Jayant Patel, J.@mdashAs the facts are common, all the petitions are dealt with by this common judgment.
2. That the petitioners, by these petitions have challenged the validity of Rules known as Gujarat Land Revenue (3rd Amendment) Rules, 2003 so far as they relate to enhancement of revenue assessment qua the category "C" and to include the lands of the petitioners who are running quarry industries in the category of "any other use".
FACTS:
3. As per the provisions of section 48 of Bombay Land Revenue Code (hereinafter referred to as "the Code") the revenue was leviable on land under the provisions of the Code prior to the impugned rules, under Gujarat Land Revenue (Ist Amendment) Rules, 1992 (hereinafter referred to as "the Rules of 1992") framed by the State Govt. In the said Rules, the manner and method of recovery of revenue for the lands which are used for non-agricultural purpose (popularly known as Non-Agricultural Revenue Assessment) were provided which, interalia, included under the Rule 81 as per Rules of 1992 as under:
"81. Ordinary rates of non-agriculrural assessment:
(1) For the purpose of determining generally the rate of non-agricultural assessment leviable, the Collector shall, from time to time, by a notification in the Official Gazette,--
(a) divide villages, towns and cities into the following classes namely:
Class A: The cities of Ahmedabad, Vadodara, Surat, Rajkot, Bhavnagar and Jamnagar.
Class B: (i) Cities and towns other than those in Class A above and having a population exceeding 50,000;
(ii) such industrial and allied areas as may be notified in this behalf by the State Government from time to time irrespective of the population in such area.
Class C: Cities and towns with a population of more than 10,000 and upto 50,000 inclusive of the population in areas falling under clause (ii) of Class B within those cities and towns;
Class D: Towns and villages with a population of more than 5,000 and upto 10,000 inclusive of the population in areas falling under clause ((ii) of Class B within those towns and villages.
Class E: Villages with a population upto 5,000 inclusive of the population in areas falling under clause (ii) of Class B within those villages, (b) determine areas adjoining such village, towns and cities into following classes, namely:--
Class I--The peripheral area of five Kilometers adjoining the cities falling under Class A.
Class II--The peripheral areas of one Kilometer adjoining the cities and towns under Class B.
Class III-The peripheral area of one kilometer adjoining the cities and towns under Class C.
Explanation I: For the purpose of this rule "population" means population as ascertained at the last preceding census of which relevant figures have been published.
Explanation II: Where a village, town or any part thereof falling in a particular class on the basis of its population also falls within the adjoining peripheral area of another city, town or village specified in relation to such other city, town or village in clause (b) and falling in a different class then that village, town, city or part thereof shall be reckoned in that one of such two classes where high rates of nonagicultural assessment are applicable.
(2) The assessment shall then be fixed by the Collector on the lands used for nonagricultural purpose with reference to the nature of the nonagricultural use of such lands at the rates shown in Table A or Table B whichever may be applicable with effect from the commencement of the revenue year 1989-90, namely:
TABLE -A
Rate per square metre per annum in paise on lands
situated in villages, towns or cities referred to
in clause (a) of sub-rule (1)
--------------------------------------------------------------- Class of Residential Industrial use village Commercial or city, town use other other use village industry industry --------------------------------------------------------------- A 12 6 20 30 B 8 4 12 16 C 6 3 8 12 D 4 2 6 8 E 1 1 1 1 ---------------------------------------------------------------
TABLE -B
Rate per square metre per annum in paise on lands
situated in peripheral areas referred to in
clause(b) of sub-rule (1)
--------------------------------------------------------------- Class of Residential Industrial use Commercial or Peripheral use other use area --------------------------------------------------------------- I 8 12 16 II 6 8 12 III 4 6 8 ---------------------------------------------------------------
Provided further that in respect of lands situate within sites of towns or cities falling under any Class A, B or C.
(a) assessment at 33 1/3% of the rate applicable to them when put to industrial or commercial use.
(b) 10% of the rate applicable to them when put to residential use on or after the Ist August, 1981;
Provided also that where any lands situate in any town or city is already put to residential use before the Ist August, 1981, it shall not be liable to any assessment.
Provided also that no assessment shall be fixed by the Collector under sub rule (2) shall remain in force till such time as it is altered by him under the general or special orders of the Govt."
As per the aforesaid Rule, the assessment was to be recovered on the basis of various categories of use of land, namely, (i) residential use, (industrial use, which was sub-divided into two categories, namely (a) village industries and (b) other industries and (iii) commercial and other use. So, broadly, there were three main classifications of use and under the head of "industrial use" it was classified into village industries and other industries. For any use, other than residential or industrial use, there was common head known as "commercial and other use". It further appears that as per the aforesaid Rule of 1992 different rates were provided within the category of different use on the basis of location of land situated in various classes which were identified as Class A, B, C, D and E. Class "A" related to the lands situated in urban cities, Class "B" related to lands situated in the cities and towns having population exceeding 50,000, Class "C" related to the lands situated in the cities and towns having population of more than 10,000 but upto 50,000, Class "D" related to land situated in the town and villages having population exceeding 5,000 but not exceeding 10,000, Class E related to the land situated in the villages with the population upto 5,000. Further, it appears that so far as the peripheral limits of the urban cities are concerned the lands situated within the peripheral area of 5 KMs were included in Class A, lands situated within the peripheral area of 1 KM of cities and towns falling in Class B category were also included in Class B and for the peripheral area of 1 KM adjoining the cities and towns of Class C were included in Class C However, for such peripheral areas instead of rates prescribed under Table A, the rates applicable were as under Table B and the distinction between Table A and B was that under the head of "industrial use" there was no specific classification based on industrial use for village industries or other industries as they were in Table A.
