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1975 (1) TMI 62 - SC - Indian LawsWhether clause (i) of section 2(1A) is violative of article 14? Whether there is any discrimination in relation to the assessments for the period prior to April 1, 1970 between pending cases and the cases in which assessment had already been completed? Whether the Corporation in determining the rates of conservancy tax has to find out the total expense it would have to incur for the various purposes mentioned in section 129(b) in connection with the conservancy service and thereafter to raise that amount by fixing different rates of conservancy tax for various categories of properties? Whether the Corporation would have to find out separately the expense required in respect of conservancy service for each category of property and thereafter to fix such rate of conservancy tax for a category of property as would be sufficient to meet the expense on the conservancy service for that particular category? Held that - The petitioner-company is in occupation of the underground strata of the land through which their electric supply lines had been laid. In order to hold that space from the Corporation, it was essential, according to the learned counsel that there should have been some agreement between the petitioner company and the Corporation or that the Corporation should have given its consent for that purpose. We are unable to accede to the above submission. Clause (a) of section 139(1) of the Corporations Act fastens the liability for payment of property tax on the actual occupier of the premises held immediately from the Government or from the Corporation. In order to attract the liability under the above clause, it is not essential that there should have been an agreement between the actual occupier and the Government or the Corporation for the holding of the premises or that the holding must be with the consent of the Government or the Corporation. The liability would accrue even if the premises vesting in the Government or the Corporation are occupied in pursuance of a statutory provision. The words held immediately from the Government or from the Corporation signify only the party in whom the premises vest which are held by the actual occupier thereof. Contention has also been advanced by Mr. Tarkunde regarding the quantum of tax levied on and the extent of the land alleged to have been occupied by the petitioner-company for the underground supply lines. This is essentially a question of fact and would have to be agitated before the authorities concerned, including the appellate authority. As a result of the above, we dismiss writ petitions.
Issues Involved:
1. Constitutional validity of various provisions of the Bombay Provincial Municipal Corporations Act as amended by Gujarat Acts No. 8 of 1968 and No. 5 of 1970. 2. Competence of the State Legislature under entry 49 of the State List to tax plant and machinery. 3. Validity of tax assessments for the years 1964-65, 1965-66, and 1966-67. 4. Validity of the reassessment of property taxes following the enactment of Gujarat Act 8 of 1968. 5. Legality of the special rate of conservancy tax for large premises. 6. Delegation of judicial or quasi-judicial powers by the Municipal Commissioner. 7. Constitutionality of section 406(2)(e) and section 411(bb) of the Corporations Act. 8. Liability of an electricity company for property tax on land occupied by underground supply lines. Detailed Analysis: 1. Constitutional Validity of Various Provisions The Supreme Court examined the constitutional validity of different provisions of the Bombay Provincial Municipal Corporations Act as amended by Gujarat Acts No. 8 of 1968 and No. 5 of 1970. The High Court had declared certain provisions invalid for infringing Article 14 of the Constitution. The Supreme Court upheld the constitutional validity of clause (i) of section 2(1A) for all years to which it applied, rejecting the High Court's finding that it was violative of Article 14 for years prior to 1969-70. 2. Competence of State Legislature to Tax Plant and Machinery The Court reaffirmed its earlier decision in New Manek Chok Spinning & Weaving Mills Co. Ltd. & Ors. v. Municipal Corporation of the City of Ahmedabad & Ors., holding that the State Legislature had no competence under entry 49 of the State List to tax plant and machinery. Rules 7(2) and (3) of the Taxation Rules were struck down for being beyond legislative competence and for excessive delegation of powers. 3. Validity of Tax Assessments for 1964-65, 1965-66, and 1966-67 The Court found that the initial tax assessments for these years were invalid as they were not in accordance with law. The Corporation was directed to prepare fresh assessment lists, but was unable to do so due to a High Court decision which held that the Corporation had no power to levy property tax for any official year after that year had ended. 4. Validity of Reassessment Following Gujarat Act 8 of 1968 The Gujarat Act 8 of 1968, which inserted section 152A in the Corporations Act, allowed reassessment of property taxes if the original assessment was affected by a court decree. The Supreme Court upheld the validity of reassessments made under section 152A, stating that the Corporation had the power to reassess lands and buildings for the official years 1964-65, 1965-66, and 1966-67. 5. Legality of Special Rate of Conservancy Tax for Large Premises The Court overturned the High Court's decision which had struck down resolutions fixing the conservancy tax at 9% for large premises like textile mills and factories. The Supreme Court held that the Corporation was justified in fixing different rates for different classes of properties, and it was not necessary to separately work out the expenditure involved for each class. 6. Delegation of Judicial or Quasi-Judicial Powers The High Court had declared section 49 of the Corporations Act invalid for delegating judicial or quasi-judicial powers to the Deputy Municipal Commissioner. The Supreme Court, however, upheld the validity of section 49, stating that it did not suffer from the vice of unreasonableness. 7. Constitutionality of Section 406(2)(e) and Section 411(bb) The Supreme Court reversed the High Court's finding that these sections were violative of Article 14. It held that the requirement for depositing the amount of tax as a condition precedent to the entertainment of an appeal did not nullify the right of appeal, especially since the appellate judge could dispense with this requirement in cases of undue hardship. 8. Liability of Electricity Company for Property Tax The Court held that the petitioner electricity company was liable to pay property tax for the underground supply lines laid under public streets. The term "land" in entry 49 of the State List includes the underground strata, and the company was considered an occupier of the land where the supply lines were laid. Conclusion The Supreme Court dismissed the writ petitions challenging the validity of the provisions and upheld the reassessment of property taxes. It also validated the special rate of conservancy tax for large premises and confirmed the liability of the electricity company for property tax on underground supply lines. The appeals filed by the Municipal Corporation and the State of Gujarat were accepted, and the High Court's judgment was set aside to the extent it had struck down the impugned provisions and resolutions.
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