http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 6  

PETITIONER: AJOY KUMAR MUKHERJEE

       Vs.

RESPONDENT: LOCAL BOARD OF BARPETA

DATE OF JUDGMENT: 11/02/1965

BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. GAJENDRAGADKAR, P.B. (CJ) HIDAYATULLAH, M. SHAH, J.C. SIKRI, S.M.

CITATION:  1965 AIR 1561            1965 SCR  (3)  47  CITATOR INFO :  D          1975 SC2193  (6,12,13,14)  RF         1991 SC1766  (28,31,62)

ACT:     Assam Local Self Government Act 1953, (Act 25 of  1953), s.   62-Tax--Whether   on  land  used  for  market   or   on market--State legislature, competence--Constitution of India Seventh   Schedule,  List  II   Entry   49--Interpretation-- Discrimination--Allegations--Burden of proof.

HEADNOTE:     The  appellant as a land-holder held a hat or market  on his  land.  The respondent, the local  board,  within  whose jurisdiction  the  market  was held, issued  notice  to  the appellant  to take out a licence and  pay a certain  sum  as licence  fee  for  holding  the  market.  Inspire  of    the continued  protests  of  the  appellant  against  the  levy, the  amount  was  sought to be recovered  by  the  issue  of distress  warrants  and  attachment  of  his  property.  The appellant   file.d  a  writ  petition  in  the  High   Court challenging on a number of grounds, the constitutionality of the  impost, which was dismissed. In appeal  by  certificate the appellant contended that (i)the Assam Legislature had no legislative  competence  to tax markets, and  (ii)  the  tax actually  imposed  on this market infringed Art. 14  of  the Constitution, because the board fixed a higher rate for  the appellant’s  market  as  compared  with  other  neighbouring markets.     HELD:(i)  The  tax  in the present case  being  on  land within  the  meaning of Entry 49 of List II of  the  Seventh Schedule  of the Constitution, would clearly be  within  the competence of the State Legislature. [49 E-C]     The  Scheme of s. 62 of the Assam Local Self  Government Act,  1953 shows that the tax provided therein is a  tax  on land, though its incidence depends upon the use of the  land as  a  market  and the owner, occupier  or  farmer  of  that land  .has  to pay a certain tax for its use  as  such.  But there  is  no  tax on the transaction that  may  take  place within  the market. Further the amount of tax  depends  upon

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 6  

the  area  of the land on which the market is held  and  the importance  of the market subject to a maximum fixed by  the State Government. Section 62(2) which used the words "impose an annual tax thereon" clearly shows that the word "thereon" refers to any land for which a licence is issued for use  as a market and not to the word "market". The use to which  the land  is put can be taken into account in imposing a tax  on it within the meaning of entry 49 of the List II. Ralla  Ram v. The Province of East Punjab, [1948] F.C.R. 207,  applied. [51 C-F]     (ii) It was for the appellant to show that in fixing the tax  on  the  other  markets as  it  did,  the  board  acted arbitrarily  and  did  not take into account  the  size  and importance of the markets. As there was no material by which the relative size and importance of those markets, could  be judged,  it  was  not  possible  to  hold  that  there   was discrimination in taxing this market. [52 F-G]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No.  630  of 1963. 48        Appeal from the judgment and order dated June 8, 1959 the Assam High Court in Civil Rule No. 42 of 1957. D.N. Mukherjee, for the appellant. Naunit Lal, for the respondent No. 3. The Judgment of the Court was delivered by        Wanchoo,  J. This appeal on a certificate granted  by the   Assam     High  Court  raises  the  question  of   the constitutionality  of an annual tax levied by  local  boards for  the  use of any land  for     the  purpose  of  holding markets  as  provided  by s. 62 of  the  Assam  Local  Self- Government Act, No. XXV of 1953, (hereinafter referred to as the Act). The appellant is a landholder in the district of i Kamrup. As such landholder, he holds a hat or market on  his land since the year 1936 and this market is known as  Kharma hat.    In 1953-54, the local board of Barpeta, within whose jurisdiction     the Kharma market is held, issued notice to the  appellant to take     out a licence and pay  Rs.  600/- for  the  year 1953-54 as licence-fee      for  holding  the market.  Later this sum was increased to Rs.  700/-      for the  year  1955-56.  The  appellant  continued   .protesting against  this levy but no heed was paid to his protests  and the  amount  was     sought  to be  recovered  by  issue  of distress  warrants  and  attachment      of  his   property. Consequently, the appellant filed a writ petition in     the High  Court challenging the constitutionality of the  impost on  a     number of grounds. In the present appeal two  main contentions  have been urged in support of  the  appellant’s case  that     the impost is unconstitutional,  namely,  (i) that the Assam legislature had no legislative competence  to tax markets, and (ii)  that     the tax actually imposed  on the Kharma market infringes Art. 14     of the Constitution. We shall therefore consider these two contentions only.  This  attack  on  behalf of the appellant  is  met  by  the respondent      by  relying  on item 49 of List  1I  of  the Seventh  Schedule to the     Constitution, and it  is  urged that  the State legislature was competent to impose the  tax under that entry, for this was a tax on land.     As to Art. 14,  the  reply on behalf of the respondent  is  that  under s.  62  of the Act, a rule has been framed  prescribing  Rs. 1000/- as     the maximum amount of tax which may be  levied by  any local board in Assam on markets licensed under  that

