# ANANT MILLS CO. LTD v. STATE OF GUJARAT & ORS

- **Citation:** [1975] 3 S.C.R. 220
- **Court:** Supreme Court of India
- **Decided:** 1975-01-21
- **Case number:** Civil Appeals Nos. 752 to 755, 489 to 513, 643 to 684 of 1973
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/anant-mills-co-ltd-v-state-of-gujarat-ors-6713
- **Pages:** 34

## Headnote

220
ANANT MILLS CO. LTD.
v.
STATE OF GUJARAT & ORS.
January 21, 1975
[A. N. RAY, C.J., P. JAGANMOHAN REDDY, H. R. KHANNA AND
P. K. GOSWAMI, .TJ.)
Constitution of India, 1950, Art. 14-Treating pending coses as a class
.differem from decided cases, if a permissible classi[ic111iv11.
Constitution of India, 1950, Art. 14-Duty of !he person challenging a provision of the Act as discrimi11atory-Constitutio11al validity, if cauld be 'decided
on the basis of supposed existence of certain facts by raising a presumption.
Bombay Provincial Municipal Corporations Act (Bombay Act 59 of 1949)
as amended by Gujarat Acts No. 8 of 1968 a11d No. 5 of 19i0, S,•ctions 129
a11d 137-Conservancy tax for different categories of prop.mies-Tax, if should
be related only to the expense for conserrancy service
for
I/wt
paniwlar
.category.
Bombay Prori11cia/ Municipal Corporations Act (Bombay Act 59 of 1949)
as amended by Gujarat Act Nos. 8 of 1968 and No. 5 of 1970, proviso to
s;ectiot1 129(b)-Corporation to determine dif/er1!nt rates for different classes of
·properties-Prol'iso, if suffers from the vidie of excessii'e delegation of legisl111ive
power.
Bombay Provi11cial M1111icipal Corporations Act (Bom{HI)' Act 59 of 1949)
as amended by Gujarat Acts No. 8 of 1968 a11d No, 5 of 1970, Section 406(2)(e)
rule 42 of Taxation Rules-Appeal against a tax or mteable value-Deposit of
amount claimed condition precedent to e11tertaining appeal-Appellate j11dge
empowered to remol'e u11due hardship ro appe//a11t-Requireme!lt of deposit, if
11ul/ifies right of appea/-Prorfsion if makes im·idio11s disti11ctio11.
A
B
c
D
Constitution of India, 1950, Entry 49, List If, Schedule
V/l-"Land", if
E
includes 1111dergro1111d strata.
The assessment of properties to property tax in Ahmedabad was made under
the Bombay Provincial Municipal Corporations Act by making: entries in the
assessment books in accordan:·e with the procedure prescribed in the Taxation
Rules set out in Chapter VIII of Schedule A of :lhe Corporations Act, A st!parate section of the assessment book was prepared by the Commissioner of the
Corporation for each official year in respect of the assessment of property tax
F
on certain kinds of properties like textile mills,
factories
and bl!.ildings
of
University. These properties were classified as special properties. There was
some increase in the rateable value fixed by the Commi>sioner for the year
1964-65 and 1965-66. The Commissioner also made initial entries in a;sessment
book in respect of those properties for the year 1966-67. A numb·~r of writ
petitions under Art. 32 of the Constitution were filed in this Court .:halJ.w(!ing
the validity of th(' asse·ssments for the yea:rs !964-65 and 1965-66 as \\'ell as
initial entries for the yca,r 1966-67. The Supreme Coun in the judgment N"w
fo.:fanek Spinnfni; & Wea1•i11p, Mills Co, Ltd. & Ors. v. /lfo//iciral CorporatiO!.' of
G
Ci1y of Al1111,-.J,1bud & Ors. [1967] 2 S.C.R. 69, allowed th·~ writ petitions a·nd
hdd the relevant entries in the ass·~ssment hooks to be invalid. Rules 7(2)
and ( 3) were also held to be invalid on account of exc·~ssive delegation
of powers hv the iegi·slature.
The 'taxation on the basis of floor area as
adopted by the Corporation was held to violah~ Art. 14 of the Constitufon.
When the Corporation initiated steps to make fresh assessment for the years
1964-65, 1965-66 and 1966-67. it was unable to do so in view of the decision
of the High Court in the case of A !tmedabad Mu11icipa/ity v. K eslwrlal 6 G.I..R.
H
2'.!8 wherein it wa-i held that the Corporation had no power to a~sess and levy
property tax for uny otncial year after that year had ended. In order to get
over this difficulty. the legislature enacted Gujarat Act 8 of 1968. New Sec. 1::2A
A
B
c
D
E
F
G
H
ANANT MILLS v. GUJARAT (Khanna, J.)
221
and new rules 7 and 2 !B were. inserted. When notices were served on the petitioners to furnish return of the particulars, the petitioners filed petitions in the High
Court challenging tho

## Text

_Characters 0–39,897 of 109,987. This is a partial read: ask again with offset=39897 for what follows._

220
ANANT MILLS CO. LTD.
v.
STATE OF GUJARAT & ORS.
January 21, 1975
[A. N. RAY, C.J., P. JAGANMOHAN REDDY, H. R. KHANNA AND
P. K. GOSWAMI, .TJ.)
Constitution of India, 1950, Art. 14-Treating pending coses as a class
.differem from decided cases, if a permissible classi[ic111iv11.
