Full Judgment Text
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PETITIONER:
GULABCHAND BAPALAL MODI
Vs.
RESPONDENT:
MUNICIPAL CORPORATION OF AHMEDABAD CITY
DATE OF JUDGMENT04/03/1971
BENCH:
SHELAT, J.M.
BENCH:
SHELAT, J.M.
VAIDYIALINGAM, C.A.
CITATION:
1971 AIR 2100 1971 SCR (3) 942
ACT:
Bombay Provincial Municipal Corporation Act, 59 of 1949, s.
129 of Act whether bad for excessive delegation and absence
of guidelines Rule 10 of Taxation Rules whether mandatory or
directory-Maintenance of ward-wise assessment books whether-
essential-Tax levied on basis of one assessment book for
whole Municipal area whether invalid-Effect of rr. 13, 15
and 19 under the Act, on the interpretation of r. 10.
HEADNOTE:
The appellant was owner of immovable property situate within
the limits of the municipal corporation, Ahmedabad City.
Under the power reserved to it by s. 127 of the Act the
Corporation served on the appellant as also on the other
rate payers, bills and demand notices for payment ,of
property tax in respect of the assessment year 1962-63.
These were challenged by the appellant and also certain
other rate payers in writ petitions before the High Court.
The High Court inter alia held (i) that s. 129 of the Act
did not suffer from the vice of excessive delegation by
reason ,of the fact that no maximum rate of tax was laid
down; (ii) that it was permissible under r. 10 to maintain
only one assessment book and the levy could not be held
invalid on the ground that ward-wise assessment books as
contemplated by rr. 13, 15 and 19 were not maintained. In
appeal to this Court by certificate,
HELD : The High Court rightly held that the charging
sections of the Act were not without guidelines. The
assessment and levy of the property taxes have to be in
conformity with the Act and the rules. These rules contain
inter alia Taxation Rules which are part of the Act.
Section 454, no doubt, empowers the corporation to amend,
alter and add to those rules but such power is made under s.
455 subject to sanction of the State Government. Under s.
456 the State Government can at any time require the
Corporation to make rules under s. 454 in respect of any
purpose or matter specified in s. 457 which includes item
"Municipal Taxes-The assessment and recovery of Municipal
Taxes." Although the Act did not during the relevant period
prescribe the maximum rate at which the property taxes could
be raised, the ultimate control for raising them was with
the councillors responsible to the people, It was difficult
therefore to sustain the plea that the power to levy the
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property tax was so unbridled as to make it possible for the
Corporation to levy it in an arbitrary manner or extent.
[951 G 852 B]
The proposition that when a provision requiring sanction of
the Government to the maximum rate fixed by the Corporation
is absent, the rest of the factors which exist in the Act
lose their efficacy and cease to be guidelines cannot be
accepted. Further, if the Corporation has the flexibility
of power given to it in fixing the rates, the State
Legislature can at any moment withdraw that flexibility by
fixing the maximum limit up to which the Corporation can
tax. Indeed the State Legislature had done so by s. 4 of
the Gujarat Act, 8 of 1968. In view of the decisions of
this Court it is not possible to agree with the contention
that the Act conferred on the Corporation such arbitrary and
uncontrolled power as to render such conferment an excessive
delegation. [954 F-G]
943
Corporation of Calcutta v. Liberty Cinema, [1965] 2 S.C.R.
477, Municipal Corporation of the City of Ahmedanwd v.
Zaveri Keshavia, 6 Guj. L.R. 701, Western India Theatres
Ltd. v. Municipal Corporation of the City Poona, [1959]
Supp. 2 S.C.R. 71, Pandit Banarsi Das Bhanot v. Madhya
Pradesh, [1959] S.C.R. 427 and Devi Das v. Punjab [1967] 3
S.C.R. 557. referred to.
Municipal Corporation of Delhi v. Birla Mills, [1968] 3
S.C.R. 251 followed.
(2) The tax levied on the basis of one assessment book was
not invalid, Rule 10 differs from s. 157 of the Bombay
Municipal Corporation Act, 1888, in that, whereas, it gives
an option to the Commissioner either to maintain one
assessment book for the entire city or separate assessment
books, Sec. 157 gave no such option and provided only for
ward assessment-book which collectively constituted, as in
r. 10(2), "the assessment book’. The legislature
deliberately made a departure from s. 157 by leaving it to
the discretion of the Commissioner either to maintain one
book or several books ward-wise. Such a departure was
presumably made because the Act was to apply not to one city
only, as did the Bombay Act of 1888, but to an unknown
number of cities where Municipal Corporations might in
future be set up, each having different conditions from the
other and not being certain whether one assessment book or
separate ward assessment books would be suitable for each of
them. [955 G; 956 A]
The contention that r. 10 should be, construed as mandatory
ignores (1) the permissive language of the rule and (2) the
deliberate departure made by the legislature from s. 1-57 of
the Bombay Corporation Act, 1888. If it intended that
assessment-books for each ward shoud be kept, there was no
necessity for it to depart from the language of s. 157 of
that Act. The fact that it made such departure is a sure
indication that it did not. Unless compelled by the context
and content of the other rules, there would be no
justification not to give to r. 10 the plain meaning of its
language, particularly in view of the fact that the Act
intended to apply not to one but to an indefinite number of
cities, each differing in conditions from the other a factor
which, as aforesaid, led the legislature to make a departure
from the said s. 157. [958 H-959 B]
Certain anomalies would arise from the High Court’s
interpretation that rr. 13, 15 and 19 would not apply in the
case of one assessment book. Rule 19 was intended to enable
the Corporation to proceed to makedemands so soon as entries
were made as provided by cl. (e) of r. 9 and the
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Commissioner had given thereafter his authentication that
there existed no valid objection to the ratable values
