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Samarendra Nath Koruri Vs. the State of West Bengal and ors. - Court Judgment

LegalCrystal Citation
SubjectOther Taxes;Constitution
CourtKolkata High Court
Decided On
Case NumberMatter No. 83 of 1979
Judge
Reported inAIR1981Cal58
ActsWest Bengal Urban Land Taxation Act, 1976 - Section 4; ;West Bengal Urban Land Taxation (Amendment) Act, 1977; ;Constitution of India - Article 14
AppellantSamarendra Nath Koruri
RespondentThe State of West Bengal and ors.
Appellant AdvocateJayanta Mitra, Adv.
Respondent AdvocateAdv. General and ;N.S. Bagchi, Adv.
Cases ReferredSpenses Hotel v. State of West Bengal
Excerpt:
- .....the building regulations 189 sq, metres are required to be kept vacant in that premises.3. the west bengal urban land taxation act, 1976 came into force on 1st april, 1976. under section 12 of the said act, 'every person liable to pay any tax under the said act, shall, within a period of six months from the beginning of the financial year, furnish to the authority, the particulars of annual return of tax payable by the owner.' in compliance with the said provisions the petitioner duly submitted annual returns for the years 1976-77, 1977-78 giving all the particulars of duty payable under the urban land tax for the said two years in respect of the land in urban agglomeration of category a at the rate of rs. 950/- for each year in accordance with sub-section 2 (i) of section 4 of the.....
Judgment:
ORDER

Padma Khastgir, J.

1. This application has been taken out by Samarendra Nath Koruri under Article 226 of the Constitution of India. The petitioner has challenged the Section 4 of the W. B. Urban Land Taxation Act, 1976 under the following circumstances.

2. The petitioner is the owner of premises No. 13, Chhatawala Gulli and premises Nos. 33 and 34, Blackburn Lane, Calcutta. Both the premises are more than 100 years old. So far Chhatawala Gulli properties is concerned the same is comprised of 1647 sq. metres and the built-in area is 1176 sq. metres. So far premises No. 13, Chhatawala Gulli is concerned, under the provisions of Building Regulations 5585 sq. metres are required to be kept vacant in that area. The total area of land comprised in premises Nos. 33 and 34, Blackburn lane is 492 sq. metres and the building area of the said premises is 378 sq. metres. Under the Building Regulations 189 sq, metres are required to be kept vacant in that premises.

3. The West Bengal Urban Land Taxation Act, 1976 came into force on 1st April, 1976. Under Section 12 of the said Act, 'Every person liable to pay any tax under the said Act, shall, within a period of six months from the beginning of the financial year, furnish to the authority, the particulars of annual return of tax payable by the owner.' In compliance with the said provisions the petitioner duly submitted annual returns for the years 1976-77, 1977-78 giving all the particulars of duty payable under the Urban Land Tax for the said two years in respect of the land in urban agglomeration of category A at the rate of Rs. 950/- for each year in accordance with Sub-section 2 (i) of Section 4 of the said Act. The petitioner has duly paid tax in respect of the same. The West Bengal Legislature passed the West Bengal Taxation Laws (2nd Amendment) Act of 1977, West Bengal Act (XX of 77). Whereby certain provisions of the said West Bengal Multistoreyed Building Tax Act, 1975 and the West Bengal Urban Land Taxation Act, 1976 were amended. The said amended provision is as follows:

(iii) in Section 4,

(a) for Sub-section (2) and the proviso thereunder, the following sub-section shall be substituted :

'(2). The urban land tax in so far as it relates to the land occupied by any building shall be levied per annum at the following rates :

(i)

in urban agglomerationof category 'A'

(a)

On the first threehundred square 'metres of the land occupied by any building

Nil

(b)

On the next one hundredsquare metres of the land or part thereof occupied by any building

Rupee one per squaremetre

(c)

On the balance of theland occupied by any building

Rupees five per squaremetre.

(ii)

in urban agglomeration of category 'D'

(a)

On the first fourhundred square metres of the land occupied by any building

Nil

(b)

On the next one hundredsquare metres of the land or part thereof occupied by any building

Thirty-five paise persq. metre.

