c ff B1'.RSI MUNICIPAL COUNCIL BARSI, DISTRICT SHOLAPUR v. LOKAMANY A MILLS, BARSI, LTD., BARS! AND ANOTHER (With Connected Appeal) September 19, 1972 [A. N. GROVER, K. K. MATHEW AND A. K. MuKHERJEA, JJ.]
Bombay Municipal Borough Act, 1925, Section 75 Explanation. Bombc.y Municipal Boroughs Rules-Rule 2(c) Boroughs Municipali- ties (Validation of certain taxes on buildings and lands) Act, 1965, Sec- tions 8 and 4.
A levy of tax cannot be validated by a validating act unless the charging section, ~arUer struck ,folrn, is revived or resurrected. The Supreme Court, in Lokmanya Mills, Barsi Lrd. v. Barsi Borough Municipalit,v (1962) 1 SCR 306 struck down Rule 2(c) as being violative of Art. 14 of the Constitutio,1> 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 Munici- palities (validation of certain faxes on buildings and lands) Act 1965, to validate the levy and collection of the tax with retrospective effect and to enable the mu.11icipalities to levy house tax on mills factories and buildings on the basis o'f Rule 2(c). Explanation to Sec. 75 of the Act was substi- tuted by the new explanation, by the Valida.ting Act.
Ss. 4 and 5 are designed to validate the levy .. nc! collection of tax with retrospective effect. On challenge through a Writ Petition, the Division Bench of the Bombay High Court struck dow,n Sections 3(b), 4(1), 4(2) and 5 of the Validating Act for tpeir contravention of Art. 14. The appeal filed by the State and the Barsi Municipal Council before this Courl, among other things, raised a question as to whether the Validating Act has resurrected the provisions of Rule 2(c) arid 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 IDfver 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 t'ax on mills, factories and buildin!!S connected therewith. After Rule 2(c) was struck down, the Municipality did not frame any rule under the provisio:oo of Section 75 of the Boroughs Act for imposing tax on mills, factories or buildings connected therewith.
Section 4 of the Validating Act does not revive or resurrect Rule 2(c). Since the charging section is :oot revived, there was no authority uncler 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 Wr'it Petition and there was no need to express an opinion on the validity of the impugned sections Of the Validating Act.
[404F] CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1194, 1196, 1197 & 1250 of 1967. (1973] 2 S.C.R. 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 appel!ant (inc.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 !250/67 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. Maheslnvari, 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 Couvt challenging the validity of the Borough Municipalities (Validation of Certain Taxes on Build- ings and Lands) Act, 1965 (Maharashtra Act No. III of 1966), hereinafter called the "Validating Act", on the .ground that the provisions of the Act violated thdr fundamental
rights under Art. 14 of the Constitution and for restraining the appellants from levying house tax on the mills, factories and buildings con- nected therewith of the respondents or collecting tthe same from them.
A Division Bench of the High Court held that seotions 3(b), 4(1), 4(2) and 5 of the Validating Act were invalid as they contravened Art. 14 and ,l(ranted the prayer for restraining the appel!ant-Municipality from levyin.e; and collecting the tax. These appeals, by certificate, are directed against the judg- ment of the Division Bench.
Till the year 1947, the appellant-Municipality used to levy house tax on the mills, factories and buildings connected there- with of the respondents in these appeals on the basis of their annual letting value and the annual !~ting_ value for thi~ purpose was ascertained in the normal way, that 1s, by ascertammg the amount at which tthe 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 :
c BARSI MUNICIPAL COUNL. v. LOKAMANYA MILLS (Maihew, J.) 40 I "2 ( c) In the case of mills and factories and build- ings conncC'ted therewith, house tax on buildings shall be levied at the usual rate on the annual rental value
fixed at Rs. 40/- for eYery 100 square feet or portions thereof for each storey, floor or cellar. "Explanation : The expression "building connect- ed therewith" means and includes warehouses, go-
downs, mi!lshops, etc. which are within the compound of mill premises but does not include residential build- ings, 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 annnal 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 p11~mises.