entered under the said cl. (e). Since the object of r. 19
was to make the entry as to the amount of tax conclusive
evidence so as to enable the Commissioner to issue the
bills, the legislature could not have intended to apply the
rule only when ward assessment-books were kept and not when,
one assessment-book was maintained, especially when in r. 10
it had deliberately given discretion to the Commissioner to
maintain either one assessment-book or several ward
assessment books. Further if r. 19 were to be so construed,
rr. 13, and 15 also would have on the same reasoning to be
likewise construed. That would mean that the notice to
enable the rate payers to take inspection under r. 13 and
the notice under r. 15 fixing the date on or before which
complaints against ’ratable value can be made, would have to
be given only where ward assessment books are kept and not
where one
L1100 SupCI/71
944
assessment book is kept. it goes without saying that the
right to inspect provided under r. 13 and the right to file
a complaint under r. 15 are vital matters. That being so it
is hardly conceivable that the legislature intended these
rules to apply only where the Commissioner kept ward
assessment-books. Since r. 10 has to be construed as
permissive and not mandatory, and the construction adopted
by the High Court in regard to rr. 13, 15 and 19 is bound to
create anomalies, the conclusion must be that it was through
inadvertence that the old language used in ss. 157 to 168 of
the Bombay Corporation Act was allowed to be retained
without carrying out the change. of language necessitated as
a result of r. 10 giving discretion to the Commissioner
either to maintain one book or several books ward-wise. In
the result the assessment book in question must be held to
be valid and no objection as to the validity of the bills
and demand notices can be raised on the ground that only one
assessment book and not warding books were kept. [959 C-960
E]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1090 of 1967.
Appeal from the judgment and decree dated May 5, 1966 of the
Gujarat High Court in S.C.A. No. 877 of 1962.
B. R. L. lyengar, N. J. Modi, P. C. Bhartari and K. N.,
Desai for the appellant.
1. N. Shroff, for respondent No. 1.
K. L. Hathiand S. P. Nayar, for respondent No.
2.
The Judgment of the Court was delivered by
Shelat, J. This appeal, by certificate, arises out of one of
the seventy Special Civil applications filed in the High
Court of Gujarat by several- rate payers challenging the
Validity of the assessment of property tax made by the
respondent-Corporation under the Bombay Provincial Municipal
Corporations Act, LIX of 1949 (hereinafter referred to as
the Act).
The appellant is the owner of an immovable property situate
within the limits of the Corporation. Until March 31, 1961,
two kinds of taxes were being levied on buildings and lands
situate within the Corporation’s municipal limits : (1) the
general tax levied by the Corporation under the Act, and (2)
the urban immovable property tax levied under the
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Bombay Finance Act, 1932 by the State Government, but
collected on its behalf by the Corporation. At the request
of the Corporation made in 1960, an arrangement was arrived
at between the Government and the Corporation where under
the Government agreed not to levy the U.I.P. tax provided
the Corporation increased the rate at which it was till then
levying the property tax. Accordingly, in January 1961 the
Corporation passed a resolution in,creasing the rate of the
property tax with effect from April 1, 1961 under the power
reserved to it by S. 127 of the Act. In
94 5
pursuance of the said resolution and in accordance with the
raised percentage of the general tax the Corporation served
on the appellant, as also on the other rate payers, bills
and demand notices. In this appeal we are concerned with
the bills and ,notices in respecter the assessment year
1962-63.
The appellant, as also certain other rate payers, challenged
the said bills and notices in their said writ petitions
mainly on the grounds (1) that the Corporation had no
authority to amend the rates with the object of including
the said U.I.P. tax in the general tax so far levied by the
Government under a different statute and given up by it
under the said arrangement; (2) that the said bills and
notices were illegal as the assessment-book kept by the Cor-
poration was not in accordance with the rules made under the
Act and was not authenticated by the Commissioner as
required thereunder; (3) that ss. 99, 123 and 129(c) of the
Act were unconstitutional in that they suffered from Other
vice of excessive, delegation in so far as they did not fix
the maximum rate at which the Corporation could levy the
property tax, and (4) that the said sections were also
violative of Art. 19(1) (f) and Art. 31 as the tax was
confiscatory in character.
By its judgment dated May 5, 1966, the High Court first dis-
posed of fifty two out of the said seventy writ petitions
rejecting the contentions raised therein. There after the
judgment under review separately disposed of the remaining
18 petitions, including that of the appellant, as, besides
the points raised in the said 52 writ petitions, these 18
writ petitions raised some additional points. The High
Court in this judgment did not deal afresh the points
already disposed of by it in the larger group of writ
petitions and based its judgment in respect of them on its
earlier judgment dated May 5, 1966.
In its judgment, dated the May 5, 1966, the High Court
elaborately examined the scheme and the objects, of the Act
and the rules and came to the following conclusions :
(1) that the Corporation need not maintain
separate assessment-book for each of the wards
and could legally maintain one assessment-book
covering all the wards;
(2) that the authentication provided for by
r. 19 of the said rules in Ch. VIII to Sch.
A of the Act ,*as not mandatory;
(3) that the liability to pay the tax arose
when entry under r. 9(e) was made in the
assessment-book; and
9 46
(4)that s. 129 (c) read with ss. 99 and 127
did not suffer from the vice of excessive
delegation as the legislature had provided in
the Act both its policy and principles guiding
the Corporation in levying the said tax.
