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SUPREME COURT OF INDIA
J.C. SHAH, S.M. SIKRI AND J.M. SHELAT, JJ.
Century Spinning and Manufacturing Co. Ltd. and others, Appellants
Versus
District Municipality of Ulhasnagar and others, Respondents.
Civil Appeals Nos. 2014, 2565, 2566 and 2567 of l966,
D/- 9-11-1967.
Advocates appeared
Mr. S. V. Gupte, Solicitor-General of India (M/s. S. A. Shroff and P. C. Bhartari, Advocates and M/s Ravinder Narain and O. C. Mathur, Advocates of M/s. J. B. Dadachanji and Co. with him), for Appellant (In C. A. No. 2014 of 1966) : Mr. S. T. Desai Senior Advocate, (Mr. A. B. Diwan, Advocate, and M/ s. Ravinder Narain and O. C. Mathur, Advocates of M/s. J. B. Dadachanji and Co. with him), for Appellant (In C. A. No. 2565 of 1966); Mr. A. R. Diwan. Advocate, and M/s. Ravinder Narain and O. C. Mathur, Advocates of M/s. J. B. Dadachanji and Co, for Appellants (In C. As Nos. 2566 and 2567 of 1966); Mr. A. K. Sen. Senior Advocate, (M/s. N. H. Gursohani, Prahlad H. Advani and N. N. Keswani, Advocates, with him), for Respondents Nos. 1 to 5 (In C. A. No. 2014 of I966) and Respondents (In C. A. Nos. 2565 to 2567 of 1966). Mr. S. P Nayar, Advocate for Mr. R. H. Dhebar, Advocate for Respondent No. 6 (In C. A. No. 2014 of 1966).
HOUSE TAX - Levy on open lands - Validity - Bombay District Municipal Act, III of 1901, Ss. 4, 7, 59, 60, 63, 65, 67-A - Bombay Municipal Boroughs Act, XVIII of 1925, S. 75 - House Tax Rules, Rr. 1(ii), 3(7), 3(9), Sch. 1.
Fact of the Case:
The Ulhasnagar Municipality framed House Tax Rules under S. 46 of the Bombay District Municipal Act, 1901, and levied house tax on the appellant companies. The companies filed writ petitions in the High Court challenging the validity of the notifications, the House Tax Rules, and the assessment and bills served on them. The High Court dismissed the petitions.
Finding of the Court:
The Supreme Court held that the notifications issued by the Government of Bombay under Ss. 4 and 7 of the Act were valid and that the Government was competent to include parts of villages in the municipal district. The Court also held that the House Tax Rules were in conformity with S. 60 of the Act and that the Municipality was not required to specify the method of valuation of annual value in the Rules. However, the Court held that the assessment of open lands by the Municipality was ultra vires the Rules and therefore invalid.
Issues: 1. Whether the notifications issued by the Government of Bombay under Ss. 4 and 7 of the Act were valid? 2. Whether the House Tax Rules were in conformity with S. 60 of the Act? 3. Whether the assessment of open lands by the Municipality was valid?
Ratio Decidendi: 1. The Court held that the Government was competent to include parts of villages in the municipal district as the Act permitted the Government to include "land adjoining thereto" in a municipal district. The Court also held that the Government had followed the procedure required by the Act before issuing the notifications. 2. The Court held that the House Tax Rules were in conformity with S. 60 of the Act as they specified the class of property to be made liable, the rate at which such property would be liable, and the basis of valuation for purposes of the rate on buildings and houses. The Court also held that the Municipality was not required to specify the method of valuation of annual value in the Rules. 3. The Court held that the assessment of open lands by the Municipality was ultra vires the Rules as the Rules did not extend to open lands and the Municipality was not authorized to levy the rate on open lands.
Final Decision: The Supreme Court partly allowed the appeals and set aside the judgment and order passed by the High Court to the extent that the assessment on open lands in each of the appeals was declared ultra vires the Rules and therefore invalid. The Court also set aside the order of costs passed by the High Court against the Century Mills.
Judgement
SHELAT, J.: These four appeals by certificate from the High Court at Bombay raise common questions of law and are therefore disposed of by a common judgment. As the facts in all these appeals are similar it is not necessary to narrate the facts of each appeal. However, for appreciating the contentions raised in these appeals we propose to set out only the relevant facts in Civil Appeal No. 2014 of 1966 as typical.
2. By a notification dated October 30, 1959 the Government of Bombay proposed to set up a local area comprising of parts of Shahad, Ambernath and other villages into a municipal district under the name of the Municipal District of Ulhasnagar, the limits of which were set out in a Schedule thereto. After considering the objections to the said proposal the Government by another notification dated September 20, 1960 issued under Sections 4 and 7 of the Bombay District Municipal Act, III of 1901 declared the said local area as the Municipal District with effect from April 1, 1960. By the said notification the Government also set up an interim Municipality for Ulhasnagar, consisting of 18 Councilors with effect from November 1, 1960 for one year in the first instance or till an elected body took over, whichever was earlier. Under Section 46 of the Act the first respondent Municipality became entitled to frame rules and bye-laws in relation to taxes it proposed to impose. Accordingly, it framed Rules and in particular the House Tax Rules, with which these appeals are concerned. On November 8, 1963 the Municipality served a notice under S. 65 (1) of the Act informing the appellant Company that it proposed to assess its buildings at Rs. 1,97,609/52. On November 28, l963 the appellant Company submitted its objections to the said assessment and the said bill. On February 22, 1964 the assessing officer requested the appellant Company to furnish to him the cost of construction of its factories and buildings and on the appellant Company failing to do so he passed his order dated March 6, 1964 assessing the appellant Company to house tax at Rupees 1,13,647 for the period from April 1, 1963 to March 31, 1964. On March 20, 1964 the Municipality served a house tax bill for the said amount. Similar house tax bills were served on the other appellant companies. Thereupon the appellant Company in Civil Appeal No. 2014 of 1966 and the appellant companies in other appeals filed writ petitions in the High Court under Arts. 226 and 227of the Constitution alleging that the said notifications, the said assessment and the said bills were invalid and should be quashed. On April 20, 1964 the High Court issued a rule nisi against the respondent municipality in all the said petitions, but summarily dismissed the said petitions so far as respondents 2, 4 and 6 were concerned and also restricted the rule only to certain grounds in the petitions. The petitions were resisted by the municipality on several grounds, viz., that they were not maintainable, that the proper remedy for the appellants was by way of appeal in the Court of the first class judicial magistrate, as provided by the Act, that he municipality was competent to levy the said tax under S. 59, that the said notifications were valid, that the tax was properly levied, that the assessing officer under Section 67-A was authorised to prepare, finalise and authenticate the assessment list and that the same was properly done. The appellant company, on the other hand, urged before the High Court (1) that the said rules were ultra vires as they did not provide for the basis for the fixation of valuation; (2) that the valuation was arrived at a flat rate on the carpet area, a method which was not permissible in law; (3) that, in any event, the Municipality was not entitled to tax open lands; (4) that the assessment was bad on account of discrimination between the appellant companies inter se inasmuch as whereas assessment was made in the case of the Century Mills on the basis of cost of con
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