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 6  

section. The rule     also provides that any local board may with the previous approval of Government impose a tax within this  maximum according to     the size and importance of  a market. So it is submitted that the     tax has been imposed by Barpeta local board in accordance with     this rule, and the appellant has failed to show that there has been     any discrimination in the  fixation of the amount of tax on  the Kharma market.   The  High Court repelled the contentions raised on  behalf of      the  appellant and dismissed the writ  petition.  As however,   questions  of  constitutional   importance   were involved, the High Court 49 granted  a certificate under Art. 132 of  the  Constitution; and that is how the matter has come up before us.    The   first  question  which  falls   for   consideration therefore is whether the impost in the present case is a tax on  land  within the meaning of entry 49 of List II  of  the Seventh  Schedule  to the Constitution. It  is  well-settled that  the entries in the three legislative lists have to  be interpreted in their widest amplitude and therefore if a tax can  reasonably  be held to be a tax on land  it  will  come within entry 49. Further it is equally well-settled that tax on  land  may be based on the annual value of the  land  and would  still  be a tax on land and would not be  beyond  the competence of the State legislature on the ground that it is a  tax  on  income: (see Ralla Ram v.The  Province  of  East Punjab(1).  It follows therefore that the use to  which  the land  is put can be taken into account in imposing a tax  on it within the meaning of entry 49 of List II, for the annual value  of land which can certainly be taken into account  in imposing  a  tax  for  the  purpose  of  this  entry   would necessarily depend upon the use to which the land is put. It is in the light of this settled proposition that we have  to examine    the    scheme   of   s.   62    of    the    Act, which imposes the tax under challenge. It  is  necessary therefore to analyse the scheme of  s.  62 which  provides for this tax. Section 62(1) inter alia  lays down  that the local board may order that no land  shall  be used  as  a  market otherwise than under  a  licence  to  be granted  by  the  board. Sub-section (2) of  s.  62  is  the charging provision and may be quoted in full:                  "On the issue of an order as in sub-section               (1), the   board at a meeting may grant within               the  local  limits of  its     jurisdiction  a               licence  for the use of any land as  a  market               and  impose  an annual tax  thereon  and  such               conditions as    prescribed by rules." Sub-section  (3) provides that when it  has been  determined that a tax shall be imposed under the preceding sub-section, the  local board shall make an order that the owner  of  any land used as a market specified in the order shall take  out a licence for the purpose. Such order shall specify the  tax not  exceeding  such amount as may be  prescribed  by  rule, which shall be charged for the financial year. It  will  be seen from the provisions of  these  three  sub- sections that power of the board to impose the tax arises on its   passing   a  resolution  that  no  land   within   its jurisdiction  shall  be  used as a market.  Such  resolution clearly  affects land within the jurisdiction of  the  board and  on the passing of such a resolution the board gets  the further  power to issue licences for holding of  markets  on lands  within its jurisdiction by a resolution and also  the power  to impose an annual tax thereon. Now it is  urged  on behalf  of  the  appellant that when  sub-s  (2)  speaks  of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 6  

