Judgment Case ID: 4091

Judgment:
Civil Appeal No. 1524 of 1978 A (From the Judgment and order dated 29 6 1978 of the Kerala High Court in original Petition No. 4411/77) CIVIL APPEALS NOS. 2091 2092 OF 1978 (From the Judgment and Order dated 26 6 1978 and 20 6 1978 of the Kerala High Court in O.P. Nos. 3909/74 and 3902/75) CIVIL APPEAL NOS. 2093 2103 OF 1979 (From the Judgments and Orders dated 27 6 78	 20 6 78	 30 6 78	 12 6 78	 26 6 78	 22 6 78	 21 6 78	 30 6 78	 20 6 78	 27 6 78 of the Kerala	 High Court in O.P. Nos. 4833/75	 1006/75	 635/78 and 4740/77	 4096/74	 1820/75	 2258/76	 203/76	 346/78	 3497/75		 and 5620/75 respectively) CIVIL APPEAL NOS. 2136 OF 1978 (From the Judgment and Order dated 12 6 78 of the Kerala High Court in O.P. No. 3933/75) CIVIL APPEAL NO. 6 OF 1979 (From the Judgment and Order dated 23 6 78 of the Kerala High Court in O.P. No. 4449/76 K) ClVlL APPEAL NOS. 27 31 OF 1978 (From the Judgments and Orders dated 28 6 78	 23 8 78	 28 6 78 5 16 6 78	 of the Kerala High Court in O.P. Nos. 3401/77	 4660/75	 1658/77	 3929/75 and 3925/75 respectively) CIVIL APPEAL NOS. 50 52 OF 1978 (From the Judgments and orders dated 28 6 78	 21 6 78 c 30 6 78 of the Kerala High Court in O.P. Nos. 3130/77 E	 5470/75 and 799/78 respectively) CIVIL APPEAL NOS. 188	 266 AND 303 OF 1979 (From the Judgments and orders dated 29 6 78	 1 6 78 and of the Kerala High Court in O.P. Nos. 4758/75	 150/76 and 5800/78 respectively) 810 CIVIL APPEAL NOS. 309 311 OF 1979 (From the Judgments and Orders dated 23 6 78	 20 6 75 and 24 11 1978 of the Kerala High Court in O.P. Nos. 3601/76	 4991/75 and 4611/75 respectively) CIVIL APPEAL Nos 472 473 OF 1979 (From the Judgment and Order dated 29 6 78 of the Kerala High Court in O.P. Nos. 4283/75 and 4290/77) CIVIL APPEAL NOS. 1543 1546 OF 1978 (From the Judgment and Order dated 12 6 1978 of the Kerala Court in O.P. Nos. 3909	 3970	 252 and 4256/74.) CIVIL APPEAL NOS. 1689 1693 OF 1978 From the Judgments and Orders dated 20 6 1978	 22 6 1978	 23 6 78	 22 6 78	 296 78	 21 6 78 & 22 6 78 of the Kerala High Court in O.P. Nos. 850/75	 1000/75	 4964/75 and 25/76	 1747/76 and 2076/76 and 544/76 and 4804/75K and 5928/75N	 1889/76G	 and 1615/76H respectively) CIVIL APPEAL NOS. 1556 OF 1978 (From the Judgment and Order dated 12 6 1978 of the Kerala High Court in O.P. No. 1147/75) CIVIL APPEAL NOS. 1981 2004 OF 1978 (From the Judgments and Orders dated 28 6 78	 23 6 78	 27 6 78	 22 6 78	 30 6 75	 21 6 78	 20 6 78	 28 6 78	 23 6 78	 28 6 75	 26 6 78	 12 6 78	 23 6 78	 28 6 78	 20 6 78	 2 6 78	 27 6 78	 26 6 78	 23 6 78	 28 6 78 and 27 6 78 of the Kerala High Court in O.P. No. 3507/77	 3622/77 and 1375/76 and 796/177 and 3005/76 and 567/78 and 5669/75	 1124/76 and 5173 and 3509/77 and 4445/76 and 3508/77 and 5852/76 and 4230/74 and 3978/76 and 3616/77 and 5328/75 and 2415/76 and 1310/77E and 5810/76G	 940/76D and 3634/76N and 1380/77L and 2742/76 respectively. ClVlL APPEAL NO. 2105 OF 1978 (From the Judgment and Order dated 20 6 78 of the Kerala High Court in O.P. No. 5175/75 CIVIL APPEAL Nos 232	 2351	 2352	 2353 AND 2354 OF 197 (From the Judgments and orders dated 30 6 1978	 23 6 78	 811 26 6 78 and 20 6 78 of the Kerala High Court in O.P. Nos.438/78B	 1535/76N and 1443/76E and 5134/75 respectively) CIVIL APPEAL NOS. 2415 2419 OF 1978 (From the Judgments and Orders dated 21 6 1978	 12 6 78	 30 6 78	 21 6 78 and 27 6 78 of the Kerala High Court in O.P. Nos. 5581/75	 5240/75	 849/78	 2751/76 and 1552/77 respectively) CIVIL APPEAL NO. 2497 OF 1978 (From the Judgment and Order dated 20 6 78 of the Kerala High Court in O.P. No. 4028/75) CIVIL APPEAL	 NOS. 2587/78 AND 67 71/79 (From the Judgments and Orders dated 30 6 1978	 7 6 78 and 21 6 1978 of the Kerala High Court in O.P. Nos. 3351/76N	 and 6127/75. 6159/75. 5972/75	 4628/77 A & 5755/75 respectively) CIVIL APPEAL NOS: 129 131 AND 197/79 (From the Judgments and Orders dated 21 6 78	 20 6 78 of the Kerala High Court in O.P. Nos. 5677/75	 5723/75 and 5263/75 and 5877/75 respectively) CIVIL APPEAL NOS 265	 420 AND 544	 545 & 580 OF 1979 (From the Judgments) and Orders dated 20 6 79	21 6 79	22 6 78	 20 6 78 and 22 6 78 of the Kerala High Court in O.P. Nos. 5004/75	 5524/75	 248/76K	 5335/75 and 2962/76G respectively) CIVIL APPEAL NOS : 1965 1967 AND 2203 2206 OF 1978 (From the Judgments and Orders dated 25 7 78	 28 6 78	 4 7 78	 3 7 78	 22 6 78	 27 6 78 and 29 6 78 of the Kerala High Court in O.P. Nos. 254/78	 3132/77 F	 4640/75	 1459/78 F	 750/76 E	 704//7 A and 5995/75 respectively) CIVIL APPEAL NOS: 2583/78	 1/79	 72/79 AND 168/79 (From the Judgments and Orders dated 23 6 78	27 678	23 6 78 and 29 6 78 of the Kerala High Court in O.P. Nos. 260/76 L 1863/ 77E	 1398/76N and 4494/77B respectively) 812 CIVIL APPEAL NOS: 2104/78	 2401/78 AND 2350/78 (From the Judgments and Orders dated 12 6 78	 26 6 78	 30 6 78 of the Kerala High Court in O.P. Nos. 4509/74	 5770/76L and 1150/76) CIVIL APPEAL NOS: 1860 1865 OF 1978 (From the Judgments and Orders dated 12 4 78	 28 6 78	 29 6 78	 23 6 78	 26 6 78 of the Kerala High Court in O.P. Nos. 4184/74	 3665/74C	 3932/77(B)	 4165/76K and 5815/76(H) respectively) CIVIL APPEAL NOS: 2256 2257/78	 333/79	 500/79 (From the Judgments and Orders dated 21 6 78	 29 6 78 and 27 6 78 of the Kerala High Court in O.P. Nos. 5494/75	 4716!77	 1285/75 and 3023/76) ClVlL APPEAL NO. 2207 OF 1978 (From the Judgment and Order dated 23 6 78 of the Kerala High Court in O.P. No. 4140/76 H) CIVIL APPEAL NO. 169 OF 1979 (From the Judgment and Order dated 28 6 77 of the Kerala High Court in O.P. No. 3117/77) CIVIL APPEAL NOS: 148 150/79	 304 305/79 AND 409/79 (From the Judgments and Orders dated 27 6 78 28 6 78	 20 6 78	 27 6 78. Of the Kerala High Court in O.P. Nos. 1941/77	 1903/77	 5176/78	 1047/77(G) and 1306/77E) CIVIL APPEAL NOS. 2254	 2255/78 AND 267 OF 1979 (From the Judgments and Orders dated 27 6 78	 21 6 78 and 27 6 78 of the Kerala High Court in O.P. No. 93/77	 5396/75 and 2277/76 D respectively) (From the Judgments and Orders dated 21 6 78 and 30 6 78 of the Kerala High Court in O.P. Nos. 5416/75 and 4782/77C) WRIT PETITION NOS. 4375 OF 1978 & 143/79 Under Article 32 of the Constitution) ClVlL APPEAL No. 39 OF 1979 (From the Judgment and Order dated ]2 6 1978 of the Kerala High Court in O.P. No. 4042/74) 813 SPECIAL LEAVE PETITION (CIVIL) No. 6298 OF 1978 (From the Judgment and order dated 5 7 78 of the Kerala High Court in O.P. No. 983/76) SPECIAL LEAVE; PETITION (CIVIL) NOS: 1137 1138/79 (From the Judgments and orders dated 7 8 78 and 27 6 78 of the Kerala High Court in O.P.I Nos. 3474/77 and 1950/77) SPECIAL LEAVE PETITION (CIVIL	) NOS: 4861 4862 & 6154 56/79 (From the Judgments and orders dated 26 6 78	 27 6 78 26 6 78	 28 6 78 and 30 6 78 of the Kerala High Court in O.P. Nos. 638/77	1530/77	 5485/78	 2950/77 and 884/78) P. Govindan Nair (C.As. 1524	 2092 2095/78	 27	 29	 303	 310 and 311/79 T. C. Raghavan (CA 266)	 T. L. Anantha Sivan and N. Sudhakaran	 for the Appellants in CAs. 1524	 2091 2092	 2093 2103	 2136/78	 6	 27 31	 50 52	 100	 266	 303	 310	 311	 309	 472 and 473/79. Anil B. Divan (1543 46 and 1556)	S. B. Saharya	 K. V. Kuriakose (in all except 1995	 1997	 1998	 29 31	 197	 500 and V. B. Sallarya for the Appellants	 in C.As. 1543 46	 1656	 1689 99	 1981 2004	 2105	 2324	 2351 2352	 2354	 2415 2419	 2497	 2587/178	 67 71	 129 131	 197	 265	 420	 544 545 and 500/79. P. A. Francis	 (1966) K. Sudhakaran (1967)	 P. Paramesuaran (1966 67) A. section Nambiar for the Appellants in 1965	 1966	 1967	 2203	 2204	 2205	 2206	 2353 and 2503/78	 1	 72 and 168/179	 165/79	 2063/78 and for the Petitioner in W.P. 143/79. P. Kesava Pillai and section K. Das Gupta for the Appellants in CAs. 2104	 2350 and 2401/78. P. Govindan Nair and Mrs. Saroja Gopalkrishnan for the Appellants in 1860 64/78. section K. Mehta	 P. N. Puri and EMS Anam for the Appellants in C.A. 2256	 2257/78	 333	 and 500/79 and 2026/79. section Balakrishnan for the Appellants in CA 2207/78 and for Petitioner in W.P. 4375/79. G. B. Pai (169)	 K. J. John and Manzal Kumar for the Appellants in C.A. 39 and 169/79. P. Govindan Nair	 Mrs. Baby Krishnan and N. Sudhakaran for the Appellants. C.A. 148 50	304 305 and 409/79 and for the Petitioners in SLP Nos. 4062	 4061	 6298	 5141	 6154 6156/78. 814 A. T. M. Sampath and P. N. Ramalingam for the Appellants in CA 2254 and 2255/78 and 267/79. K. P. P. Pillai for the Appellants in C.A. 542 and 571/79. N. Sudhakaran for the petitioners in SLP 1137 1138/79. M. M. Abdul Khader and K. M. K. Nair for the Respondents in all matters. The Judgment of the Court was delivered by SHINGHAL	 J. These cases relate to the validity of certain provisions of the Kerala Building Tax Act	 1975	 hereinafter referred to as the Act	 and are directed against the judgment of the Keral High Court dated June 12	 1978	 by which the validity of those provisions has been upheld. We have heard these cases together and shall deal with them in this judgment. In order to appreciate the controversy	 it will be convenient to make a brief mention of the background of the Act. The Legislature of the Kerala State wanted to impose a tax on buildings	 and passed the Kerala Building Tax Act	 1961	 which came into force on March 2	 1961. Its validity was challenged	 and by his judgment dated November 20	 1964	 a learned Single Judge of the High Court held it to be invalid and unconstitutional. The division bench took the same view in its judgment dated July 7	 1966	 and dismissed the appeal of the State. The matter came to this Court	 and it also dismissed the appeal by its judgment dated August 13	. 