Case: Ahmedabad Manufacturing &amp; Calico Printing Co. Ltd. &amp; Others Vs. State of Gujarat &amp; Others

to other lands. Section 128 of the Code then provides:"Section 128 : The existing exemption from payment of land revenue of lands other than lands which have hitherto been ordinarily used for purposes of agriculture only, situate within the sites of towns and cities in which an inquiry into titles has been made under the provisions of Bombay Act IV of 1868 shall be continued First - if such lands are situated in any town or city where there has been in former years a survey which the State Government recognise for the purpose of this section, and are shown in the maps or other records of such survey as being held wholly or partially exempt from the payment of land revenue; * * * * " The exemption granted by S. 128 saves lands in the inner zone from the application of land revenue and the middle zone bears the non-agricultural assessment since it does not fall within this exemption. It is subjected to non-agricultural assessment by reason of the non-agricultural use to which it is put. The outer zone being outside the limits of village sites, town or city and composed of pure agricultural land is subject to land revenue only. 8. The three zones are the result of the operation of different laws in rural and urban areas. Lands subjected to city survey and assessed to property-tax are saved from the imposition of land revenue to which all lands are normally subject. This exemption is a hundred years old and is based on the fact that land in the heart of the city ceases to be agricultural. Similarly lands in the outer circle are free from municipal assessment because they are outside municipal limits and do not benefit from the municipal services. They are subject to land revenue only. The middle zone comes into being because the owners and holders of agricultural lands are not content to hold land for agriculture but divert it to other uses. In course of time the limits of the municipality have to be revised and these lands are taken within the municipality which means that they begin to share in the municipal services. They are therefore, assessed to municipal taxes as a return for the services rendered. 9. Now a cess is really a tax and it is generally imposed for providing money for some stated administrative purpose. It is usually collected as an addition to an existing tax. And so it is here. It is made as an addition to the tax already levied on lands and buildings, Since lands and buildings bear different kinds of taxes in the different zones, an attempt has been made to adjust the rates for the different zones presumably to make the levy equitable, regard being had to the situation and advantages to be derived from the expenditure on education. No objection has been made in the case that the tax levied in any zone is not commensurate with the advantages which are likely to accrue or that the burden has been made unduly high in any particular zone. The only objections raised are three. The first and second are (a) that flat rate is applied in calculating the annual letting value, and (b) that plant and machinery are included in lands and buildings. This has been corrected by the decision of our brother Mitter. The third is that the middle zone bears both the surcharge and the tax. A double imposition by itself is not offensive to Art. 14 of the Constitution unless it can be shown that the double tax in one zone as compared with the single tax in the other zones falls more heavily than the single tax. This is not attempted to be established except on the ground of flat rate above mentioned. Since that has been struck down already and will presumably be replaced by some more accurate and equitable valuation, we do not set any reason to interfere. The decision of other brother Mitter will dead to a readjustment of the assessment book and then only the around that the rate of cess in the middle zone exceeds the rate in the other two zones can be considered. As at present situated it is sufficient to say that there is no discrimination because the method of calculation of cess in the three zones, the surcharge and tax have to be paid, the rates, the cess falls equitably on all landlords regard being had to the advantages derived from the cess and the advantages derived from the situation of the lands. 10. Finally there is the argument that the Cess Act, in not providing its own procedure of assessment and in not giving the tax-payers an opportunity for putting forward their objections by way of representation, appeal or otherwise, before the tax is finally fixed, offends the principles of natural justice. This argument is not correct. The cess is nothing more than an addition to existing taxes. As it is a percentage of another tax, the determination of the cess is not by an independent assessment. It is an arithmetical calculation based on the result of assessment under other Act or Acts. Those Acts allow the raising of objections and provide for appeals. It is only the result of assessment after scrutiny, objection and appeals which forms the basis for the application of a percentage. There is no need for further scrutiny, objection or appeals. Nor is the Cess Act bad because it is not self-contained in the matter of assessment. In all cases of imposition of cesses for special administrative purposes (such as health cess, road cess, education cess, etc.) this method is followed. Being an addition to another tax this is the only method possible. The legislation on the subject of the imposition, levy and collection of a cess is made complete by incorporation of and reference to another piece of legislation. This practice is neither ineffective nor unconstitutional and cannot be said to be bad.