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Issues Involved:
1. Constitutionality of Sections 3(1), 3(8a), and 67(3) of the Punjab Municipal Act, 1911 (as amended by Punjab Act No. 11 of 1984). 2. Legality of the orders of assessment, appellate or revisional orders, and notices issued by municipalities for recovery of house tax. Detailed Analysis: 1. Constitutionality of Sections 3(1), 3(8a), and 67(3) of the Punjab Municipal Act: Section 3(1): - Petitioners' Argument: The amended Section 3(1) is ultra vires to the legislative power of the State as it imposes a tax on the capital value of the property, which falls under the exclusive domain of the Parliament (Entry 86 of List-I). It is also discriminatory and violative of Article 14 of the Constitution because it creates an artificial, arbitrary, and irrational classification between properties occupied by tenants and those occupied by owners. - Respondents' Argument: The house tax is levied on land or buildings, not on the capital assets of the owner. The State Legislature is competent to legislate on this subject under Entry 49 of List-II. The amendment was necessary to empower municipalities to generate more revenue for providing better civic amenities. - Court's Analysis: The Court held that the tax under amended Section 3(1)(b) is on land or buildings and not on the capital assets of the owner. The criteria for determining the annual value based on the capital value of the property does not make it a tax on capital assets. The Court cited various judgments, including Ralla Ram v. The Province of East Punjab, Ajoy Kumar Mukherjee v. Local Board of Barpeta, and Sudhir Chandra Nawn v. Wealth-Tax Officer, to support its conclusion that the amended Section 3(1)(b) is within the legislative competence of the State. Section 3(8a): - Petitioners' Argument: Section 3(8a) is unconstitutional as it lacks guidelines for determining the market value of the property, leaving it to the discretion of municipalities. - Court's Analysis: The Court found Section 3(8a) to be discriminatory because it confers unguided power to municipalities to adopt any of the two modes for determining the market value of the property. The argument that municipalities generally follow the principles in Section 23 of the Land Acquisition Act, 1894, was not sufficient to save the provision from the charge of discrimination. Section 67(3): - Petitioners' Argument: Section 67(3) confers unbridled and unguided power upon municipalities for re-determination of the annual value of properties. - Court's Analysis: The Court upheld Section 67(3), noting that it includes safeguards such as notice and opportunity for hearing, which embody the rules of natural justice. Therefore, it cannot be declared discriminatory or violative of Article 14. 2. Legality of the Orders of Assessment, Appellate or Revisional Orders, and Notices Issued by Municipalities for Recovery of House Tax: - Petitioners' Argument: The orders and notices issued by municipalities for recovery of house tax are illegal as they are based on the unconstitutional provisions of the Act. - Court's Analysis: The Court's decision to declare Section 3(1)(b) unconstitutional due to its discriminatory nature implies that any assessment, appellate, or revisional orders, and notices issued based on this provision are also invalid. Conclusion: - Section 3(1)(b): Declared unconstitutional as it is discriminatory and violative of Article 14. - Section 3(8a): Declared unconstitutional due to the lack of guidelines for determining market value, leading to discrimination. - Section 67(3): Upheld as it includes procedural safeguards and does not violate Article 14. The judgment concludes that while the State Legislature is competent to enact laws for levying taxes on land and buildings, the specific provisions in question (Sections 3(1)(b) and 3(8a)) are discriminatory and violate the principle of equality enshrined in Article 14 of the Constitution.
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