2001 (3) TMI 1023 - SC - Indian Laws

Summary

Issues Involved:
1. Constitutionality and delegation of taxing power to the Bangalore Development Authority (BDA).
2. Validity of the Amending Act and its provisions.
3. Validation of past tax collections by the BDA.

Summary:

1. Constitutionality and Delegation of Taxing Power:
The appellant challenged the BDA's authority to levy taxes, cesses, or fees on properties outside the Bangalore City Corporation limits, arguing that Section 29 of the BDA Act was unconstitutional and ultra vires. The High Court ruled that the BDA lacked inherent power to levy such taxes without explicit legislative sanction. The Supreme Court upheld this, stating that delegation of taxing power to a statutory body like the BDA is valid if the body is entrusted with developmental duties and the process is statutorily controlled. The delegation was not considered excessive or arbitrary as it followed procedures laid out in the Corporation Act.

2. Validity of the Amending Act:
The Amending Act introduced Sections 28A, 28B, and 28C, empowering the BDA to levy property tax and collect cesses. The appellant argued that this Act suffered from excessive delegation and was arbitrary. The Supreme Court dismissed these arguments, noting that the delegation was to a statutory body responsible for development and that the procedures for tax collection were well-defined. The Court found no merit in the argument that the BDA's limited functions made the tax collection arbitrary.

3. Validation of Past Tax Collections:
The appellant contested Section 7 of the Amending Act, which sought to validate past tax collections declared illegal by the High Court. The Supreme Court held that the Legislature could not validate these collections without addressing the lack of services provided by the BDA, as previously determined by the High Court. The Court emphasized that legislative validation must remove the cause of invalidity identified by the court. Therefore, Section 7 was declared invalid for validating past property tax collections. However, the Court upheld the validity of cess collections under Section 28C, as these were collected as an agent for other Acts and the BDA was retrospectively deemed a local authority for this purpose.

Conclusion:
The Supreme Court upheld the validity of Sections 28B and 28C of the BDA Act but declared Section 7 of the Amending Act invalid concerning the validation of past property tax collections. The appeal was partly allowed, and the BDA was directed to refund the invalidly collected taxes.