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PETITIONER: STATE OF BIHAR AND OTHERS

       Vs.

RESPONDENT: SACHCHIDANAND VISHORE PRASADSINHA ANDOTHERS

DATE OF JUDGMENT06/01/1995

BENCH: B.P. JEEVAN REDDY & SUJATA V. MANOHAR, JJ.

ACT:

HEADNOTE:

JUDGMENT: B.P.JEEVAN REDDY, J.: 1.   Leave granted.  Heard counsel for the parties. 2.   This  appeal is preferred against the judgment  of  the Patna  High Court striking down clauses (a) and (c) of  sub- rule (1) of Rule 3 of the Assessment of Annual Rental  Value of   Holding  Rules,  1993  (hereinafter  referred   to   as "Assessment  Rules")  framed by the State  Government  under Section  227  read with Section 130 of the  Patna  Municipal Corporation  Act  and the two notifications  issued  by  the Patna Municipal Corporation under Rules 3 and 5 of the  said Rules,  The  High  Court is of the  opinion  that  the  said clauses  offend the equality clause enshrined in Article  14 of the Constitution of India. 3.   Sub-section (1) of Section 123 of the         Municipal Corporation Ant empowers the corporation to impose, with the previous  approval  of  the  State  Government,  the   taxes mentioned under clauses (a) to (p) of the said  sub-section. We  are  concerned  herein with the  taxes  mentioned  under clauses (a), (b) and (c), viz., "(a) a tax on 461 holdings  situated  within Patna assessed on  their  letting value; (b) a water tax assessed on the annual letting  value of  holdings; and (c) a latrine tax assessed on  the  annual letting  value  of holdings".  Section  124  prescribes  the ceiling  beyond  which  the tax on  holdings  shall  not  be imposed.   The ceiling prescribed is twelve and a  half  per cent  of  the  annual value of the  holdings.   Section  130 defines   the  expression  "    annual  value   of holdings" occurring  in sub-section (1) of Section  124.   Sub-section (1)  of Section 130 says that "save as may be prescribed  by the rules made by the State Government, the annual value  of a  holding shall be deemed to be the gross annual rental  at which the holding may reasonably be expected to let".   Sub- section (2) deals with a situation where there is a building or buildings on a holding and the actual cost of erection of the  same  can be ascertained and which building(s)  is  not intended  for  letting  or for the residence  of  the  owner himself the annual value of such holding shall be deemed  to be  an  amount which may, subject to the rules made  by  the Government, be equal to but not exceed twelve and a half per

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cent  of such cost in addition to a reasonable  ground  rent for  the  land comprised in the building.   Sub-section  (3) says that the value of any machinery or furniture which  may be  a  holding  shall not be  taken  into  consideration  in estimating  the  annual  value of a  holding.   Section  136 prescribes  the  procedure following which  the  corporation shall determine the percentage of the valuation of  holdings at  which  tax on holdings shall be levied.   It  says  that subject to provisions of Section 124, the corporation shall, at  a  meeting  to  be held before the  close  of  the  year preceding the relevant year, determine the percentage of the valuation  of  holdings at which the tax  shall  be  levied. This  has  to be done after calling for a  report  from  the Chief Executive Officer and the standing committee and after considering the same.  The percentage so fixed shall  remain in force until the corporation decides otherwise. (The  High Court  observes in the judgment under appeal that under  the scheme of taxation in vogue till the Assessment Rules,  1993 came  into force, the rate of taxation had  already  reached the  maximum prescribed rates.) Once the tax is assessed  in respect of a holding, it is open to the person  dissatisfied with  the assessment or with the valuation to apply  to  the Chief  Executive Officer or other officer empowered in  that behalf  by  the  State  Government  for  a  review  of   the assessment or valuation or to exempt him from the assessment or  the tax (vide Section 1501 Section 227 confers upon  the State  Government  the power to make rules as  to  taxation. According  to the rules (framed under Section 227 read  with Section 130) in force prior to the coming into force of  the Assessment  Rules, 1993, the annual letting value (which  is the basis for levying tax on holdings, water tax and latrine tax)  was  to be determined separately for  each  individual holding,  having regard to various  relevant  circumstances. The  government felt that such a system provided ample  room for corruption and arbitrariness and, therefore, it  thought of  devising  a  system of taxation  which  would  eliminate altogether any room for abuse, corruption or  arbitrariness. It  is  with  this view that the 1993 Rules  were  made  and notified  in the Bihar Gazette Extra-ordinary  dated  August 12, 1993.  A brief reference to these rules is necessary for a proper appreciation of the contentions arising herein. 4.     Rule 2(b) defines "annual rental 462 value"  to  mean  the  rent that a  holding  is  capable  of fetching  over  a period of one year Clauses (d) and  (e)  o Rule  2  define  the  expression  commercial  holding’   and ’industrial  holding’  respectively.  Rule 3, which  is  the rule   most   relevant  for  our  purposes,   provides   for classification of holdings.  It reads as follows:               "3.   Classification  of  holding--  (1)   The               holding  in  the  Corporation  area  shall  be               classified by the Corporation on the following               criteria:               (a)   Situation of the holding:               (i)   Holdings on the Principal Main Road.               (ii)  Holdings on the Main Road.               (iii) Holdings other than sub-clauses (i)               and (ii).               (b)   Use of the Holding:               (i)   Purely residential;               (ii)  Purely commercial or industrial (whether               self owned or otherwise )               (iii) Partly residential and partly com-               mercial/industrial;               (iv)  All holdings other than sub-clauses (i),