The High Court also negatived the contention that s. 129(c)
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by giving power to tax without laying down the maximum rate
was violative of Art. 19(1) (f) and/or Art. 31 or Art. 14.
The High Court also rejected the additional contentions
raised in the petitions left over from the earlier batch of
52 petitions and dismissed all of them. The correctness of
the views expressed by-the High Court in this judgment, as
also in its earlier judgment by the combined effect of which
altogether 70 writ petitions were negatived, is challenged
in this appeal.
We need not go into all the diverse contentions raised
before the High Court as counsel for the appellant raised
before us the following three questions only
(1) that while making the, assessment the
procedure contemplated by ss. 127, 129(c) of
the Act and rr. 9 to 20 of the Taxation Rules
was not cornplied with inasmuch as no ward
assessment-books were maintained, and
consequently, the entries therein were not
authenticated as required by r. 19;
(2) that S. 129 suffers from the vice of
excessive delegation of legislative
powering as-the Act fails to provide either
the maximum rate leviable by the Corporation
or the guidelines for levying the tax;
(3) that in any view of the matter, in the
circumstances in which the resolution raising
the rate was passed, it did not impose the
enhanced rate on the property of the appellant
as the same was ,not, prior to April 1961’
subjected to the U.I.P. tax.
Later, Mr. lyengar gave up, the third contention. We are,
there fore, left with his contentions (1) and (2) only for
determination.
Broadly stated, the facts regarding the assessment-book and
its authentication are as follows : Each year the
Commissioner either prepared or continued the assessment-
book required to be maintained by him under the Taxation
Rules. Each year he went through the procedure for
authentication of the assessment-book purporting to do so
under r. 19 of the Taxation Rules. After
9 4 7
the assessment-book was authenticated, as aforesaid, and a
certificate was issued by him that no valid objection had
been received in respect of the rateable values entered in
the assessment-book as required by cl. (e) of r. 9 of the
said rules, the Corporation issued bills and demand notices
requiring the owners or occupiers of the properties to pay
the said tax. The Act and the rules provide for objections
to the rateable values entered in the assessment-book under
Cl. (b) of r. 9, which objections would be heard and decided
by the Commissioner. There are provisions in the Act, such
as ss. 406, 4 1 0 and 41 1, for appeals to the Judge, Small
Causes Court, both against the rateable value fixed under
the Taxation Rules as also against the amount of tax
demanded in the bills.
As aforesaid, the High Court dismissed the contention as to
the constitutionality of s. 129(c) basing its decision
mainly on the authority of the Corporation of Calcutta v.
Liberty Cinema,(1) wherein the validity of s. 548(2) of the
Calcutta Municipal Act, authorising the Corporation to levy
a fee (held by this Court to be a tax) for every licence and
permission at such rate as may be fixed from time to time by
the Corporation’. but which did not lay down the maximum
rate, was challenged. The High Court in particular relied
on the observations in that decision (1) that fixation of
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the rate was not an esserxtial legislative function and
could be delegated, and (2) that the provisions in the Act,
which limited the power to levy taxes to the extent of the
statutory needs of the Corporation, furnished sufficient
control and guidance. Reliance was also placed on the
following observation relating to the absence of maximum
rate
"It is said that the delegation of power to
fix rates of taxes authorised for meeting the
needs of the delegate to be valid, must
provide the maximum rate that can be fixed, or
lay down rules indicating that maximum. We
are unable to see how the specification of the
maximum rate supplies any guidance as to how
the amount of the tax, which no doubt has to
be below the maximum, is to be fixed.
Provision for such maximum only sets out a
limit of the rate to be imposed and a limit is
only a limit and not a guidance."
Besides deriving support from this judgment, the High Court
examined various provisions of the Act and reached the
conclusion that under the Act, as under the Calcutta Act,
the tax, which the Corporation could collect, would have to
be for the purposes of the Act only and that fact, together
with certain other controls embodied in the Act, furnished
sufficient guidance preventing the vice of arbitrariness or
excessive delegation.
(1) 1962 S.C.R. 477.
948
Before the High Court, the contention also was that for
each. of the relevant years there was no valid assessment-
book on the basis of which the property tax could be levied.
The argument was that the Taxation Rules required the
Commissioner to prepare ward assessment-book for each of the
wards and not one assessment-book for the whole of the
municipal limits, that being so, the assessment made on the
properties was not in accordance with the rules prescribed
for that purpose and was therefore in breach of Art. 265 of
the Constitution and s. 127(2) of the Act which lays down
that the taxes shall be assessed and levied in accordance
with the provisions of the Act and the rules. The High
Court, on a reading of the rules, found : (1) that r. 10
gave discretion to the, Commissioner to prepare either one
assessment book or ward assessment-books, and (2) that the
rules used both the expressions, namely, ’assessment-book’
and ’ward assessment books the latter expression being used
only in rr. 13 (1), 15 f and 1 9 (1 ) and (2). According to
the High Court, the contention as to the validity of the
assessment-book and the construction of the rules suggested
on behalf of the appellant were not correct. The object of
r. 9, according to the High Court, was to provide for the
preparation and maintenance of the assessment-book wherein
would be entered the amount of property tax against each of
the buildings and lands set out therein. The rule provided
that the Commissioner shall first make entries under cls.
