TMI Blog1962 (10) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... uniform rate of basic tax on all lands in the State of Travancore-Cochin. The expression basic tax was defined in Section 2(1) as the tax imposed under the provisions of the said Act. Under Section 3, it was provided that notwithstanding anything in any statute, grant, deed or other transaction, the arrangement made for the levy of basic tax shall be deemed inter alia to be a general revenue settlement of the State. Section 4 provided that subject to the provisions of the Act, there shall be charged and levied in respect of all lands in the State, of whatever description and held under whatever tenure, a uniform rate of tax to be called the basic tax. Under Section 5(1) of the Act the basic tax charged and levied under Section 4 shall be at the rate of three pies per cent of land per annum. Section 7 declared that the Act was not applicable to lands held or leased by the Government or any land or class of lands which the Government may, by notification in the gazette, either wholly or partiaily, exempt from the provisions of the Statute, Section 14 related to bar of suits as against Government in any Civil Court, in respect Of anything done or any order passed under the Act. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Cochin Land Tax (Amendment) Act X of 1957, was challenged by various persons before the Supreme Court, by. tiling peti-tions under Article 32 of the Constitution. 7. The exact grounds of attack raised by the petitioners therein, as well as the stand taken by the State Government, and the discussion on the relevant aspect by their Lordships of the Supreme Court, in those matters, will also be adverted to later. But it is enough to point out at this stage, that the Act was challenged as vioiative of Articles, 14, 19 (1) (f) and 31 of the Constitution. Sections 4, 5A and 7 of the Act were held by the Supreme Court, to be violative of Article 14, as also Article 19 (1) (f) of the Constitution; and their Lordships also held that these provisions are in effect confiscatory. As there was no question of severability of those sections, from the other provisions of the Act, the entire Act was struck down by the Supreme Court. The decision of the Supreme Court is reported in Thathunni Moopil Nair v. State of Kerala, 1961 Ker LJ 143 : (AIR 1961 SC 552). No doubt Mr. Justice Sarkar has written a dissenting judgment, upholding the validity of the statute. 8. After the decision of the Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of public revenue due in respect of land held by him and, in the case of lands which have not been surveyed, the proprietor of the land. The expression prescribed is stated to mean by Section 3(6} as prescribed by rules made unaer the Act; and the expression prescribed authority under Section 3(7) is stated to mean the authority appointed by Government by notification in the Gazette to perform the functions of the prescribed authority under the Act. 10. Section 4 provides that notwithstanding anything in any enactment, grant, deed or other transaction, the arrangement made therein for the levy of basic tax, shall be deemed inter alia to be a general revenue settlement of the State. There are four provisos and an explanation to Section 4, which are not necessary to be adverted to. Section 5 is the charging section and Section 6 provides for the rate of basic tax; and Section 7 deals with provisional assessment of basic tax in the case of unsurveyed lands. As these three sections nave come in for very severe attack in these proceedings, it is desirable to set cut three sections themselves: 5. Charge of land tax-- (1) subject to the provisions of this Act, there shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, by notification in the Gazette levy and collect basic tax at the rate of two rupees per acre per annum on such land, notwithstanding the fact that such crops, plants or trees had not begun to yield or bear and that for the time being no income was made from that land or that the, income made was less than ten rupees per acre per annum. Explanation 1:-- For the purposes of this section 'gross income' with reference to any land shall mean the gross income actually made from the land or the gross income that could be made from the land with due diligence, whicn-ever is higher. Explanation 2.