Gulabchand Bapalal Modi Vs. Municipal
Corporation of Ahmadabad City  INSC 74 (4 March 1971)
CITATION: 1971 AIR 2100 1971 SCR (3) 942
Bombay Provincial Municipal Corporation Act,
59 of 1949, s. 129 of Act whether bad for excessive delegation and absence of
guidelines Rule 10 of Taxation Rules whether mandatory or directory-Maintenance
of ward-wise assessment books whetheressential-Tax levied on basis of one
assessment book for whole Municipal area whether invalid-Effect of rr. 13, 15
and 19 under the Act, on the interpretation of r. 10.
The appellant was owner of immovable property
situate within the limits of the municipal corporation, Ahmadabad City.
Under the power reserved to it by s. 127 of
the Act the Corporation served on the appellant as also on the other rate
payers, bills and demand notices for payment ,of property tax in respect of the
assessment year 1962-63.
These were challenged by the appellant and
also certain other rate payers in writ petitions before the High Court.
The High Court inter alia held (i) that s.
129 of the Act did not suffer from the vice of excessive delegation by reason
,of the fact that no maximum rate of tax was laid down; (ii) that it was
permissible under r. 10 to maintain only one assessment book and the levy could
not be held invalid on the ground that ward-wise assessment books as
contemplated by rr. 13, 15 and 19 were not maintained. In appeal to this Court
HELD : The High Court rightly held that the
charging sections of the Act were not without guidelines. The assessment and
levy of the property taxes have to be in conformity with the Act and the rules.
These rules contain inter alia Taxation Rules which are part of the Act.
Section 454, no doubt, empowers the
corporation to amend, alter and add to those rules but such power is made under
s.455 subject to sanction of the State Government. Under s. 456 the State
Government can at any time require the Corporation to make rules under s. 454
in respect of any purpose or matter specified in s. 457 which includes item
"Municipal Taxes-The assessment and recovery of Municipal Taxes."
Although the Act did not during the relevant period prescribe the maximum rate
at which the property taxes could be raised, the ultimate control for raising
them was with the councilors responsible to the people, It was difficult
therefore to sustain the plea that the power to levy the property tax was so
unbridled as to make it possible for the Corporation to levy it in an arbitrary
manner or extent.
[951 G 852 B] The proposition that when a
provision requiring sanction of the Government to the maximum rate fixed by the
Corporation is absent, the rest of the factors which exist in the Act lose
their efficacy and cease to be guidelines cannot be accepted. Further, if the
Corporation has the flexibility of power given to it in fixing the rates, the
State Legislature can at any moment withdraw that flexibility by fixing the
maximum limit up to which the Corporation can tax. Indeed the State Legislature
had done so by s. 4 of the Gujarat Act, 8 of 1968. In view of the decisions of
this Court it is not possible to agree with the contention that the Act
conferred on the Corporation such arbitrary and uncontrolled power as to render
such conferment an excessive delegation. [954 F-G] 943 Corporation of Calcutta
v. Liberty Cinema,  2 S.C.R.
477, Municipal Corporation of the City of
Ahmedanwd v. Zaveri Keshavia, 6 Guj. L.R. 701, Western India Theatres Ltd. v.
Municipal Corporation of the City Poona,  Supp. 2 S.C.R. 71, Pandit
Banarsi Das Bhanot v. Madhya Pradesh,  S.C.R. 427 and Devi Das v. Punjab
 3 S.C.R. 557. referred to.
Municipal Corporation of Delhi v. Birla
Mills,  3 S.C.R. 251 followed.
(2) The tax levied on the basis of one
assessment book was not invalid, Rule 10 differs from s. 157 of the Bombay
Municipal Corporation Act, 1888, in that, whereas, it gives an option to the
Commissioner either to maintain one assessment book for the entire city or
separate assessment books, Sec. 157 gave no such option and provided only for
ward assessment-book which collectively constituted, as in r. 10(2), "the
assessment book'. The legislature deliberately made a departure from s. 157 by
leaving it to the discretion of the Commissioner either to maintain one book or
several books ward-wise. Such a departure was presumably made because the Act
was to apply not to one city only, as did the Bombay Act of 1888, but to an
unknown number of cities where Municipal Corporations might in future be set
up, each having different conditions from the other and not being certain
whether one assessment book or separate ward assessment books would be suitable
for each of them. [955 G; 956 A] The contention that r. 10 should be, construed
as mandatory ignores (1) the permissive language of the rule and (2) the
deliberate departure made by the legislature from s. 1-57 of the Bombay
Corporation Act, 1888. If it intended that assessment-books for each ward should
be kept, there was no necessity for it to depart from the language of s. 157 of
that Act. The fact that it made such departure is a sure indication that it did
not. Unless compelled by the context and content of the other rules, there
would be no justification not to give to r. 10 the plain meaning of its
language, particularly in view of the fact that the Act intended to apply not
to one but to an indefinite number of cities, each differing in conditions from
the other a factor which, as aforesaid, led the legislature to make a departure
from the said s. 157. [958 H-959 B] Certain anomalies would arise from the High
Court's interpretation that rr. 13, 15 and 19 would not apply in the case of
one assessment book. Rule 19 was intended to enable the Corporation to proceed
to make demands so soon as entries were made as provided by cl. (e) of r. 9 and
the Commissioner had given thereafter his authentication that there existed no
valid objection to the ratable values entered under the said cl. (e). Since the
object of r. 19 was to make the entry as to the amount of tax conclusive
evidence so as to enable the Commissioner to issue the bills, the legislature
could not have intended to apply the rule only when ward assessment-books were
kept and not when, one assessment-book was maintained, especially when in r. 10
it had deliberately given discretion to the Commissioner to maintain either one
assessment-book or several ward assessment books. Further if r. 19 were to be
so construed, rr. 13, and 15 also would have on the same reasoning to be
likewise construed. That would mean that the notice to enable the rate payers
to take inspection under r. 13 and the notice under r. 15 fixing the date on or
before which complaints against 'ratable value can be made, would have to be
given only where ward assessment books are kept and not where one L1100
SupCI/71 944 assessment book is kept. it goes without saying that the right to
inspect provided under r. 13 and the right to file a complaint under r. 15 are
vital matters. That being so it is hardly conceivable that the legislature
intended these rules to apply only where the Commissioner kept ward
assessment-books. Since r. 10 has to be construed as permissive and not
mandatory, and the construction adopted by the High Court in regard to rr. 13, 15
and 19 is bound to create anomalies, the conclusion must be that it was through
inadvertence that the old language used in ss. 157 to 168 of the Bombay
Corporation Act was allowed to be retained without carrying out the change. of
language necessitated as a result of r. 10 giving discretion to the
Commissioner either to maintain one book or several books ward-wise. In the
result the assessment book in question must be held to be valid and no
objection as to the validity of the bills and demand notices can be raised on
the ground that only one assessment book and not warding books were kept. [959
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1090 of 1967.
