Judgment

KHANNA, J. :- questions relating to the constitutional validity of the different provisions of the Bombay Provincial Municipal Corporations Act (Bombay Act 59 of 1949) (hereinafter referred to as the Corporations Act) as amended by Gujarat Acts No. 8 of 1968 and No. 5 of 1970 arise for determination in these appeals and the connected writ petitions. The Corporations Act was enacted by the Bombay legislature in December 1949 for the establishment of municipal corporations in the cities of Ahmedabad and Poona. It was applied to Ahmedabad on July 1, 1950.

2. The assessment of properties to property tax in Ahmedabad was made under the corporations Act by making entries in the assessment books in accordance with the procedure prescribed in the Taxation Rules set out in chapter Vlll .of Schedule A of the corporations Act A separate section of the assessment book was prepared by the commissioner of the Corporation for each official year in respect of the assessment of property tax on certain kinds of properties like textile mills, factories and buildings of University. These properties were classified as special properties. The ratable value of properties included in the Special property Section was previously determined on a flat rate for every 100 sq. ft. of the floor area. In arriving at the figure of the ratable value, the plants and machinery situate upon lands and buildings were also taken into account as provided in clauses (2) and (3) of Rule 7 of the Taxation Rules. There was some increase in the rateable value fixed by the Commissioner for the years 1964-65 and 1965-66. The commissioner also made initial entries in assessment book in respect of those properties for the year 1966-67. A number of writ petitions under Article 32 of the Constitution were filed in this Court challenging the validity of the assessments for the years 1964-65 and 1965-66 as well as the initial entries for the year 1966-67. Those writ petitions were disposed of by this court by a judgment delivered on February 21, 1967 and reported as New Manek chowk SPg. and Wvg. Mills co. Ltd. v. Municipal Corporation of the City of Ahmedabad. (1967) 2 SCR 679 . This court allowed the writ petitions and held the relevant entries in the assessment books to be invalid, it was held in that case that the State Legislature had no competence under Entry 49 of the State List in the Seventh Schedule to the constitution to make a law for taxing machinery . Rule 7 (2) was held to be beyond the legislative competence of the State. Rules 7 (2) and (3) were also held to be invalid on account of excessive delegation of powers by the legislature under those rules the specification of the classes of machinery for the purpose of taxation was to be made by the commissioner with the approval of the corporation irrespective of the question as to where they were to be found. This court found that it depended upon the arbitrary will of the commissioner as to what machinery he would specify and what he would not and that he was the only person who could examine this question as there was no right of appeal. Dealing with the method of levy of tax on the basis of floor area, this Court observed that it was against the provisions of the Act and the rules made thereunder and that it had not been shown that conditions prerequisite for determination of the annual value on that basis had existed at the relevant time. The above method of taxation on the basis of floor area, it was held, was violative of Article 14 of the Constitution as it would in the absence of classification of factories on any rational basis give rise to inequalities,

3. Although the SC directed the Corporation to prepare fresh assessment lists relating to properties in the Special property Section for the official years 1964-65, 1965-66 and 1966-67, the Corporation was unable to do so in view of the decision of the High Court in the case of Ahmedabad Municipality v. Keshavlal, (1965) 6 Guj LR 238 wherein it was held