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TMI Blog1962 (4) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... its must be carefully examined. Therefore, in our opinion the challenge to the validity of the Act on the ground that it contravenes article 31(2) is not well-founded. The petitioner has not stated the extent of the rent which he is required to pay for his land-holdings. He holds the lands as bhumidar and the respondents contend that the rent recovered from bhumidars is very law. It was even suggested during the course of argument by Mr. Aggarwal that the rent recovered from the bhumidars would not exceed 1% of the gross income and in some cases it may even be less. Unfortunately, the petitioner has not made any statement about this important particular. The operation of the rates prescribed by the Schedule is based on the annual valuation of the lands, and the said valuation is determined ultimately on the basis of the rent, so that unless the rent is known, the extent of the impost cannot be adequately judged. Therefore, in our opinion, on the material adduced by the petitioner before us, it is impossible to accept the argument that the tax levied by the Act is confiscatory. Besides, as we have already seen, the scheme of the present Act does not disclose any constitutional in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Constitution. These petitions were Nos. 325, 326 and 327 of 1960. These three petitions were directed against the notices served on the petitioner for the years 1365, 1366 and I367 falsi respectively. Out of these petitions, the first two were dismissed on the ground that they were barred by res judicata. It is common ground that after the Allahabad High Court dismissed the petitioner's writ petitions, he applied for and obtained a certificate from the said High Court to appeal to this court, but he failed to deposit the necessary security for printing charges as required by the Rules of the Allahabad High Court, and, in consequence, on the 9th August, 1960, the certificate granted to him was cancelled. That is how the two writ petitions which purported to challenge the validity of the notices served on the petitioner for the two years 1365 and 1366 fasli were held to be barred by res judicata. On the petitioner's writ petition No. 327 of 1960 which is concerned with the assessment for the year 1367 fasli, rule was ordered to be issued by this court and it is on this rule that the present petition has come for final disposal before us today. This writ petition is confined to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sbandry, pisciculture or poultry farming and includes uncultivated land held by a land-holder as such [section 2(15)] ; and according to section 2(16), " land-holder " means (i) an intermediary, where the land is in his personal cultivation or is held as sir, khudkasht or grove and (ii) any other person who holds or occupies land otherwise than as--(a) an asami, (b) a sub-tenant, (c) a tenant of sir, or (d) a sirtan, and includes a manager or a principal officer, as the case may be. These two definitions give an idea as to the property over which the Act purports to impose a tax and as to the person from whom the tax is recoverable. Section 4 defines a " land-holding ". It provides that " land-holding " means the aggregate of all land held or occupied on the first day of July each year by a land-holder, whether in his own name or in the name of any member of his family, and all such land shall be deemed to form part of the land-holding of such land-holder. With the rest of the section we are not concerned in the present petition. It is the land-holding thus defined which is the subject-matter of taxation imposed by section 3. Section 3(1) provides that there shall, save as hereinaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sanctioned hereditary rates, on such principles as may be prescribed, provided that the State Government may, where such rates were sanctioned prior to the first day of July, 1927, enhance the rates by such percentage not exceeding fifty as may be specified by notification in the Official Gazette and different percentages may be specified for the different classes of lands and for different areas of Uttar Pradesh. The scheme of taxation evidenced by sections 3, 4 and 5 is thus clear. Where the area covered by a land-holding exceeds thirty acres, the tax is leviable. The tax is leviable at the rates prescribed by the Schedule and the rates prescribed by the Schedule are fixed by a reference to the annual value of the land determined in the manner provided by section 5. That, in effect, is the result of the relevant provisions of Chapter II of the Act which deals with the imposition of holding tax. Chapter III consists of sections 6 to 16 which are concerned with the procedure prescribed for the assessment of holding tax. Section 6 deals with the assessing authority. Section 7 requires notice regarding return of land-holdings to be served on the assessee. Section 8 deals with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de, they must be interpreted so as to give effect to that amplitude. It would be out of place to put a narrow or restricted construction on words of wide amplitude in a Constitution. A general word used in an entry like the present one must be construed to extend to all ancillary or subsidiary matters which can fairly and reasonably be held to be included in it, vide Navinchandra Mafatlal v. Commissioner of Income-tax and United Provinces v. Mt. Atiqa Begum. If this principle is borne in mind, it is obvious that the word " lands " cannot be interpreted in the manner suggested by Mr. Goyal. The word " lands " is wide enough to include all lands, whether agricultural or not, and it would be plainly unreasonable to assume that it includes non-agricultural lands but does not include agricultural lands. It is, however, urged that since entry 46 in List II refers to taxes on agricultural income, it follows that agricultural income is not included in entry 49. That no doubt, is true ; if the State Legislature purports to impose a tax on agricultural income, it would be referable to entry 46 and not entry 49 and in that sense agricultural income is not covered by entry 49. But it must b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to adopt different multiples in different districts and in reference to different classes of land included in the land-holding. Mr. Goyal suggests that when section 5(1) provides that the rent may be multiplied by such multiple not exceeding 12 1/2 as maybe prescribed and different multiples may be prescribed for different districts or portions of districts or for different classes of land included in a land-holding, the legislature intended that different multiples must be prescribed as therein indicated. In other words, " may " in the context means " must " and since