Appeal from the judgment and decree dated May
5, 1966 of the Gujarat High Court in S.C.A. No. 877 of 1962.
B. R. L. lyengar, N. J. Modi, P. C. Bhartari
and K. N., Desai for the appellant.
1. N. Shroff, for respondent No. 1.
K. L. Hathiand S. P. Nayar, for respondent
The Judgment of the Court was delivered by
Shelat, J. This appeal, by certificate, arises out of one of the seventy
Special Civil applications filed in the High Court of Gujarat by severalrate
payers challenging the Validity of the assessment of property tax made by the
respondent-Corporation under the Bombay Provincial Municipal Corporations Act,
LIX of 1949 (hereinafter referred to as the Act).
The appellant is the owner of an immovable
property situate within the limits of the Corporation. Until March 31, 1961,
two kinds of taxes were being levied on buildings and lands situate within the
Corporation's municipal limits : (1) the general tax levied by the Corporation
under the Act, and (2) the urban immovable property tax levied under the Bombay
Finance Act, 1932 by the State Government, but collected on its behalf by the
Corporation. At the request of the Corporation made in 1960, an arrangement was
arrived at between the Government and the Corporation where under the
Government agreed not to levy the U.I.P. tax provided the Corporation increased
the rate at which it was till then levying the property tax. Accordingly, in
January 1961 the Corporation passed a resolution increasing the rate of the
property tax with effect from April 1, 1961 under the power reserved to it by
S. 127 of the Act. In 94 5 pursuance of the said resolution and in accordance
with the raised percentage of the general tax the Corporation served on the
appellant, as also on the other rate payers, bills and demand notices. In this
appeal we are concerned with the bills and ,notices in respecter the assessment
The appellant, as also certain other rate
payers, challenged the said bills and notices in their said writ petitions
mainly on the grounds (1) that the Corporation had no authority to amend the
rates with the object of including the said U.I.P. tax in the general tax so
far levied by the Government under a different statute and given up by it under
the said arrangement; (2) that the said bills and notices were illegal as the
assessment-book kept by the Corporation was not in accordance with the rules
made under the Act and was not authenticated by the Commissioner as required
there under; (3) that ss. 99, 123 and 129(c) of the Act were unconstitutional
in that they suffered from Other vice of excessive, delegation in so far as
they did not fix the maximum rate at which the Corporation could levy the
property tax, and (4) that the said sections were also violative of Art. 19(1)
(f) and Art. 31 as the tax was confiscatory in character.
By its judgment dated May 5, 1966, the High
Court first disposed of fifty two out of the said seventy writ petitions
rejecting the contentions raised therein. There after the judgment under review
separately disposed of the remaining 18 petitions, including that of the
appellant, as, besides the points raised in the said 52 writ petitions, these
18 writ petitions raised some additional points. The High Court in this
judgment did not deal afresh the points already disposed of by it in the larger
group of writ petitions and based its judgment in respect of them on its
earlier judgment dated May 5, 1966.
In its judgment, dated the May 5, 1966, the
High Court elaborately examined the scheme and the objects, of the Act and the
rules and came to the following conclusions :
(1) that the Corporation need not maintain
separate assessment-book for each of the wards and could legally maintain one
assessment-book covering all the wards;
(2) that the authentication provided for by
r. 19 of the said rules in Ch. VIII to Sch.
A of the Act ,*as not mandatory;
(3) that the liability to pay the tax arose
when entry under r. 9(e) was made in the assessment-book; and 9 46 (4)that s.
129 (c) read with ss. 99 and 127 did not suffer from the vice of excessive
delegation as the legislature had provided in the Act both its policy and principles
guiding the Corporation in levying the said tax.
The High Court also negatived the contention
that s. 129(c) by giving power to tax without laying down the maximum rate was
violative of Art. 19(1) (f) and/or Art. 31 or Art. 14.