4. It appears that the aforesaid Rules of 1992 continued to remain in operation till 2003, and however, the pertinent aspect is that the Rules of 1992 were made effective from the year 1989. In the year 2003 the impugned rules are framed as Gujarat Land Revenue (3rd Amendment) Rules, 2003 (hereinafter referred to as "the Rules of 2003"). Prior to framing of Rules it also appears that the draft rules were published and the objections/as well as suggestions were invited by the persons likely to be affected thereby and such objections were to be submitted by 7.8.2003. It is the case of the respondents that the petitioners did not file any objections. However, upon request of the learned counsel appearing for both sides the original file of the Government is made available to this court for perusal and it shows that the petitioners did not file objections but similar quaryholders of Sabarkantha District have filed objections protesting against the rise in the rates of revenue assessment for nonagricultural lands. The said aspect will be dealt with hereinafter on the question of law, but the perusal of the file further shows that the objections were considered and it was ultimately found by the State Government that the objections are submitted after the expiry of period of 30 days and it was found by the State Govt that there are no valid reasons for making change and the earlier rates of assessment are in existence since 1989 and the period of 14 years has passed and therefore the increase in rates is reasonable and ultimately it was decided by the State Govt to proceed for final notification. It appears that the final notification has been published on 26.12.2003 and the Rule 81 is sought to be substituted by the Rules of 2003 which reads as under:
"For Sub Rule (1) the following subrule shall be substituted, namely:
(1) For the purpose of determining generally the rate of non-agricultural assessment leviable, the Collector shall, from time to time, by a notification in the Official Gazette, divided villages, towns and cities into the following classes namely:
Class A: The cities of Ahmedabad, Vadodara, Surat, Rajkot, Bhavnagar and Jamnagar, Gandhinagar and area within limit of Ahmedabad Urban Development Authority (AUDA), Vadodara Urban Development Authority (VUDA), Surat Urban Development Authority (SUDA), Rajkot Development Authority (RUDA), Bhavnagar Urban Development Authority (BUDA), Jamnagar Urban Development Authority (JADA), Gandhinagar Urban Development Authority (GUDA) and Junagadh Municipal Corporation and 5 KMs peripheral area of the Junagadh Municipal Corporation.
Class B: (i) Cities and towns other than those in Class A above and having a population exceeding one lakh and peripheral area of one Kilometer adjoining to those cities and towns;
Class C: All areas other than class A and Class B above;
Explanation I: For the purpose of this rule "population" means population as ascertained at the last preceding census of which relevant figures have been published.
Explanation II: Where a village, town or city or any part thereof falling in a particular class on the basis of its population also falls within the adjoining peripheral area of another city, town or village specified in relation to such other city, town or village falling in a different class than the village, town or city or part thereof shall be reckoned in that one of such two classes where higher rates of nonagicultural assessment are applicable.
For sub rule (2) and Table A and B thereunder, the following shall be substituted, namely:
(2) The assessment shall then be fixed by the Collector on the lands used for nonagricultural purpose with reference to the nature of the nonagricultural use of such lands at the rates shown in Table appended hereto with effect from Ist August, 2003:
TABLE
Rate of square meter per annum in paise on lands
situated in villages, towns or cities as
classified in subrule (1)
-------------------------------------------- Class of Residential and city, town charitable use Anyother use vilalge -------------------------------------------- A 50 Paise 100 Paise B 25 paise 50 Paise C 10 paise 25 paise --------------------------------------------
Explanation: For the purpose of this table, charitable use means such use as the State Govt may by order specify from time to time."
5. The perusal of the impugned rules shows that the categorisation on the basis of location of land is made into three classes as against earlier 5 classes. In the impugned Rules Class A includes the lands located in the urban cities and the land falling within the area of Urban Development Authority of the said urban cities and also the area of Gandhinagar Urban Development Authority, the Junagadh Municipal Corporation and the peripheral area of 5 KMs. of Junagadh Municipal Corporation. Class B as per the impugned rules provides for inclusion of the land located in the cities and town other than those which are falling in Class A having population exceeding 1,00,000 and peripheral area of 1 KM adjoining to such cities and towns. Class C as per impugned rules includes the land located in all other areas than those which are falling under Class A and Class B. Explanation 1 provides for the basis of population as per the last census which in the present case would be of the year 2,000 Explanation 2 provides for applying higher rates of nonagricultural assessment if the land is located in an area falling under more than one class. Subrule (2) of impugned rules provides that the assessment is then to be fixed by the Collector on the basis of land use for nonagricultural purpose, performance, nature of the nonagricultural use. Such land at the rate shown in the table and the perusal of the rates shows that as against earlier three categories for use including sub-categorisation of village industries and other industries the classification on the basis of use is made into two categories, namely, residential and charitable use and anyother use. The explanation of table provides for charitable use means such use as the State Govt may by order specify from time to time. The perusal of the file shows that the State Govt by exercise of such power has categorised and included only certain classes of use as charitable, namely, the activities like religious, dispensary/hospitals(which are run on "no profit no loss basis), gosala, institutions giving shelter to the cattle (pinjrapole), library, institutions rendering services to old aged and children. The petitioners who were earlier falling in E category and the rates of NA assessment as per earlier rules was of 1 paise per Sq. Mtr, is now raised to 25 paise per Sq. Mtr since as per the classification of the impugned rules, such rate is chargeable on the basis of location of the land. The petitioners who are now falling in C category have approached this court challenging the constitutional validity of the rules so far as they relate to placing them under "any other use" and for charging 25 ps per Sq. Mtr as against earlier rate was 1 Paise per Sq. Mtr under "any other use".
