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1979 Supreme(Cal) 78
HIGH COURT OF CALCUTTA
Sabyasachi Mukharji, J.
State Bank of India
Versus
State of West Bengal & Ors.
And
The State Bank of India. Senior Supervising Staff Co-operative Housing Society Ltd. & Anr.
Versus
State of West Bengal & Ors.
And
Basanti Debi Saraogi
Versus
State of West Bengal & Ors.
Matter No.115 and 116 of 1978 And C.R. No. 53 (W) of 1978
Decided On : March 5, 1979
Advocate Appeared:
In Matter No.115 and 116
M.K. Banerjee, Sivaji. Mitra for the petitioners;
Naranarayan Gupta, Senior Govt. Pleader, Umesh Banerjee for the respondents.
In C.R. 53 (W)
R. N. Bajoria, S.K. Bajoria for the petitioner;
Naranarayan Gupta, Senior Govt. Pleader, S.N. Saraf, Pulak Ranjan Mandal for the respondents.
A taxing statute cannot impose on the same class of property similarly situated an incidence of taxation which leads to obvious inequality.
Headnote:
WEST BENGAL MULTI-STOREYED BUILDING TAX ACT, 1975 - VALIDITY - ARTICLE 14 OF THE CONSTITUTION - DISCRIMINATION - CLASSIFICATION - UNIFORMITY - TAX ON LANDS AND BUILDINGS - ENTRY 49 OF LIST II OF THE 7TH SCHEDULE OF THE CONSTITUTION - AMENDMENT OF 1977 - PRESIDENT'S ASSENT - WHETHER NECESSARY - TAX ON LUXURIES - ENTRY 62 OF LIST II OF THE 7TH SCHEDULE OF THE CONSTITUTION - SCOPE - CLASSIFICATION - REASONABLE DIFFERENTIA - RATIONAL RELATION TO THE OBJECT - EQUALITY BEFORE LAW - EQUAL PROTECTION OF THE LAWS - CLASSIFICATION - PERMISSIBLE CLASSIFICATION - CONDITIONS - INTELLIGIBLE DIFFERENTIA - RATIONAL RELATION TO THE OBJECT - MATHEMATICAL NICETY OR PERFECT EQUALITY NOT REQUIRED - CLASSIFICATION BASED ON DIFFERENT BASIS - PRESUMPTION IN FAVOUR OF THE VALIDITY OF AN ENACTMENT - BURDEN OF PROOF ON THE PERSON CHALLENGING - TAX ON BUILDINGS AND LANDS - RELEVANT FACTORS TO BE CONSIDERED - UNIFORMITY OF TAXATION - CLASSIFICATION BASED ON INCOME OR PROPERTY - CLASSIFICATION BASED ON DIFFERENT KINDS OF PROPERTY - CLASSIFICATION BASED ON THE SAME CLASS OF PROPERTY SIMILARLY SITUATED - CLASSIFICATION CREATING INEQUALITY AMONG HOLDERS OF THE SAME KIND OF PROPERTY - CLASSIFICATION BASED ON THE RENT PAYABLE FOR THE LAND - ADJUSTMENT OF MULTIPLE BY THE STATE GOVERNMENT - DISCRETION - WHETHER UNFETTERED OR UNCANALISED - CLASSIFICATION BASED ON FLOORAGE - WHETHER SCIENTIFIC, ARBITRARY OR MECHANICAL - CLASSIFICATION BASED ON THE VALUE OF THE PROPERTY - CLASSIFICATION BASED ON THE ANNUAL LETTING VALUE OF THE PROPERTY - CLASSIFICATION BASED ON THE PRODUCTIVE CAPACITY OF THE LAND - CLASSIFICATION BASED ON THE OBJECTS TO BE TAXED, THE QUANTUM TO BE LEVIED, THE CONDITIONS SUBJECT TO WHICH THE LEVY HAD TO BE MADE, THE SOCIAL AND ECONOMIC POLICIES WHICH THE TAX WAS DESIGNED TO SUB-SERVE - CLASSIFICATION BASED ON THE FLOOR AREA OF THE PREMISES - CLASSIFICATION BASED ON THE USE OF THE PREMISES - CLASSIFICATION BASED ON THE LOCATION OF THE BUILDING - CLASSIFICATION BASED ON THE DEGREE OF DEVELOPMENT OF THE AREA - CLASSIFICATION BASED ON THE COST OF