The High Court also rejected the additional
contentions raised in the petitions left over from the earlier batch of 52
petitions and dismissed all of them. The correctness of the views expressed
by-the High Court in this judgment, as also in its earlier judgment by the
combined effect of which altogether 70 writ petitions were negatived, is
challenged in this appeal.
We need not go into all the diverse
contentions raised before the High Court as counsel for the appellant raised
before us the following three questions only (1) that while making the,
assessment the procedure contemplated by ss. 127, 129(c) of the Act and rr. 9
to 20 of the Taxation Rules was not cornplied with inasmuch as no ward
assessment-books were maintained, and consequently, the entries therein were
not authenticated as required by r. 19;
(2) that S. 129 suffers from the vice of
excessive delegation of legislative powering as-the Act fails to provide either
the maximum rate leviable by the Corporation or the guidelines for levying the
(3) that in any view of the matter, in the
circumstances in which the resolution raising the rate was passed, it did not
impose the enhanced rate on the property of the appellant as the same was ,not,
prior to April 1961' subjected to the U.I.P. tax.
Later, Mr. lyengar gave up, the third
contention. We are, there fore, left with his contentions (1) and (2) only for
Broadly stated, the facts regarding the
assessment-book and its authentication are as follows : Each year the
Commissioner either prepared or continued the assessment book required to be
maintained by him under the Taxation Rules. Each year he went through the
procedure for authentication of the assessment-book purporting to do so under
r. 19 of the Taxation Rules. After 9 4 7 the assessment-book was authenticated,
as aforesaid, and a certificate was issued by him that no valid objection had
been received in respect of the rateable values entered in the assessment-book
as required by cl. (e) of r. 9 of the said rules, the Corporation issued bills
and demand notices requiring the owners or occupiers of the properties to pay
the said tax. The Act and the rules provide for objections to the rateable
values entered in the assessment-book under Cl. (b) of r. 9, which objections
would be heard and decided by the Commissioner. There are provisions in the
Act, such as ss. 406, 4 1 0 and 41 1, for appeals to the Judge, Small Causes
Court, both against the rateable value fixed under the Taxation Rules as also
against the amount of tax demanded in the bills.
As aforesaid, the High Court dismissed the
contention as to the constitutionality of s. 129(c) basing its decision mainly
on the authority of the Corporation of Calcutta v. Liberty Cinema,(1) wherein
the validity of s. 548(2) of the Calcutta Municipal Act, authorising the
Corporation to levy a fee (held by this Court to be a tax) for every licence
and permission at such rate as may be fixed from time to time by the
Corporation'. but which did not lay down the maximum rate, was challenged. The
High Court in particular relied on the observations in that decision (1) that
fixation of the rate was not an esserxtial legislative function and could be
delegated, and (2) that the provisions in the Act, which limited the power to
levy taxes to the extent of the statutory needs of the Corporation, furnished
sufficient control and guidance. Reliance was also placed on the following
observation relating to the absence of maximum rate "It is said that the
delegation of power to fix rates of taxes authorised for meeting the needs of
the delegate to be valid, must provide the maximum rate that can be fixed, or
lay down rules indicating that maximum. We are unable to see how the
specification of the maximum rate supplies any guidance as to how the amount of
the tax, which no doubt has to be below the maximum, is to be fixed.
Provision for such maximum only sets out a
limit of the rate to be imposed and a limit is only a limit and not a
guidance." Besides deriving support from this judgment, the High Court
examined various provisions of the Act and reached the conclusion that under
the Act, as under the Calcutta Act, the tax, which the Corporation could
collect, would have to be for the purposes of the Act only and that fact,
together with certain other controls embodied in the Act, furnished sufficient
guidance preventing the vice of arbitrariness or excessive delegation.
(1) 1962 S.C.R. 477.
948 Before the High Court, the contention
also was that for each. of the relevant years there was no valid assessment book
on the basis of which the property tax could be levied.
The argument was that the Taxation Rules
required the Commissioner to prepare ward assessment-book for each of the wards
and not one assessment-book for the whole of the municipal limits, that being
so, the assessment made on the properties was not in accordance with the rules
prescribed for that purpose and was therefore in breach of Art. 265 of the
Constitution and s. 127(2) of the Act which lays down that the taxes shall be
assessed and levied in accordance with the provisions of the Act and the rules.
The High Court, on a reading of the rules, found : (1) that r. 10 gave
discretion to the, Commissioner to prepare either one assessment book or ward
assessment-books, and (2) that the rules used both the expressions, namely,
'assessment-book' and 'ward assessment books the latter expression being used
only in rr. 13 (1), 15 f and 1 9 (1 ) and (2). According to the High Court, the
contention as to the validity of the assessment-book and the construction of
the rules suggested on behalf of the appellant were not correct. The object of
r. 9, according to the High Court, was to provide for the preparation and
maintenance of the assessment-book wherein would be entered the amount of
property tax against each of the buildings and lands set out therein. The rule
provided that the Commissioner shall first make entries under cls.
(a) to (d) of the rule. An entry under cl.
(e), as its language plainly shows, is to be made after :(1) the rates of
property tax are fixed, (2) the period fixed for receipt of complaints against
the rateable values has expired, and (3) after such complaints, if any, are
disposed of by the Commissioner. An entry under cl. (e) having to be made only
after the events in (1), (2) and (3) above stated have happened, r. 9 takes in,
by using the expression "as hereinafter provided", the public notice
provided by rr. 13 and
15. According to the High Court, the
liability to pay the property tax arises as soon as entry under cl. (e) of r. 9
is made in the assessment-book in the manner therein provided and is not
dependent on authentication and certification provided in r. 19 in respect of
ward assessment-books. Authentication and certification in such ward
assessment-books provides a rule of evidence in the sense that the entries
therein become conclusive evidence as regards the amount of tax therein set out
against each property and is not an event on the happening of which the
liability to pay arises. Such liability arises as soon as entry under cl. (e)
of r 9 is made.