(c)

On the balance of theland occupied by any building

Rupees two per squaremetre.'

(b) for Sub-section (3), the following sub-section shall be substituted:

(3) The urban land tax in so far as it relates to land appurtenant to any building, shall be levied per annum at the rate of rupees two per square metre in urban agglomeration of category A and at the rate of seventy paise per square metre in urban agglomeration of category D :

Provided that no urban land lax shall be levied in respect of that much quantity of land which is required to be kept vacant under the provisions of the building regulation made under any law for the time being in force

Provided further that the land required to be kept vacant under the first proviso shall in no case exceed 500 square metres.'

4. The provisions of the said Act came into effect on and from 1st April 1977. According to the petitioner, the tax on land and/or building is levied on the basis of its annual value. But it would appear that by the said amendment the urban land lax is sought to be imposed at a flat rate without making any reasonable classification as to the site of the building, the income derived from it; hence the levy of urban tax is not based upon any reasonable and just relation to the object sought to be attained by such legislation. Under the said amending Act, unequals have been placed and/or treated with equals and there has been violation of Article 14 of the Constitution. The amending Act is completely silent about the different categories of properties, the area where they (are) situated, the income yielding from such pro-ponies, the condition of the properties and also the paying capacity of the owner. The said Act is discriminatory and it docs not provide the yardstick to measure for levy of the taxes, on the considerations indicated earlier. By the amending Act, the rate at which the petitioner will have to pay the taxes is almost 4.43 times more than the original rate provided in the Act itself. Hence the amended Section 4 of the Urban Land Tax Act, 1976 has been challenged by the petitioner being violative of the provisions of the Constitution. On perusal of the said section it would appear that the amending Act has been made to impose tax at a flat rate without making any reasonable classification as to different kinds of properties the yield from such properties situation of such properties and conditions of such properties. Hence there has been no real and substantial distinction between the different properties. The unequals have been sought to be treated with equals. The amending Act has made no reasonable classification.

5. Mr. layanta Mitra appeared in support of this application. He referred to a case reported in 1979 (1) Cal LJ. 363 : (1979 Tax LR NOC 133 (Cal)) (State Bank of India v. State of West Bengal) and submitted that this particular case is completely governed by the said decision of this Court whereunder certain sections of the West Bengal Multistoreyed Building Act, 1975 were challenged on identical grounds and they were struck down by this Court. Hence applying the same principles in this particular case this Court should also make the Rule absolute.

6. The Senior Government Pleader, Mr. Naranarayan Gooplu, appeared on behalf of the State of West Bengal with Mr. N. S. Bagchi and submitted that save and except what was submitted before Mr. Justice Sabyasachi Mukharji in the case referred to above he has nothing further to add.

7. This application had been appearing in the last for a long lime as from time to time Mr. Advocate-General appeared on behalf of State of West Bengal and prayed for time on the ground that he would advise the State of West Bengal to consider this particular provision of the amending Act. However in spite of repeated time and adjournment being granted nothing has been done in the matter so far.

8. The main contention of the petitioner before me is that Section 4 of the Amending Act violates the provisions of Article 14 of the Constitution and as such it is bad. As it has been held for times without number that while judging the validity of legislation under Article 14 of the Constitution of India the Court will have to see whether the State has denied equality before law and whether unequals have been treated as equals while imposing tax upon them. It has been held that to treat unequals is equals while imposing the burden of tax is violative of the principles of equality as embodied under Article 14 of the Constitution. When discrimination is made in treating dissimilar or unequals as equals it is the duty of the Court to examine and scrutinise the same carefully and then, if necessary strike down such part of the legislation which is discriminatory.

9. It is apparent that the properties situate in different areas are bound to have different income, capacity to yield income, their potentiality, their enjoyment, value, the cost of construction and also other amenities and the liabilities and so it is not proper to treat them on equal basis for the purpose of payment of tax under the said Act. It is the well established principle of law that permissible classification could only be made when it is based on intelligible differentia which distinguishes persons who are grouped together from the other persons who did not fall in the same group and the differentia must have rational relation to the objects sought to be achieved by the statute.

