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Y.L. Taneja Etc. Vs. Municipal Corporation of Delhi Etc. - Court Judgment

LegalCrystal Citation
SubjectMunicipal Tax
CourtDelhi High Court
Decided On
Case NumberCivil Appeal Nos. 2 and 5 of 1970 and Civil Writ Appeal Nos. 240, 584 and 1312 of 1969, 78 of 1970 a
Judge
Reported inILR1975Delhi457
ActsDelhi Municipal Corporation Act, 1957 - Sections 114(1); Constitution of India - Article 14
AppellantY.L. Taneja Etc.
RespondentMunicipal Corporation of Delhi Etc.
Advocates: Harbans Singh,; R.M. Lal,; D.N. Nijhawan,;
Cases ReferredMatthews v. Chicory Marketing Board
Excerpt:
(i) delhi municipal corporation act, (1957) - section 114(1)(d) as amended in (1968)--levying of property tax on the basis of graduated scale--whether ultravires of article 14 of the constitution.; that in matters of levying tax legislature is the best judge to decide the amount of the tax to be levied and the class of persons and the goods to be taxed. it is within the province of the legislature to classify persons and properties into different categories and tax them differently so long as the classification made is rational. a taxing statute cannot be challenged merely because different tax is prescribed for different categories of persons and object similarly situated. it is only when within the range of its selection the taxing law operates unequally and cannot be justified on the.....prithvi raj, j.(1) the petitioners challenge the levy of property tax by the municipal corporation of delhi (herein called 'the corporation') under section 114(1)(d) of the delhi municipal corporation act, 1957, (herein called 'the act') on the basis of the graduated scale prescribed under the second proviso to the said section. (2) since common questions of law are involved it would be expedient to deal with these petitions together by a single judgment. it may be noted here that petitioners in civil references no. 3 to 5 in their grounds of attack did not raise the legal contentions urged by the other petitioners. they were, however, permitted by us to adopt the said contentions as canvassed by the other petitioners in their petitions. (3) the corporation was constituted under the act.....
Judgment:

Prithvi Raj, J.

(1) The petitioners challenge the levy of property tax by the Municipal Corporation of Delhi (herein called 'the Corporation') under section 114(1)(d) of the Delhi Municipal Corporation Act, 1957, (herein called 'the Act') on the basis of the graduated scale prescribed under the second proviso to the said section.

(2) Since common questions of law are involved it would be expedient to deal with these petitions together by a single judgment. It may be noted here that petitioners in Civil References No. 3 to 5 in their grounds of attack did not raise the legal contentions urged by the other petitioners. They were, however, permitted by us to adopt the said contentions as canvassed by the other petitioners in their petitions.

(3) The Corporation was constituted under the Act for carrying out the fanctions enjoined on it by the Act. To provide finances to the Corporation to meet its obligations, section 113 empowers the Corporation to levy taxes enumerated therein. We are concerned only with the levy of general tax under sub-clause (d) of section 114(1) of the Act as amended by the Delhi Municipal Corporation (Amendment) Act. 1968, (herein called the Amendment Act) which envisages that, among other taxes, a general tax on lands and buildings within urban areas of not less than 10 per cent and not more than 30 per cent of their rateable value shall be levied. It may be noted here that the Amendment Act raised the maximum rate of tax from 20 per cent to 30 per cent, besides introducing a second proviso to the said clause which is as follows :

'PROVIDEDfurther that the general tax may be levied on a graduated scale, if the Corporation so determines'.

(4) While introducing the Bill the statement of objects and reasons necessitating the amendment of the Act outlined the difficult position encountered by the Corporation for meeting its expenses for carrying out its various functions. It became necessary to confer on the Corporation Power to impose general tax at a higher rate while ensuring at the same time that the burden of the tax was distributed on a graduated scale according to the principle of ability to pay. The Bill sought to replace the Ordinance (No. 1 of 1968) which earlier had been promulgated by the President because of the immediate necessity of conferring on the Corporation the power to levy the tax on graduated scale of not less than 10 per cent and not more than 30 per cent of the rateable value of lands and buildings.