The High Court distinguished its earlier
decision in the Municipal Corporation of the City of Ahmedabad v. Zaveri
Keshavtal(1) by pointing out that that decision was under the Bombay (1) 6 Guj.
949 Municipal Boroughs Acts, 1925 which had a
scheme and provisions different from the present Act and the rules there under
made. That decision had laid down that the liability of the rate payer would
arise only after authentication of the assessment book. For distinguishing that
decision the High Court, firstly, relied on r. 30 of the Taxation Rules which
provides that property tax shall accrue clue on the 1st of April of each
official year, and secondly, on the ground that the Boroughs Act and the rules
there under did not have a rule corresponding to r. 9(e) which, when read with
r. 30, shows that the liability to pay the amount of tax arises on entry under
cl. (e) of that rule being made. According to the High Court, r. 19, )which
provides for authentication applies only to ward assessment books and not to a
single assessment-book, that such authentication has nothing to do with the
accrual of liability and is a mere rule of evidence which is not available to
the Corporation where the Commissioner does not prepare ward assessment-books
and keeps only one assessment book. The High Court in this connection observed
"If a single assessment-book is prepared, then the amount of tax entered
in the assessment-book will not be the conclusive evidence. In an appeal, it
would be open to a rate payer to challenge the amount on any legal ground,
possibly including the challenge to the rateable value of the property in
respect of the fact that had not been done before by him." On this
interpretation, the High Court dismissed the entire batch of the said 70 writ petitions
including that of the appellant. Though the earlier judgment is not under
review in this appeal, we have set out its conclusions as the judgment under
review followed the earlier judgment delivered by the same learned Judges and
rejected the conclusions raised by the appellant. In effect, therefore, both
the judgments are under challenge to the extent that they decided questions
raised in this appeal.
Sec. 127(1) lays down that "for the
purposes of this Act" the taxes which the Corporation has compulsorily to
levy are property taxes and a tax on vehicles, boats and animals. The second
subsection authorises the Corporation to levy the taxes set out therein in
addition to the aforesaid two taxes. Sec. 129 deals with property taxes.
Cl. (c) there of provides that property taxes
shall comprise inter alia of a general tax of not less than 12% of the rateable
value of buildings and lands. We may note that the Gujarat State Legislature,
by Act 8 of 1968, has recently amended cl. (c) by inserting therein the maximum
rate of 30%, so that the question as to the absence of maximum rate is relevant
only 950 for the assessment years prior to the amendment. The Legislature
itself has framed elaborate rules contained in Sch. A to the Act of which the
Taxation Rules in Ch. VIII thereof are part and which under s. 453 form part of
the Act. Besides the said rules, ss. 454 and 455 authorise the Corporation to
add to, amend, alter ,or rescind those rules subject to their being not
inconsistent with the provisions of the Act, sanction of the State Government
and to the condition of their being made after previous publication.
The other relevant provisions of the Act are
ss. 63 to 66 which lay down the obligatory functions which the Corporation must
perform and certain discretionary functions which it can perform.
The argument was that thought s. 127 ( 1 )
lays down that property taxes can be levied by the Corporation only for the
purposes ,of the Act, that is to say, for and in respect of the functions which
the Corporation must and can carry out, the Act being silent as to the maximum
rate upto which the Corporation can levy, it gives unbridled and arbitrary
power to levy the property tax as much and to any extent it may desire. Mr.
Iyengar pointed out that amongst the discretionary functions which the
Corporation can undertake under s. 66 there are such things as swimming pools,
public parks, gardens, recreation grounds, construction of dwellings, for
municipal officers and servants, libraries, museums etc. for undertaking which
the Corporation can spend huge, amounts and impose extravagant and burdensome
rate of tax. According to the argument, there are no guidelines or controls in
the Act which can place any limits to the spending by the Corporation on such
discretionary objects, and therefore, the rate payers are exposed to being
taxed in an arbitrary and uncontrolled fashion.
The question. thus is whether the Act
contains any policy or' guidelines or control over the taxing power of the
Corporation without which the delegation of power to tax would be excessive,
arbitrary and violative of Art. 14.
The Act, as its preamble and the long title
show, was passed for establishment of municipal corporations in the city of
Ahemadabad and Poona and certain other cities for ensuring better municipal
government. It was apparently modelled after the Bombay Municipal Corporation
Act, 1888. The Act does not lay down any maximum rate in s. 127 probably
because its operation was not confined to any particular city in which the
municipal corporation would be set up.
The Legislature, while passing it, could not
envisage in which particular cities such corporations would be set up.
Nor could it envisage what their financial
needs would be;
nor which of the discretionary functions,
under S. 66, such ,corporations would feel they must undertake. Such needs
being variable and incapable of uniform specification, the Legislature might
have felt if inexpedient to restrict the fiscal powers of the corporations to
be established in future.
951 The point for consideration is whether
the absence of a provision laying down the maximum rate is by itself sufficient
to render the delegation of the power excessive. As already stated, s. 127(1)
expressly provides that taxes can be levied only for the purposes of the Act.
