P. N. BHAGWATI, J. M. SHELAT, J.

( 1 ) THESE petitions under Article226 of the Constitution raise an interesting question of law relating to the validity of Urban Immov- able Property tax sought to be collected by the Municipal Corporation of Ahmedabad on behalf of the State of Gujarat from the owners of various plots of open land situate within the City of Ahmedabad. The facts involved in these petitions are identical and so is the question of law arising in them and it would therefore be convenient to dispose them of by a common judgment.

( 2 ) PRIOR to 1st July 1950 the Ahmedabad Municipality (hereinafter referred to as the Municipality) was a Borough Municipality governed by the Bombay Municipal Boroughs Act 1925 (hereinafter referred to as the Boroughs Act ). There were in force during the period upto 31st March 1947 the Valuation and Taxation Rules made by the Municipality under sec. 58 (1) and sanctioned by the Government by their resolution dated 14 February 1931 under sec. 76 prescribing various taxes leviable by the Municipality. Amongst these taxes was a tax on non-residential buildings and lands belonging to mills and factories and open lands and yards be- longing to railway companies and that tax was based on valuation arrived at by taking a certain percentage of capital value but there was no tax as such on open lands in general. In regard to Government taxation too there were various taxes levied by the Provincial Government under the Bombay Finance Act 1932 but there was no tax on open lands or for the matter of that even on buildings. The Provincial Legislature therefore brought into force the Bombay Finance (Amendment) Act 1939 by which Part VI was inserted in the Bombay Finance Act 1932 with effect from 31st March 1939 This Part was headed Urban Immovable Property Tax and it authorized the levy of Urban Immovable Property tax on buildings and lands situate in the area to which the Part extended. Sec. 20 which was the first section in this Part declared that the Part shall extend inter alia to the limits of the Municipal Borough of Ahmedabad and certain other notified areas. Sub-sec. (1) of sec. 21 definedannual letting value to mean in relation to Municipal Borough of Ahmedabad the annual letting value of build- ings or lands as determined in accordance with the provisions of sec. 78 of the Bombay Municipal Boroughs Act 1925 but this definition was subject to a proviso and since in our view the entire decision of these petitions turns on the true construction to be placed on this proviso it would be desirable to set it out in extenso. The proviso was in the following terms:provided that if in any case the property tax is assessed on any building or land on its capital value such percentage of the capital value as may be determined by the State Government shall be deemed to be the annual letting value. Property tax was defined in sub-sec. (7) of sec. 31 and that definition in so far as it is material for our present purpose said that property tax shall mean in municipal areas governed by the Boroughs Act a tax or rate on buildings or lands levied under the Boroughs Act. Sec. 22 provided for the Urban Immovable Property Tax in the following words:22 Levy of Urban Immovable Property Tax:-There shall subject to the provi sions of sec. 23 be levied and paid to the Provincial Government a tax on buildings and lands hereinafter called the Urban Immovable Property tax at ten per cent. of the annual letting value of such buildings or lands:. . . . . . . . . . . . . . . . . The rate of ten per cent specified in this section was subsequently reduced to seven per cent and by a further amendment made with effect from 1st April 1949 the rate was declared to be such rate not exceeding seven per cent. of the annual letting value of the buildings or lands in such area or areas as may be notified by the State Government in the Official Gazette. There were also provisos to this section which provided for lower rates in certain

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