Constitution of India, 1950, Art. 14-Duty of !he person challenging a provision of the Act as discrimi11atory-Constitutio11al validity, if cauld be 'decided
on the basis of supposed existence of certain facts by raising a presumption.
Bombay Provincial Municipal Corporations Act (Bombay Act 59 of 1949)
as amended by Gujarat Acts No. 8 of 1968 a11d No. 5 of 19i0, S,•ctions 129
a11d 137-Conservancy tax for different categories of prop.mies-Tax, if should
be related only to the expense for conserrancy service
for
I/wt
paniwlar
.category.
Bombay Prori11cia/ Municipal Corporations Act (Bombay Act 59 of 1949)
as amended by Gujarat Act Nos. 8 of 1968 and No. 5 of 1970, proviso to
s;ectiot1 129(b)-Corporation to determine dif/er1!nt rates for different classes of
·properties-Prol'iso, if suffers from the vidie of excessii'e delegation of legisl111ive
power.
Bombay Provi11cial M1111icipal Corporations Act (Bom{HI)' Act 59 of 1949)
as amended by Gujarat Acts No. 8 of 1968 a11d No, 5 of 1970, Section 406(2)(e)
rule 42 of Taxation Rules-Appeal against a tax or mteable value-Deposit of
amount claimed condition precedent to e11tertaining appeal-Appellate j11dge
empowered to remol'e u11due hardship ro appe//a11t-Requireme!lt of deposit, if
11ul/ifies right of appea/-Prorfsion if makes im·idio11s disti11ctio11.
A
B
c
D
Constitution of India, 1950, Entry 49, List If, Schedule
V/l-"Land", if
E
includes 1111dergro1111d strata.
The assessment of properties to property tax in Ahmedabad was made under
the Bombay Provincial Municipal Corporations Act by making: entries in the
assessment books in accordan:·e with the procedure prescribed in the Taxation
Rules set out in Chapter VIII of Schedule A of :lhe Corporations Act, A st!parate section of the assessment book was prepared by the Commissioner of the
Corporation for each official year in respect of the assessment of property tax
F
on certain kinds of properties like textile mills,
factories
and bl!.ildings
of
University. These properties were classified as special properties. There was
some increase in the rateable value fixed by the Commi>sioner for the year
1964-65 and 1965-66. The Commissioner also made initial entries in a;sessment
book in respect of those properties for the year 1966-67. A numb·~r of writ
petitions under Art. 32 of the Constitution were filed in this Court .:halJ.w(!ing
the validity of th(' asse·ssments for the yea:rs !964-65 and 1965-66 as \\'ell as
initial entries for the yca,r 1966-67. The Supreme Coun in the judgment N"w
fo.:fanek Spinnfni; & Wea1•i11p, Mills Co, Ltd. & Ors. v. /lfo//iciral CorporatiO!.' of
G
Ci1y of Al1111,-.J,1bud & Ors. [1967] 2 S.C.R. 69, allowed th·~ writ petitions a·nd
hdd the relevant entries in the ass·~ssment hooks to be invalid. Rules 7(2)
and ( 3) were also held to be invalid on account of exc·~ssive delegation
of powers hv the iegi·slature.
The 'taxation on the basis of floor area as
adopted by the Corporation was held to violah~ Art. 14 of the Constitufon.
When the Corporation initiated steps to make fresh assessment for the years
1964-65, 1965-66 and 1966-67. it was unable to do so in view of the decision
of the High Court in the case of A !tmedabad Mu11icipa/ity v. K eslwrlal 6 G.I..R.
H
2'.!8 wherein it wa-i held that the Corporation had no power to a~sess and levy
property tax for uny otncial year after that year had ended. In order to get
over this difficulty. the legislature enacted Gujarat Act 8 of 1968. New Sec. 1::2A
A
B
c
D
E
F
G
H
ANANT MILLS v. GUJARAT (Khanna, J.)
221
and new rules 7 and 2 !B were. inserted. When notices were served on the petitioners to furnish return of the particulars, the petitioners filed petitions in the High
Court challenging tho~ validity of those notices. Those petitions were ullowed
by the High Court as per judgment dated July 3, 1969 on the ground that
the ·.demand for certain particulars contained in the notices was beyond me
scope of r. 8(1). In the appeal filed by the Corporation against the judgment
dated 3rd July, 1969, the Supreme Court, in its judgment in Municipal Corpora·
1io11 of the City of Ahmedabad, etc. v. New, Sherock Spg. & Wvg. Co. Ltd. etc.
[1971] 1 S.C.R. 288, heid that, as the assessments were not in accordan:e with
law, ihe Crirporation was not entitled to retain that amount.
The Court· also
struck down sub-section (3) of >. 152-A which gave power to •he Corporation
to refuse to refund the amount illegally collected despite the· order of the
Court.
·
For the offici&l year 1967-68 the Corporation determined the rate of conservancy tax to be 3 per cent and a special rate of 9 per cent for the large
premises like textile mills and factories.
The petitioners preferred
appeals
against the order of the Deputy Commissioner determining the amount of
property tax to the Chief Judge of the Court of Small Causes. Ahmedabad ..
The Chief Judge W3's, however, pre:luded from hearing those appeals since the
amount of tax was not deposited by the petitioners as required bys. 406 (2)(e)
of the Corporations Act. The petitioners thereafter filed petitions in the High
Court challenging the validity of the assessments made by the Depu,ty Municipal
Commissioner for the official years 1966-67, 1%7-68 and 1968-69. Those
writ petitions were allowed by the Gujarat High Court as per judgment dated
October 27, 1969.
