Anant Mills Co. Ltd. Vs. State of Gujarat & Ors [1975] INSC 9 (21 January 1975)
ACT:
Constitution of India, 1950, Art. 14--Treating pending cases as a class different from decided cases, if a permissible classification.
Constitution of India, 1950, .Art. 14--Duty of the person challenging a provision of the Act as discriminatory--Constitutional validity, if could be decided on the basis of supposed existence of certain facts by raising a presumption.
Bombay Provincial Municipal Corporations Act (Bombay Act 59 of 1949) as amended by Gujarat Acts No. 8 of 1968 and No. 5 of 1970, Sections 129 and 137--Conservancy tax for different categories of properties--Tax, it should be related only to the expense for conservancy service for that particular category.
Bombay Provincial Municipal Corporations Act (Bombay Act 59 of 1949) as amended by Gujarat Act Nos. 8 of 1968 and No. 5 of 1970, proviso to section 129(b)--Corporation to determine different rates for different classes of properties--Proviso, if suffers from the vice of excessive delegation of legislative power.
Bombay Provincial Municipal Corporations Act (Bombay Act 59 of 1949) as amended by Gujarat Acts No. 8 of 1968 and No. 5 of 1970, Section 406(2) (e) rule 42 of Taxation--Appeal against a tax or rateable value--Deposit of amount claimed condition precedent to entertaining appeal--Appellate judge empowered to remove undue hardship to appellant--Requirement of deposit, if nullifies right of appeal--Provision if makes invidious distinction.
Constitution of India, 1950, Entry 49, List II, Schedule VII-"Land", if includes underground strata.
HEADNOTE:
The assessment of properties to property tax in Ahmadabad was made under the Bombay Provincial Municipal Corporations Act by making entries in the assessment books in accordance with the procedure prescribed in the Taxation Rules set out in Chapter VIII of Schedule A of the Corporations Act, A separate section of the assessment book was prepared by the Commissioner of the Corporation for each official year in respect of the assessment of property tax on certain kinds of properties like textile mills, factories and buildings of University. These properties were classified as special properties. There was some increase in the rateable value fixed by the Commissioner for the year 1964-65 and 1965-66.
The Commissioner also made initial entries in assessment book in respect of those properties for the year 1966-67. A number of writ petitions under Art. 32 of the Constitution were filed in this Court challenging the validity of the assessments for the years 1964-65 and 1965-66 as well as initial entries for the year 1966-67. The Supreme Court in the judgment New Manek Spinning & Weaving Mills Co. Ltd. & Ors. v. Municipal Corporation of City of Ahmadabad & Ors.
[1967] 2 S.C.R. 69, allowed the writ petitions and held the relevant entries in the assessment books to be invalid.
Rules 7(2) and (3) were also held to be invalid on account of excessive delegation of powers by the legislature. The taxation on the basis of floor area as adopted by the Corporation was held to violate Art. 14 of the Constitution.
When the Corporation initiated steps to make fresh assessment for the years 1964-65, 1965-66 and 1966-67, it was unable to do so in view of the decision of the High Court in the case of Ahmadabad Municipality v. Keshavlal 6 G.L.R. 228 wherein it was held that the Corporation had no power to assess and levy property tax for any official year after that year had ended. in order to get over this difficulty, the legislature enacted Gujarat Act 8 of 1968.
New Sec. 152A 221 and new rules 7 and 21B were inserted. When notices were served on the petitioners to furnish return of the particulars, the petitioners filed petitions in the High Court challenging the validity of those notices. Those petitions were allowed by the High Court as per judgment dated July 3, 1969 on the ground that the demand for certain particulars contained in the notices was beyond the scope of r. 8(1). In the appeal filed by the Corporation against the judgment dated 3rd July, 1969, the Supreme Court, in its judgment in Municipal Corpora. lion of the City of Ahmadabad, etc. v. New Sherock Spg. & Wvg. Co. Ltd. etc.
[1971] 1 S.C.R. 288, held that, as the assessments were not in accordance with law, the Corporation was not entitled to retain that amount. The Court also struck down subsection (3) of s. 152-A which gave power to the Corporation to refuse to refund the amount illegally collected de-spite the order of the Court.
For the official year 1967-68 the Corporation determined the rate of conservancy tax to be 3 per cent and a special rate of 9 per cent for the large premises like textile mills and factories. The petitioners preferred appeals against the order of the Deputy Commissioner determining the amount of property tax to the Chief Judge of the Court of Small Causes, Ahmadabad. The Chief Judge was, however, precluded from hearing those appeals since the amount of tax was not deposited by the petitioners as required by s. 406 (2) (e) of the Corporations Act. The petitioners thereafter filed petitions in the High Court challenging the validity of the assessments made by the Deputy Municipal Commissioner for the, official years 1966-67, 1967-68 and 1968-69. Those writ petitions were allowed by the Gujarat High Court as per judgment dated October 27, 1969. The ordinance dated December 23, 1969. was replaced by Gujarat Act No. 5 of 1970 which came into effect from March 31, 1970. This Act brought about material changes in the Corporations Act.
The High Court held (i) Section 2(IA) Clause (i) is valid so far as it is applicable to the official year 1969-70 but it is null and void in so far as it applies to the official years from the commencement of the Corporations Act up to and including the official year 1968-69, on account of infraction or Art. 14; (ii)Section 406(2) (e) and s. 411 (b) are null and void as being in contravention of Art.
14; Rule 42 of the Taxation Rules is also ultra vires and void in so far as it provides that if an appeal is preferred or entertained against the tax, warrant shall not issue for the recovery of the amount of tax; and (ii)The Resolutions passed by the Corporation for the official year 1967-68, 1968-69, 1969-70 and 1970-71 to the extent to which they fix the rate of conservancy tax at 9 per cent inter alia in respect of textile mills and factories belonging to the petitioners are ultra vires the proviso to s. 129(b) and the rate of conservancy tax applicable in respect of these textile mills and factories must, therefore, be taken to be the general rate of 3 per cent. The High Court upheld the constitutional validity of proviso (e) to s. 2(IA) clause (ii) and sections 49, 129(b), 406(2)(e) and 411(bb) of the Act and s. 13(1) and 13 (2) of the Act 5 of 1970.
