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2025 Supreme(Raj) 1333
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
PUSHPENDRA SINGH BHATI, CHANDRA PRAKASH SHRIMALI, JJ.
Modern Insulators Limited - Appellant
Versus
State of Rajasthan - Respondent
D.B. Civil Writ Petition No. 1847 of 2007
Decided on : 02-05-2025
Advocate Appeared:
For the Appellant : Mr. Pranjul Mehta
For the Respondent: Mr. Harshvardhan Singh for Mr. Mahaveer Bishnoi, AAG
The actual use of land determines tax liability under the Rajasthan Finance Act, 2006, and the petitioner’s land did not qualify for exemption.
Headnote:
(A) Rajasthan Finance Act, 2006 - Sections 38(c), 39, 40, 42, 47, and 49 - Writ petition challenging land tax on agricultural land - Petitioner claimed tax was ultra vires and sought quashing of assessment and demand notices - Petitioner later abandoned challenge to Act's validity - Court found that land in question did not fall within exempt categories and due process was followed in issuing notices. (Paras 1, 4, 10, 11, 12)
(B) Taxation - Definition of land - The term 'land' under the Act excludes agricultural and residential land only when used exclusively for those purposes; actual use determines tax liability. (Paras 9, 10)
Facts of the case:
The petitioner challenged the imposition of land tax under the Rajasthan Finance Act, 2006, claiming the land was exempt as agricultural. The petitioner later abandoned the challenge to the Act's validity but contested the assessment process and demand notices issued for tax collection. (Paras 1, 3, 4)
Findings of Court:
The court found that the land did not qualify for exemption under the Act, and the assessment process complied with legal requirements. The demand notice was valid and enforceable. (Paras 11, 12, 14)
Issues: The main issues included whether the land was exempt from tax and if due process was followed in the assessment and demand notices. (Paras 4, 10)
Ratio Decidendi: The court ruled that the actual use of land determines tax liability, and the petitioner’s land did not meet the criteria for exemption under the Act. The assessment process was conducted in accordance with the law. (Paras 10, 11, 12)
Result: Petition dismissed.
JUDGMENT :
Per Dr. Pushpendra Singh Bhati, J:
1. This Writ Petition under Article 226 of the Constitution of India has been preferred claiming the following reliefs:
“It is, therefore, humbly prayed that the Writ Petition may kindly be allowed and by an appropriate, order or direction-
(i) declare Part VII of the Rajasthan Finance Act, 2006 imposing Land Tax and the Rules framed thereunder and consequential notifications as ultra vires and the same may be struck down.
(ii) hold that the State legislature has no jurisdiction to impose the impugned tax on agricultural land in the State.
(iii) impugned Assessment Order dated 27/12/2006 (Annexure 3) & Demand Notice dated 2/3/2007 (Annexure 4) may kindly be quashed and set-aside.
(iv) hold that in any case no tax can be levied and collected for the Financial Year 2006-2007.
(v) Any other order or direction which this Hon’ble Court deems just and proper may kindly be passed.”
1.1. At the outset, it has been brought to the notice of this Court that the challenge to the validity of the Act of 2006 in the present petition, has already been given up by the petitioner, which is reflected in the order dated 10.07.2017 passed by this Hon’ble Court; the said order reads as under:
“Learned counsel for the petitioner submits that the petitioner is not pressing the prayer No.1 that is to declare Part VII of the Rajasthan Finance Act, 2006 ultra vires, hence, the matter is nor required to be adjudicated by the learned Single Bench.
In view of the statement made by learned counsel appearing on behalf of the petitioner, the writ petition so far as the prayer No.1 is concerned is dismissed as not pressed.
For the remaining causes, let this writ petition be listed before learned Single Bench for adjudication.”
2. Before unraveling the remaining controversy in the present case, it is pertinent to underscore the provision of law application whereof the controversy arose.
2.1. The State of Rajasthan enacted Rajasthan Finance Act, 2006 (hereinafter referred to as ‘Act of 2006’), which was then published in the Official Gazette on 31.03.2006. The State Government, in exercise of powers conferred by Section 61 under Chapter VII of the Act of 2006, also framed the Rajasthan Land Tax Rules, 2006 (hereinafter referred to as ‘Rules’), and notified the same in the Official Gazette on 25.09.2006.
2.2. The Act of 2006 under its Chapter VII provided for levy of tax in the State of Rajasthan, on certain classes of land. The provisions of the Act were applicable on the lands as defined under Section 38(c), and the Scheme of levy and collection of tax was as such that under Section 39 of the Act of 2006, the State Government was to prescribe by a notification in the Official Gazette, the levy of tax on the classes of lands at such rates as were to be notified by the State Government from time to time in the Official Gazette.
2.3. Furthermore, Section 40(1) of the Act of 2006 read with Rule 4 of the Rules, provided for preparation of a provisional assessment list (in short “provisional list”) by the assessing authority (defined under Section 38 (b) of the Act of 2006), of all lands liable to pay the prescribed tax. After preparation of the provisional list, a public notice has to be given as per Section 40(3) of the Act of 2006 and Rule 5(1) of the Rules, which contained the particulars as prescribed by the State Government, and that the said list has to be open for inspection by every person claiming to be the land holder of the land mentioned in the list. Section 41 read with Rule 5(4) of the Rules, provided for objections to the entries in the list by any person aggrieved by any entry in the provisional list, and Section 42 read with Rule 5(7) of the Rules, provided for finalization of the assessment list, after the provisional list being duly authenticated by the assessing authority, and the list so authenticated shall be kept open for inspection by holders of the land or their agents. Then as per Section 47 of the Act of 2006