(5) The Corporation by its resolution No. 59 dated 13th February, 1968, for the year 1968-69 resolved to levy general tax in the urban area on lands and buildings other than those enumerated in the resolution on the following rates, namely, lands and buildings fetching rateable value up to Rs. 1800 at 10 per cent; over Rs. 1800 to and including Rs. 8000 at 11 per cent; over Rs. 8000 to and including Rs. 12000 at 12.5 per cent; over Rs. 12000 to and including Rs. 20000 at 15 per cent; over Rs. 20000 to and including Rs. 40000 at 17.5 per cent; over Rs. 40000 to and including Rs. 1,00,000 at 19 per cent; and over Rs. 1,00,000 at 20 per cent.

(6) For the year 1969-70 the Corporation by its resolution dated 13th February, 1969, decided to levy general tax on the following rates, namely, on buildings and lands with the annual reteable value up to 600 at 10 per cent; over Rs. 600 to and including Rs. 2000 at 11 per cent; over Rs. 2000 to and including Rs. 8000 at 12 per cent; over Rs. 8000 to and including Rs. 12000 at 14 per cent; over Rs. 12000 to and including Rs. 20000 at 17 per cent; over Rs. 20000 to and including Rs. 40000 at 20 per cent and over Rs. 40000 at 22 per cent.

(7) In Civil Writs No. 240 of 1969, 584 of 1969, 78 of 1970 and 72 of 1972 the challenge is to the levy of general tax for the year 1968-69 while in Civil References No.2 to 5 of 1970 and Civil Writ No. 1312 of 1969 levy for the year 1969-70 is impugned.

(8) On behalf of the petitioners it was contended :

(I)that the second proviso to section 114(l)(d) as well as the impugned levy of tax under the graduated scale are ultra virus of Article 14 of the Constitution.

(II)that while fixing the rates of the general tax the rates of the tax should have been commensurate with (a) the value of the property and have to be such which do not eat away the property and (b) the tax imposed by a-local body has to be commensurate with the services rendered by the local body:

(III)that the manner in which the tax has been imposed cannot be said to be on a graduated scale;

(IV)that on their own wording the impugned resolutions can be interpreted to be postulating that the rate of tax to be levied is to be on the slab basis and not on a flat basis in respect of a property. In other words, levy of the tax has to be graduated qua a property and not in respect of various properties fetching different rental value. The graduation contemplated by the resolutions is for the levy of the general tax qua a particular property while in the schedule prescribed by the two resolutions there is no graduation in the levy on the particular rateable value of the particular property, but, on the contrary, what is prescribed is the graduated scale between levies on different properties; and

(V)that the imposition of a tax on a graduated scale must have a certain maximum limit of tax payable which is conspicuous by its absence in the impugned resolutions. On the contrary, the maximum provided in the impugned graduated scale has the possibility of exceeding the said maximum.

(9) Taking up the first submission it was contended that sub-clause (d) of section 114(1) and the second proviso to it providing for a graduated scale for levying tax would lead to discrimination in respect of properties similarly situated. The proviso seeks to make a classification which is not reasonable. In order to tax the lands and buildings at a flat rate on their rateable value the Corporation had adopted a method which was against the recognised concepts of valuation in the law of Rating, and as such was repugnant to the petitioners' right guaranteed by Article 14 of the Constitution.

(10) In support of the above contention strong reliance was placed on New Manak Chowk Spg. and Wvg. Mills Co. Ltd. etc. v. Municipal Corporation of the City of Ahmedabad and others, : [1967]2SCR679 .

(11) In that case by section 129 of the Bombay Provincial Municipal Corporation Act, 1949, general tax was livable on graduated scale on buildings and lands in the city, of not less than 12 per cent of their rateable value, the Municipal Corporation of Ahmedabad instead of determining the annual rent levied the tax on the basis of flat rate per 100 square feet of the floor area of the property situate within its limits. The levy was held to be against the recognised concepts and principles of valuation in the law of Rating as it 'assumed uniformity of return per square foot' in respect of structures of different classes which in their very nature could not be similar. It was observed that under the impugned method of levy a cow-shed and a modern cinema house in the best locality were sought to be charged with the same amount of tax if the extent of floorage of both was the same,