Civil Appeals Nos. 489 to 513 and 752 to 755 of 1973 have been filed in this Court by the petitioners before the High Court against the Judgment of that Court in so far as the Court had upheld the constitutional validity of the impugned provisions. Civil Appeals Nos. 643 to 684 of 1973 have been filed by the Municipal Corporation of the City of Ahmadabad and others against the above judgment in so far as the High Court has struck down the impugned provisions and the Resolutions. Civil Appeals No. 389 to 430 of 1974 have been filedby the State of Gujarat against the judgment in so far as the High Court hasstruck down the impugned provisions. Writ Petitions Nos. 51, 60 to 73, 87 to91.
197, 492 to 503, 533, 534 and 583 of 1972 as also writ petitions Nos. 1866 to 1877 and 2046 of 1973 which have been filed by the Aryodaya Sp-. & Wvg. Mills Co. Ltd. and other parties involve substantially the same question which arises in appeals, though some of these writ petitions relate to the subsequent period of 1971-72. Writ Petition No. 74 of 1972 filed by the Ahmadabad Electricity Co. Ltd. involves an additional point regarding its liability to pay property tax which ha% been levied on the ground that it occupies land below the surface for underground cables.
222 Reversing the decision of the High Court,
HELD : (i) As the affidavit filed on behalf of the respondents discloses that ,the factual position as it existed before the promulgation of Ordinance 6 of 1969 was that the provisions of ,he Bombay Rent Act were not taken into account in determining the rateable value, there would be no escape from the conclusion that no differential treatment has been meted out to pending cases in clause (i) of s. 2(IA). There is a presumption of the constitutional validity of a statutory provision. In case any party assails the validity of any provision on the ground that it is violative of Art. 14 of the Constitution. it is for that party to make the necessary averments and adduce material to show discrimination violative of Art 14. No averments were made in the petitions before the High Court by the petitioners that the assessments before the coming into force of Ordinance. 6 of 1969 had been made by taking into account he rent restriction provisions of the Bombay Rent Act. It is extremely hazardous to decide the question of constitutional validity of a provision on the basis of the supposed existence, of certain facts by raising a presumption. it is very clear that the High Court has acted on an incorrect assumption. [236G-237E] Assessment Committee of the Metropolitan BoRough of Poplar v. Roberts [1922] 2 A.C. 93, Gulam Ahmed Rogey v. Bombay Municipality A.I.R. 1951 Bom. 320 and The Corporation of Calcutta v. Sn. Padma Devi and Ors. [1962] 3 S.C.R. 49, referred to (ii)Classification by treating decided cases as belonging to one category and pending cases as belonging to another category is reasonable and not per se offensive to Art 14 of the Constitution. [238H-239A] Ram Krishna Dalmia v. Shri Justice S. R. Tanadolkar, [1959] S.C.R. 279, Khandige Shah Bhav v. Agricultural Income-tax Officer, [1963] 3 S.C.R. 809, Rao Shiv Bahadur Singh v.
State of Vindhya Pradesh [1953] S.C.R. 1188, 1197, Hathisingh Manufacturing Co. Ltd. v. Union of India [1960] 3 S.C.R. 528 and Jain Bros. and Ors. v. The Union of India & Ors. [1970] 3 S.C.R. 253. referred to.
(iii)The scheme of the Corporation Act appears to be that in the case of premises used solely for public purposes and not intended to be used for purposes of profit or in the case of premises intended to be used for residential or charitable or religious purposes in respect of which conservancy tax is payable 'by the Government, the rate of conservancy tax should be lower compared to the rate of general conservancy tax. What is required by s. 129 is that before determining the rates of conservancy tax for different categories of properties the Corporation should find out the total expense it would have to incur for the various purposes mentioned in clause (b) of that section.
After having ascertained the total expense it would be permissible to the Corporation to fix different rates of conservancy tax for various categories of properties. It is ,not essential except in cases mentioned in sub-sections (2) and (3) of s. 137 that the rate of conservancy tax for a particular category of properties should be such as would be related only to the expense for conservancy service for that particular category of properties. Clause (b) of s. 129 also takes into account the expense required for efficiently maintaining and repairing the municipal drains and for finding out the total expenditure for conservancy service.
The High Court was, therefore, in error in striking down the resolution passed by the Corporation. [242E-F; 244F-H; 245BC] (iv)The "opinion of Corporation" mentioned in clause (b) of section 129 ,is formed after budget estimates are prepared in accordance with Ss. 95. 96 and 100 of the Corporations Act. The entire procedure provides built-in safeguards and lays down adequate guidelines in the matter of taxation. It cannot, therefore, be said that the legislature has not prescribed any guiding principle for the Corporation for determining the rates of conservancy tax. [245F-G. H-246A] (v)The bar created by s. 406(2)(e) to the entertainment of the appeal by a person who has not deposited the amount of tax due from him and who is not 223 able to show to the appellate judge that the deposit of the amount would cause him undue hardship arises out of his own omission and default. A disability or disadvantage arising out of a party's own default or omission cannot be taken to be tantamount to the creation of two classes offensive to Art. 14 of the Constitution. especially when that disability or disadvantage operates upon all persons who make the default or omission. Section 406(2)(e) is constitutionally valid and, in as much as 'the validity of s. 41 1 (bb) and r. 42 hinges on the validity of sec. 406(2)(e) all the three provisions are constitutionally valid, [247D-248C, F-G] Hannah Cohen, Ex. of Sol. Cohen, Deceased, and David E. Cohen, Intervener, Petitioners & .Anr.. v. Beneficial Loan Corporation & Ors. 37 U.S. 539, referred to.
(vi)There can be no doubt that land in entry 49 of List II would include underground Strata. The word "land" has also been defined in clause (30) of s. 2 of the Corporations Act to include land which is being built upon or is built upon or covered with water, benefits to arise out of land, things attached to the earth or permanently fastened to anything attached to the earth or permanently fastened to anything attached to the earth and rights created by legislative enactment over any street. This definition is of inclusive nature and does not exclude from its ambit the underground strata of the land. The petitioner-company is in occupation of the land wherein underground supply line is laid. [249EF. 25OD-E] Electric Telegraph Co. v. Salford Overseers, [1855] 11 Ex.
181, 186, Mysore Aldermen and Councillors of the City of Westminster Ors. v. The Southern Railway Company, The Railway Assessment Authority and W. H.Smith & Son, Limited & Ors. 1936 A.C. 511, The Assessment Committee of Holywell Union & Anr. v. Halkyn District Mines Drainage Col, [1895] A.C. 117 Rex. v. Chelsea Waterworks Company. 5 B. & Ad. 156 and Reg v. West Miiddlesex Waterworks, 1 E. & E, at p. 720, referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 752 to 755, 489 to 513, 643 to 684 of 1973 & 389 to 430 of 1974.
