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TMI Blog1960 (12) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... tutional, in view of the provisions of Art. 14 of the Constitution, all these operative sections of the Act, namely 4, 5A and 7, must be held to offend Art. 19(1)(f) of the Constitution also. Appeal allowed. - Petitions Nos. 13 to 24, 42 and 46 to 54 of 1958. - - - Dated:- 9-12-1960 - SINHA, BHUVNESHWAR P. IMAM, SYED JAFFER SARKAR, A.K. SUBBARAO AND K. SHAH, J.C., JJ. For the Petitioners : M.C. Setalvad, Attorney-General for India, Syed Mahmud, J. B. Dadachanji, S. N. Andley, Rameshwar Nath and P. L. Vohra, C.K. Daphtary, Solicitor-General of India, Syed Mahmud, J. B. Dadachanji, S. N. Andley, Rameshwar Nath and P. L. Vohra, For the Respondent : K.V. Suryanarayana Iyer, Advocate General of Kerala and Sardar Bahadur,. JUDGMENT SINHA, C. J.- In this batch of 22 petitions under Art. 32 of the Constitution, the petitioners impugn the constitutionality of the Travancore-Cochin Land Tax Act, XV of 1955, as amended by the Travancore-Cochin Land Tax (Amendment) Act, X of 1957, which hereinafter will be referred to as the Act. The Act came into force on June 21, 1955, and the Amending Act on August 6, 1957. The petitioners are owners of forest areas in certain parts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y thousand rupees per annum and informing the petitioner that, if no representation was made within thirty days, the said provisional assessment would be confirmed and a demand notice would be issued. As there has been no survey of the area of forest land in the petitioner's possession, the District Collector has conjectured the said area to be twenty-five thousand acres. The Petitioner had made an application to the District Collector under the Madras Preservation of Private Forests Act for felling trees in an area of one thousand acres, but the Collector was pleased to grant permission to out trees from 450 acres only in the course of five years at the rate of 90 acres a year. The petitioner has leased out that right to another person, who made the highest bid of Rs. 3,100 per year, as the landlord's fee for the right to cut and remove the trees, and other minor produce. Besides the demand aforesaid, the revenue authorities have levied about four thousand rupees as tax on the surveyed portions of the forest. The petitioner's forest has large areas of and rocks, rivulets and gorges. The petitioner, in those circumstances, questions the constitutional validity of the Act, the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at this stage to indicate briefly the relevant provisions of the Act which is impugned by the petitioners as ultra vires the State Legislature. The preamble of the Act is in these terms: "Whereas it is deemed necessary to provide for the levy of a low and uniform rate of basic tax on all lands in the State of TravancoreCochin" Basic tax has been defined as "the tax imposed under the provisions of this Act". Section 3 lays down that the arrangement made under the Act for the levy of the basic tax shall be deemed inter alia to be a general revenue settlement of the State, notwithstanding anything in any statute, grant, deed or other transaction subject to certain provisos not material for our present purposes. The charging section is s. 4, which is in these terms:-"Subject to the provisions of this Act, there shall be charged and levied in respect of all lands in the State, of whatever description and held under whatever tenure, a uniform rate of tax to be called the basic tax." Section 5 lays down the rate of the tax which, by the Amendment, has been raised to Rs. 2 per acre (two pies per cent. of land per annum) and the basic tax charged and levied at that rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed section 5A, which has been very much assailed in the course of the argument before us and it is, therefore, necessary to set it out in full. It is in these terms:"S. 5A. Provisional assessment of basic tax in the case of unsurveyed land8.- (1) It shall be competent for the Government to make a provisional assessment of the basic tax payable by a person in respect of the lands held by him and which have not been surveyed by the Government, and upon such assessment such person shall be liable to pay the amount covered in the provisional assessment. (2)The Government after conducting a survey of the lands referred to in sub-section (1) shall make a regular assessment of the basic tax payable in respect of such lands. After a regular assessment has been made, any amount paid towards the provisional assessment made under sub-section (1) shall be deemed to have been paid towards the regular assessment and when the amount paid towards the provisional assessment exceeds, the amount payable under the regular assessment, the excess shall be refunded to the person assessed." By s. 9, s. 3 of the Madras Revenue Recovery Act, 1864, has been substituted in these terms: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposed to be levied under the Act, it is further contended, it imposes very unreasonable restrictions on the right to hold property and is thus an invasion on the rights guaranteed to the petitioners under Art. 19(1)(f) of the Constitution. The Act does not lay down any provision calling for a return from the assessee, for any enquiry or investigation of facts before the provisional assessment is made or for any right of appeal to any higher authority from the order of provisional assessment; in fact, there is no provision for hearing the assessee at any stage. The Act is of an arbitrary character and is thus wholly repugnant to the guaranteed rights of the petitioners. Section 7 quoted above gives uncanalised, unlimited and arbitrary power to the Government to pick and choose in the matter of grant of total or partial exemption from the provisions of the Act. It also suffers from the vice of discrimination. It has also been vehemently argued that the Act, though it purports to be a tax on land, is really a law relating to forests in possession of the petitioners and would not come within the purview of entry 18 read by itself or in conjunction with entry 45 of List II, but is l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of taxation had been envisaged by the Act and as ultimately the tax at that rate would be realised from land found to be in possession of particular persons after a regular survey, the regular survey to be ultimately made would automatically determine the amount of tax to be paid and the