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             (ii) and (iii).               (c)   Type of construction:               (i)   Pucca building with R.C.C. roof.               (ii)  Pucca building with asbestos/ corrugated               sheet roof               (iii) All other buildings not covered in  sub-               clauses (i) and (ii).               2.    Subject  to  the approval of  the  State               Government  the Corporation may from  time  to               time, publish the list of Principal main roads               as well as main roads and if necessary  modify               the lists of the purposes of these Rules." 5.   Rule 4 provides, the manner in which    the carpet area has to be calculated. Rule    5 empowers the corporation  to fix the rental value and annual rental value.  Sub-rule  (1) says  "the  rate of rental value per square  foot  shall  be fixed  by  the corporation with the prior  approval  of  the State Government having regard to the situation, use and the type of construction of the holdings".  Sub-rule (2) of Rule 5  says that the annual rental value shall be computed as  a multiple of the carpet area and the rental value fixed under sub-rule (1) while sub-rule (3) says that "the rental  value per square foot of the carpet area for different classes  of holding shall be published from time to time by the corpora- tion with the prior approval of the State Government".  Rule 6 prescribes the rate of tax.  It reads thus:               "6.   Rate of tax-- Tax shall be  assessed  on               the  basis  of  Annual  Rental  Value  on  the               following rates:-               1.    Holding Tax--at the rate of 2.5  percent               of    Annual Rental Value.               2.    Water  Tax--at the rate of 2% of  Annual               Rental Value.               3.    Latrine Tax--at the rate of 2% of Annual               Rental Value." 6.   Rule -/ empowers the corporation to revise the rate  of tax on Annual Rental Value (A.R.V.) with the prior  approval of  the  State Government whereas Rule 8  confers  upon  the State Government the poser to remove difficulties in  giving effect to the said Rules. 463 7.  After  publication  of the Assessment  Rules,  1993  the corporation  issued  two notifications  dated  September  8, 1992,  one under Rule 3(2) and the other under Rule 5(1)  of the  said Rules.  Under the first notification issued  under Rule  3(2), the corporation classified the several roads  in patna  city into three categories.  Twenty four  roads  have been identified as ’Principal main roads’, eighty eight have been identified as ’main roads’ while the rest of the roads, streets,  lanes bye-lanes gullies, alleys not falling  under first  two categories are placed in the third  category.  in the   second  notification  issued  under  Rule  5(1),   the corporation  has  specified the rates of  rental  value  per square foot depending upon the situation, use and the nature of  construction  of the holdings.  To mention  a  few,  the rental  value  of  a pucca  building  used  for  residential purpose  and situated on a principal main road is  fixed  at Rs.18/- per sq.ft., for a building meant for commercial  use situated  on a principal main road, the annual rental  value is  Rs. 54/ - per sq.ft.; the rental value of a  residential building  situated  on a main road is fixed at  Rs.12/-  per sq.ft.  and that of a commercial building on a main road  at Rs.36/-  per sq.ft.; the rental value of residential  build- ings on roads other than principal main roads and main roads is  fixed  at  Rs.6/- per sq.ft and  that  of  a  commercial

