Full Judgment Text
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PETITIONER:
BARSI MUNICIPAL COUNCIL BARSI, DISTRICT DHOLAPUR
Vs.
RESPONDENT:
LOKAMANYA MILLS, BARSI, LTD., BARSI AND ANOTHER(With Connect
DATE OF JUDGMENT19/09/1972
BENCH:
MATHEW, KUTTYIL KURIEN
BENCH:
MATHEW, KUTTYIL KURIEN
GROVER, A.N.
MUKHERJEA, B.K.
CITATION:
1973 AIR 1021 1973 SCR (2) 399
1972 SCC (2) 857
ACT:
Bombay Municipal Borough Act, 1925, Section 75 Explanation.
Bombay Municipal Boroughs Rules-Rule 2(c) Boroughs
Municipalities (Validation of certain taxes on buildings,
and lands) Act, 1965, Sections 8 and 4. A levy of tax cannot
be validated by a validating act unless the charging
section, earlier struck down, is revived or resurrected.
HEADNOTE:
The Supreme Court, in Lokmanya Mills, Barsi Led. v. Barsi
Borough Municipality (1962) 1 SCR 306 struck down Rule 2(c)
as being violative of Art. 14 of the Constitution of India,
for the vice of assumed uniformity of return per sq. ft.
from structures of different classes which are in their
nature not similar. The Maharashtra Legislature passed
Borough Municipalities (validation of certain taxes on
buildings and lands) Act 1965, to validate the levy and
collection of the tax with retrospective effect and to
enable the municipalities to levy house tax on mills
factories and buildings on the basis of Rule 2(c).
Explanation to Sec. 75 of the Act was substituted by the new
explanation, by the Validating Act. Ss. 4 and 5 are
designed to validate the levy and collection of tax with
retrospective effect. On challenge through a Writ Petition,
the Division Bench of the Bombay High Court struck down
Sections 3(b), 4(1), 4(2) and 5 of the Validating Act for
their contravention of Art. 14. The appeal filed by the
State and the Barsi Municipal Council before this Court
among other things, raised a question as to whether the
Validating Act has resurrected the provisions of Rule 2(c)
and levy and collection were validated as required by law.
Dismissing the appeal,
HELD : When the rule was struck down by this Court, the
effect was that the Rule could never be deemed to have been
passed. Apart from Rule 2(c), there was no charging
provision ’similar to Rule 2(c) either in the Boroughs Act
or in the Validating Act for levying house tax on mills,
factories and buildings connected therewith. After Rule
2(c) was struck down, the Municipality did not frame any
rule under the provisions of Section 75 of the Boroughs Act
for imposing tax on mills, factories or buildings connected
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therewith. Section 4 of the Validating Act does not revive
or resurrect Rule 2(c). Since the charging section is not
revived, there was no authority under law to collect tax on
the said categories of properties. Since in the eye of law
there was no charging provision, there could be no
validation of any levy or collection. [403G]
Held further, that the above holding was enough to grant all
reliefs claimed by the respondent in the Writ Petition and
there was no need to express an opinion on the validity of
the impugned sections of the Validating Act. [404F]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1194, 11
96, 1197 & 1250 of 1967.
400
Appeals by certificate from the judgment and order dated
November 22, 23 and 24, 1966 of the Bombay High Court in
Special Civil Applications Nos. 1476 and 1424 of 1966.
G. L. Sanghi, C. K. Ratnaparkhi and A. G. Ratnaparkhi, for
the appellant (in C.A. No. 1194/67).
B. N. Lokur, C. K. Ratnaparkhi, A. G. Ratnaparkhi and
B. M. Srivastava, for the appellant (in C.A. No. 1196/67).
M. C. Bhandare, B. D. Sharma, for the appellants (in C.As.
Nos. 1197 and 1250/67 and Respondent No. 2 (in C.As. Nos.
1194 and 1196/67).
Sharad Manohar and B. P. Maheshwari, for respondent No. 1
(in C. As. Nos. 1194 and 1197 of 1967).
M. N. Phadke, Sharad Manohar and B. P. Maheshwari, for
respondent No. 1 (in C.As. Nos. 1196 & 1250/67).
B. N. Lokur, G. L. Sanghi, C. K. Ratnaparkhi, A. G. Ratna-
parkhi and B. M. Srivastava, for respondent No. 2 (in C.As.
Nos. 1197 & 1250/67).