From the Judgment and order dated the 4th December, 1972 of the Gujarat High Court in Spl. Civil Appeals. Nos. 233, 239-241, 339, 488, 1634, 1635 and 1636 of 1971, and Writ Petitions Nos. 51, 60 to 74, 87 to 91, 157, 492 to 503, 533534 and 583 of 1972 and 1866 to 1877 & 2040 of 1973.
Y.M. Tarkunde (In C. As, Nos. 752, 489, 643, 389 and W.P.
Nos. 51 and 74/72), C. T. Daru and Ravinder Narain, P. C.
Bhartari, K. M. Desai and K. J. John, for the petitioners, (In all the W.Ps.) and Appellants (In C.As. Nos. 489-513, 752-755/73) and respondent No. 1 (C.As. Nos. 643-47, 650654, 658-664, 667-671, 674, 678, 679 and 681-684/73).
F.S. Nariman, Additional Solicitor General of India, S.
B. Vakil and 1. N. Shroff, for appellants (In C.As. Nos.
643-684/73) and for respondent No. 3 (In all the W.Ps.) for respondents Nos. 2-4 (In C.As. Nos. 489-497) respondent Nos.
1-4 (In C.As. Nos. 498-511) respondent Nos. 2-5 (In C.As.
Nos. 512-513) respondent No. 2-4 (In C.A. No. 752) respondent Nos. 1-4 (In C.A. Nos. 753-754) respondent Nos.
2-5 (In C.A. No. 755) and for respondent Nos. 1-3 (In C.As.
Nos. 389-430/74).
224 M.C. Bhandare and M. N. Shroff, for the appellants (In C.As. Nos. 389-430) respondent No. 7. (In C.A. No. 389-497, 512-513) respondent No. 5 (In C.As. Nos. 498-510) respondent No. 2. (In C.A. Nos. 643-678, 681-684) respondent No. 3 (in C.As. Nos. 679680) respondent No. 1 (In C.As. Nos. 752-755) respondent No. 5 (In C.As. Nos. 753) respondent No. 6 (In C.A. No. 754) and respondent No. 4 (In all the W.Ps.) C. S. S. Rao, for respondent No. 5 (In C.A. No. 752/73).
R. H. Dhebar and B. V. Desai, for respondent No. 4. (In C.As. Nos. 417-418/74) and In C.As. No. 656-657 of 1973).
The Judgment of the Court was delivered by KHANNA, J.-Questions relating to the constitutional validity of the different provisions of the Bombay Provincial Municipal Corporations Act (Bombay Act 59 of 1949) (hereinafter referred to as the Corporations Act) as amended by Gujarat Acts No. 8 of 1968 and No. 5 of 1970 arise for determination in these appeals and the connected writ petitions. The Corporations Act was enacted by the Bombay legislature in December 1949 for the establishment of municipal corporations in the cities of Ahmadabad and Poona.
It was applied to Ahmadabad on July 1, 1950.
The assessment of properties to property tax in Ahmadabad was made under the Corporations Act by making entries in the assessment books in accordance with the procedure prescribed in the Taxation Rules set out in Chapter VIII of Schedule A of the Corporations Act. A separate section of the assessment book was prepared by the Cornmissioner of. the Corporation for each official year in respect of the assessment of property tax on certain kinds of properties like textile mills, factories and buildings of university.
These properties were classified special properties. The rateable value of properties included in the Special Property Section was previously determined on a flat rate for every 100 sq. ft. of the floor area. In arriving at the figure of the rateable value, the plants and machinery situate upon lands and buildings were also taken into account as provided in clauses (2) and (3) of rule 7 of the Taxation Rules. There was some increase in the rateable value fixed by the Commissioner for the years 1964-65 and 1965-66. The Commissioner also made initial entries in assessment book in respect of those properties for the year 1966-67. A number of writ petitions under article 32 of the Constitution were filed in this Court challenging the validity of the assessments for, the years 1964-65 and 196566 as well as the initial entries for the year 1966-67.
Those writ petitions were disposed of by this Court by a judgment delivered on February 21, 1967 and reported as New Manek Chok Spinning & Weaving Mills Co. Ltd. & Ors. v. Municipal Corporation of the City of Ahmadabad & Ors.(1) This Court allowed the writ petitions and held the relevant entries in the assessment books to be invalid. It was held in that case that the State Legislature had no competence under entry 49 of the State List in the Seventh Schedule to the Constitution to make a law for taxing plant and machinery. Rule 7 (2) was held to be beyond the legislative competence of the State. Rules 7 (2) and (1) [1967]2 S.C.R. 679.
225 (3) were also held tobe invalid on account of excessive delegation of powers by thelegislature. Under those rules. the specification (A. the classes of machinery for the, purpose of taxation was to be made, by the Commissioner with the approval of the Corporation irrespective of the question as to where they were to be found. This Court found that it depended upon the arbitrary will of the Commissioner as to what machinery he would specify and what he would not and that he was the only person who could examine this question as there,was no right of appeal.
Dealing with the method of levy of tax on the basis of floor area, this Court observed that it was against the provisions of the Act and the rules made thereunder and that it had not been shown that conditions prerequisite for determination of the annual value on that basis had existed at the relevant time. The above method of taxation on the basis of floor area, it was held, was violative of article 14 of the Constitution as it would in the absence of classification of factories on any rational basis give rise to inequalities.
Although the Supreme Court directed the Corporation to prepare fresh assessment lists relating to properties in the Special Property Section for the official years 1964-65, 1965-66 and 1966-67, the Corporation was unable to do so in view of the decision of the High Court in the ease of Ahmadabad Municipality v. Keshavlal(1) wherein it was held that the Corporation had no power to s and levy property tax for any official year after that year had ended. The legislature in order to get over this difficulty enacted Gujarat Act 8 of 1968 and by this amending Act inserted inter alia new section 152A in the Corporations, Act. The new section conferred power on the Corporation to assess or reassess property taxes if the original assessment was affected by a decree or order of a court on either of the grounds on which the Supreme Court had set aside the assessment for the official years 1964-65, 1965-66 and 196667 in New Manek Chowk Mills case (supra). The amending Act also substituted new rule 7 for the old rule which contained the offending clauses (2) and (3). Rule 21B was also inserted by the amending Act and the said rule permitted the Municipal Commissioner to make fresh valuation of properties after the expiry of the official year if preparation or completion of the assessment before the expiry of the official year were or would be affected on account of any order of a court.. After the amending Act had come into force, the Corporation initiated proceedings for reassessment of lands and buildings of the petitioners to property tax for the official years 1964-65, 1965-66 and 1966-67. When notices were served on the petitioners to furnish return of the particulars, the petitioners filed petitions in the High Court challenging the validity of those notices. Those petitions were allowed by the High Court as per judgment dated July 3, 1969 on the ground that the demand for certain particulars contained in the notices was beyond the scope of rule 8(1). The contention of the petitioners in those petitions that no assessment could be made after the expiry of the official year was repelled and it was held that the Corporation had the power under section 152A to reassess lands and buildings of the petitioners to property tax for the official years 1964-65. 1965-66 and 1966-67 notwithstanding the expiration of those (1) 6 G.L.R. 228.