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buildings at Rs. 18/- per sq.ft. 8.   Several contentions were urged by the writ  petitioners (respondents in this appeal) before the High Court, some  of which  were rejected by me High Court and some relegated  to appeal  and other remedies provided by the Act.   The  court confined  its  attention  only to the validity  of  the  As- sessment  Rules,  1993.  The grounds which appealed  to  the High Court and on the basis of which clauses (a) and (c)  of subrule  (1)  were struck down, may best be set out  in  the words of the High Court itself.               "It appears to me that the impugned Assessment               Rules  were  well intended and  contained  the               seeds  of  a good and  reasonable  idea  which               unfortunately  floundered for want  of  proper               attention to the-details of the schemes.   The               main  shortcoming of the Assessment  Rules  is               that  the  classifications  made   thereunder,               either in case of roads or in case of types of               constructions   are  wholly   inadequate   and               incomplete  and are, therefore, bound to  lead               to  results  quite  unrelated  to  the  actual               letting   value   of   holdings.    Had    the               authorities  paid  proper  attention  to   the               details  of  the  scheme,  they  would   have,               perhaps, enlarged the classification regarding               nature  of construction by adding  more  heads               and  sub-heads classifying not only the  types               of  construction  of the  structure  but  also               taking  into  account other features  such  as               quality of finish, appeartenances, provisions,               conveniences  and facilities available with  a               holding.   Perhaps, classifying holdings  into               A, B and C classes depending upon the  quality               of  finish  etc. in addition to the  types  of               construction of the structure would have  gone               a  long way in meeting the challenge  advanced               by the petitioners.               Similarly the three possible heads under which               all  the roads of Patna are to  be  classified               for   determining  the  locational  value   of               holding is wholly incomplete to say the least.               Perhaps, if the authorities had taken care  to               divide the entire city into different zones or                             areas  and had then proceeded to classify  the               roads,  streets,  lanes and  gullies  in  each               zone, on an objective basis and under a larger               number   of   heads  then   the   petitioners’               challenge  could  have been easily  met.   The               necessity  to divide the city into  zones,  in               the case of Patna is best illustrated by Ashok               464               Raj  Path.  This road, over  10-12  kilometers               long  runs  through  the better  part  of  the               entire length or the city.  It passes  through               the  new parts of the city where  markets  and               shops and the main hospital and the university               are located and it also passes through the old               and  congested  city  where  it  narrows  down               considerably.      In    the     Corporation’s               notification  the whole of Ashok Raj Path  has               been classified as ’principal main-road’.  Now               I  find  it  difficult  to  accept  that   all               holdings   on   this  road  (either   in   the               commercial class or in the residential  class)               would have the same rental value regardless of

