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PETITIONER: LT. COL. SAWAI BHAWANI SINGH ETC. ETC.

       Vs.

RESPONDENT: THE STATE OF RAJASTHAN & OTHERS

DATE OF JUDGMENT:       06/02/1996

BENCH: MADAN MOHAN PUNCHHI, K. RAMASWAMY,

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T Punchhi, J.      When a  legislative enactment  is caused  an  amendment beyond the  competence of the legislature and the mistake is corrected by  another amendment  to bring the enactment back within its  competence, can the entire legislation, original as well  as ambulatory  be said  to be "still-born" and thus unenforceable, is  the significant  question which falls for determination in this group of cases.      It will  be  necessary  to  refer  to  the  legislative history of  the questioned provisions. In the year 1964, the Rajasthan State  legislature enacted  a measure  called  the Rajasthan  Urban   Lands  Tax   Act  (Act   No.18  of  1964) [hereinafter referred to as the "Principal Act"], to provide for levy  of tax  alone on  "urban lands"  in the  State  of Rajasthan. The Act then did not levy tax on buildings though within the  competence of the legislature. The Principal Act was not  enforced  till  l973,  when  amendment  was  caused thereto by  the Amending  Act No.  15 of 1973 bringing about drastic changes in the Act, of far reaching consequences. By virtue of this Amendment Act, tax was sought to be levied or imposed upon  both lands and buildings in the urban areas of the State  of Rajasthan.  The Principal Act and the Amending Act were  made enforceable  with effect from April 1 l973. A private corporation  challenged the  constitutional validity of the  Act as  amended, in the High Court of Rajasthan. The State Government perhaps realizing the flaws in the Amending Act No.  15 of  1973, had the Governor of the State issue on June 23,  1973, an  Ordinance No.  6 of  1973 bringing about corrective changes  in the  provisions, (reference  to which will be  made later)  which Ordinance  was replaced  by  the Amending Act  No. 18  of 1973,  which  came  into  force  on November 10,  1973 but  effective from  l-4-73. The rates of tax as  applicable with  effect  from  April  1,  1973  were changed subsequently  by the  Rajasthan Finance  Act of 1977 (Act No.2  of 1977)  causing  necessary  amendments  in  the charging section of the Principal Act.      Section 3  of the  Principal Act,  as it was originally enacted, reads as under:      "3. Levy  of Urban  land tax:(1) Subject

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    to the  other  provisions  contained  in      this Act,  there  shall  be  levied  and      collected for  each year  a tax on Urban      lands (hereinafter  referred to  as  the      Urban Land  tax)  from  every  owner  of      urban Land at such rate not exceeding 2%      of the  market value  of such urban land      as determined  under Section  4, as  the      State Government  may by Notification in      the Official  Gazette  declare  in  this      respect.      Provided that  the State  Government may      fix graduated  rates of tax on different      slabs of market value of urban lands.      Provided further  that no  tax shall  be      levied on  any urban  land if  the owner      thereof or  his predecessor  in interest      has acquired  such land by transfer from      the Government  or any  local  authority      within a period of two years immediately      preceding the  year for which the tax is      levied.      (2) The  tax shall be in addition to any      other tax  for the time being payable in      respect of  the urban  land  or  portion      thereof under any other law for the time      being in force. This Section 3 was subsequently substituted by the following provision, by  Section 4  of the Amending Act No.15 of 1973. with effect from April 1, 1973.      "3. Levy  of lands and buildings tax:(1)      There shall  be  levied  and  collected,      with effect on and from 1st April, 1973,      for  each   year  a  tax  on  lands  and      buildings  situate  in  an  urban  area,      (hereinafter referred  to as  the  lands      and buildings  tax) from  the  owner  of      such lands  and buildings  at such rates      not exceeding  2% of  the  market  value      thereof as  the State Government may, by      notification  in  the  official  gazette      declare in this behalf.      Provided that  the State  Government may      fix graduated  rates of tax on different      slabs of  market values  of urban  lands      and buildings.      Provided   further    that    until    a      notification declaring  rates of  tax is      issued under this sub-section, the rates      of tax  on lands  and buildings shall be      as follows:      On First Rs.50,000/- of the market value      of the lands and buildings - NIL      On the  balance of  the market  value of      the lands and buildings - 1/4%      Provided further  that if  any  area  is      declared   a    cantonments,    or    is      constituted a  municipality,  after  the      commencement of          Rajasthan Urban      Land Tax  (Amendment) Act, 1973, the tax      on lands  and buildings  situate in such      area shall  be levied and collected with      effect from the commencement of the year      following the year during which the area      is   declared   a   cantonment   or   is