SUBMISSIONS:
6. Mr. A.J. Patel, Ld.counsel appearing with Mr. Shah for the petitioners mainly raised the contention that the impugned rules are in contravention to section 48 of the Code in as much as per Mr. Patel section 48 of the Code expressly provides for power to levy land revenue with reference to the use of land. It has been submitted that section 48 classifies the land, on the basis of use, into five categories, namely, (i) for the purpose of agriculture, (ii) for the purpose of residence, (iii) for the purpose of industry, (iv) for the purpose of commerce, or (v) for any other purpose, whereas, in the present impugned rules, the said aspect is ignored by the rule making authority and the classification is made on the basis of only two categories, namely, (i) residential, charitable and (iii) any other purpose.
7. Mr. Patel also submitted that if for different categories of use one rate is made applicable as sought to be done in the present impugned rules, inequals are treated as equals and consequently the rules would be rendered not only in contravention to the provisions of section 48, but also would be rendered discriminatory and arbitrary and therefore violative of Article 14 of the Constitution of India. Mr. Patel also submitted that the classification on the basis of use of land is made u/s 48 of the Code with the purpose that use of land would make a different yardstick or yield for the purpose of charging revenue and he submitted that when the legislature while enacting the section has concisely made 5 types of classification for the purpose of charging revenue, the rule making authority could not have ignored the same and he submitted that as it is the impugned rules are running counter and in contravention to section 48 of the Code. He further submitted that when the use is taken into consideration it can reasonably be considered that the yield or benefit derived by utilisation of the land for industrial purpose will be less in comparison to the benefits derived by utilisation of land for commercial purpose keeping in view the area of land used for such purpose. Mr. Patel submitted that the industry would normally require larger area in comparison to the commercial or any other purpose. He also submitted that even amongst the industries which are situated in village areas even otherwise are also required to be encouraged by the State Govt. If the objects of special benefits are not continued as was under the old Rules of 1992, it would seriously affect the industries situated in the village area. He, therefore, submitted that the said aspects were required to be considered by the rule making authority and as it is not considered the rules would be rendered arbitrary and violative of Article 14 of the Constitution of India.
8. Mr. Patel lastly submitted that even otherwise also giving raise in the land revenue by 25 times in comparison to old rules is to result into imposing the revenue having confiscatory character. He has submitted that if the quantum of revenue is considered as per impugned rules keeping in view the value of the property which is used for nonagricultural purposes it would be very high and the same consequently would result into taking away the total value of the property within a short span and therefore it is having effect of confiscatory in nature. Mr. Patel submitted that the land revenue though is not, in a strict sense, a tax, even a tax can not have the character of confiscatory in nature and therefore if the revenue is imposed having confiscatory character, the same would be unreasonable and unconstitutional. He, therefore, submitted that the levy sought to be imposed by the impugned rules upon the industries like the petitioners falling in C category deserves to be struck down.
9. On behalf of the respondent-State, it has been submitted by the Ld. AGP, Mr. Gori that the earlier rules were, though framed in the year 1992, given effect from 1989 and the present rules for the rates of land revenue are after a period of 13/14 years. Mr. Gori submitted that keeping in view the devaluation of rupee and rise in the inflation rate, it can not be said that the State Govt was not justified in framing the rules for revenue assessment as per the impugned rules. Mr. Gori also submitted that as such as per the report of the Finance Commission it was suggested to raise the rates of land revenue and the Govt has also considered the said aspects. He further submitted that the State Govt is not to retain the total income of the land revenue but has to part with the same to local bodies where the land is situated and the major portion is to be allotted to the local bodies like Gram Panchayat, municipalities or other such local bodies where the land is situated. He also submitted that such local bodies are in need of money for undertaking the development work and with a view to support the same the decision is taken to raise the rates of revenue by the impugned rules. Mr. Gori also submitted that as such the petitioners did not raise any objection when the draft rules were published and therefore the petitioners now can not make any grievance before this court by the present petitions. Mr. Gori also submitted that figures of valuation which are given in the petitions are illusory in as much as the same refer to cost paid by the petitioners at the relevant point of time and no basis is shown for giving valuation as per the Govt. Mr. Gori also submitted that as per section 191 of Gujarat Panchayats Act the State Govt has power to levy other taxes also and if the limits provided u/s 191 of the Gujarat Panchayats Act is considered, it can not be said that the tax is having confiscatory character and the raise given in the revenue by the impugned rules can not be said to be unreasonable or arbitrary. He, therefore, submitted that the challenge made by the petitioners to the impugned rules is baseless and this court may not interfere with the decision of the State Govt of framing rules for raising the income of revenue when major portion of which is to be utilised by the local bodies where the land is situated.
FINDINGS:
10. The action of the State Govt of framing the rules and the impugned rules itself is a subordinate piece of legislation and therefore as per the settled legal position the scope of judicial scrutiny to such rules or subordinate piece of legislation would be restricted to that extent only. If a subordinate piece of legislation is beyond the scope of the Act or authority, the court may interfere. If such subordinate piece of legislation is in contravention to parent Act then also it would call for judicial interference. The rules can not be said to be unreasonable or arbitrary merely because a second opinion can be formed by the court considering the facts and circumstances of the case but, at the same time, if the rules are discriminatory on the face of it of if the rules imposing a tax is having effect of confiscatory in nature or it results into taking away the property of the citizen, then also it may call for judicial interference by this court under Article 226 of the Constitution. It is sell settled that the yardstick or criteria for testing the validity of an action of the State Govt having administrative or quasi judicial character can not be made applicable while testing the validity or constitutional validity of the rules imposing tax or revenue. Keeping in view the aforesaid aspects the matters will have to be examined.
