dues within the said period, can further proceedings under Chapter VI of the Act can be initiated, it held.

“Reading of Section 292 of the Act, 1916 indicates that any arrears of rent for a shop from a person in possession of the shop after the same having been allotted to him by the Municipality, can be recovered only in the manner prescribed in Chapter-VI. Rent is not a tax and, therefore, it cannot be recovered as arrears of land revenue u/s 173-A of the Act, 1916”, said the Court.

Accordingly, the writ petitions were allowed.

Case Title: Manjeet Singh & Others. v. State of U.P. and Others [Writ C No. 30049 of 2016]

Case Citation: 2023 LiveLaw (AB) 208

Counsel For Petitioner: Rameshwar Nath, Ashish Jaiswal

Counsel For Respondents: C.S.C., Manu Saxena, S.K. Srivastava

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