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]4. It will be noticed that education cess is of three separate kinds. It is (a) a surcharge on land revenue assessed on purely agricultural lands, or (b) a surcharge on non-agricultural assessment in respect of lands used for non-agricultural purposes or (c) a tax on lands and buildings which do not bear land revenue. The properties in Ahmedabad are in three zones which may be described as demarcated by three concentric circles. In the inner zone are situated properties which do not bear land revenue and no surcharge, is therefore payable in respect of lands and buildings. Properties in this zone were exempted from the payment of land revenue under S. 128 of the Bombay Land Revenue Code in Ahmedabad in common with other towns and cities in which there had been formerly a city survey. In the middle zone are situated lands which though originally agricultural lands have been diverted to non-agricultural use and the lands and buildings, therefore, bear both municipal tax and non-agricultural assessment. In the outer zone are lands which are purely agricultural and they bear land revenue but no other charge5. The textile mills of the petitioners are situated in the middle zone within the municipal limits of Ahmedabad and the main complaint in these cases is that by reason of their situation, these mills have to pay both the surcharge as well as the tax whereas the owners of property in the other two zones bear either a surcharge on the land revenue or a tax on the annual letting value. It is also contended that the preparation of the assessment book having been struck down by this Court in the case cited earlier by us, the tax under S. 12 is no longer leviable and S. 12 having become inoperative, the Cess Act must fall as a wholeIn our judgment it does not. Section 12 lays down that the tax on lands and buildings situated in urban areas shall be collected at the rate of 3 per cent of the annual letting value (now 4.5 per cent) where a building or land is used for the purpose of trade, commerce, industry, profession or business. This rate is applicable to the annual letting value as determined under the Bombay Provincial Municipal Corporations Act. If as a result of the decision of this Court the assessment book needs revision or the principles on which valuation must be based have to be laid down afresh by the Legislature, the provisions of S. 12 of the Cess Act do not fail automatically. They will fasten on the new valuation when made. This cannot affect the validity of the section in the mean time. The section remains on the statute book to be worked into such assessment book as may hereafter emerge. The argument that S. 12 has failed must be rejected8. The three zones are the result of the operation of different laws in rural and urban areas. Lands subjected to city survey and assessed to property-tax are saved from the imposition of land revenue to which all lands are normally subject. This exemption is a hundred years old and is based on the fact that land in the heart of the city ceases to be agricultural. Similarly lands in the outer circle are free from municipal assessment because they are outside municipal limits and do not benefit from the municipal services. They are subject to land revenue only. The middle zone comes into being because the owners and holders of agricultural lands are not content to hold land for agriculture but divert it to other uses. In course of time the limits of the municipality have to be revised and these lands are taken within the municipality which means that they begin to share in the municipal services. They are therefore, assessed to municipal taxes as a return for the services renderedThe cess is nothing more than an addition to existing taxes. As it is a percentage of another tax, the determination of the cess is not by an independent assessment. It is an arithmetical calculation based on the result of assessment under other Act or Acts. Those Acts allow the raising of objections and provide for appeals. It is only the result of assessment after scrutiny, objection and appeals which forms the basis for the application of a percentage. There is no need for further scrutiny, objection or appeals. Nor is the Cess Act bad because it is not self-contained in the matter of assessment. In all cases of imposition of cesses for special administrative purposes (such as health cess, road cess, education cess, etc.) this method is followed. Being an addition to another tax this is the only method possible. The legislation on the subject of the imposition, levy and collection of a cess is made complete by incorporation of and reference to another piece of legislation. This practice is neither ineffective nor unconstitutional and cannot be said to be bad.