Lt.
Col. Sawai Bhawani Singh Vs. The State of Rajasthan & Ors [1996] INSC 202 (6 February 1996)
Madan
Mohan Punchhi, K. Ramaswamy, Punchhi, J.
ACT:
HEAD NOTE:
When a
legislative enactment is caused an amendment beyond the competence of the
legislature and the mistake is corrected by another amendment to bring the
enactment back within its competence, can the entire legislation, original as
well as ambulatory be said to be "still-born" and thus unenforceable,
is the significant question which falls for determination in this group of
cases.
It
will be necessary to refer to the legislative history of the questioned
provisions. In the year 1964, the Rajasthan State legislature enacted a measure
called the Rajasthan Urban Lands Tax Act (Act No.18 of 1964) [hereinafter
referred to as the "Principal Act"], to provide for levy of tax alone
on "urban lands" in the State of Rajasthan. The Act then did not levy tax on buildings though within the
competence of the legislature. The Principal Act was not enforced till l973,
when amendment was caused thereto by the Amending Act No. 15 of 1973 bringing
about drastic changes in the Act, of far reaching consequences. By virtue of
this Amendment Act, tax was sought to be levied or imposed upon both lands and
buildings in the urban areas of the State of Rajasthan. The Principal Act and the Amending Act were made
enforceable with effect from April 1 l973. A private corporation challenged the
constitutional validity of the Act as amended, in the High Court of Rajasthan.
The State Government perhaps realizing the flaws in the Amending Act No. 15 of
1973, had the Governor of the State issue on June 23, 1973, an Ordinance No. 6
of 1973 bringing about corrective changes in the provisions, (reference to
which will be made later) which Ordinance was replaced by the Amending Act No.
18 of 1973, which came into force on November 10, 1973 but effective from
l-4-73. The rates of tax as applicable with effect from April 1, 1973 were changed subsequently by the
Rajasthan Finance Act of 1977 (Act No.2 of 1977) causing necessary amendments
in the charging section of the Principal Act.
Section
3 of the Principal Act, as it was originally enacted, reads as under:
"3.
Levy of Urban land tax:
(1)
Subject to the other provisions contained in this Act, there shall be levied
and collected for each year a tax on Urban lands (hereinafter referred to as
the Urban Land tax) from every owner of urban Land at such rate not exceeding
2% of the market value of such urban land as determined under Section 4, as the
State Government may by Notification in the Official Gazette declare in this
respect.
Provided
that the State Government may fix graduated rates of tax on different slabs of
market value of urban lands.
Provided
further that no tax shall be levied on any urban land if the owner thereof or
his predecessor in interest has acquired such land by transfer from the
Government or any local authority within a period of two years immediately
preceding the year for which the tax is levied.
(2)
The tax shall be in addition to any other tax for the time being payable in
respect of the urban land or portion thereof under any other law for the time
being in force.
This
Section 3 was subsequently substituted by the following provision, by Section 4
of the Amending Act No.15 of 1973. with effect from April 1, 1973.
"3.
Levy of lands and buildings tax:
(1)
There shall be levied and collected, with effect on and from 1st April, 1973,
for each year a tax on lands and buildings situate in an urban area,
(hereinafter referred to as the lands and buildings tax) from the owner of such
lands and buildings at such rates not exceeding 2% of the market value thereof
as the State Government may, by notification in the official gazette declare in
this behalf.
Provided
that the State Government may fix graduated rates of tax on different slabs of
market values of urban lands and buildings.
Provided
further that until a notification declaring rates of tax is issued under this
sub-section, the rates of tax on lands and buildings shall be as follows:
On
First Rs.50,000/- of the market value of the lands and buildings - NIL On the
balance of the market value of the lands and buildings - 1/4% Provided further
that if any area is declared a cantonments, or is constituted a municipality,
after the commencement of Rajasthan Urban Land Tax (Amendment) Act, 1973, the
tax on lands and buildings situate in such area shall be levied and collected
with effect from the commencement of the year following the year during which
the area is declared a cantonment or is constituted a municipality.
Provided
also that where more than one land or building in the same urban area is owned
by the same Person, the land and building tax shall be assessed on the market
value of all such lands and building taken together.
(2)
The tax shall be in addition to any other tax for the time being payable in
respect of the land and building or portion thereof under any other law for the
time being in force." By Amending Ordinance VI of 1973, which was later
replaced by Amending Act No.18 of 1973, the last proviso to sub- section (1) of
Section 3 was omitted and it was provided that the same shall be deemed always
to have been omitted and the following sub-section (1)A was inserted
retrospectively after sub-section ((1) of Section 3.
"(1)A
- For removal of doubt it is declared that the tax shall be levied on land or
building or both separately as units." Section 4 of the Principal Act, as
it was originally enacted in the year 1964, was under:
"4.
Determination of market value:
(1)
The Assessing Authority shall determine in the prescribed manner the market
value of the urban land liable to be taxed under this Act.
(2)
The Assessing Authority in determining the market value shall have regard to
the following matters, namely:
(a) the
locality in which urban land is situated.
(b) the
predominant use to which the urban land is likely to be put, that is to say,
industrial commercial or residential.
