Case: State Of Andhra Pradesh &amp; Anr Vs. Nalla Raja Reddy &amp; Ors

1. These 44 appeals by certificate are preferred against the common judgment of a Division Bench of the Andhra Pradesh High Court allowing the petitions filed by the respondents under Art. 226 of the Constitution for directing the State of Andhra Pradesh and other appropriate authorities to forbear from collecting the assessment of land revenue under the provisions of the Andhra Pradesh Land Revenue (Additional Assessment) and Cess Revision Act, 1962 (Act 22 of 1962), hereinafter called the Principal Act, as amended by the Andhra Pradesh Land Revenue (Additional Assessment) and Cess Revision (Amendment) Act, 1962 (Act 23 of 1962), hereinafter called the Amending Act. For convenience of reference the Principal Act as amended by the Amending Act will be called in the course of the judgment as the Act. The appellants raised the question of the constitutional validity of the relevant provisions of the Act2. The Principal Act was passed on September 27, 1962 and it came into force an July 1, 1962; and the Amending Act was passed on December 24, 1962, and it came into force on July 1, 1962. We are concerned in these appeals only with the Act, i. e. Principal Act as amended by the Amending Act3. It is said that the main object in passing the Principal Act was to rationalise the land revenue assessment in the State by bringing uniformity between Telengana and Andhra areas and to raise the rate of revenue in view of the rise in prices and to make the ryots hear equitably their share of the burden of the plans. With that view, as the long title of the Principal Act indicates, the said Act was passed to provide for the levy of additional assessment on certain classes of land in the State of Andhra Pradesh and for the revision of the assessments leviable in respect of such lands and matters connected therewith. The relevant provisions of the Act, i. e., the Principal Act as amended by the Amending Act, read thus:Section 3. In case of dry land in the State, an additional assessment at the rate of seventy five pet cent of the assessment payable for a fasli year for that land shall be levied and collected by the Government from the person liable to pay the assessment for each fasli year in respect of that land:Provided that the additional assessment together with the assessment payable in respect of any such land shall in no case be less than fifty naya paise per acre per fasli year. In the case of wet land inthe State which is served by a Government source of irrigation specified in classes I,II and III of the Table below, an additional assessment at the rate of one hundred per cent and in the case of wet land in the State which is served by a Government source of irrigation specified in Class IV thereof, an additional assessment at the rate of fifty per cent, of the assessment payable for a fasli year for that land shall be levied and collected by the Government from the person liable to pay the assessment for each fasli year in respect of that land:Provided that the additional assessment together with the assessment payable per acre per fasli year for any wet land specified in column (1) of the Table below shall, in no case, be less than the minimum, or exceed the maximum, specified in the corresponding entry against that land -(a) in column (2) of the Table in the case of a single crop wet land, and(b) in column (3) of the Table in the case of a double-crop wet lande of assessment payable forsingle crop wet land, pere of assessment payable forand extent of ayacut under Government5,000 acres and above but below 30,00050 acres and above but below 5,000(a) The expression Government source of irrigation does not include a well, spring channel, parrekalava or cross - bunding;(b) taram and bhagana classification shall be as registered in the revenue and settlement records;(c) where no such taram or bhagana classification is recorded, in the revenue and settlement records, in respect of any land, that land shall be deemed to bear the taram or bhagana classification which a similar land in the vicinity bearsSection 8. (1) The District Collector, shall, from time to time by notification published in the Andhra Pradesh Gazette and the District Gazette, specify the Government sources of irrigation falling under classes I, II and lV of the Table under Section 4 and may in like manner, include in, or exclude from such notification any such sourceAny person aggrieved by a notification published under sub-section (1) may, within forty five days from the date of publication of the notification in the Andhra Pradesh Gazette and the District Gazette, prefer an appeal to the Board of Revenue whose decision thereon shall be final4. We will analyse the provisions of the said section at a later stage of the judgment. The High Court in deciding against the constitutional validity of the said provisions gave in effect the following findings :(1) Under S. 3 of the Act there is no classification at all in the case of dry lands.(2) The ayacut basis adopted in the Table under S. 4 of the Act has no rational relation to the taram or quality of the land or the nature of the irrigation source.(3) The minimum fixed by the proviso in many cases is more than 100 per cent increase fixed by the section and thus the proviso has exceeded the section.(4) The Act is silent as to the machinery for making the assessment, the criteria for fixation of the assessment, within the range of a fixed maximum and a minimum, the rights and remedies of the assessees and the obligation of the Government to survey the lands. In short, the High Court struck down the said provisions on the ground that they offend Arts. 14 and 19 of the Constitution for three reasons, namely (i) in the case of dry lands there is no reasonable classification at all as the flat minimum rate of 50 nP. per acre has no relation to the fertility of the land, (ii) in regard to wet land there is no reasonable relation between the quality of the land and the ayacut to which it belongs, and (iii) the procedure prescribed for the ascertainment of the rate is arbitrary and uncontrolled. The High Court, though it elaborately considered the question whether the revenue assessment was by authority of law within the meaning of Art. 265 of the Constitution, did not express a final opinion thereon.