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             whether  they  are situated in  the  new  city               (commonly  known as Bankinore) or in  the  old               city  (commonly known as Patna City).   In  my               view,  a road like Ashok Raj path can only  be               headled  properly  by dividing the  city  into               different zones.               However, as the relevant provisions  contained               in  rules 3(1) (a) and (c) stand at present  I               have  no option but to hold and  declare  that               these infringe Article 14 of the  Constitution               and are ultra vires section 123 and 130 of the               Patna Municipality Corporation Act." 9.The  High  Court then took up the  two  notifications  and found  that they are " equally indicative of the  slip  shod manner  in  which the scheme is sought to  be  implemented". The  High Court held that so far as the notification  issued under Rule 5(1) is concerned, the counter-affidavit does not disclose   "the   objective   material   that   went    into consideration for determining the rates".  It then  referred to  the property owned by the respondents which was said  to have been let out on a monthly rental of Rs.1,200/-  (annual rent of Rs.14,400/-) whereas its annual rental value as  per the  impugned notifications would be Rs.  1,55,520/-*.   The High Court observed that this fact shows the enormous burden placed   upon  certain  house-owners.   Dealing   with   the notification  issued under Rule 3, the High  Court  observed that   the   classification  suffers   from   "complete   in application  of  mind  to  the  details".   It  opined  that classifying  Hardinge  Road  as a principal  main  road  and classifying Desh Ratan Marg (said to be the most prestigious road  in the town), Strand road, Circular road in the  third category defies logic.  It observed, "the very basis said to have  been adopted by the Corporation, namely, intensity  of traffic and commercial activity appears to be lop sided  and unreasonable"  and  proceeded to say "for  consideration  of space,  I  do  not  propose to dilate  on  the  question  of classification  of roads made by the Corporation;  otherwise the  classification  appears  to  be  so  unreasonable   and arbitrary  as  to  be summarily rejected.  I  only  like  to observe  here that classification for the purpose of  taxing statute  is  a  serious  business  and  must  be  undertaken seriously".    Accordingly,  both  the  notifications   were declared  bad and inoperative.  While concluding,  the  High Court observed:               "the  idea  of determining the  annual  rental               value of a holding on floor area basis may not               be per se bad.  It is also understandable that               this   method  has  a  number   of   practical               advantages   over   the   existing   mode   of               determination  of  annual rental  value  of  a               holding.   But  before introducing  the  floor               area method great care must               --------------------------------------               *  The High Court ought to have  noticed  that               tax  on the said holding at the rate  of  nine               per  cc.-it  (tax on holding,  water  tax  and               latrine tax together) would be Rs.13,996.80p.,               a  fact  set out in the counter filed  by  the               corporation in the High Court.               465               be  taken in classification of holding and  in               the  determination of the rate of  rental  per               square  foot so that the annual  rental  value               reckoned   by   this  method  may   at   least               approximately  correspond with the rental  the

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             holding may be reasonably expected to fetch in               practice.   Otherwise,  the scheme  cannot  be               held  intra vires sections 123 and 130 of  the               Patna Municipal Corporation Act". 10.The  State of Bihar and the Patna  Municipal  Corporation challenge  the  correctness  of the  said  holding  in  this appeal.   Since  the rules and the notifications  have  been struck down on the ground of Article 14 of the Constitution, it  is but appropriate to remind ourselves of  the  relevant principles  applicable in the case of taxing enactments  and Article 14. 11.  In Twyford Tea Company Limited v.  State   of    Kerala (1970  (3) S.C.R.383), Hidayatullah,C.J., speaking  for  the majority of the Constitution Bench, observed:               "This indicates a wide range of selection  and               freedom  in appraisal not only in the  objects               of  taxation  and the manner of  taxation  but               also in the determination of the rate or rates               applicable......   the   burden   of   proving               discrimination  is  always heavy  and  heavier               still   when   a  taxing  statute   is   under               attack.....   the  burden  is  on   a   person               complaining of discrimination.  The burden  is               proving not possible ’inequality’ but  hostile               ’unequal’  treatment.   This is more  so  when               uniform taxes are levied". 12.In  R.K.Garg  v.  Union of India  (1982  (1)  S.C.R.947), Bhagwati,J.,  speaking for the Constitution Bench, made  the following oft-quoted observations:               "Now  while  considering  the   constitutional               validity of a statute said to be violative  of               A Article 14, it is necessary to bear in  mind               certain well established principles which have               been  evolved  by  the  courts  as  rules   of               guidance  in discharge of  its  constitutional               function  of judicial review.  The first  rule               is  that  there  is always  a  presumption  in               favour  of the constitutionality of a  statute               and  the burden is upon him who attacks it  to               show that there has been a clear transgression               of the constitutional principles.....  Another               rule of equal importance is that laws relating               to  economic activities should be viewed  with               greater  latitude  than  laws  touching  civil               rights  such  as freedom of  speech,  religion               etc.   It  has been said by no less  a  person               than Holmes,J. that the legislature should  be               allowed  some play in the joints,  because  it               has to deal with complex problems which do not               admit  of  solution through any  doctraire  or               straight   jacket   formula   and   this    is               particularly  true  in  case  of   legislation               dealing  with economic matters, where,  having               regard to the nature of the problems  required               to  be dealt with, greater play in the  joints               has  to  be allowed to the  legislature.   The               court  should  feel  more  inclined  to   give               judicial deference to legislature judgment  in               the field of economic regulation than in other               areas  where  fundamental  human  rights   are               involved....  The court must  always  remember               that  "legislation  is directed  to  practical               problems,  that  the  economic  mechanism   is               highly   sensitive  and  complex,  that   many               problems  are  singular and  contingent,  that

