1995 (1) TMI 390 - SC - Indian Laws

Summary

Issues Involved:
1. Validity of Clauses (a) and (c) of Sub-rule (1) of Rule 3 of the Assessment of Annual Rental Value of Holding Rules, 1993.
2. Validity of notifications issued by the Patna Municipal Corporation under Rules 3 and 5 of the said Rules.

Summary:

Issue 1: Validity of Clauses (a) and (c) of Sub-rule (1) of Rule 3 of the Assessment Rules, 1993

The Supreme Court examined the judgment of the Patna High Court, which struck down Clauses (a) and (c) of Sub-rule (1) of Rule 3 of the Assessment Rules, 1993, on the grounds that they violated Article 14 of the Constitution. The High Court found the classifications under these rules inadequate and incomplete, leading to results unrelated to the actual letting value of holdings. The Supreme Court, however, emphasized that the burden of proving discrimination in taxing statutes is heavy, citing precedents such as *Twyford Tea Company Limited v. State of Kerala* and *R.K. Garg v. Union of India*. The Court held that the absence of further classification based on quality of finish and other factors does not make the existing classification discriminatory. The Court noted that "a mere possibility of a better classification is no ground to strike down the classification made by the statutory authority." The Court concluded that the grounds upon which the High Court invalidated Clauses (a) and (c) were insupportable in law.

Issue 2: Validity of Notifications Issued by the Patna Municipal Corporation

The Supreme Court also addressed the High Court's invalidation of the notifications issued under Rules 3(2) and 5(1) of the Assessment Rules, 1993. The High Court had found the notifications indicative of a "slipshod manner" of implementation and criticized the classification of roads and the determination of rental values. The Supreme Court, however, emphasized that the new system reduced the percentage of taxation from about 43.75% to 9%, thereby eliminating room for arbitrariness and corruption. The Court held that taking the instance of a single holding to invalidate the notification was not a correct approach. The Supreme Court found that the annual rental value determined under the new rules was not excessive or unreasonably high. The Court also dismissed arguments related to the applicability of the Rent Control Act, as these were not raised before the High Court. The Supreme Court agreed with the High Court's decision to leave other issues to be agitated in appropriate forums.

Conclusion:

The Supreme Court allowed the appeal, setting aside the judgment of the High Court, and upheld the validity of Clauses (a) and (c) of Sub-rule (1) of Rule 3 of the Assessment Rules, 1993, as well as the notifications issued under Rules 3(2) and 5(1).