(a) to (d) of the rule. An entryunder cl. (e), as its
language plainly shows, is to be made after :(1) the rates
of property tax are fixed, (2) the period fixed forreceipt
of complaints against the rateable values has expired, and
(3) after such complaints, if any, are disposed of by the
Commissioner. An entry under cl. (e) having to be made only
after the events in (1), (2) and (3) above stated have
happened, r. 9 takes in, by using the expression "as herein-
after provided", the public notice provided by rr. 13 and
15. According to the High Court, the liability to pay the
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property tax arises as soon as entry under cl. (e) of r. 9
is made in the assessment-book in the manner therein
provided and is not dependent on authentication and
certification provided in r. 19 in respect of ward
assessment-books. Authentication and certification in such
ward assessment-books provides a rule of evidence in the
sense that the entries therein become conclusive evidence as
regards the amount of tax therein set out against each
property and is not an event on the happening of which the
liability to pay arises. Such liability arises as soon as
entry under cl. (e) of r 9 is made.
The High Court distinguished its earlier decision in the
Municipal Corporation of the City of Ahmedabad v. Zaveri
Keshavtal(1) by pointing out that that decision was under
the Bombay
(1) 6 Guj. L.R.701.
949
Municipal Boroughs Acts, 1925 which had a scheme and pro-
visions different from the present Act and the rules
thereunder made. That decision had laid down that the
liability of the rate payer would arise only after
authentication of the assessmentbook. For distinguishing
that decision the High Court, firstly, relied on r. 30 of
the Taxation Rules which provides that property tax shall
accrue clue on the 1st of April of each official year, and
secondly, on the ground that the Boroughs Act and the rules
thereunder did not have a rule corresponding to r. 9(e)
which, when read with r. 30, shows that the liability to pay
the amount of tax arises on entry under cl. (e) of that rule
being made. According to the High Court, r. 19, )which
provides for authentication applies only to ward assessment-
books and not to a single asscssment-book, that such
authentication has nothing to do with the accrual of
liability and is a mere rule of evidence which is not
available to the Corporation where the Commissioner does not
prepare ward assessment-books and keeps only one assessment-
book. The High Court in this connection observed
"If a single assessment-book is prepared,
then the amount of tax entered in the
assessment-book will not be the conclusive
evidence. In an appeal, it would be open to a
rate payer to challenge the amount on any
legal ground, possibly including the challenge
to the rateable value of the property in
respect of the fact that had not been done
before by him."
On this interpretation, the High Court dismissed the entire
batch of the said 70 writ petitions including that of the
appellant. Though the earlier judgment is not under review
in this appeal, we have set out its conclusions as the
judgment under review followed the earlier judgment,-
delivered by the same learned Judges and rejected the
conclusions raised by the appellant. In effect, therefore,
both the judgments are under challenge to the extent that
they decided questions raised in this appeal.
Sec. 127(1) lays down that "for the purposes of this Act"
the taxes which the Corporation has compulsorily to levy are
property taxes and a tax on vehicles, boats and
animals. The second subsection authorises the Corporation
to levy the taxes set out therein in addition to the
aforesaid two taxes. Sec. 129 deals with property taxes.
Cl. (c) there of provides that property taxes shall comprise
inter alia of a general tax of not less than 12% of the
rateable value of buildings and lands. We may note that the
Gujarat State Legislature, by Act 8 of 1968, has recently
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amended cl. (c) by inserting therein the maximum rate of
30%, so that the question as to the absence of maximum rate
is relevant only
950
for the assessment years prior to the amendment. The
Legislature itself has framed elaborate rules contained in
Sch. A to the Act of which the Taxation Rules in Ch. VIII
thereof are part and which under s. 453 form part of the
Act. Besides the said rules, ss. 454 and 455 authorise the
Corporation to add to, amend, alter ,or rescind those rules
subject to their being not inconsistent with the provisions
of the Act, sanction of the State Government and to the
condition of their being made after previous publication.
The other relevant provisions of the Act are ss. 63 to 66
which lay down the obligatory functions which the
Corporation must perform and certain discretionary functions
which it can perform.
The argument was that thought s. 127 ( 1 ) lays down that
property taxes can be levied by the Corporation only for the
purposes ,of the Act, that is to say, for and in respect of
the functions which the Corporation must and can carry out,
the Act being silent as to the maximum rate upto which the
Corporation can levy, it gives unbridled and arbitrary power
to levy the property tax as much and to any extent it may
desire. Mr. Iyengar pointed out that amongst the
discretionary functions which the Corporation can undertake
under s. 66 there are such things as swimming pools, public
parks, gardens, recreation grounds, construction of
dwellings, for municipal officers and servants, libraries,
museums etc. for undertaking which the Corporation can spend
huge, amounts and impose extravagant and burdensome rate of
tax. According to the argument, there are no guidelines or
controls in the Act which can place any limits to the
spending by the Corporation on such discretionary objects,
and therefore, the rate payers are exposed to being taxed in
an arbitrary and uncontrolled fashion.
The question. thus is whether the Act contains any policy
or’ guidelines or control over the taxing power of the
Corporation without which the delegation of power to tax
would be excessive, arbitrary and violative of Art. 14.
The Act, as its preamble and the long title show, was passed
for establishment of municipal corporations in the city of
Ahemedabad and Poona and certain other cities for ensuring
better municipal government. It was apparently modelled
after the Bombay Municipal Corporation Act, 1888. The Act
does not lay down any maximum rate in s. 127 probably
because its operation was not confined to any particular
city in which the municipal corporation would be set up.
The Legislature, while passing it, could not envisage in
which particular cities such corporations would be set up.
Nor could it envisage what their financial needs would be;
nor which of the discretionary functions, under S. 66, such
,corporations would feel they must undertake. Such needs
being variable and incapable of uniform specification, the
Legislature might have felt if inexpedient to restrict the
fiscal powers of the corporations to be established in
furture.