(12) Reliance was next placed on State of Kerala v. Haji K. Kutty Naha and others, : [1969]1SCR645 . In that case the virus of Kerala Buildings Tax Act (19 of 1961) were challenged alleging that the schedule to the Act prescribed different, rates of building tax on the basis of floor area, such as, the buildings having total floor area between 1000 to 2000 square feet the tax varied between Rs. 100 to Rs. 200; for buildings with a floor area between 2000 to 4000 square feet it varied between Rs. 400 to Rs. 800 and so on and so forth. It was in that back-ground that it was held that in enacting the Kerala Buildings Tax Act no attempt at any rational classification was made by the legislature which in imposing the tax did not take into consi- deration the class to which a building belonged, the nature of construction, the purpose for which it was used, its situation, its capacity for profitable user and other relevant circumstances which have a bearing on matters of taxation.

(13) As will be presently noted the above-cited cases arc of no avail to the petitioners.

(14) Courts recognise a larger discretion in the legislature in the matter of classification by characterising the persons or objects sought to be taxed in different groups so long as the legislature adheres to the fundamental principles underlying Article 14 of the Constitution having a reasonable nexus to the object of the law.

(15) It is settled law that in matters of levying tax legislature is the best judge to decide the amount of the tax to be levied and the class of persons and the goods to be taxed. It is within the province of the legislature to classify persons and properties into different categories and tax them differently so long as the classification made is rational. taxing statute cannot be challenged merely because different tax is prescribed for different categories of persons and objects similarly situated. It is only when within the range of its selection the taxing law operates unequally and cannot be justified on the basis of any valid classification that it would be vocative of Article 14 of the Constitution. (See M/s. East India Tobacco Co. v. Stale of A. P. and others, : [1963]1SCR404 ); and V. Venugopala Ravi Verma Raju v. Union of India, : [1969]74ITR49(SC) .

(16) Equality in the matter of taxing laws is generally conceived in terms of capacity to pay as the payment of tax ultimately has to be made by some individual. That being so, the legislature in its wisdom thought it fit to categorise the lands and properties according to their rateable value and to charge a certain percentage by way of general tax on the said rateable value in terms of section 114(l)(d) of the Act. Such categorisation cannot be said to be obnoxious to the freedom against discrimination guaranteed by Article 14. On the contrary to our mind the categorisation of lands and properties according to their rateable value is a practical and reasonable method of classification for the purpose of levying general tax, besides being a well-knit and integrated system in which inequalities are not likely to arise, giving rise to any cause for grievance. In the instant cases the rate of tax has been levied on the basis of annual letting values, lands and buildings having been evaluated at annual rental which a hypothetical tenant would pay in respect of them. The levy of tax in the circumstances does not depend on the arbitrary will of the Corporation to determine rateable value which has to be determined in accordance with the provisions of section 116 of the Act which provides sufficient guidelines for determining it. According to section 124 of the Act. the Corporation prepares assessment list of all lands and buildings. The Commissioner gives a public notice thereof and of the place where the list or a copy thereof may be inspected, entitling their owner, lessee or occupier or any authorised agent of such person to inspect the list and to take extracts there from free of charge. A public notice of the date not less than one month thereafter is given when the Commissioner shall proceed to consider their rateable valuation and in all cases in which any land or building is for the first time assessed, or their rateable value is increased, a notice in writing thereof is given to the owner or to any lessee or occupier inviting objections in writing, which are recorded in registers to he kept turn the purpose. The objections arc enquired into and investigated and the person making them is allowed an opportunity of being heard. When all objections have been disposed of and the revision of the rateable value has been completed the assessment is authenticated by the signatures of the Commissioner or, the officer authorised by him in that behalf. The assessment list so authenticated is deposited in the office of the Corporation and is open to inspection free of charge. It may be noted that a public notice is issued forthwith that the list is open to inspection free of charge.

(17) Section 169 provides for appeals against assessment orders made by the Commissioner. The appeal lies to the Court of the District Judge. It may bear mention here that the petitioners in Civil References No. 2 to 5 of 1970 availed of the said right of appeal in the instant cases on which the said References were made to this Court.

(18) The lists after having been prepared in accordance with the foregoing provisions have to be accepted as conclusive evidence for the purpose of assessing any tax livable under the Act on the basis of the rateable value.