Court's reasoning:
11. The broad principles of Ryotwari system may be stated thus: (1) Under that system the soil itself is taxed and the assessment is fixed on the land: (2) Lands are classed into two general heads, namely, wet and dry, (3) The soils of similar grain values are bracketed together in orders called Tarams each with its own rate of assessment; (4) The rates are further adjusted, in the case of dry lands, with reference to the nature and quality of water-supply. This system has been followed from time immemorial and had the general approval of the public. It has a scientific basis and throws equitable burden on the different classes of land18. Prima facie we do not see any reasonable relation between the extent of the ayacut and the assessment payable in respect of an acre of land forming part of that ayacut. The system of periodical ryotwari settlement held by the British Government on a scientific basis of quality and productivity of the soil with marginal adjustments on the foot of the duration of water supply in the case of wet lands and grouping of villages in the case of dry lands was given up. The scheme of surcharge on pre-existing rates, earlier accepted, was not adopted. The recommendation of the Committee that the assessment should be based on the duration of water supply among others was not followed. Instead the Act introduced in the case of both dry and wet lands an unscientific and arbitrary method of assessment imposing a minimum flat rate irrespective of the tarams. In the case of wet lands an additional irrational factor is laid down, viz., the rate is linked with the extent of the ayacut. In the case of wet land, a minimum flat rate with some variations within different groups in classes I and II and a minimum flat rate in respect of the groups in classes III and IV is fixed without any rational connection between the two.Mr. P. A. Choudhury contended that the scheme accepted by the Act was hit by Art. 14 of the Constitution inasmuch as it gave up practically the principle of tarams and bhaganas and accepted a flat rate irrespective of the quality and productivity of the land and, therefore, suffered from want of reasonable classification. He further contended that the alleged justification for the classification, namely, the extent the ayacut, had no reasonable relation to the objects sought to be achieved by the Act, namely, rationalisation of the revenue assessments on land in the entire StateIn Srikakulam district some of the water sources which supply water for more than 8 months fall under class III, because of their ayacut. The record also discloses that Sitanagaram Anicut system has a registered ayacut of 4017 acres, Mahadevpuram tank system has only 1500 acres, Dondapad tank system has 1504 acres, Anamsemudram-Biraperu tank system has 826 acres, Jangamanaheswarapuram tank system has only 246 acres. Yerur Tank system has 1500 acres, and Ponnalur tank system has 987 acres. Under S. 4 all these water sources fall under class III. It is not necessary to multiply instances.The High Court has carefully considered this aspect. Enough has been said to make the point that classification based on ayacut has no reasonable relation to the duration of water supply. It is, therefore, clear that the ayacuts do not correspond to the number of months of water supply; indeed, many tanks which supply water for a longer duration have smaller ayacuts. Tanks supplying water for equal duration fall under different classes. In a large number of cases the minimum rate is more than 100 per cent of the earlier assessment indicating thereby that the minimum rate has no relation to the quality or the productivity of the soil. In short. both Ss. 3 and 4 in fixing the minimum flat rate for dry or wet lands, as the case may be, have ignored the well-established taram principle, and in the case of wet lands an attempt has been made to classify different systems on the basis of the ayacuts but the said test is unreasonable and has no relation to either the duration of water supply or to the quality or the productivity of the soil. The classification attempted in either case has no reasonable relation to the objects sought to be achieved, namely, imposition of fair assessments and rationalisation of the revenue assessment structure. Indeed, an arbitrary method has been introduced displacing one of the most equitable and reasonable methods adopted all these years in the revenue administration of that State. Therefore, if S. 6 is put aside, there is absolutely no provision in the Act prescribing the mode of assessment. Sections 3 and 4 are charging sections and they say in effect that a person will have to pay an additional assessment per acre in respect of both dry and