(c) accessability
or proximity to market dispensary, hospital, railway station, educational institutions,
or Government offices.
(d) such
other matter as may be prescribed." This Section was also substituted by
the under mentioned provision by Section 5 of the Amending Act No.15 of 1973:
"4.
Determination of market value –
For
purpose of this Act, the market value of any land or building or both shall be
estimated to be the price which in the opinion of the assessing authority such
land or buildings or both would have reached, if sold in the open market on the
date of the commencement of the Rajasthan Urban Land Tax (Amendment)Act,
1973." The relevant portion of charging Section 3, as it stands, after the
amendments made therein by Act No.18 of 1973 and Act No.2 of 1977, runs as
under:
"Provided
further that until a notification declaring rate of tax is issued under this
sub-section, the rate of tax on lands and buildings shall be as follows:
On the
first Rs.50,000/- of the market value of the land and building - NIL On the
balance of the market value of the land and buildings 1.4% Provided further that
if any area is declared a cantonment, or is constituted a municipality, after
the commencement of Rajasthan Urban Land Tax amendment) Act, 1973, the tax on
lands and buildings situate in such area shall be levied and collected with
effect from the commencement of the year following the year during which the
area is declared a cantonment or is constituted a municipality.
(1-A)
For removal of doubt it is declared that the tax shall be levied on land or
building or both separately as units." The challenge was batched up in 42
writ petitions, which were decided by a common order by a learned Single Judge
of the High Court on May
11, 1979. The learned
Single Judge allowed all the writ petitions in part, leaving both the writ
petitioners as well as the state of Rajasthan aggrieved. 59 special appeals
were thus filed before a Division Bench of the High Court which was disposed of
by a common order whereby the appeals of the State were allowed.
appeals
of the writ petitioners were dismissed and as a consequence the writ petitions
were dismissed in their entirety. Thus on granting leave in the present batch
of appeals before us, the only question raised by learned counsel and regarding
which written submissions have been submitted to us is whether or not the
Principal Act No.18 of 1964 was by itself invalid, more so after its amendment
by Amending Act No. 15 of 1973 rendering it further void because it was beyond
the legislative competence of the State Legislature. The argument is that since
levy of tax on all lands and buildings of a person taken together under the
charging sections 3 and 4 in the enacted provisions were outsides the
legislative competence of the State Legislature, the entire measure was a piece
of "still-born" legislation, incapable, because inseperatability of
being enlivened after its amendment by the Amending Ordinance No. 6 of 1973 and
the subsequent Amending Act 13 of 1973. The view of the learned Single Judge
was that the Principal Act as enacted in 1964 was a valid piece of legislation
and was fully covered by Entry 49, List II as it stood in the 7th Schedule of
the Constitution. The learned Single Judge was further of the view that the
Amending Act 15 of 1973 had brought in the Principal Act the offensive material
which was beyond the legislative competence to the State Legislature, but since
that material was severable from the remaining provisions of the charging
Section 3, therefore the healthy portion of Section 3 together with the other
provisions of the Act was valid, except the last proviso to Section 3(1), which
was subsequently deleted by Amending Act 18 of 1973. The Hon'ble Judges of the
Division Bench, improving the view of the learned Single Judge, went on to say
that the last proviso to Sub-section (1) of Section 3 was also separable from
the rest of the provisions of the said Section and after striking out the
invalid portion, namely, the last proviso to Sub- section (1) of Section 3, the
remaining portion of Section 3 contains a complete Code in itself and is
workable without reference to and notwithstanding that a portion thereof is
unenforceable. The Bench also took the view that for the purpose of separability,
it was immaterial as to whether the invalid and valid portions sere enacted in
the same Section or in different sections, because what is important is the
substance of the matter, the form being immaterial. Noticeably Ordinance 6 of
1973/Act 18 of 1973 had omitted the last proviso to Sub-section (1) of Section
3 with retrospective effect, thus keeping the remaining portion of Section 3
presenting a workable scheme without affecting its validity. On the deletion of
the last proviso to Sub-section (l) of Section 3, the charging provision was
expressly clarified by adding a new Sub-section (1)A thereto which declared
that the tax shall be levied on lands and buildings or on both separately as
units.
It is
now well settled that as per Entry 49 of List II, the State Legislature is
competent to impose tax either on lands or on buildings or on both. A land or
building or both of a person may be subjected to direct tax by the State
legislature under Entry 49 of List II and may also be subject matter of direct
tax as a component of his total assets, like Wealth-tax by the Union
legislature as mentioned in Entry 86 of List I. These two taxes are separate
and distinct in nature and it cannot be said that there was any overlapping, or
that the State Legislature was not competent to levy such tax on lands and
buildings merely on the ground that they have been subjected to another tax as
a component of the total assets of the person concerned.
See in
this connection, a seven member Bench decision of this Court in Union of India
vs. H.S. Dhillon [1972(2) SCR 33]. This Court clearly said that for a tax to be
under Entry 49 of List II, three conditions must be satisfied, i.e.
