# '942 GULABCHAND BAPALAL MODI v. MUNICIPAL CORPORATION OF AHMEDABAD CITY

- **Citation:** [1971] 3 S.C.R. 942
- **Court:** Supreme Court of India
- **Decided:** 1971-03-04
- **Case number:** Civil Appeal No. 1090 of 1967
- **Bench:** J. M. Shelat, c. A. VAIDIALINGAM
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/942-gulabchand-bapalal-modi-v-municipal-corporation-of-ahmedabad-city-5461
- **Pages:** 19

## Headnote

Bombay Provincial ,Municipal Corporation Act, 59 of 1949, J. 129 of
Act whether bad for excessive delegation and absence of 'guidelinesRule 10 of Taxation Rules whether mandatory .or directory-Maintenanc•
of ward-wise assessment books whether essential-Tax levied on basis of
.one assessment book for whole Municipal area whether invalid-Effect of
'"'· 13, 15 and 19 under the Act, on tlie interpretation of r. 10.
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
-0! 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 asses~ment book and the
levy could not be held invalid on the ground that ward-wise assessment
books as .cor.templated by r'r. 13, 15 and 19 were n-0t maintained.
In
appeal to this Court by certificate,
A
B
c
D
HELD : The High Court rightly held that the charging sections of
E
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 c~ 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 1respect of
any purpose or matter specified in s. 457 which includes item "Municipal
F
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 \\·as difficult
therefore to sustain the plea that the power to levy the 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 Bl
G
The proposition that \vhen a provision requiring sanction of the Gov ..
ernment to the maximum rate fixed bv the Corporation is absent. the rest
of the factors which exist in the Aci lose their efficacy and cease to be
guidelines cannot be accepted.
Further. if the Corporation has the
flexibility of power given to it in fixi~!_! .the rates. the State Leg_islature .ca!!
at any moment withdraw that flex1b1htv by fixmg the maximum hm1t
up to which the Corporation can tax.
Indeed the State Legislature had
done so by s. 4 of the Gujarat Act. 8 of ! 968. In view of the decisions
H
of this Court it is not possible to agree with the contention that the Act
conferred on the Corporation such arbitran: and uncontrolled power as
to render such conferment an excessive delegation. (954 F-G]
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BAPALAL v. MUNIC. CORP. AHMEDABAD (She/at, J.)
943
Corporation of Calcutta v. Liberty Cinema, [1965] 2 S.C.R. 477, Municipal Corporation of the Cill"! of Ahmedanwd v. Zaveri Keshavla/, 6 Guj.
L.R. 701, Wes~ern India Theatres Ltd. v. Municipal Corporation of the
City of 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. Bir/a Mills, [1968) 3 S.C.R. 251
followed.
c
(2) The tax levied on the basis of ooe 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 o

## Text

_Characters 0–39,814 of 53,634. This is a partial read: ask again with offset=39814 for what follows._

'942
GULABCHAND BAPALAL MODI
v.
MUNICIPAL CORPORATION OF AHMEDABAD CITY
March 4, 1971
[J. M. SHELAT AND c. A. VAIDIALINGAM, JJ.]
Bombay Provincial ,Municipal Corporation Act, 59 of 1949, J. 129 of
Act whether bad for excessive delegation and absence of 'guidelinesRule 10 of Taxation Rules whether mandatory .or directory-Maintenanc•
of ward-wise assessment books whether essential-Tax levied on basis of
.one assessment book for whole Municipal area whether invalid-Effect of
'"'· 13, 15 and 19 under the Act, on tlie interpretation of r. 10.
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
-0! 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 asses~ment book and the
levy could not be held invalid on the ground that ward-wise assessment
books as .cor.templated by r'r. 13, 15 and 19 were n-0t maintained.
In
appeal to this Court by certificate,
A
B
c
D
HELD : The High Court rightly held that the charging sections of
E
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 c~ 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 1respect of
any purpose or matter specified in s. 457 which includes item "Municipal
F
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 \\·as difficult
therefore to sustain the plea that the power to levy the 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 Bl
G
The proposition that \vhen a provision requiring sanction of the Gov ..
ernment to the maximum rate fixed bv the Corporation is absent. the rest
of the factors which exist in the Aci lose their efficacy and cease to be
guidelines cannot be accepted.