wet lands. They do not lay down how the assessment should he levied. No notice has been prescribed, no opportunity is given to the person to question the assessment on his land. There is no procedure for him to agitate the correctness of the classification made by placing his land in a particular class with reference to ayacut, acreage or even taram. The Act does not even nominate the appropriate officer to make the assessment to deal with questions arising in respect of assessments and does not prescribe the procedure for assessment. The whole thing is left in a nebulous form. Briefly stated under the Act there is no procedure for assessment and however grievous the blunder made there is no way for the aggrieved party to get it corrected. This is a typical case where a taxing statute does not provide any machinery of assessmentIt is, therefore, manifest that this Court while conceding a larger discretion to the Legislature in the matter of fiscal adjustment will insist that a fiscal statute just like any other statute cannot infringe Art. 14 of the Constitution by introducing unreasonable discrimination between persons or property either by classification or lack of classification. Two decisions relied upon by the learned counsel for the appellant may now be noticed. In C. V. Rajagopalachariar v. State of Madras, AIR 1960 Mad 543   the facts were: two Acts, Namely, Madras Land Revenue Surcharge Act (19 of 1954) and Madras Land Revenue (Additional Surtharge) Act (30 of 1955), were passed by the Madras Legislature increasing the land revenue payable by landlords to the extent of the surcharge levied. Those two Acts were questioned, inter alia, on the ground that they offended Art. 14 of the Constitution; but the ground of attack was that the Acts fixed a slab system under which the rate of surcharge progressively increased from As. -/2,/-to As. -/8/- on each rupee of the land revenue paid and that the relevant provision was discriminatory in its operation as a distinction had been made between rich and poor people and as the levy of the tax was different for different classes of owners. That contention, for the reasons given therein, was negatived. In the said Madras Acts a surcharge was imposed in addition to the previous rates and the previous rates had been made on the basis of ryotwari settlements which did not offend Art. 14 of the Constitution and, therefore, a small addition to the said rates could not likewise infringe the said article. The present question did not arise in that case. Nor is the decision of the Mysore High Court in H. H. Vishwasha Thirtha Swamiar of Sri Pejavar Mutt v. State of Mysore, (1966) 1 Mys LJ 351 at p. 359 in regard to the Mysore Land Revenue Surcharge Act (13 of 1961) has any bearing on the present question. There, as in the Madras Acts, the revenue surcharge levied was an additional imposition of land tax and, therefore, the Mysore High Court held that it did not offend Art. 14 of the ConstitutionIt will be seen that in that case on existing rates based upon scientific data a surcharge was imposed as a temporary measure till a uniform land revenue law was enacted for the whole State.That decision, therefore, does not touch the present case. But in the instant case, as we have pointed out earlier, the whole scheme of ryotwari settlement was given up so far as the minimum rate was concerned and a flat minimum rate was fixed in the case of dry lands without any reference to the quality or fertility of the soil and in the case of wet lands a minimum rate was fixed and it was sought to be justified by correlating it to the ayacut. Further, the whole imposition of assessment was left to the arbitrary discretion of the officers not named in the Act without giving any remedy to the assessees for questioning the correctness of any of the important stages in the matter of assessments, such as ayacut, taram, rate or classification or even in regard to the calculation of the figures. Not only the scheme of classification, as pointed out by us earlier, has no reasonable relation to the objects sought to be achieved, viz., fixations and rationalisation of rates but the arbitrary power of assessment conferred under the Act enables the appropriate officers to make unreasonable discrimination between different persons and lands. The Act, therefore, clearly offends Art.14 of the Constitution24. In some of the appeals relating to Peddapuram and Kumarapuaram villages another point was raised, namely, that a special rate had been fixed which was neither for a single crop nor for a double crop and that, therefore, they do not come under any of the provisions of the Act. In the view we have expressed on the other questions it is not necessary to notice this argument.