CONSTRUCTION - CLASSIFICATION BASED ON THE CAPACITY TO YIELD INCOME - CLASSIFICATION BASED ON THE CONDITION AND AGE OF THE BUILDING - CLASSIFICATION BASED ON THE YIELD OF INCOME - CLASSIFICATION BASED ON THE POTENTIONALITY OF THE INCOME TO BE YIELDED - CLASSIFICATION BASED ON THE VALUE OF CONSTRUCTION - CLASSIFICATION BASED ON THE USER OF THE BUILDING - CLASSIFICATION BASED ON THE RESIDENTIAL AND COMMERCIAL OR RESIDENTIAL BASIS - CLASSIFICATION BASED ON THE PURPOSE OF THE TAX - CLASSIFICATION BASED ON THE INTENTION OF THE LEGISLATURE - CLASSIFICATION BASED ON THE POLICY OF THE LEGISLATURE - CLASSIFICATION BASED ON THE WISDOM OF THE LEGISLATURE - CLASSIFICATION BASED ON THE FACTUAL ASPECTS - CLASSIFICATION BASED ON THE REALITY OF LIFE - CLASSIFICATION BASED ON THE ESSENTIAL FEATURES OF THE OBJECTS - CLASSIFICATION BASED ON THE UNEQUALS - CLASSIFICATION BASED ON THE EQUALS - CLASSIFICATION BASED ON THE SIMILARITY - CLASSIFICATION BASED ON THE DISSIMILARITY - CLASSIFICATION BASED ON THE UNIFORMITY - CLASSIFICATION BASED ON THE DISCRIMINATION - CLASSIFICATION BASED ON THE INEQUALITY - CLASSIFICATION BASED ON THE RATIONAL NEXUS - CLASSIFICATION BASED ON THE SUB-CLASSIFICATION - CLASSIFICATION BASED ON THE MINI-CLASSIFICATION - CLASSIFICATION BASED ON THE SUB-DELEGATION OF LEGISLATIVE FUNCTION - CLASSIFICATION BASED ON THE GUIDELINES - CLASSIFICATION BASED ON THE VAGUENESS - CLASSIFICATION BASED ON THE UNREASONABLENESS - CLASSIFICATION BASED ON THE ARTICLE 19 OF THE CONSTITUTION - CLASSIFICATION BASED ON THE ARTICLE 31 OF THE CONSTITUTION.
Fact of the Case:
The petitioners challenged the validity of the West Bengal Multi-storeyed Building Tax Act, 1975 as amended by the West Bengal Taxation Laws 2nd Amendment Act, 1977 on various grounds, including violation of Article 14 of the Constitution, unreasonableness, vagueness, violation of Article 19 of the Constitution, and violation of Article 31 of the Constitution.
Finding of the Court:
The Court held that the West Bengal Multi-storeyed Building Tax Act, 1975 as amended by the West Bengal Taxation Laws (Second amendment) 1977 was ultra vires, bad and unenforceable as it violated Article 14 of the Constitution. The Court found that the Act treated unequals as equals in the burden of taxation by ignoring the vital factors which are germane for imposition of taxing buildings and lands, such as the value of construction, the potentiality of the income to be yielded or the income actually yielded, the condition and age of the building. The Court also held that the Act was not violative of Article 19 or Article 31 of the Constitution.
Issues: 1. Whether the West Bengal Multi-storeyed Building Tax Act, 1975 as amended by the West Bengal Taxation Laws 2nd Amendment Act, 1977 was ultra vires and violative of Article 14 of the Constitution? 2. Whether the Act was unreasonable and vague? 3. Whether the Act violated Article 19 of the Constitution? 4. Whether the Act violated Article 31 of the Constitution?