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             laws are not abstract propositions and do  not               relate  to  abstract units and are not  to  be               measured  by  abstract  symmetry"  that  exact               wisdom  and  nice adaption of remedy  are  not               always possible and that "judgment is  largely               a  prophecy based on meager and  uninterpreted               experience".   Every legislation  particularly               in economic matters is essentially empiric and               it is based on experimentation or what one may               call  trial and error method and therefore  it               cannot provide for all possible situations  or               anticipate all possible abuses.  There may 466               be  crudities  and inequities  in  complicated               experimental economic legislation but on  that               account  alone  it cannot be  struck  down  as               invalid.  The courts cannot, as pointed out by               the  United States Supreme Court in  Secretary               of   Agriculture  v.  Central  Reig   Refining               Company (94 Lawyers’ Edition 381) be converted               into tribunals for relief from such crudities-               and inequities.  There may even be  possibili-               ties  of abuse, but that too cannot of  itself               be a ground for invalidating the  legislation,               because it is not possible for any legislature               to anticipate as if by some divine prescience,               distortions and abuse of its legislation which               may be made by those subject to its provisions               and  to provide against such  distortions  and               abuses.   Indeed, howsoever great may  be  the               care bestowed on its framing, it is  difficult               to conceive of a legislation which is not  ca-               pable  of  being  abused  by  perverted  human               ingenuity.   The Court must therefore  adjudge               the  constitutionality of such legislation  by               the  generality of its provisions and  not  by               its   crudities  or  inequities  or   by   the               possibilities   of   abuse  of  any   of   its               provisions.   If any crudities, inequities  or               possibilities  of  abuse come  to  light,  the               legislature  can  always  step  in  and  enact               suitable amendatory legislation.  That is  the               essence of pragmatic approach which must guide               and  inspite the legislature in  dealing  with               complex economic issues". 13.To  the  same effect are the observations of  a  Division Bench in State Maharashtra v. M.B.Badiya (1988 Suppl.(2) SCR 482) wherein Sabyasachi Mukharji,J. observed:               "About  discrimination it is well to  remember               that a taxation law cannot claim immunity from               the  equality  clause  in Article  14  of  the               Constitution.   But in view of  the  intrinsic               complexity  of fiscal adjustments  of  diverse               elements,  a considerably wide discretion  and               latitude  in the matter of classification  for               taxation  purpose  is  permissible.   See  the               observations  of  this  Court  in  Income  Tax               Officer, Shillong and Anr.etc. v. N.Takim  Roy               Rymbai   etc.etc.,  (supra).   Also  see   the               observation  in  Mrs.Meenakshi and  others  v.               State  of karnataka, (supra); Anant Mills  Co.               Ltd.  v. State of Gujarat & Ors., (supra)  and               Khandige   Sham   Bhat   and   Ors.   v.   The               Agricultural Income-tax Officer, (supra). 14.We  may  also  refer  in  this  connection  to  the  very