The ordin&nce dated December 23, 1969, was replaced by
Gujarat Act No. 5 of 1970 which came into effect from March 31. 1970. This
Act brought about material changes in the Corporations Act. .
The High Court held (i) Section 2\IA) Clause (i) is valid so far as it
is applicable to the official year 1969·70 but it is null and void in so far as it
applies to the official years from the commencement of the Corporations Act
upto and including the official year 1968-69, on account of infraction or Art. 14;
(ii) Se:tion 406(2)(~) ands. 41l(bb) are null und void as being in contravention of Art. 14; Rule 42 of the Taxation Ru,1es is also ultra vircs and void
in so far as it' provides that if an appeal is preferred or entertained against
the tax, wa:rrant shall not issue for the recovery of the amount of tax; and
(iii) Th·~ Resolutions passed by the CorporJtion for the official year 1967-68,
1968-69, 1969-70 and 1970-7! to the extent to which they fix the rate of
conservancy tax at 9 per cent inter alia in respect of textile mills and factories
belonging to the petitioners are ultra vires the proviso to s. 129(b) and the
rate of conservancy tax applicable in respect of these textile mills and factories
must. therefore, ·be taken to be the general rate of 3 per .:ent. The High
Court upheld the constitutional validity of provi»o (e) to s. 2(IA) clause (ii)
and sections 49, 129(b), 406(2)(e) and 411 (bb) of the Act ands. 13(1) and
13 t ~) of the Act 5 of 1970.
Ci1il Appeals Nos. 489 to 513 and 752 to 755 of 1973 have been filed
in thi' CouJ·t by the petitioners before the High Cl"urt against the Judgment
of that Court in so far a:s the Court had upheld the wm::tl.!.tional validity of
the impugned provisions. Civil Appeals Nos. 643 to 684 of 1973 have be.en
filec by the Municipal Corporation of the City of Ahmedabad and o~her.; against
·the abovz judgment in so far as the High Court has struck down the impugned
provisions and the Resoiutions.
Civil. Appeals No. 389 to 430 of 1974 have
been filed by the State of Gujarat against the judgment in so far as the High
Court has struck down the impugned provi,ions.
Writ Petitions Nos. 51, 60 to
73, 87 to 91. 197. 492 to 503, 533, 534 and 583 of 1972 as also writ petitions
Nos. 1866 to 1877 and 2046 of 1973 which have been filed by the Aryodaya
Spg, & Wvg. Mills Co. Ltd. and other parties involve substantially the same
question which arises in appeals, thou.gh some of these writ petitions relate
to the subseql\ent period of 1971-72. Writ Petition No. 74 of 1972 filed by
the Ahmedabad Electricity Co. Ltd. involves an additional point regarding its
liability to pay property tax which has been levied on the ground that it o:cupies
land below the surface for underground cables.
/
\
222
SliPREME COURT REPORTS
.l.1975] 3 s.c.R.
Reversing the decision of the High Court,
HELD : ( i) As the affidavit filed on behalf of the re;pondents di·sclo;~s that
the factual position as it existed refore th,: promu gation of Ordinance 6 of
1969 was that the provisions of the Bombay Rwt Ac~ were not tai(·on into
account in determining the rateable value, there would b0 no escape frcm 1he
conc·lusion that no differential treatment has been meted out to pending cases
in clause (i) of s. 20A). Ti)ere is a presumption of rhe constitutional validity
A
-0f a statutory provision. In case any party assails the validity of any provision
B
on the ground that it is violative of Art. 14 of the Con~titution. it is for that
party to make the ne::essary averments and adduce material to show discrimina1ion violative of Art. 14. No a1·-erments were made in the petitions before
the High Court by the petitioners that the assessm~nts before the coming into
force of Ordinance 6 of 1969 had been made by taking into account the rent
restriction provisions of the Bombay Rent· Act. It is extremely hazardou·i to
decide the question of constitutional validity of a provi;ion on the basis of the
supposed existence of certain facts by rnistng a presumption. lt is very clear
.that the Hi&h Court has acted on an incorrect u.mtmption. [236G-23'.'El
C
Assessment Committee of the Metropolitan Borough of Poplar v. Roberts
[1922] 2 A.C. 93, Gu/am Ahmed Rooo· v. Bombay Municipality A.Ul. 19Sl
Bom. 320 and The Corporation of Cairn/la v. Sm. Padma Devi and Ors. [1962]
.3 S.C.R. 49, referred to
(ii) Classification by treating decided cases as belonging to one caitcgory
and pending ca>es as belonging to another category is
reasonable
and
not
per se offensivi: to Art 14 of the Constitution.
[238H-239A]
D
Ram Krishna Dalmia v. Shri Justice S, R. Tando/kar, [1959] S.C.R. 279,
Khandige Shah Bhav v.
1~gricu/tural Income-lax Officer, [1963] 3 S.C.R. 809,
Rao Shiv Bahadur Singh v. State of Vind.~ya Pradesh [1953] S.C.R. 1188, 1197.
Hathisingh Manufacturing Co. Ltd. v. Union of Jndia [1960] 3 S.C.R. 528 and
Jain Bros. and Ors. v. Tile Union of India & Ors. [1970] 3 S C.R. 253, referred
·to.