Further. if the Corporation has the
flexibility of power given to it in fixi~!_! .the rates. the State Leg_islature .ca!!
at any moment withdraw that flex1b1htv by fixmg the maximum hm1t
up to which the Corporation can tax.
Indeed the State Legislature had
done so by s. 4 of the Gujarat Act. 8 of ! 968. In view of the decisions
H
of this Court it is not possible to agree with the contention that the Act
conferred on the Corporation such arbitran: and uncontrolled power as
to render such conferment an excessive delegation. (954 F-G]
•
•
A
B
BAPALAL v. MUNIC. CORP. AHMEDABAD (She/at, J.)
943
Corporation of Calcutta v. Liberty Cinema, [1965] 2 S.C.R. 477, Municipal Corporation of the Cill"! of Ahmedanwd v. Zaveri Keshavla/, 6 Guj.
L.R. 701, Wes~ern India Theatres Ltd. v. Municipal Corporation of the
City of 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. Bir/a Mills, [1968) 3 S.C.R. 251
followed.
c
(2) The tax levied on the basis of ooe 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 wpether one assessment book or separate ward
assessment books would be suitable for each of them. [955 G; 956 Al
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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 Bomba)' 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 depacture 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. JO 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 BJ
CerJain anomalies would arise from the High Court's interpretation
that rr. 13, IS and 19 would not apply in the case of one assessment book.
Rule 19 was intended to enable the Corporation to proceed . to makt'
demands so soon as entries were made· as provided by cl. (e) of r. 9 and
the Commissioner had given thereafter his authentication that there
existed no valid objection to the rateable values entered under the said.
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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 whe11
ward assessment-books were kept and not when one assessment-book wa~
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.
H
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 rateable value can be made, would have to be
given only where ward assessment books are kept and not where one
16-LtlOOSupCI/71
944
SUPREME COURT REPORTS
[1911] 3 S.C.R.
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 Corpdration Act was. allowed to be retained wi~h~ut
carrying out the change of language necessitated as a result of r. 10 g1vmg
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 wardwise books were kept. [959 C-960 El
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. Iyengar, N. J. Modi, P. C. Bhartari and K. N .. Desai
for the appellant.
I. N. Shroff, fot respondent No. 1.
K. L. Hatlzi and 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 ~e 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
situ!!_te within the
Corporation's
municipal limits : ( 1)
the
general tax levied by thel Corporation under the Act, and (2)
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the urban immovable property tax levied under the
Bombay
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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 whereunder 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 inH
creasing the rate of the property tax with eff~t from· April 1,
1961 under the powelr reserved to it by s. 127 of the Act. In
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BAPALAL v. MUNrc. CORP. AHMEDABAD (Shelat, /.)
945
pursuance of the said ·resolution and in accordance with the
raised percentage of the g~eral tax the Corporation served qn
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 respect of the assessment year 1962-63.
The appellant, as also certain other rate payers, challenged
the said bills and notices in their said writ petitiQDS mainly on the
grounds ( 1) that the Corp'oration 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 undell' a different statute and
givCT! up by it under the said arrangement; (2) that the said bills
and notices were illegal as the assessment-book kept by the Corporation 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 thel 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(l)(f) and Art. 31 as
the tax was confiscatory in character.
By its judgment dated May 5, 1966, the High Court first disposed of fifty two out of the said seventy writ petitions rejecting
the contentions raised therein.
Thereafter 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. Vill to Sch. A of the Act
was not mandatory;
( 3) that the liability to pay the tax arose. when entry
under r. 9 ( e) was made in the assessment-book;
and
·
946
SUpREME COURT REPORTS
[1971 ]3 s.c.R.
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(4) thats. 129(c) read with ss. 99 and 127 did not
A
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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) by
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giving power to tax without laying down the maximum rate was
violative of Art. 19(l)(f) :;md/or Art. 31 or Art. 14.
Th~ High
~ourt also rejected the additional contentions raised in the peti-
!Ions left over from the e;arlier 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 comc
~
bined 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
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rr. 9 to 20 of the Taxation Rules was not complied with inasmuch as no ward assessment-books
were maintained, and consequently, the entries
therein were not authenticated as required by
r. 19;
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(2) that s. 129 suffers from the vice of excessive
delegation of legislative power inasmuch. 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 circumsF
.... _:·
tances 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.1.P.
tax.