adjustment of the taxes already paid could be made on that basis. On the legal aspect of the controversy raised on behalf of the petitioners, it was argued that the Act has its justification in Art. 265 of the Constitution, which was not subject to the provisions of Part III of the Constitution and that, therefore, Arts. 14, 19, 31 could not be pressed in aid of the petitioners. It was also contended that even if the Act is, in effect, confiscatory, it cannot be questioned, being a taxing statute. Finally, it was urged that the question of the amount of income derived by the petitioners from the property sought to be taxed is wholly irrelevant, because the Act was not a tax on income but it was a tax on the property itself. The most important question that arises for consideration in these cases, in view of the stand taken by the State of Kerala, is whether Art. 265 of the Constitution is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssification is unequal. Similarly, different kinds of property may be subjected to different rates of taxation, but so long as there is a rational basis for the classification, Art. 14 will not be in the way of such a classification resulting in unequal burdens on different classes of properties. But if the same class of property similarly situated is subjected to an incidence of taxation, which results in inequality, the law may be struck down as creating an inequality amongst holders of the same kind of property. It must, therefore, be held that a taxing statute is not wholly immune from attack on the ground that it infringes the equality clause ill Art. 14, though the Courts are not concerned with the policy underlying a taxing statute or whether a particular tax could not have been imposed in a different way or in a way that the Court might think more just and equitable. The Act has, therefore, to be examined with reference to the attack based on Art. 14 of the Constitution. It is common ground that the tax, assuming that the Act is really a taxing statute and not a confiscatory measure, as contended on behalf of the petitioners, has no reference to income, either actual or p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly discriminatory in its effect and, therefore, infringes Art. 14 of the Constitution. The Act does not lay down any principle or policy for the guidance of the exercise of discretion by the Government in respect of the selection contemplated by a. 7. This Court has examined the cases decided by it with reference to the provisions of Art. 14 of the Constitution, in the case of Shri Ram Krishna Dalmia v. Shri Justice S. B. Tendolkar and others (1). S. R. Das, C. J., speaking for the Court has deduced a number of propositions from those decisions. The present case is within the mischief of the third proposition laid down at pages 299 and 300 of the Report, the relevant portion of which is in these terms:- "A statute may not make any classification of the persons or things for the purpose of applying its provisions but may leave it to the discretion of the Government to select and classify persons or things to whom its provisions are to apply. In determining the question of the validity or otherwise of such a statute the Court will not strike down the law out of hand only because no classification appears on its face or because a discretion is given to the Government to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional assessment, and by virtue of s. 3 of the Madras Revenue Recovery Act, 1864, the land-holders may be liable to pay the tax. The Act being silent as to the machinery and procedure to be followed in making the assessment leaves it to the Executive to evolve the requisite machinery and procedure. The whole thing, from beginning to end, is treated as of a purely administrative character, completely ignoring the legal position that the assessment of a tax on person or property is at least of a quasi-judicial character. Again, the Act does not impose an obligation on the Government to undertake survey proceedings within any prescribed or ascertainable period, with the result that a land-holder may be subjected to repeated annual provisional assessments on more or less conjectural basis and liable to pay the tax thus assessed. Though the Act was passed about five years ago, we were informed at the Bar that survey proceedings had not even commenced. The Act thus proposes to impose a liability on land-holders to pay a tax which is not to be levied on a judicial basis, because (1) the procedure to be adopted does not require a notice to be given to the proposed assessee; (2) there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lear, therefore, that apart from being discriminatory and imposing unreasonable restrictions on holding property, the Act is clearly confiscatory in character and effect. It is not even necessary to tear the veil, as was suggested in the course of the argument, to arrive at the conclusion that the Act has that unconstitutional effect. For these reasons, as also for the reasons for which the provisions of ss. 4 and 7 have been declared to be unconstitutional, in view of the provisions of Art. 14 of the Constitution, all these operative sections of the Act, namely 4, 5A and 7, must be held to offend Art. 19(1)(f) of the Constitution also. The petitions are accordingly allowed with costs against the contesting respondent, the State of Kerala. SARKAR,J.: These petitions were filed under Art.32 of the Constitution, challenging the validity of the Travancore Cochin Land Tax Act, 1955, as amended by Act X of 1957. The principal Act was passed by the legislature of the State of Travancore-Cochin and the Amending Act, by the legislature of the State of Kerala, in which the State of Travancore Cochin had been merged. The petitioners are owners of lands in the State of Kerala. The Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssume that the Act does so. The question then is, is such a classification illegal? The equal protection clause in the Constitution does not mean that there shall be no classification for the purpose of any law. It has been said by this Court in Budhan Choudhury v. The State of Bihar ([1955] 1 S.C.R. 1045 1049): "It is now well established that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differential which distinguishes persons or things that are grouped together from others left out of the group and (ii) that differential must have a rational relation to the object. Bought to be achieved by the statute in question". On the argument of the petitioners, the