-- Lands comprised in the same survey or sub-division number and held by the same land-holder shall be treated as a single unit for calculating the gross Income for the purposes of this section. Explanation 3-- For the purposes of calculating the gross income in money from any land the cash value or the produce from the land shall be committed into money at the average market rate of such produce for six years immediately preceding the commencement of this Act. (3) An application for fixation of the rate of basic tax under Sub-section (2) shall be in the form specified by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed under this section shall be recoverable in the same manner as the basic tax. (6) The Government shall, as soon as may be, and in any case before the expiry of a period of five years from the date of publication of this Act in the Gazette, cause a survey to be conducted of the unsurveyed lands, and thereupon the prescribed authority shall make a regular assessment of the basic tax payable in respect of such lands. The provisions of Section 6 shall apply to such regular assessment, provided that the time for making application for the fixation of the rate of basic tax under Sub-section (2) of Section 6 shall be four months from the date of completion of the survey of the land. After a regular assessment has been made under Section 6, any amount paid towards the provisional assessm t shall be deemed to have been paid towards the regular assessment and, where the amount paid towards the provisional assessment exceeds the amount payable under the regular .assessment, the excess shall be refunded to the person entitled thereto . 11. Section 8 makes special provision relating to basic tax for periods prior to the date of publication Of the Act; and Sub-section (1) is broadly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Sub-section 4 makes the decision of the District Judge, on such reference final. Sub-section 5 provides that notwithstanding a reference has been made under Section 10 to the District Court, basic tax shall be payable in accordance with the assessment made in the case; and there is a proviso to Sub-section 5 to the effect that if the amount of the assessment is reduced as a result of the reference, the amount overpaid snail be refunded. 13. Section 11 gives power to the Board of Revenue to exercise powers of revision over the orders of the Appellate Authority either suo moto at any time or if its jurisdiction is invoked by the party filing an application for tnat purpose within 30 days from the date of the order of the appellate authority. The first proviso to Sub-section (1) states that no order enhancing the rate of basic tax or the amount of provisional assessment shall be passed with-out notice, to the party who may be affected by the order; the second proviso again states that no order passed on the basis of a reference under Section 10 and to the extent covered by the answer to such reference shall be subjected to revision by the 'Board of Revenue. Sub-section (2) p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1955, and the Kerala Land Tax Ordinance, 1961 (Ordinance 2 of 1961). 19. Before I advert to the relevant rules framed unaer the Act, I may also incidentally refer to the Kerala Additional Tax on Lands Act 1961, Act 25 of 1961, published in the State Gazette on 15th July, 1961. This Act makes provision for the levy of an additional tax on certain lands. Under Section 4 it is provided that subject to the provisions of the Act, there shall be charged and levied as and from 1st April, 1961 an additional tax at the rate Of ₹ 2 per acre per annum on all lands of whatever description held by a person, the gross Income from which is not less than ₹ 20 per acre per annum. 20. I do not think it necessary to go into the various other matters provided therein excepting to state that there is provision made in this Act for a person holding lands as on 1st April, 1961 liable to the additional tax to submit a return to the prescribed authority giving the various particulars relating to the lands held by him. There is also provision made for making revised returns or for amending a return that has already been sent and the procedure for making assessment is also indicated in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the nature of cultivation of such lanas. Sub-rule (2) of Rule 8 provides for fixing the money value in the manner indicated therein after the gross Income in Kind is determined. Sub-rule (3) of Rule 8 provides for the Tahsildar recording in his proceeding the basis for the determination of gross Income from any land as also the money value for the several hinds of produce; it also provides thai copy of the proceeding shall be given to the landholder or other person concerned liable to pay the tax. 22. Rule 9 provides that the appeals against the orders of the Tahsildar before the District Collector are to be filed within 30 days of the receipt of the order and it also provides for the form of the appeal; the fee payable on an appeal; and the manner of service of notice. 23. Rule 11 deals with application fdr refund of tax, the form in which it has to be filed and the particulars to be given and also the period within which such applications are to be filed; and for the Revenue Divisional Officer ordering refund after satisfying himself that the amount a to be refunded. 24. Rule 14 provides that the basic tax charged and levied under the Act is to be paid in two equal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s basic tax and the steps taken by him before the Supreme Court challenging those proceedings by filing aft application, namely, Petition No. 19 of 1958 under Article 32 of the Constitution. 