1939 (9) TMI 2 - HC - Service Tax

Issues Involved:
1. Jurisdiction of the High Court under Section 226 of the Government of India Act, 1935.
2. Validity of the Urban Immovable Property Tax under the Bombay Finance Act, 1932, as amended by the Bombay Finance (Amendment) Act, 1939.
3. Whether the Urban Immovable Property Tax is a tax on income or on land and buildings.
4. Whether the tax is a tax on the capital value of assets.
5. Authority of the Municipal Commissioner to collect the tax.

Issue-Wise Detailed Analysis:

1. Jurisdiction of the High Court under Section 226 of the Government of India Act, 1935:
The first point taken by the Government is that this Court has no jurisdiction to hear the suit by reason of Section 226 of the Government of India Act, which provides that no High Court shall have any original jurisdiction in any matter concerning the revenue. However, it was determined that if the tax is illegal, its imposition does not concern revenue but is a nullity. Therefore, the Court has the jurisdiction to decide on the legality of the tax. This point was not seriously contested by the Advocate General.

2. Validity of the Urban Immovable Property Tax under the Bombay Finance Act, 1932, as amended by the Bombay Finance (Amendment) Act, 1939:
The Plaintiff challenged the validity of Part VI of the Bombay Finance Act, 1932, as amended, arguing that it was ultra vires of the Bombay Provincial Legislature. The Court analyzed Sections 20 to 29 of the Act, which define the tax structure and collection mechanism. The Court found that the provisions of the Act were within the legislative powers of the Bombay Provincial Government under the Government of India Act, 1935.

3. Whether the Urban Immovable Property Tax is a tax on income or on land and buildings:
The Court examined whether the impugned tax falls within item 42 of the Provincial List or items 54 and 55 of the Federal List. The Court concluded that the impugned tax is a tax on land and buildings and falls within item 42 of the Provincial List. It was determined that the tax is not a tax on income, as it is charged on the annual letting value of the property and not on the actual income. This conclusion was supported by references to legislative practices in England and India, as well as relevant case law.

4. Whether the tax is a tax on the capital value of assets:
The Court considered whether the tax falls within item 55 of the Federal List, which pertains to taxes on the capital value of assets. It was concluded that the impugned tax is not a tax on the capital value of the assets, as it is imposed without any relation to the capital value except ascertained by reference to the rateable value. The tax is on the land and buildings themselves, not on their capital value.

5. Authority of the Municipal Commissioner to collect the tax:
The Plaintiff argued that it was ultra vires for the Provincial Legislature to order the Municipal Commissioner to collect the tax. The Court found no authority to support this contention. It was held that if the power to impose the tax is conceded, the power to collect the same is necessarily implied. The Provincial Legislature has the authority to appoint any person or corporation to collect the tax. The Court also noted that the inquiry into this issue is barred by Section 226(1) of the Government of India Act.

Conclusion:
The Court concluded that Part VI of the Bombay Finance Act, 1932, as amended, is not ultra vires the Provincial Government, and the Urban Immovable Property Tax is a valid tax. The Plaintiff's suit fails and is dismissed with two sets of costs. A certificate under Section 205 of the Government of India Act was granted.

← Previous Next →