(iii) The scheme of the Corporation Act appears to be that in the case
of premises used solely for public purposes and not intended to be med for
purpo!!CS of profit or in the case of premises intended to be used for residential
or charitable or religious pu.rposes in respect of which conservancy tax is payable
by the Government, the rat: of conservancy tax should be lower \compared to the
rate of general conservancy tax'. What is required by s. 129 is that before
determining the rates of cod'servMicy tax for different categories of propertie~
the Corporatio11 should find out the total expense it would have to incur for
the various purposes mentioned in clause (b) of that section.
After having
·ascertained the total expccse it would be permi11Sible to the Corporatton to fix
different rates of conecrvaccy tax for v1ulo11s categories of properties. It b
not essential except !n cues me11tloned in sub.sections (2) and (3) of s. 137
that the rate of conservancy tax for a particular category of properties should
'be such as wo·uad be Nlated only to the expense for con~rvancy mvii:<! for
that particular category of properties. Clause lb) oi s, 129 al•so takes into
.account the expecse required for efficiently maintaining and repairing the municipal drains and for finding out the total expenditure for .conserva11cy S·ervice.
The High Court. was, therefore, in error in striking down the resolution passed
by the Corporation. [242E-F; 244F-H; 245B-C]
·
.
(iv) The "opinian of Corporation" mentioned in clause (b) of section 129
'is formed after budget estimates are prepared in accordance with Ss.
!~S. 96
and 100 of the Corporations Act. The entire procedure provides built-insafeguards and lays down adequate guidelines in the matter of taxation.
lt
cannot, therefore, be said that the legislature has not prescribed any guiding
principle for the Corporation for determining the rates of conservancy
tax.
f245F·G. H-246Al
(v) The bar created by s. 406(2)(c) to the entertainment of the appeal by
a person who has not deposited the amount of tax due from him and whe> i~ not
E
F
G
H
A
8
c
D
E
F
G
H
ANANT MILLS v. GUJARAT (Khanna, J.)
223
able to show to the appellate judge tha:'. the deposit of the amount would cause
him undue hardship arises out of his own omission and default. A disability
or disadvantage arising out of a party's own default or omission cannot be taken
to be tantamount to the creation of two classes offensive lo Art. 14 of the
Constitution, especially when that disabiliiy or disall'lantage operates upon all
persons who make the default or omission. Section 406 (2) ( e) i> constitutionally
valid and, in as much as <he validity of s. 411 (bb) and r. 42 binges on the
validity of sec. 406(2)(e) all the three provisions are constitutionally valid.
f247D-248C. F-Gl
Hannah Cohen, Ex. of Sol,
Cohen,
De.cnisc•,1',
and
Da1•id
E. Cohen,
bitc1Te11er, l'elitimr,n & .. for., v. Beneficial Loan Corpo.·a1io11 & Ors. 337 U.S.
539, referred lo.
(vi) There can be no doubt that land in entry 49 of List JI would include
underground 5trala . The word "land" has also been defined in clause (30) of
s. 2 of the Corporations Act to include land which fa being built upon or is
built upon or covered with water, benefits to a:rise out of land, things attached
to the earth or permanently fa·stened to anything attached to the earth or
permanently fastened t.o anything attached- to the earth and rights created by
legislative cllllctmcnt over any street. This definition is of inclusive 11<1ture and
does not exclude from its ambi't the underground strata of the land. The
petitioner-company is in oo:upation of the land whetein underground supply
line i~ laid.
f249E-F: 250D-El
E/ectJ'ic Telegraph Co. v. Salford O»e:secrs, [1855] 11 Ex. 181, 186, Mysore
A/denritn and Council/or3 of .the City of Westminster Ors.
v.
The Sout/iem
Railway Company, Tiu Railw.ay Assessment Authority and W. IJ. Smii/1 & Son,
Limited &: Ors, 1936 A.C. 511, The Assessment Committ~e of Holywel/ Union
& Anr. v. Ha/kyn District Mines Drainage Col, [1895] A.C. 117 Rex. v. Chelsea
Waterworks Company, 5 B. & Ad. 156 and Reg v. foJiest Middlesex Waterworks,
1 E. & E. at p. 720, referred lo.
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 752 to 755,
489 to 513, 643 to 684 of 1973 & 389 to 430 of 1974.
From the Judgmei,1t and order dated the 4th December, 1972 of
the Gujarat High Court in Sp!. Civil Appeals. Nos. 233, 239-241, 339,
488, 1634, 1635 and 1636 of 1971, and
Writ Petitions Nos. 51, 60 to 74, 87 to 91, 157, 492 to 503, 533534 and 583 of 1972 and 1866 to 1877 &: 2040 of 1973.
Y. M. Tarkundt (In C. ~. Nos. 752, 489, 643, 389 and W.P.
Nos. 51 and 74/72), C. T. Daru and Ravinder Narain, P. C. Bhartari,
K. M. DeUli and K. J. John, for the petitioners, (In all the W.Ps.) and
Appellants (fa C.As. Nos. 489-513, ,752-755 /73) and respondent No.
1 (C.As. Nos. 643-47, 650-654, 658-664, 667-671, 674, 678, 679
Wld 681-684/73).
F. S. Nariman, Additional Solicitor General of India, S. B. Vakil
and /. N. Shroff, for appellants (In C.As. Nos. 643-684/73) and for
respondent No. 3 (In all the W.Ps.) for respondents Nos. 2-4 (In C.As.
Nos. 489-497) respondent Nos. F4 (In C.As. Nos. 498-511) respondent Nos. 2-5 (In C.As. Nos. 512-513) respondent No. 2-4 (In C.A.