The Judgment of the Court was delivered by
MATHEW, J. The respondents in these appeals filed writ peti-
tions in the Bombay High Court challenging the validity of
the Borough Municipalities (Validation of Certain Taxes on
Buildings and Lands) Act, 1965 (Maharashtra Act No. 111 of
1966), hereinafter called the "Validating Act", on the
ground that the provisions of the Act violated their
fundamental rights under Art. 14 of the Constitution and for
restraining the appellants from levying house tax on the
mills, factories and buildings connected therewith of the
respondents or collecting the same from them. A Division
Bench of the High Court held that sections 3(b), 4(1), 4(2)
and 5 of the Validating Act were invalid as they contravened
Art. 14 and granted the prayer for restraining the
appellant-Municipality from levying and collecting the tax.
These appeals, by certificate, are directed against the
judgment of the Division Bench.
Till the year 1947, the appellant-Municipality used to levy
house tax on the mills, factories and buildings connected
therewith of the respondents in these appeals on the basis
of their annual letting value and the annual letting value
for this purpose was ascertained in the normal way, that is,
by ascertaining the amount at which the buildings might
reasonably be expected to let from year to year. In 1947,
the appellant-Municipality made fresh rules for levy of
house tax and rule 2 (c) of the new rules ran as follows
401
"2(c) In the case of mills and factories and
buildings connected therewith, house tax on
buildings shall be levied at the usual rate on
the annual rental value fixed at Rs. 40/- for
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every 100 square feet or portions thereof for
each sterey, floor or cellar.
"Explanation : The expression "building
connected therewith" means and includes
warehouses, godowns, millshops, etc. which are
within the compound of mill premises but does
not include residential buildings, such as
bungalows, out-houses.
"Note : Buildings which are not taxed under
Rule 2(c) shall be taxed under the ordinary
rules."
Under this rule,-the annual rental value of all the
buildings of mills and factories other than residential
buildings was fixed at a uniform rate of Rs. 40/-for every
square foot of floor area irrespective of the actual rental
value of the premises.
One of the respondents, namely, Lokamanya Mills. Barsi,
Limited, claimed refund of amounts paid by them on the basis
that Rule 2(c) was ultra vires the Boroughs Act and they
filed 4 suits for the same. Against the decrees dismissing
the suits, appeals were preferred to this Court and they
were finally disposed of by this Court in Lokamanya Mills,
Barsi Ltd. v. Barsi Borough Municipality(1). This Court,
after referring to the provisions of S. 78 and the
explanation to S. 75 of the Boroughs Act, held that the
Municipality could levy a rate on lands and buildings on the
basis of their capital or annual letting value and that in
framing rule 2(c), the Municipality had adopted a mode of
valuation different from the one sanctioned by the Boroughs
Act. The Court also observed :
"The vice of the rule lies in an assumed
uniformity of return per square foot which
structures of different classes which are in
their nature not similar, may reasonably fetch
if let out to tenants and in the virtual
deprivation to the rate-payer of his statutory
right to object to the valuation."
Accordingly, the Court allowed the appeals and decreed the
suits.
The main objects of the Validatting Act were to enable the
municipalities governed by the Boroughs Act to levy house
tax on mill’s factories and buildings connected therewith on
the basis of rule 2(c) and to validate the levy and
collection of the tax with retrospective effect. Section 3
of ,the, Validating Act
(1) [1962] 1 S.C.R. 306.
402
brings about certain amendments in the Boroughs Act. In s.
3 of the Boroughs Act, a clause is inserted which lays down
that " rate on buildings or lands" includes any tax imposed
on buildings or lands. Another amendment introduced in the
Boroughs Act is with reference to Explanation to s. 75.
Prior to the amendment, the explanation to s. 75 was as
follows :
"In the case of lands the basis of valuation
may be either capital or annual letting
value."
This explanation was substituted by the
Validating Act by an explanation which reads
"Explanation : For the purposes of a rate on
buildings or lands, the basis of valuation may
be
(i) the annual letting value.
(ii) the annual value;
(iii) the floor area, in the case of mills,
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factories buildings and lands connected
therewith;
(iv) the capital value in the case of vacant
lands".
Both these amendments were given retrospective
effect from the commencement of the Boroughs
Act. Sections 4 and 5 of the Validating Act
are designed to validate with retrospective
effect, the levy and collection of tax
notwithstanding the decision of this Court.