(19) A perusal of the foregoing provisions of the Act leaves no manner of doubt that the legislature has prescribed not only guidelines for preparing the assessment list but has also provided sufficient safeguards to eliminate any chance of the assessment list being prepared capraciously or arbitrarily. In the circumstances, it cannot be said that uncontrolled or unguided power vests in the Commissioner in preparing the list.

(20) The method of levying tax on the basis of certain percentage on a graduated scale on properties of different rateable value in effect does not operate unevently in respect of properties similarly situate offending the equality clause. The impact of the levy is on ability to pay. Though property 'A' may be situate adjacent to property 'B' in the same locality and both may be having the same area but they cannot be said to be similarly situate because of the difference in their annual rental value. Lands and buildings fetching different annual rental value would without doubt form distinct groups. Imposing the levy on a graduated scale would apportion the burden equitably between different categories of properties with varying annual rental values which at the same time would achieve the purpose of the Act. The Amendment Act in our opinion is based on objective consideration corporation permitting imposition of tax on a higher rate on properties fetching higher rental value from those of impecunious value. Such a method envisages classification on a reasonable basis. The method adopted is free from the vice of being arbitrary or mechanical. The incidence of the tax in this method does not fall unevenly on things similar. The classification of properties on the basis of their annual rental value is not arbitrary. The rateable value having already been determined the imposition of tax with reference to the rateable value, posits a reasonable nexus between the tax sought to be imposed and the object of Amendment Act aiming at raising funds of the Corporation to discharge its statutory duties.

(21) Classifying the properties into different categories on the basis of their annual rental value would be a justifiable and rational basis of classification as within each group of properties the rate of tax would apply uniformly. In categorising the properties into different groups on the basis of their rateable value it cannot be said that similarly taxable properties were meted out dissimilar treatment. The method adopted in our opinion is not capracious, fanciful, arbitrary or unjust. It does not offend Article 14 of the Constitution of India.

(22) The impugned resolutions do not make invidious distinction between the properties with a higher rateable value than the ones with the less rateable value. The two sets of properties in the circumstances could not be said to be identically placed because of differentia in their rateable value. The system adopted forges a rational nexus between the differentia created by categorising the properties into groups on the basis of their rateable value and the object of the Act sought to be achieved. The levy is obviously geared to the income from the property.

(23) According to the submissions of the learned counsel for the petitioners while fixing the graded scale of tax the properties could be classified on the basis of their utility and location. Assuming it was possible to do so at best it means that there was another rule on the basis of which the Corporation could have proceeded to classify the properties for levying the general tax. Where there are two or more modes of categorisation of the properties for the purpose of the levy, she Corporation having adopted, the present method of levy over the other it is not possible for this Court to hold that the Corporation should have adopted the particular mode suggested by the petitioners and not the one adopted by the impugned resolutions. Clause (d) of section 114(l) says that the tax would be a percentage of the rateable value. Proviso 2 to the said section says that there can be a graduation in the percentage of the levy. That is what has been done by the impugned resolutions.

(24) The contention that gradualion itself is discriminatory cannot he- sustained. Graduation provides a rational classification according to the rateable value. The property with less rateable value is made liable for less tax and the property with larger rateable value is made liable to tax at a higher rate.

(25) Prior to the amendment in fixing the general rate of tax at 11 per cent on the rateable value in respect of all lands and buildings within the urban area of Delhi presumably the Corporation understood that the general tax was required to be levied on one flat percentage on the lands and buildings irrespective of their rental value. To remove that doubt and to enable the Corporation to augment its funds second proviso was introduced making it clear that the general tax need not be one percentage on all lands and buildings irrespective of their rental value which was not in consonance with the present trend of legislation namely, tax be levied on the ability to pay. The proviso accordingly empowers the Corporation to levy tax on a graduated scale on the rental value, inter se the groups there would be no discrimination. One flat rate of taxation prior to the amendment was considered to be unfair and hard as the properties fetching lesser rental were subjected to the same rate of tax as was livable on the properties fetching a higher rental. With a view to eliminate that hardship the legislature thought it fit to clarify that the Corporation could impose general tax on a graduated scale on lands and buildings taking into consideration their rateable value.

(26) There is another way to look at this problem. But for the second proviso by virtue of the Amendment Act, the Corporation could fix general tax at the maximum limit of 30 per cent of the rateable value of lands and buildings. That obviously was considered to be oppressive in respect of the properties fetching lesser rateable value. To mitigate the rigor the legislature thought it fit to give power to impose general tax. on graduated scale on the rateable value of the properties.