No. 752) respondent Nos: 1-4 (In C.A. Nos. 753-754) respondent
Nos. 2-5 (In C.A. No. 755) and for respondent Nos. 1-3 (In C.As.
Nos. 389-430/74).
224
SUPREME COURT REPORTS
[1975] 3 s.c.R.
M. C. Bhandare and M. N. Shroff, for the appellants (In C.As.
Nos. 389-430) respondent No. 7. (In C.A. No. 389-497, 512-513)
respondent No. 5 (In C.As. Nos. 498-510) respondent No. 2.
(In
C.A. Nos. 643-678, 681-684) respondent No. 3 (In C.As. Nos. 679680) respondent No. l (In C.As. Nos. 752-755) respondent No. 5
(In C.As. Nos. 753) respondent No. 6 (In C.A. No. 754) and respondent No. 4 (In all the W.Ps.)
C. S.S. Rao, for respondent No. 5 (In C.A. No. 752/73).
R. H. Dhebar and B. V. Desai, for respondent No. 4. (ln C.As.
Nos. 417-418174) and In C.As. No. 656-657 of 1973).
The Judgment of the Court was delivered by
KHANNA, J .-Questions relating to the constitutional validity of the
different provisions of the Bombay Provincial Municipal Corporations
Act (Bombay Act 59 of 1949) (hereinafter referred to as the Corporations Act) as amended by Gujarat Acts No. 8 of 1968 and No. 5 of
1970 arise for determination in these appeals and the connected writ
petitions. The Corporations Act was enacted by the Bombay legislature in December 1949 for the establishment of mU'ilicipal corporations
in the cities of Ahmedabad and Poona. It was applied to Ahmiedabad
on July 1, 1950.
The assessment of properties to property tax in Ahmedabad was
made under the Corporations Act by making entries in the assessment
books in accordance with the procedure prescribed in the Taxation
Rules set out h1 Chapter VIII of Schedule A of the Corporations Act.
'A separate section of the assessment book was prepared by the Commissioner of the Corporation for each official year in respect of the
assessment of property tax on certain kinds of properties like textile
mills, factcries and buildings of university.
These properties were
classified as special properties.
The rateable value of properties included in the Special Property Section was previously determined on a
float rate for every 100 sq. ft. of the floor area. In arriviug at the figure
of the rateable value, the plants and machinery situate upon lands and
buildings were also taken into account as provided in clauses (2) and
( 3) of rule 7 of the Taxation Rules. There was some increase in the
rateable value fixed by the Commissioner for the years 1964-65 ~nd
1965-66.
The CommissiO'aer also made initial entries in assessment
boo.k in respect of those properties f0r the year 1966-67. A number
of writ petitions under article 32 of the Constitution were filed in this
Court challenging the validity of the assessments for the years 1964-65
and 1965-66 as well as the initial entries for the year 1966-67. Those
writ petitions were disposed of by this C0urt by a judgment delivered
on February 21, 1967 and reporterl as New Manek Chok Spinning &
Weaving Mills Co. Ltd. & Ors. v. Municipal Corporation of the Cit)•
of A111nedabad & Ors.( 1) This Court allowed the writ petitions and
held the relevant entries in the assessment books to be invalid. It was
held in that case that the State Legislature had no competence under
entry 49 of the State List i'.1 the Seventh Schedule to the Constitution
to make a law for taxing: plant and machinery. Rule 7(2) was held
to be beyond the legislative competence of the State. Rules 7(2) and
(!) [1967) 2 S.C.R. 679.
T!ll!IZ''''lnl!'! .. Pf
A
B
c
D
E
F
G
1:1
A
8
c
D
E
F
G
H
ANANT MILLS v. GUJARAT (l(lwnnti, J.)
225
( 3) were also held to t:>e invalid on account of excessive delegation of
powers. by the legislature.
Under those rules the specification of the
classes of machinery for the purpose of taxation was to be made by
the Commissioner with the approval of the Corporation irrespective of
the questioa as to where they were to be found.
ThiS Court found
that it depended upon the arbitrary will of the Commissioner as to
what machinery he would specify and what he would not <and that he.
was the only person who could examine this question as there was no
right of appeal. Dealing with the method of levy of tal( on the basisof floor area, this Court observed that it was against the provisiorui of
the Act •and the rules· made thereunder altld that it had not been shown
that conditions prerequi~ite for determination of the annual value on
that basis had existed at the relevant time. The above method of taxation on the basis of floor area, it was held, was violative of 'llrticle 1-4
of the Constitution as it would in tho absence of cllSliification ol
f&ctories on any rational basis give rise to inequalities.
Although the Supreme Court directed the Corporation to prepare
fresh <assessment lists relating to properties in the Special Property
Section for the official years 1964-65, 1965-66 and 1966-67, the Coe·
poration was unable to do so in view of the decision of the High Court
in the case of Ah~dabad Municipality v. Keshavlal( 1) wherein it WM
held that the Corporation had no power to assess and levy property
tu for any official year after that year had anded. The legislature in
order to get over this difficulty enacted Gujarat Act 8 of 1968 and by
this amefading Act inserted inter alia new section 152A in the C0rpora·
tions Act.
The new section conferred power on the Corporation. to
assess or re-assess property taxes if the original assessment was affected
by a decree or order of a court da either of the grounds on which the
Supreme Court !:rad set aside the es8essment for the official years 196465, 1965-66 and 1966-67 in New Manek Chowk Mills case (supra).
