9911796707
TMI Blog1969 (4) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... es and sells cotton yarn and cloth. Respondent No. 1 is the Broach Borough Municipality constituted under section 8 of the Bombay Municipal Boroughs Act 1925. In the assessment years 1961-62, 1962-63 and 1963-64 the municipality purporting to act under section 73 of the Bombay Municipal Boroughs Act, 1925, and the Rules made thereunder imposed a purported rate on lands and buildings belonging to the respondent at a certain percentage of the capital value. Section 73 of the Act allows the municipality to levy " a rate on buildings or lands or both situate within the municipal borough ". The Rules under the Act applied the rates on the basis of the percentage on the capital value of lands and buildings. The assessment lists were published and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties. The basis of such tax was the annual value of the lands or buildings. It was discussed in the case that there were three methods by which the rates could be imposed : the first was, to take into account the actual rent fetched by the land or building where it was actually let ; the second was, where it was not let, to take rent based on hypothetical tenancy, particularly in the case of buildings ; and the third was, where neither of these two modes was available, by valuation based on capital value from which annual value had to be found by applying suitable percentage which might not be the same for lands and buildings. It was held that in section 73 the word " rate " as used must have been used in the special sense in which the wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any time before the comnmncement of this Act shall be deemed to have been invalidly assessed, imposed, collected or recovered by reason of the assessment being based on the capital value or the percentage of the capital value, and not being based on the annual letting value, of the building or land, as the case may be, and the imposition collection and recovery of the tax or rate so assessed and the provisions of the rules made under the relevant municipal law under which the tax or rate was so assessed shall be valid and shall be deemed always to have been valid and shall not be called in question merely on the ground that the assessment of the tax or rate on the basis of the capital value of the building or land, as the case may be, or on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall not bind, for that is tantamount to reversing the decision in exercise of judicial power which the legislature does not possess or exercise. A court's decision must always bind unless the conditions on which it is based are so fundamed tally altered that the decision could not have been given in the altered circumstances. Ordinarily, a court holds a tax to be invalidly imposed because the power to tax is wanting or the statute or the rules or both are invalid or do not sufficiently create the jurisdiction. Validation of a tax so declared illegal may be done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometimes this is done by providing for jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislature possesses that power then it can authorise the municipality to levy that tax. To test the proposition we may consider section 99 which has now been enacted in the Gujarat Municipalities Act. It reads : " 99. Taxes which may be imposed. (1) Subject to any general or special orders which the State Government may make in this behalf and to the provisions of sections 101 and 102, a municipality may impose for the purposes of this Act any of the following taxes, namely :-- (i) a tax on buildings or lands situate within the municipal borough to be based on the annual letting value or the capital value or a percentage of capital value of the buildings or lands or both ; Learned counsel for the appellants did not contend that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 73 had not authorised the levy of a tax in this manner but had authorised the levy of a rate. That led to the sussion whether a rule putting the tax on capital value of buildings answered the description of the impost in the Act, namely, " a rate on buildings or lands or both situate within the municipal borough ". It was held by this court that it did not, because the word rate " had acquired a special meaning in legislative practice. Faced with this situation the legislature exercised its undoubted powers of redefining " rate " so as to equate it to a tax on capital value and convert the tax purported to be collected as a " rate " into a tax on lands and buildings. The legislature in the Validation Act, therefore, provided for the follo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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