29. After adverting to the decision of the Supreme Court striking down the Land Tax Act of 1955, and to the promulgation of the Ordinance, 2 of 1961 as well as the passing of the Act in question, the petitioner states that the various infirmities pointed out by the Supreme Court in the Land Tax Act 1955 exist in the present Act, and, therefore, it has to be struck down as offending Articles (sic) 19 and 31 of the Constitution. 30. The petitioner avers that there is absolutely no reasonable basis for classification of lands yielding annually ₹ 10/- per acre and more and lands yielding less than ₹ 10/- per acre. According to the petitioner, lands just yielding ₹ 10/- per acre and lands yielding more than ₹ 500 per acre are taxed at a uniform rate of ₹ 7 per acre per annum, and, therefore, the Act is discriminatory and hit by Article 14 of the Constitution. 31. According to the petitioner, the provisions of Sec-tion 7 of Ihe Act authorising the imposition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing a provisional assessment and the statute has also provided for a right of appeal and revision, apart from giving a further right to the assessee to ask tor a reference on a point of law to the District Court. The levy of basic tax, under this Act, is made after having due regard to the income, either actual or potential, that may accrue from the land. The classification of lands yielding an annual income of ₹ 10/- and more and of lands yielding an annual income less than ₹ 10/- is a classification made having due regard to the object of the statute, the provisions of the Madras Preservation of Private forests Act have, according to the State, no bearing in considering the validity of this Act. It is also stated that the extent -of unsurveyed lands has been ascertained, after due enquiry by its Officers; and it is really on that basis that the provisional assessment is sought to be made. Therefore, according to the State the Act is a perfectly valid piece of legislation. 36. in 0. P. No. 874 of 1961, on behalf of the petitioner, his learned counsel Mr. T. Chandrasekhara Menon, . again seeks the issue of a writ of prohibition forbearing the District Collector of Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t enormous amount as and by way of basic tax and if the amounts are not paid the properties will be proceeded with under the Revenue Recovery Act. According to the petitioner, the present Act is nothing more than a colourable device adopted by the Government for virtually confiscating and expropriating the forest ano wastelands under the guise of imposing a land tax. The petitioner further avers that notwithstanding the tact that applications for change of pattas, in respect of the properties allotted to the various sharers have been made long ago, the revenue authorities hava taken no action whatsoever and they are demanding the entire amount from the petitioner. There is no provision in the Act giving a right to the petitioner to raise all these objections btfore the authorities and, therefore, the levy sought to be made is illegal and arbitrary. 40. In the counter-affidavit filed in this writ petition by the State, apart from denying the various grounds of attach raised as against the validity of the Act, the State avers that it is not true that the whole income of the petitioner's properties will have to be paid as tax. They also state that under Section 6 (2) a right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and necessary before a real revenue settlement can be effected. The original land revenue payable by the petitioner was ₹ 1,211-0-6 whereas under the ACT the petitioner has to pay a basic tax of ₹ 4554.58. The properties have been leased for a considerably long period on a fixed rent and in view of the increase in the lana tax the petitioner cannot get 3 proportionate increase. In the rent also. 43. Here again, the State Government have contro-verted the various grounds of attack levelled as against the validity of the Act. So far as I could see, there is no specific denial in the counter-affidavit of the State of the various statements of fact made in the petitioner's affidavit. 44. In 0. P. Ho. 1644 of 1961, Mr. K. Kuttikrishna Menon, learned counsel, on behalf of the petitioner, who is an advocate receiver appointed in 0. S. No. 56 of 1957 by the Subordinate Judge of Palghat, again seeks the issue of a prohibition against the respondent, the State, the collector of Palghat and the Tahsildar of Alathur Taluk, from enforcing the provisions of Kerala Act 13 of 1961. 