The amending Act also substituted new rule 7 for the old rule which
contained the offending clauses (2) and (3). Rule 21B was also inserted by the amending Act and the said rule permitted the Municipal .
Commissioner to make fresh valuatie!.1 of properties <after the expiry ·of
tho official year if preparation or completion of the assessment beloce
the expiry of the official year were or would be affected on account of
any order of a court. After the amending Act had come into force.
the Corporation initiated proceedings for re-assessment of lands and
buildings of the petitioners to property tax for the official years 196465, 1965-66 alnd 1966-67. When notices were served on the petitioners to furnish return of the particulars, the petitioners filed petitions in the High Court challenging the validity of those notices. Those
petitions were allowed by the High Court as per judgment dated July
3, 1969 on the ground that the demand for certain particulars contJained in the •,10tices was beyond the scope of rule 8 ( 1) . The contentioo
of the petitioners in those petitions that no assessment could be_rn,ade
after tho expiry of the official year was reoelled and it was held that
the Corooration had the nower under section 152A to r~assess lands
and buildings of the petitioners to property tax for the official years
19~65. 1965-66 and 1966-67 notwithstanding the expiration of those
(.t) 6 G.LR. 228.
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yeim. · The High Court also held that the new section .did not stand in
the way of the petitioners getting refund of the property tu already
paid. · Appeal was filed in this Court against the above judgment by
the Corporation.
.
The Ahmedabad Corporation, it may be stated, used to pass
:i
resolution u'ilder section 99 of the Corporations Act determining the
rate at whi:ch property tax would be levied for the particular official
year. So far as conservancy tax was concerned, the rate determined
by the Corporation was 3 per cent. A special rate of conservancy tax
of 7t per c:ent was,, however, fixed by the Corporation for tht: official
year up to 1966-67 for hotels, clubs, stable8'\ theatres or cinemas or
other large premises including mills and factories registered under the
Fiactories Act and where fifty or more workmeii1 were employed in
manufacture for all the shifts. For the official year 1967-68 the Corporation determined the rate of conservancy tax to be 3 per cent and a
special rate of 9 per cent for the large premises mentioned above. The
rate of general tax for ordin•ary property was fixed on a graduated
scale but 011 properties used by textile mills the rate was uniform at
30 per cent. The powers of the Commissioner under the Taxation
Rules were entrusted to the Deputy Municipal Commissioner by virtue
of an office order issued under section 49(1). The Deputy Commissioner thereafter determined the rateable value of the lands and buildings of the petitioners. The petitioners preferred appeals against the
order of the Deputy Commissioner determining the amount of property
tax to the Chief Judge of the Court of Small Causes Ahmedabadl. The
Chief Judge was, however, precluded from hearing those appeals since
the amount of tax was not deposited by the petitioners. as required by
section 406 ( 2) ( e) of the Corporation Act. The petitioners the:reafter
filed petitions in the High Court challenging the '"'1Hdity of the asse~s
ments made by the Deputy Municipal Commissioner for the official
years 1966-67, 1967-68 and 1968-69. Those writ petitions were
allowed by the Gujarat High Court as per judgment dated Octot1er 27,
1969. It was held that section 49 of the Corporation Act did ncit con·
template delegation of judicial or quasi-judicioal powers by the Muni·
cipal Commi~sioner under taxation rule 18 and that disposal of complaints by the Deputy Commissioner was not permi.ssible. The High
Court also declared section 406(2) (c) violative of article 14. Part of
rule 42 which related to distress or >attachment for default in payment
of tax was also struck down on the ground that it could not stand independently of section 406(2)(e). The fixation of special ratf: of 9
per cent for conservancy tax in respect of large premises including
mills aad factories was also held to be illegal and void.
The officral year 1969-70 having in the meantime commenced, the
Municipal Commissioner adopted under taxation rule 21 the entries
of the official year 1968-69 as the entries for the official year 1969-70.
Complaints were then filed by the petitioners against the amount of
rateab1e value entered in the ~ssment books. During the pendency
of those complaints, the. Governor of Gurarat promulgated Ordinance
No. 6 of 1969 on ~:ember 23, 1969. The ordinance was rertaced
by Gujarat Act No. 5 of 1970 which came into force with effect from
March 31, 1970. The ordinance amel\ded the definition of rat~ble ·
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ANANT MILLS v. GUJARAT (Khanna, J.)
227
value as well as section 49 with retrospective effect. It also contained
·certain ·valid'itins provisions. Gujarat Act 5 of 1970 was on the line •
of Ordinance No. 6 of 1969, except in the ID!ltter of definition of rateable value. A number of petitions in the meantime were filed to challenge the validity of •the provisions of Ordinance No. 6 of 1969 and
those of Act 5 of 1970.
For the official year l~n0-71, the valuation was made in accordance with Gujarat Act 5 of 1970. A number of writ pe'itions were
filed before the Gujarat High Court challenging the provisions . of
Gujarat Act 5 of 1970 as well as the valuation for the year 1970-71.
