Appeals Nos
1194 11 96 1197  1250 of 1967
400 Appeals by certificate from the judgment and order dated November 22 23 and 24 1966 of the Bombay High Court in Special Civil Applications Nos
1476 and 1424 of 1966
G L Sanghi C K Ratnaparkhi and A G Ratnaparkhi for the appellant in CA No 119467
B N Lokur C K Ratnaparkhi A G Ratnaparkhi and B M Srivastava for the appellant in CA No 119667
M C Bhandare B D Sharma for the appellants in CAs
1197 and 125067 and Respondent No 2 in CAs
1194 and 119667
Sharad Manohar and B P Maheshwari for respondent No 1 in C As
1194 and 1197 of 1967
M N Phadke Sharad Manohar and B P Maheshwari for respondent No 1 in CAs
1196  125067
B N Lokur G L Sanghi C K Ratnaparkhi A G Ratna parkhi and B M Srivastava for respondent No 2 in CAs
1197  125067
The Judgment of the Court was delivered by MATHEW J
The respondents in these appeals filed writ peti tions in the Bombay High Court challenging the validity of the Borough Municipalities Validation of Certain Taxes on Buildings and Lands Act 1965 Maharashtra Act No 111 of 1966 hereinafter called the Validating Act on the ground that the provisions of the Act violated their fundamental rights under article 14 of the Constitution and for restraining the appellants from levying house tax on the mills factories and buildings connected therewith of the respondents or collecting the same from them
A Division Bench of the High Court held that sections 3b 41 42 and 5 of the Validating Act were invalid as they contravened article 14 and granted the prayer for restraining the appellant Municipality from levying and collecting the tax
These appeals by certificate are directed against the judgment of the Division Bench
Till the year 1947 the appellant Municipality used to levy house tax on the mills factories and buildings connected therewith of the respondents in these appeals on the basis of their annual letting value and the annual letting value for this purpose was ascertained in the normal way that is by ascertaining the amount at which the buildings might reasonably be expected to let from year to year
In 1947 the appellant Municipality made fresh rules for levy of house tax and rule 2 c of the new rules ran as follows 401 2c In the case of mills and factories and buildings connected therewith house tax on buildings shall be levied at the usual rate on the annual rental value fixed at Rs 40 for every 100 square feet or portions thereof for each sterey floor or cellar
Explanation  The expression building connected therewith means and includes warehouses godowns millshops etc
which are within the compound of mill premises but does not include residential buildings such as bungalows out houses
Note  Buildings which are not taxed under Rule 2c shall be taxed under the ordinary rules
 Under this rule the annual rental value of all the buildings of mills and factories other than residential buildings was fixed at a uniform rate of Rs 40 for every square foot of floor area irrespective of the actual rental value of the premises
One of the respondents namely Lokamanya Mills
Barsi Limited claimed refund of amounts paid by them on the basis that Rule 2c was ultra vires the Boroughs Act and they filed 4 suits for the same
Against the decrees dismissing the suits appeals were preferred to this Court and they were finally disposed of by this Court in Lokamanya Mills Barsi Ltd vs Barsi Borough Municipality1
This Court after referring to the provisions of section 78 and the explanation to section 75 of the Boroughs Act held that the Municipality could levy a rate on lands and buildings on the basis of their capital or annual letting value and that in framing rule 2c the Municipality had adopted a mode of valuation different from the one sanctioned by the Boroughs Act
The Court also observed  The vice of the rule lies in an assumed uniformity of return per square foot which structures of different classes which are in their nature not similar may reasonably fetch if let out to tenants and in the virtual deprivation to the rate payer of his statutory right to object to the valuation Accordingly the Court allowed the appeals and decreed the suits
The main objects of the Validatting Act were to enable the municipalities governed by the Boroughs Act to levy house tax on mill s factories and buildings connected therewith on the basis of rule 2c and to validate the levy and collection of the tax with retrospective effect
Section 3 of the Validating Act 1  402 brings about certain amendments in the Boroughs Act
In section 3 of the Boroughs Act a clause is inserted which lays down that  rate on buildings or lands includes any tax imposed on buildings or lands
Another amendment introduced in the Boroughs Act is with reference to Explanation to section 75
Prior to the amendment the explanation to section 75 was as follows  In the case of lands the basis of valuation may be either capital or annual letting value
 This explanation was substituted by the Validating Act by an explanation which reads Explanation  For the purposes of a rate on buildings or lands the basis of valuation may be i the annual letting value
ii the annual value iii the floor area in the case of mills factories buildings and lands connected therewith iv the capital value in the case of vacant lands
Both these amendments were given retrospective effect from the commencement of the Boroughs Act
Sections 4 and 5 of the Validating Act are designed to validate with retrospective effect the levy and collection of tax notwithstanding the decision of this Court
Sub section 1 and 2 of section 4 provide 41 Any house tax and any water tax levied or purported to be levied and collected in respect of any mills factories and buildings and lands connected therewith or in respect of any vacant lands under the Boroughs Act and rules made thereunder at any time before the commencement of this Act shall be deemed to have been levied and collected by or under the Boroughs Act as amended by this Act and accordingly notwithstanding anything in any judgment decree or order of any Court any such house tax or water tax levied and collected shall for all purposes be deemed to be and always to have been validity levied and collected and shall not be called in question merely on the ground that the tax was not levied on the basis of the annual letting value or was levied on the basis of a uniform rate on the floor area or that it was levied on the basis 403 of capital value or a percentage on such value or on the ground that any proceeding laid down in the Boroughs Act or in the rules was not followed 42 anything done or any action taken by or on behalf of any Borough Municipality or any officer of such Municipality acting or purporting to act under the provisions of the Boroughs Act or any rules made thereunder for or in connection with the levy or collection of the said taxes shall be deemed for all purposes to have been validly done or taken and no suit or other legal proceedings whatsoever shall be entertained or continued in any Court on any or all of the grounds mentioned in sub section 1
