Bombay High Court Upholds Rejection of Additional Evidence in Municipal Tax Appeal.


09 June 2025 Civil Writ Petition >> Civil & Consumer Law  

The Bombay High Court has dismissed a petition of Jindal Poly Films Ltd. Mumbai v/s Navi Mumbai Municipal Corporation, Through its Commissioner, Navi Mumbai., challenging a Civil Judge's decision to reject an application for additional evidence in a long-standing municipal tax appeal. The High Court affirmed that proceedings under Section 406 of the Maharashtra Municipal Corporations Act, 1949, are appellate in nature, thus requiring strict adherence to the conditions for adducing additional evidence under Order 41 Rule 27 of the Code of Civil Procedure, 1908.

The petitioner, an importer of goods, was engaged in a dispute with the Navi Mumbai Municipal Corporation regarding the refund of cess paid on imported goods. The petitioner had claimed a refund under Rule 49 of the Bombay Provincial Municipal Corporation (Cess on Entry of Goods) Rules 1996, asserting that the goods were exported outside the city limits. However, in April 2004, the Deputy Municipal Commissioner (Cess) disallowed the refund, determining that the sales and deliveries occurred within Navi Mumbai, holding the petitioner liable for over Rs. 18 lakh in dues.

 
 

Aggrieved by this assessment, the petitioner filed an appeal, Municipal Appeal No. 16 of 2004, before the Civil Judge, Senior Division, Thane, under Section 406 of the Act. During the course of the appeal, the petitioner sought to introduce additional evidence, including check-post receipts, account books, and sales registers, arguing that these documents would prove the goods were transferred to other branch offices outside the city. The petitioner contended that the Assessing Officer had not considered these documents previously.

The Municipal Corporation resisted the application, arguing that the proceeding was an appeal, not an original suit, and therefore, the petitioner had to satisfy the stringent conditions for presenting additional evidence at the appellate stage.

The Civil Judge, in April 2021, rejected the petitioner's application, specifically finding that the petitioner had failed to meet the requirements of Order 41 Rule 27 of the Code of Civil Procedure.

High Court's Rationale:

Before the High Court, the petitioner argued that the Civil Judge erred in treating the Section 406 proceeding as a strict appeal, especially since the court had previously allowed a written statement, framed issues, accepted affidavits in lieu of examination-in-chief, and even permitted amendments to the appeal memo—procedures typically associated with an original suit. The petitioner relied on various Supreme Court judgments to emphasize that a legal decision is limited to what it actually decides.

However, the High Court disagreed. It focused on Section 434(1) of the Maharashtra Municipal Corporations Act, 1949, which explicitly states that "the provisions of the Code of Civil Procedure, 1908 relating to appeals from original decrees, shall apply to appeals to the Judge from the orders of the Commissioner."

The High Court also drew support from the Division Bench judgment in Walchandnagar Industries Ltd, Mumbai v. Municipal Corporation of the City of Pune & Ors. This case, while primarily concerning the constitutional validity of a pre-deposit clause for appeals under Section 406(2)(e), clarified that proceedings under Section 406 cannot be equated to "initial or original proceedings." The Supreme Court's observations in Gujarat Agro Industries Co. Ltd v. Municipal Corporation of the City of Ahmedabad and Ors. further reinforced this view, suggesting that an appeal to the court under Section 406 might even be considered a "second appeal" after an initial complaint to the Commissioner.

The High Court acknowledged some provisions in Chapter XXVI of the Act that deviate from typical appellate procedures, such as provisions for arbitration or summoning witnesses. However, it concluded that these exceptions do not fundamentally alter the appellate nature of a Section 406 proceeding.

Crucially, the High Court noted the significant delay in the case. The assessment order was from 2004, and the appeal had not progressed to a hearing after over 20 years. The court also highlighted that the petitioner had previously filed a similar application for additional evidence in 2013, which was rejected, yet another identical application was filed.

Considering these circumstances, the High Court found no infirmity in the Civil Judge's decision to reject the application for additional evidence, concluding that the petitioner failed to make a case for permission to file additional evidence at such a late appellate stage.

Consequently, the High Court dismissed the petition, upholding the original rejection of the application for additional evidence and discharging the Rule.


Section 406, MAHARASHTRA MUNICIPAL CORPORATIONS ACT - 1949  

Section 434, MAHARASHTRA MUNICIPAL CORPORATIONS ACT - 1949  

MAHARASHTRA MUNICIPAL CORPORATIONS ACT, 1949