11. In case of
" It is necessary to remind ourselves as to what is the precise nature of impost of land revenue on the lands used for agricultural and nonagricultural purposes u/s 48 of the Code. In Bommaji Ardeshir Wadia v. Secretary of State AIR 29 PC 34, the judicial committee was concerned with the question of the nature of the grant for services rendered to the Government and in that context the Judicial Committee referred to the nature of the impost of land revenue. The Judicial Committee observed as under:
''.... The Act of 1879 by section 48 does not provide for an additional assessment; it only provides for an altered assessment to be imposed according to rules. Once the building assessment is imposed the old agricultural assessment has gone for ever. This if it is thought out is quite logical. The root idea of British rule in India is that he who has the soil must pay not in kind like a proper tithe but in money a certain proportion of what he gets from the cultivation and this money payment can be raised from time to time so as to maintain the proportion to the fruits of cultivation which have increased. If, therefore, the cultivation for agricultural purposes is given up and the land is used for building the building assessment carries out the same idea as being the equivalent for a certain proportion of what the cultivation of lands under these new conditions might bring....''
In section 48 if the location of land has no relevance in fixing the assessment there could not have been different assessment for agricultural land situated within different parts of the State. The legislative intention in section 48 for assessment of land revenue with reference to use of the land by necessary implication postulates the assessment of the land with reference to its location also. Such nonagricultural assessment was to be a percentage of the full market value of the land as a building site or the market value of the land estimated on the basis of actual sales of unoccupied lands for building purposes in the locality where there is a demand for building site. The special rate was liable to be revised on expiry of ten years or at such another interval as the State Govt may direct. It is thus clear that the concept of fixing the nonagricultural assessment rate not only with regard to the use of the land but also with regard to its location is not a novel concept introduced by the impugned Amendment Rules, 1977
While considering the point as to whether Rules of 1977 is violative of Article 14 of the Constitution in as much as they are arbitrary, unjust or discriminatory at paras 26 and 27 observations are made and the relevant observations made at para 27 are as under:
"It is not capable of any debate that a taxing statute is not wholly immuned from attack on the ground that it infringes the equality clause of Article 14 of the Constitution. Courts are however not concerned with the public policy which has prompted the State in adopting a particular taxing measure nor are they concerned whether there would have been more reasonable and equitable way of taxing the subject. What Article 14 provides is the class legislation and not classification. In order to be a classification beyond the prohibition of Article 14 it should be found on intelligible differentia which distinguishes the persons grouped together from those who are left out and the differentia must have a rational nexus with the object sought to be achieved by the Act. The main principle is that the State does not have to tax everything in order to tax something. The principle provides a wide liberty and latitude to the State of selection and freedom in appraisal not only in the objects of the tax and manner of the tax but also in the determination of the rate or rates applicable. The next principle which has been established on the highest authority is that the burden of proving discrimination is always heavy and heavier still when taxing statute is under attack. The burden is on the person complaining of discrimination. The burden is of proving not possible inequality but hostile unequal treatment. As long as there is equality and uniformity within each group and/or category of the objects to be taxed under a statute the measure can not be attacked on the ground of it being discriminatory notwithstanding that some concluded in a class or group get some advantage over others due to fortuitous circumstances or a peculiar situation provided they are no sought for a special treatment. It is equally settled that mere fact that a tax falls more heavily on some in the same group or category is by itself not a ground for its invalidity for then hardly any tax should escape such a charge.(See
''One must first find out the object of the impugned provision and compare it with the topic of legislation and then try to discover a reasonable basis for making a difference between different classes of persons affected by the law in keeping with the topic of legislation and the object of the enactment. A difference which is aimless, arbitrary or unreasonable and which is unconnected with the object in view must remain a discrimination and incapable of being upheld. In all cases in which laws were struck down under Article 14 this was the approach. It is hardly necessary to refer to the previous cases because each provision to be tested in its own setting and no two cases can be alike.''
