NEW MANEK CHOWK SPG AND WVG MILLS COMPANY LIMITED Vs. MUNICIPAL CORPORATION OF THE CITY OF AHMEDABADIN ALL THE PETITIONS

JUDGEMENT

(1.) This is a group of Writ Petitions under Art. 32 of the Constitution challenging the validity of the assessment book relating to Special Property section prepared and published by the Municipal Corporation of the City of Ahmedabad by which the Municipality seeks to impose or has imposed property tax on properties described as Special Properties like textile mills, factories, buildings of the universities etc., on the basis of a flat rate per 100 sq. ft. of the floor area of the property situate within the municipal limits of the city. In Writ Petitions Nos. 133, 156-157 159-171, 178, 184 and 234 of 1966. the challenge relates to the validity of the assessment book relating to the year 1966-67: in Writ Petitions Nos. 206 and 210 of 1966. the challenge relates to the years 1964-65 and 1965-66 while in W. Ps. Nos. 207, 208 and 209 of 1966 the challenge relates only to the year 1965-66. The difference lies in this. So far as the assessments for the year 1966-67 and concerned. there has been no authentication of the assessment book after the disposal of all complaints relating to the entries made in the book while the challenge relating to the years l964-65 and 1965-66 is made at a statue after such authentication and in respect of which attachments of property belonging to the assessees have already been levied. in W. P. No. 234 of 1966 filed in October 1966, the issue of a distress warrant and the levy of attachment are also challenged. Several textile mills in the city of Ahmedabad are before this Court in these petitions and they have a common complaint against the assessments.

(2.) To appreciate the points raised in these petitions, it is necessary to take a bird's eye view of the relevant provisions of the Bombay Provincial Municipal Corporations Act (LIX of 1949) under which the assessments were purported to be made. S. 127 (1) of the Act makes it obligatory on the Corporation of the City of Ahmedabad to impose, among other taxes, a property tax. Sub-s. (3) of the section provides that municipal taxes shall be assessed and levied in accordance with the provisions of the Act and the Rules and sub-s (4) lays down that nothing in this section shall authorise the impositions of any tax which the State Legislature has no power to impose in the State under the Constitution. (it is needless to add that the Act has been amended after the Constitution came into force). S. 128 empowers the Corporation to recover the tax by the processes laid down in the section in the manner prescribed by rules. These are inter alia (1) by presenting a bill: (2) by serving a written notice of demand; (3) by distraint and sale of the defaulter's movable property: and (4) by the attachment and sale of a defaulter's immovable property. S. 129 lays down that for the purposes of sub-s. (1) of S. 127 property taxes shall comprise the taxes mentioned which shall, subject to the exceptions, limitations and conditions provided be levied on buildings and lands in the city. One of these mentioned in Cl. (c) is a general tax of not less than 12 per cent of their rateable value which may be levied, if the Corporation so determines, on a graduated scale. A building has been defined in S. 2, sub-s. (5) and land in S. 2, sub-s. (30). 'Land' under this definition includes land which is being built upon or is built upon or covered with water, benefits to arise out of land, things attached to the earth or permanently fastened to anything attached to the earth and rights created by legislative enactment over any street. Under S. 2 (49) 'property tax' means a tax on buildings and lands in the city. S. 2 (53) defines 'rack rent' as the amount of the annual rent for which the premises with reference to which the term is used might reasonably be expected to let from year to year as ascertained for the purpose of fixing the rateable value of such premises and under S. 2 (54) 'rateable value' means the value of any building or land fixed in accordance with the provisions of the Act and the rules for the purpose of assessment to property taxes. Under S. 453 the rules in the Schedule as amended from time to time shall be deemed to be part of the Act. The relevant taxation rules are to be found in Chapter VIII of the rules. R. 7 (1) provides that