16L379SupCI/75 226 years. The High Court also held that the new section did not stand in the way of the petitioners getting refund of the property tax already paid.. Appeal was filed in this Court against the above judgment by the Corporation.
The Ahmadabad Corporation, it may be stated, used to pass a resolution under section 99 of the Corporations Act determining the rate at which property tax would be levied for the particular official year. So far as conservancy tax was concerned, the rate determined by the Corporation was 3 per cent. A special rate of conservancy tax of 7-1/2 per cent was, however, fixed by the Corporation for the official year up to 1966-67 for hotels, clubs, stables, theaters or cinemas or other large premises including mills and factories registered under the Factories Act and where fifty or more workmen were employed ill manufacture for all the shifts. For the official year 1967-68 the Corporation determined the rate of conservancy tax to be 3 per cent and a special rate of 9 per cent for the large premises mentioned above the rate of general tax for ordinary property was fixed on a graduated scale but on properties used by textile mills the rate was uniform at 30 per cent.
The powers of the Commissioner under the Taxation Rules were entrusted to the Deputy Municipal Commissioner by virtue of an office order issued under section 49(1). The Deputy Commissioner thereafter determined the rateable value of the lands and buildings of the petitioners. The petitioners preferred appeals against the order of the Deputy Commissioner determining the amount of property tax to the Chief Judge of the Court of Small Causes Ahmadabad. The Chief Judge, was, however, precluded from hearing those appeals since the amount of tax was not deposited by the petitioners as required by section 406 (2) (e) of the Corporation Act. The petitioners thereafter filed petitions in the High Court challenging the validity of the assessments made, by the Deputy Municipal Commissioner for the official years 1966-67, 1967-68 and 1968-69. Those writ petitions were allowed by the Gujarat High Court as per judgment dated October 27, 1969. it was held that section 49 of the Corporation Act did not contemplate delegation of judicial or quasi-judicial powers by the Municipal Commissioner under taxation rule 18 and that disposal of complaints by the Deputy Commissioner was not permissible.
The High Court also declared section 406(2) (e) violative of article 14. Part of rule 42 which related to distress or attachment for default in payment of tax was also struck down on the ground that it could not stand independently of section 406 (2) (e). The fixation of special rate of 9 per cent for conservancy tax in respect of large premises including mills and factories was also held to be illegal and void.
The official year 1969-70 having in the meantime commenced, the Municipal Commissioner adopted under taxation rule 21 the entries of the official year 1968-69 as the entries for the official year 1969-70. Complaints were then filed by the petitioners against the amount of rateable value entered in the assessment books. During the pendency of those complaints, the Governor of Gujrat promulgated Ordinance No. 6 of 1969 on December 23, 1969. The ordinance was replaced by Gujarat Act No. 5 of 1970 which came into force with effect from March 31, 1970. The ordinance amended the definition of rateable 227 value as well as section 49 with retrospective effect. It also contained ,tam validating provisions. Gujarat Act 5 of 1970 was on the line Ordinance No-. 6 of 1969, except in the matter of definition of rateable value. A number of petitions in the meantime were filed to challenge the validity of the provisions of Ordinance No. 6 of 1969 and :)se of Act 5 of 1970.
For the official year 1970-71, the valuation was made in accordance with Gujarat Act 5 of 1970. A number of writ petitions were A before the Gujarat High Court challenging the provisions of Gujarat Act 5 of 1970 as well as the valuation for the year 1970-71.
In the meantime, on April 17, 1970 appeal filed by the Corporation against judgment dated July 3, 1969 of Gujarat High Court was ;missed by this Court. The decision of this Court was given in Municipal Corporation of the City of Ahmadabad, etc. v. New Shorock vg. & Wvg. Co. Ltd. etc.(1).
It was held by this Court that under conviction 152A before the Corporation can retain an amount collected property tax, there must be assessment according to law. As the impugned assessments were not in accordance with law, the Corporation was not entitled to retain that amount. This Court also struck own subsection (3) of section 152A which had been added by ordinance 6 of 1969 and which gave power to the Corporation to fuse to refund the amount illegally collected despite the order of the Court.
It may be stated that the dispute with which we are concerned in be present appeals and writ petitions relates to assessment to property x of large premises like textile mills, and factories. One writ petition dates to an electricity company.
Before setting out the findings of the High Court and dealing with the questions which arise for determination in the appeals and writ petitions before us, we consider it appropriate to refer to some of the relevant provisions.
Section 127(1) of the Corporations Act requires the Corporation to impose inter alia property taxes. "Property taxes" according to section 129, shall comprise(a) water tax, (b) conservancy tax, and (c) a general tax. Clause (b) and the relevant part if clause (c) of that section read as under :
For the purpose of sub-section (1) of section 127 property taxes shall comprise the following taxes which shall, subject to the exceptions, limitations and conditions hereinafter provided, be levied on buildings and lands in the City (a)................
(b) a conservancy tax at such percentage of their rateable value as will in the opinion of the Corporation suffice to provide for the collection, removal and disposal, by municipal agency, of all excrementitious and polluted matter from privies, urinals and cess-pools and for efficiently maintaining and repairing the municipal drainsconstructed or used for the receipition or (1) [1971] 1 S.C.R. 288.
228 conveyance of such matter, subject however to the provisos that the minimum amount of such tax to be levied in respect of any one separate holding of land or of any one building or of any one portion of a building which is let as a separate holding shall be eight annas per mensem and that the amount of such tax to be levied in respect of any hotel, club or other large premises may be specially fixed under section 137;
(c) a general tax of not less than twelve per cent. of their rateable value, which may be levied,if the Corporation so determines, on a graduated scale Provided.............
