Srinivasa
Theatre Versus Government Of Tamil Nadu – AIR 1992 SC 999
12 The
decisions of this court on the above aspect are legion, starting from Moopil
Nair V/s. State of Kerala,
(1961) 3 SCR 77. One of the latest decisions is in Spences Hotel Pvt. Ltd.
V/s. State of West
Bengal, (1991) 2 SCC 154: (1991 AIR SCW 757), wherein almost all the earlier
decisions of this court on this aspect have been referred to and discussed.
To bring out the principle, it would be sufficient if we refer to two of them
namely, S. K. Datta, I.T.O. V/s. Lawrence Singh Ingty, (1968) 2 SCR 165 and Elel
Hotel and Investments Ltd. V/s. Union of India, (1991) 2 SCC 166. In the
former case, this court observed:
"It
is not in dispute that taxation laws must also pass the test of Art. 14. That
has been laid down by this Court in Moopil Nair V/s. State of Kerala, (1961) 3 SCR 77. But as observed by this Court in East
India Tobacco Co. V/s. State of Andhra Pradesh, (1963) 1 SCR 404, in deciding
whether a taxation law is discriminatory or not it is necessary to bear in
mind that the State has a wide discretion in selecting persons or objects it
will tax, and that a statute is not open to attack on the ground that it
taxes some persons or objects and not others; it is only when within the
range of its selection, the law operates unequally, and that cannot be justified
on the basis of any valid classification, that it would be violative of Art.
14.
It is well settled that a State does not have to tax everything in order to
tax something. It is allowed to pick and choose districts, objects, persons,
methods and even rates for taxation if it does so reasonably."
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Federation
Of Hotel And Restaurant Association Of India, Versus Union Of India – AIR 1990 SC 1637
46 It
is now well settled that though taxing laws are not outside Art. 14, however,
having regard to the wide variety of diverse economic criteria that go into
the formulation of a fiscal policy, legislature enjoys a wide latitude in the
matter of selection of persons, subject matter, events, etc., for taxation.
The tests of the vice of discrimination in a taxing law are, accordingly,
less rigorous. In examining the allegations of a hostile, discriminatory
treatment what is looked into is not its phraseology, but the real effect of
its provisions. A legislature does not, as an old saying goes, have to tax
everything in order to be able to tax something. If there is equality and
uniformity within each group, the law would not be discriminatory. Decisions
of this court on the matter have permitted the legislatures to exercise an
extremely wide discretion in classifying items for tax purposes, so long as
it refrains from clear and hostile discrimination against particular persons
or classes.
47 But,
with all this latitude certain irreducible desiderata of equality shall
govern classifications for differential treatment in taxation laws as well.
The classification must be rational and based on some qualities and
characteristics which are to be found in all the persons grouped together and
absent in the others left out of the class. But this alone is not sufficient.
Differentia must have a rational nexus with the object sought to be achieved
by the law. The State, in the exercise of its governmental power, has, of
necessity, to make laws operating differently in relation to different groups
or classes of persons to attain certain ends and must, therefore, possess the
power to distinguish and classify persons or things. It is also recognised
that no precise or set formulae or doctrinaire tests or precise scientific
principles of exclusion or inclusion are to be applied. The test could only
be one of palpable arbitrariness applied in the context of the felt needs of
the times and societal exigencies informed by experience.
|
Raja
Jagannath Baksh Singh Versus State Of Uttar Pradesh – AIR 1962 SC 1563
The
power of taxation is, no doubt, the sovereign right of the State; as was
observed by Chief Justice Marshall in McCulloch V/s. Maryland, (1819) 4 Law.
Ed. 579, "The power of taxing the people and their property is essential
to the very existence of Government and may be legitimately exercised on the
objects to which it is applicable to the utmost extent in which the
Government may choose in 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.
Art.
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 Art. 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 Art. 19 or Art. 14 of the Constitution.
Therefore,
it must now be taken to be settled that the validity of a tax law can be
challenged on the ground that it infringes one or the other of the
fundamental rights guaranteed by Part III, and so, the argument that the tax
with which we are concerned is invalid because it offends against Arts. 14
and 19(1)(f), cannot be rejected as inadmissible.