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 Lid. v. Bars/ Borough Municipality('). 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 q.te on lands and buildings on the basis of their capital or annual letting value and that in framing rul·~ 2(c), the Municipality had adopted a mode of valuation different from the one sanctioned by the B(lroughs Act. The Court also observed :
"The vice of the rule lies in an assumed uniformity of reti;m per SQuare foot which structures of different classes which are in their nature not similar, may reasonably Mch if let out to tenants and in the virtual
deprivation to the rate-payer of his satutory right to object to tb:e valull.tion." Accordinj!ly, the Court allowed the appeals and decreed the suits. The main objects of the Ve lida!ting Act were
to enable the ·municipalities governed bv the Boroughs Act to levy house tax on mills, factories and buildings connected therewith on the basis of rule 2 (c) an_d to validate the levy and collection of the tax with retrospective effect.
Section 3 of 'the Validating Act (!) [19621 I .S.C.R. 306. -I 0 ~ brings about certain amendments in the Boroughs Act. In s. 3 of the Boroughs Act. a clause is ins-~rted which lays down that "rate on buildings or lands'' includes any tax imposed on build- ings or lands.
Another amendment introduced in. the Boroughs Act is with reference to Explana:tion to s. 75. Prior to the amendment. the explanation to s. 75 was as follows : "In the case of lands the basis of valuatfon may be
either capital or annual Jetting value." This explanaiion 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, factories buildings and lands connec<ted therewith; (iv) the capital valw~. in the case of vacant lands".
Both these amendments were given retrospective effect from the commencement of the Boroughs Ac<t. 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 coll·~cted 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 deel!led to
have been levied and collected by or underthe Boroughs Act as amended by this Act; and accordingly notwi:h- standing anything in any judgment, decree or order of any Court any suc'h 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 lev~~ on the basi~ of the ai:inual
lettinr value. or was levied on the bas.is of a u111forp.1 rate on the floor area, or that it was levied on the basts c BARS! MUNICIPAL COUNL. v. LOKAMANYA MILLS (Mathew, J.) 403 of capital value or a pero~ntage on _such value, or on
the )l,round that any proceeding laid down in the Boroughs Act or in the rules was not followed." "4(2) anyithing 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 mad-~ thereunder for or in connection wi'th the levy or col- lection of the said taxes, shall be deem~d for all pur-
poses -to have been validly done or taken; and no suit or other legal proceo~dings whatsoever shall be enter- tained 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 cono~rned 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 therewi'th 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 retrospeciive 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 ('I) on the basis that the Boroughs Act authorized levy of house tax only on the basis of annual letting vaJue 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 uitra vires the Act.
When the rule was struck down by this Court, the effect was, that the rule could never be d·~emed 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. 7 5 of the Boroughs Act for imposing house tax on mills factories or build- ings conneclr'…d therewith.
The Validating Act has not also re- vived or resurrected rule 2 ( c). Therefore. the position was 1that 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 (I) [1962] 1 s.c.R. 306.
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 co.nsequeno~. is that .th~re could be no levy of
house tax on the nulls, factones or bmldmgs connected therewith of the respondents nor could any d·~mand be made on the res- pondents on the basis of any levy. The High Court was, there-
fore, 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 tha!t there was, in the eye of law, a provision for charging house tax on mills, factories or buildings connected therewith so tha1t the t'llx levied and collected might be validated.
Even if s. 4 had resurrectOO rule 2(c) and said that it shall be deemed ito 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 lll'Y 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 resur- rect rule 2 ( c), much less, give it retrospective operation. In this view. we have no occasion to reach :the constitutional question as rei:ards 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 siruck down <the provisions of sections 3(2), 4(1), 4(2) and 5 of the Vali· dating Act. When rule 2 ( c) was held to be inoperative by virtue of the decision of this Court, all the reliefs claimed by the res- pontients in 1the writ petitions could have been giv>!n to !!I.em with- out· striking down these provisions. It is a wise tradition with Courts not to decide a constitutional quesion if the case can be dispose<l of on other grounds.
We dismiss the appeals but. in the circumstances, make no order as to costs. S.B.W. Appeals dismissed. c