According to section 99 the Corporation shall, on or before the twentieth day of February,, after considering the Standing Committee's proposals in this behalf,, determine inter alia subject to limitations an( conditions prescribed in Chapter XI, the rates at which municipal taxes referred to in sub-section (1) of section 127 shall be levied in the next ensuing official year. "Official year" has been defined in section 2(44) to mean the year commencing on the first day of April. Section 137 reads as under :
"(1) The Commissioner may, whenever he thinks fit, fix the conservancy tax to be paid in respect of any hotel, club, stable or other large premises at such special rate as shall be generally approved by the Standing Committee in this behalf, whether the service in respect of which such tax is leviable be performed by human labour or by substituted means or appliances.
(2)In the case of premises used solely for public purposes and not used or intended to be used for purposes of profit or for residential or charitable or religious purposes in respect of which the conservancy tax is payable by the Government the Commissioner shall fix the said tax at a special rate approved as aforesaid.
(3)In any such case the amount of the conservancy tax shall be fixed with reference to the cost or probable cost of the collection, removal and disposal, by the agency of municipal conservancy staff, of excrementitious and polluted matter from the premises." Section 150 relates to supplementary taxation. Clause (1) of section 49 enables a Deputy Municipal Commissioner, subject to the orders of the Commissioner, to exercise such of the powers and perform such of the duties of the Commissioner as the Commissioner shall from time to time depute to him. Section 406 deals with appeals. According to clause (1) of section 406, subject to the provisions hereinafter contained, appeals against any rateable value or tax fixed or charged under the Act shall be heard and determined by the Judge. "Judge" has been defined in clause (29) (as amended by Act 8 of 229 1968) of section 2 to mean in the city of Ahmadabad the Chief Judge of the Court of Small Causes. Clause (e) of sub section (2) of section 406 states that no appeal shall be heard against a tax, or in the case of an appeal made against a rateable value after a bill for any property tax a assessed upon such value has been presented to the appellant, unless the amount claimed from the appellant has been deposited by him with the Commissioner. Section 411 (as amended by Act 8 of 1968) makes provision for appeal to the High Court from a decision of the Judge in an appeal in certain contingencies. Clause (54) of section 2 defines "rateable value" to mean the value of any building or land fixed in accordance with the provisions of the Act and the rules for the purpose of assessment to property taxes.
According to section 453, the rules in the schedule as amended from time to time shall be deemed to be part of the Act. Chapter VIII of the schedule contains the Taxation Rules. According to clause (1) of rule 7, in order to fix the rateable value of any building or land assessable to a property-tax there shall be deducted from the amount of the annual rent for which such land or building might reasonably be expected to let from year to year a sum equal to ten per cent of the said annual rent, and the said deduction shall be in lieu of all allowance for repairs or on any other account whatever. Clauses (2) and (3) of that rule need not be set out as they were struck down by this Court in the case of New Manak Chowk Mills (supra). Rule 9 relates to the keeping of an assessment book in which shall be entered inter alia every year the rateable value of buildings and lands in the city of Ahmadabad determined in accordance with the provisions of the Act and the rules as also the names of persons primarily liable for the payment of property taxes, if any, leviable on each such building or land' Clause (i) of rule 42 reads as under (1) If the person on whom a notice of demand has been served under rule 41 does not within fifteen days from such service pay the sum demanded or shows sufficient cause, for nonpayment of the same to the satisfaction of the Commissioner and if no appeal is preferred against the said tax, a,, hereinafter provided, such sum, with all costs of the recovery, may be levied under a warrant in Form H or to the like effect, to be issued by the Commissioner, by distress and sale of the movable property of the defaulter or the attachment and sale of the, immovable property' of the defaulteror, if the defaulter be the occupier of any premises in respect of which a property-tax is due, by distress and sale of any movable property found on the said premises or. if the, tax be due in respect of any vehicle, boat or animal by distress and sale of such vehicle, boat or animal in whomsoever'.,, ownership, possession or control, the same may be.', We may now set out the material changes brought out in the Corporations Act by Gujarat Act No. 5 of 1970. Sections 2, 4, 6, 7, 10, 11, 12 and 13 of (2) of the amending Act read as under :
"2. In the Bombay Provincial Municipal Corporations Act, 1949 (hereinafter referred to as 'the principal Act'), in section 2,230 (1)before clause (1) the following clause shall be, and shall be deemed always to have been, inserted, namely (1A) 'annual letting value' means(i)in relation to any period prior to 1st April, 1970, the annual rent for which any building or land or premises, exclusive of furniture or machinery contained or situate therein or thereon, might, if the Bombay Rents, Hotel and Lodging House Rates Control Act, 1974 were not in force, reasonably be expected to let from year to year with reference to its use :
(ii)in relation to any other period, the annual rent for which any building or land or premises, exclusive of furniture or machinery contained or situate there in or thereon, might reasonably be expected to let from year to year with reference to its use;
and shall include all payments made or agreed to be made to the owner by a person (other than the owner) occupying the building or land or premises on account of occupation, taxes, insurance or other charges incidental thereto Provided that, for the purpose of sub clause (ii),(a) in respect of any building or land or premises the standard rent of which has been fixed under section 11 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1.947, the annual rent thereof shall not exceed the annual amount of the standard rent so fixed;
(b) in the case of any land of a class not ordinarily let, the annual rent of which cannot in the opinion of the Commissioner be easily estimated, the annual rent shall be deemed to be six per cent of the estimated market value of the land at the time of assessment;
(c) in the case of any building of a class not ordinarily let, or in the case of any industrial or other premises of a class not ordinarily let, or in the case of a class of such premises the building or buildings in which are not ordinarily let, if the annual rent thereof cannot in the opinion of the Commissioner be easily estimated, the annual rent shall be deemed to be six per cent of the total of the estimated market value, at the time of the assessment, of the land on which such building or buildings stand or, as the case may be. of the land which is comprised in such premises, and the estimated cost, at the time of the assessment, of erecting the building, or as the case may be, the building or buildings comprised in such premises;' 231 (2)for clause (54), the following shall be, and shall be deemed always to have been, substituted, namely (54)'rateable value' means the value of any building or land fixed, whether with reference to any given premises or otherwise, in accordance with the provisions of Act and the rules for the purpose of assessment to property taxes; 4. In section 49 of the principal Act, in sub-section (1),(1)for the words 'such of the duties of the Commissioner' the words 'such of the duties of the Commissioner, including powers and duties of a judicial or quasi-judicial nature, shall be, and shall be deemed always to have been, substituted;
(2)after the first proviso, the following further proviso shall be, and shall be deemed always to have been, added, namely :'Provided further that nothing in this subsection " be deemed to empower the Commissioner to issue any order regulation the exercise of powers or performance of duties of a judicial or quasi-judicial nature deputed by him., 6.In section 129 of the principal Act, to clause (b), the following proviso shall be, and shall be deemed always to have been, added, namely :'Provided that when determining under section 99 or section 150 the rate at which conservancy tax shall be levied for any official year or part of an official year, the Corporation may determine different rates for different classes of pro7.In section 137 of the principal Act, to subsection (1) the following proviso shall be added, namely ."Provided that if the Corporation shall have determined for any official year any different rate of conservancy tax for any class of properties to which any of the properties referred to in this sub-section belongs, the Commissioner shall not, without the previous approval of the Corporation, fix, for such official year or part thereof, the conservancy tax to be paid in respect of any property belonging to such class for which such different rate may have been determined by the Corporation, at any other different rate under this subsection.'
