IMPORTANT POINT
Exemption from levy of general property tax – Where assessee could survive without receiving voluntary contributions, it would be liable to pay general property tax – In a democratic set-up, a municipality requires proceeds from taxes for their own administration and there is a need to leave to these municipalities power to impose and collect taxes.

JUDGMENT :

SANJIV KHANNA, J.

Section 127¹[“127. (1) For the purposes of this Act, the Corporation shall impose the following taxes, namely :-

(a) Property taxes either under section 129 or under section 141 AA;

[* * * * * ]”] of the Gujarat Provincial Municipal Corporations Act, 1949 (Bombay Act No. LIX of 1949) ²[For short, ‘GPMC Act’. Originally, the Bombay Provincial Municipal Corporations Act, 1949.], as applicable to the State of Gujarat, post the Gujarat Act No. 2 of 2007³[The Bombay Provincial Municipal Corporations (Gujarat Amendment and Validation) Act, 2007], empowers a Municipal Corporation⁴[Hereinafter referred as the ‘Corporation’.] to impose property tax either under Section 129⁵[“129. For the purposes of sub-section (1) of section 127 property taxes shall comprise the following taxes which shall, subject to the exceptions, limitations and conditions hereinafter provided, be levied on buildings and lands in the City:-

[* * * * * ]

(c) a general tax of not less than twelve per cent. 2 but not more than thirty per cent of their rateable value, which may be levied, if the Corporation so determines on a graduated scale;

[* * * * * ]” based on the rateable value of buildings and lands, or under Section 141AA⁶[“141AA. For the purposes of sub-section (1) of section127, property taxes shall comprise the following taxes which shall, subject to exceptions, limitations and conditions hereinafter provided, be levied on buildings and lands in the City:

[* * * * * ]

(c) a general tax which may be levied in accordance with the provisions of section 141B, if the Corporation so determines on a graduated scale;

[* * * * * ]”] based on the carpet area of the buildings and lands. The common question of law which arises in the aforementioned appeals is whether the appellants, namely, Parivar Seva Sanstha⁷[Hereinafter referred to as ‘Appellant No.1 Trust’] and Bai Gulab Hargovandas Jagjivandasni Dikarina Dikarina Will Trust⁸[Hereinafter referred to as ‘Appellant No. 2 Trust’.], are entitled to exemption from levy of general tax in terms of clause (b) to sub-section (1) of Section 132 in cases where the Corporation has exercised the option to levy property tax on carpet area method under Section 141AA of the GPMC Act. An additional issue which arises for consideration in the appeal preferred by Appellant No. 2 Trust relates to the challenge to Rule 8B(4)(i) of the Taxation (Amendment) Rules 2001⁹[Schedule-A, Chapter VIII of the GPMC Act. For short, ‘Taxation Rules’.], as applicable to the Ahmedabad Municipal Corporation, on the ground that it is unconstitutional, illegal and arbitrary as it violates the principle of equality enshrined under Article 14 of the Constitution of India.

2. The first issue should not hold us for long as when we assort and pigeonhole sub-sections under Chapter XI of the GPMC Act, it is crystal clear that Sections 129 to 141A of the GPMC Act are grouped together and are applicable when property tax is payable on annual letting value/annual rateable value, whereas provisions from Sections 141AA to 141F of the GPMC Act apply when property tax is payable on the basis of carpet area method. We do not find any good ground and reason to hold that clause (b) to sub-section (1) of Section 132 of the GPMC Act, which grants exemption to buildings and lands or portions thereof solely occupied and used for public worship or for public charitable purposes, would apply when property tax is calculated and is payable on the basis of the carpet area method, which is to be computed and calculated in accordance with the provisions of Section 141AA to Section 141F of the GPMC Act. This aspect has been examined threadbare in the two impugned judgments passed by the Gujarat High Court, with which we agree. However, for the sake of clarity and convenience, we would briefly record our reasons.

3. As noticed above, Chapter XI of the GPMC Act deals with municipal taxation and sub-section (1) to Section 127 states and gives an option to the Corporat