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    constituted a municipality.      Provided also  that where  more than one      land or  building in the same urban area      is owned  by the  same Person,  the land      and building  tax shall  be assessed  on      the market  value of  all such lands and      building taken together.      (2) The  tax shall be in addition to any      other tax  for the time being payable in      respect of  the  land  and  building  or      portion thereof  under any other law for      the time being in force." By Amending  Ordinance VI  of 1973, which was later replaced by Amending  Act No.18  of 1973,  the last  proviso to  sub- section (1)  of Section  3 was  omitted and  it was provided that the  same shall  be deemed  always to have been omitted and   the    following   sub-section   (1)A   was   inserted retrospectively after sub-section ((1) of Section 3.      "(1)A -  For  removal  of  doubt  it  is      declared that the tax shall be levied on      land or  building or  both separately as      units." Section 4 of the Principal Act, as it was originally enacted in the year 1964, was under:      "4. Determination of market value:      (1)     The  Assessing  Authority  shall      determine in  the prescribed  manner the      market value of the urban land liable to      be taxed under this Act.      (2)   The    Assessing   Authority    in      determining the  market value shall have      regard to the following matters, namely:      (a) the  locality in which urban land is      situated.      (b) the  predominant use  to  which  the      urban land  is likely to be put, that is      to   say,   industrial   commercial   or      residential.      (c) accessability or proximity to market      dispensary, hospital,  railway  station,      educational       institutions,       or      Government offices.      (d)  such   other  matter   as  may   be      prescribed." This Section  was also  substituted by  the under  mentioned provision by Section 5 of the Amending Act No.15 of 1973:      "4. Determination  of market value - For      purpose of this Act, the market value of      any land  or building  or both  shall be      estimated to  be the  price which in the      opinion of  the assessing authority such      land or  buildings or  both  would  have      reached, if  sold in  the open market on      the date  of  the  commencement  of  the      Rajasthan Urban Land Tax (Amendment)Act,      1973."      The relevant  portion of  charging  Section  3,  as  it stands, after  the amendments  made therein  by Act No.18 of 1973 and Act No.2 of 1977, runs as under:      "Provided   further    that   until    a      notification declaring  rate of  tax  is      issued under  this sub-section, the rate      of tax  on lands  and buildings shall be      as follows:      On the  first Rs.50,000/-  of the market

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    value of the land and building - NIL      On the  balance of  the market  value of      the land and buildings     1.4%      Provided further  that if  any  area  is      declared a cantonment, or is constituted      a municipality,  after the  commencement      of Rajasthan  Urban Land  Tax amendment)      Act,  1973,   the  tax   on  lands   and      buildings situate  in such area shall be      levied and         collected with effect      from  the   commencement  of   the  year      following the year during which the area      is   declared   a   cantonment   or   is      constituted a municipality.      (1-A)  For   removal  of   doubt  it  is      declared that the tax shall be levied on      land or  building or  both separately as      units."      The challenge  was batched  up in  42  writ  petitions, which were  decided by  a common  order by  a learned Single Judge of  the High Court on May 11, 1979. The learned Single Judge allowed  all the  writ petitions in part, leaving both the writ  petitioners as  well as  the  state  of  Rajasthan aggrieved. 59  special appeals  were  thus  filed  before  a Division Bench of the High Court which was disposed of by a common order  whereby the appeals of the State were allowed. appeals of  the writ  petitioners were  dismissed and  as  a consequence the  writ  petitions  were  dismissed  in  their entirety. Thus  on granting  leave in  the present  batch of appeals before  us, the  only  question  raised  by  learned counsel and regarding which written submissions have been submitted to us is whether or not the Principal Act No.18 of 1964 was  by itself  invalid, more so after its amendment by Amending Act  No. 15  of  1973  rendering  it  further  void because it  was beyond  the legislative  competence  of  the State Legislature. The argument is that since levy of tax on all lands and buildings of a person taken together under the charging sections  3 and  4 in  the enacted  provisions were outsides   the   legislative   competence   of   the   State Legislature, the  entire measure was a piece of "still-born" legislation, incapable, because inseperatability of being enlivened after its amendment  by the  Amending Ordinance  No. 6 of 1973 and the subsequent  Amending Act  13 of  1973. The  view of  the learned Single  Judge was  that the Principal Act as enacted in 1964  was a  valid piece  of legislation  and  was  fully covered by Entry 49, List II as it stood in the 7th Schedule of the Constitution. The learned Single Judge was further of the view that the Amending Act 15 of 1973 had brought in the Principal Act  the offensive  material which  was beyond the legislative competence  to the  State Legislature, but since that material was severable from the remaining provisions of the charging  Section 3,  therefore the  healthy portion  of Section 3  together with the other provisions of the Act was valid, except  the last  proviso to  Section 3(1), which was subsequently deleted by Amending Act 18 of 1973. The Hon’ble Judges of  the Division  Bench, improving  the view  of  the learned Single  Judge, went  on to say that the last proviso to Sub-section  (1) of Section 3 was also separable from the rest of  the  provisions  of  the  said  Section  and  after striking out  the invalid  portion, namely, the last proviso to Sub-  section (1)  of Section 3, the remaining portion of Section 3 contains a complete Code in itself and is workable without reference  to and  notwithstanding  that  a  portion thereof is  unenforceable. The Bench also took the view that