10. In section 406 of the principal Act, in sub-section (2),(1)for the words 'shall be heard' the words 'shall be entertained' shall be substituted;
and (2)the following proviso shall be added after clause (e), namely :'Provided that where in any particular case the Judge is of opinion that the deposit of the amount by the appellant 232 will cause undue hardship to him the, Judge may in his discretion dispense with such deposit or part thereof, either unconditionally or subject to such conditions as he may deem fit.' 11.in section 411 of the principal Act, after clause (a), the following clause shall be inserted, namely :'" (b) from any order of the Judge under the proviso to sub-section (2) of section 406;
and;"
12. In Schedule A to the principal Act, in Chapter VIII,(i)in sub-rule (3) of rule 7, for the words annual rent for which such building, land or premises might reasonably be expected to let from year to year a sum equal to ten per cent of the said annual rent' the words 'annual letting value of such building, land or premises a sum equal to ten per cent of such annual letting value' shall be, and shall be deemed always to have been substituted; and (ii)in sub rule (1) of rule 42, for the words is preferred' the words 'is preferred or entertained' shall be substituted.
13.Notwithstanding anything contained in any judgment, decree or order of any court or tribunal or any other authority,(1)................
(2)no determination of any special or different rate, of conservancy tax by a Municipal Corporation constituted by or under the principal Act in respect of any hotel, club, stable, industrial premises or other large premises in exercise or purported exercise of its powers under any of the provisions of the principal Act, at any time before the commencement of the said Ordinance, shall be deemed to have been invalidly made by reason of the Corporation having no power to determine such rate at the time when such determination was made; and any such determination shall be deemed to be valid and shall be deemed always to have been validly made under the provisions of the principal Act as amended by this Act as if this Act had been in force at the time when such determination was made; and no such determination of different or special rate of conservancy tax, or any entry of tax made in any assessment book pursuant thereto, or any levy of such tax or bill or notice of demand or distress or attachment issued or executed for collection of such tax, shall be called in question in any court or before any tribunal or authority merely on the ground that the Corporation had no power or authority to determine such different or special rate of conservancy tax in respect of any hotel, club, stable, industrial premises or other large premises or on any ground Consequential hereto." 233 The High Court after protracted hearing we given to understand lasted for 21 days besides 4 days for judgment while partly allowing the petitions filed before it under article 226 of constitution made the following declaration :
"(i) Section 2 1A) clause (i) is valid so far as it is applicable to the official year 196970 but it is null and void in so far as it applies to the official years from The commencement of the Corporations Act upto and including the official year 1968-69, on account of infraction of article 14.
(ii) Proviso (c) to section 2(1A) clause (ii) is not violative of article14 and is constitutionally valid.
(iii) Section 49 does not suffer from the vice of unreasonableness and is constitutionally valid and so_ also is section 13(1) of Gujarat Act 5 of 1970.
(iv)The proviso to section 129(b) is not violative of article 14 nor does it suffer from the vice of excessive delegation of legislative power.
(v)Section 13(2) of Gujarat Act 5 of 1970 is not violative of article 14 or article 19(1)(f) and cannot be challenged as constitutionally invalid.
(vi)Section 406(2)(e) and section 411(bb) are null and void as being in. contravention of article 14 : Rule 42 of the Taxation Rules is also ultra vires and void in so far as it provides that if an appeal is preferred or entertained against the tax, warrant shall not issue for the recovery, of the amount of tax.
(viii) The Resolutions passed by the Corporation for the official years 1967-68, 1968-69, 1969-70 and 1970-71 to the extent to which they fix the rate of conservancy tax at 9 per cent inter alia in respect of textile, mills and factories belonging to the petitioners are ultra vires the proviso to section 129(b) and the rate of conservancy tax applicable in respect of these textile mills and factories must, therefore be taken to be the general rate of 3 per cent." Civil appeals Nos. 489 to 513 and 752 to 755 of 1973 have been filed in this Court by the petitioners before the High Court against the judgment of that court in so far as the court has upheld the constitutional validity of the impugned provisions. Civil appeals Nos. 643 to 684 of 1973 have been filed by the Municipal Corporation of the City of Ahmadabad and others against the above judgment in so far as the High Court has struck down the impugned provisions and the Resolutions. Civil appeals No. 389 to 430 of 1974 have been filed by the State of Gujarat against the judgment in so far as the High Court has struck down the impugned provisions.
Writ petitions Nos. 51, 60 to 73, 87 to 91, 157, 492 to 503, 533, 534 and 583 of 1972 as also writ petitions Nos. 1866 to 1877 and 2046 of 1973 which have been filed by the Aryodaya Spg. & Wvg. Mills Co. Ltd. and other parties involve substantially the same question Which arises in 234 appeals, though some of these writ petitions relate to the subsequent period-of 1971-72. Writ petition No. 74 of 1972 filed by the Ahmadabad Electricity Co. Ltd. involves an additional point regarding its liability to pay property tax which has been levied on the ground that it occupier. land below the surface for underground cables. This judgment would dispose of all the appeals and writ petitions.
The first important question which arises for determination is whether clause (i) of section 2(1A) is violative of article 14. According to this clause, "annual letting value" means in relation to any period prior to 1st April, 1970 the annual rent for which any building or land or premises, exclusive of furniture or machinery contained or situate therein or thereon, might, if the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 were not in force, reasonably be expected to let from year to year with reference to its use. According to the petitioners, the operation of this clause affected only the assessment proceedings pending on December 23, 1969 when Ordinance 6 of 1969 (which was subsequently replaced by Act 5 of 1970) came into force and did not affect the assessments which were final and completed before that date. The said provision war, thus said to create an arbitrary and irrational classification which had no reasonable nexus with the object of levying the tax. As against the above, the following four contentions were advanced on behalf of the Corporation : (1) There is no discrimination in the matter of completed assessments and pending assessment because the prior law did not require valuation to be restricted to standard rent. The impugned provision is merely declaratory of previous state of law.