G
Later, Mr. Jyengar gave up the third contention. We are, therefore, 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 mainH
tained by him under the Taxation Rules.
Each year he went
, ii>·
through the procedure for authentication of the assessment-book
purporting to do so under r. 19 of the Taxation Rules.
After
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FAPALAL v. MUNIC. CORP. AHMEDABAD (She/at, J.)
947
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, 410 and 411, 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 pennission at such ratP, 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 the rate was not an essential 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 statu,tory 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
F
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
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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
H
embodied in the Act, furnished sufficient guidance preventing the
\
vice of arbitrariness or excessive delegation.
(1) [1965]2 S.C.R. 477.
948
SUPREME COURT REPORTS
[1971] 3 S.C.R.
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 assessn;ent-book for each of the wards and not one assessment-book for the whole of the municipal-limits, that that being
so, the assessment made on the properties was not in accordance
with the rules prescribed for that purpose and was therefore in
bre.ach of Art. 265 of the Constitutior ands. 127(2) of the Act
which lays down that the taxes shaJIJ. b~ 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 assessmentbook 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(1)
and 19(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, accordin J 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 ther~n. The rule provided that
the Commissioner shall first make entries under els. (a) to ( d)
of the rule. An entry under cl. ( e), as its language plainly shows,
is to be made after :
(1) the rates of property tax are fixed, (2)
the period fixed for receipt 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 hereinafter provided", the public notice provided by rr. 13 and 15.
According to the High Court, the liability to pay the 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 'as~essment-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 S(lt 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 t_he Municipal Corporation of the City of Ahmedabad v. Zaver1 Keshav·
la/(') by pointing out that that decision was under the Bombay
(I) 6 Guj. L.R. 701.
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13APALAL v. MUNIC. CORP. AHMEDA13AD (She/at, J.)
949
Municipal Boroughs Acts, 1925 which had a scheme and provisions 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 due on the 1st of April of each official
ye.ar; 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
amou~t 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 ass~ent.-books and i;iot to
a single assessment-book, that such authentication has noth.mg .to
do with the accrual of liability and is a mere rule of ey1~ence
which is not available to the Corporation where the Comm1Ss1oner
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 assessme,nt-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
that had not been done before by him."
On this interpretation, the High Court dismissed the entire batch
of the s~id '.0 writ petitions including that of the appellant. Though
the earl~er 1udgme_nt is not m;1.der 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 ~onclusion~ 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. ~27(1) lays do~n 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 sub-
~ection. ~uthorises the Corporation to levy the taxes set out therein
m addition to the aforesaid two taxes. Sec. 129 deals with property taxes.
Cl. ( c) thereof 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 amended
cl. ( c) by inserting therein the maximum' rate of 30% so that
the question as to the absence of maximmn rate is rele~ant only
950
SUPREME COURT REPORTS
[1971) 3 S.C.R.
for t)le 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 catry out, the Act being silent as
to·the. I,Ilaximum rate upto which the Corperi!tion 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 swiming 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 Corpora~on
without' which the delegation of power to tax would be excessive,
arbitrary and violative of Art. 14.
The Act, as its preamble and the Jong title show, was passed
for establishment of municipal corporations in the city of Ahmedabad and Poona and cer\ain 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 rnte in s. 127 probably because its operation was
not confined to any particular city in which the municipal corporation would be se.t 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 it inexpedient to restrict the fiscal powers of the
c'orporations to be established in furture.
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DAPALAL v. MUNIC. CORP. AHMEDABAD (She/at, J.)
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The point for consideration is whether the absence of a provision· 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 leyied 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 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 tlj.an 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 Committee has to wepare 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 subject to the limitations and conditions laid
down in Ch. XI, are 'to be levied for the neitt ensuing offiCial year,
Under s. 100, the Corporation either sends back the budget esti·
mates 'A' or 'B' for further consideration, or a~ts them with
such alterations as it deems expedient. The conditions and limi·
tations subject to which the Corporation can fix, under s. 99, the
rates at which the property taxes a~e to be levied are those pro·
vided ins. 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. 456, the State
Government can at any time req11ire the Corporation to make rules
· under s. 454 in re5pect of any purpose or matter specified in s.
