Case: Gopal Narain Vs. State of Uttar Pradesh &amp; Another

2. Bareilly is an old City in the State of Uttar Pradesh. In the middle of the 19th century it consisted of small houses situated in congested localities with narrow lanes. At some distance away from the said City area there existed even then a cantonment area. Between the City area and the Cantonment area there was a tract of uneven and undeveloped land. The Municipal Board of Bareilly acquired a part of the said land and, together with some nasul land, developed it at a considerable cost. The newly developed area come to be known as the Civil Lines. The Municipal Board has provided special amenities for the residents of that area. The said facts and the particulars of the amenities provided are given in the counter-affidavit filed on the behalf of the Municipal Board and a map of the Bareilly City and the Cantonment area is also annexed thereto. A glance at the map discloses that the City of Bareilly is divided into three separate blocks - the old City, the Cantonment and the Civil Lines. The Civil Lines area is situated between the old City and the Cantonment. We have no reason not to accept the said facts given in the counter-affidavit as representing the division of the City of Bareilly based on its geographical features and strata of development.3. In the Civil Lines area, which the Municipal Board acquired and developed, the said Board imposed house tax from January 31, 1870. In the year 1916 the Act was passed in order to consolidate and amend the laws relating to municipalities in the State of Uttar Pradesh. The Act came into force on July 1, 1916. After the Act came into force, the old tax was abolished and a new house tax was imposed by the Municipal Board of Bareilly in the Civil Lines area with effect from January 1, 1918. A latrine tax was also imposed with effect from May 25, 1918, but it was replaced by scavenging tax with effect from April 1, 1939. The petitioner, a resident of the Civil Lines area, who owns a house bearing door No. 43 therein, filed this writ petition in this Court for a declaration that S. 128(1) of the Act, in so far as it authorizes the Municipal Board to impose a tax in any part of the municipal area, is void and for the issue of a writ of mandamus against the Municipal Board, Bareilly, directing it not to realize the said house tax and scavenging tax from him. To the said petition, the State of Uttar Pradesh and the Municipal Board, Bareilly, are made respondents 1 and 2 respectively.

Court's reasoning:
9. The duties cannot be discharged and the discretionary functions cannot be performed unless the municipality has power to collect money by way of taxes. Section 128 of the Act confers such a power on the Municipal Board. It says that the Municipal Board may impose in the whole or any part of the municipality the taxes mentioned therein. A fair reading of these three provisions makes it clear that the amounts collected by the Municipal Board by way of taxes are mainly intended to enable the Board to discharge its duties in the municipal area or a part of the municipal area, as the case maydo not agree. Section 7 and 8 enumerate the obligatory duties and discretionary functions of a municipality. These duties and functions need not necessarily be discharged or performed in the entire area of the municipality at once. They may have to be introduced gradually, starting from one part of the area in the municipality with a view to cover the entire area in due course. It may also be that the amenities required in one part of the municipal area may be different from those required in another part of the municipality. It may also be that a part of the area, because of the nature of the soil, distance from the well-developed part of the city or for historical reasons, calls for a larger investment for development compared to other parts of the municipality. If so much is conceded, that is, different parts of a municipality may require special treatment in the matter of provisions of amenities, it would be reasonable to collate the power of taxation in a part of a municipality with such separate treatment. While the former two sections, by necessary implication, enable a municipality to provide special amenities in a part of the municipality, the latter section empowers it to impose taxes in that part. If so understood, the legislative guidance is apparent from the said three provisions; that is to say, a municipality can impose a tax in a part of a city, if that part, because of its peculiar situation or otherwise, has to be provided with special amenities throwing a heavy financial burden on themay be so; but the indirect benefit cannot be equated with the direct benefit conferred upon a part of the city treated as a separate unit for the purpose of taxation.Looking at the policy disclosed by Ss. 7 and 8 and S. 128 of the Act and applying the liberal view a law of taxation receives in the application of the doctrine of classification it is not possible to say that the policy so disclosed infringes the rule of equality. This Court in more than one decision held that equality clause does not forbid geographical classification, provided the difference between the geographical units has a reasonable relation to the object sought to be achieved. This principle has been applied to a taxation law in Khandige Sham Bhats Case, AIR 1963 SC 591  .In that case, this Court also accepted the principles that the legislative power to classify is of wide range and flexibility so that it can adjust its system of taxation in all proper and reasonable ways. It is indicated in "Willis on Constitutional Law", at p. 590, that a State can make a territory within a city a unit for the purpose of taxation.So the impugned section in permitting in the matter of taxation geographical classification which has reasonable relation to the object of the statute, namely, for providing special amenities for a particular unit the peculiar circumstances whereof demand them, does not in any way impinge upon the equalityis clear from the affidavit filed on behalf of the Municipal Board and the map annexed there to that the area covered by the Civil Lines has been treated as a separate unit in the matter of development from the year 1870. The Municipal Board acquired the land in that area, laid out roads, carved out good sized building plots, and provided special amenities for the residents by way of broad roads, open and bigger plots for construction of houses, parks and gardens, special lighting arrangements, footpath with cement benches, water booths with watermen for giving water to the public and special sanitary