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PETITIONER: BARSI MUNICIPAL COUNCIL BARSI, DISTRICT DHOLAPUR

       Vs.

RESPONDENT: LOKAMANYA MILLS, BARSI, LTD., BARSI AND ANOTHER(With Connect

DATE OF JUDGMENT19/09/1972

BENCH: MATHEW, KUTTYIL KURIEN BENCH: MATHEW, KUTTYIL KURIEN GROVER, A.N. MUKHERJEA, B.K.

CITATION:  1973 AIR 1021            1973 SCR  (2) 399  1972 SCC  (2) 857

ACT: Bombay Municipal Borough Act, 1925, Section 75 Explanation. Bombay   Municipal   Boroughs   Rules-Rule   2(c)   Boroughs Municipalities  (Validation of certain taxes  on  buildings, and lands) Act, 1965, Sections 8 and 4. A levy of tax cannot be  validated  by  a  validating  act  unless  the  charging section, earlier struck down, is revived or resurrected.

HEADNOTE: The  Supreme Court, in Lokmanya Mills, Barsi Led.  v.  Barsi Borough Municipality (1962) 1 SCR 306 struck down Rule  2(c) as being violative of Art. 14 of the Constitution of  India, for  the  vice of assumed uniformity of return per  sq.  ft. from  structures  of different classes which  are  in  their nature  not  similar.  The  Maharashtra  Legislature  passed Borough  Municipalities  (validation  of  certain  taxes  on buildings  and  lands) Act 1965, to validate  the  levy  and collection  of  the  tax with retrospective  effect  and  to enable  the  municipalities  to  levy  house  tax  on  mills factories   and  buildings  on  the  basis  of  Rule   2(c). Explanation to Sec. 75 of the Act was substituted by the new explanation,  by  the  Validating  Act.  Ss.  4  and  5  are designed  to  validate the levy and collection of  tax  with retrospective effect.  On challenge through a Writ Petition, the  Division  Bench of the Bombay High  Court  struck  down Sections  3(b), 4(1), 4(2) and 5 of the Validating  Act  for their  contravention  of Art. 14.  The appeal filed  by  the State  and  the Barsi Municipal Council  before  this  Court among  other  things, raised a question as  to  whether  the Validating  Act has resurrected the provisions of Rule  2(c) and levy and collection were validated as required by law. Dismissing the appeal, HELD  :  When the rule was struck down by  this  Court,  the effect was that the Rule could never be deemed to have  been passed.   Apart  from  Rule  2(c),  there  was  no  charging provision  ’similar to Rule 2(c) either in the Boroughs  Act or  in  the Validating Act for levying house tax  on  mills, factories  and  buildings connected therewith.   After  Rule 2(c)  was  struck down, the Municipality did not  frame  any rule under the provisions of Section 75 of the Boroughs  Act for imposing tax on mills, factories or buildings  connected

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therewith.  Section 4 of the Validating Act does not  revive or  resurrect Rule 2(c).  Since the charging section is  not revived, there was no authority under law to collect tax  on the said categories of properties.  Since in the eye of  law there   was  no  charging  provision,  there  could  be   no validation of any levy or collection. [403G] Held further, that the above holding was enough to grant all reliefs  claimed by the respondent in the Writ Petition  and there  was no need to express an opinion on the validity  of the impugned sections of the Validating Act. [404F]

JUDGMENT: CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos.  1194,  11 96, 1197 & 1250 of 1967. 400 Appeals  by  certificate from the judgment and  order  dated November  22,  23 and 24, 1966 of the Bombay High  Court  in Special Civil Applications Nos. 1476 and 1424 of 1966. G.   L. Sanghi, C. K. Ratnaparkhi and A. G. Ratnaparkhi, for the appellant (in C.A. No. 1194/67). B.   N. Lokur, C. K. Ratnaparkhi, A. G. Ratnaparkhi and B.   M. Srivastava, for the appellant (in C.A. No. 1196/67). M.   C. Bhandare, B. D. Sharma, for the appellants (in C.As. Nos.  1197 and 1250/67 and Respondent No. 2 (in  C.As.  Nos. 1194 and 1196/67). Sharad  Manohar and B. P. Maheshwari, for respondent  No.  1 (in C. As. Nos. 1194 and 1197 of 1967). M.   N.  Phadke,  Sharad Manohar and B. P.  Maheshwari,  for respondent No. 1 (in C.As. Nos. 1196 & 1250/67). B.   N. Lokur, G. L. Sanghi, C. K. Ratnaparkhi, A. G. Ratna- parkhi and B. M. Srivastava, for respondent No. 2 (in  C.As. Nos. 1197 & 1250/67). The Judgment of the Court was delivered by MATHEW, J. The respondents in these appeals filed writ peti- tions  in the Bombay High Court challenging the validity  of the  Borough Municipalities (Validation of Certain Taxes  on Buildings  and Lands) Act, 1965 (Maharashtra Act No. 111  of 1966),  hereinafter  called  the "Validating  Act",  on  the ground  that  the  provisions  of  the  Act  violated  their fundamental rights under Art. 14 of the Constitution and for restraining  the  appellants from levying house tax  on  the mills,  factories and buildings connected therewith  of  the respondents  or collecting the same from them.   A  Division Bench of the High Court held that sections 3(b), 4(1),  4(2) and 5 of the Validating Act were invalid as they contravened Art.   14  and  granted  the  prayer  for  restraining   the appellant-Municipality from levying and collecting the tax. These  appeals,  by certificate, are  directed  against  the judgment of the Division Bench. Till the year 1947, the appellant-Municipality used to  levy house  tax on the mills, factories and  buildings  connected therewith  of the respondents in these appeals on the  basis of  their annual letting value and the annual letting  value for this purpose was ascertained in the normal way, that is, by  ascertaining  the amount at which  the  buildings  might reasonably  be expected to let from year to year.  In  1947, the  appellant-Municipality  made fresh rules  for  levy  of house tax and rule 2 (c) of the new rules ran as follows  401               "2(c)  In the case of mills and factories  and               buildings  connected therewith, house  tax  on               buildings shall be levied at the usual rate on               the annual rental value fixed at Rs. 40/-  for