·457, which includes item "(7) Municipal Taxes.-(a) The assess·
952
SUPREME COURT REPORTS
[1971] 3 S.C.R.
ment and recovery of municipal taxes". Thus, although the Act
does not prescribe the maximum rate at which the property taxes
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 pow~r to levy the property tax is so unbridled as to make it possible for the corporation to levy it in an
arbitrary manner or extent.
In all statutes dealing with local administration municipal
authorities have inevitably to be delegated the power of taxation.
Such power is a necessary adjunct to a system of local self-government. 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(') this Court spelt out the policy in the expression "for the purposes of this Act'', an expression also used
ins. 127. In Pandit Banarsi Das Bhanot v. Madhya Pradesh(2i,
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(') 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 hav;: 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, disagre::d
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(') came for consideration in Devi
Das v. Punjab(') w)lere Subba Rao, C.J., speaking for the Court,
said:
(ll [1959] Supo. 2 S.C.R.71.
(3) [1965] 2 S.C.R. 477.
(2) [1959[ S.C.R.427.
(4) [1967] 3 S.C.R. 557.
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BAPALAL v. MUNIC. CORP. AHMEDABAD (She/at, J.)
953
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"If this decision [Libert)! Cinema case(1)] is
an
authority for the positfon 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
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rates .... ".
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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 statu'IOry functions, the Couft did not disapprove Liberty
Cinema case ( 1) but confined the principle laid down there to the
provisions of the C11lcutt11 Munlc1pal A.ct in which the majoritr.
hlld found the requisite 1uldeline1. No sueh 1uidance was 11val •
Able In the Sll!H T11x 111ltulll before the Dench deeldln1 D1vl Dall
ense(1), The po1ltlon which emer11ed from the. lleeldam1 10 f11r,
therefore, w111 that the power to tlx ntes e1m be dele1ated If the·
statute doing so eontalns a polley or prinelples £urn!Jhln1 1uldance to the aelegate in exercising such power.
In the Municipal Corporation of Delhi v, Bir/a Mllls( 8), 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 anq 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 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· {9llowing 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 fa~tor was
not conclusive, it was nonetheless relevant and must
be taken into account with other relevant factors;
(3) th~t the impugned s. 150 itself contained a provision
.
which reqmred that ftie maximum rate fixed by theCorporation should have the approval of the Govern·
ment;
(I) [1965] 2 S.C.R. 477.
(3) 1968(3) S.C.R.251.
(2) [ 1967] 3 S. C.R. 577.
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SUPREME COURT REPORTS
(1971] 3 s.c.R.
(4) that the Act contained provisions which required
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adoption of budget estimates by the Corporation
annually; and
(5) that there was a check by the courts of law where
the power of taxation is used unreasonably or in non-<
compliance or breach of the provisions and objeets of
the Act.
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Referring to Devi Das's case('), he pointed out that (1) that
case did not disapprove Liberty Cinema case( 2 ) was concerned
with a sales rax statute and not with a statute dealing with bodies
with limited purposes, such as local self governing bodies. At
page 268 of the report, he observed :
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"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
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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 taxmg power refrains from providing a maximum rate does not by itself render
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the delegation invalid.
From the provisions of the present Act, cited earlier, it will
be seen that though factor (3) of t]le factors r~lied on by W ai1.s;hoo,
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
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of the factors which exis~ 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 momen~ withdraw that flexibility by fixing
the maximum limit up to which the Corporation can tax. Indeed,
the State Legislature has now done so by s. 4 of Gujarat Act, 8
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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 render such conferment an excessive delegation.
That brings us to the contention regarding the validity of the
.,
. assessment-book maintained by the Commissioner for the assessH
ment year in question.
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(I) [1967] 3 S.C.R. 577.
(2) [1965] 2 S.C.R. 477.
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BAPALAL v. MUNIC. CORP. AHMEDABAD (She/at, /.)
955
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Rules 9 to 21 of the Taxation Rules are headed "AssessmentBook". A comparison of these rules with ss. 156 to 168 of the
Bombay Municiilal 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
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(a) a list of buildings and lands,
(b) the rateable value of each o{ 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 levied for
the year have been duly fixed by the Corporation and
the period fixed by publi£. 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
assessment-book is assessed to each of the property
taxes, if any, liable thereon."
The rule contain Qther 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,
jf 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 l!O 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
SUPREME COURT REPORTS
[1971) 3.