In the meantime, on April 17, 1970 appeal filed by the Corporation against judgment .dated July 3, 1969 of Gujarat High Court was
dismissed by this Court:
The decision of this Court was given in
Municipal Corporation of the City of Ahmedabad, etc. v. New Shorock
Spg. & Wvg. Co. Ltd. etc.( 1). It was held by this Court that under
·section 152A before the Corporation can retain an amount collected
as property tax, there must be assessment according to law. As the
impugned assessments were not in accordance with law, the Corporation was not entitled to retain that amount. This Court also struck
down sub section (3) of section 152A which had been added by
Ordinance 6 of 1969 and which gave power to the Corporation to
refuse to refund the amount illegally collected despite the ordi;ir of the
court
It may be stated that the dispute with which we are concerned in
the present appeals and writ petitions relates to assessment to property
tax of large premises like textile mills, and factories. One writ petition
relates to an electricity company,
Before setting out the findings of the High Court and dealing with
the questions which arise for determination in the appeals and writ
petitions before us, we consider it appropriate to refer to some of the
relevant provisions. Section 127(1) of the Corporations Act requires
the Corporation to impose inter ~lia property taxes1 "Property taxes",
according to section 129, shall comprise (a) water tax, (b) conservancy tax, and (c) a general tax. Clause (b) and the relevant part
of clause ( c) of that section read as under :
"For the purpose of sub-sectipn (1) of Section 127 pro·
perty taxes shall comprise the following taxes which shall,
subject to the exceptions, limitations and conditions hereinafter provided, be levied on buildings and lands in the City :-
(a) ............... .
(b) a conservancy tax at such percentage of their rateable
value as will in the opinion of the Corporation suffice
to provide for the collection, removal and disposal
by municipal agency, of all excrementitious and pol~
luted matter from privies, urinals and cess-pools and
for effi~iently maintaining and repairing the munici-
--.
pal drams constructed or used for the· receipition or
(I) (1971] I S.C.R. 288.
228
SUPREME COURT REPORTS
[1975] 3 s.c.R.
conveyance of such matter, subject however to the
provisos that the minimum amount of sue~ tax to be
levied in respect of any one separate holdmg of land
or of any one building or of any one portion of a
building which is let as a separate holding shall be
eight annas p~r mensem and that th<! amount of such
tax to be levied in respect of any hotel, club or other
large pwmises may be specially fixed under section
137;
( c) a general tax of not less than twelve per cent. of their
rateable value, which may be levied, if the Corpora"
tion so determines, on a graduated scale
Provided . . . . . . . . . . . .
C
Accordng to section 99 the Corporation shall, on or bef01:c the twentieth day of February, after considering the Standing Committee's pr°"
posals in this behal( determine inter alia subject. to Iimi~~ions and
conditions prescribed in Chapter XI, the rates at which municipal taxes
referred to in sub sec;tion (1 ) of section 12 7 shall be levied in the next
ensuing official year. "Official year" has been defined in section 2( 44)
D
to mean the~ year commencing on the first day of April. Section 137
reads as under :
"(l) The Commissioner may, whenever he thinks fit, fix
the conservancy tax to be paid in respect of any hotel, club,
stable or other large premises at such special rate as shall
be generally approved by the Standing Committee in this behalf, whether the service in respect of which such tax is leviII:
able be performed by human labour or by substituted means
or appliances.
(2) In the case cf premises used solely for public purposes and not used or intended to be used for purposes of
profit or for residential or charitable or religious purposes in
respect of which the conservancy tax is pavable by the GovF
ernment the Commission:er shall fix the said tax at a special
rate approved 21s aforesaid.
(3) In any such case tbe amount of the conservancy tax
shall be fixed with reference to the cost or probable cost of
t~e collection, removal and disposal, by the agency of municipal conservancy staff,
of excrementitious and polluted
matter from the premises."
G
.section 150 relates to suppl
1ementary taxa'ion.
Clause (l) of
sect10n 49 enables a Deputy Municipal Commissioner, subject to the
orders of the Commissioner, to exercise such of the powers and oerform such of the duties of the Commissioner as the Commissioner
shall fr?m time to time depute to him. Section 406 deals wi'h appeals.
!"-ccordmg to. clause (1) of section 406. subiect to the provisions heremafter contained, appeais against any rateable value or tax fi.xed or
H
charged under the Act shall be heard and determined bv the Judge
"Judge" has been defined in clause (29) (as amended by Act g of
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ANANT MILLS v. GUJARAT (Khanna, J.)
22 9
1968) of section 2 to mean in the city of Ahmedabad the Chief Judge
of the Court of Small Causes. Clause (e) of sub section
(2)
of
section 406 states that no appeal shall be heard against a tax, or in
the case of an appeal made against a rateable value after a bill ior
any property tax assessed upon such value has been presented to the
appellant, unless the amount claimed from rhe app~llant has been d~-·
posited by him with the Commissioner. Section 411 (as amended by
Act 8 of 1968) makes provision for appeal to the 'High Court from a
decision of the Judge in an appeal in certain contingencies.
Clause.
(54) of section 2 defines "rateable value" to mean the value of any
building or land fixed in accordance ·with the provisions of the Act
and the rules for th1: purpose of assessment to property taxes. According to section 453, the rules in the schedule as amended from time
to time shall be deemed to be part of the Act.