imposing of "an annual (1) [1948] F.C.R. 207. 50 tax thereon" it means the imposition of an annual tax on the market,  and  that there is no provision in List II  of  the Seventh. Schedule for a tax on markets as such. "Markets and fairs"  appear  at item 28 of List H, and it is  urged  that under item 66 of the same List, fees with respect to markets and  fairs  can be imposed; but there is  no  provision  for imposing a tax on markets in the entries from 45 to 63 which deal  with taxes. It may be accepted that there is no  entry in  List II which provides for taxes as such on markets  and fairs.  It  may  also be accepted that entry  66  will  only justify  the imposition of fees on markets and  fairs  which would  necessitate  the providing of services by  the  board imposing the fees as a quid pro quo. That however, does  not conclude  the  matter, for the contention on behalf  of  the State  is  that tax under s. 62 is on land and  not  on  the market and further the tax depends upon the use of the  land as a market. It seems to us on a close reading of sub-s. (2) that  when that sub-section speaks of "annual tax  thereon", the  tax is on the land but the charge arises only when  the land is used for a market. This will also be clear from  the subsequent provisions of s. 62 which show that the tax is on land  though  its  imposition  depends  upon  user  of   the land as a market. Sub-section (3) shows that as soon as sub- s. (1) and (2) are complied with, the local board shall make an  order that the owner of any land used as a market  shall take out the licence. Thus the tax is on the land and it  is the  owner of the land who has to take out the  licence  for its  use as a market.The form of the tax i.e. its  being  an annual tax as contrasted to a tax for each day on which  the market is held also shows that in essence the tax is on land and  not on the market held thereon.Further the tax  is  not imposed  on  any transactions in the market by  persons  who come  there  for business which again shows that  it  is  an impost  on land and not on the market i.e. on  the  business terein.  Then sub-s (5) provides that the tax shall be  paid by the owner of any land used as a market which again  shows that  it is on the land that the tax is levied,  though  the charge  arises when it is used as a market. Sub-section  (6) then  lays  down that on receiving the amount so  fixed  the board  shall issue a licence to the person paying the  same. Here  again  the license is for the rise of the  land.  Then comes  sub-s.  (8) which provides that wherever.  being  the wner or occupier of any land uses or permits the same to  be used as a market without a licence shall be liable to  fine. This provision clearly shows that the tax is on the land and it  is the owner or occupier of the kind who is  responsible and  is  liable  to prosecution if he fails to  take  cut  a licence.  No  liability of any kind is thrown on  those  who come to the market for-the purpose of trade. Sub-section (9) then  lays  down that where a conviction has  been  obtained under  sub-s.  (8),  the  District  Magistrate  or  the  Sub Divisional Officer, as the case may be, may stop the use  of the  land as a market. Sub-section (10) then  provides  that every, 51 owner, occupier or farmer of a market shall cause such drain to be made therein and take all necessary steps to keep such market  in  a  clean and  wholesome state  and  shall  cause supply  of sufficient water for the purpose as well  as  for drinking  purpose. Sub-sections (ID and (12) give  power  to the board on the failure of any owner, occupier or farmer to comply  with a notice under sub-s. (10), to take  possession