different multiples have not been prescribed for different districts and in reference to different classes of land, the multiple value of the petitioner's land-holding cannot be determined under the uniform multiple prescribed by the State Government. In our opinion, there is no substance in this argument. It is quite clear that the word " may " in the context cannot mean " shall " or " must ". Section 5(1) has prescribed the maximum limits of the multiple which may be adopted and it has left it to the discretion of the State Government to adopt such multiple for different districts or by reference to different c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent may choose to carry it ". In that sense, it is not the function of the court to enquire whether the power of taxation has been reasonably exercised either in respect of the amount taxed or in respect of the property which is made the object of the tax. Article 265 of the Constitution provides that no tax shall be levied or collected, except by authority of law ; and so, for deciding whether a tax has been validly levied or not, it would be necessary first to enquire whether the legislature which passes the Act was competent to pass it or not. But that is not the only enquiry which is relevant in deciding the validity of a taxing statute. Since a taxing statute is a law, it is a law for the purpose of article 13 and so its validity can be challenged on the ground that it contravenes one or the other of the fundamental rights guaranteed by Part III. It is thus clear that a citizen can challenge the validity of a taxing statute on the ground that it offends against article 19 or article 14 of the Constitution. At one stage, it appears to have been assumed in some of the earlier decisions of this court that article 31(1) was concerned with deprivation of property otherwise than by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticle 14. Similarly, if a taxing statute makes no specific provision about the machinery to recover tax and the procedure to make the assessment of the tax and leaves it entirely to the executive to devise such machinery as it thinks fit and to prescribe such procedure as appears to it to be fair, an occasion may arise for the courts to consider whether the failure to provide for a machinery and to prescribe a procedure does not tend to make the imposition of the tax an unreasonable restriction within the meaning of article 19(5). An imposition of tax which in the absence of a prescribed machinery and the prescribed procedure would partake of the character of a purely administrative affair can, in a proper sense, be challenged as contravening article 19(1)(f). Therefore, whenever the validity of a taxing statute is challenged on the ground that it contravenes article 14 or article 19, the challenge cannot be thrown out on the preliminary ground that a tax law is beyond such challenge, but its merits must be carefully examined. The position, however, is different when the challenge is made on the ground that the Act is inconsistent with article 31. So far as article 31(1) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings, subject to the important proviso that holdings the area whereof does not exceed thirty acres would not be taxed. In other words, it is only big holders whose land-holdings are subjected to tax by this Act. Even so, the basis adopted for levying the tax is ultimately the rent payable for the land or lands in question and taking the basis of the said rent, the annual value of the land is required to be determined by adopting a suitable multiple. Section 5(1) prescribes the maximum limit of this multiple and leaves it to the discretion of the State Government to adjust the multiple as local conditions and conditions of land may require. It would obviously not have been practicable for the legislature to provide for different multiples in respect of different districts or in regard to different classes of lands. Having laid down the general policy in that behalf, the legislature naturally left the adjustment of the multiple to the discretion of the State Government because the said adjustment had to be made in the light of local conditions and by reference to the class of the land. Therefore, we do not think that the discretion left to the State Government can be said to be unfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a taxing statute cannot be challenged on the ground that it is a colourable piece of legislation and as such is a fraud on the legislative power conferred on the legislature in question. If, in fact,it is shown that the Act which purports to be a taxing Act is a colourable exercise of the legislative power of the legislature, then that would be an independent ground on which the Act can be struck down. Colourable exercise of legislative power is not a legitimate exercise of the said power and as such it may be open to challenge. But such a challenge can succeed not merely by showing that the tax levied is unreasonably high or excessive, but by proving other relevant circumstances which justify the conclusion that the statute is colourable and as such amounts to a fraud. As an illustration of such a colourable statute, we may refer to the decision of this court in K. T. Moopil Nair v. State of Kerala. In that case, the provisions of sections 4 and 7 of the Travancore-Cochin Land Tax Act (XV of 1955) as amended by Act X of 1957, were declared to be unconstitutional in view of the provisions of articles 14 and 19(1)(f) of the Constitution. These provisions along with the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposition that in testing the validity of a taxing statute, the court can embark upon an enquiry whether the tax imposed by the statute is unreasonably high and whether it should have been fixed at a lower level. Let us now see what the petitioner has proved in the present case in support of his plea that the Act is confiscatory and should, therefore, be struck down as a colourable piece of legislation. It appears that when the petition was first filed, it had not clearly made out a case on this point. The petitioner had, no doubt, alleged that approximately 3/5th of the income had to be utilised for the cost of production in terms of raw materials, labour, capital and the risk taken by the farmer, and so, according to the petitioner, only 1/5th of the gross agricultural income can be termed to be the net agricultural income of the farmer. On this basis, the Act was described as confiscatory. Later on, an application for amendment of the petition was filed on the 30th January, 1961, and in this application, some additional facts were alleged in support of the plea that the Act is confiscatory. In paragraph 6 of this amendment petition, it was sought to be shown that 14% of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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