1965 (2) TMI 93 - SC - Indian Laws

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? Held that The tax in the present case being on land would clearly be within the competence of the State legislature. 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. 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 ₹ 600/- per year as compared to taxing the three other markets at less than ₹ 600/-. The attack therefore on the amount actually fixed on the ground of discrimination must fail. Appeal dismissed.

Summary

Issues:
Constitutionality of annual tax levied by local boards for market use under Assam Local Self-Government Act, No. XXV of 1953; Legislative competence of Assam legislature to tax markets; Violation of Article 14 of the Constitution.

Analysis:
The case involved a challenge to the constitutionality of an annual tax imposed by a local board for using land as a market under the Assam Local Self-Government Act. The appellant contended that the Assam legislature lacked the authority to tax markets and that the tax on the Kharma market violated Article 14 of the Constitution. The respondent argued that the tax fell under the State's competence as a tax on land and was imposed within the prescribed limits set by the Act. The High Court dismissed the writ petition, prompting the appeal to the Supreme Court.

The primary issue addressed by the Supreme Court was whether the tax imposed under section 62 of the Act constituted a tax on land within the scope of legislative competence. The Court analyzed the provisions of section 62, emphasizing that the tax was linked to the use of land for market purposes. The Court concluded that while the tax was contingent on land use, it was fundamentally a tax on land, making it within the State legislature's authority. The appellant's argument that there was no provision for taxing markets in the legislative list was rejected based on the interpretation of the tax as being on land.

Regarding the allegation of violating Article 14, the Court highlighted the burden on the appellant to demonstrate discriminatory treatment. The appellant claimed arbitrary fixation of a high tax rate on their market compared to neighboring markets. However, the Court found the appellant's allegations vague and lacking specific evidence of discrimination. The Court noted that the tax rates were based on the size and importance of the markets, as per the Act's provisions. Without concrete evidence of discrimination, the Court ruled against the appellant's claim under Article 14.

In conclusion, the Supreme Court upheld the imposition of the tax as constitutional and dismissed the appeal. The Court emphasized the distinction between a tax on land and a tax on market transactions, affirming the State legislature's competence in levying the tax. The appellant's failure to substantiate claims of discrimination led to the rejection of the Article 14 challenge. The appeal was dismissed with costs, affirming the legality of the tax imposed by the local board for market land use.