951
The point for consideration is whether the absence of a pro-
vision laying down the maximum rate is by itself sufficient
to render the delegation of the power excessive. As already
stated, s. 127(1) expressly provides that taxes can be
levied only for the purposes of the Act. They cannot thus
be raised for any function ’other than the one provided by
the Act. Sec. 82 requires all monies received by the
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Corporation under the Act to be credited to the Municipal
Fund held by the Corporation in trust for the purposes of
the Act. By reason of s. 86, no payment can be made out of
the Municipal Fund unless it is covered by the current
budget grant. Furthermore, s. 88 lays down that the moneys
credited in the Municipal Fund shall be applied in payment
of sums, charges and costs necessary for carrying the Act
into effect, or payment directed or sanctioned by or under
the Act. Sec. 89 restricts expenditure by the Corporation
within the city except when provided by the Act or by a
resolution by not less than. half the total number of
councillors. Under s. 95, the Commissioner is required
annually to lay before the Standing Committee estimates of
income and expenditure, and under s. 96. the Standing Com-
mittee has to prepare budget estimate ’A’ "having regard to
all the requirements of this Act." The budget estimate then
has to be laid before and passed by the Corporation.
Similar provisions are made in ss. 97 and 98 for budget
estimate ’B’ prepared by the Transport Manager. It is after
all this has been, done that the Corporation under s. 99
determines, on or before the 20th of February of each year,
the rates at which property taxes under s. 127(1), but sub
ject to the limitations and conditions laid down in Ch. XI,
are to be levied for the next ensuing official year, Under
s. 100, the Corporation, either sends back the budget esti-
mates ’A or ’B’ for further consideration, or adopts them
with such alterations as it deems expedient. The conditions
and limitations subject to which the Corporation can fix,
under s. 99, the rates at which the property taxes are to be
levied are those provided in s. 127(3) and (4), i.e., they
can be assessed and levied in accordance with the provisions
of the Act and the rules. These provisions clearly show
that the ultimate control, both for raising the taxes and
incurring expenditure, lies with the councillors chosen by
and responsible to the people.
As aforesaid, the assessment and levy of the property taxes
have to be in conformity with the Act and the rules. These
rules contain inter alia Taxation Rules, which are part of
the Act. Sec. 454, no doubt, empowers the Corporation to
amend, alter and add to these rules, but such power is made
under s. 455 subject to the sanction of the State
Government. Under s. 4 56, the State Government can at any
time require the Corporation to make rules under s. 454 in
respect of any purpose of matter specified in s. 457, which
includes-item "(7) Municipal Taxes.-(a) The assess-
95 2
ment and recovery of municipal taxes". Thus, although the
Ac does not prescribe the maximum rate at which the property
taxe can be raised, the ultimate control for raising them is
with the councillors responsible to the people. It is
difficult, therefore, to sustain the plea that the power to
levy the property tax is so un bridled as to make it
possible for the corporation to levy it in arbitrary manner
or extent.
In all statutes dealing with local administration municipa I
authorities have inevitably to be delegated the power of
taxation,. Such power is a necessary adjunct to a system of
local self-govemment. Whether such delegation is excessive
and amounts to abdication of an essential legislative
function has to be considered from the scheme, the objects,
and the provisions of the statute in question.
In The Western India Theatres Ltd. v. Municipal Corporation
of the City of Poona(1) this Court spelt out the policy in
the expression "for the purposes of this Act", an expression
also used in S. 127. In Pandit Banarsi Das Bhanot v. Madhya
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Pradesh(2), delegation of power to the executive to
determine the details relating to the working of taxation
laws, such as the selection of persons on whom the tax is to
be levied the rates at which it is to be charged in respect
of different classes of goods and the like, was held not to
be unconstitutional on the principle that so long as the
legislature retains or has the power of withdrawing or
altering the power to tax delegated to a subordinate
authority such delegation would be held neither an
abdication nor excessive. In Liberty Cinema case ( 3 ) the
majority view was that the power to fix the rate of a tax
was not of the essence of the legislative power and that
such a power could be delegated even to a non-legislative
body. But the decision laid down that when such a power is
delegated, the legislature must provide guidance for such
fixation. The majority held that where rates have not been
specified in the statute, the power to fix the rates as
might be necessary to meet the needs of the delegate itself
affords guidance. The minority view differed from the
majority view, in that, according to it, the power to fix
the rate of tax was an essential legislative function. But,
even according to that view, such a power can be delegated
provided the delegate is afforded guidance by the
legislative laying down the policy and principles in the
Act, It, however, disagreed with the majority view that the
raising of tax ’co-extensive with the needs of the delegate
in implementing the purposes of the Act can afford such
guidance.
The Liberty Cinema case(3) came for consideration in Devi
Das v. Punjab (4) where Subba Rao, C.J., speaking for the
Court, said :
(1)[1959] Sup, 2 S.C.R.71.
(2) [1959] S.C.R.427.
(3) [1965]2 S.C.R. 477.
(4 [1967] 3 S.C.R. 557.
953
"If this decision [Liberty Cinema case(1) is
an authority for the position that the
Legislature can delegate its power to a
statutory authority to levy taxes and fix
rates in regard thereto, it is equally an
authority for the position that the said
statute to be valid must give a guidance to
the said authority for fixing the said
rates. . . "
Though he did not agree as a general principle that guidance
can always be spelt out from the limitation to fix the rate
by the extent of needs of and the expenses required by the
delegate to discharge its statutory functions, the Court did
not disapprove Liberty Cinema case(1) but confined the
principle laid down there to the provisions of the Calcutta
Municipal Act in which the majority had found the requisite
guidelines. No such guidance was available in the Sales Tax
statute before the Bench deciding Devi Das’s case(2). The
position which emerged from the decisions so far, therefore,
was that the power to fix rates can be delegated if the
statute doing so contains a policy or principles furnishing
gunance to the delegate in exercising such power.