At para 33 it has been observed, interalia, as under:
"The first aspect which we have to consider is as to whether the prescribed division of the district into different classes of cities, towns and villages is founded on intelligible basis which would distinguish the persons grouped together from those who are left out. We do not think and really no attempt was made on behalf of the petitioners to treat these different classifications as an unintelligible or to treat this differentia as one without any distinction. The aspect which immediately arises for our consideration is: What is the object of the impugned provision? The object, in our opinion, is apparent. It is to locate the land and ascertain the purpose of its use. The two fold exercise of locating the land and ascertaining the precise use thereof is actuated with the object of finding out the optimum use of the land and the nonagricultural use. It hardly requires much of imagination to appreciate that the fruits of cultivation of the land by putting it to different non agricultural use, such as, residential, industrial, commercial etc would materially vary and therefore unless the broad classification, as has been brought to be attempted in the impugned Amendment Rules of 1977, is made, there is possibility of the Rules being exposed to the vice of treating unequals as equals, which, in its turn, would render such provisions as violative of Article 14 of the Constitution. Where objects, persons or transactions essentially dissimilar or treated by the imposition of a uniform tax, discrimination may result since the refusal to make a rational classification may itself in some cases operate as denial of equality (see
It is, further, observed at para 34 as under:
"The topic of legislation is obviously levy, assessment and collection of the land revenue. The genesis of the land revenue, as explained by the Privy Council in Bomanji Ardeshuir Wadia''s case (supra) is that he who has the soil must pay in money a certain proportion of what he gets from cultivation and this money payment can be varied directly with the increase in fruits of cultivation from the land so as to maintain a certain proportion and the nonagricultural assessment also carries out the same root of idea, namely, the revenue must be equivalent to the produce from the cultivation of the land by putting it to nonagricultural use under the changed conditions. We are, therefore, unable to agree with the learned counsel for the petitioners that the object of the impugned provision has no connection with the topic of the legislation. In our opinion, the classification of the land having regard to its use and location is inextricably connected with the levy and assessment of the land revenue. The learned counsel for the petitioners was right when he urged that the occupants of the land situate in different cities, towns and villages will be assessed at different relevant rates prescribed in the impugned Amendment Rules and, therefore, assessed in different sums even though they may be putting the lands to the same type of use. He was also right when he contended that the occupants of the land situate within different classes of cities, towns and villages will be treated differently in the matter of assessment from those occupants of the land situate within different classes of peripheral areas since different rates have been prescribed for the cities, towns and villages and the peripheral areas. We are afraid this is too spacious a contention which can invalidate the impugned Amendment Rules. A State has a very wide latitude in classification for taxation in as much as it is allowed to prescribe different rates of taxation for different persons and objects. It is recognised on principle and authority that equal protection rule is not infringed by a State providing for assessment on different basis. It can provide for the assessment of one type of intangible at its actual value while other intangibles can be assessed at their face value and the State has extremely wide discretion in classifying the properties for tax purposes so long as it does not practice clear and hostile discrimination against particular persons or classes(see Twyford Tea Co Ltd''s case-supra). No doubt if the same class of property similarly situate is subjected to an incidence of taxation which results in inequality, the taxing measure has the vice of the breach of the rule of equality(See Moopil Nair''s Case--supra). It is equally settled that so long as there is equality and uniformity within each group of class, the tax can not be attacked on the ground of it being discriminatory although due to a particular situation some included in a class or group may get some advantage over others provided no special preferential treatment is sought to be given to them (see Khandige Shyam Bhut''s case-supra). It is therefore difficult for us to agree with the petitioner''s counsel that merely because the use of the land is same or similar by the occupants of the lands situate in different classes of cities, towns or villages, there is a breach of the rule of equality. There is no case that in the same class of cities, towns or villages the occupants using the lands for same purposes are treated differently. The apparent difference in the matter of assessment of the occupants of the lands in different classes does not really constitute discrimination much less hostile discrimination against particular persons or classes since the classification of the persons, objects or things is bound to result into some kind of different treatment. The burden of proving discrimiantion is on the person complaining of the same. The burden is of proving not possible inequality but hostile inequal treatment. We are not satisfied that any hostile discrimiantion is practised against any particular user of the land. The entire legislative attempt of the classification under the impugned Amendment Rules is with an ultimate view of equalising the tax incidence through the method of ascertaining the use of the land which is not possible de hors its location. It should be emphasised at the cost of repetition that the land revenue u/s 48 of the Code read with Rule 81 of the Rules is to be assessed according to the use of the land is put and ''especially in case of use of the land for the purpose other than agriculture, the nonagricultural assessment would be assessed keeping in view the use of to which the land is put and the profit and advantages derived from such use of land'' (see
Section 48(1) of the Code which is pressed in service and is relevant for the purpose of the present case reads as under"
"48. Manner of assessment and alteration of assessment--prohibition of use of land for certain purposes---
(1) The land revenue leviable on any land under the provisions of this Act shall be assessed or shall be deemed to have been assessed, as the case may be, with reference to the use of land--
(a) for the purpose of agriculture
(b) for the purpose of residence
(c) for the purpose of industry
(d) for the purpose of commerce, or
(e) for any other purpose.
12. On true construction of section 48 it appears that the land revenue is leviable and shall be assessed with reference to use of the land referred to in Classes A to E and therefore at the most it can be said that the revenue shall be assessable with reference to the use of the land but, thereby, it can not be said that the assessment must be different on different rates merely because the use is falling in A to E categories separately. The provisions of section 48, in my view, can at the most be read as the enabling power to assess the revenue on the basis of use of the land. Section 48 does not prohibit the assessment of the revenue at the same rate if the use differs from Class B to E separately as per the scheme of the Code. Use can be classified broadly into two categories, i.e. (i) agricultural use and (ii) non-agricultural use. Within nonagricultural use there may be different uses as mentioned in Class B to E and class E is residuary class. Therefore, the classification of use in categories B to E within the use of nonagricultural purposes can at the most be read as authorising the rule making authority to make the assessment of revenue keeping in view the use of the land. The provisions of section 48 can not be read as putting restriction upon the power of the rule making authority to apply same rates if the use is different, may be falling in category B to E but thereby it does not mean that the rule making authority would not be required to keep in view the use, but at the same time, it can not be said that if there is uniform rate or different rates are provided for more than one category of use of land, the same would run counter the provisions of section 48 of the Code. Section 48 of the Code recognises the various uses of the land and the assessment of the revenue for such purposes and it does not restrict in any manner the power of the rule making authority to fix the particular rate for a particular use of land. It is within the power of the rule making authority to fix the uniform rate for the land, its use for the purpose of more than one classification in category B to E. So far as the agricultural land is concerned, the same is not the subject matter of this petition and therefore the question regarding use of land for agricultural purposes is not required to be examined nor is required to be decided. Therefore, if the rule making authority has fixed the rate for use of land for industry or commerce and both such lands are included in any other purposes in distinction to the use of land for residence, it can not be said that the rule so framed by the rule making authority is in contravention to the provisions of section 48 of the Code nor can it be said that the same is not within the power of the rule making authority. Therefore, the said contention of Mr. Patel can not be accepted and deserves to be rejected.