(27) DISCRIMINATION. can only be found if it exists between persons who are similarly situated. Obviously, there can. be no comparison between the properties fetching a higher annual rental with the properties which are fetching less annual rental. Levy of tax on a graduated scale on the annual letting value of properties has been sustained in a number of cases, it would be appropriate to note them.

(28) In Bai Hiralaxmi and others v. M. Corporation of the City of D Ahmedabad and another, : AIR1967Guj198 , a contention was raised that the property tax as defined in the Bombay Provincial Municipal Corporation Act was a tax on land and buildings and not on rateable value or on annual letting value thereof and that the resolution of the Corporation authorising the graduated scale of levy was vocative .of Article 14. Repelling the contention it was observed that the contention was based on erroneous conception that the property tax could not be construed as tax on the rateable value or annual letting value and that the properties of the same class similarly situated and enjoying the same same amenities had been inequally treated. When the Act provides for taxation of lands and. buldings and though the word 'rate' may not be used, the tax is on the annual value (if the lands and buildings and that for the measure of the property tax, the annual letting value is the basis. The law requiring the Corporation to levy the tax with reference to the annual letting value, 'wheneever the groups arc constituted for levying the different rates of tax for the purposes of the general tax on the basis of annual letting value. there was nexus between such groupings and the purpose of the Act'.

(29) In The Glonal Mills C.c., Ltd. v. The Broach Borough Municipalty I.L.R. (1956) Bom 465, tax at higher rate on the business and industrial premises was sustained on the ground that there was a rational basis for the classification.

(30) In M/s. Seth Sukhlal Chandanmull v. A. C. Jain and another, : [1959]37ITR101(Cal) , the validity of Finance Act 1.951 was challenged alleging that it was ultra virus of the Constitution in so far as it provided for a graded scale of income-tax, the rate of tax rising with the rise in income. Rejecting the contention it was observed that capacity to pay has reasonable relation to the object sought to be achieved by a taxing statute. The differences in income have a rational connection with that object.

(31) In Burmah Shell Oil Storage and Distributing Co. of India Ltd.v. Licensing Officer of Tarnluk Municipality and others, : AIR1956Cal397 , the company challenged the order of the respondent municipality to take out a trade license and impugned the notices and demands for payment of trade tax imposed on it. The trade tax levied was graduated. Taking the veiw that the object of taxation is to raise revenue and one of the ingredients of that power being that the tax is levied according to the paying capacity of the tax-payer, the contention of the company that all traders in a particular trade being in the same category and, thereforee, a graduated, table of taxation was not permissible was negatived.

(32) In Sukhlal Chundanmall v. A. C. Jain and another, : AIR1958Cal669 , the petilioner challenged the determination of the assessment made by the Income-tax Officer on progressive and graduated system of tax by applying the different rates of mcome-tax siurchage and super-tax prescribed by the Finance Act: of 1951 as applicable to Finance Act 1954. A contention was advanced that imposing different rates of tax upon the income of different persons, resulted in an unreasonable classification between different persons and as such was vocative of Article 14. Repelling the contention it was held that the progressive graduation of income-tax with different rates applying to different income groups or to different slabs of income far from being discriminatory is a just, practical and reasonable system of classification, and that a fiat rate applicable to different groups of income would be the most inequitable arrangement.

(33) In Oudh Sugar Mills Ltd. Hargaon v. State of U. P. and another, : AIR1960All136 , the validity of the U.P. Large Land Holdings Tax Act, 1957, was challenged before a Full Bench. The tax in that case was payable on the annual value. In determining the annual value the principle adopted was of progressive scale of taxation and not of equal taxation. Taking note of the fact that land tax on a progressive scale had been introduced in some countries it was observed that progressive taxation had come to be recognised as a well-accepted principle of taxation. It was accordingly held that though the tax was on the land but the scale was a progressive one and was based not on the principle of equal tax on all persons but on the principle that tax equal to the capacity of a person to pay. The mere fact that there was a graded scale of tax and the large land holdings were assessable to a larger tax did not make the provisions of the Act discriminatory.

