ANANT MILLS COMPANY LIMITED ARYODAYA SPG AND WVG MILLS COMPANY LIMITED MUNICIPAL CORPN OF CITY OF AHMEDABAD STATE OF GUJARAT ARYODAYA SPG AND WVG MILLS COMPANY LIMITED Vs. STATE OF GUJARAT:THE ANANT MILLS CO LTD:THE MUNICIPAL CORPN OF THE CITY OF AHMEDABAD:THE MUNICIPAL CORPORATION OF THE CITY OF AHMEDABAD

JUDGEMENT

(1.) 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 municipal corporations in the cities of Ahmedabad and Poona. It was applied to Ahmedabad on July 1, 1950.

(2.) 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 in chapter Vlll .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, factories and buildings of University. These properties were classified as special properties. The ratable value of properties included in the Special property Section was previously determined on a flat rate for every 100 sq. ft. of the floor area. In arriving at the figure of the ratable 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 and 1965-66. The commissioner also made initial entries in assessment book in respect of those properties for 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 court by a judgment delivered on February 21, 1967 and reported as New Manek chowk SPg. and Wvg. Mills co. Ltd. v. Municipal Corporation of the City of Ahmedabad. (1967) 2 SCR 679 . 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 in the Seventh Schedule to the constitution to make a law for taxing machinery . Rule 7 (2) was held to be beyond the legislative competence of the State. Rules 7 (2) and (3) were also held to be 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 question 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 tax on the basis of floor area, this Court observed that it was against the provisions of the Act and the rules made thereunder and that it had not been shown that conditions prerequisite 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 Article 14 of the Constitution as it would in the absence of classification of factories on any rational basis give rise to inequalities,

(3.) 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 Corporation was unable to do so in view of the decision of the High Court in the case of Ahmedabad Municipality v. Keshavlal, (1965) 6 Guj LR 238 wherein it was held that the Corporation had no power to assess and levy property tax for any official year after that year had ended. The legislature in order to get over this difficulty enacted Gujarat Act 8 of 1968 and by this amending Act inserted inter alia new Section 152-A in the Corporations 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 on either of the grounds on which the Supreme Court had set aside the assessment for the official years 1964-65, 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 21-B was also inserted by the amending Act and the said rule permitted the Municipal Commissioner to make fresh valuation of properties after the expiry of the official year if preparation or completion of the assessment before 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 1964-65, 1965-66 and 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. These petitions were allowed 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 the scope of Rule 8 (1). The contention of the petitioners in those petitions that no assessment could be made after the expiry of the official year was repelled and it was held that the Corporation had the power under Section 152-A to re-assess lands and buildings of the petitioners to property tax for the official years 1964-65, 1965-66 and 1966-67 notwithstanding the expiration of those years. The High Court also held that the new section did not stand in the way of the petitioners getting refund of the property tax already paid. Appeal was filed in this Court against the above judgment by the Corporation.