Act makes a classification between owners of lands using as the differentia, the area of the land held by them. The question then, is, is that differentia intelligible and has that differentia a rational relation to the object of the Act? Now it seems to me that both the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention. What had happened there was that a certain statute had imposed a tax ad valorem on all coal situated in a certain area and in assessing the tax, the coal of the Cumberland Coal Company had been assessed by the authorities concerned at its full value while the coal of the rest of the class liable to the tax had been assessed at a lower value. Thereupon it was held that "the intentional systematic undervaluation by State Officials-of taxable property of the same class belonging to other owners contravenes the constitutional right of one taxed on the full value of his property. "On this view of the matter the Supreme Court of America directed readjustment of the assessments. The statute with which this case was concerned had levied the tax ad valorem which, it may be, is the same thing as a tax correlated to productivity. The case had therefore nothing to do with the question that a tax on coal otherwise than ad valorem would be unconstitutional. In fact this case did not declare any statute invalid. Then it seems to me that if the contention of the petitioners is right, and land could be taxed only on its productivity, for the same reason, taxes on all other thin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of properties and may be differently treated. Again, all unsurveyed lands would on survey have to pay tax from the beginning. It would follow that the holders of both classes of lands are eventually subjected to the same burden. As to the contention that under this section the Government has the right to levy the provisional assessment at its choice on some and not on all holders of unsurveyed lands, I am unable to agree that this is a proper reading of the section. In my view, the expression "a person" in the section does not lead to that conclusion. That expression should be read as "all persons" and it is easily capable of being so read. The section says, "It shall' be competent for the' Government to make a provisional assessment of the basic tax payable by a person". Now the basic tax is payable by all persons holding land. So the provisional assessment, if made, has to be on all persons holding lands whose lands have not been surveyed. The Government cannot, therefore, pick and choose. A statute is intended to be legal and it has therefore to be read in a manner which makes it legal rather than in a manner which makes it illegal. If the Government did not make the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that seems to me not to be of much consequence. If the assessee is entitled to be heard, the fact that he is not asked to make a return, would not constitute a departure from the rules of natural justice. Likewise, the absence of a right of appeal is not something on which the petitioners can rely. Rules of natural justice do not require that there must always be a right of appeal. Under the Act it is the Government which makes the assessment and it would not be unreasonable to hold that in view of the high authority of the person assessing, the absence of a right of appeal is not likely to cause any miscarriage of justice. I am therefore unable to hold that in the absence of express provisions laying down the procedure according to which the provisional assessment is to be made, the Act has to be held invalid. It may here be stated that in those instances where, in the present cases, provisional assessments had been made, the, assessees had either themselves supplied the area of the lands held by them or the area had been determined after giving them a hearing. After the area has been determine , the amount of the tax payable is decided by a simple calculation at the rate of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is contained in the amending Act only. Even if the section be held to be invalid that would not affect, the rest of the amending Act or any question that arises on these petitions. The validity of the Act is also challenged on the ground that it infringes Art. 19, cl. (1), sub-cls. (f ) (g). This challenge seems to me to be wholly untenable. Apart from the question whether a taxing statute can become invalid as offending Art. 19, as to which the position on the authorities does not seem to be very clear, it is plain that Art. 19 permits reasonable restrictions to be put on the rights mentioned in subcls. (f ) (g). Now there is no dispute that the rate of tax fixed by the Act is a very low rate. It has not been said that the rate fixed is unreasonable. It clearly is not so. The restrictions on these rights under Art. 19(1), (f) (g) put by the Act, if any, are clearly reasonable. These rights cannot therefore be said to have been infringed by the Act. The lands of the petitioners are lands on which stand forests. It is said that under the Madras Preservation of Private Forests Act, (Act XXVII of 1949), which applies to the lands with which we are concerned as they are sit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the question of legislative competency". In the present case, there being in my view, no want of legislative competency in the legislature which passed the Act in question, the Act cannot be assailed as a piece of colourable legislation. I may add that I do not accept the argument that the Act is in its nature expropriatary orthat the tax imposed by it is really excessive. I come now to the last argument advanced by the petitioners. It is said that the Act was beyond the legislature competence of the State Legislature. It is conceded that the State Legislature has power to impose a tax on land under entry 49 of List 2 in the Seventh Schedule to the Constitution, but it is said that land as mentioned in that entry does not include lands on which forests stand. It is contended that the State Legislature has power to legislate about forests under entry 19 of that List and also as to land under entry 18. There is however no power to impose a -axon forests while there is power under entry 49 of that list to tax land. Therefore, it is said, that there is no power to impose tax on lands on which forests stand and the Act in so far as it imposes tax on lands covered by forests, which t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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