They cannot thus be raised for any function 'other than the one provided by the
Act. Sec. 82 requires all monies received by the Corporation under the Act to
be credited to the Municipal Fund held by the Corporation in trust for the
purposes of the Act. By reason of s. 86, no payment can be made out of the
Municipal Fund unless it is covered by the current budget grant. Furthermore,
s. 88 lays down that the moneys credited in the Municipal Fund shall be applied
in payment of sums, charges and costs necessary for carrying the Act into
effect, or payment directed or sanctioned by or under the Act. Sec. 89
restricts expenditure by the Corporation within the city except when provided
by the Act or by a resolution by not less than. half the total number of
councillors. Under s. 95, the Commissioner is required annually to lay before
the Standing Committee estimates of income and expenditure, and under s. 96.
the Standing Committee has to prepare budget estimate 'A' "having regard
to all the requirements of this Act." The budget estimate then has to be
laid before and passed by the Corporation.
Similar provisions are made in ss. 97 and 98
for budget estimate 'B' prepared by the Transport Manager. It is after all this
has been, done that the Corporation under s. 99 determines, on or before the
20th of February of each year, the rates at which property taxes under s.
127(1), but subject to the limitations and conditions laid down in Ch. XI, are
to be levied for the next ensuing official year, Under s. 100, the Corporation,
either sends back the budget estimates 'A or 'B' for further consideration, or
adopts them with such alterations as it deems expedient. The conditions and
limitations subject to which the Corporation can fix, under s. 99, the rates at
which the property taxes are to be levied are those provided in s. 127(3) and
(4), i.e., they can be assessed and levied in accordance with the provisions of
the Act and the rules. These provisions clearly show that the ultimate control,
both for raising the taxes and incurring expenditure, lies with the councillors
chosen by and responsible to the people.
As aforesaid, the assessment and levy of the
property taxes have to be in conformity with the Act and the rules. These rules
contain inter alia Taxation Rules, which are part of the Act. Sec. 454, no
doubt, empowers the Corporation to amend, alter and add to these rules, but
such power is made under s. 455 subject to the sanction of the State
Government. Under s. 4 56, the State Government can at any time require the
Corporation to make rules under s. 454 in respect of any purpose of matter
specified in s. 457, which includes-item "(7) Municipal Taxes.-(a) The
assess95ment and recovery of municipal taxes". Thus, although the Ac does
not prescribe the maximum rate at which the property tax can be raised, the
ultimate control for raising them is with the councillors responsible to the
people. It is difficult, therefore, to sustain the plea that the power to levy
the property tax is so un bridled as to make it possible for the corporation to
levy it in arbitrary manner or extent.
In all statutes dealing with local
administration municipal authorities have inevitably to be delegated the power
of taxation,. Such power is a necessary adjunct to a system of local self-government.
Whether such delegation is excessive and amounts to abdication of an essential
legislative function has to be considered from the scheme, the objects, and the
provisions of the statute in question.
In The Western India Theatres Ltd. v. Municipal
Corporation of the City of Poona(1) this Court spelt out the policy in the
expression "for the purposes of this Act", an expression also used in
S. 127. In Pandit Banarsi Das Bhanot v. Madhya Pradesh(2), delegation of power
to the executive to determine the details relating to the working of taxation
laws, such as the selection of persons on whom the tax is to be levied the
rates at which it is to be charged in respect of different classes of goods and
the like, was held not to be unconstitutional on the principle that so long as
the legislature retains or has the power of withdrawing or altering the power
to tax delegated to a subordinate authority such delegation would be held
neither an abdication nor excessive. In Liberty Cinema case ( 3 ) the majority
view was that the power to fix the rate of a tax was not of the essence of the
legislative power and that such a power could be delegated even to a
non-legislative body. But the decision laid down that when such a power is
delegated, the legislature must provide guidance for such fixation. The
majority held that where rates have not been specified in the statute, the
power to fix the rates as might be necessary to meet the needs of the delegate
itself affords guidance. The minority view differed from the majority view, in
that, according to it, the power to fix the rate of tax was an essential
legislative function. But, even according to that view, such a power can be
delegated provided the delegate is afforded guidance by the legislative laying
down the policy and principles in the Act, It, however, disagreed with the
majority view that the raising of tax 'co-extensive with the needs of the
delegate in implementing the purposes of the Act can afford such guidance.
The Liberty Cinema case(3) came for consideration
in Devi Das v. Punjab (4) where Subba Rao, C.J., speaking for the Court, said :
(1) Sup, 2 S.C.R.71.
(2)  S.C.R.427.
(3) 2 S.C.R. 477.
(4  3 S.C.R. 557.
953 "If this decision [Liberty Cinema
case(1) is an authority for the position that the Legislature can delegate its
power to a statutory authority to levy taxes and fix rates in regard thereto,
it is equally an authority for the position that the said statute to be valid
must give a guidance to the said authority for fixing the said rates. . .
" Though he did not agree as a general principle that guidance can always
be spelt out from the limitation to fix the rate by the extent of needs of and
the expenses required by the delegate to discharge its statutory functions, the
Court did not disapprove Liberty Cinema case(1) but confined the principle laid
down there to the provisions of the Calcutta Municipal Act in which the
majority had found the requisite guidelines. No such guidance was available in
the Sales Tax statute before the Bench deciding Devi Das's case(2). The
position which emerged from the decisions so far, therefore, was that the power
to fix rates can be delegated if the statute doing so contains a policy or
principles furnishing gunance to the delegate in exercising such power.