1968	 reported in State of Kerala vs Haji K. Haji K. Kutty Naha and others. This was so because the Legislature had adopted merely the floor area of the building as the basis of the tax irrespective of all other considerations. The intention to introduce a fresh Bill and to levy a non recurring tax on building was stated in the Finance Minister 's budget speech of 1910 71. A Bill was published some time in June	 1970	 and it was stated there that the Act would be brought into force with effect from April 1	 1970. The Bill was introduced in the Legislative Assembly on July S	 1973	 and was referred to a Select Committee. The Committee submitted its report on March 28	 1974. It recommended that the Act may be brought into force from April 1	 1973. As the Bill could not be taken up during the budget session	 the Government of the State promulgated the Kerala Building Tax ordinance	 1974	 on July 27	 1974 to give effect to the provisions of the Bill as reported by the Select Committee. It was followed by another ordinance dated November 18	 1974 on the lines of the 815 earlier ordinance. The Bill was passed soon after	 and the Governor gave his assent to it on April 2	 1975. Several writ petitions were filed in the High Court to challenge its constitutional validity. and we have made a mention of the High Court 's impugned judgment dated June 12	 1978	 from which the present cases have arisen. While four Hon 'ble Judges of the High Court have upheld the validity of the Act. a different views has been taken by Eradi	 J. The question which arises for consideration at the threshold is that relating to the competence of the State Legislature to enact the law	 on which considerable stress has been laid by Mr. P. A. Francis. He has argued that the subject matter of the Act being a tax on buildings	 it is a tax on the capital value of the assets of an individual or company and falls within the scope of entry 86 of List I of the Seventh Schedule of the Constitution	 and not under entry 49 of List II	 so that it was beyond the legislative competence of State Legislature. The question is whether this is so. The word "tax" in its widest sense includes all money raised by taxation. It therefore includes taxes levied by the Central and the State Legislatures	 and also these known as "rates '	 or other charges	 lavied by local authorities under statutory powers. "Taxation" has therefore been defined in clause (28) of article 366 of the Constitution to include "the imposition of any tax or impost	 whether general or local or special	 and it has been directed that tax. ' shall be 'construed accordingly." Chapter I of Part XI of the Constitution deals with the distribution of legislative powers. Article 246 of that chapter states	 inter alia	 the exclusive powers of the Parliament and the State Legislatures according as the matter is enumerated in List I or List II of the Seventh Schedule. Entry 86 of List I	 in which reliance has been placed by Mr. Francis	 reads as follows: "86. Taxes on the capital value of assets	 exclusive of agricultural land	 of individuals and companies; taxes on the capital of companies. " Now the word "assets" has been defined in the Century Dictionary (which is an encyclopedic lexicon of the English language) as follows "Property in general; all that one owns	 considered as applicable to the payment of his debts . As a singular. Any portion of one 's property or effects so considered. " 816 So if a tax is levied on all that one owns	 or his total assets	 it would fall within the purview of entry 86 of List I	 and would be outside the legislative competence of a State Legislature	 e.g. a tax on one 's entire wealth. That entry would not authorise a tax imposed on any of the components of the assets of the assessee. A tax directly on one 's lands and buildings will not therefore be a tax under entry 86. On the other hand	 entry 49 of List Ir is as follows	 "49. Taxes on lands and buildings. " If therefore a tax is directly imposed on "buildings"	 it will bear a direct relation to the buildings owned by their assessee. It may be that the building owned by an assessee may be a component of his total assets	 but a tax under entry 86 will not bear any direct or definable relation to his building. A tax on "buildings" is therefore a direct tax on the assessee 's buildings as such	 and is not a personal tax without reference to any particular property. It has to be appreciated that in almost all cases	 a tax has two elements which have been precisely stated by Seervai in his "Constitutional Law of India	 second edition, volume 2, as follows, at page 1258, Another principle for reconciling apparently conflicting tax entries follows from the fact that a tax has two elements: the person	 thing or activity on which the tax is imposed	 and the amount of the tax. The amount may be measured in many ways; but decided cases establish a clear distinction between the subject matter of a tax and the standard by which the amount of tax is measured. These two elements are described as the subject of a tax and the measure of a tax. " It may well be that one 's building may imperceptibly be the subject matter of tax	 say the wealth tax	 as a component of his assets. under entry 86 (List I); and it may also be subjected to tax	 say a direct tax under entry 46 (List II)	 but as the two taxes are separate and distinct imposts	 they cannot be said to overlap other and would be within the competence of the Legislatures concerned. Reference in this connection may be made to Sudhir Chandra Nawn vs Wealth Tax officer	 Calcutta and others.(1) The petitioner there challenged the demand for the recovery of wealth tax on the ground	 inter alia	 that since the expression "net wealth" included the buildings of the assessee and tho power to levy tax on them was referred to the 817 State Legislature under entry 49	 List II	 Parliament was not competent .4 to levy the tax under entry 86 of List I. This Court rejected the challenge and laid down the law as follows	 "The tax which is imposed by entry 86 List I of the Seventh Schedule is not directly a tax on lands and buildings. It is a tax imposed on the Capital value of the assets of individuals and companies	 on the valuation date. The tax is not imposed on the components of the assets of the assessee: it is imposed on the total assets which the assessee owns	 and in determining the net wealth not only the encumbrances specifically charged against any item of asset	 but the general liability of the assessee to pay his debts and to discharge his lawful obligations have to be taken into account. . . . . Tax on lands and buildings is directly imposed on lands and buildings	 and bears a definite relation to it. Tax on the capital value of assets bears no definable relation to lands and buildings which may form a component of the total D. assets of the assessee. By legislation in exercise of power under entry 86 List I tax is contemplated to be levied on the value of the assets. For the purpose of levying tax under entry 49 List II the State Legislature may adopt for deter mining the incidence of tax the annual or the capital value of the lands and buildings. But the adoption of the annual or capital value of lands and buildings for determining tax liability will not	 in our judgment	 make the fields of legislation under the two entries overlapping. " The decision in Sudhir Chandra Nawn 's case was followed by this Court in Assistant Commissioner of Urban Land Tax and others vs F. The Buckingham and Carnatic Co. Ltd.	 Etc.(1) where the vires of the Madras Urban Land Tax Act	 1966	 was challenged with reference to entry 86 of List I of the Seventh Schedule. The legal position on that aspect of the controversy was reiterated as follows	 "But in a normal case a tax on capital value of assets bears no definable relation to lands and buildings which may or may not form a component of the total assets of the assessee. But entry 49 of List II	 contemplates a levy of tax on lands and buildings or both as units. It is not concerned with the division of interest or ownership in the units of lands or buildings which are brought to tax. Tax on lands and buildings	 is directly imposed on lands and buildings	 818 and bears a definite relation to it. Tax on the capital value of assets bears no definable relation to lands and buildings which may form a component of the total assets of the assessee. " There is therefore no force in the argument that the State Legislature was not competent to impose the tax on buildings under entry 49 of list II of the Seventh Schedule of the Constitution. We may as well put aside the other argument that the Act is unconstitutional as it was passed on April 2	 1975 but has imposed a tax on buildings with retrospective effect from April 1	 1973. Craies on Statute Law	 seventh edition	 has stated the meaning of "retrospective" at page 387 as follows	 "A statute is to be deemed to be retrospective	 which takes away or impairs any vested right acquired under existing laws	 or creates a new obligation		 or imposes a new duty	 or attaches a new disability in respect of transactions or considerations already past. But a statute "is not properly called a retrospective statute because a part of the requisites for its action is drawn from a time antecedent to it	 passing". " It has however not been shown how it could be said that the Act has taken away or impaired any vested right of the assessees before us which they had acquired under any existing law	 or what that vested right was. It may be that there was no liability to building tax until the promulgation of the Act (earlier the ordinances) but mere absence of an earlier taxing statue cannot be said to create a "vested right	 under any existing law, that it shall not be levied in future with effect from a date anterior to the passing of the Act. Nor can it be said that by imposing the building tax from an earlier date any new obligation or disability has been attached in respect of any earlier transaction ar consideration. The Act is not therefore retrospective in the strictly