(34) In Western India Theatres Ltd. v. Cantonment Board, Poona, : AIR1959SC582 , it was observed that it may not be unreasonable or improper if a higher tax was imposed on the shows given by a cinema house which contained large seating accommodation and was situate in fashionable or busy localities where the number of visitors were more numerous and in more affluent circumstances than the tax that may be imposed on shows given in a smaller cinema house containing less accommodation and situate in some localities where the visitors were less numerous or financially in less affluent circumstances, for the two could not in those circumstances, be said to be similarly situated.

(35) It is, thereforee, evident that levy of tax on the rateable value of lands and buildings has always been upheld where it is within the purview of the statutory power. The levy of tax on graduated scale being in consonance with the avowed object of taxation laws on the principle of ability to pay, was sustained.

(36) In Patel Gordhandas Hargovindas and others v. The Municipal Commisioner Almedabad, : [1964]2SCR608 , followed by Gujarat High Court in Bai H'.ralaxmi's case (supra), Wanchoo, J. (as he then was) speaking for the majority of the Court on an examination of various statutes and text books on 'rating' in England before the enforcement of the Rating and Valuation Act, 1925, observed that the term 'rate' always had the meaning of a tax on the annual value or rateable value of lands and buildings and that the annual value or rateable value was arrived at by one of the three modes, namely, (i) actual rent fetched by land or building where it was actually let, (ii) where it was not let, rent based on hypothetical tenancy, and (iii) where either of those two methods were not available by valuation based on capital value from which annual value had to be found by adopting a suitable percentage. Their Lordships noted that the Rating and Valuation Act, 1925, did not for the first time apply the concept of net annual value and rateable value for levying a rate for the purposes of local taxation in England; that basis was always there for centuries before the Act of 1925 was passed. Accordingly it was observed that in England from where in this country we had borrowed the word 'rate', that word had acquired a special meaning, namely, it was a tax on the annual value of lands and buildings found through one of the three modes indicated above. On a consideration of the law, the legislative history and practice in India on the subject, their Lordships observed at page 1747 that in Indian Legislation where the word 'rate' was used it meant 'a tax for local purposes imposed by local authorities and the basis of the tax was the annual value of the lands and buildings on or in connection with which it was imposed' arrived at in one of the three ways indicated above. It is thus evident that the Supreme Court has upheld the mode of levy of tax on the lands and buildings by a local authority on the basis of the annual rateable value of the property.

(37) Yet another submission in support of the contention that the levy is discriminatory was that for the year 1969-70 properties fetching an annual rent of Rs. 600.00 are liable to pay tax of Rs. 60.00 only at 10 per cent but properties fetching annual rent of Rs. 605.00 would be liable to pay a tax of Rs. 77.00 at 11 per cent. Thus in fetching Rs. 5.00 more by way of annual rent the latter property was subjected to more tax, the incidence of tax falling onerously created an unwarranted discrimination between the two properties. This submission fails to take note of the fact that the two properties being in distinct classses one falling the group of property fetching an annual rent of Rs. 600.00 and the oilier falling in the group fetching annual rent over Rs. 600.00 and including Rs. 2000.00 cannot be said to belong to the same group giving rise to the charge of discrimination.

(38) There is no merit in the first contention advanced on behalf of the petitioners, the same is accordingly rejected.

(39) This brings us to the second contention. There is no force in this contention as well. The Supreme Court in Patel Gordhaandas Hargovindas's case (supra) had sustained the mode of levy of tax on the basis of the rateable value of the property. The Corporation having adopted the said mode in levying the impugned tax, the contention that the tax imposed would cat away the property has to be negatived. The contention is wholly misconceived. The levy is not on the corpus of the property but on the income accruing on it by way of annual letting value.

(40) The other part of the contention that the tax imposed by a local body has to be commensurate with the services rendered cannot be accepted in view of the decision of their Lordships of the Supreme Court in The Commissioner, Hindu Religions Endowments, Madras v. Shri Lakshmindra Thirtha Swamiar of Sri Shirur Mult, A.I.R. 1954 S.C. 292, v/herein the definition or tax given by Latham C. J. of the High Court of Australia in Matthews v. Chicory Marketing Board, 60 Clr 2630, being 'a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered' was approved.