In the Municipal Corporation of Delhi v.
Birla MilIs(3), the question as to the limits of delegation of taxing power
once more arose. The Delhi Municipal Corporation Act, 1957, like the present
Act, entrusted to the Delhi Corporation two kinds of functions, compulsory and
optional. In relation to the former, the Act specified the maximum rate of tax
the Corporation could raise, but not so in the case of tax relating to or for
implementing the optional functions. The controversy was whether the Act
contained provisions furnishing guidance to the Corporation in the exercise of
the power to tax. After an analysis of the provisions of the Act, Wanchoo,
C.J., pointed out the following factors which furnished' sufficient guidance
preventing the delegation becoming invalid :
(1) that the delegation was to an elected
body responsible to the people, including those who pay taxes and to whom the
councillors have every four years to turn to for being elected;
(2) that the limits of taxation were to be
found in the. purposes of the Act for the implementation of which alone taxes
could be raised and though this factor was not conclusive, it was nonetheless
relevant and must be taken into account with other relevant factors;
(3) that the impugned s. 1 150 itself
contained a provision which required that the maximum rate fixed by the.
Corporation should have the approval of the Government;
(1) [196512 S.C.R. 477, (2)  3 S.C.R.
(3) 1968(3) S.C.R.251.
954 (4) that the Act contained provisions which
required adoption of budget estimates by the Corporation annually; and (5) that
there was a check by the courts of law where the power of taxation-is used
unreasonably or in non compliance or breach of the provisions and objects of
Referring to Devi Das case(1), he pointed out
that (1) that did not disapprove Liberty Cinema case (2 ) was concerned case
with a sales tax statute and not with a statute dealing with bodies with
limited purposes, such as local self governing bodies. At page 268 of the
reports he observed.:
"There is in our opinion a clear
distinction between delegation of fixing the rate of tax like sales tax to the
State Government and delegation of fixing rates of certain taxes for purposes
of local taxation. The needs of ,the State are unlimited. The result of making
delegation of a tax like sales tax to the, State Government means a power to
fix the tax without any limit even if the needs and purposes of the State are
to be taken into account." Thus, the majority view in this decision, which
is binding on us, shows that the mere fact that an Act delegating taxing power
refrains from providing a maximum rate does not by itself render the delegation
From the provisions of the present Act, cited
earlier, it will be seen that though factor (3) of the factors relied on by
Wanchoo, C.J., is absent in s. 127, the rest are present.
It is impossible to say that when a provision
requiring sanction of the Government to the maximum rate fixed by the
Corporation is absent, the rest of the factors which exist in the Act loose
their efficacy and cease to be guidelines.
Furthermore, if the Corporation were to
misuse the flexibility of the power given to it in fixing the rates, the State
legislature can at any moment withdraw that flexibility by fixing the maximum
Emit up to which the Corporation can tax. Indeed, the State Legislature has now
done so by S. 4 of Gujarat Act, 8 of 1968. In view of the decisions cited above
it is not possible for us to agree with counsel's contention that the Act
confers on the Corporation such arbitrary and uncontrolled power as to render
such conferment an excessive delegation.
That brings us to the contention regarding
the validity of the assessment-book maintained by the Commissioner for the
assessment year in question.
(1)  3 S.C.R. 577.
(2)  2 S.C.R. 477.
955 Rules 9 to 21 of the Taxation Rules are
headed "Assessment Book". A comparison of these rules with ss. 156 to
168 of the Bombay Municipal Corporation Act, 1888 at once shows that they are,
with the exception of r. 10, taken almost verbatim from those sections. Rule 9
requires the Commissioner to keep a book to be called the "Assessment Book"
in which the following matters have to be entered, viz., (a) a list of
buildings and lands, (b) the rateable value of each of them, (c) the names of
persons primarily liable for the payment of the property taxes, if any,
leviable on each such building or land, (d) the reasons for non-liability, if
any of them is not liable to be assessed to the general tax, and (e) "when
the rates of the property-taxes to be levid for the year have been duly fixed
by the Corporation and the period fixed by public notice, as hereinafter
provided, or the receipt of complaints against the amount of rateable value entered
in any portion of the assessment-book has expired, and in the case of any such
entry which is complained against, when such complaint has been disposed, of
in' accordance with the provisions hereinafter contained, the amount at which
each building or land entered in such portion of the assessrnent-book is
assessed to each of the property taxes, if any, liable thereon." The rule
contain other clauses, but we are not at present concerned with them.
Rule 10(1) provides that the assessment-book
may, if the Commissioner thinks fit, be made in separate books called
"ward assessment-books", one for each of the wards into which the
city is for the time being divided for purposes of the elections. Cl. (2) of
the rule says that the ward assessment-books and the respective parts, if any,
shall collectively constitute the assessment-,book. Rule 10 differs from s. 157
of the Bombay Municipal Corporation Act, in that, whereas it gives an option to
the Commissioner either to maintain one assessment-book. for the entire city or
separate ward assessment-books, s. 157 gives no such option and provides only
for ward assessment-books which collectively constitute, as in r. 10(2),
"the assessment book". The Legislature, thus, deliberately made a
departure from s. 157 by leaving it to the discretion of the Commissioner
either to maintain one book or several books ward wise. Such a departure was
presumably made because the Act 956 was to apply not to one city only, as did
the 'Bombay Act of 1888, but to an unknown number of cities where municipal
corporation might in future be set up, each having different conditions from
the, other and not being certain whether one assessment-book or separate ward
assessment books would be suitable for each of them.