45. According to the petitioner, the Tahsildar or Alathur has made a demand for payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48. Then again, an attack is made as against Explanation 2 of Section 6 to the effect that lands comprised in the same survey or sub-division number and held by the same landholder shall be treated as a single unit for calculating the gross income for purposes of the section. The petitioner claims that in particular, Sy. No. 561/3 owned by him is of an extent of over 4300 acres consisting of hills, rivulets and rocks on which nothing grows and nothing will grow. But if a very small portion of this Survey number is, with considerable difficulty, cultivated by the petitioner and he is able to get some income, by virtue of this explanation, the entire extent of 4300 acres in this sub-division number will be treated on the same basis and tax levled. That, according to the petitioner, is clearly opposed to the principles laid down by the Supreme Court that the tax must have some reference to the income accruing from the lands. 49. The provisions regarding appeal and revision provided in the statute are again challenged as illusory and serving no purpose whatsoever. In particular, the petitioner urges that the rules framed under this Act clearly show that in the enquiry that is bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ildar has issued notices demanding a sum of ₹ 7108.24 for the period 1st September, 1957 to 31st March, 1961, though the properties have not yielded any income whatsoever. Various grounds of attack again are raised as against the several sections in the Act. There is no counter-affidavit filed by the State in this matter. 55. In 0. P. No. 2196 of 1961, Mr. K. V. Suriya-narayana Iyer, learned counsel for the petitioner, challenges-the assessment order passed by the concerned Tahsildar under Section 7 (3) of the Kerala Land Tax Act, 1961,, in-respect of an extent of unsurveyed forest stated to be owned by the petitioner. 56. According to the petitioner, when the forests were in the Madras area, revenue was not levied as against unsurveyed forest lands and under the revenue settlement tax was levied even in respect of other lands based upon a proper classification of the soil. The petitioner refers to the issue of a notice by the concerned Tahsildar under Section 7 (1) and to the petitioner sending a reply stating that he gets no income from the properties as the lands are forest tracts-in respect of which felling licenses are granted only when the trees become mature for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Land Tax Act of 1953 before the Supreme Court. The petitioner owns about 8434.90 acres of land out of which an extent of 3695 acres are waste or tharisu lands and the rest are forest lands and both sets of properties do not yield any appreciable income to the petitioner. 62. The petitioner again attacks the various provisions of the Act on the ground that they violate Articles 14, 19 and 31 of the Constitution. There is no counter-atlidavit filed by the State in this matter. 63. In 0. P. No. 3371 of 1961, the properties concerned are unsurveyed lands and the petitioners are represented by their learned counsel Mr. Velayudhan Nair, the petitioners seek to have the provisional assessment made by the concerned Tahsildar under the Act for the four years 1957-58 to 1960-61 in the sum of ₹ 94,600/- quashed. The basic tax has been fixed annually in the sum Of ₹ 24,000/- According to the petitioners, who are receivers appointed by Court, the annual income from these properties is only ₹ 3000/- whereas the annual basic tax that is sought to be collected is eight times the said income and, therefore, the petitioners aver that it is absolutely impossible to meet the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 2/- per annum which was the very thing held lo be unconstitutional by the Supreme Court. Further, the petitioner takes up the position that when even the legislature contemplates a person getting an annual income of less than ₹ 10/- per acre and also gives such a person a tight under Section 6 (2), nevertheless even pending the disposal of an application filed by the petitioner for fixation of Basic tax at less than ₹ 2 per acre, the petitioner is bound to pay the tax at the maximum rate of ₹ 2/- per acre, harsh and illegal and constitutes a violation of the guarantee under Article 19 (1) (1). The fact that there is a provision for making a refund ultimately is again, according to the petitioner, absolutely illusory be-cause there will be no scope for getting any refund whatsoever once the provisos and Explanations to Section 6 (2) are invoked and applied, as they will surely be applied by the taxing authorities. 69. The petitioner also avers that when the statute itself proceeds on the basis that the arrangement is to be considered as a general revenue settlement of the State, before a tax liability is fixed, there must be a proper investigation condu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articular, the petitioner states that the order of the Tahsildar dated 24-10-1981 that the form of application for fixation of basic tax has been published in the Kerala Gazette on 7-2-1961 is meaningless and the reference to Rule 15 of the Kerala Land Tax Rules published in the State Gazette on 11-/-1981 is again a very serious error committed by the Tahsildar. 