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 6  

of  the  land and the market thereon and execute  the  works itself  and  receive  all rents, tolls  and  other  dues  in respect  of  the market. This will again show that  the  tax provided by s. 52(2) is a tax for the use of the land and it is not a tax on the market as such, for the income from  the market  in the shape of tools, rents and other dues  is  not liable  to  tax under s. 52 and is different from  tax.  The scheme  of s. 62 therefore shows that whenever any  land  is used for the purpose of holding a market, the owner,occupier or farmer of that land has to pay a certain tax for its  use as  such.  But there is no tax on any transaction  that  may take  place  within the market. Further the  amount  of  tax depends  upon the area of the land on which market  is  held and the importance of the market subject to a maximum  fixed by the State Government. We have therefore no hesitation  in coming to the conclusion    on a consideration of the scheme of  s. 52 of the Act that the tax provided therein is a  tax on  land, though its incidence depends upon the use  of  the land  as a market. Further as we have already  indicated  s. 62(2)  which uses the words "impose an annual  tax  thereon" clearly shows that the word "thereon" refers to any land for which a licence is issued for use as a market and not to the word  "market".  Thus the tax in the present case  being  on land  would  clearly be within the competence of  the  State legislature. The contention of the appellant that the  State legislature  was  not competent to impose this  tax  because there is no provision in List II of the Seventh Schedule for imposing a tax on markets as such must therefore fail.     Then  we  come to the contention under Art.  14  of  the Constitution.  As to that it is well-settled that it is  for the  person  who alleges that equality before law  has  been infringed  to show that such really     is the case. It  was therefore  for  the appellant to produce facts  and  figures from  which it can be inferred that the tax imposed  in  the present case is hit by Art. 14 of the Constitution. In  that connection,  all that the appellant has stated in  his  writ petition is that the board fixed a high rate arbitrarily and thus  discriminated  against the   appellant’s   market   as against  the  other  neighbouring markets where the tax  had been  fixed at a much lower rate, and that this was  hit  by Art. 14. There was certainly an allegation by the  appellant that  Art.  14 had been infringed; but  that  allegation  is vague  and gives no facts and figures for holding  that  the tax  imposed  on the Kharma market  was  discriminatory.  It appears that the tax was imposed for the year 1953-54. which was  continued  Inter on, with some modifications.  At  that time there were five 52 markets on which the tax was imposed  including  the  Kharma market. The lowest tax was at Rs. 400/- on two markets, then at  Rs.  500/- on the third market and at Rs. 600/-  on  the Kharma market and finally at Rs. 1000/- on the fifth market. Rule  300(2),  flamed  in  accordance  with  s.  63(3)  runs thus:---                     "Rs.  1000/- (Rupees one thousand)  only               per annum has been fixed as the maximum amount               of tax which may be levied by the local boards               in Assam on markets licensed under section  62               of the Act.                     Any  local board may with  the  previous               approval  of  Government impose a  tax  within               this   maximum  according  to  the  size   and               importance of a market." Now the rule provides that Rs. 1000/- is the maximum tax and within  that  maximum  the board has  to  graduate  the  tax

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 6  

according to the size and importance of the market. The size of  the market naturally takes into account the area of  the land  on  which the market is held; the  importance  of  the market  depends  upon the number of transactions  that  take place  there, for the larger the number of transactions  the greater  is the importance of the market. If  therefore  the appellant is to succeed on his plea of Art. 14 on the ground that  the tax fixed on his market was discriminatory he  had to  adduce facts and figures, firstly as to the size of  the five  markets  on which the tax was levied in  the  relevant years  and secondly as to the relative importance  of  these markets. But no such facts and figures have been adduced  on behalf  of the appellant. It is true that the respondent  in reply to the charge of discrimination was equally vague  and merely  denied that there was any arbitrary  discrimination. But it was for the appellant to show that in fixing the  tax on  the five markets as it did, the board acted  arbitrarily and did not take into account the size and importance of the markets.  As there is no material before us by which we  can judge the relative size and importance of the five  markets, it is not possible to hold that there was discrimination  in taxing  Kharma market at Rs. 600/- per year as  compared  to taxing  the three other markets at less than Rs. 600/-.  The attack therefore on the amount actually fixed on the  ground of discrimination must fail. We therefore dismiss the appeal with costs. Appeal dismissed. 53