(2) There is no discrimination in the matter of completed assessment,% pending assessments because as a matter of fact valuation assessments finalised before December 23, 1972 were in disregard of the provisions of the Rent Act.
(3) Pending cases constitute a class by themselves and any law which makes a distinction between decided cases and pending cases is not violative of article 14 of the Constitution as the above distinction is based upon rational classification.
(4) In any case so far as the year 1969-70 is concerned, there is no discrimination or violation of article 14.
The High Court rejected the first three contentions urged can behalf of the Corporation but accepted the fourth contention. Accordingly, it held that clause (i) of section 2(1A) was valid in so far a,,, it was applicable to the official year 1969-70, but was null and void in so far as it applied to the previous years on account of the infraction of article 14.
Regarding clause (c) of the proviso to sub-clause (2) of clause (1A) of section 2 of the Act, the High Court held that it is only if 235 the annual rent having regard to the provisions of the Bombay Rent Act cannot be easily estimated that the Commissioner can adopt the basis of the valuation set out in proviso to clause (c). Mr. Tar under learned counsel for the petitioners has not pressed the attack on the constitutional validity of clause (c) because, according to him, it is not known as to which property would be covered by that clauses as construed by the High Court.
Likewise, so far as the constitutional validity of section 49 of the Act is concerned, the attack has not been pressed on behalf of the petitioner-appellants. Mr. Tarkunde has also pointed out that despite the decision of this Court in Manek Chowk Spg. & Wvg. Mills case (supra) in making assessments attempts are being made by the Corporation to include some structures which constitute plant and machinery as part of building. The learned counsel, however, concedes that this would be question of fact depending upon each case. He accordingly states that his clients would if necessary agitate the matter in appeal.
It has been argued before us by the Additional Solicitor General, Mr. Vakil and Mr. Bhandare on behalf of the Corporation as well as the State Government that the High Court was in error in holding that clause (i) of section 2(1A) was violative of article 14 in respect of the_years prior to the official year 1969-70. As against that, Mr.
Tarkunde on behalf of the petitioners (the word "petitioners" would cover not only the petitioners in this Court but also those who were the petitioners in the High Court) has supported the finding of the High Court in this.
respect. Mr. Tarkunde in his own turn has mailed the finding of the High Court in so far as it has held that clause (i) of section 2(1A) is not violative of article 14 in respect of the year 1969-70. After hearing the learned counsel for the parties we find considerable force in the submission made on behalf of the Corporation and the State Government.
The first questionwhich arises for consideration in the above context is whether thereis any discrimination in relation to the assessments for the periodprior to April 1, 1970 between pending cases and the cases in which assessment had already been completed. So far as this aspect is concerned, we find that in the case of Assessment Committee of the Metropolitan Borough of Poplar.V.
Hobberis(1) the House of Lords held by majority that in arriving at the valuation for this purposes of the Valuation (Metropolis) Act, 1969, of a hereditament to which the Increase of Rent and Mortgage interest (Restriction) Act 1920 applies, the maximum gross value to be assigned to that hereditament is not limited to the standard rent of the creditament together with the additions thereto permitted by the latter Act. It was further held that the above mentioned Act of 1920 is not to be taken into account in determining the valuation for rating purposes of the hereditaments to which it applies. Following the above decision of the House of Lords a Division Bench of the Bombay High Court held in the case of Gulam Ahmed Rogay v. Bombay Municipality(1), (1) [1922] 2 A.C. 93.
236 That in arriving at the rateable value for purposes of section 154(1) ,of the City of Bombay 'Municipal Act, 18 8 8 of property to which the Bombay Rents, 'Hotel & 'Lodging house Rates Control Act, 1947 applies the maximum value to be assigned to the property is not to'be limited,to the maximum standard rent of the property together with additions thereto permitted by the latter Act. Similar question there-after arose in the case of The Corporation of Calcutta v. Sm. Padma Debi & ors (2) . This Court in that case was concerned with the provisions of section 127(a) of the Calcutta Municipal Act, according to which the annual rental value of land and the annual value of any building erected for letting purposes or ordinarily act, shall be deemed to be the gross annual rent at which the land or building might at the time of assessment reasonably be expected to let from year to year, less, in the case of a building, an allowance of ten per cent for the cost of repairs and for all other expenses necessary to maintain the building in a state to command such gross rent. I was held by this Court that on a fair reading of the above provision the rental value ,cannot be fixed higher than the standard rent under the Rent Control Act. It was further held that the words "gross annual rent at which the land. or building might at the time of assessment reasonably be expected to let from year to year" imply that the rent which the landlord might realise if the house was let is the basis for fixing the annual value of the building. The criterion is the rent realisable by the landlord and not the value of the holding in the wards of the tenent. The value of the property to the owner is the standard in making the assessment. The Corporation, it was accordingly concluded, had no power to fix the annual value of the premises higher than the $tandard rent.
It was argued on behalf of the Corporation before the High Court that no averment had been made by the petitioners in the petitions that the assessments which had been completed before the coming into force of Ordinance 6 of 1969 were made having regard to the provisions of the Bombay Rent Act and that in the absence of such averments no case of discrimination could be said to have been made by the petitioners. The High Court rejected this contention because in its opinion it would be reasonable to presume that the assessments were made keeping in view the rent restriction provisions of the Bombay Rent Act. We are unable to agree with the above approach of the High Court.