13. The aforesaid takes me to examine the second contention on the aspect of unreasonableness in including the land under head of ''anyother purpose'' in distinction to the use for residence or charitable purpose as per impugned rules. In view of the observations made hereinabove if the rule making authority has decided to frame the rules by including the land use for all other purposes, by separately classifying the lands used for residence and charitable purposes, for applying identical rate, it can not be said that the same would be unreasonable or arbitrary. As such, the rule making authority has made two broad classifications, one for residential and charitable purpose and another for any other purpose which may include the industry or commerce. Even if the matter is considered on the basis of use of land, then also the use of land for residence or charitable purposes can be said as different classes in comparison to the use of land for industrial, commercial or other purposes. The intention appears to be to classify the land used for business, commerce or profit making activity in contradiction to the nonprofit making activity. It can not be said that there is no intelligible differentia made by the rule making authority while forming of classes of the persons holding the land and using the same for residence and charitable purposes. Therefore, the classification made by the rule making authority consequently resulting into including the petitioner in the group of class using the land for any other purpose can not be said to be arbitrary or unreasonable which would violate the Article 14 of the Constitution. Therefore, the contention of Mr. Patel based on the aforesaid submission can not be accepted and deserves to be rejected.
14. The contention that whether the impugned rules so far as they relate to the petitioners of the class of holders of land falling in C category is discriminatory or whether the imposition or increase in revenue by 25 times is having character of confiscatory in nature, deserve consideration. Upon the examination and perusal of the file of the State Govt, it appears that there was recommendation to increase the rates of revenue by three times. The same is reflected from the proposal moved from the revenue department, C Branch. The rational shown is that since last 14 years there is no increase in the rates of revenue and the rate of inflation is going up and there is devaluation of rupee.
15. Keeping in view the said aspects, if the revision of rate of revenue is considered in comparison to the rates as they were in existence, for the purpose of the categories A,B,C, D and E for categories A, B and C, it can broadly be said that the lands falling in earlier categories A, B and C would be included in the present categories A and B of the impugned rules. So far as the land falling in categories D and E are concerned as per the earlier rules, would broadly fall within the category C of the impugned rules. If the revision of rates are considered keeping in view the aforesaid broad classification as per the rules of 1992, for residential purpose, Class A was 12ps, Class B was 8ps and Class C was 6ps which are now raised by the Rules of 2003 for Class A 50ps. Class B 25ps. Similarly, for Class D and E as per Rules of 1992 for residential purpose it was 4 ps and 1 ps per Sq. Mtr which now is sought to be raised to 10ps as per rules of 2003 for Class C category. Therefore, if the increase is considered for Class C category in the Rules of 2003, in a village where the population is upto 5,000 rise in the rate will be by 10 times in comparison to earlier rates as per rules of 1992. Similarly, if the matter is considered for classes A, B and C for industrial use and for commercial and other uses, the rates prevailing were from 6ps to 3 ps for village industries, 20ps to 8 ps for other industries and 30ps to 12ps for commercial and other uses. In comparison to the same, the increase in the rates by the Rules of 2003 is 100ps for Class A, 50ps for Class B. Even if the minimum is taken as the basis as was followed in the Rules of 1992 as 3 ps the maximum rise given is by 15 times. In comparison to the same, if for the earlier classes "D" and "E" the rates are considered, for village industries they were 2ps and 1ps and for other industries 6ps and 1 ps and for commercial and other uses it was 8 ps to 1 ps. As against the same, in the present impugned rules of 2003 for class Class C it is raised to 25ps and if the minimum of earlier Rules 1992 is considered and compared, the rise is 25 times, more particularly in respect of the land situated within the limits of village and not exceeding population of 5,000. The perusal of the file of the Govt/rule making authority shows that the only rational coming out from the record is simplification of rules and with a view to avoid further litigation. Simplification of rules and simplification of procedure if considered by the rule making authority can be said to be on rational basis. However, for making distinction in giving rise of 25 times as such no rational is borne out from the file of the rule making authority nor the State Govt has justified in the affidavit in reply.
(As court time is over, SO to 14/10/04 for further dictation)
14.10.2004
16. The perusal of the affidavit filed on behalf of the State Govt shows that it refers to the objections filed by Ankleswar Industries Association, Federation of Industries and Associations (Gujarat), Ahmedabad, Karjan Taluka Industries Association, Karjan, Dist. Vadodara, President Taluka Panchayat, Gadhada (Swan), Dist.Bhavnagar. However, it has been submitted that the respondents did not receive the objections in time. It has also been stated that the decision is taken by the Govt in exercise of its policy decision which is said to be just and proper. The rational is sought to be canvassed in para 6 of the affidavit filed on behalf of the State Govt which is as under:
"I state that at this juncture, it may be further relevant to note that before introducing the Gujarat Land Revenue (3rd Amendment) Rules, 2003 vide notification, dated 25.12.2003 the State Govt has actually considered various objections and after duly considering the overall facts and circumstances as well as various reports by the Finance Commission and other such bodies, a notification came to be issued which in my humble submission is mainly issued to achieve the means and objects of the Act."
Further, at para 7 it has been stated as under:
"It would further be most relevant to note that the impugned notification was sought to be issued by the State of Gujarat to achieve various objects including mobilisation of revenue resources so that the same can be utilised for the welfare activity of the State".