10. As observed by the Division Bench of this High Court in Spenses Hotel v. State of West Bengal reported in 1975 Cal HC Notes 115 : (1975 Tax LR 1890) that 'such classification need not be based on mathematical nicety or perfect equality. But in cases of tax on building and land certain relevant factors will have to be taken into consideration otherwise dissimilar objects or persons may be treated as similar which would be violative of the provisions of Article 14. There is no classification based on any rational differentia nor the differentia has any rational relation to the objects to be achieved by the Statute.

11. Here different types of properties have been treated as similar and a flat rate of tax have been imposed on them. No classification whatsoever has been made between the different types of properties situate in the area covered by the said Act irrespective of the equality of the land and the building and/or its income yielding capacity and other benefits arising therefrom. The burden of taxes should fall equally on all persons holding similar property. Different class of properties situate differently having different yield of income have been subjected to an incidence of tax at a flat rate which amounts to unequal treatment under the law. The Supreme Court has again and again held that ordinarily the tax on land or property should be assessed on actual or potential productivity of the land sought to be taxed; in other words the tax should have reference to the income actually made or which could have been made with due diligence from the same and also held that the lack of classification in such cases created inequality.

12. In this particular case no classification has been made on reasonable ground. The levy of property tax required a reasonable correlation to the value of the property to the tax levied. The area of the land and/or the premises cannot be the only criterion for imposition of such tax without taking into consideration the age, location, rental value or capital value of the said property. It would appear that the present section under challenge has no reasonable correlation to the value of the building for which such tax has been imposed. The quality of the building, its location nor its usefulness have been taken into consideration. The absence of such classification of building situate in different parts of the city of Calcutta has created inequality as the burden of tax would not be equal on persons holding similar properties in different parts of Calcutta irrespective of its age, quality and income yielding capacity. It has been held in number of cases that in matter of taxation, large discretion is vested in the legislature and it is for them to decide whom to tax and whom not to tax. But when it is brought to the notice of the court that a particular statute or any section of it is violative of the principles of the Constitution it is also the duty of the Court to consider the same in that background and strike it down, if necessary.

13. In this particular case neither the capital value or the reasonable letting out value have been taken into consideration. As it has been observed by the Supreme Court that the flat rate method is only applicable where majority of the properties are similar in character or so nearly alike in character as to be regarded as identical for such purpose. As it has been held by the Supreme Court that 'bare equality of treatment regardless of inequality of realities is neither justice nor homage to the constitutional principle'. As it has been held by Justice Mukherjee in the case referred to above that 'the modern Slate in exercising its sovereign power of taxes have to deal with complex factors relating to the objects to be taxed, the quantum to be levied, the condition subject to which levy has to be made, the social and economic policies for which the tax was designed to subserve and what not.' Justice Mukherjee further observed that 'the court is concerned with only a very narrow question namely, whether likes have been treated alikes or whether unlikes have been treated likes, that is to say, when you treat all in the same level and thereby make them unequal, the lack of classification or even lack of sub-classification may create inequality violative of Article 14 of the Constitution.

14. This particular provision of Section 4 does not make any distinction between the areas in the city of Calcutta, degree of development and has made no difference between posh area like Park Street or Chowringhee from other parts of Calcutta. All these different areas cannot be treated as equal; hence the Act is operating uniformly on all areas which are not equal and cannot have any comparison with one and the other.

15. In this case also the impugned amending Act has not taken into consideration the factual aspect and have treated unequal buildings as equals. Hence this particular provision suffers from the vice of inequality as there has been no rational classification between the different properties situate at different parts of Calcutta; hence it should be struck down as ultra vires the Constitution on the ground that it is violative of Article 14 of the Constitution.

16. Following the principles laid down by the Supreme Court in different and also following the decision reported in 1979 (1) CLJ 363, where Mukherjee, J. has dealt with various decision on this point thoroughly, I am of the view that Section 4 of the said Amending Act is ultra vires, bad and unenforceable.

17. Hence I make the Rule absolute to that extent.

18. No order as to costs.


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