Ratio Decidendi: 1. The Court held that the Act violated Article 14 of the Constitution as it treated unequals as equals in the burden of taxation by ignoring the vital factors which are germane for imposition of taxing buildings and lands, such as the value of construction, the potentiality of the income to be yielded or the income actually yielded, the condition and age of the building. 2. The Court held that the Act was not unreasonable or vague. 3. The Court held that the Act did not violate Article 19 of the Constitution. 4. The Court held that the Act did not violate Article 31 of the Constitution.
Final Decision: The Court declared the provisions of the West Bengal Multi-storeyed Building Tax Act, 1975 as amended by the Bengal Taxation Laws (Second amendment) 1977 to be bad and violative of Article 14 of the Constitution. The Court restrained the respondents Government authorities from enforcing and realising tax under the said Act and directed that the taxes if realised should be refunded to the respective petitioners within a period of three months from the date of the judgment.
In this judgment I am dealing with several applications under Article 226 of the Constitution, two in the Original Side and one in the Appellate Side as these raise the common and the important question of the validity of West Bengal Multi-storeyed Building Tax Act, 1975 being West Bengal Act XIX of 1975 as amended by West Bengal Act XX of 1977. In all these applications several points were taken. But as the most important question raised in these applications was the validity and the vires of the West Bengal Multi-storeyed Building Tax Act, 1975 as amended by the Act of 1977 it is necessary to set out the relevant provision of the said Act. The West Bengal Multi-storeyed Building Tax Act, 1975 hereinafter called the 1975 Act, came into effect from 1st of July, 1975 with the prior assent of the President of India. The rules made thereunder were framed by notification dated 21st of August, 1975. Under S. 3 of the Act as the Act stood originally the rate of tax had been provided at Re. 1/- per sq, metre of covered space of multi-storeyed building' per year. Section 2(c) of 1975 Act, which defined Multi-storeyed Building was as follows :-
"Multi-storeyed building" means a building on any land in an urban
area consisting of five 5toreys and above constructed after the first day of April 1969 and includes any building in such area with less than five storeys constructed prior to that date but raised after that date to a level of five storeys and above."
The expression Urban area has been defined to mean "such area as the State Government may by notification declare to be an Urban area for the purpose of this Act." Under S. 3 (2) of the 1975 Act, the tax is payable by the owner who is defined as follows :-
"Owner includes the person for the time being receiving the rent of any multi-storeyed building or any part there of whether on his own account or as agent or trustee for any person or society or for any religious or charitable purpose, or as a receiver or, who would so receive such rent if the multi-storeyed building or part thereof were let to a tenant."
2. The 1975 Act as mentioned herein before was amended in 1977 by the West Bengal Taxation Laws 2nd Amendment Act, 1977, the Governor of West Bengal gave his assent to the said Act, and the same was published in the Calcutta Gazette Extra- ordinary on the 30th of September, 1977. In the case of 1977 amendment no assent of the President was obtained, The 1975 Act after its amendment provides that this is an Act for the imposition of tax on multi-storeyed buildings in West Bengal. It extends to the whole of West Bengal. Section 2(b) defines covered space as follows :-
"(b) 'covered space' means the floor space and includes the space of covered courtyard, gangway, garage, verandah, common service area and such other space as may be prescribed ;"
Multi-storeyed building has been defined under S.2 (c) as follows :-
"(c) 'multi-storeyed building' means a building on any land in an urban area consisting of five storeys and above"
Urban area has been defined in S. 2 (11) as follows;-
"(h) 'urban area' means such area as the State Government may, by notification, declare to be an urban area for the purposes of this Act ;"
Section 3 which deals with the levy of tax is to the -following effect :_
3. Levy of tax.-( I) Notwithstanding anything to the contrary contained in any other law for the time being in fore; but subject to other provisions of this Act, there shall be charged and levied for every year a tax (here-in-after referred to as 'the tax') on every multi storeyed building.
(2) The tax in respect of multi-storeyed building shall be payable by the owner thereof to the State Government.
(3) The tax shall be levied per year or' part thereof on the covered space of the multi-storeyed building at the rates specified below:
I. (i) where the total Fifty paise per square metre.
covered space does
not exceed fifty
square metres
(ii) where the total Rupee one per square metre.
covered space ex