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perceptive  observations of Chandrachud, J. in The State  of Jammu  & Kashmir v. Triloki Nath Khosa & Ors.  (A.I.R.  1974 S.C. 1).  Adverting to the danger of indulging in minute and micro-cosmic  classifications, the learned  Judge  observed: "let  us  not evolve, through  imperceptible  extensions,  a theory   of  classification  which  may   subvert,   perhaps submerge,  the precious guarantee of equality.  The  eminent spirit of an ideal society is equality and so we must not be left to ask in wonderment; What after all is the operational residue of equality and equal opportunity?" 15.Let us examine the facts of this case in the light of the aforestated  principles.   The main objection  of  the  High Court  to  Rule  3(1)  is  that  "the  classifications  made thereunder,  either in case of roads or in case of types  of constructions  are wholly inadequate and incomplete and  are therefore bound to lead to the result quite unrelated to the actual  letting  value  of the holdings" .  The  High  Court suggested   an   enlargement  of  the   classification;   it opined:  ..perhaps  classifying buildings into A,  B  and  C classes,  depending  upon  the quality  of  finish  etc.  in addition to the type of construction of the structure  would have gone a long way in meeting the challenge 467 advanced  by the petitioners".  The other criticism  against the  rule is that the division of the municipal  corporation area with reference to roads is bad and that it should  have been done zone-wise, i.e., on the basis of   zones. 16.  Taking the first criticism, the High Court   does   not say   that  the  classification  made  by  the   rule-making authority  is bad.  The rule has divided the buildings  into three  categories on the basis of the type of  construction, viz.,  (i)  pucca  buildings with R.C.C.  roof,  (ii)  pucca buildings with asbestos/corrugated sheet roof and (iii)  all other  buildings not falling under (i) and (ii).  That  this is  a reasonable classification for the purposes  of  fixing different rates of tax is not disputed.’ What is said by the High  Court  is  that  there  should  have  been  a  further classification  among these three categories depending  upon the   quality   of   finish,   appurtenances,    provisions, conveniences  and facilities etc.  The High Court is of  the opinion  that  all buildings in any one of  the  said  three categories do not fetch the same rent and that the rent of a building  depends upon several factors mentioned by  it  and for  that  reason, the classification has been  held  to  be inadequate  and  incomplete.  The question  is  whether  the absence  of  further classification on the  basis  suggested makes the classification made by the Rule discriminatory and offensive to Article 14?  We think not.  This was  precisely the  argument which was dealt with and rejected  in  Twyford Tea  Company  Limited.   The contention  was  that  the  Act impugned  therein  provided for "a uniform rate of  tax  per hectare  which every owner of a name plantation has  to  pay irrespective  of  the  extent or value of  the  produce  and therefore the law imposes a uniform tax burden on unequals". Repelling the argument, Hidayatullah,C.J., speaking for  the majority, stressed that in such cases "the burden is proving not  possible ’inequality’ but hostile ’unequal’  treatment. This  is more so when uniform taxes are levied.  It  is  not proved to us how the different plantations can be said to be hostility or unequally treated.  A uniform wheel tax on cars does not take into account the value of the car, the mileage it  runs, or in the case of taxis, the profits it makes  and the miles per gallon it delivers.  An Ambassador taxi and  a Fiat  taxi  gives different outturns in terms of  money  and mileage.   Cinemas pay the same show fee.  We do not take  a

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doctrinaire view of equality.  The Legislature has obviously thought  of  equalising the tax through a  method  which  is inherent  in the tax scheme.  Nothing has been said to  show that  there is inequality much less hostile treatment.   All that  is said is that the state must  demonstrate  equality. That  is not the approach. At this rate nothing can ever  be proved to be equal to another" (Emphasis added). 17.  It  is  one  thing  to  suggest  that  the  rule-making authority  may consider making a further distinction on  the lines suggested and an altogether different thing to  strike down   the   rule  itself  on  the  ground   of   inadequate classification.   It  is  true  that  the  rental  value  of building falling in any of the three categories will not  be uniform.   There  would  be  any  number  of  distinguishing features  even among, say, pucca buildings with R.C.C.  roof depending  upon  the  quality  of  finish,  the  nature   of fittings, the dimensions of rooms, the type of material used in  construction  and so on and so forth.  It  would  be  an endless  quest.  It would not be easy to draw the ,lines  of distinction.  It may not be possible 468 to  evolve  a classification to cater to all  these  several distinctions.   Even if it is so evolved, not only would  it be  too  complex  and elaborate, it  would  leave  too  much discretion  to  assessing authorities,  the  elimination  of which is one of the main objects of the new Rules.  The  low rates of tax specified in Rule 6 of the Assessment Rules  (2 1/2%  of  the  annual rental value in the  case  of  tax  on holdings, 2% of annual rental value in the case of water tax as well as latrine tax) ensures that even a building with an inferior  quality  of furnish is not subjected to  an  undue burden  of  tax.  Treating all pucca buildings  with  R.C.C. roof as one class and subjecting them to uniform rate of tax subject,  of  course,  to the location and  nature  of  user cannot be said to amount to hostile discrimination so as  to offend   Article  14.   A  mere  possibility  of  a   better classification  is no ground to strike down the  classifica- tion  made by the statutory authority  more particularly  in the case of a taxing enactment.  Saying so would be to  deny the "  range of selection and freedom in appraisal not  only in  the objects of taxation and the manner of  taxation  but also in the determination of the rate or rates  applicable". It  would also run counter to the entire reasoning  of  this court in R.K.Garg in the passages quoted above.   Similarly, the  other  objection that the  municipal  corporation  area ought to have been divided on the basis of zones and not  on the  basis of the roads is also not a ground upon which  the court  could have invalidated the rule.  It is  not  pointed out  that  the division with reference to roads  amounts  to hostile  treatment.  In case of such  classification,  there will  always be some instances where one gets  an  advantage and the other suffers a disadvantage but that is no  ground, as  has  been  repeatedly emphasised by this  court  in  the decisions  referred to above for invalidating a statute  and more  particularly  a  taxing statute.   The  merit  of  the Assessment  Rules, 1993, as emphasised by the High Court  at more  than one place, is that they rid the  house-owners  of the  harassment  and  the constant threats  of  revision  of annual  rental  value  by the  concerned  officials  of  the corporation.   The earlier system of taxation left too  much discretion in their hands.  Now, the only thing that has  to be ascertained is the carpet area of the house, the rest  is determined by the Rules and the notifications.  There is  no question of revision of annual rental value periodically  on the ground that the rental value has gone up.  A new system,