(41) Taking up the third contention it was submitted that the concept of tax on graduated scale obviously contemplates, computing tax on. the income of the property on the basis of different slabs of income of that property and not to tax the whole income of that property at a particular rate. In this respect we have to bear in mind that section 114(l)(d) and the second proviso thereto speak of the levy of general tax on all lands and buildings in the urban area. The section and the proviso seem to contemplate 'graduated scale' qua the various properties of different reteable value and do not contemplate or speak of a 'graduation' in the value of any particular land or building. The object in passing the Amendment Act was to confer on the Corporation powers to impose general tax at a higher rate with a view to finding more funds for the Corporation to meet its expenses in discharging its statutory functions. It is thus obvious that in permitting the levy of general tax on a graduated scale, what is contemplated is to categorise the properties into different groups according to their rateable value and tax different groups of properties on a graduated scale gearing the levy on the well-established principle of ability to pay. The term 'graduated scale' has been described in Webster's Dictionary page 985 Col. Ii as 'increased rate in the increase in tax value'. Progressive graduation of tax with defferent rates applying to different income groups has been recognised as a well accepted principle of taxation. It is that object which the second proviso seeks to achieve 'Graduated scale' of tax on different incomes is qua different income groups. Progressive graduation contemplates levying different rates of tax for different income groups and not on the various slabs in the income of a particular person or property unless so envisaged by the Act imposing the levy which in the instant case the Act does not provide.

(42) Our attention was drawn to two cases, Sukhlal Chandaimal (supra) : [1959]37ITR101(Cal) . The said cases are not directly on the point sought to be urged by the petitioners and are of no help to them. It may, however, be noted that progressive graduation in income-tax was held to be a levy of different rates of tax on different income groups, the rate of tax rising with the rise in income.

(43) We see no merit in the third contention and accordingly reject the same.

(44) There is equally no force in the fourth contention, namely, that on their own wording the impugned resolutions can be interpreted to purport that the rate of tax to he levied is to be on the basis and not on a flat basis in respect of a property. The argument was based on an assumption that the graduation contemplated by the resolutions is for the levy of the general tax qua particular properly while in the schedule prescribed by the two resolutions there is no graduation in the levy on the particular rateable value of the particular property, but, on the contrary what is prescribed is the graduated scale between levies on different properties. We have already dealt with this aspect of the matter in the foregoing part of the judgment and have held that the levy of the tax was permitted on a 'graduated scale'. Keeping in view the well established principle in taxation matters according to ability to pay the tax being on the basis of ability to pay indicates that different properties were intended to be taxed on a graduated scale according to their rental value, so as to relieve from hardship the owners of properties fetching less rateable value at the same time providing necessary revenue to the Corporation for carrying out its statutory obligations. What the second proviso contemplates is that the general tax may be levied on a graduated scale not in respect of each property but in respect of properities fetching different rateable value. Prior to the passing of the Amendment Act, the Corporation had imposed a uniform rate of tax at 11 per cent on the rateable value of the properties irrespective of the fact whether a particular property fetched more or less annual rent despite the fact that the section permitted levy not less than 10 per cent and not more than 20 per cent of the rateable value of the lands and buildings. With a view to impose the levy in accordance with the well-accepted principle of ability to pay the legislature thought it fit to permit the Corporation to imose the levy on a graduated scale on different rental values of the different properties, so that properties fetching a particular rental value came to be categorised into different groups forming a class among themselves in a particular group to be taxed at a uniform rate prescribed for that group. The proviso does not prescribe that in respect of a particular property the rate of tax shall be so much on a particular slab in the rental value of that property and between such and such slab of its rental value the rate of tax shall be so much and so on and so forth. No exception can. thereforee, be taken to the impugned resolutions which are in conformity with the second proviso, the properties having been categorised on a rational basis forming distinct groups on the basis of their rental value. Properties fetching rent over the rent fetched by the former group being categorised in another group and so on and so forth. We accordingly see no hesitation in rejecting this contention.