In the Municipal Corporation of Delhi v. Birla MilIS(3), the
question as to the limits of delegation of taxing power once
more arose. The Delhi Municipal Corporation Act, 1957, like
the present Act, entrusted to the Delhi Corporation two
kinds of functions, compulsory and optional. In relation to
the former, the Act specified the maximum rate of tax the
Corporation could raise, but not so in the case of tax
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relating to or for implementing the optional functions. The
controversy was whether the Act contained provisions
furnishing guidance to the Corporation in the exercise of
the power to tax. After an analysis of the provisions of
the Act, Wanchoo, C.J., pointed out the following factors
which furnished’ sufficient guidance preventing the
delegation becoming invalid :
(1) that the delegation was to an elected
body responsible to the people, including
those who pay taxes and to whom the
councillors have every four years to turn to
for being elected;
(2) that the limits of taxation were to be
found in the. purposes of the Act for the
implementation of which alone taxes could be
raised and though this factor was not
conclusive, it was nonetheless relevant and
must be taken into account with other relevant
factors;
(3) that the impugned s. 1 150 itself
contained a provision which required that the
maximum rate fixed by the. Corporation should
have the approval of the Government;
(1) [196512 S.C.R. 477,
(2) [1967] 3 S.C.R. 577.
(3) 1968(3) S.C.R.251.
954
(4) that the Act contained provisions which
required adoption of budget estimates by the
Corporation annually; and
(5) that there was a check by the courts of
law where the poower of taxation-is used
unreasonably or in non compliance or breach of
the provisions and objects of the Act.
Referring to Devi Das case(1), he pointed out that (1) that
did not disapprove Liberty Cinema case (2 ) was concerned
case with a sales tax statute and not with a statute dealing
with bodies with limited purposes, such as local self
governing bodies. At page 268 of the reports he observed.:
"There is in our opinion a clear distinction
between delegation of fixing the rate of tax
like sales tax to the State Government and
delegation of fixing rates of certain taxes
for purposes of local taxation. The needs of
,the State are unlimited. The result of making
delegation of a tax like sales tax to the,
State Government means a power to fix the tax
without any limit even if the needs and
purposes of the State are to be taken into
account."
Thus, the majority view in this decision, which is binding
on us, shows that the mere fact that an Act delegating
taxing power refrains from providing a maximum rate does not
by itself render the delegation invalid.
From the provisions of the present Act, cited earlier, it
will be seen that though factor (3) of the factors relied on
by Wanchoo, C.J., is absent in s. 127, the rest are present.
It is impossible to say that when a provision requiring
sanction of the Government to the maximum rate fixed by the
Corporation is absent, the rest of the factors which exist
in the Act loose their efficacy and cease to be guidelines.
Furthermore, if the Corporation were to misuse the
flexibility of the power given to it in fixing the rates,
the State legislature can at any moment withdraw that
flexibility by fixing the maximum Emit up to which the
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Corporation can tax. Indeed, the State Legislature has now
done so by S. 4 of Gujarat Act, 8 of 1968. In view of the
decisions cited above it is not possible for us to agree
with counsel’s contention that the Act confers on the
Corporation such arbitrary and uncontrolled power as to ren-
der such conferment an excessive delegation.
That brings us to the contention regarding the validity of
the assessment-book maintained by the Commissioner for the
assessment year in question.
(1) [1967] 3 S.C.R. 577.
(2) [1965] 2 S.C.R. 477.
955
Rules 9 to 21 of the Taxation Rules are headed "Assessment-
Book". A comparison of these rules with ss. 156 to 168 of
the Bombay Municipal Corporation Act, 1888 at once shows
that they are, with the exception of r. 10, taken almost
verbatim from those sections. Rule 9 requires the
Commissioner to keep a book to be called the "Assessment-
Book" in which the following matters have to be entered,
viz.,
(a) a list of buildings and lands,
(b) the rateable value of each of them,
(c) the names of persons primarily liable
for the payment of the property taxes, if any,
leviable on each such building or land,
(d) the reasons for non-liability, if any of
them is not liable to be assessed to the
general tax, and
(e) "when the rates of the property-taxes to
be levid for the year have been duly fixed by
the Corporation and the period fixed by
public notice, as hereinafter provided, or
the receipt of complaints against the amount
of rateable value entered in any portion of
the assessment-book has expired, and in the
case of any such entry which is complained
against, when such complaint has been
disposed, of in’ accordance with the
provisions hereinafter contained, the amount
at which each building or land entered in such
portion of the assessrnent-book is assessed to
each of the property taxes, if any, liable
thereon."
The rule contain other clauses, but we are not at present
concerned with them.
Rule 10(1) provides that the assessment-book may, if the
Commissioner thinks fit, be made in separate books called
"ward assessment-books", one for each of the wards into
which the city is for the time being divided for purposes of
the elections. Cl. (2) of the rule says that the ward
assessment-books and the respective parts, if any, shall
collectively constitute the assessment-,book. Rule 10
differs from s. 157 of the Bombay Municipal Corporation Act,
in that, whereas it gives an option to the Commissioner
either to maintain one assessment-book. for the entire city
or separate ward assessment-books, s. 157 gives no such
option and provides only for ward assessment-books which
collectively constitute, as in r. 10(2), "the assessment-
book". The Legislature, thus, deliberately made a departure
from s. 157 by leaving it to the discretion of the
Commissioner either to maintain one book or several books
wardwise. Such a departure was presumably made because the
Act
956
was to apply not to one city only, as did the ’Bombay Act of
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1888, but to an unknown number of cities where municipal
corporation might in future be set up, each having different
conditions from the, other and not being certain whether one
assessment-book or separate ward assessment books would be
suitable for each of them.
