2001 (12) TMI 70 - HC - Income Tax

Summary

Issues Involved:
1. Fresh assessment of land held by previous owner under one-time tax scheme.
2. Tax liability on land or building as separate units upon transfer.
3. Consequence of change in ownership.
4. Authority for fresh levy on already taxed property.
5. Tax on rebuilt or enlarged buildings with one-time tax paid.
6. Constitutionality of sections 13 and 15 of the Act under Article 265.

Issue-wise Detailed Analysis:

1. Fresh Assessment Under One-Time Tax Scheme:
The court addressed whether fresh assessment is permissible when the previous owner had opted for the one-time tax scheme under section 3(1B) of the Rajasthan Land and Buildings Tax Act, 1984, and a certificate exempting the land from future tax liability was issued. The court concluded that fresh assessment is not permissible as it violates Article 265 of the Constitution, which mandates that no tax shall be levied or collected except by authority of law.

2. Tax Liability on Land or Building as Separate Units:
The court examined whether the tax under the Act is on land or building or both separately as units and whether transfer of such property incurs further tax liability. It was determined that the tax is indeed on land or building as separate units, and once the property has been taxed, further tax liability does not arise merely due to transfer of ownership.

3. Consequence of Change in Ownership:
The court considered whether a change in ownership affects tax liability. It was held that the change in ownership is inconsequential under the Act as the tax is on the property itself, not on the owner. Sections 13(1)(b) and 15(b) of the Act, which imply tax liability due to change in ownership, were declared ultra vires the Constitution.

4. Authority for Fresh Levy on Already Taxed Property:
The court analyzed whether section 3, the main charging section, authorizes fresh levy on property already subjected to tax. It was concluded that section 3 does not authorize such fresh levy. The court emphasized that clause (c) of section 3(1B) only subjects the assessee to pay tax on rebuilt or enlarged buildings, not on transferred properties.

5. Tax on Rebuilt or Enlarged Buildings:
The court clarified that clause (c) of section 3(1B) subjects the assessee to pay tax only on rebuilt or enlarged buildings where one-time tax has been paid. The provision does not cover properties transferred to new owners.

6. Constitutionality of Sections 13 and 15 Under Article 265:
The court scrutinized sections 13 and 15 of the Act for their constitutionality under Article 265. It was held that these sections are violative of Article 265 as they impose tax liability on the owner rather than the property, which is beyond the legislative competence of the State Legislature under entry 49, List II of the Seventh Schedule. Consequently, sections 13(1)(b) and 15(b) were declared ultra vires the Constitution.

Conclusion:
The court allowed the writ petition, quashing the impugned assessment orders and demand notices. It declared that no fresh proceedings can be carried out on land and buildings once assessed and opted for one-time tax. Sections 13(1)(b) and 15(b) were struck down as unconstitutional. The order of the Rajasthan Taxation Tribunal dated December 8, 1997, was set aside.