Rules 11 and 12 deal with treatment of
properties let to two or more persons in separate occupancies and the procedure
where the name of the person primarily liable for property taxes cannot be
ascertained. Rule 12, it Will be noticed, mentions only the assessment-book and
not ward assessment books. Rule 13 provides that when entries required by cls.
(a), (b), (c) and (d) of rule 9 have been
completed "in any ward assessment-book-, the. Commissioner shall give
public notice thereof and of the place where the ward assessmentbook, or a copy
of it, may be inspected." Rule 14 provides for inspection and taking
extracts by an owner or occupier of premises-entered' in "the
assessment-book" from any portion of "tie said book" which
relates to the said premises. Rule 15 requires the Commissioner "at the
time and in the manner prescribed in r. 13" to give notice of a day not
being less than 15 days from the publication of such notice, on or before which
complaints against the amount of any rateable value entered "in the ward
assessment-book" will be received in his office. Cl. ,(2) of that rule
requires the Commissioner to give a special written notice to the owner or
occupier of premises which have for the first time been entered "in the
assessment-book' as liable to property taxes or in which the ratable value of
any premises has been increased. Rule 16 provides for the manner of filing
complaints referred to in r. 1 5 against the rateable value "entered in
the assessment-book", and r.
17 provides that complaints received under r.
16 shall be registered in a book kept for that purpose as also for notice to
each complainant of the, time and place when and whereat his complaint would be
investigated. , Rule 18 provides for the hearing of the complaint if and cl.
(3) thereof lays down that when a complaint is disposed of, its result shall be
noted in the said book of complaints and the necessary amendment shall be made
in accordance with such result "in the assessment-book".
Rule 19, which has been the subject matter of
controversy both in the High Court and before us, provides that when "all
such complaints, if any, have been disposed of and the entries required by cl.
(e) of r. 9 have been completed in the ward assessment-book, the said book
shall be authenticated by the Commissioner, who shall certify, under his
signature, that except in the cases, if any, in which amendments have been made
as shown therein, no valid objection has been made to the rateable values
entered in the said book". Cl. (2) provides that "the said ward
assessment-book subject to such alterations as may thereafter be made therein
under the provisions of r. 20 shall be accepted as conclusive evidence of the
amount of each property-tax leviable on each building and land in the ward in
the official year to which the book-relates." Rule 20 empowers the
Commissioner to amend the assessment-book even after it has been authenticated
in certain cases and subject to the conditions set out therein. Lastly , r. 21
provides that it is not necessary to prepare a new assessment-book every
official year and permits the Commissioner to adopt the entries in the last
preceding year's book as the entries for each new year. This, he can do, for.
four successive years.
From the scheme of rules 9 to 21, it is clear
that the Commissioner first enters in the assessment book prescribed by r. 9
the particulars set out in cls. (a) to (d) of at rule. Having done this, he
proceeds to enter in the assessment-book the amount at which each building or
land is assessed. He can do this under cl. (e) naturally after (i) the rates of
property taxes are fixed by the Corporation, (ii) the period fixed by public
notice under r. 13 and for the receipt of complaints under 15 against rateable
values entered under cl. (b) has expired, and (iii) after such complaints, if
any, have been disposed of.
On a plain meaning of the language in r. 10
the Commissioner has the option to maintain either one assessment-book or ward
assessment-books separately for each ward. But even if he were to do so, such
ward assessment-books would collectively constitute "the
assessment-book". As earlier stated, giving of such an option under r. 10
was a clear departure by the Legislature from s. 157 of the Bombay Act, 1888.
Since these rules have been taken almost verbatim from that Act, the departure
has to be regarded as deliberate. and for the reason that the Legislature could
not foresee at the time of enacting the Act as to the cities in which municipal
corporations would be set up and the conditions prevailing at such time in
The difficulty, however, arises because rr.
13, 15 and 19, which provide for a notice for inspection, for filing complaints
against rateable Values entered under el. (b) of r. 9 and for authentication
and certification, use the expression "ward assessment book". It is
from this fact that the contention was raised that, though r. IO is couched in
permissive language, it must be construed as mandatory requiring the
Commissioner to maintain ward assessmentbooks. Therefore, the Commissioner
having maintained only one assessment-book for the whole city, it is not a
valid book on the basis of which the levy of the property tax can be sustained.
The argument was that the right of inspection, the right of taking extracts,
the right to file complaints and the duty to give 958 public. notice under rr.
13 and 15 and a special notice under cl. (2) of r. 15, as also the duty to
authenticate and certify under r. 1 9, are all matters vital to both the rate
payers, as also. the Corporation, and that it was in respect of these vital
matters that rr. 13, 15 and 19 speak of ward assessment-books. Therefore, if
the Legislature, which framed these rules, had contemplated one assessment-book
instead of separate assessment-books for each of the wards, the language of
these rules would not have been what it is.
The Language of these rules, therefore, show
that r. 10 must be construed to mean that the Commissioner has to maintain ward
assessment-books and it is when such books are maintained that the Corporation
can validly levy the tax on the basis of such books.