(45) This brings us to the fifth contention which grievance also is without any substance. The maximum rate of tax livable is provided in the section itself, namely, 30 per cent of the rateable value of the property. By resolution No. 594 dated 13th February, 1968. prescribing the rate of levy for the year 1963-69 the maximum'. late at which the levy is sought to be imposed is 20 per cent of the rateable value over Rs. 1.00.000 while for the year 1969-70 vide resolution dated 13th February, 1969, the maximum rate at which the tax is to be imposed is 22 percent of the rateable value over Rs. 40,000. It thereforee, cannot be said that the maxmimum limit of the rase of tax payable has not been prescribed in the impugned resolution or that they infringe the. limit of the maximum prcscribed by section 114(l)(d). That being so, the question of the maximum rate at which the general tax is imposed on the rateable value of the lands and buildings having the possibility of exceeding the maximum limit prescribed by the section does not arise.

(46) On behalf of Kanwar Manmohan Krishan Kaul petitioner in Civil Writ Nos. 1312 of 1969 and 78 of 1970 it was strenuously con-ended that on facts of his case he has been discriminated against from the owners of other adjacent properties of Rajpur Road. If that be so, it was urged that the impugned levy and the demand notices ued against him are liable to be quashed. The petitioner in the above- mentioned two writ petitions is the owner of property bearing No. 39, Rajpur Road. Delhi, which he bought in the year 1954, consisting of land having appraxmately an area of 7,000 square yards on which one bungalow and some outhouses were constructed. From time to time the petitioner carried out certain additions and alterations and made new constructions on the ?aid land so that at present on the said land of 7,000 square yards there exists one bungalow and 9 flats besides some outhouses and garages. The grievance of the patitioner is that properties bearing Nos. 41 and 49, Rajpur Road, adjacent to the property of the petitioner, have an area of over one acre each. After about 1964, when permission was being granted to sub-divide the bigger plots situate in the Civil Lines, which permission was not being granted when the petitioner had made additional constiuetions on his land in 1958, the said lands Nos. 41 and 49, Rajpur Road, were sub-divided into various plots with the result that each plot and the building thereon has, lesser rateable value than the petitioner's property though the amount of construction, on the total area of the petitioner's land is pradically the same as the area under construction on the properties known as 41 and 49, Rajpur Road. The petitioner accordingly alleges that he is paying higher rate of tax than the owner of the properties No. 41 and 49 because the petitioner's property is being treated as one unit and thus has a higher rateable value than the properties situated at 41 and 49, Rajpur Road. The petitioner, thereforee, contends that he has been discriminated against qua the persons who are similarly situated. We see no force in this submission. On his own showing because of the sub-division of the properties bearing No. 41 and 49, Rajpur Road, a change was brought about and the said lands and buildings constructed on each plot after the sub-division were rightly considered as distinct and separate property. It is, thereforee, futile for the petitioner to contend that his property and the properties constructed on lands of plot Nos. 41 and 49 after the sub-division continue to be similarly situated resulting in discrimination qua the petitioner. The grievance of the petitioner in these two writ petitions as set out above is about the division and non-division of the plots for which he can seek appropriate remedy under the Act but it is not relevant for determining the virus of the levy.

(47) Shri R. M. Lal, appearing for the petitioners in Civil Writ No, 240 of 1969 apart from pressing the contentions already dealt with above, sought to challenge the demand notice on the ground that the petitioners are separate Lessers of the ground and the first floor and being in separate possession of their respective floors, the tax could be levied only individually on the reteable value of their respective and separate property and that the two portions could not be clubbed together for arriving at the rateable value of the property in question. The learned counsel, however, did not pursue the point further staling that his clients would seek their remedy with the appropriate authority under the Act.

(48) Before parting with the cases it may be noted that because of the stand taken by the petitioners challenging only the virus of the second proviso to section 114(l)(d) and impugning the demand notices on the basis of the said challenge it was not necessary to note the particulars of the various properties and the amount of tax imposed for the year to which it pertains as it was not relevant for determinig the questions is isue.

(49) In view of our discussion on the various points noted above the view taken by Shri O. N. Vohra, Additional District Judge. Delhi. that the rates of tax determined by the Corporation by the impagned resolutions arc in conformity with its power to impose general tax on a graduated scale is sustained. Civil References No. 2 to 5 are answered accordingly.

(50) In the result Civil Writ Nos. 1312 of 1969; 78 of 1970; 240 of 1969; 584 of 1969 and 72 of 1972 are dismissed. In the circumstances of the case the parties are left to bear their respective costs.


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