At para 8, it has been stated as under:
"Thus, these rules were not revised for 14 years. It was, therefore, necessary to revise the rates and therefore after a long period of 14 years, the State Govt duly considered the other aspects of the revised and fixed rates of nonagricultural assessment, which is just and proper and in consonance with the provisions of law. I state that it would be further relevant to note that while carrying out the exercise, whereby the impugned notification came to be passed, the State Govt has also taken into consideration the steep price in inflation as well as price index. I state that actually the impugned rise in nonagricultural assessment which is under challenge in the present petition is in consonance with and thus commensurate as inflammatory and steep rise in price index. Therefore, the averments made by the petitioner apropos exhorbitant rates of nonagricultural assessment is actually illusionary."
Further at para 9 it has been stated as under:
"That prior to revision, the rates of NA assessment were classified into 29 various categories depending on the population of village/town/city/its peripheral areas and use of the land, i.e. for residential, village industries, other industries, commercial use and other use. This tax structure was found to be complicated. I further state that by way of impugned notification, as stated hereinabove, the classification as well as structure of schedule of rates were sought to be rationalised and simplified for maintaining overall transparency and smooth administration of the issue on hand."
Further at para 10 it has been stated as under:
"I further state that it would further be relevant to note that ultimately revenue so collected in view of the aforesaid notification will as per the provisions of law, more precisely, as per the provisions of Gujarat Panchayats Act will be passed on to the bodies of local self governance I state that even otherwise to achieve the aim and object of 73rd amendment in Constitution of India, such objectives of local self governance are to be encouraged and to achieve such objects, various steps were necessitated including the impugned notification and therefore after duly considering with all aspects, which may help to achieve aims and objectives of 73rd Amendment of Constitution the impugned notification came to be necessitated."
Therefore, no rational is coming out even from the affidavit in reply for justifying the different rates in the revenue assessment qua different lands and only the ground considered is the price index. Even in the file of the State Govt which is made available for the perusal of the Court shows that at the time when the proposal was moved it was considered that the revenue recovery should be increased by 5 times. Same is reflected from the note moved for the first time on 6.3.2003 at para 5 and the basis shown is the devaluation of rupee and the rate prevailing since last 14 years. The perusal of the proposal at para 6 shows that for D and E category from 1 paise for industrial use and for village industries, the proposal was for three times as per table A and for table B also it was three times and as such in respect of class of city for all the different uses of land for residential, industrial and commerce in the schedule of proposal it was suggested for three times rise in the revenue. The file further shows that thereafter on 15.3.2003 it was considered to modify the charge of revenue assessment and therefore suggestion was made to categorise the land in three classes on the basis of location and in two categories on the basis of use. It appears that in the note it has been referred to that the existing revenue is around Rs. 2.5 crores and if the category is modified as proposed and referred to hereinabove the income is likely to be around Rs. 5 crores. Ultimately, the said proposal subject to modification for class A is accepted. Therefore, it appears that the only ground on the basis of which the rise suggested from 1 paise to 25 paise qua the land falling in C class is simplification and the rationalisation of the revenue assessment. If the matter is considered on the basis of tentative income of the Govt, the resulting consequence of doubling the income can not be said as prohibited in view of steep rise in the prices and inflation and the rationalisation or simplification can be said as a valid ground for maintaining the simple structure. But for rationalisation it appears that there should be comparative circumstances to treat similarly situated persons differently before the rule making authority and for such purpose no material is available on record of the file of the authority nor in the affidavit filed on behalf of the State.
17. It is true that this court in its jurisdiction under Article 226 of the Constitution can not sit in appeal over the decision of the rule making authority nor the rule can be struck down as arbitrary or unreasonable merely because a different opinion can be formed by the court by substituting the reasons. However, when the legislature has delegated the power to the rule making authority, the exercise of power is subject to limitations and it has to meet with the test of Article 14 of the Constitution. If there is rational for treating two different classes or category of persons as equal and if the court finds that there is justification for such purpose, the court may not interfere since exercise of power is essentially within the domain of the rule making authority, but if there is no material on record nor the Govt is in a position to justify giving of of the same treatment to two different classes of persons, then such an exercise of power on the part of the rule making authority can be said as discriminatary and it would not meet with the test of Article 14 of the Constitution. The same would be the position if the similarly situated persons/class is to be treated differently.
18. It is well settled that when the validity of any statutory provision is under challenge, as far as possible, the court shall make an attempt to maintain the statutory provision and shall strike down if required only to the extent it is discriminatory or violative of constitutional provision. If the matter is examined accordingly, as observed earlier, the maximum rise in the revenue to all categories except the lands situated in C category or any other use is not exceeding 15 times whereas for the category of holders of land which was falling in E class as per rules of 1992, in the present rules of 2003 for any other use, the rise is 25 times. Had it been the ground only for increasing rates due to steep rise in the price index and inflation rate and if there is no material coming on record to justify for giving different treatment, the rule making authority could not have made the provision for giving rise to 25 times in comparision to the maximum rise given to another category not exceeding 15 times. Therefore, the impugned rules to the extent of rise in the revenue for C class of the land for any other use exceeding 15 times(consequently 15 paise) would be discriminatory and violative of Article 14 of the Constitution. The reference may be made to the recent decision of the Apex Court in the matter of Punjab Dairy Development Baard and Anr. etc v. Cepham Milk Specialities Ltd and Ors. etc reported in AIR 2004 SCW 4778 and it would be profitable to extract the observations made by the Apex Court in the said decision at para 14 as under:
"No rational explanation could be given as to why the levy was only on these plants. The only explanation given was that these plants could apply for reduction of the installed capacity in case they are not capable of using their entire capacity. It was stated that on such an application being made they would be allowed to reduce their installed capacity. We are not impressed by this explanation. One fails to understand why a milk plant should apply for reducing its capacity. It may consume, as per its capacity in seasons when that quantity of milk is available, but it may not be able to consume as per its capacity in seasons or at times when milk of that quantity is not available. Further, due to temporary closure of some machines for purposes of repairs or maintenance they may be consuming less during a particular period. Further, if there is no production/consumption and even if the plant is shut down the cess would still have to be paid. This would be so, even if the closure is for more than six months in any particular year. Irrespective of what their consumption/production is, these plants would have to continue to pay cess at the rate of 10 paise per litre of their installed capacity. We find that such a levy is arbitrary."