(3.) The Writ Petition of which the papers were placed in detail before the Court is No. l33 of 1966 preferred by the New Manek Chowk Spinning and Weaving Mills Ltd. The respondents are: (l) the Municipal Corporation of the City of Ahmedabad, (2) the Deputy Municipal Commissioner of the same city and (3) the State of Gujarat. The challenge in this case relates to the validity of the assessment book for the year l966-67. The complaint is that respondent No. 1 by the said book imposed property tax on the petitioner on the basis of a flat rate per 100 sq. ft. of the floor area of the petitioner's property as also of all other textile mills, factories, university buildings.' etc., under R. 9 of the Taxation Rules. Annexure 'A' to the petition gives a synopsis of the entries relating to the year of assessment 1966-67. It is divided into three parts, the first being headed 'buildings', the second 'additional land' and the third 'machinery'. So far as 'buildings' are concerned, there are three columns, the first being the area of the building in square feet, the second monthly rental per 100 sq. ft. and the third the annual rental. The building is again divided into two classes, one for processing and the other non-processing. The monthly rental for the processing part of the building is taken at Rs. 6-10-0 per 100 sq. ft. while that for the non-processing portion is Rs. 5-4-0 per 100 sq. ft. With regard to the additional land, the valuation is on the basis of the market rate per sq. ft. of land and as regards machinery the valuation is taken to be effective value of which the annual rental at 71/2per cent, is taken as the annual value. The petitioners complaint is that while under the provisions of the Act and the rules made thereunder it was clear that the rateable value of the property must be arrived at after determining the rack rent or the annual rental value in respect of each premises which is to be computed on the basis of the annual rent for which the property might reasonably be expected to let from year to year, the municipal corporation of Ahmedabad had adopted the method of determining the annual rent on a flat rate method according to the floor area, irrespective of the locality, quality, age and nature of the property which was not a recognised method and was not permissible in law. According to the petition, a formula on the flat rate method of a fixed amount per 100 sq. ft. for arriving at the rental was not only against the express provisions of the Act but was also against the recognised concepts of valuation in the Law of Rating. The method adopted by respondent No. 1 in this case was arbitrary and repugnant to the petitioner's right guaranteed under Art. 14 of the Constitution. It was said that the buildings of the textile mills were situate in different localities some of which were in the heart of the city and some on its out-skirts. There was no uniformity in the floor area of the mills concerned nor was the age of the buildings in all cases the same. It was further complained that buildings in respect of the properties covered by the special property section included textile mills taxed on the fixed rate method whereas buildings other than those of textile mills were taxed on the basis of annual rent for which such premises were reasonably expected to let from year to year. A further complaint was made that respondent No. 1 had assessed the property tax apart from buildings and lands on the plant and machinery of the petitioner. It was submitted that the imposition of property tax on plant and machinery was beyond the legislative competence of the State. Sub-r. (3) of R. 7 was challenged as giving the Commissioner arbitrary and unguided power to set out the classes of plant and machinery and to describe what plant and machinery fell within each such class for the purpose of assessment of property tax. Moreover, such classification by the Commissioner was made final and binding and no right was given to any person affected thereby to object to the same nor was any right of appeal against such decision of the Commissioner provided. A complaint was also made that respondent No. 1 had not prepared any ward assessment books for the year 1966-67. It is the petitioner's case that the figures in the assessment book for the year 1966-67 were adopted from those of the previous year 1965-66, under R. 21 of the Taxation Rules. It was submitted that such adoption was invalid and improper inasmuch as the assessment books for the previous years were bad in low. The assessment books for the previous years were also bad in law inasmuch as the same were authenticated under R. 19 by the Deputy Municipal Commissioner and not by the Commissioner as contemplated in the said rule. The complaints were not considered by the Municipal Commissioner himself. It was said that the action of the Deputy Municipal Commissioner under a purported delegation of power by order dated November 20, 1964 was invalid as a quasi judicial function could not be delegated. In this connection, reference was made to S. 49 (1) of the Act. It was further contended that even in the Year 1966-67 the power of conducting proceedings under Rr. 13, 15, 16, 17, 18 and 19 of the Taxation Rules had been deputed by the Municipal Commissioner in favour of the Deputy Municipal Commissioner and as such, such deputation was bad in law. Finally, the petition proceeded on the basis that the imposition of property tax on the flat rate method on textile mills as under the special property section was ultra vires the Act and the rules made therein and was violative of the fundamental rights of the petitioner guaranteed under Arts. 14, 31 (1) and 19 of the Constitution and the procedure adopted in preparing the assessment book was ultra vires the procedure laid down by the Act and the rules. The grounds of challenge are formulated in paragraph 35 of the petition. Among the prayers are a writ of mandamus or any similar write directing respondent No. l to forbear from taking any steps for to imposition and realisation of the property tax pursuant to the preparation of the assessment book for the year 1966-67 relating, to the Special Property section, a writ of certiorari or other similar writ to quash the assessment book for the said year; a writ of prohibition or other order restraining respondent No. 2, the Deputy Municipal Commissioner from acting under deputation under S. 49 (1) and other reliefs.