Rules 11 and 12 deal with treatment of properties let to two or m
ore persons in separate occupancies and the procedure
where the name of the person primarily liable for property
taxes cannot be ascertained. Rule 12, it Will be noticed,
mentions only the assessment-book and not ward- assessment-
books. Rule 13 provides that when entries required by cls.
(a), (b), (c) and (d) of rule 9 have been completed "in any
ward assessment-book-, the. Commissioner shall give public
notice thereof and of the place where the ward assessment-
book, or a copy of it, may be inspected." Rule 14 provides
for inspection and taking extracts by an owner or occupier
of premises-entered’ in "the assessment-book" from any
portion of "tie said book" which relates to the said pre-
mises. Rule 15 requires the Commissioner "at the time and
in the manner prescribed in r. 13" to give notice of a day
not being less than 15 days from the publication of such
notice, on or before which complaints against the amount of
any rateable value entered "in the ward assessment-book"
will be received in his office. Cl. ,(2) of that rule
requires the Commissioner to give a special written notice
to the owner or occupier of premises which have for the
first time been entered "in the assessment-book’ as liable
to property taxes or in which the rateable value of any
premises has been increased. Rule 16 provides for the
manner of filing complaints referred to in r. 1 5 against
the rateable value "entered in the assessment-book", and r.
17 provides that complaints received under r. 16 shall be
registered in a book kept for that purpose as also for
notice to each complainant of the, time and place when and
whereat his complaint would be investigated. , Rule 18
provides for the hearing of the complaint if and cl. (3)
thereof lays down that when a complaint is disposed of, its
result shall be noted in the said book of complaints and
the necessary amendment shall be made in accordance with
such result "in the assessment-book".
Rule 19, which has been the subject matter of controversy
both in the High Court and before us, provides that when
"all such complaints, if any, have been disposed of and the
entries required by cl. (e) of r. 9 have been completed in
the ward assessment-book, the said book shall be
authenticated by the Commissioner, who shall certify, under
his signature, that except in the cases, if any, in which
amendments have been made as shown therein, no valid
objection has been made to the rateable values entered in
the said book". Cl. (2) provides that "the said ward
assessment-book sub-
95 7
ject to such alterations as may thereafter be made therein
under the provisions of r. 20 shall be accepted as
conclusive evidence of the amount of each property-tax
leviable on each building and land in the ward in the
official year to which the book-relates." Rule 20 empowers
the Commissioner to amend the assessment-book even after it
has been authenticated in certain cases and subject to the
conditions set out therein. Lastly , r. 21 provides that it
is not necessary to prepare a new assessment-book every
official year and permits the Commissioner to adopt the
entries in the last preceding year’s book as the entries for
each new year. This, he can do, for. four successive years.
From the scheme of rules 9 to 21, it is clear that the
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Commissioner first enters in the assessment book prescribed
by r. 9 the particulars set out in cls. (a) to (d) of at
rule. Having done this, he proceeds to enter in the
assessment-book the amount at which each building or land is
assessed. He can do this under cl. (e) naturally after (i)
the rates of property taxes are fixed by the Corporation,
(ii) the period fixed by public notice under r. 13 and for
the receipt of complaints under 15 against rateable values
entered under cl. (b) has expired, and (iii) after such
complaints, if any, have been disposed of.
On a plain meaning of the language in r. 10 the Commissioner
has the option to maintain either one assessment-book or
ward assessment-books separately for each ward. But even if
he were to do so, such ward assessment-books would
collectively constitute "the assessment-book". As earlier
stated, giving of such an option under r. 10 was a clear
departure by the Legislature from s. 157 of the Bombay Act,
1888. Since these rules have been taken almost verbatim
from that Act, the departure has to be regarded as
deliberate. and for the reason that the Legislature could
not foresee at the time of enacting the Act as to the cities
in which municipal corporations would be set up and the
conditions prevailing at such time in those cities.
The difficulty, however, arises because rr. 13, 15 and 19,
which provide for a notice for inspection, for filing
complaints against rateable Values entered under el. (b) of
r. 9 and for authentication and certification, use the
expression "ward assessment book". It is from this fact
that the contention was raised that, though r. IO is couched
in permissive language, it must be construed as mandatory
requiring the Commissioner to maintain ward assessment-
books. Therefore, the Commissioner having maintained only
one assessment-book for the whole city, it is not a valid
book on the basis of which the levy of the property tax can
be sustained. The argument was that the right of
inspection, the right of taking extracts, the right to file
complaints and the duty to give
958
public. notice under rr. 13 and 15 and a special notice
under cl. (2) of r. 15, as also the duty to authenticate and
certify under r. 1 9, are all matters vital to both the rate
payers, as also. the Corporation, and that it was in respect
of these vital matters that rr. 13, 15 and 19 speak of ward
assessment-books. Therefore, if the Legislature, which
framed these rules, had contemplated one assessment-book
instead of separate assessment-books for each of the wards,
the language of these rules would not have been what it is.
The Language of these rules, therefore, show that r. 10 must
be construed to mean that the Commissioner has to maintain
ward assessment-books and it is when such books are
maintained that the Corporation can validly levy the tax on
the basis of such books.