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             every 100 square feet or portions thereof  for               each sterey, floor or cellar.               "Explanation   :  The   expression   "building               connected   therewith"  means   and   includes               warehouses, godowns, millshops, etc. which are               within the compound of mill premises but  does               not  include  residential buildings,  such  as               bungalows, out-houses.               "Note  : Buildings which are not  taxed  under               Rule  2(c) shall be taxed under  the  ordinary               rules." Under  this  rule,-the  annual  rental  value  of  all   the buildings  of  mills and factories  other  than  residential buildings  was fixed at a uniform rate of Rs. 40/-for  every square foot of floor area irrespective of the actual  rental value of the premises. One  of  the respondents, namely, Lokamanya  Mills.   Barsi, Limited, claimed refund of amounts paid by them on the basis that  Rule  2(c) was ultra vires the Boroughs Act  and  they filed 4 suits for the same.  Against the decrees  dismissing the  suits,  appeals were preferred to this Court  and  they were  finally disposed of by this Court in Lokamanya  Mills, Barsi  Ltd. v. Barsi Borough Municipality(1).   This  Court, after  referring  to  the  provisions  of  S.  78  and   the explanation  to  S. 75 of the Boroughs Act,  held  that  the Municipality could levy a rate on lands and buildings on the basis  of their capital or annual letting value and that  in framing  rule 2(c), the Municipality had adopted a  mode  of valuation different from the one sanctioned by the  Boroughs Act.  The Court also observed :               "The  vice  of  the rule lies  in  an  assumed               uniformity  of  return per square  foot  which               structures  of different classes which are  in               their nature not similar, may reasonably fetch               if  let  out  to tenants and  in  the  virtual               deprivation to the rate-payer of his statutory               right to object to the valuation." Accordingly,  the Court allowed the appeals and decreed  the suits. The  main objects of the Validatting Act were to enable  the municipalities  governed by the Boroughs Act to  levy  house tax on mill’s factories and buildings connected therewith on the  basis  of  rule  2(c) and  to  validate  the  levy  and collection of the tax with retrospective effect.  Section  3 of ,the, Validating Act (1)  [1962] 1 S.C.R. 306. 402 brings about certain amendments in the Boroughs Act.  In  s. 3 of the Boroughs Act, a clause is inserted which lays  down that "  rate on buildings or lands" includes any tax imposed on buildings or lands.  Another amendment introduced in  the Boroughs  Act  is with reference to Explanation  to  s.  75. Prior  to  the amendment, the explanation to s.  75  was  as follows :               "In  the case of lands the basis of  valuation               may  be  either  capital  or  annual   letting               value."               This   explanation  was  substituted  by   the               Validating Act by an explanation which reads               "Explanation  : For the purposes of a rate  on               buildings or lands, the basis of valuation may               be               (i)   the annual letting value.               (ii)  the annual value;               (iii) the  floor area, in the case  of  mills,