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with  all  good  intentions is being  tried  out   a  system designed  in  the interest of the body of  house  owners-tax payers  as  well as the corporation.  May be,  this  is  the trial  and error method spoken of in R.K.Garg. Unless  found to be offending the constitutional or statutory  provisions, it must be allowed to be worked out.  One should start  with the  presumption  that  the corporation knows  what  is  the better method of classification.  It has chosen to divide it with  reference to roads.  It is difficult for the court  to substitute  its opinion for that of the corporation nor  can any one guarantee that if the municipal corporation area  is divided  on  the  basis  of  zones  it  will  be  a  perfect classification  and  would  eliminate  all  complaints   and grievances of differential treatment.  It is because of  the inherent complex nature of taxation that a greater  latitude and  a larger elbow room is conceded to the legislature   or its delegate, as the case may be  in such matters.   Dealing with  a similar objection, this court said in Khandige  Sham Bhat v. Agrl. I.T.Officer (1963 (3) S.C.R.809:               "It is suggested that a more reasonable               469               course would have been to tax the assessees in               the Madras area for the income that accrued to               them during the 5 months by treating the  said               income  as  the  income for  the  entire  year               commencing  from April 1, 1956 and  ending  on               March 31, 1957 and that in that event not only               their  income  for the said period  could  not               have  escaped taxation but it would have  also               avoided the unjust treatment meted out to them               in the rate of tax.  Prima facie there appears               to be some plausibility in this argument;  but               a closer examination discloses that though the               method suggested may have been better than the               method  actually  adopted,  the  hardship   in               individual  cases  cannot  in  any  event   be               avoided.  It is true taxation law cannot claim               immunity  from  the  equality  clause  of  the               Constitution.  The taxation clause shall  also               not  be arbitrary and oppressive, but  at  the               same  time  the  Court  cannot,  for   obvious               reasons, meticulously scrutinize the impact of               its burden on different persons or  interests.               Where there is more Om one method of assessing               tax  and  the Legislature selects one  out  of               them,  the  Court  will not  be  justified  to               strike  down  the law on the ground  that  the               Legislature should have adopted another method               which,  in the opinion of the Court,  is  more               reasonable,  unless it is convinced  that  the               method   adopted  is   capricious,   fanciful,               arbitrary or clearly unjust " 18.Reference may also be had to the recent decision of  this Court  in P.M.Ashwathanarayana Setty v. Slate  of  Karnataka (1989 Suppl.(1) 696), where Venkatachaliah,J., speaking  for the court made the following pertinent observations:               "The  lack  of  perfection  in  a  legislative               measure  does  not necessarily imply  its  un-               constitutionality.  It is rightly said that no               economic measure has yet been devised which is               free  from all discriminatory impact and  that               in  such a complex arena in which  no  perfect               alternatives exist, the court does well not to               impose  too  rigorous  fiscal  services.    In               G.K.Krishnan  v.State of Tamil Nadu (1975  (1)