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for the  purpose of  separability, it  was immaterial  as to whether the  invalid and  valid portions sere enacted in the same Section  or in  different  sections,  because  what  is important is  the substance  of the  matter, the  form being immaterial. Noticeably  Ordinance 6  of 1973/Act  18 of 1973 had omitted the last proviso to Sub-section (1) of Section 3 with  retrospective   effect,  thus  keeping  the  remaining portion of  Section 3  presenting a  workable scheme without affecting its  validity. On the deletion of the last proviso to Sub-section  (l) of Section 3, the charging provision was expressly clarified by adding a new Sub-section (1)A thereto which declared  that the  tax shall  be levied  on lands and buildings or on both separately as units.      It is now well settled that as per Entry 49 of List II, the State  Legislature is  competent to impose tax either on lands or on buildings or on both. A land or building or both of a  person may  be subjected  to direct  tax by  the State legislature under  Entry 49  of List  II  and  may  also  be subject matter  of direct  tax as  a component  of his total assets,  like   Wealth-tax  by   the  Union  legislature  as mentioned in  Entry 86  of  List  I.  These  two  taxes  are separate and  distinct in  nature and it cannot be said that there was any overlapping, or that the State Legislature was not competent to levy such tax on lands and buildings merely on the  ground that  they have been subjected to another tax as a  component of the total assets of the person concerned. See in  this connection,  a seven  member Bench  decision of this Court  in Union  of India vs. H.S. Dhillon [1972(2) SCR 33]. This  Court clearly  said that  for a  tax to  be under Entry 49  of List  II, three  conditions must  be satisfied, i.e. (i)  it must be a tax on units i.e., land and buildings separately as  units; (ii)  the  tax  cannot  be  a  tax  on totality i.e., it is not a composite tax on the value of all lands and buildings; and (iii) the tax is not concerned with the division of interest in the building or land; in another words, the tax was not concerned whether one person owned or occupied the  land or building or two or more persons occupy or own  it. In  pith and substance, it was a tax on property and not  a personnel  tax. Other  cases of  the same  nature being D.C.  Gouse & Co. etc. vs. State of Kerala & Anr. etc. [1980(1) SCR  268], which  are of  the same  species, may be turned to  with  advantage.  B.  Shama  Rao  vs.  The  Union Territory   of Pondicherry  [1967(2) SCR  650], pressed into service by  learned counsel  for the appellants, which was a case under the Pondicherry General Sales Tax Act, enlightens us that  the core  of the  taxing statute is in the charging Section of  the provisions  levying such  tax  and  defining persons who  are liable  to pay  such tax. Understandably if the  core  disappears,  the  remaining  provisions  have  no application. This is well understood.      The Principal Act, as it originally stood, provided for levy of  tax on  lands only.  It could then have no taint of unconstitutionally and  none could  be pointed out to us. It is the  Amending Act  No.15 of  1973 which brought about the questioned changes  in Section 3 and 4, which gave the spill as if  levy of  tax was  being made by the State legislature under Entry  86 of  List l  on the  premise that the tax was being made  leviable on  a person  taking into  account  his total  assets  in  lands  and  buildings,  which  taint,  as identified, was  later withdrawn  by Ordinance 6 of 1973/Act 18  of  1973  by  causing  certain  deletions  to  keep  the remainder complete  as a  code. Thus  it is evident that the Principal Act  could stand  on its  own  and  the  amendment caused to  it by  Amending Act  No.l5  of  1973,  by  itself brought a  blot by way of substitution the offending portion