The Apex Court, at para 15, has observed as under:
"We also find that this levy is discriminatory. There is no levy on the farmers and cooperative societies, who produce the milk and/or milk plants whose capacity is less than 10,000 litres per day. No explanation is given which justified this discrimination. Faced with this situation, it was submitted that this court could read down the Act. It was submitted that from the definition of the term "milk plant" in section 2(d) of the Act, the words "which was registered under the Milk and Milk Products Order, 1992" be deleted. It was submitted that the words "licenced capacity" in section 12 be also deleted. It was submitted that it is settled law that wherever it is possible to uphold legislation by reading it down the Court must do so."
The Apex court, at para 16, has observed as under:
"There can be no dispute with the principle that if possible the provision of the Statute must be saved by, if necessary, reading them down. However, in this case, we are unable to accept this submission. As stated above, the Act has been amended in 2004. The levy is already abolished. At present the purchase tax is again being levied. For the period during which the Act subsisted, it is not possible for us to read it down in as much as it would now affect persons, who never went to court because during the period it existed it did not apply to them. Such parties are not before the court. We thus see no reason to delete the words as suggested on behalf of the appellants."
19. Further, the contention sought to be canvassed by Mr. Patel that the revenue assessment imposed by the impugned rules dealing with the land located in class C for any other use is having character of confiscatory in nature also deserves some consideration. In this regard, the petitioners have tried to rely upon the valuation of the land in question either on the basis of sale instances or on the basis of valuation made for converting the land as unrestricted tenure or for grant of permission to transfer the land. One of the examples given on behalf of the petitioners is that for the land situated at village Sonarpada where number of quarries are situated and some of the petitioners are having the land. To support the valuation of the land in question the petitioners have relied upon the order, dated 10.10.1996 passed by the Collector in which the valuation of the land as on 30.11.1994 is shown as Rs. 35,100/- per hectare which would mean Rs. 3.51ps per Sq. Mtr. Even if the normal rise on the basis of the land at the rate of 10% every year is considered from 1994 to 2003 then also the price of the land would not exceed Rs. 7/- per sq. mtr. No material is produced on behalf of the rule making authority to say that the valuation of the land is otherwise. Mr. Gori, Ld. AGP submitted that as such there is no jantri valuation made and the process is going of making jantri valuation of the land question situated in villages Sonarpada and others of taluka Songadh. Therefore, if Rs. 7/- is considered as the basis of valuation in the year 2003 per Sq. Mtr and in comparison to the said valuation if the revenue of 25 paise per Sq. Mtr is taken as the basis then the same would be around 3.50% of the valuation of the land. In case of
"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 can not be questioned."
However, it was further observed that:
"It is not possible to put the test of reasonableness into the straight jacket of a narrow formula. The objects to be taxed, the quantum of tax to be levied, the conditions subject to which it is levied and the social and economic policies which a tax is designed to subserve are all matters of political character and these matters have been entrusted to the legislature and not to the courts. In applying the test of reasonableness it is also essential to notice that the power of taxation is generally regarded as an essential attribute of sovereignty and constitutional provisions relating to the power of taxation are regarded not as grant of power but as limitation upon the power which would otherwise be practically without limit."
Ultimately, in the said case, it was found that the levy of tax at 0.4 per cent of the market value as unreasonable.
20. In the present case, as observed earlier, it is true that there can not be any straight jacket formula for finding out the character of tax as confiscatory or otherwise, but if the valuation of the property is considered, the assessment or rise in the revenue assessment to the extent was within the short span may result into recovering the whole value of the property from the citizen. Accordingly, if the rate of 25 paise per Sq. Mtr is considered in comparison to the value of the land as Rs. 7/-per Sq. Mtr the revenue assessment can be said as exorbitant and may not meet with the test of reasonableness. Further, it can not be ignored that the lands which are situated in the village area or within the limits of any other local authority would also be liable to other taxation of local authority. But, in view of the reasons recorded hereinabove, if the levy is maintained by permitting rise to the maximum of 15 paise it can be said that the levy would not continue to have the character of confiscatory in nature. Therefore, I find that it may not be necessary for this court to finally conclude upon the said issue.
21. In view of the aforesaid discussion, the impugned Rules of 2003 so far as they relate to giving rise to the revenue assessment of lands situated in C class for any other use to the extent of exceeding 15 times (in effect 15ps per Sq. Mtr) is discriminatory and therefore unconstitutional and is violative of Article 14 of the Constitution and hence the impugned rules to that extent are declared as unconstitutional and void. As a consequence, the impugned rules for the aforesaid lands shall continue to operate for rise upto 15 times only and therefore the revenue recoverable for the aforesaid lands would be 15ps per Sq. Mtr.
22. All the petitions are allowed to the aforesaid extent. Rule in each petition is partly made absolute. Considering the facts and circumstances, there shall be no costs.
Original files are returned to the Govt Pleader after the dictation of the judgment.