technical sense. What it does is to impose the building tax from April 1, 1973. But as was held in Bradford Union vs Wilts,(1) if the language of the statute shows that the legislature thinks it expedient to authorise the making of retrospective rates, it can fix the period as to which the rate may be retrospectively made. 819 This Court had occasion to examine the validity of the retrospective levy of sales tax in The Tata Iron and Steel Co., Ltd. vs The State of Bihar(1) and it was held that that was not beyond the legislative competence of the State Legislature. Nor can the choice of April 1, 1973 as the date of imposition of the building tax be assailed as discriminatory with reference to article 14 of the Constitution. It will, be enough for us to refer in this connection to the following passage from this Court 's decision in Union of India and another vs M/s. Parameshwaran Match Works Etc. Which was a case under the Central Excise and Salt Act, 1944. The choice of a date as a basis for classification cannot always be dubbed as arbitrary even if no particular reason is forthcoming for the choice unless it is shown to be capricious or whimsical in the circumstances. When it is seen that a line or a point there must be and there is no mathematical or logical way of finding it precisely	 the decision of the legislature or its delegate must be accepted unless we can say that it is very wide of the reasonable mark. See Louisville Gas Co. vs Alabama Power Co. 240 U.S. 30 at 32 (1927) per Justice Holmes. " It has not been shown in this case how it could be said that the date (April 1	 1973) for the levy of the tax was wide of the reasonable mark. On the other hand it would appear from the brief narration of the historical background of the Act that the State Legislature had imposed the building tax under the Kerala Building Tax Act	 1961	 which came into force on March 2	 1961	 and when that Act was finally struck down as unconstitutional by this Court 's decision dated Aug(lst 13	 1968	 the intention to introduce a fresh Bill for the levy was made clear in the budget speech of 1970 71. It will be recalled that the Bill was published in June 1973 and it was stated there that the Act would be brought into force from April 1	 1970. The Bill was introduced in the Assembly on July S	 1973. The Select Committee however recommended that it may be brought into force from April 1	 1973. Two ordinances were promulgated to give effect to the provisions of the Bill. The Bill was passed soon after and received the Governor 's assent on April 2	 1975. It cannot therefore be said with any justification that in choosing April 1	 1973 as the date for the levy of the tax	 the Legislature acted unreasonably	 or that it was "wide of the reasonable mark. " 820 The real controversy in this case is that relating to the nature of the tax	 for it has been vehemently argued before us that it is not merely a tax on buildings	 but it is a tax on the buildings	 as well as on the lands of those	 buildings. As has been mentioned	 what entry 49 of List II of the Seventh Schedule of the Constitution permits is the levy of "taxes on lands and buildings. " It is therefore permissible to levy a taxes either on lands as well as buildings	 or on lands	 or on buildings. If the Legislature decides to impose a tax only on "buildings"	 the tax will be imposed on all that goes to make	 or constitute	 a building. The word ' building" has been defined in the oxford English Dictionary as follows	 "That which is built; a structure	 edifice: now a structure of the nature of a house built where it is to stand. " Entry 49 therefore includes the site of the building as its component part. That	 if we may say so	 inheres in the concept or the ordinary meaning of the expression "building". A somewhat similar point arose for consideration in Corporation of the City of Victoria vs Bishop of Vancouver Island(1) with reference to the meaning of the word "building" occurring in section 197(1) of the Statutes of British Columbia	 1914. It was held that the word must receive its natural and ordinary meaning as "including the fabric of which it is composed	 the ground upon which its walls stand and the ground embraced within those walls. " That appears to us to be the correct meaning of "building." The Act contains its own definition of what is meant by "building"	 and clause (e) of section 2 is to the following effect	 "(e) "building" means a house	 out house	 garage	 or any other structure or part thereof	 whether of masonry	 bricks	 wood	 metal or other material	 but does not include any portable shelter or any shed constructed principally of mud	 bamboos	 leaves	 grass or thatch or a. latrine which is not attached to the main structure. " There are two explanations to the clause	 but they are not relevant for the controversy before us. The definition therefore makes it quite clear that. as a house	 out house	 garage or any other structure cannot be erected without the ground on which it is to stand	 the expression "building" includes	 the fabric of which it is composed	 the ground 821 upon which its walls stand and the ground within those walls. It is A equally clear that the ground referred to above would not have a separate existence	 apart from the building	 and would not be "lands ' jointly stated with "buildings" as the subject matter of the tax in entry 49 of List II. In other words	 the "ground" referred to above would not be the subject matter of a separate tax	 apart from the tax on the building standing on it. It is true that sub section (4) of section 6 of the Act provides that in determining the annual value of a building under sub section (2) or sub section (3)	 the assessing authority shall	 among other factors	 have regard to the "location of the building"	 and the "value of the land on which the building is constructed"	 but that is necessary for fixing the annual value of the "building"	 and does not bear on the annual value of the ground of the building which	 as we have shown	 does not have an existence of its own apart from the building. Thus a building which is located in an important business area of a city	 will have a higher annual value than a building located in the outskirts of the city. But any such enhanced value is the value of the building and not of its ground	 for what is located in an important business area is not the ground of the building as such	 but the building itself. It may be that the value of the ground on which the building stands may be known	 or may be capable of being ascertained. That is why the other factor mentioned in sub section (4) of section 6 is tho value of that land. But here again	 as the land has no separate existence of its own the value of the ground inevitably goes to constitute the value of the building. Rule 4 of the Kerala Building Tax Rules	 1974	 provides that the return under sub section (1) or (3) of section 7	 or section 8 of the Act shall be in Form II. Column 2 of that form makes a mention of the location of the building	 but not the location of its ground or land	 or the value thereof. It refers only to the annual value of the building in column (13) and its capital value in column 7	 so that the location of the building	 as distinct from the location of its ground	 or the value of the ground as such	 do not go in for the determination of the annual or capital value of the building. It is therefore futile to contend that as factors (a) and (f) of sub section (4) of section 6 of the Act refer to the location of the building and the value of the land	 the law recognises the separate existence or entity of the ground on which the building stands	 so that tho tax imposed under it is a tax both on lands and buildings and both the entities should be separately recognised and determined	 and taxed as such. As has been stated	 the location or value of the land has 16 625 SCI/79 822 importance of its own	 and contributes to the value of the building standing on it	 but that does not justify the argument that what the Act provides is a tax on lands and buildings	 and not merely on buildings. There is also the further fact that while the Act provides the method of arriving at the capital value of the building	 on the basis of the annual value	 it does not provide any method of assessing the annual or capital value of the ground on which the building stands. We shall next examine the other argument that the method of determining the capital value of a building on the basis of its annual value is hypothetical and arbitrary and should be struck down as unconstitutional. We have given our reasons for holding that the tax on buildings	 under the provision of the Act	 has been imposed by virtue of entry 49 of List II of the Seventh Schedule of the Constitution. So when the State Legislature had taken a decision to impose that tax	 it was open to it to decide how best to levy it. If the tax was to be annual	 one of the usual modes of levying it was to make provision for determining what is known as "rate"	 or annual value of the building. Rateable value is now	 in almost all cases	 the same as the net annual value of the building. But if the State Legislature decides	 as in the present case	 to levy a tax on buildings once for all or	 as was stated in the statement of subjects and Reasons of one of the Bills	 as a "non recurring" tax on buildings	 it had to go beyond the annual value	 and work out the capital value. This could be done in one of the various modes open to it e.g. On the basis of the capital cost of construction of the building	 or its market value	 or on the basis of the rent arrived at by what has aptly been described by Channel J.	 