Case: Ajoy Kumar Mukherjee Vs. Local Board Of Barpeta

1. This appeal on a certificate granted by the Assam High Court raises the question of the constitutionality of an annual tax levied by local boards for the use of any land for the purpose of holding markets as provided by S. 62 of the Assam Local Self-Government Act, No. XXV of 1953, (hereinafter referred to as the Act). The appellant is a landholder in the district of Kamrup. As such landholder, he holds a hat or market on his land since the year 1936 and this market is known as Kharma hat. In 1953-54, the local board of Barpeta, within whose jurisdiction the Kharma market is held, issued notice to the appellant to take out a licence and pay Rs. 600 for the year 1953-54 as licence-fee for holding the market. Later this sum was increased to Rs. 700 for the year 1955-56. The appellant continued protesting against this levy but no heed was paid to his protests and the amount was sought to be recovered by issue of distress warrants and attachment of his property. Consequently, the appellant filed a writ petition in the High Court challenging the constitutionality of the impost on a number of grounds3. The High Court repelled the contentions raised on behalf of the appellant and dismissed the writ petition. As, however questions of constitutional importance were involved, the High Court granted a certificate under Art. 132 of the Constitution; and that it how the matter has come up before us.

Court's reasoning:
It is well-settled that the entries in the three legislative lists have to be interpreted in their widest amplitude and, therefore, if a tax can reasonably be held to be a tax on land it will come within entry 49. Further it is equally well-settled that tax on land may be based on the annual value of the land and would still be a tax on land and would not be beyond the competence of the State legislatur on the ground that it is a tax on income. [see Ralla Ram v. province of East Punjab, 1948 FCR 207: (AIR 1949 FC 81)]. It follows, therefore, that the use to which the land is put can be taken into account in imposing a tax on it within the meaning of entry 49 of List II, for the annual value of land which can certainly be taken into account in imposing a tax for the purpose of this entry would necessarily depend upon the use to which the land is put. It is in the light of this settled proposition that we have to examine the scheme of S. 62 of the Act, which imposes the tax under challengeThus the tax is on the land and it is the owner of the land who has to take out the licence for its use as a market. The form of the tax, i.e., its being an annual tax as contrasted to a tax for each day on which the market is held also shows that in essence the tax is on land and not on the market held thereon. Further the tax is not imposed on any transactions in the market by persons who come there for business which again shows that it is an impost on land and not on the market, i.e., on the business thereinThis will again show that the tax provided by S. 62(2) is a tax for the use of the land and it is not a tax on the market as such, for the income from the market in the shape of tolls, rents and other dues is not liable to tax under S. 62 and is different from such tax. The scheme of S. 62, therefore, shows that whenever any land it used for the purpose of holding a market, the owner, occupier or farmer of that land has to pay a certain tax for its use as such. But there is no tax on any transaction that may take place within the market. Further the amount of tax depends upon the area of the land on which market is held and the importance of the market subject to a maxium fixed by the State Government. We have, therefore, no hesitation in coming to the conclusion on a consideration of the scheme of S.62 of the Act that the tax provided therein is a tax on land, though its incidence depends upon the use of the land as a market. Further as we have already indicated S. 62(2) which uses the words "impose an annual tax thereon" clearly shows that the word "thereon" refers to any land for which a licence is issued for use as a market and not to the word "market". Thus the tax in the present case being on land would clearly be within the competence of the State legislature. The contention of the appellant that the State legislature was not competent to impose this tax because there is no provision in List II of the Seventh Schedule for imposing a tax on markets as such must therefore failIt was therefore for the appellant to produce facts and figures from which it can be inferred that the tax imposed in the present case is hit by Art. 14 of the ConstitutionThe size of the market naturally takes into account the area of the land on which the market is held; the importance of the market depends upon the number of transactions that take place there, for the larger the number of transactions the greater is the importance of the market. If, therefore, the appellant is to succeed on his plea of Article 14 on the ground that the tax fixed on his market was discriminatory he had to adduce facts and figures, firstly, as to the size of the five markets on which the tax was levied in the relevant years and secondly as to the relative importance of these markets. But no such facts and figures have been adduced on behalf of the appellant. It is true that the respondent in reply to the charge of discrimination was equally vague and merely denied that there was any arbitrary discrimination. But it was for the appellant to show that in fixing the tax on the five markets as it did, the board acted arbitrarily and did not take into account the size and importance of the markets. As there is no material before us by which we can judge the relative size and importance of the five markets, it is not possible to hold that there was discrimination in taxing Kharma market at Rs. 600 per year as compared to taxing the three other markets at less than Rs. 600. The attack, therefore, on the amount actually fixed on the ground of discrimination must fail.