There is a presumption of the constituticonal validity of a statutory provision. In case any party ass-ails the validity of any provision on the ground that it is violative of article 14 of the Constitution, it is for that party to make the necessary averments and adduce material to show discrimination violative of article 14. No averments were made in the petitions before the High Court by the petitioners that the .assessments before the coming into force of Ordinance 6 of 1969 bad been made by taking into account the rent restriction provisions of the Bombay Rent Act. Paragraph 2B and some other paragraphs of petition No. 233 of 1970 before the High Court, to which our attention was invited by Mr. Tarkunde, also do not contain that averment. No material on this factual aspect was in the circumstances produced either on behalf of the petitioners or the Corporation. The High Court, as already observed, decided the matter merely on the basis of a presumption. It is, in our opinion, extremely hazardous to decide the question of the constitutional validity of a provision on the basis of the supposed existence of certain facts by raising a presumption. The facts about the supposed existence of which presumption was raised by the High Court were of such a nature that a definite averment could have been made in respect of them and concrete material could have been produced in support of their existence or non-existence. Presumptions are resorted to when the matter does not admit of direct proof or when there is some practical difficulty to produce evidence to prove a particular fact. When, however, the fact to be established is of such a nature that direct evidence about its existence or nonexistence would be available, the proper course is to have the direct evidence rather than to decide the matter by resort to presumption. A pronouncement about the constitutional validity of a statutory provision affects not only the parties before the Court, but all other parties who may be affected by the impugned provision. There would, therefore, be inherent risk in striking down an impugned provision without having the complete factual data and full material before the court. It was therefore, in our opinion, essential for the High Court to ascertain and field out the correct factual position before recording a finding that the impugned provision is violative of article 14. The fact that the High Court acted on an incorrect assumption is also borne out by the material which has been adduced before us in the writ petitions filed under article 32 of the Constitution.
In the affidavit of Jayantilal Maneklal Shah, Assessor and Collector of the Corporation, filed on behalf of, the respondents in these petitions, the factual position has been brought out at length. According to the affidavit, after the Corporation had been constituted with effect from July 1, 1950 the Commissioner kept for every official year an assessment book as contemplated by rule 9 of the Taxation Rules. The rateable value of lands and buildings in Special Property Section were first determined by the municipal valuers on Contractor's Theory in accordance with the methods prevailing under the English law of rating. The owners of lands avoid buildings which were valued on' Contractor's Theory filed appeals. During the pendency of the appeals,. the authorities concerned agreed to refer the question of determination of the rateable values to the arbitration of the arbitrators, one appointed by the Corporation and the other appointed by the taxpayers. On disagreement between the two arbitrators the matter was referred in 1953 to Shri H. V. Divetia, a former Judge of.
the High Court of Judicature at Bombay as umpire. Shri Divetia held that flat rate floor area method which was being adopted by the Municipal Corporation of the city of Bombay in similar cases was the proper method. The municipal authorities consequently adopted that method. The award of Shri Divetia was effective only till the official year 1954-55, but its application was extended by agreement between the parties up to the year 1958-59. The municipal authorities continued to value the lands;
238 and buildings aforesaid on the flat rate floor area method for the year 1959-60 and onwards to prevent any dispute being raised. The affidavit further shows that notwithstanding decision in Padma Devi's case (supra) the Corporation continued as before to value the properties included in the Special Property Section on the flat rate floor area method. Both the valuers as well as the persons liable to pay property taxes were not conscious of any impact of rent restriction for the purposes of property taxes. The Collector has denied that in determining the rateable value the Municipal Commissioner had been taking into account the standard rent of the building or land of was following the principle that the rent restricted by law was the measure of the true rent of the building.
There is no material before us to show that the factual position is in any way different from that brought out in the affidavit of the Assessor and Collector of the Corporation. Mr. Tarkunde has referred to three orders dated March 22, 1969 of the Deputy Municipal Commissioner whereby the rateable value as initially fixed was reduced on complaint filed by the ratepayers It would appear from the orders that in reducing the rateable value the Deputy Municipal Commissioner took into account the rental value.
The above three orders, in our opinion, can hardly be of any help to the petitioners because there is nothing to show that the Deputy Municipal Commissioner while making those orders took into account the standard rent and the restrictions placed on the increase in rent by the Bombay Rent Act.
Mr. Tarkunde then urges that the material which has been placed before this Court regarding the factual position was not before the High Court and as such this Court should not disturb the finding of the High Court on the constitutional validity of clause (i) of section 2(1A). We are unable to accede to this submission. The validity of the above clause has also been assailed in the writ petitions filed before us and in deciding those writ petitions, we cannot refuse to take into account the material which has been placed before us. As that material discloses that the factual position as it existed before the promulgation of Ordinance 6 of 1969 was that the provisions of the Bombay Rent Act were not taken into account in determining the rateable value, there would be no escape from the conclusion that no differential treatment has been meted, out to pending cases in clause (i). It is plain that the impugned provision cannot be held to be violative of article 14 in the appeals filed against the judgment of the High Court and constitutionally valid in the writ petitions. As the High Court decided the matter without having the full and complete data before it and as such data is available to us, the contention that we should not take that data into account, in our opinion, is wholly untenable. We would, therefore hold that there is no material on record as might justify the inference that a differential hostile treatment has been meted out in pending cases. The very basis of striking down the impugned provisions on the ground of being violative of article 14 would thus disappear.
Apart from the above. We are of the opinion that classification by treating decided cases as belonging to one category and pending cases 239 as belonging to another category is reasonable and not per se offensive to article 14.
It is well-established that article 14 forbids class legislation but does not forbid classification. Permissible classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group, and the differentia must have a rational relation to the object sought to be achieved by the statute in question. In permissible classification mathematical nicety and perfect equality are not required. Similarity, not identity of treatment, is enough. If there is equality and uniformity within each group, the law will not be condemned as discriminative, bought due to some fortuitous circumstances arising out of a peculiar situation some included in a class get an advantage over others, so long as they are not singled out for special treatment. Taxation law is not an exception to this doctrine. But, in the application of the principle the courts, in view of the inherent complexity of fiscal adjustment of diverse elements, permit a larger discretion to the legislature in the matter of classification, so long as it adheres to the fundamental principles underlying the said doctrine. The power of the legislature to classify is of wide range and flexibility so that it can adjust its system of taxation in all proper and reason-able ways (see Ram Krishna Dalmia v. Shri Justice S. R. Tendolkar(1) and Khandige Shah Bhat v. Agricultural Income-tax Officer, Kasaragod(2). Keeping the above principles in view, we find no violation of article 14 in treating pending cases ;as a class different from decided cases. It cannot be disputed that so far as the pending cases covered by clause (i) are concerned, they have been all treated alike. In the case of Rao Shiv Bahadur Singh v.
State of Madhya Pradesh(") this Court observed :
"But there is no reason why pending proceedings cannot be treated by the legislature as a class by themselves having regard to the exigencies of the situation which such pendency itself call,, for. 'Mere can arise no question as to such a saving provision infringing article 14 so long as no scope is left for any further discrimination inters seas between persons affected by such pending matters." In Hathising Manufacturing Co. Ltd. v. Union of India(4) the constitutional validity of section 25FFF of the Industrial Disputes Act, 1947 was assailed. That section made a distinction between employers who had closed their undertakings on or before November 28, 1