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New
Manek Chowk Spg.And Wvg.Mills Company Limited, Versus Ahmedabad Municipal
Corporation
From
this it follows that it would be useless for the assessee to take objections
or file appeals against the decisions on rateable value to the authorities
prescribed by the Act if he was challenging the determination of the rateable
value as being violative of Art. 14 of the Constitution. It is no answer to
such a charge to say that the rateable value could be determined properly by
the municipal authorities acting under the Act and the rules thereunder when
they do not resort to any of the well-known methods of valuation and cannot
justify their arbitrary method.
Moreover,
it appears to us that the right of appeal in a case where the rateable value
is challenged on the ground of Art. 14 is hardly of any use to the assessee.
As
already noted, sec. 128 of the Act shows that a municipal tax may be
recovered by presenting a bill or by serving a written notice of demand or by
attachment and sale of the defaulter's immovable property, etc.
As
the Commissioner is not likely to pay heed to any complaint against the
determination of any rateable value based on Art. 14 of the constitution, he
is bound to authenticate the assessment book under R. 19 and can under R. 39
cause to be presented to the assessee a bill for the amount of the tax due.
Under
. 41 he can serve upon the person liable for the payment of the tax a notice
of demand in Form G if the amount of the tax has not been paid into the
municipal office or deposited with him as required by sub-sec. of sec. 406
within 15 days from the service of the bill.
Rule
42 (1) lays down that if the person to whom the notice of demand has been
served under R. 41, does not within 15 days from the said service pay the sum
demanded or show sufficient cause for non-payment of the same to the
satisfaction of the Commissioner and if no appeal is preferred against the
said tax, such sum with costs of recovery may be levied under a warrant in
Form H to be issued by the Commissioner by distress and sale of moveable
property of the defaulter or the attachment and sale of immovable property of
the defaulter, etc.
sec.
406 (1) provides for appeals against any rateable value or tax fixed or
charged under the Act. sec. 406 (2) provides inter alia as follows :
"No
such appeal shall be heard unless- (a) it is brought within fifteen days
after the accrual of the cause of complaint: (b) in the case of an appeal
against a rateable value a complaint has previously been made to the
Commissioner as provided under this Act and such complaint has been disposed
of ; (e) in the case of an appeal against a tax, or in the case of an appeal
made against rateable value after a bill for any property tax assessed upon
such value has been presented to the appellant, the amount claimed from the
appellant has been deposited by him with the Commissioner."
16 The
net result of all this is that unless the assessee pays the amount of tax
demanded, his appeal cannot be heard so that if he questions the rateable value
or the levy of the tax, he must in any event, deposit the amount demanded. In
effect, the Act and the appeal rules do not make any provision for relief to
an assessee who complains that the assessment book has been prepared in
violation of the law.
27 It,
therefore, appears to us that R. 7 (2) of the rules framed under the Bombay
Act of 1949 was beyond the legislative competence of the State. The rule also
suffers from another defect. namely, that it does not lay down any principle
on which machinery is to be specified by public notice by the Commissioner to
be deemed to form part of such building for the purpose of fixing the
rateable value.
To
this, Mr. Setalvad argued that if the building was equipped with machinery
for the purpose of running a textile mill, whatever machinery was there for
the purpose would be valued. According to him the question would be which of
the machinery would help in the enjoyment of the property and thereby add to
its rateable value.
Unfortunately,
the specification of the classes is done from time to time by the
Commissioner with the approval of the Corporation irrespective of the
question as to where they are to be found. It, therefore, depends on the
arbitrary will of the Commissioner as to what machinery he would specify and
what he would not.
Moreover,
he is the only person who can examine this question. There is no right of
appeal from any specification made under sub-r. (3) of R. 7 except that the
Commissioner is to act under the directions of the Standing Committee. Rule 7
(2) shows the' all plant and. machinery may not be taken into account for the
purpose of valuation and any such plant or machinery which is not included in
the classification may escape rateability, however, much they may be prized
by the tenant who takes the premises on rent. It seems to us, therefore, that
R. 7 (2) is beyond the legislative competence of the State Legislature and
sub-r. (3) of R. 7 is also invalid on account of excessive delegation of powers
by the Legislature.
|
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