 Section 5 provides among other things for recovery of tax by the municipal authority concerned and the period within which it should be recovered etc
The two points which arise for consideration in these appeals are whether rule 2c was available to the appellant Municipality for imposing house tax on mills factories and buildings connected therewith of the respondents and whether the rule can be deemed to have been in operation in order that the levy and collection of house tax might be validated with retrospective effect It may be recalled that rule 2 c was struck down by this Court in Lokamanya Mills Barsi Ltd vs Barsi Borough Muni cipality 1 on the basis that the Boroughs Act authorized levy of house tax only on the basis of annual letting value or capital value of the land or building as the case may be and that rule 2c as it purported to levy house tax on the basis of the floor area was ultra vires the Act
When the rule was struck down by this Court the effect was that the rule could never be deemed to have been passed
Apart from rule 2c there was no charging provision similar to rule 2c either in the Boroughs Act or in the Validating Act for levying house tax on mills factories and buildings connected therewith
After rule 2c was struck down the Municipality did not frame any rule under the provision of section 75 of the Boroughs Act for imposing house tax on mills factories or buildings connected therewith
The Validating Act has not also revived or resurrected rule 2c
Therefore the position was that there was no charging provision for imposition of house tax on the mills factories or buildings connected therewith
It is only if there was a charging provision for imposing house tax on the mills factories or buildings connected therewith that any house tax could be imposed upon the mills factories or buildings connected therewith of the respondents
All that the explanation to section 75 substituted by the Validating Act did was 1  404 to enact that for imposing house tax floor area will be the basis of valuation in the case of mills factories or buildings connected therewith
The consequence is that there could be no levy of house tax on the mills factories or buildings connected therewith of the respondents nor could any demand be made on the respondents on the basis of any levy
The High Court was therefore right in restraining the appellant Municipality from levying house tax on the mills factories or buildings connected therewith of the respondents and in quashing the demand notice issued
Section 4 did not resurrect rule 2c with retrospective effect in order that it might be said that there was in the eye of law a provision for charging house tax on mills factories or buildings connected therewith so that the tax levied and collected might be validated
Even if section 4 had resurrected rule 2c and said that it shall be deemed to have been passed under the Validating Act with retrospective effect that might not have cured invalidity on account of its being violative of article 14 of the Constitution as it imposed a flat rate on the floor area without making any classification of the area on the basis of income productivity
or age of building etc
But we do not think it necessary to pass upon this hypothetical question as section 4 did not revive or resurrect rule 2c much less give it retrospective operation
In this view we have no occasion to reach the constitutional question as regards the validity of the impugned sections of the Validating Act and we express no opinion upon it
We think that it was not necessary for the High Court to have struck down the provisions of sections 32 41 42 and 5 of the Validating Act
When rule 2c was held to be inoperative by virtue of the decision of this Court all the reliefs claimed by the respondents in the writ petitions could have been given to them without striking down these provisions
It is a wise tradition with Courts not to decide a constitutional question if the case can be disposed of on other grounds
We dismiss the appeals but in the circumstances make no order as to costs
SBW Appeals dismissed


Summary:
The Supreme Court in Lokmanya Mills Barsi Led
vs Barsi Borough Municipality  struck down Rule 2c as being violative of article 14 of the Constitution of India for the vice of assumed uniformity of return per sq
from structures of different classes which are in their nature not similar
The Maharashtra Legislature passed Borough Municipalities validation of certain taxes on buildings and lands Act 1965 to validate the levy and collection of the tax with retrospective effect and to enable the municipalities to levy house tax on mills factories and buildings on the basis of Rule 2c
Explanation to Sec
75 of the Act was substituted by the new explanation by the Validating Act
Ss 4 and 5 are designed to validate the levy and collection of tax with retrospective effect
On challenge through a Writ Petition the Division Bench of the Bombay High Court struck down Sections 3b 41 42 and 5 of the Validating Act for their contravention of article 14
The appeal filed by the State and the Barsi Municipal Council before this Court among other things raised a question as to whether the Validating Act has resurrected the provisions of Rule 2c and levy and collection were validated as required by law
Dismissing the appeal HELD  When the rule was struck down by this Court the effect was that the Rule could never be deemed to have been passed
Apart from Rule 2c there was no charging provision similar to Rule 2c either in the Boroughs Act or in the Validating Act for levying house tax on mills factories and buildings connected therewith
After Rule 2c was struck down the Municipality did not frame any rule under the provisions of Section 75 of the Boroughs Act for imposing tax on mills factories or buildings connected therewith
Section 4 of the Validating Act does not revive or resurrect Rule 2c
Since the charging section is not revived there was no authority under law to collect tax on the said categories of properties
Since in the eye of law there was no charging provision there could be no validation of any levy or collection
403G Held further that the above holding was enough to grant all reliefs claimed by the respondent in the Writ Petition and there was no need to express an opinion on the validity of the impugned sections of the Validating Act
404F