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of which  was later  sliced off  as  much.  Nothing  was  so inextricably mixed  up so that the extricable parts were not severable, or  that any  damage had  been occasioned  to the left out healthy portion rendering it incomplete. This court in M.P.V.Sundara  Ramaiar and Co.vs. State of Andhra Pradesh [l958 SCR  1442] and  R.M.D. Chamarbaugwalla  vs.  Union  of India  [1957  SCR  930  at  page  950]  has  laid  down  the principles that  in determining  whether the  valid parts of the statute are separable from its invalid parts, it is the intention of the legislature that is the determining factor. The test to be applied is whether the legislature would have enacted the  valid part if it had known that the rest of the statute was invalid. If the valid and invalid provisions are so inextricably  mixed up that they cannot be separated from one another, then the invalidity of a portion must result in the invalidity  of the  Act  in  its  entirety.  This  Court further took  the view that if on the other hand those valid and invalid  portions were  so distinct  and  separate  that after striking  out  what  is  invalid,  what  is  itself  a complete code,  independent of  the rest,then it will be the subsisting object,  notwithstanding that the rest has become unenforceable. In  the light  of the aforesaid principles it is clear  that the  charging section  3, which to begin with was unquestionably  valid, was  replaced with  the amendment made by  Amending Act  15 of  1973, making  it in that state unenforceable, but  when the  unhealthy part  was removed by Ordinance 6 of 1973. Amending Act 18 of 1973, Sections 3 and 4   got   resuscitated,   gaining   radiatance,   pristinely legislative, its  sparkle re-doubled  by insertion  of  Sub- section (1)A  to Section  3, so  as to  remove  doubts  ever existing regarding  levy of tax on buildings and lands. Thus it must  be  held  that  the  charging  Section  3  and  the supportive Section  4, as  salvaged, are  part of  a  scheme which was within the legislative competence of the Rajasthan State Legislature.  The afore-analysis  also demolishes  the "stillborn" theory because the Principal Act was by itself a measure existing  on the  statute book  which had  life  and breath  of   its  own,  irrespective  of  the  date  of  its enforceability having been kept for a future date. It is the Amending Act  No.15 of  l973 which got to choke its life but before it  could die  or be  declared dead  by  a  court  to competent jurisdiction,  life was  breathed into  it by  the Amending Ordinance  6 of  1973 and  Amending Act  18 of 1973 with retrospective  effect in  the manner  stated above. The cases relied  upon -  M/s. West Ramnad Electric Distribution Co. Ltd.  vs. State of Madras [1963(2) SCR 747] and Mahendra Lal Jaini  vs. The  State of  Uttar Pradesh and others [1963 Supp.(1) SCR  912], would  not serve  the purpose  for which they have  been pressed  forward by  learned counsel for the appellants to  incapacitate the State Legislature to correct its own wrongs, well in time and before a judicial verdict.      On the  basis of  the aforesaid  analysis and reasoning the question  posed at  the outset  and the  three questions summarized in the written submission, namely:      (i) whether  the Amendment  Act of  1973      (Rajasthan Act  XV to  1973) in pith and      substance  imposes   a  tax   which   is      relatable to Entry 86 of List I or Entry      49 of List II?;      (ii) If  the Amendment  Act of  1973  in      pith and  substance imposes  a tax under      Entry 86  of List  I and not under Entry      49  of   List  II,  whether  the  second      proviso to  Section 3  is severable from      the rest of the Act?; and

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    (iii) Whether  the Ordinance  VI of 1973      introducing Sub-Section  1(A) to Section      3   would    have    the    effect    of      retrospectively curing the defect of the      Amendment Act  of 1973  and thus revives      it?, would  stand   appropriately   answered,   without   further elaboration, in favour of the State of Rajasthan and against the appellants.      No other  question  was  raised  besides  those  afore- referred to.      As  a   result,  these  appeals  fail  and  are  hereby dismissed with no order as to costs.