The Assessment Committee of the Brad Ford on Aven Union vs Write(1) as the "higgling of the market"	 and multiplying it by a number which	 in the opinion of the Legislature	 would best serve the purpose of determining the value of the building	 and then to specify the rate of the tax on it. The value of a building is not merely the cost of its bricks and mortar or other building material. It is therefore difficult to ascertain that cost. It is also difficult to find out the market value of a building. Doing so would	 at any rate	 take time and may be open to manipulation or avoidable criticism	 and may not provide a ready or convenient basis of taxation. The Legislature cannot therefore be blamed if it decides to link the levy with the annual value of a building and prescribes a uniform formula for determining its capital value and . calculating the tax. Annual value of a building has in fact played as 823 important a role in "rating" that	 in a converse case	 resort has some A times been taken to the capital value or cost of construction to work it out. As has been stated by Faraday on Rating (fifth edition	 page 24) there are four recognised methods of arriving at the annual value of a building	 1. The "competitive or comparative method" i.e.	 by finding out rents actually paid for the building and/or others of a similar kind	 adjusting them to bring them into line with statutory conditions	 and thus arriving directly at an estimate of the rent. The "profits basis"	 or calculation by reference to receipts and expenditure	 usually applied to public utility undertakings. The "contractor 's method"	 by which it is assumed	 in the absence of any other and better way of estimating the rent	 that the tenant would arrive at it by finding the figure for which a contractor would provide him with premises neither more nor less suitable for his purpose	 and the rate of interest on that cost which the contractor would charge him as rent. The "unit method" by which schools may be valued at so much a place	 hospitals at so much a bed	 or certain industrial premises at so much a furnace	 or other unit of output. There is nothing to prevent any of the four methods from being applied either singly	 or in combination	 as overall checks to the same building. The fundamental object in each of these methods is to find out the rent which a tenant might reasonably be expected to pay for a building. It is the expectation which is to be reasonable and not necessarily the rent	 for the reasonable expectation would exclude any so called black market rent. Halsbury (Vol. 23 p. 119 third edition) has in fact defined "rate" to mean "a rate the proceeds of which are applicable to local purposes of a public nature and which is leviable on the basis of assessment in respect of the yearly value of property." As has been stated in "State and Local Taxation" by J. R. Hellerstein (page 684)	 increasing weight is being given to earnings as a weighty factor in real estate tax valuations. 824 There is however no rule of law as to the method of valuation to be adopted for determining the annual value of a building. Where	 however	 the building has been let at what is plainly a rackrent	 that rent is the best evidence of value if it has been fixed by the higgling of the market. If therefore the Legislature selects that method to determine the annual value of a building	 there is neither reason nor authority for holding that it is hypothetical or arbitrary. What the Legislature has done under the Act is to make it clear that the tax is on buildings	 and not on the grounds on which they stand	 or on lands. It has defined [in clause (e) of section 2] what a "building" means. It has also defined in clause (a) of section 2 what is meant by "annual value" of a building and clause (i) of the same section defines "capital value". Section 6 prescribes the mode of determining the capital value of a building according to the formula of sixteen times the annual value prescribed in clause (f) of section 2. Having made these necessary provisions	 section S states that a tax	 referred to as "building tax" in the Act	 shall be charged at the rate specified in the Schedule etc. There are other ancillary provisions	 but it will be sufficient for us to say that	 taken together	 they contain the entire scheme for the levy and collection of the building tax on the capital value of the buildings. The expression "capital value" used in the Act is not however the cost of construction of the building or its market value as a wealth. It is a convenient or a working expression which may roughly be said to be the taxable value of the building	 and the State Legislature was quite competent to select that as the basis for assessing the building tax. Reference in this connection may be made to this Court 's decision in Khandise Sham Bhat and others vs The Agricultural Income Tax officer(1) where it has been held as follows at page 823	 "Where there is more than one method of assessing tax and the Legislature selects one out of them	 the court will not be justified to strike down the law on the ground that the Legislature should have adopted another method which	 in the opinion of the court. is more reasonable	 unless it is convinced that the method adopted is capricious	 fanciful	 arbitrary or clearly unjust. " It may be mentioned that this Court has held in Assistant Commissioner of Urban Land Tax(supra) that "for the purpose of Ievying tax under entry 49	 List II	 the State Legislature may adopt for determining the incidence of tax the annual or the capital value of the lands and 825 buildings. " There is therefore no justification for the argument to the Contrary We may as well deal here with the ancillary argument that the building tax could not	 at any rate	 have been based on the "gross annual rent" of the building. Thus argument has arisen because clause (a) of section 2 of the Act defines "annual value" as follows	 1 "annual value" of a building means the gross annual rent at which the building may at the time of completion be expected to let from month to month or from year to year. " It is therefore true that the expected gross annual rent has been made the annual value of a building	 but that	 by itself	 cannot be said to be open to objection for two reasons. Firstly	 there is nothing to prevent the Legislature from making the expected gross annual rent	 and thereby the annual value of a building	 from being the unit for multiplication by sixteen for arriving at its capital value for charging the tax under section 5. Secondly	 section 6 of the Act states that for determining the capital value for the purposes of the Act	 the annual value of a building shall be the "annual value fixed for that building in the assessment books of the local authority within whose area the building is situate ' and a cross reference to section 102 (2) of the Kerala Municipal Corporation Rct	 1961	 shows that while the annual value of lands and buildings shall be deemed to be the gross annual rent at which they may at the time of assessment reasonably be expected to let from month to month or from year to year	 a deduction in the case of buildings of fifteen per cent of that portion of such annual rent which is attributable to the building	 alone apart from their sites and adjacent lands occupied as appurtenances thereto shall be made and that deduction shall be in lieu of all allowances for repairs or on any other account whatever. As by virtue of section 6 of the Act the same annual value forms the basis for determining the capital value of the building for purposes of the Act	 what really is taken as the annual value under the definition in clause (a) of section 2 is not their gross annual rent but the net rent after allowing for the cost of its repairs etc. A similar deduction has been provided under section 100(2) of the Kerala Municipalities Act	 1960. It has not been disputed before us that a provision exists in the law relating to Panchayats also for actually basing the tax on buildings at the prescribed percentage of the net annual rental value of the buildings. It is not therefore factually correct to contend that the annual value of buildings in Kerala is determined on the basis of their gross annual rent. without any deduction on account of repairs etc.	 and there is 826 no force in the argument that determination of the capital value is arbitrary as it is arrived at by multiplying the gross annual rent by sixteen. But there is	 even otherwise	 no inherent illegality or vice if the gross income of the property were to be capitalised for the purpose of determining the value of the property. It has thus been stated in American Jurisprudence	 second edition	 in para 762	 on which reliance has been placed by Mr. Govindan Nair as follows. "A valuation of real property for taxation may be made by capitalizing gross income therefrom	 if the percentage used is sufficient to cover legitimate deductions and a fair net return to the owner. " Reference may also be made to Faraday on Rating which shows that the gross value of a building is often made the datum point by statue and there is nothing unusual or illegal about it particularly when there are statutable deductions from it as in the present case. Then it has been argued that under the Kerala Municipal Corporation Act	 1961	 the annual value is largely determined on the basis of the value of the land on which the building has been constructed and the land appurtenant thereto	 but it is not permissible to make it the basis of levying the tax on buildings under the Act as it purports to be a tax only on buildings and not on lands or on lands and buildings. Reference for this argument has been made to that part of section 102(1) of the Kerala Municipal Corporation Act which provides that a building shall be assessed "together with its site and other adjacent premises occupied as appurtenances thereto". We have given our reasons for taking the view that the site or ground on