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             factories   buildings  and   lands   connected               therewith;               (iv)  the capital value in the case of  vacant               lands".               Both these amendments were given retrospective               effect  from the commencement of the  Boroughs               Act.   Sections 4 and 5 of the Validating  Act               are  designed to validate  with  retrospective               effect,   the  levy  and  collection  of   tax               notwithstanding the decision of this Court.               Sub-section (1) and (2) of s. 4 provide               "4(1)  Any house tax and any water tax  levied               or  purported  to be levied and  collected  in               respect of any mills, factories and  buildings               and lands connected therewith or in respect of               any  vacant lands, under the Boroughs Act  and               rules made thereunder, at any time before  the               commencement  of this Act shall be  deemed  to               have been levied and collected by or under the               Boroughs  Act  as  amended by  this  Act;  and               accordingly  notwithstanding anything  in  any               judgment,  decree  or order of any  Court  any               such  house  tax  or  water  tax  levied   and               collected shall, for all purposes be deemed to               be,  and always to have been, validity  levied               and  collected,  and shall not  be  called  in               question merely on the ground that the tax was               not levied on the basis of the annual  letting               value, or was levied on the basis of a uniform               rate on the floor area, or that it was  levied               on the basis                403               of  capital  value  or a  percentage  on  such               value,  or on the ground that  any  proceeding               laid down in the Boroughs Act or in the  rules               was not followed."               "4(2) anything done or any action taken, by or               on  behalf of any Borough Municipality or  any               officer   of  such  Municipality,  acting   or               purporting to act under the provisions of  the               Boroughs Act or any rules made thereunder  for               or  in connection with the levy or  collection               of  the  said taxes, shall be deemed  for  all               purposes  to have been validly done or  taken;               and   no  suit  or  other  legal   proceedings               whatsoever  shall be entertained or  continued               in  any  Court on any or all  of  the  grounds               mentioned in sub-section (1)." Section 5 provides, among other things, for recovery of  tax by  the municipal authority concerned and the period  within which it should be recovered, etc. The  two  points  which arise  for  consideration  in  these appeals  are,  whether  rule,  2(c)  was  available  to  the appellant-Municipality  for  imposing house  tax  on  mills, factories   and   buildings  connected  therewith   of   the respondents and whether the rule can be deemed to have  been in operation in order that the levy and collection of  house tax might be validated with retrospective effect It may be recalled that rule, 2 (c) was struck down by  this Court in Lokamanya Mills, Barsi Ltd. v. Barsi Borough  Muni- cipality (1) on the, basis that the Boroughs Act  authorized levy of house tax only on the basis of annual letting  value or capital value of the land or building as the case may be, and that rule 2(c) as it purported to levy house tax on the basis of the floor area was ultra vires the Act.

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When the rule was struck down by this Court, the effect was, that  the  rule could never be deemed to have  been  passed. Apart  from  rule  2(c), there  was  no  charging  provision similar  to rule 2(c) either in the Boroughs Act, or in  the Validating Act for levying house tax on mills, factories and buildings  connected therewith.  After rule 2(c) was  struck down,  the  Municipality did not frame any  rule  under  the provision  of S. 75 of the Boroughs Act for  imposing  house tax  on  mills factories or buildings  connected  therewith. The Validating Act has not also revived or resurrected  rule 2(c).   Therefore,  the  position was  ,that  there  was  no charging provision for imposition of house tax on the mills, factories  or buildings connected therewith.  It is only  if there was a charging provision for imposing house tax on the mills,  factories or buildings connected therewith that  any house  tax  could be imposed upon the  mills,  factories  or buildings connected therewith of the respondents.  All  that the  explanation to s. 75 substituted by the Validating  Act did was (1)  [1962] 1 S.C.R. 306. 404 to  enact that, for imposing house tax, floor area  will  be the  basis of valuation in the case of mills,  factories  or buildings  connected  therewith.  The  consequence  is  that (there could be no levy of house tax on the mills, factories or  buildings  connected therewith of  the  respondents  nor could any demand be made on the respondents on the basis  of any   levy.   The  High  Court  was,  therefore,  right   in restraining  the appellant-Municipality from  levying  house tax on the mills, factories or buildings connected therewith of the respondents and in quashing the demand notice issued. Section  4  did not resurrect rule 2(c)  with  retrospective effect in order that it might be said that there was, in the eye  of  law, a provision for charging house tax  on  mills, factories  or buildings connected therewith so that the  tax levied  and collected might be validated.  Even if s. 4  had resurrected  rule 2(c) and said that it shall be  deemed  to have been passed under the Validating Act with retrospective effect,  that might not have cured invalidity on account  of its  being  violative of Art. 14 of the Constitution  as  it imposed  a  flat rate on the floor area without  making  any classification   of  the  area  on  the  basis  of   income, productivity. or age of building, etc.  But we do not  think it necessary to pass upon this hypothetical question as s. 4 did  not revive or resurrect rule 2(c), much less,  give  it retrospective operation. In   this   view,  we  have  no  occasion  to   reach   ?the constitutional  question  as  regards the  validity  of  the impugned  sections of the Validating Act and we  express  no opinion upon it.  We think that it was not necessary for the High  Court to have struck down the provisions  of  sections 3(2),  4(1),  4(2) and 5 of the Validating Act.   When  rule 2(c) was held to be inoperative by virtue of the decision of this  Court, all the reliefs claimed by the  respondents  in the writ petitions could have been given to  them  without striking down these provisions.  It is a wise tradition with Courts  not to decide a constitutional question if the  case can be disposed of on other grounds. We dismiss the appeals but, in the circumstances, make no order as to costs. S.B.W. Appeals dismissed. 405

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