Chapter VIII of the
schedule contains the Taxation Rules. According to clause
( 1)
of
rule 7, in order to fix the rateable value of any building or land assessable to a property-tax there shall be deducted from the amount of the
annual rent for which such land or building might reasonably be expeted to let from year to year a sum equal to ten per ce.nt of . the
said annual rent, and the said deduction shall be in lieu of all allowance for repairs or on any other account whatever. Clauses (2) and
( 3)
of that rule need not be set out as they were struck down by
this Court in the case of New Manak Chowk Mills (supra). Rule 9
relates to the keeping of an assessment book in which shall be entered
inter aliai every year the ·rateable value of buiklings and lands in the
city of Ahmedabad determined in accordance with the provi!.ions of
the Act and the rules as also the names of persons primarily liable
for the payment of property taxes, if any, leviable on each such building or land. Clause ( 1) of rule 42 reads as under :
" ( 1 ) · If the person on whom a notice of demand has been
served under rule 41 does not within fifteen days from such
service pay the sum demanded or shows sufficient cause for
non-payment of the same to the satisfaction of the (',ommiss!oner and if. no appeal is preferred against the said tax, as
heremafter provided, such sum, with all costs of the recovery,
may be levied under a warrant in Form H or to the like
effect, to be issued by the Commissioner, by distress and sale
of the moveable property of the defaulter or the attachment
and sale of the immovable property of the defaulter or, if
the defaulter be the occupier of an.y premises in respect of
which a property-tax is due, by distress and
sale of any
moveable property found on the said premises or. if the tax
be due in respect of ~ny vehicle, boat or animal by distress
and sale of such vehicle, boat or animal in whomsoever's
ownership, possession or control, the same may be."
W,e may now set .out the material chan.ees brou.itht out in tho Cor- .
porat10ns Act by Gu.iarat Act No. 5 of 1970. Seetions 2, 4, 6. 7,
10, 11, 12 and 13 of (2) of the amending Act read as under:
"2. In the ~ombay Provincial· Municioal
Corporations
Act~ 1949 (he rem after referred to as 'the principal Act') in
section 2,-
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230
SUPREME COURl' REPORTS
[19751 3 s.c.R.
(1) before clause (1) the following clause shall be, and shall be
deemed always to ha.ve been, inserted, namely :-
, ( 1 A) 'annual letting value' means,-
(i) in relation to any period prior to 1st April, 1~70,
the annual rent for which any building or l~nd or pre~s1:s,
exclusive of furniture or
machin1~ry
con~a1ned0 or situate
therein or thereon, might, if the Bombay Rents, Hotel and
Lodging House Rates Control Act, 1974 were not .in forc:e,
reasonably be f~xpected to let from year to year wtth reforence to its use :
(ii) in relal!ion to any other period, the annual rent for
which any building or land or premises, exclusive of furrriture or machim:ry contained or situate there in or thereon,
might reasonably be expected to let from year to year with
referenc:e to its use;
and shall include all payments ·made or agreed to be made
to the owner by a person (other than the owner) occupying
the building or land or premises on account of occupation,
taxes, insurance or other charges incidental thereto
Provided that, fur the purpose of sub clause (ii),-
(a) i.n respei:t of any building or land or premises the
standard rent of which has been fixed under section
11 of the Bombay Rents, Hotel and Lodging House
Rates Control Act, 1947, the
annual rent there·of
shall not exceed the annual amount of the standard
rent so fixed;
( b) in the case of any land of a class not ordinarily le:t,
the annual rent of which cannot in the opinion of
the Commissoner be easily estimated, the annual rent
shall be deemed to be six per cent of the estimate:d
market value of the land at the time of assessment;
( c) in the case .gf any building of a class not ordinarHy
let, or in the case of any industrial or other premisc:s
of a class not ordinarily let. or in the case of a class
of . such pr7mi~es the building or buildings in which
are not ordmar1ly let, if the annual rent thereof cannot
in the opinion of the Commissioner be easily estimated, the annual rent shall be deemed to be six Jl(:r
c.ent of the total of the estimated market value, at the
time of the assessment, of the land on which such
building or bu!ldi~gs sta~ or,. as the case may be:.
of the land which 1s comprised m such premises, and
the ~stimated ~os.t. at the time of the assessment, of
~:reeling th.e ?uildmg, or as the case may be, the buildmg or bu1ldmgs comprised in such premises;'.
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ANANT MILLS v. GUJAM.T (Kha1111a, J.)
2 31
(2) for clause ( 54), the following shall be, and shall be deemed
alW!lYS to have been, substituted, namely :.-
' ( 54) 'rateable value' means the value of any building
or land fixed, whether with reference to any given premises
or otherwise, in accordance with the provisions of this Act
and the rules for the purpose cf assessment to property taxes;'
4. In section 49 of the principal Act, in sub-section (1),-
( 1) for the words 'such of the duties of the Cqmmissillncr'
the words
'such of the duties of the Commissioner,
including powers and duties of a judicial or quasi-judicial
nature,' shall be, and shall be deemed always to have been,
substituted; .
(2) after the first proviso, the following further proviso
shall be, ind shall be deemed always to have been, adde<;l,
namely :-
. 'Provided further that nothing in this sub-section shall be
deemed to empower the Commissioner to issue any order
regulating the exercise of powers or performance of duties of
a judicial or quasi-judicial nature deputed by him.'
6. In section 129 of the principal Act, to clause (b). the following
· proviso shall be, and shall be deemed always to have been, added,
namely:-
'Provided that when determining under section 99 or_
section 150 the rate at which conservancy tax shall be levied
for any official year or part of an official year, the Corporation may determine different rates for different classes of prd·
perties.'
7. In section 137 of the principal Act, to sub-section (1)
the
fol.lowing proviso shall be added, namely :-
'Provided that if the Corporation shall have determined
for any official year any different rate of conservancy tax for
any class of properties to which any of the properties referred
to in this sub-section belongs, the Commissioner shall not,
without the previous approval of the Corporation, fix, for
such official year or part thereof, the conservancy tax to be
paid in respect of any property beloging to such class for
which such different rate may have· been determined by the
Corporation, at any other different rate U'lder this subsection.'
10.