which the building stands is a part of the building. It has therefore to be taxed along with the fabric	 for the two of them constitute the building. There is therefore no occasion to tax the site separately	 or to ascertain its value and add it to the value of the fabric. This is also the position in the case of appurtenances. An appurtenance has been defined in the oxford English Dictionary as follows	 "A thing that belongs to another	 `belonging '; a minor property	 right	 or privileges	 belonging to another more important	 and passing in possession with it; an appendage." An appurtenance thus belongs to the building concerned and has no existence of its own. This Court had occasion to examine the meaning 827 of "appurtenance" in Maharaj Singh vs State of Uttar Pradesh and others and has observed as follows (at page 1085)	 " "Appurtenance"	 in relation to a dwelling	 or to a school	 college. includes all land occupied therewith and used for the purpose thereof (Words and Phrases legally Defined Butterworths	 2nd edn.). "The word 'appurtenances ' has a distinct and definite meaning. Prima facie it imports nothing more than what is strictly appertaining to the subject matter of the devise or grant	 and which would	 in truth	 pass without being specially mentioned: ordinarily	 what is necessary for the enjoyment and has been used for the purpose of the building	 such as easements	 alone will be appurtenant. Therefore	 what is necessary for the enjoyment of the building is alone covered by the expression 'appurtenance '. If some other purpose was being fulfilled by the building and the lands	 it is not possible to contend that those lands are covered by the expression 'appurtenances '. Indeed 'it is settled by the earliest authority	 repeated with out contradiction to the latest	 that land cannot be appur tenant to land. The word 'appurtenances ' includes all the incorporeal hereditaments attached to the land granted or demised	 such as rights of way. Of common. but it does not include lands in addition to that granted '. (Words and Phrase	 supra). In short	 the touchstone of 'appurtenance ' is dependence of the building on what appertains to it for its use as building." So even if it is presumed	 as has been argued before us	 that there is some land as an appurtenance to a building	 then if the word "appurtenance" has been used in its true sense	 it is an integral part of the building to which it belongs	 while if the word has been used loosely	 it will have its separate existence quite apart from the building. In either case	 its value will not come in for addition to the annual value of the building. It would not matter	 therefore	 if under the Corporation Act the annual value of a building includes the value of the appurtenances. for that is really the true annual value of the building concerned. Another argument which has been advanced is that the multiple of 16 for ascertaining the capital value of a building on the basis of its annual value	 is unrealistic and arbitrary and should be held to be "confiscatory". It has been pointed out that competing returns from 828 investments range from 12 to 18 per cent on long term bank deposits. It has also been argued that mere multiplication of the annual value would give an unrealistic value and is not a satisfactory method of arriving at the capital value. As has been pointed out earlier	 the Legislature has decided to impose a non recurring tax on buildings in the State. It had therefore necessarily to go beyond the ascertainment of the annual value	 and adopt one of the several ways of ascertaining the capital value of buildings. And if the Legislature chose to adopt the annual value as the base for working out the capital value with reference to it	 it cannot be blamed for it as	 besides other advantages	 it was readily available from the records of the local authorities and was quite a simple and reliable basis to work upon. The controversy really centres round the choice of the multiple	 to work out the capital value. The Legislature has thought it proper to define "capital value" of a building to mean the value arrived at by multiplying the annual value of a building by sixteen. There was nothing to prevent it from doing so for	 as has been pointed out	 it had legislative competence to impose the building tax. And it is by now well settled that the quantum of the tax levied by the taxing statute and the conditions subject to which it is levied	 are matters within the competence of the Legislature: Rai Ramkrishna and others vs The State of Bihar.(1) It is also well settled that so long as the tax is not confiscatory or extortionate	 the reasonableness of the tax cannot be questioned in a court of law: Kunnathat Thathuni Moopil Nair vs The State of Kerala and another and Assistant Commissioner of Urban Land Tax vs The Buckingham and Carnatic Co. Ltd. (supra) . It has to be appreciated that investment in buildings is a conservative mode of raising income and even if it were presumed that it does not yield the same quick results as some other forms of investment	 it cannot be denied that it involves lesser risk. So even if it yields a return of not more than 6.25 per cent or so	 it cannot be denied that	 unlike most of the other dependable investments	 it has the considerable advantage of giving to the investor a far greater return in the form of a more or less continuous appreciation of the market value of the buildings. Our attention has been invited to certain modes of investment by way of fixed deposits	 or national savings certificates	 which	 we are told	 829 yield income upto about 10 per cent per annum	 and would be higher than the conservative 6.25 per cent yield on real estate. But it cannot be forgotten that in fixed deposits and certificates the money and the interest of the investor remain locked up until the expiry of the term of the deposit or the certificate. The term of deposit is often quite long if it has to yield income at the rate of 10 per cent or so. If however the deposit is for a short period of say six months	 the income from interest may not be far in excess of 6.25 per cent	 which appears to be the basis for fixing the multiple at 16. Mr. Dewan has invited our attention to a statement prepared by him showing building tax on gross annual rent	 and he has argued that	 in one of the cases before us	 while the cost of construction of the building was only Rs. 2	79	686.20 its annual rental income is Rs. 1	34	400	00	 its capital value works to Rs. 21	50	400. On and the building tax on it will amount to Rs. 3	04.	610.00. It has been urged that the building tax will thus be far in excess of the cost of construction	 and would be extortionate. But the argument misses the point that only the cost of construction of the structure cannot be the full capital value of the building. It also overlooks the fact that the entire cost of construction	 on Mr. Dewan 's own showing	 would be recovered in about two years because of the high rental income	 and if the owner has to pay a non recurring tax of Rs. 3	04	610.00	 that will be less than three years rental income	 so that	 thereafter	 his investment will be a source of a recurring income of Rs. 1	34	400.00 for as long the building lasts. There is nothing unreasonable in determining the capital value of a building yielding so much annual rent without reference to its cost of construction. A tax of such a nature cannot be said to be arbitrary or confiscatory or extortionate. But even if it were assumed that the income from a building is no	 more than 61 per cent	 and the whole of it is denied to the owner for a period of 16 years	 to coincide with the multiple of 16	 it cannot be gainsaid that after the expiry of that period	 the owner would	 at any rate	 be able to retain the whole of the income and	 in the meantime	 benefit from the appreciation of its market value as years go by. Such a taxing statute cannot be said to be "colourable". It has in fact been held by this Court in Raja Jagannath Baksh Singh vs The State of Uttar Pradesh(1) that	 ". the conclusion that a taxing statute is colourable would not and cannot normally be raised merely on the finding that the tax imposed by it is unreasonably high or 830 heavy	 because the reasonableness of the extent of the levy is always a matter within the competence of the Legislature. Such a conclusion can be reached where in passing the Act the Legislature has merely adopted a device and a cloak to confiscate the property of the citizen taxed. " Reference may also be made to section Kodar vs State of Kerala(1) for the following observation	 "Generally speaking	 the amount or rate of a tax is a matter exclusively within the legislative judgment and as long as a tax retains its avowed character and does not confiscate property to the State under the guise of a tax	 its reasonableness is outside the judicial ken. " As has been stated by A.A. Ring on "the valuation of Real Estate"	 second edition	 page 232	 "the most important	 and perhaps the most controversial	 and yet the least known phase of property valuation revolves about the procedure for the determination of a market rate of capitalisation through which estimated future net income can be converted into a sum of present value. " The author has dealt with various methods of property valuation and the mathematics thereof	 but they are approaches to a difficult problem and the fact remains that no one method is perfect	 or final	 or above criticism. As it is	 we are unable to think that the multiple of 16 suffer from any constitutional or legal infirmity. The legality of the building tax has however been challenged on the further ground that the Act	 does not provide any procedural machinery for the assessment of the annual value of buildings and is really a colourable exercise of legislative power. The argument has been advanced with reference to sub section (1) of section 5 and has been supported on the basis of this Court 's decisions in Kunnathat Thathuni Moopil Nair vs The State of Kerala	 Raja Jagannath Baksh Singh vs The State of Uttar Pradesh and Rai Ramkrishna and others vs The States of Bihar ( supra) . Sub section (1) of section 5 of the Act	 which is the charging section	 provides that the building tax shall be charged at the rate specified in the Schedule where its capital value exceeds Rs. 20	000/ . Clause (f) of section 2 states that the "capital value ' of a building means the value arrived at by multiplying its annual value by 16. So if the annual value of a building can be ascertained with finality	 by any satisfactory procedure prescribed by law	 it would only require its 831 multiplication by 16 to determine its capital value	 and then to assess the building tax leviable on it would be a matter of simple arithmaticaI calculation according to the table given in the Schedule. Section 6 of the Act provides the mode of determining the capital value of a building. For purposes of the argument under consideration	 sub section (1) of that section alone arises for consideration because it is not disputed that sub section (2)	 which deals with a case where the annual value fixed in the assessment books of the local authority is held to be "too low"	 and sub section (3)	 which deals with a case where the capital has not been fixed at all	 are on a different footing. For them	 the factors for determining the annual value	 and the assessing and the appellate and revisional authorities etc. have all been provided by the Act and there is no grievance on that account. The question is whether determining capital value on the basis of the annual value recorded in the assessment books of the local authority concerned is arbitrary because of the absence of the necessary machinery for its determination. Sub section (1) of section 6 reads as follows: "6.(1). For determining the capital value for the purposes of this Act	 the annual value of a building shall be the annual value fixed for that building in the assessment books of the local authority within whose area the building is situate. " It therefore accepts the annual value fixed for a building in the books of the local authority as correct. But that would not justify the argument that doing so is illegal or unreasonable as long as it can be shown that what is entered to the assessment books of the local authority has been arrived at in accordance with a satisfactory procedure laid down for it in the statute concerned. Thus if it can be shown that the ANNUAL value	 in the case of a local authority	 has been determined according to the procedure laid down for it in the Act governing the constitution of the local authority and the assessment and fixation of the annual value of buildings situated within its local area	 and if that procedure is unexceptionable	 then there is nothing illegal or unconstitutional if another taxing statute provides that the annual value so fixed and recorded in the assessment books of the local authority shall be accepted as correct and form the basis for the calculation of any other tax or impost that may be permissible under the other statute. In such a case	 where the necessary machinery for determining the annual value has been provided in the Act and/or the rules of the 832 local authority	 there is no reason or necessity for providing another machinery in the other Act and rules. Doing so would really mean making avoidable and unnecessary provision	 and may nave the disadvantage of creating confusion and inconsistency for no useful purpose. A case of the nature contemplated by sub section (2) of section 6 is on a different footing for there are reasons to take the view that the annual value fixed for the building by the local authority is too low. Everything therefore turns on the question whether the law governing the levy and fixation of annual value of buildings in the areas of the local authorities concerned provide the necessary procedure and the machinery for their assessment and final fixation. It is not disputed before us that the three Acts which bear on the question are the Kerala Municipal Corporation Act	 1961	 the Kerala Municipalities Act	 1960	 and the Kerala Panchayats Act	 1960. We had occasion to refer to section 102(2) of the Corporations Act earlier	 with specific reference to the annual value of buildings. Section 138 of that Act provides	 inter alia	 that the rules embodied in Schedule II of the Act shall be read as part of the chapter on "Taxation". Rules 4 to 16 provide the procedure and the machinery for assessment of the property tax (which is oased on the annual value)	 including the procedure for moving the Commissioner by a revision petition to reduce the tax. Sub rule (22) of rule 22 provides for the hearing of such applications by the Commissioner and for their determination by him under sub rule (3). Rule 23 provides for the filing of appeal to the Standing Committee against the revisional order of the Commissioner. Then there is provision in rule 24 for the filing of appeal to the District Court and there is further provision in rule 26 to the effect that the Court may	 if it thinks fit	 state a case on any appeal for the decision of the High Court and shall do so whenever a question of law is involved if either the Commissioner or the appellant applies in writing in that behalf. Rule 27 provides for the disposal of the case by the District Court in conformity with the decision of the High Court. Moreover rule 28 provides for the correction of the assessment books according to the decision of the Standing? Committee	 or the District Court. The Corporation Act thus provides all the necessary procedure and machinery for determining the annual value of buildings in a fair and reasonable manner. We have gone through the provisions of the Municipalities Act also	 in regard to the procedure and the machinery for determining the annual value of buildings. Chapter VI of Part III deals with 833 "Taxation and Finance". Section 150 states that the rules and tables embodied in Schedule II shall be read as part of that Chapter. Rules 7 provides that the value of the building for purposes of the property tax (including the annual value) shall be determined by the Commissioner. Rule 12 provides for the filing of a revision petition and rule 13 provides for its disposal only after hearing the revision petitioner. Rule 24 provides for the filing of appeal to the Municipal Council against the Commissioner 's assessment. Rule 30 provides for the appointment of Special officer to exercise the Councils appellate power. So the Municipal Act also provides the necessary procedure and the machinery for the proper fixation of the annual value of buildings. In the Panchayat Act also	 provision has been made in section 68 for ascertaining the annual rental value of buildings. Section 144 provides for appeals and revisions. Under sub section (1) of that section the appeal lies to the Panchayat and then under sub section (2) to the Deputy Director. Sub section (3) gives power to the State Government also to call for and examine the record and pass an appropriate order. Then there are the Kerala Panchayats (Taxation and Appeal) Rules	 1963. That Act also thus provides the necessary procedure and machinery for determining the annual value of buildings in a satisfactory manner. It is therefore futile to contend that there is no adequate procedure or machinery in the three Acts mentioned above for the satisfactory and proper determination of the annual value	 of buildings. That value can therefore very well be made the basis for determining the capital value of a building and thereby fixing the building tax under the charging section. Moreover	 sections 9 to 16 of the Act contain the procedure and the machinery for the assessment of the building tax on the returns filed under sections 7 and 8. These provisions are adequate in all respects and are not open to challenge with reference to any of the cases cited by learned counsel It has next been argued that as the capital value of buildings is bound to differ according to their location	 the standard of their construction and the amenities and appurtenances etc. provided by them	 the provision in the Act for ascertaining their capital value by multiplying the annual value by 16 suffers from the vice of treating unequals as equals. That	 it has been urged	 is discriminatory and violative of article 14 of the Constitution. But the argument loses sight of the basic fact that the capital value of a building has to be arrived at by multiplying the annual 834 value by 16	 and the Legislature has taken care to define "annual value" to mean the annual rent at which the building may be expected to let. So if a building is situated in an important locality	 or if its standard of construction is high	 or if it has attractive appurtenances etc. to it	 it would be expected to fetch a higher rent than a building which does not have those advantages. The definition therefore takes care of any possible criticism that the Act suffers from the vice of treating unequals as equals. It provides for the levy of a highest building tax on buildings on which such levy would be justified	 because the incidence of the levy is a matter to be decided on the basis of its capacity to fetch rent. The argument to the contrary is therefore quite untenable. Section 29 of the Act declares	 for the avoidance of doubt	 that in fixing the fair rent of a building under section 5 of the Kerala Buildings (Lease and Rent Control) Act	 1965	 the rent control court shall not take into consideration the building tax payable in respect of the building under the Act. That has given rise to the argument that the provision is extortionate as it prevents the owner from passing on the liability to the tenant. This argument can be answered in three ways. Firstly	 learned counsel could not point to any of the cases before us in which such a question could be said to have arisen. It cannot therefore he said to have arisen for consideration. Secondly	 the building tax being a non recurring tax	 payable by the owner once for all	 without any recurring liability	 the question of passing it on to the tenant by splitting it up in proportion to the number of years of the tenancy	 cannot be said to arise. Thirdly	 learned counsel have not been able to refer to any provision of the Kerala Buildings (Lease and Rent Control Act	 1965	 under which the building tax could be taken into consideration in fixing the fair rent of the building and section 29 of the Act has prevented that being done. Lastly	 it has been argued that while section 18 of the Act provides that the tax may be paid in such instalments as may be prescribed	 the proviso to sub section (1) of section 11	 which deals with appeals	 renders that provision negatory as it states that no such appeal shall lie unless the building tax has been paid. The concern of the learned counsel in advancing this argument is justified; but if the aforesaid provisions of sections 11 and 18 are read harmoniously it would appear that if an	 assessee is entitled to pay the building tax in instalments under the prescription referred to in section 18	 he will not be identified to file an appeal if he has paid those instalments 835 as and when they fall due. That is a fair and reasonable view to take of the relevant provisions of the Act	 and we hold accordingly. In the result	 we find no merit in these cases and they are all dismissed without any order as to the costs. We however think it proper	 in the circumstances in which all this controversy has arisen and uncertainty about the true effect of the provisions of the Act has been created	 to direct that in cases where the building tax has not been assessed so far	 the assessing authority may give the assessees an opportunity to produce evidence on which they may want to rely in support of their returns. In cases where the assessments have been made	 but the assessees could not or did not file their appeals within the period specified therefor	 we direct that they may be permitted to do so within a period of 30 days from the date of this judgment and the appellate authority may admit those appeals as the prosecution of these cases was sufficient cause for not presenting them earlier. It is clarified that if any matter is pending before the Government of Kerala under section 3(2) of the Act	 it will be permissible for that Government to dispose it of according to the law. So also	 in cases where the High Court has given an option or opportunity to any assessee to file fresh objections before the authority concerned	 under the provisions of the Act	 it will be permissible for him to do so. P.B.R. Appeals dismissed.

Summary:
The Kerala Building Tax Act	 1975 passed by the State Legislature under Entry 49 of List II (Taxes on lands and buildings) is imposed as a non recurring tax on buildings	 constructed on or after April 1	 1973	 the "capital value" of which exceeds Rs. 20	000/ . The term "capital value" is defined to mean the value arrived at by multiplying the 'annual value" of a building by sixteen. "Annual value" means the gross annual rent on which the building may	 at the time of completion	 be expected to let from month to month or from year to year. Section 6 provides that the annual value of a building shall be the annual value fixed for that building in the assessment books of the local authority (which includes a Municipal Corporation or a municipality and so on) within whose area the building is situate. Section 6(4) provides that in determining the annual value of a building regard must be had to the location of the building	 the nature and quality of the structure of the building	 the capability of the building and so on. An assessee objecting to the assessment of building tax assessed or denying the liability may appeal to the Appellate Authority under section 11. But no appeal lies unless the building tax due has been paid. Although no appeal lies from the decision of the Appellate Authority	 provision is made for reference to the District Court on a question of law and the District Collector is given power to revise the order of the Appellate Authority and the Government has the power of revision against the order of the District Collector. Jurisdiction of Civil Court is barred by	 section 27 of the Act. The High Court	 having upheld the validity of the Act	 the appellants in their appeals impugned the view of the High Court. It was contended on behalf of the appellants that (1) the tax levied on buildings being a tax on the capital value of the assets falls within the scope of entry 86 of List I of the Seventh Schedule and	 therefore	 is beyond the legislative competence of the State Legislature; (2) the Act was unconstitutional in that it imposed a tax on buildings retrospectively (over a period of 2 years of its enactment); (3) it was not merely a tax on buildings but a tax on the buildings	 and lands of those buildings; (4) the method of determining the capital value of a building on the basis of its annual value is hypothetical and arbitrary and is	 therefore	 unconstitutional. ^ HELD: 1 There is no force in the argument that the State Legislature was not competent to impose a tax on the buildings under entry 49 of List II. [818 B] (a) Article 366(28) defines tax to include imposition of any tax whether general	 local or special. The word "tax" in its widest sense includes all money 805 raised by taxation and includes tax levied both by the Central and State Legislatures as well as rates and charges levied by local authorities [815 D E] (b) The term "assets" referred to in entry 86 of List I means "Property in general	 all that one owns. " If a tax is levied on "all that one owns" or his total assets	 it would fall within the purview of entry 86 and therefore would be outside the legislative competence of the State Legislature. On the other hand	 if a tax is directly imposed on "buildings" it will bear direct relation to the buildings owned by the assessee. Though the building owned by an assessee is a component of his total assets	 the tax under entry 86 will not bear any direct or definable relation to his building. A tax on "buildings" is	 therefore	 a direct tax on buildings as such. It is not a personal tax without reference to any particular property. [815 H	 816 A B] (c) A tax has two elements: the person	 thing or activity on which it is imposed and the amount of the tax. The amount of tax may be measured in many ways. There is a distinction between the subject matter of a tax and the standard by which the amount of tax is measured. Thus a building may be the subject matter of a tax like wealth tax (entry 86 List I) or it may also be the subject of a direct tax under entry 49 of List II. The two taxes being separate and distinct	 the do not over lap each other. Therefore the tax imposed in the instant case is well within the competence of the legislature. [816 E Fl Sudhir Chandra Nawn vs Wealth Tax officer Calcutta & Ors.	 ; ; Assistant Commissioner of Urban Land Tax and ors. vs The Buckingham and Carnatic Co. Ltd.	 Etc.	 ; referred to. (d) It is settled law that the quantum of tax levied by the taxing statute and the conditions subject to which it is levied are matters within the competence of the legislature and so long as the tax is not confiscatory or extortionate the reasonableness of the tax cannot be questioned in a court of law. [828 D E] Rai Ramkrishan & Ors. vs The State of Bihar	 ; ; Kunnathat Thathunni Moopil Nair vs The State of Kerala & Anr.	 ; referred 2(a). The Act is not retrospective in the strictly technical sense of the term. A statute is deemed to be retrospective	 when it takes away or impairs any vested right acquired under existing laws or creates a new obligation in respect F ' of the transactions or considerations already past. The Act	 though passed in April 1975	 had imposed a tax on buildings with retrospective effect from April 1973. By so doing it has not taken away or impaired any vested right of the owner of the building acquired under any existing law. Absence of an earlier taxing statute cannot be said to create a "vested right" under any existing law. Nor has any new obligation or disability been attached in respect of any earlier tax transaction. If the language of the enactment shows that the legislature thought it expedient to authorise the making of retrospective rates	 it can fix the period as to which the rate may be retrospectively made. [828 D H] Bradford Union vs Wilts	 ; The Tata Iron & Steel Co Ltd. vs The State of Bihar	 ; referred to. (b) The choice of the legislature to impose a tax on buildings with effect from April 1	 1973 cannot be said to be discriminatory. The choice of a date as a basis for classification cannot be dubbed as arbitrary even if no particular reason is forthcoming unless it is shown that it was capricious or whimsical 15 625SCI/79 806 Similarly unless it is shown that the fixing of the date is very wide of the reasonable mark the decision of the legislature must be accepted. [819 C D] In the instant case	 after the 1961 Act was struck down by this Court in 1968 the Government declared its intention to introduce a fresh Bill so as to bring a new Act into force from April 1970. After its introduction in the Assembly it was referred to a Select Committee which recommended that the Act should be brought into force from April 1	 1973. Two ordinances giving effect to the provisions of the draft Bill were promulgated and eventually the Bill became an Act in April	 1975. These facts would not show that the choice of the date of April 1	 1973 was unreasonable or that it was wide of the reasonable mark. [819 E G] 3(a). What entry 49 of List II permits is the levy of "taxes on lands and buildings. " It is permissible Under this entry to levy a tax either on lands as well as buildings	 or on lands	 or on buildings	 if the legislature decides to impose a tax only on buildings	 the tax would be imposed on all that goes to make or constitute a building. [820 B C] (b) The word "building" means "that which is built; a structure. edifice;" The natural and ordinary meaning of a "building" is	 a "a fabric of which it is composed	 the ground upon which its walls stand and the ground embraced within those walls. " Entry 49 includes the side of the building as its component part. [820 C D] (c) The definition of the term "building" in the Act makes it clear that a house	 outhouse	 garage or any other structure cannot be erected without the ground on which it is to stand. The expression "building" includes the fabric of which it is composed	 the ground upon which its walls stand and the ground within those walls because the ground would not have a separate existence	 apart from the building. The ground referred to in Entry 49 List II would not be the subject matter of a separate tax	 apart from the tax on the building standing on it. That being so there is no occasion to tax the site separately or to ascertain its value and add it to the value of the fabric. [820 F G] (d) This is also the position in the case of appurtenances. An appurtenance belongs to the building concerned and has no existence of its own. An appurtenance	 it its true sense	 is an integrated part of the building to which it belongs. [826 F G] (e) In the matter of fixing the annual value of the building under section 6 regard must be had to the "location of the building" and the "value of the land on which the building constructed"	 but it does not bear on the annual value of the ground of the building which does not have an existence of its own apart from the building. It is therefore futile to contend that as factors (a) and (f) of sub section 4 of section 6 refer to the location of the building and the value of the land	 the law recognises the separate existence or entity of the ground on which the buildings stands	 so that the tax imposed under it is a tax both on lands and buildings and both entities should be separately recognised and determined	 and taxed as such [821 C E] 4(a) When the State Legislature had decided to impose a tax	 it was open to it to decide how best to levy it. One of the usual modes of levying tax is to make provision for determining the "rate"	 or annual value of the building. Rateable value is the same as the net annual value of the building. But 807 if the Legislature decides to levy a tax on buildings once for all or	 as a "non recurring tax on buildings	 it has to go beyond the annual value	 and work out the capital value which could be done on the basis of capital cost of construction of the building or its market value or on the basis of rent arrived at by what is known as "higgling of the market" multiplying it by a number which would best serve the purpose of determining the value of the building and then to specify the rate of tax on it. [822 C F] (b) If the Legislature chose to adopt the annual value as the basis for working out the capital value it cannot be blamed for it because besides other advantages it is readily available from the records of local authorities and is a quite simple and reliable basis to work upon. [828 B C] (c) The various methods of properly valuation are the various facets to a difficult problem and no one method is perfect or final or above criticism. The multiple of sixteen adopted cannot be said to suffer from any constitutional or legal infirmity. [830 G H] (d) The capital value of a building is not merely the cost of its bricks and mortar. It may be difficult to provide a ready or convenient basis of taxation. There can be no objection if the Legislature decides to levy the annual value of a building and prescribes a uniform formula for determining its capital value. The four well accepted methods for arriving at the annual value of the building	 are: (I) The "competitive or comparative method ' '; (2) the 'profits basis"; (3) the "contractor 's method"; and (4) the "unit method". These four methods can be applied either singly or in combination. [823 B E] (e) The fundamental object of each of these methods is to find out the rent which the tenant might reasonably be expected to pay for a building. It is the expectation which is to be reasonable and not necessarily the rent tor the reasonable expectation would exclude any so called black market rent. But there is no rule of law as to the method of valuation to be adopted for determining the annual value of a building. If the Legislature selects the method of determining the annual value on the basis of rent	 that is the best evidence of value. If it has been fixed by the higgling of the market there is neither reason nor authority for holding that it is hypothetical or arbitrary. [823 G H	 824 A B] (f) The provisions of the Act	 taken together	 contain the entire scheme for the levy and collection of the building tax on the capital value of building. The expression "capital value" is not the cost of construction of the building or its market value as wealth but is only a working expression which	 roughly stated	 is the taxable value of the building. The State Legislature was quite competent to select that as the basis for assessing the building tax. [824 D E] (g) There is no inherent illegality if the gross income of the property were to be capitalised for the purpose of determining the value of the property. firstly	 because there is nothing to prevent the Legislature from making the expected gross annual rent and thereby the annual value of a building from being the unit for multiplication by sixteen for arriving at its capital value for charging tax under section 5. Secondly	 by virtue of section 6 the annual value forms the basis for determining the capital value of the building for the purposes of the Act. However what is really taken as the annual value under the determining in section 2(a) is not the gross annual rent but the net rent after allowing for the 808 cost of its repairs etc. It is not therefore factually correct to say that the annual value of the buildings in the State is determined on the basis of their gross annual rent without any deduction on account of repairs. Nor is it correct to say that the determination of the capital value was arbitrary as it was arrived at by multiplying the gross annual rent by sixteen. The gross value of a building is often made the datum point by statute and there is nothing unusual or illegal about it particularly when there are statutable deductions from it. [825 C H] (h) Section 6(1) accepts the annual value of a building in the books of the local authorities as correct. But that would not justify the argument that doing so is illegal or unreasonable as long as it can be shown that what is entered in the assessment books of the local authorities has been arrived at in accordance with a satisfactory procedure laid down for it in the statutes concerned. If the procedure prescribed in that Act is unexceptionable	 there is nothing illegal or unconstitutional if another taxing statute provides that the annual value fixed by it shall be accepted as correct and would From the basis for the calculation of any other tax permissible under another statute. such cases there is no necessity for providing another machinery in the other Act and Rules. Moreover sections 9 to 16 of the Act contain the procedure and the machinery for the assessment of the building tax on the returns filed under sections 7 and 8. These provisions are adequate in all respects and are not open to challenge. [831 F H	 832 A B] 5. (a) The argument that the capital value of a building is bound to differ according to its location	 amenities and appurtenances etc. and that ascertainment of the capital value by multiplying the annual value by sixteen is discriminatory and violative of article 14	 loses sight of the fact that the Legislature has defined the annual value to mean the annual rent at which a building may be expected to let. [833 H	 834 A B] (b) A building in an important locality with attractive appurtenance is expected to fetch a higher rent than a building without those advantages. The definition capital value provides for the levy of a higher building tax on buildings on which such levy would be justified	 because the incidence of the levy would depend on the capacity of the building to fetch the rent. [834 B C] 6. There is no force in the argument that when section 29 says that in fixing the fair rent of a building under section S of the Rent Control Act	 the rent control court would not take into consideration the building tax payable under the Act and that this makes the provision extortionate because it prevents the owner from passing on the liability to the tenant. The tax being a non recurring tax	 the question of passing it on to the tenant by splitting it up in proportion to the number of years of the tenancy cannot arise. There is no provision in the Rent Control Act under which a building tax could be taken into consideration in fixing the fair rent. [834 D F] 7. Section 18 which provides that tax may be paid in certain prescribed number of instalments and the proviso to section 11(1) which deals with appeals should be read harmoniously. If an assessee is entitled to pay the building tax in instalments	 he would not be disentitled to file an appeal if he has paid those instalments as and when they fell due. [834 G Hl 809