(i) it
must be a tax on units i.e., land and buildings separately as units;
(ii) the
tax cannot be a tax on totality i.e., it is not a composite tax on the value of
all lands and buildings; and
(iii) the
tax is not concerned with the division of interest in the building or land; in
another words, the tax was not concerned whether one person owned or occupied
the land or building or two or more persons occupy or own it. In pith and
substance, it was a tax on property and not a personnel tax.
Other
cases of the same nature being D.C. Gouse & Co. etc. vs. State of Kerala
& Anr. etc.[1980(1) SCR 268], which are of the same species, may be turned
to with advantage. B. Shama Rao vs. The Union Territory of Pondicherry [1967(2)
SCR 650], pressed into service by learned counsel for the appellants, which was
a case under the Pondicherry General Sales Tax Act, enlightens us that the core
of the taxing statute is in the charging Section of the provisions levying such
tax and defining persons who are liable to pay such tax. Understandably if the
core disappears, the remaining provisions have no application. This is well
understood.
The
Principal Act, as it originally stood, provided for levy of tax on lands only.
It could then have no taint of unconstitutionally and none could be pointed out
to us. It is the Amending Act No.15 of 1973 which brought about the questioned
changes in Section 3 and 4, which gave the spill as if levy of tax was being
made by the State legislature under Entry 86 of List l on the premise that the
tax was being made leviable on a person taking into account his total assets in
lands and buildings, which taint, as identified, was later withdrawn by
Ordinance 6 of 1973/Act 18 of 1973 by causing certain deletions to keep the
remainder complete as a code. Thus it is evident that the Principal Act could
stand on its own and the amendment caused to it by Amending Act No.l5 of 1973,
by itself brought a blot by way of substitution the offending portion of which
was later sliced off as much. Nothing was so inextricably mixed up so that the
extricable parts were not severable, or that any damage had been occasioned to
the left out healthy portion rendering it incomplete. This court in M.P.V.Sundara
Ramaiar and Co.vs. State of Andhra Pradesh [l958 SCR 1442] and R.M.D. Chamarbaugwalla
vs. Union of India [1957 SCR 930 at page 950] has laid down the principles that
in determining whether the valid parts of the statute are separable from its
invalid parts, it is the intention of the legislature that is the determining
factor.
The
test to be applied is whether the legislature would have enacted the valid part
if it had known that the rest of the statute was invalid. If the valid and
invalid provisions are so inextricably mixed up that they cannot be separated
from one another, then the invalidity of a portion must result in the
invalidity of the Act in its entirety. This Court further took the view that if
on the other hand those valid and invalid portions were so distinct and
separate that after striking out what is invalid, what is itself a complete
code, independent of the rest,then it will be the subsisting object,
notwithstanding that the rest has become unenforceable. In the light of the
aforesaid principles it is clear that the charging section 3, which to begin
with was unquestionably valid, was replaced with the amendment made by Amending
Act 15 of 1973, making it in that state unenforceable, but when the unhealthy
part was removed by Ordinance 6 of 1973. Amending Act 18 of 1973, Sections 3
and 4 got resuscitated, gaining radiatance, pristinely legislative, its sparkle
re-doubled by insertion of Sub- section (1)A to Section 3, so as to remove
doubts ever existing regarding levy of tax on buildings and lands. Thus it must
be held that the charging Section 3 and the supportive Section 4, as salvaged,
are part of a scheme which was within the legislative competence of the
Rajasthan State Legislature. The afore-analysis also demolishes the
"stillborn" theory because the Principal Act was by itself a measure
existing on the statute book which had life and breath of its own, irrespective
of the date of its enforceability having been kept for a future date. It is the
Amending Act No.15 of l973 which got to choke its life but before it could die
or be declared dead by a court to competent jurisdiction, life was breathed
into it by the Amending Ordinance 6 of 1973 and Amending Act 18 of 1973 with
retrospective effect in the manner stated above. The cases relied upon - M/s.
West Ramnad Electric Distribution Co. Ltd. vs. State of Madras [1963(2) SCR
747] and Mahendra Lal Jaini vs. The State of Uttar Pradesh and others [1963
Supp.(1) SCR 912], would not serve the purpose for which they have been pressed
forward by learned counsel for the appellants to incapacitate the State
Legislature to correct its own wrongs, well in time and before a judicial
verdict.
On the
basis of the aforesaid analysis and reasoning the question posed at the outset
and the three questions summarized in the written submission, namely:
(i) whether
the Amendment Act of 1973 (Rajasthan Act XV to 1973) in pith and substance
imposes a tax which is relatable to Entry 86 of List I or Entry 49 of List II?;
(ii)
If the Amendment Act of 1973 in pith and substance imposes a tax under Entry 86
of List I and not under Entry 49 of List II, whether the second proviso to
Section 3 is severable from the rest of the Act?; and
(iii)
Whether the Ordinance VI of 1973 introducing Sub-Section 1(A) to Section 3
would have the effect of retrospectively curing the defect of the Amendment Act
of 1973 and thus revives it?, would stand appropriately answered, without
further elaboration, in favour of the State of Rajasthan and against the
appellants.
No
other question was raised besides those afore- referred to.
As a
result, these appeals fail and are hereby dismissed with no order as to costs.
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