Judgment

WANCHOO, J. : (for himself, B. P. Sinha, C.J.I., S. K. Das and K. C. Das Gupta, JJ.) This appeal on a certificate granted by the Bombay High Court arises out of a suit brought by the appellants to challenge the imposition of a rate by the respondent Municipal Corporation of Ahmedabad on vacant lands situate within the municipal limits. The rate was levied under S. 3 of the Bombay Municipal Boroughs Act No. XVIII of 1925, (hereinafter referred to as the Act) read with the explanation to S. 75 of the Act. The Municipality framed R. 350-A for rating open lands which provides that the rate on the area of open lands shall be levied at 1 per centum on the valuation based upon capital. "Valuation based upon capital" was defined in R. 243 as the capital value of lands and buildings as may be determined from time to time by the valuers of the municipality, who shall take into consideration such reliable data as the owners or the occupiers thereof may furnish either of their own accord or on being called upon to do so. The contention of the appellants was that reading the two rules together, the rate was levied at a percentage of the capital value of open lands and this the municipality could not do. Two submissions were made in support of this contention. In the first place it was urged that R. 350-A read with R. 243 was ultra vires Ss. 73 and 75 inasmuch as it permitted the fixation of rate at a percentage of capital value and this was not permitted by the Act for the word "rate" used in S. 73 (1) (i) had acquired a special meaning by the time the Act came to be passed and meant a tax on the annual value of lands and buildings and not on their capital value. In the second place, it was urged that if the Act permitted the levy of a rate on a percentage of capital value of the lands and buildings rated thereunder, it was ultra vires the Provincial Legislature because of item 55, List I of the Seventh Schedule to the Government of India Act 1935. The appellant finally contended that the assessment based on R. 350-A read with R. 243 was ultra vires and the assessment list prepared pursuant to the said rule was illegal and void. They therefore prayed that R. 350-A read with R. 243 for assessment of vacant lands as well as the assessment charged on vacant lands under the said rule since April 1, 1947 and the assessment list for the year 1947-48 which were prepared for that purpose be declared illegal and ultra vires and further prayed that an order of permanent injunction might be made against the respondent-Municipality restraining it from collecting or causing to be collected from the appellants any sum of money as assessment for vacant lands for the year 1947-48 or for any year thereafter, based on capital valuation on the strength of the said rule.

2. The suit was resisted by the municipality. Its defence in substance was that the rule was intra vires and the assessment lists had been properly prepared in accordance with the provisions of the Act and were not open to any objection. The trial Court held that R 350-A read with R. 243 was illegal and void and beyond the authority given to the municipality under S. 73 of the Act, inasmuch as it would amount to taxing the open lands as assets of individuals, within the meaning of item 55 of list I of the Seventh Schedule to the Government of India Act. The trial Court therefore decreed the suit and granted the relief as claimed by the appellants.

3. Then followed an appeal to the High Court which was allowed. The High Court held that the manner in which open lands were rated did not bring the rate within item 55 of List I of the Seventh Schedule to the Government of India Act as the method employed was only a mode of levying the rate. The High Court therefore held that R. 350-A read with R. 243 was not ultra vires. As to the other contention that the rule was ultra vires Ss. 73 and 75 of the Act the High Court held that even if it be assumed that by adopting the basis of capital value