Confronted with this difficulty, the High
Court construed the rules to mean that r. 10 was discretionary and not
mandatory but that rr. 13, 15 and 19 apply only when ward assessment-books are
kept, and that when they are read together, they show that the scheme was that
where ward assessment-books are prepared the Legislature intended to invest
each of such books with a finality and did not intend that the question as to
rateable value or the amount of tax should remain hanging fire until all the
ward assessment books were prepared. As regards r. 19, the High Court held that
"if a single assessment-book is prepared, then the amount of tax entered
in the assessment-book will not be conclusive evidence".
Such a conclusion means that r. 19, as also
rr. 13 and 15 would apply only to ward assessment-books, and therefore, there
would be no authentication and certification where one assessment book is kept
and entries in such a single assessment-book would not be conclusive evidence
as regards the quantum of tax entred in it under cl. (e) of r. 9. But once it
is held that r. IO is discretionary and the Commissioner can maintain one
assessment-book or several ward assessment-books, as the High Court has done,
it is hardly possible that the legislature which gave such an option could have
intended that r. 19 should apply only to ward assessment-books and not where
one assessment-book is kept and deprive the Corporation of the benefit of
entries in it being treated as conclusive evidence., It is true that a genuine
difficulty arises in construing these rules as a result of the use of the
expression "ward assessment-book" in rr. 13, 15 and 19, and the use
of the expression "a ssessment-book in the rest of the rules. At the same
time acceptance of the appellant's contention or the in terpretation by the
High Court would create difficulties. The contention that r. 10 should be
construed as mandatory ignores (1) the permissive language of the rule, and 9
59 (2)the deliberate departure made by the Legislature from s.157 of the Bombay
Corporation Act. If it intended that assessment books for each ward should be
kept, there was no necessity for it to depart from the language of s. 157 of
that Act. The fact that it made such a departure is a sure indication that it
did not. Unless compelled by the context and the content of the other rules,
there would be no justification not to give to r. 10 the plain meaning of its
language, particularly in view of the fact that the Act is intended to apply not
to one but to an indefinite number of cities, each differing in conditions from
the other, a factor which, as aforesaid, led the Legislature to make a
departure from the said s. 157.
But a far more serious difficulty would arise
if the conclusion reached by the High Court were to be accepted.
If r. 19 were to be interpreted as applying
to ward assets books, and not where one assessment-book is kept, rr. 13 and 15
must also on the same reasoning be construed in the same way. The Legislature
could not have intended that the entry under cl. (e) of r. 9, as regards the
quantum of property tax leviable on each building and land, would become
conclusive evidence only where ward assessment books are kept and not where one
assessment-book is kept. Cl. (e) of r. 9 requires the Commissioner to enter in
the assessment-book the amount at which each building is assessed to each of
the property taxes. The object of authen0cation under r. 19 is to make such
entry conclusive evidence of the amount being leviable on each such building
and land for the particular official year. It is the amount of tax entered
under cl. (e) of r. 9 to which is given the attribute of conclusive evidence,
so that the Corporation can thenceforth proceed to issue bills for those
amounts and serve demand notices. The rate payers cannot object to such bills
and notices on the ground that the amounts therein set out are not correct by
reason of some error or such similar reason. Rule 19 confers conclusiveness
only to that extent and not to the rateable value or the tax fixed or charged,
as both are subject to an appeal under s.406. Rule 19, therefore, was intended
to enable the Corporation to proceed to make demands so soon as entries are
made as provided by cl. (e) of r. 9 and the Commission has given thereafter his
authentication that there exists no valid objection to the rateable value
entered under the said cl. (e) . Since the object of r. 19 is to make the entry
as to the amount of tax conclusive evidence so as to enable the Commissioner to
issue the bills, the Legislature could not have intended to apply the rule only
when ward assessment books are kept and not when one assessment book is
maintained especially when in r. 10 it has deliberately given discretion to the
Commissioner to maintain either one assessment-book or several ward
We are in agreement with the High Court that
the liability to pay the tax arises under r. 30 and r. 9(e) and is not
dependent on 17-LI10OSupCI/71 9 60 authentication, which, as aforesaid, is
intended for a limited purpose. But that does not mean that the provision as to
authentication applies only when ward assessment books are kept, or that r. 19
does not apply where one assessment book is prepared. If r. 19 were to be so
construed, rr. 13 and 15 also would have on the same reasoning to be likewise
construed. That would mean that the notice to enable the rate pay to take
inspection under r. 13 and the notice under r. 15 fixing the date on or before
which complaints against rateable value can be made, would have to be given
only where ward assessment-books are kept and not where one assessment-book is
kept. It goes without saying that the right to inspect provided under r. 13 and
the right to file a complaint under r. 15 are vital matters. That being so, it
is hardly conceivable that the Legislature intended these rules to apply only
where the Commissioner keeps ward assessment-books.
Since, for the reasons given earlier, r. 10
has to be construed as permissive and not mandatory, and the construction adopted
by the High Court in regard to rr. 1 3, 15 and 19 is bound to create anomalies
pointed out above, the conclusion we must reach is that it was through
inadvertence that the old language used in ss. 157 to 168 of the Bombay
Corporation Act was allowed to be retained without carrying out the change of
language necessitated as a result of r. 10 giving discretion to the
Commissioner either to maintain one book or several books ward wise.
The result, therefore, is that the
assessment-book in question must be held to be valid and no objection as to the
validity of the bills and demand notices can be raised on the ground that only
one assessment-book and not ward wise books are kept. The appellant, thus, does
not succeed on either of the two contentions raised on his behalf. The appeal
fails 'and is dismissed with costs.
G.C. Appeal dismissed.