arrangements, whereas the old city area to Bareilly consisted of small plots of land with small houses thereon situated in congested localities with narrow lanes. The Municipal Board imposed house tax in the Civil Lines area from as early as January 31, 1870 and, after the Act came into force, reimposed the impugned tax in accordance with the provisions of the Act. In the case of scavenging tax, there appears to be different methods adopted in the two areas. In the Civil Lines area nightsoil and rubbish are collected by the Municipal Board from each bungalow, while in the City area they are collected from one common place in each ward. The former certainly involves higher expenditure than the latter.It will, therefore be seen that for about 90 years the Civil Lines area has been treated as a separate geographical unit for the purpose of taxation, having regard to historical reasons and the extra amenities provided for the residents of that locality and the heavy expenditure incurred by the Municipal Board in doing so. The differences between the old city and the Civil Lines area are so pronounced in the matter of amenities that there is a reasonable relation between the taxes imposed and the geographical classification made for the purpose of taxation. We, therefore, hold that the notification imposing the said taxes does not infringe Art. 14 of the131 does not confer any power on the Board to impose a tax. Section 128 confers such a power and that section with meticulous care enumerates the subjects of taxation. Section 131 provides a machinery for imposing the said taxes. The said taxes cannot be imposed in vacuum. There should be some machinery for ascertaining the rate of taxation and the persons or the class of persons liable to pay the same. If S. 131 stood alone, there may be some jurisdiction for the comment, but if it is read along with Section 128 it posits a reasonable nexus between the tax in respect of a subject and the rate payable and the persons or class of persons liable to pay the same. To illustrate: S. 128 empowers the Municipal Board to levy a tax on the annual value of a building and to make a person, who should obviously be a person connected with the building, liable to pay the same. For deciding those questions a quasi-judicial procedure is prescribed under S. 131 and the succeeding section of the Act. Under S. 131 the Municipal Board makes the proposals specifying the tax, the rate and the persons or the class of persons liable to pay the tax and such other details prescribed thereunder. The Board thereupon publishes in the manner prescribed the said details. Under Section 132 any inhabitant of the municipality may, within a fortnight from the publication of the said notification, submit his objections thereto.Thereupon the Board shall take any objection so submitted into consideration and pass orders thereon by special resolution. If the Board decides to modify its proposals, it shall publish the modified proposals and the modified proposals may also be objected to. After the final orders are made by the Board, it shall submit the proposals along with the objections, if any, to the prescribed authority. Under S. 133, the prescribed authority shall then submit the proposals and the objections to the State Government, which will make the final orders. When the proposals are sanctioned by the prescribed authority or the State Government, the State Government shall make rules having regard to the draft rules submitted by the Board; when the rules are sanctioned by the State Government, they will be sent to the Board and thereupon the Board by special resolution shall direct the imposition of the tax with effect from a date specified in the resolution. Thereafter the said resolution will be notified by the State Government in the Gazette. It will be seen from the aforesaid provisions that the rate of tax to be levied and the persons or the class of persons liable to pay the same have a reasonable relation to the subjects taxable under the Act. The said rate to be imposed and the persons or the class of persons liable to pay the same are ascertained by a quasi-judicial procedure after giving opportunity to the parties affected, subject to revision by the State Government. We cannot, therefore, say that the power conferred upon the Municipal Board is an arbitrary power offending Art. 14 of thethe outset it may be noticed that the house tax was imposed with effect from January 31, 1870 and the latrine tax was imposed with effect from May 23, 1918 and the latter tax was replaced by scavenging tax with effect from April 1, 1939. Though decades have passed by, no one has questioned till now the validity of those taxes on the ground that the procedure was not strictly followed. There is a presumption, when a statutory authority makes an order, that it has followed the prescribed procedure. The said presumption is not in any way weakened by the long acquiescence in the imposition by the resident of the Civil Lines. Nonetheless no tax shall be levied or collected except in accordance with law. If it is not imposed in accordance with law, it would infringe the fundamental right guaranteed under Art. 19 (1) (f) of the Constitution. While the long period of time that lapses between the imposition of the tax and the attack on it may permit raising of certain presumptions where the evidence is lost by efflux of time, it cannot exonerate the statutory authority if, it imposes a tax in derogation of the statutoryfacie this resolution shows that there were draft proposals; those draft proposals are not before us and they must have contained all the details required by the section. We reject this contention. We, therefore, hold that it has not been established that the impugned taxes have been imposed in violation of any of the provisions of S. 131 and other relevant sections of themust be some distinction between scavenging tax and a tax for cleansing of latrines and privies. Presumably cl. (xi) is more comprehensive than cl. (xii). In the counter affidavit it is stated that night soil and rubbish are collected by the Municipal Board from the bungalows in the Civil Lines. Though a part of that function is covered by cl. (xii), the combined function is covered by cl. (xi) of S. 128 of the Act. The question of the validity of the tax depends upon the existence of power to tax in respect of a subject. The Municipal Board had certainly power to impose the scavenging tax. The mention of cl. (xii) in the notification appears to be a mistake for cl. (xi) and that does not affect the power of the Municipal Board to impose the tax. There are no merits in this contention either.