Confronted with this difficulty, the High Court construed
the rules to mean that r. 10 was discretionary and not
mandatory but that rr. 13, 15 and 19 apply only when ward
assessment-books are kept, and that when they are read
together, they show that the scheme was that where ward
assessment-books are prepared the Legislature intended to
invest each of such books with a finality and did not intend
that the question as to rateable value or the amount of tax
should remain hanging fire until all the ward assessment-
books were prepared. As regards r. 19, the High Court held
that "if a single assessment-book is prepared, then the
amount of tax entered in the assessment-book will not be
conclusive evidence".
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Such a conclusion means that r. 19, as also rr. 13 and 15
would apply only to ward assessment-books, and therefore,
there would be no authentication and certification where one
assessment book is kept and entries in such a single
assessment-book would not be conclusive evidence as regards
the quantum of tax entred in it under cl. (e) of r. 9. But
once it is held that r. IO is discretionary and the
Commissioner can maintain one assessment-book or several
ward assessment-books, as the High Court has done, it is
hardly possible that the legislature which gave such an
option could have intended that r. 19 should apply only to
ward assessment-books and not where one assessment-book is
kept and deprive the Corporation of the benefit of entries
in it being treated as conclusive evidence.,
It is true that a genuine difficulty arises in construing
these rules as a result of the use of the expression "ward
assessment-book" in rr. 13, 15 and 19, and the use of the
expression "a ssessment-book in the rest of the rules. At
the same time acceptance of the appellant’s contention or
the in terpretation by the High Court would create
difficulties. The contention that r. 10 should be construed
as mandatory ignores (1) the permissive language of the
rule, and
9 59
(2)the deliberate departure made by the Legislature from s.
157 of the Bombay Corporation Act. If it intended that
assessmentbooks for each ward should be kept, there was no
necessity for it to depart from the language of s. 157 of
that Act. The fact that it made such a departure is a sure
indication that it did not. Unless compelled by the context
and the content of the other rules, there would be no
justification not to give to r. 10 the plain meaning of its
language, particularly in view of the fact that the Act is
intended to apply not to one but to an indefinite number of
cities, each differing in conditions from the other, a
factor which, as aforesaid, led the Legislature to make a
departure from the said s. 157.
But a far more serious difficulty would arise if the
conclusion reached by the High Court were to be accepted.
If r. 19 were to be interpreted as applying to ward
assetsment books, and not where one assessment-book is kept,
rr. 13 and 15 must also on the same reasoning be construed
in the same way. The Legislature could not have intended
that the entry under cl. (e) of r. 9, as regards the quantum
of property tax leviable on each building and land, would
become conclusive evidence only where ward assessmentbooks
are kept and not where one assessment-book is kept. Cl. (e)
of r. 9 requires the Commissioner to enter in the
assessment-book the amount at which each building is
assessed to each of the property taxes. The object of
authen0cation under r. 19 is to make such entry conclusive
evidence of the amount being leviable on each such building
and land for the particular official year. It is the amount
of tax entered under cl. (e) of r. 9 to which is given the
attribute of conclusive evidence, so that the Corporation
can thenceforth proceed to issue bills for those amounts and
serve demand notices. The rate payers cannot object to such
bills and notices on the ground that the amounts therein set
out are not correct by reason of some error or such similar
reason. Rule 19 confers conclusiveness only to that
extent and not to the rateable value or the tax fixed or
charged, as both are subject to an appeal under s.406. Rule
19, therefore, was intended to enable the Corporation to
proceed to make demands so soon as entries are made as
provided by cl. (e) of r. 9 and the Commission has given
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thereafter his authentication that there exists no valid
objection to the rateable value entered under the said
cl. (e) . Since the object of r. 19 is to make the entry as
to the amount of tax conclusive evidence so as to enable the
Commissioner to issue the bills, the Legislature could not
have intended to apply the rule only when ward assessment-
books are kept and not when one assessmentbook is maintained
especially when in r. 10 it has deliberately given
discretion to the Commissioner to maintain either one
assessment-book or several ward assessment-books.
We are in agreement with the High Court that the liability
to pay the tax arises under r. 30 and r. 9(e) and is not
dependent on
17-LI10OSupCI/71
9 60
authentication, which, as aforesaid, is intended for a
limited purpose. But that does not mean that the provision
as to authentication applies only when ward assessment books
are kept, or that r. 19 does not apply where one assessment-
book is prepared. If r. 19 were to be so construed, rr. 13
and 15 also would have on the same reasoning to be likewise
construed. That would mean that the notice to enable the
rate pay to take inspection under r. 13 and the notice under
r. 15 fixing the date on or before which complaints against
rateable value can be made, would have to be given only
where ward assessment-books are kept and not where one
assessment-book is kept. It goes without saying that the
right to inspect provided under r. 13 and the right to file
a complaint under r. 15 are vital matters. That being so,
it is hardly conceivable that the Legislature intended these
rules to apply only where the Commissioner keeps ward
assessment-books.
Since, for the reasons given earlier, r. 10 has to be
construed as permissive and not mandatory, and the
construction adopted by the High Court in regard to rr. 1 3,
15 and 19 is bound to create anomalies pointed out above,
the conclusion we must reach is that it was through
inadvertence that the old language used in ss. 157 to 168 of
the Bombay Corporation Act was allowed to be retained
without carrying out the change of language necessitated as
a result of r. 10 giving discretion to the Commissioner
either to maintain one book or several books wardwise.
The result, therefore, is that the assessment-book in
question must be held to be valid and no objection as to the
validity of the bills and demand notices can be raised on
the ground that only one assessment-book and not wardwise
books are kept. The appellant, thus, does not succeed on
either of the two contentions raised on his behalf. The
appeal fails ’and is dismissed with costs.
G.C. Appeal dismissed.
961