KANTILAL POPATLAL SHAH Vs. STATE OF GUJARAT

JUDGEMENT

(1.) These petitions under Article226 of the Constitution raise an interesting question of law relating to the validity of Urban Immov- able Property tax sought to be collected by the Municipal Corporation of Ahmedabad on behalf of the State of Gujarat from the owners of various plots of open land situate within the City of Ahmedabad. The facts involved in these petitions are identical and so is the question of law arising in them and it would therefore be convenient to dispose them of by a common judgment.

(2.) Prior to 1st July 1950 the Ahmedabad Municipality (hereinafter referred to as the Municipality) was a Borough Municipality governed by the Bombay Municipal Boroughs Act 1925 (hereinafter referred to as the Boroughs Act). There were in force during the period upto 31st March 1947 the Valuation and Taxation Rules made by the Municipality under sec. 58(1) and sanctioned by the Government by their resolution dated 14 February 1931 under sec. 76 prescribing various taxes leviable by the Municipality. Amongst these taxes was a tax on non-residential buildings and lands belonging to mills and factories and open lands and yards be- longing to railway companies and that tax was based on valuation arrived at by taking a certain percentage of capital value but there was no tax as such on open lands in general. In regard to Government taxation too there were various taxes levied by the Provincial Government under the Bombay Finance Act 1932 but there was no tax on open lands or for the matter of that even on buildings. The Provincial Legislature therefore brought into force the Bombay Finance (Amendment) Act 1939 by which Part VI was inserted in the Bombay Finance Act 1932 with effect from 31st March 1939 This Part was headed Urban Immovable Property Tax and it authorized the levy of Urban Immovable Property tax on buildings and lands situate in the area to which the Part extended. Sec. 20 which was the first section in this Part declared that the Part shall extend inter alia to the limits of the Municipal Borough of Ahmedabad and certain other notified areas. Sub-sec. (1) of sec.21 definedannual letting value to mean in relation to Municipal Borough of Ahmedabad the annual letting value of build- ings or lands as determined in accordance with the provisions of sec. 78 of the Bombay Municipal Boroughs Act 1925 but this definition was subject to a proviso and since in our view the entire decision of these petitions turns on the true construction to be placed on this proviso it would be desirable to set it out in extenso. The proviso was in the following terms:

(3.) Pursuant to the provisions enacted in Part VI Urban Immovable Property tax was levied on buildings and lands situate within the limits of the Municipal Borough of Ahmedabad and even after the amendment made by Bombay Act No. II of 1949 in sec. 22 with effect from 1st April 1949 it was common ground between the parties that the area within the limits of the Municipal Borough of Ahmedabad was notified by the State Government as the area in which Urban Immovable Property tax was to be levied and the rate of tax was also specified in the notification. The Municipality collected the Urban Immovable Property tax in the same manner in which property tax levied by it was collected nd there was no difficulty until 31st March 1947 and we are not concerned with the position prior to that date. Sometime prior to 20th February 1947 the Municipality at a General Meeting passed a Resolution selecting tax on open lands for being levied by the Municipality and approving certain amendments in the Valuation and Taxation Rules prescribing such tax and specifying various particulars in relation to such tax set out in sec. 75 of the Boroughs Act. These amendments were sanctioned by the Government by a Resolution dated 20th February 1947 under sec. 76 of the Boroughs Act and the amendments so sanctioned were published by the Municipality together with a notice reciting the sanction and the date and serial number thereof. The notice specified 1st April 1947 as the date from which the amendment shall come into force and the amendments accord- ingly came into force from 1st April 1947. One of the amendments was the substitution of Rule 243 and the new Rule defined valuation based upon capital. This definition became necessary because of the amendment of Rule 320. The amended Rule 320 provided for levy of a rate on open lands by the Municipality. Open land was defined in Rule 321 to mean land not built upon or land with unauthorized construction or structure or with building in respect of which permission to occupy has not been issued under sec. 124 of the Boroughs Act. Rule 350-A was also added and the material portion of it read as follows: