Mangalam Cement Ltd. and Vs State of Rajasthan and Another

@JUDGMENTTAG-ORDER

M.B. Sharma, J.@mdashIn the above numbered six writ petitions the petitioners have challenged the vires of the Rajasthan Land Tax Act, 1985 (for short, the State Act). The State Act was passed by the Rajasthan State Legislature in 1985 and received the assent of the Governor on July 31, 1985. According to its preamble it is law which has been enacted to provide for imposition of tax on land in areas other than urban areas in the State of Rajasthan and the matters incidental thereto. u/s 3 of the State Act the tax is imposed on the annual value of the land. Annual value has been defined in Section 2(a) of the State Act. So far as the annual value in the case of land which are governed by the mining leases is concerned, it is given in Section 2(a)(i) of that Act. The petitioners, have challenged the vires of the Act inter alia on the ground that it is beyond the legislative competence of the Legislature and covered under entry No. 54 of the Union List-I of the VIIth Schedule to the Constitution; that the State Act does not in letter or spirit impose tax on the land, and what is being taxed is not the land and in the garb of tax on the land dead rent and royalty on the minerals excavated is being charged; it creates hostile discrimination between various mine owners similarly situated; it is arbitrary and unreasonable; that the procedure provided in the State Act for provisional assessment is in violation of principles of natural justice.

2. Besides challenging the vires of the said Act on the aforesaid grounds in some of the writ petitions, the petitioners also challenged the assessment orders made against them for tax under the State Act by the Assessing Authorities and have also claimed that the acquisition of land for production of cement for commercial purposes has been held to be for public purposes and therefore the acquisition of land by the State Government for granting the same to the petitioners is exempted from the payment of land tax u/s 4(1)(b)(iii) of the State Act. The petitioner company is exempted from the payment of tax.

3. Notice to show cause was given to the respondents and reply has been filed in S. B. Civil Writ Petition No. 2114/1985 and 269/86. As the points involved in all the writ petitions are identical, with the consent of the parties the replies have been read as replies in alt the writ petitions. In the aforesaid return filed on behalf of the respondents it has been stated that the Act is within the legislative competence of the State Legislature and it is a tax on the land which the State Legislature is competent to levy. Only for the determination of the annual value the royalty is taken into consideration and the dead rent and royalty on the mineral are not the object of taxation.

4. The following questions need adjudication in this case : --

(i) Whether the State Act is beyond the legislative competence of the State Legislature.?

(ii) If the answer to the above point is against the petitioners and for the State, then whether the tax is confiscatory in nature?

(iii) Whether the tax is discriminatory and is liable to be struck out on this count?

(iv) Whether the land of the petitioners is exempted from the tax u/s 4(l)(b)(iii) of the State Act?

Re : Question No.(i)

5. It is contended by the learned counsel for the petitioners that all the petitioners hold mining leases under the provisions of the Mines and Mineral Regulation and Development Act, 1957(ActNo. 57 of 1957) (for short, the Central Act) read with the relevant Mining Concession Rules and are carrying on the mining operations. The State Act in so far as it imposes tax on the land held for carrying on mining operations is unconstitutional being beyond the legislative power of the State inasmuch as the field has been taken over by Parliament by declaration made u/s 2 of the Central Act. It is further contended that the tax is duty or royalty on mineral and the Act has been framed by the State Legislature in colourable exercise of the powers. The State Act is also violative of Article 14 of the Constitution of India. It does not impose tax on the production or excavation of mineral. Lastly, it is contended that the tax is unreasonable and arbitrary and it is one of the reasons to strike down the taxing statute. Mr. K. K. Sharma, learned counsel for the respondent has contended that to see the validity of an Act on the ground of legislative competence one has to see the respective entries and it will be clear that the Act has been framed by the State Legislature under entry No. 49 of the List II-State List of the VIIth Schedule to the Constitution of India which relates to the taxes on lands and building and does not cover the subject of entry No. 54 List-I Union List. It is further contended by him that the tax is the tax on the land and not royalty or tax on royalty in the garb of the tax or royalty on the land and the taxing statute cannot be challenged on the ground that it is excessive.

6. Ours is a federal constitution in which there is a division of legislative powers between the Central and State Legislatures. In such a situation it appears to be inevitable that controversy should arise whether one or other Legislature is exceeding its own, and encroaching on the others constitutional legislative power, and in such a controversy it is a principle which has been recognised that it is not the name of the tax but its real nature, its ''pith and substance'' which must determine into what category it falls. (See AIR 1945 98 (Privy Council) Even in the case of AIR 1941 16 (Federal Court) it was observed that the subjects dealt with in the three legislative lists are not always set out with scientific definition. In that case the three lists of Schedule VII of the Government of India Act, 1935 were for consideration. Their Lordships observed that it would be practically impossible to define each item in the Provincial List in such a way as to make it exclusive of every other item in that list, and Parliament seems to have been content to take a number of comprehensive categories and to describe each of them by a word of broad and general import. In the case of The Assistant Commissioner of Urban Land Tax and Others Vs. The Buckingham and Carnatic Co. Ltd., etc., it was held that the Legislative entries must be given a large and liberal interpretation, the reason being that the allocation of the subjects to the lists is not by way of scientific or logical definition but by way of a mere simple enumeration of broad categories. In Raja Jagannath Baksh Singh Vs. The State of Uttar Pradesh and Another, learned Judge Gajendragadkar J. observed that it is necessary to bear in mind that we are interpreting the words used in the Constitution and it is an elementary cardinal rule of interpretation, that the words used in the Constitution which confer legislative powers must receive the most liberal construction and if they are words of wide amplitude, they must be interpreted so as to give effect to that amplitude. In the same case another learned Judge, Venkatarama Ayyar J. held that when a law is impugned on the ground that it is ultra vires the powers of the legislature which enacted it, what has to be ascertained is the true character of the legislation. To do that one must have regard to the enactment as a whole to its objects and to the scope and effect of its provisions. If on such examination it is found that the legislation is in substance one on a matter assigned to the legislature then it must be held to be valid in its entirety, even though it might incidentally trench on matters which are beyond its competence. In R.S. Joshi, Sales Tax Officer, Gujarat and Others Vs. Ajit Mills Limited and Another, learned Judge Krishna Iyer J. held that :

"To put it more relevantly to the case on hand, if a legislation apparently enacted under one Entry in the List, falls in plain truth and fact within the contents not of that Entry but of one assigned to another legislature, it can be struck down as colourable even if the motive were most commendable. In other words, the letter of the law notwithstanding what is the pith and substance of the Act? Does it fall within any Entry assigned to that legislature in pith and substance, or as covered by the ancillary power implied in that Entry? Can the legislation be read down reasonably to bring it within the legislature''s constitutional powers? If these questions can be answered affirmatively, the law is valid. Malice or motive is beside the point, and it is not permissible to suggest Parliamentary incompetence on the score of mala fides."

A Full Bench of the Orissa High Court in Laxmi Narayan Agarwalla and Others etc. Vs. State of Orissa and Others etc., considered the above authorities of the Supreme Court and held that it is the pith and substance of the Act which is to be looked into to judge the competence of the legislature to enact it.

7. Let us have a look at the statement of objects and reasons of the State Act as well as to some other relevant provisions of it to see as to what is the "pith and substance" of the Act? whether it is within the competence of the State Legislature. The preamble of the State Act says that it is an Act to provide for the imposition of tax on land in areas other than urban areas in the State of Rajasthan and the matters incidental thereto. The Statement of Objects and Reasons says that the lands situate in areas other than the urban areas in the State of Rajasthan are extensively being made use of for the purpose of excavating or extracting ores or minerals, for growing, collecting or receiving forest or horticultural produce or for industrial or commercial purpose. It has become necessary to levy tax on such land so as to augment the revenue of the State. At present, land and buildings tax is being levied on the lands situate in an urban area but lands other than so situate have not been brought within the purview of the Rajasthan Lands and Buildings Tax Act, 1964 (Act 18 of 1964). It is, therefore, intended to levy tax on such lands as are situate in areas other than the urban area or notified area. Lands used exclusively for agricultural or residential purpose shall however be excluded. An abadi land would also not be subject to any levy of tax. The statement of objects and reasons also provide that the tax shall be assessed on the annual value of the land. ''Land'' as per Section 2(g) means land held or used for (i) excavating, extracting, removing or utilising any ore or mineral, (ii) growing, collecting or receiving any forest or horticultural produce; (iii) any industrial or commercial purpose of (iv) any other purpose, but shall not include a land held or used exclusively for agricultural or residential purpose or a land situate in an urban area or in a notified area declared as such u/s 313 of the Rajasthan Municipalities Act, 1959 (Rajasthan Act 38 of 1959) or an abadi land as defined in Clause (b) of Section 103 of the Rajasthan Land Revenue Act, 1956 (Rajasthan Act 15 of 1956). u/s 2(k) ''Tax'' means the tax on land payable under the State Act. Section 3 deals with incidence of tax and under it every land holder shall be liable to pay lax under the State Act on the annual value of the land for every year or as the case may be, part thereof during which such land is held or used by him. ''Annual value'' has been defined in Section 2(a). Section 4 deals with exceptions and under Sub-section (i) (b) (iii) no tax shall be payable under the State Act on the land for public worship or public purpose. Section 5 deals with rate of tax. Under it the tax payable by a land-holder shall be assessed at such rate not exceeding 50% of the annual value, as may be specified by the State Government from time to time by Notification in the Official Gazette and different rates may be specified for lands held or used for different purposes. Vide notification No. F. 16(FD) GR-IV/85 dated August 1, 1985 u/s 5 of the aforesaid Act the State Government specified rate of tax payable under the Act to be 25% of the annual value used for excavating, extracting any ore or mineral. Section 7 deals with the returns to be filed by the land holders. u/s 8 of the State Act there is provision for provisional assessment. Section 9 deals with assessment. Then there are provisions of appeal, and revision against the order of assessment. Section 26 vests powers in the State Government to make rules for the purpose of carrying into effect the provisions of the State Act, Rules so framed are to be laid as soon as may be after they are so made before the House of the State Legislature while it is in session for a period of not less than fourteen days which may be comprised in one session or in two successive sessions and if before the expiry of the session in which they are so laid or of the session immediately following the House of the State Legislature makes any modification in any of such rules or resolves that any such rules should not be made such rules shall thereafter have effect only in such modified form or be of no effect.

8. A look at the Lists I and II of the VIIth Schedule to the Government of India Act, 1935 as well as to the list I (Union List) and List II (State List) of the Vllth Schedule to the Constitution of India will show that so far as the regulation of mines and minerals is concerned, entry 36 of List I of the Government of India Act, 1935 and entry 23 of List II of that Act have almost similarity to the entry No. 54 of List I and entry 23 of List II of the Vllth schedule to the Constitution of India with a slight difference. In the case of AIR 1945 98 (Privy Council) the legislative competence of the then Provincial Madras to Legislate Madras General Sales Tax Act (No. 9 of 1939) came up for consideration the Privy Council held that an attempt must be made to reconcile the legislative powers of Federal and Provincial legislature which are enumerated in lists I and II of the Vllth Schedule to the Constitution and if it cannot fairly be reconciled the latter must give way to the former. Referring to the various provisions of that Act it was held by their Lordships that the pith and substance of the tax is on the sale of the goods and as such the Act was within legislative competence of Madras Provincial Legislature. Entry No. 49 deals with taxes on lands and building and entry No. 23 thereof deals with Regulation of mines and mineral development subject to the provisions of list I with respect to regulation and development under the control of the Union. Entry No. 54 List I, Union List deals with Regulation of Mines and Mineral Development to the extent to which such regulation and development under the control of the Union is declared by the Parliament by law to be expedient in the public interest. There can be no dispute that the jurisdiction of the State legislature under Entry 23 List II is subject to the limitation imposed by the latter part of the said Entry and because the Parliament by law declared that the regulation and development of mines should be under the control of Union to the extent of such declaration, the jurisdiction of the State Legislature is excluded. In the case of The Hingir-rampur Coal Co. Ltd. and Others Vs. The State of Orissa and Others, the cess levied under the provisions of Orissa Mining Areas Development Fund Act, 1952 was under challenge on the ground of legislative competence. Their Lordships referred to the case of AIR 1945 98 (Privy Council) and the majority came to the conclusion that the Act was within the powers of the State legislature. In H.R.S. Murthy Vs. Collector of Chittoor and Another, and State of Orissa Vs. M.A. Tulloch and Co., referring to the provisions of Sections 78 and 79 of the Madras District Boards Act (14 of 1920) which provided for levy of land cess on the annual value and annual rent value, held that these sections have nothing to do and are not concerned with the development of mines and minerals or their regulation. It was further held that it will be seen that there is no connection between the regulation and development of mines and minerals dealt with in the central Acts and the levy and collection of land cess for which provisions is made by Sections 78 and 79 of the Act. It was also urged in that case before their Lordships that the land cess was really a (ax on the mineral rights falling within entry 50 of the State List. The court observed :

"When a question arises as to the precise head of legislative power under which a taxing statute has been passed, the subject for enquiry is what in truth and substance is the nature of the tax. No doubt in a sense, but in a very remote sense it has relationships to mining as also to the mineral won from the mine under a contract by which royalty is payable on thequantity of mineral extracted. But that does not stamp it as a tax on either the extraction of the mineral or on the mineral right..... In the context of Sections 78 and 79 and the scheme of those truth a "tax on lands" within Entry 49 of the State List."

In Western Coalfields Limited Vs. Special Area Development Authority, Korba and Another, it was held that the property tax under the M.P. Nagar to the Gram Nivash Adhiniyam (23 of 1973) the paramount purpose is to levy tax on land and buildings and was not in conflict of the powers conferred by the Central Act, the case of Baijnath Kadio Vs. State of Bihar and Others, was distinguished on the ground that the Bihar Government demanded dead rent, Royalty and surface rent from the appellant in that case contrary to the terms of his lease on the strength of the amended Section 10(2) of the Bihar Land Reforms Act, 1950. In Laxmi Narayan Agarwalla and Others etc. Vs. State of Orissa and Others etc., almost a similar controversy was involved and it was contended that the Act is beyond the legislative competence of the State Legislature, In my opinion, a perusal of the various provisions of the Act will show that the main pith and substance of the Act is to levy tax on the land as defined u/s 2(g) of the State Act and the purpose of the Act is not the regulations of mines and mineral developments. The "pith and substance" of the Act is to tax the land and as such it falls under entry 49 of the list II-State List.

9. A connected argument of the learned counsel for the petitioners may now be dealt with. It has been contended that u/s 5 of the Act the tax payable by the land holders shall be assessed at such rate not exceeding 50% of the annual value of the land as specified by the Government from time to time by the notifications in the official gazette. ''Annual Value'' has been defined in Section 2(a) of the State Act. Before the Amendment of the aforesaid clause by the State Legislature ''annual value'' meant in the case of the land held or used in a year for excavating, extracting, removing or utilising any ore or mineral equal to the amount of the annual dead rent or half of the amount of the royalty payable for the year with regard to such ore or mineral whichever is higher. After the amendment of the above clause Section 2(1)(a) reads as under :

In this Act unless the context otherwise requires (a) annual value means in the case of land held or used in a year (i) for excavating, extracting, removing, or utilising any ore or mineral four times of the amount of annual dead rent or twice of the amount of royalty with regard to such ore or mineral whichever is higher.

Explanation -- For the purpose of determining the Annual Value, total area held or used by a lessee under more than one lease shall be considered asone area of land.

We are not concerned presently with clause other than Clause (i) of Section 2(a) of the State Act, but suffice it to say that the decision for Clause (i) will apply to other clauses also. The validity of the tax is not to be judged in regard to the mode of calculation prescribed for assessing the amount of tax. In the case of State of Bombay Vs. R.M.D. Chamarbaugwalia and Others, it was held that the intrinsic character of tax is not to be determined by the mode of measurement or standard of calculation prescribed for assessing the amount of tax. In the case of AIR 1949 81 (Federal Court) Fazal All J. held that :

"It is true that the annual value was used as the basis, but it was very different from the annual value which may be used for getting at the true income. It is only a standard used in the Income Tax Act for getting at income, but that is not enough to bar the use of the same standard for assessing provincial tax. If a tax is to be levied on property, it will not be irrational to correlate it to the value of the property and to make some kind of annual value the basis of the tax, without intending to tax income....."

In Constitutional Law of India by H. M. Seervai, Vol II Third Edition in Chapter 22, Legislative Powers of the Union and the States para 22.27 has said : --

"Again, as observed by the Privy Council the machinery devised for the effective collection of tax does not affect its real nature, and the same view has been taken by the Supreme Court in The State of Bombay Vs. R.M.D. Chamarbaugwala, It was there contended that the tax levied by the Bombay Lotteries and Prize Competitions Act, 1948 was a tax on the Business of the respondent since the respondent was taxed at a certain percentage of the fee received on each entry in the competition. It was held that on ultimate analysis the tax was a tax on each entry-fee received from each individual competitor from Bombay, and the collection of the tax from the promoters after the entry-fee came into their hands was nothing but a convenient method of collecting the tax as it would be practically impossible for the State to get at each individual competitor.

A similar question arose in the case of Laxmi Narayan Agarwalla and Others etc. Vs. State of Orissa and Others etc., wherein after referring to the Commentary of D. Basu on the Constitution of India, it was held that : --

"The rax is charged u/s 4 of the Cess Act. The provisions in Sections 5, 6 and 7 contain the mode, the manner or the machinery of taxation. It is therefore difficult to accept the contention that as the annual value of lands held for carrying on mining operations is calculated with reference to royalty or other payments paid or payable for the right of raising minerals, the cess levied under the Orissa Cess Act, 1962 is not on lands but is royalty ore levy on royalty".

Learned counsel for the petitioners further contended that Section 2(a) provided a mode of assessment of the annual value and it is one which is not recognised for the purpose of arriving at the annual value of the land. I find no force in it. The facts on which the annual value is to be determined are definite and do and can form the basis of arriving at the annual value. The annual dead rent or royalty payable for the year with regard to the ore or mineral whichever is higher is always a known factor and therefore this method of arriving at the Annual Value for the purpose of Section 5 of the Act is not open to challenge in the explanation to Clause (1) of Section 2(a) of the State Act for the purpose of determining the annual value, total area held or used by a lessee under more than one lease shall be considered as one area of land. Instead of assessing the tax u/s 5 of the State Act separately for each area of land held separately the explanation provides that the total area held or used by the lessee under the lease shall be considered as one area of the land. It is not going to make any difference so far as the lessee of more than one mining lease is concerned, whether for determining the annual value area under separate leases is taken separately or are clubbed together.

10. Yet another contention and a connected contention so far as the validity of the provisions of the Act is concerned has been raised that the tax assessed under the Act is excessive. In one of the writ petitions, (S.B. Civil Writ Petition No. 269/1986) it has been pleaded that the holders of mining lease have to pay royalty in respect of any mineral removed by them for lease area at the rate specified in the First Schedule of Minor Mineral Concession Rules, 1977. These rates are liable to be increased by the State Government after a period of every five years. The lessee has further to pay for the surface area used by him for the purpose of mining under Clause (2) of Rule 18 of the Minor Mineral Concession Rules, 1977. The Government further charges certain amount per year or part thereof for removal of dumps from the mines and quarry from the lease. The dead rent has also to be paid in accordance with the Rules fixed by the Government specified in the Second Schedule, Huge sum is invested in carrying out the mining operations and has also to pay u/s 89 of the Rajasthan Land Revenue Act compensation for such infringement on the land of any khatedar and such compensation shall be calculated by the collector and thus, the Mining operation is a very costly affair as huge money is invested in various items mentioned above. The petitioners have to pay the tax under the Act for the use of the land. It will not be only confirmatory but is excessive and unreasonable. I will deal with this point under separate head when I would take up the question whether the tax is confiscatory or not as alleged by the petitioners.

11. In my opinion the scheme of the State Act its scope and its "pith and substance" is to impose tax on the land and the measure of the rate of tax u/s 5 of the Act has to be determined by its annual value as contained in Section 2(a)(i) of the Act and other clauses. Thus there is no doubt that the Act is within the legislative competence of the State Legislature under entry 49 of the List II State List. Re: Question (ii)

12. Under this, head, I will deal with the question as to whether the tax is confiscatory arbitrary, unreasonable and excessive or not. The case of the petitioners is that the levy of tax at the rate of 25% of annual value is confiscatory in character. The petitioners have also to pay the dead rent and royalty and surface rent for the mining lease of their holdings for excavating various minerals. It is also the case of the petitioners that after the filing of the writ petition the provisions of Section 2(a)(i) of the State Act have been amended and in the aforesaid clause the words ''equal to'' and the word ''half'' have been substitute by ''four times'' and ''twice''. The amended clause has been extracted in the earlier part ''of this order.

A perusal of this will show that so far as the annual value within the meaning of Section 2(a)(i) is concerned it means four times of the amount of annual dead rent or twice of the amount of royalty with regard to ore or mineral extracted. u/s 5 of the Act the rate of tax can be at a rate not exceeding 50% of the annual value. By notification No.F. 6(FD)GR/IV/85 dated August 1, 1985 the State Government has specified the rate of tax payable by the land holders for the use of the land specified in Clause (i) of Section 2(a) of the State Act. In support of their submission that the tax is confiscatory reliance has been placed by the learned counsel for petitioners on Kunnathat Thathunni Moopil Nair Vs. The State of Kerala and Another, and more specifically to its para 10. Learned counsel for the non-petitioners contends that under Article 19(1)(f) a person was to acquire and hold and dispose of the property, but it was omitted by Section 2 of the Constitution (44th Amendment) Act, 1978. According to the non-petitioners the deletion of the aforesaid clause from Article 19(1) of the Constitution jsnq longer open to challenge on the ground that the same is confiscatory. He further contends that the State is the] owner of the land and therefore the State] cannot confiscate its own property.

13. In the case of K. T. Moopil Nair (supra) the Supreme Court in para 10 held that the Travancore-Cochin Land Tax Act as amended by Act 10 of 1957 is confiscatory. In that case the petitioners owned forests in certain parts of Palghat Taluk in Palghat District which was part of the State of Madras before the reorganisation of States. Later on those forests were in the State of Kerala. The forests had been given on lease by the owners thereof and the lessees were given permission by the Collector in exercise of the powers given to him under the Madras Preservation of Private Forests Act, Madras Act VII of 1949, and the petitioner Moopil Nair got an income of Rs. 3100/- per year from the forests. Under the Travancore-Cochin Land Tax Act Rs. 20/- per acre has been imposed on the petitioner and a notice was issued. The Supreme Court held that:

"The petitioner in petition 42 of 1958 has been assumed to own 25 thousand acres of forest land. The liability under the Act would thus amount to Rs. 50,000/- a year, as already demanded from the petitioner on the basis of the provisional assessment under the provisions of Section 5(A). The petitioner is making an income of Rs. 3, 100/- per year out of the forests. Besides, the liability of Rs. 50,000/- as aforesaid, the petitioner has to pay a levy of Rs. 4,000/- on the surveyed portions of the said forest. Hence his liability for taxation in respect of his forest land amounts to Rs. 54,000/- whereas his annual income for the time being is only Rs. 3100/- without making any deductions for expenses of management. Unless the petitioner is very enamoured of the property and of the right to hold it, it may be assumed that he will not be in a position to pay the deficit of about Rs. 51,000/- every year in respect of the forests in his possession. The legal consequences of his making a default in the payment of the aforesaid sum of money will be that the money will be realised by the coercive process of law. One can easily imagine that the property may be sold at auction and may not "fetch, even the amount for the realisation of which it may be proposed to be sold at public auction."

It is clear, therefore, that apart from being discriminatory and imposing unreasonable restrictions on holding property, the Act is clearly confiscatory in character and effect."

In the aforesaid case of Kunnathat Thathunni Moopil Nair Vs. The State of Kerala and Another, the Supreme Court held that a taxing statute is not wholly immune from attack on the ground that it infringes the equality clause in Article 14, though the courts are not concerned with the policy underlying a taxing statute or whether a particular tax could not have been imposed in a different way or in a way that the court might think more just and equitable. That case has no application to the present case because true purpose of the tax was not levy of the tax but to appropriate the proprietorship of''the land without payment of compensation and as such it was held to have been made by the State Legislature in colourable exercise of the powers. In the case in hand the tax on the land has been imposed by the State legislature which as already stated earlier was competent to levy. Moreover, being the owner of the land it can hardly be said that it could confiscate its own property. The Supreme Court in Raja Jagannath Baksha Singh v. State of Uttar Pradesh AIR 1962 SC 1563 ) (supra) held that a taxing statute can be challenged on the ground that fundamental rights being violative of Articles 14, 19 and 31 of the Constitution of India. Their Lordships dealt with Art, 19(1)(f)of the Constitution as stood then before its deletion by the 44th Amendment Act. It was held that the tax being on the land holding, it is fixed in the Might of the annual value of the landholding. The land-holding is taxed on the basis of its annual value and the Schedule cannot successfully be challenged as being inconsis- tent with Articles 14 and 19(1)(f) of the Constitution pf India Referring to Art 265 of the Constitution, their Lordships further held that the validity of the taxing statute cannot be challenged on the ground that it imposes an unreasonably high burden, it does not follow that a taxing statute cannot be challenged on the ground that it is a colourable piece of legislation and as such is a fraud on the legislative power conferred on the legislature in question. In the opinion of their Lordships, 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 heavy, because the reasonableness of the extent of the levy is always a matter within the competence of the legislature. In Rai Ramkrishna and Others Vs. The State of Bihar, it has been held that the power of taxing people and their property is an essential attribute of the Government and Government may legitimately exercise the said power by reference to the objects to which it is applicable to the utmost extent to which Government thinks it expedient to do so. The quantum of tax levied by the taxing statute, the conditions subject to which it is levied, the manner in which it is sought to be recovered, are all matters within the competence of the Legislature, and in dealing with the contention raised by a citizen that the taxing statute contravenes Article 19 would naturally be circumspect and cautious. It was further held that where it appears to the court that the taxing statute is plainly discriminatory or provides no procedural machinery for assessment and levy of the tax or that it is confiscatory, courts would be justified in striking down the impugned statute as unconstitutional A reference was made to the case of Kunnathat Thathunni Moopil Nair Vs. The State of Kerala and Another, The Supreme Court in the Corporation of Calcutta and Another Vs. Liberty Cinema, was dealing with the case of increased of licence fee from Rs. 400/- to i Rs. 6000/- per year. It was held that the statute has to be read so as to make it valid and if possible an interpretation leading to a contrary position should be avoided and it has to be construed ut res magis valeat quam pareat. It was further held that the increase from Rs. 400/- per year fixed in 1948 came to be fixed at Rs. 6000/- per year in 1958 by changing the basis of assessment and finding it at Rs. 5/- per show, though the increase in rate of fee was large, but it cannot be challenged as invalid on the ground that it amounted to expropriation when according to the seating capacity of the house it would collect about Rs. 1000/- per show. In Hari Krishna Bhargav Vs. union of india (UOI) and Another, it has been held that

"Exercise of the taxing power to the State has undoubtedly to be tested in the light of the fundamental freedoms guaranteed by Ch. III of the Constitution. It is not a power which transcends the fundamental rights, as was assumed in certain earlier decisions..... but it is now settled by decisions of this court (e.g.) Kunnathat Thathunni Moopil Nair Vs. The State of Kerala and Another, that a taxing statute is subject to the conditions laid down in Art 13 of the Constitution of India. A taxing statute may accordingly be open to challenge on the ground that it is expropriatary, or that the statute prescribes no procedure or machinery for assessing tax, but it is not open to challenge merely on the ground that the tax is harsh or excessive."

14. In the Malwa Bus Service (Private) Limited and Others Vs. State of Punjab and Others, meeting with the argument that the operations of the State carriage bus service has become uneconomical it was held that the levy cannot be struck down on the ground that the state carriage has become uneconomical. In S. Kodar Vs. State of Kerala, dealing with the additional tax under the Tamil Nadu Additional Sales Tax Act, (14 of 1970) it was held that it is not shown to be confiscatory. The court observed that 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. In The Assistant Commissioner of Urban Land Tax and Others Vs. The Buckingham and Carnatic Co. Ltd., etc., it was held that the Madras Land Tax Act (12 of 1966) cannot be struck down on the ground that by imposing a tax on the capital value of a certain rate it is not correlated to the income or rateable value and therefore violates the requirement of reasonableness. It was further held that as a general rule it may be said that so long as a tax retains its character as a tax and is not confiscatory, or extortionate the reasonableness of the tax cannot be questioned. It is not possible to put the test of reasonableness into the straight-jacket of a narrow formula. The court further held that levy of tax under the Act at 0.4 percent of the market value of the urban land is by no means confiscatory in effect. Merely because the property tax under the Municipalities Act and the tax on urban land under the 1966 Act, both enacted under entry 49 exhaust an unreasonably high proportion of income it cannot be said that the charging section under i the 1966 Act is unreasonable. The basis of tax being different it is not permissible to club together the two taxes and complain of the cumulative burden. If the tax is on the market value of the urban land it does not admit of a complaint that it takes away an unreasonably high proportion of the income" In Indian Telephone Industries Limited, Bangalore and Vs. State of Karnataka and etc. etc., it was held in para No. 10 that :

"Art. 19(1)(f) and 31 of the Constitution that guaranteed right to acquire and hold property and the right to claim compensation for the property acquired for a public purpose have been deleted by the Constitution 44th Amendment Act that came into force on 1-8-1979. With the deletion of those Articles, these petitioners, even if they can invoke those Articles cannot sustain their challenge to the Acts. From this also the challenge of the petitioners based on Articles 19(1)(f) and 31 of the Constitution is liable to be rejected".

The court also examined the case assuming that Articles 19(1)(f) and 31 were part of the Constitution. In D.G. Gose and Co. (Agents) Pvt. Ltd. Vs. State of Kerala and Another, besides holding that Kerala Buildings Tax Act (7 of 1975) was within the competence of the State Legislature, it was also held that the method for determining the capital value of a building on the basis of its annual value is not hypothetical and arbitrary. Mr. Kuhad, learned counsel for one of the petitioners has contended that under Article 300A of the Constitution of India a tax law is to be reasonable. The effect of law and not its purported purpose is to be seen. He further contends that deletion of Article 19(1)(f) is of no consequence and taxing law is subject to Article 14 and because it is against fairness and reasonableness and is arbitrary it is liable to be struck down under Article 14 of the Constitution. In support of his submission. He has placed reliance on Lohia Machines Ltd. and Another Vs. Union of India (UOI) and Others, in the dissenting judgment, ithas been held that: --

"To establish arbitrariness or unreasonableness it does not become necessary to prove that the undertaking of the assessee will be completely crippled and will have to be closed down in consequence of the withdrawal of the relief with retrospective effect. There cannot be any doubt about the real possibility of very serious prejudice being caused to the assessee for no fault of the assessee..... The operation of the retrospective amendment is bound to have very serious effect on the assessee and there is reasonable possibility of the business being adversely affected and seriously prejudiced The retrospective amendment, therefore, is also violative of Article 19(1)(g) of the Constitution."

The majority did not express any opinion on this point. The observations in the dissenting judgment have no relevance to the present case because they were considering a case of withdrawal of relief with retrospective effect In my opinion the tax is not expropriatary and is not open to challenge on the ground being corifiscatory and excessive, unreasonable and arbitrary. After having gone through the provisions of the Act it cannot be said that there is any arbitrariness in it and merely because royalty, dead rent surface charge was being realised under the Minor Mineral Concession Rules the tax does not become excessive, rather the taxes or charges under other statutes cannot be taken into consideration while examining the vires of the State Act on any ground whatsoever.

Re : Question (iii)

15. The contention of the learned counsel for the petitioners is that the State Act creates hostile discrimination between mine-owners similarly situated. A man holding 100 X 100 meters for a costly mineral such as Gold, Silver and Diamond, will have to pay heavy land tax than the one who is having a lease of one square meter for any minor mineral. That apart, the notification dated August 1, 1985, exempts land from the purview of the Act. It is also contented that abadi land is exempted from the provisions of the Act u/s 2(g) of the Act. There are certain mines within urban area which are exempted from the provisons of the State Act. This is apparently discriminatory between these mines which are situated within Urban area and those Mines which are not so situate. According to the non-petitioner there is no discrimination in the imposition of the tax, and the State Legislature is competent, they can choose the object to be taxed and it is not necessary that to tax one had to tax all. A perusal of the relevant provisions of the Act will show that even its Statements of Objects and Reasons shows that it is a tax on the land situated in area other than urban area and the purpose is to augment the revenue of the State. Thus the State intended to levy tax on such lands as are situated in areas other than the urban areas or notified area, and the reason is obvious from the statement of objects and reasons that so far as the land and buildings which have been excluded, that have already been taxed under the Rajasthan Land and Buildings Tax Act, 1964 (18 of 1964). u/s 4 a power is vested in the State Government to exempt lands mentioned therein which are owned by (i) Central Government (ii) the State Government or a local authority or waqf property. Small area of land up to 2 hectares has been exempted from payment of tax under the Act and it cannot amount to any hostile discrimination because the land-holders of two hectares land or below are a class by themselves. In British India Corporation Ltd. Vs. Collector of Central Excise, dealing with the case of foot-wears it was held that it is a fallacy to assume that there can be no classification of manufacturers on the basis of the number of workers or the employment of power above a particular horse-powers. It was held that the legislation of that type depending upon the number of workers or the extent of power employed, is frequently to be found and it is not discriminatory. A reference may also be made to the case of Orient Weaving Mills (P) Ltd. Vs. The Union of India (UOI), thereof, it has been held that it is always open to the State to tax certain classes of goods and not to tax others. In Raja Jagannath Baksh Singh Vs. The State of Uttar Pradesh and Another, it has been held that taxing statute can be challenged on the ground being discriminatory. In that case the tax under the U.P. Large Land Holdings Tax Act (31 of 1957) had been levied on the landholders. In para 16 it has been held that :

"A taxing statute can be held to contravene Article 14 if it purports to impose on the same class of property similarly situate an incidence of taxation which leads to obvious inequality. There is no doubt that it is for the Legislature to decide on what objects to levy what rate of tax and it is not for the courts to consider whether some other objects should have been taxed or whether a different rate should have been prescribed for the tax. It is also true that the legislature is competent to classify persons or properties into different categories and tax them differently, and if the classification thus made is rational, the taxing statute cannot be challenged merely because different rates of taxation are prescribed for different categories of persons or objects. But if in its operation any taxing statute is found to contravene Article 14 it would be open to courts to strike it down as denying to the citizens the equality before the law guaranteed by Article 14."

In D. Kastur Chandji v. State, AIR 1967 Madh Pra 268, in para No. 15 dealing with the challenge to the validity of Madhya Pradesh Nagriya Sthavar Sampati Kar Adhiniyam (14 of 1964) it was held that the Act applies to urban immovable property and in itself creates no discrimination. ''Urban'' and ''Rural'' property are two distinct and defined classes of property. If therefore the Legislature has chosen to impose tax on urban property only, it cannot be held that there has been discrimination between ''urbanities'' and ''ruralities'' contrary to Article 14 of the Constitution. In Laxmi Narayan Agarwalla and Others etc. Vs. State of Orissa and Others etc., one of the arguments advanced in challenging to the validity of the Act there under consideration was that Cess Act was violative of Article 14 of the Constitution. It was held that there is an intelligible differentia distinguishing lands held for carrying mining operations from other lands and the differentia has a rational relation to the objects sought to be achieved.

16. It is well known that in case where the lands are left out of the taxation, then it is for the revenue to satisfy the dual test that there is intelligible differentia in excluding certain lands. In the instant case as already stated, so far as urban lands are concerned, they are already subject to tax under the Rajasthan Land and Buildings Tax Act and that is why they were excluded from definition of land u/s 2(g) of the State Act Similarly, lands exclusively used for residential and agricultural purposes have been excluded. In my opinion there is an intelligible differentia in the lands held and used for purposes defined in Clauses (i) to (iv) of Section 2(g) of the State Act and those exempted from it, such as lands situated in Abadi area or notified area This differentia has rational relationship with the object sought to be achieved. The challenge to the State Act on the ground that it is discriminatory does not survive.

Re : Question (iv)

17. Section 4(i)(b)(iii) of the State Act provides that no tax shall be payable under the Act on the lands held or used for public purpose or public worship. The contention of the learned counsel for the petitioners in few writ petitions; is that acquisition of the land for production of cement has been held to be a public purpose and in this connection reference has been made to Raja Anand Brahma Shah Vs. State of Uttar Pradesh and Others, . It is contended that the State Government acquired the land for production of cement i.e. for a public purpose and therefore so far as the few petitioners are concerned, no tax can be levied. This argument carries no weight. An expression used in a particular Act need not be given the same meaning more-so, when two do not deal with cognate subjects. (See S. Mohan Lal Vs. R. Kondiah, . It is not disputed that the petitioners are the owners of the cement industries. Merely because the land was acquired under the Rajasthan Land Acquisition Act and the purpose therein was defined as Public Purpose it cannot be said that the petitioners are holding or using the land for public purpose. In the contest the words ''public purpose'' have been used in Section 4(1)(b)(iii) of the State Act the petitioners cannot be said to be holding or using the land for public purpose.

18. The result is that none of the grounds to the challenge to the Rajasthan Land Tax Act 1985 survives. All the writ petitions are dismissed with no order as to costs.