Sub-section (1) and (2) of s. 4 provide
"4(1) Any house tax and any water tax levied
or purported to be levied and collected in
respect of any mills, factories and buildings
and lands connected therewith or in respect of
any vacant lands, under the Boroughs Act and
rules made thereunder, at any time before the
commencement of this Act shall be deemed to
have been levied and collected by or under the
Boroughs Act as amended by this Act; and
accordingly notwithstanding anything in any
judgment, decree or order of any Court any
such house tax or water tax levied and
collected shall, for all purposes be deemed to
be, and always to have been, validity levied
and collected, and shall not be called in
question merely on the ground that the tax was
not levied on the basis of the annual letting
value, or was levied on the basis of a uniform
rate on the floor area, or that it was levied
on the basis
403
of capital value or a percentage on such
value, or on the ground that any proceeding
laid down in the Boroughs Act or in the rules
was not followed."
"4(2) anything done or any action taken, by or
on behalf of any Borough Municipality or any
officer of such Municipality, acting or
purporting to act under the provisions of the
Boroughs Act or any rules made thereunder for
or in connection with the levy or collection
of the said taxes, shall be deemed for all
purposes to have been validly done or taken;
and no suit or other legal proceedings
whatsoever shall be entertained or continued
in any Court on any or all of the grounds
mentioned in sub-section (1)."
Section 5 provides, among other things, for recovery of tax
by the municipal authority concerned and the period within
which it should be recovered, etc.
The two points which arise for consideration in these
appeals are, whether rule, 2(c) was available to the
appellant-Municipality for imposing house tax on mills,
factories and buildings connected therewith of the
respondents and whether the rule can be deemed to have been
in operation in order that the levy and collection of house
tax might be validated with retrospective effect
It may be recalled that rule, 2 (c) was struck down by this
Court in Lokamanya Mills, Barsi Ltd. v. Barsi Borough Muni-
cipality (1) on the, basis that the Boroughs Act authorized
levy of house tax only on the basis of annual letting value
or capital value of the land or building as the case may be,
and that rule 2(c) as it purported to levy house tax on the
basis of the floor area was ultra vires the Act.
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When the rule was struck down by this Court, the effect was,
that the rule could never be deemed to have been passed.
Apart from rule 2(c), there was no charging provision
similar to rule 2(c) either in the Boroughs Act, or in the
Validating Act for levying house tax on mills, factories and
buildings connected therewith. After rule 2(c) was struck
down, the Municipality did not frame any rule under the
provision of S. 75 of the Boroughs Act for imposing house
tax on mills factories or buildings connected therewith.
The Validating Act has not also revived or resurrected rule
2(c). Therefore, the position was ,that there was no
charging provision for imposition of house tax on the mills,
factories or buildings connected therewith. It is only if
there was a charging provision for imposing house tax on the
mills, factories or buildings connected therewith that any
house tax could be imposed upon the mills, factories or
buildings connected therewith of the respondents. All that
the explanation to s. 75 substituted by the Validating Act
did was
(1) [1962] 1 S.C.R. 306.
404
to enact that, for imposing house tax, floor area will be
the basis of valuation in the case of mills, factories or
buildings connected therewith. The consequence is that
(there could be no levy of house tax on the mills, factories
or buildings connected therewith of the respondents nor
could any demand be made on the respondents on the basis of
any levy. The High Court was, therefore, right in
restraining the appellant-Municipality from levying house
tax on the mills, factories or buildings connected therewith
of the respondents and in quashing the demand notice issued.
Section 4 did not resurrect rule 2(c) with retrospective
effect in order that it might be said that there was, in the
eye of law, a provision for charging house tax on mills,
factories or buildings connected therewith so that the tax
levied and collected might be validated. Even if s. 4 had
resurrected rule 2(c) and said that it shall be deemed to
have been passed under the Validating Act with retrospective
effect, that might not have cured invalidity on account of
its being violative of Art. 14 of the Constitution as it
imposed a flat rate on the floor area without making any
classification of the area on the basis of income,
productivity. or age of building, etc. But we do not think
it necessary to pass upon this hypothetical question as s. 4
did not revive or resurrect rule 2(c), much less, give it
retrospective operation.
In this view, we have no occasion to reach ?the
constitutional question as regards the validity of the
impugned sections of the Validating Act and we express no
opinion upon it. We think that it was not necessary for the
High Court to have struck down the provisions of sections
3(2), 4(1), 4(2) and 5 of the Validating Act. When rule
2(c) was held to be inoperative by virtue of the decision of
this Court, all the reliefs claimed by the respondents in the
writ petitions could have been given to them without
striking down these provisions. It is a wise tradition with
Courts not to decide a constitutional question if the case
can be disposed of on other grounds.
We dismiss the appeals but, in the circumstances, make no
order as to costs.
S.B.W.
Appeals dismissed.
405
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