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             S.C.C.375),  this  Court  referred  to,   with               approval,  the  majority view in  San  Antonio               Independent  School District v. Rodriguez  (39               L.ed.2d. 16) speaking through Justice Stewart:               ’No  scheme  of taxation, whether the  tax  is               imposed  on property, income or  purchases  of               goods and services, has yet been devised which               is free of all discriminatory impact.  In such                             a   complex   arena  in   which   no   perfect               alternatives exist, the court does well not to               impose  too  rigorous a standard  of  scrutiny               lest all local fiscal schemes become  subjects               of   criticism  under  the  Equal   Protection               clause’... The  observations  of  this Court in ITO  v.  K.N.Takin  Roy Rymbai (1976 (1) S.C.C.916) made in the context of  taxation laws are worth recalling:               ’(T)he mere fact that a tax falls more heavily               on some in the same category, is not by itself               a  ground  to render the law invalid.   It  is               only  when within the range of its  selection,               the  law  operates  unequally  and  cannot  be               justified   on   the   basis   of   a    valid               classification,   that   there  would   be   a               violation of Article 14’.  " 19.  We are, therefore, of the opinion that  grounds    upon which clauses (a) and (c)     of   Rule   3(1)   have   been invalidated arc insupportable in law. 20.  Coming to the impugned notifications    issued  by  the corporation, we are equally of the opinion that the grounds 470 upon  which  the notifications have been  in  validated  are unsustainable  in  law.  It is the common case of  both  the parties  that whereas the percentage of taxation  under  the previous system of taxation was about 43.75% it has now been reduced  to  9% only.  While putting the  method  of  deter- mination  of  annual rental value on a  more  uniform  basis eliminating  room  for  arbitrariness  and  corruption,  the corporation  has substantially reduced the rate of tax.   We are unable to see any room for legitimate grievance on  this account.   Taking  the  instance of  a  single  holding  and invalidating the notification on that basis is not a correct approach.   Insofar  as  the  holding  of  the   respondents referred  to  in Para (25) of the High Court’s  judgment  is concerned,  it is stated in the counter-affidavit  filed  in the  High Court that the carpet area of the said holding  is 2,880 sq.ft. (after giving the exemptions as provided by the rules) and that it has been put to commercial use, being let out  as shops.  It is also stated that besides shops,  there is  a residential hotel, called Sunway Hotel.   The  respon- dents-writ  petitioners say that the monthly rental  of  the entire  building  is only Rs. 1,200/- which  appears  to  us wholly  unacceptable.  It is difficult to believe  that  any tenement  in  Patna city with 2,880 sq.ft. of  carpet  area, having commercial value and situated on one of the principal main  roads  of the city would fetch a  rent  of  Rs.1,200/- only.  It is not stated by the respondents-writ  petitioners that  this low rent is because of the applicability  of  the Rent Control Act and the fixation of fair rent.  But for the applicability  of the Rent Control Act and fixation of  fair rent thereunder, it is difficult to believe the respondents’ case  that  a property of the above  nature  and  dimensions would  fetch  such a low rent.  According  to  the  impugned rules   and  notifications,  its  annual  rental  value   is determined at Rs. 1,55,520/- (annual tax of Rs.  13,996.80p.

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at  the  rate of nine per cent) which in  the  circumstances cannot be said to be either excessive or unreasonably  high. We have dealt with this particular instance because the High Court   has   made  it  a  ground   for   invalidating   the notifications and   not for any other reason. 21.  Sri Muralidhar, learned  counsel for the     respondents submitted that rules and the notifications do not take  into account buildings which are covered by the Rent Control  Act and  that  where the said Act applies, the  rent  cannot  be enhanced except to a limited extent provided by the Act  and that in such cases the said rules and notifications  operate with  undue harshness.  But no such argument  was  addressed before  the  High Court nor it has been dealt  by  it.   We, therefore, do not propose to express any opinion on the said submission, nor with the reply given by the learned  counsel for the appellants to the said submission. 22.  Sri Muralidhar also submitted that no notification  was issued  under Section 134 of the Act with respect to  Circle VIIIA  in which the respondents’ holding is  situated.   The High  Court has declined to entertain the said plea  on  the ground that it can always be raised in the appeal and  other remedies provided by the statute.  We are in agreement  with the High Court.  We too have confined our attention only  to the validity of the rules and the notifications as the  High Court had done, leaving other questions to be agitated in an appropriate forum at the appropriate stage. 23.  For  the above reasons, the appeal is allowed  and  the judgment of the High Court is set aside.  No costs. 472