MODEL TOWN RESIDENTS ASSOCIATION Vs. STATE OF PUNJAB

JUDGEMENT

(1.) The common question of law which arises in these petitions involves determination of the constitutionality of Ss. 3(1) of the Punjab Municipal Act, 1911 (as amended by Punjab Act No. 11 of 1984 for short, the Act). In CWP Nos.14253 of 1996 and 3386 of 1999, the petitioners have also challenged the vires of Sec. 67(3). In CWP No. 3386 of 1999, the constitutional validity of Sec. 3(8a) has also been challenged. The other questions raised by the petitioners relate to the legality of the orders of assessment and/of appellate or revisional orders and/or notices issued by the concerned municipalities for recovery of house tax.

(2.) The petitioners have referred to the un -amended and amended definition of the expression "annual value" contained in Sec. 3(1) of the Act and have averred that Clause (b) of amended Sec. 3(1) is liable to be declared ultra vires to the legislative power of the State because it seeks to empower the municipalities to levy house tax on the capital value of the property occupied by the owner and this subject falls within the exclusive domain of the parliament under Entry 86 of List -I (Union List) of the Seventh Schedule of the Constitution. They have further averred that Sec. 3(1) of the Act is discriminatory and violative of Article 14 of the Constitution of India because the classification made between the land or building on the basis of their occupation by tenant or owner is artificial, arbitrary and irrational and has no nexus with the object of imposing tax on land or building.

(3.) The respondents have defended the impugned provision by asserting that the house tax is being levied on land or building and not on capital assets of the owner and the State Legislature is competent to legislate on this subject under Entry 49 of List -II (Stat List) of the Seventh Schedule of the Constitution. They have averred that for the purpose of giving effect to the mandate of the provisions contained in Part IX -A of the Constitution, the Punjab Municipal Act, 1911 was amended by the State Legislature imposing greater burden on the municipalities and with a view to enable them to generate more revenue to meet the additional expenditure, the definition of annual value was also amended. In the written statements filed on behalf of some of the municipalities, it has been averred that determination of annual value under the amended definition is commensurate with the expenses incurred by them in providing services to the owners and occupants of lands and buildings. They have further averred that amendment in the definition of annual value was necessitated to provide better structure to the local bodies to meet the growing needs of the urban population and better civic amenities to the residents. According to them, gross annual rent is the basis for determination of annual value of the land or building in occupation of the tenant and the concept of annual value has been introduced for land or building occupied by the owner.