74. The petitioner urges that notwithstanding the fact that a right is given to file an application under Section 6(2) within the time mentioned in Sectioc 6(3), the petitioner has been effectively deprived of getting relief by the total inaction of the State Government in not having specified the form by notification, as it was bound to do under Section 6 (3) of the Act. Though the petitioner has been repeatedly asking the Tahsildar concerned to send the form, the Tahsildar has totally misunderstood this request. 75. The Act itself was published in the State Gazette only on 5th April 1961 and, therefore, the reference made by the Tahsildar to the form of application stated to have been published on 7-2-1961 does not convey any meaning. 76. Again, the petitioner urges that the Kerala Land Tax Act, 1961, was publish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before me that no form has been specified by Government, by notification, as contemplated under Section 6 (3) even up to data. Even apart from this, in spite of specific averments by the petitioners in some of their applications to the effect that no form has been prescribed, there has been no denial by the State Government on that aspect in any of the counter-affidavits. Therefore, it is very clear that no form was specified by the State Government at any time before the expiry of four months, namely, the period within which the application under Section 6 (2) is to be filed. 79. As the learned counsel for the petitioners have contended that the Infirmities pointed out by the Supreme Court in the Land Tax Act of 1955 are present in the Act in question, and, therefore, it must be struck down and as the learned Advocate General urged that the various Infirmities pointed out by the Supreme Court have been fully rectified and that the Act does not suffer from any such Infirmities and, therefore, it is a valid piece of legislation, the various aspects dealt with by their Lordships of the Supreme Court regarding the Land Tax Act of 1955 will now be briefly Indicated by me. 80. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act on the ground that the said section gives uncanalised, unlimited and arbitrary power to the Government to picx and choose in the matter of granting total or partial exemption from the provisions of the Act. The learned Chiet Justice also adverts to, the attack on the Act before tnem that the tax proposed to be levied on private property in the State has absolutely no relation to the paying capacity of the persons sought to be taxed with reference to the Income they could derive or actually did derive from the property. 84. These various grounds of attack were met by the State Government before the Supreme Court, by urging that the notices proposing provisional assessment have been issued on the basis of areas ascertained by the authorities concerned through the local officers. Inasmuch as the State had made a levy of tax at ₹ 2 per acre in respect of land, the question of the land producing any Income or otherwise is of no consequence whatsoever and, therefore, there was absolutely no necessity for making any provisions regarding the conduct of any enquiry or investigation, inasmuch as the rate was known and the extent had been ascertained by the local officers on enq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustice further emphasises that if the same class of property, similarly situateo is subjected to an Incidence of taxation which results in Inequality, the law may be struck down as creating an Inequality among holders of the same kind of property. 87. After laying down these broad propositions, the (earned Chief Justice proceeds to state that the Act before them, has no reference to the Income, either actual or potential, from the property sought to be taxed and that the Act obliges every person who holds land to pay tax at the flat rate prescribed, whether or not he makes any Income out of the property or whether or not the property is capable of yielding any Income. It is the further view of the learned Chief Justice that ordinarily a tax on land or land revenue is assessed on the actual or potential productivity of the land sought to be taxed and that the tax has reference to the income actually made or which could have been made with due diligence and, theretore, is levied with due regard to the Incidence of taxation, on this aspect, ultimately, the learned Chief Justice is of the view that in the Act before them, Inequality' is writ large on the Act and is inherent in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertake survey proceedings within any particular period, a landholder is subjected to repeated annual provisional assessments on more or less conjectural basis and made name for the tax as assessed. 91. The learned Chief Justice ultimately, winds up the discussion in this aspect at p. 152 (of Ker LJ); tat p. 559 of AIR) by stating: The Act thus proposes to impose a liability on landholders to pay a tax which is not to be levied on a judicial basis because (1) the procedure to be adopted does not require a notice to be given to the proposed assessee; (2) there is no procedure for rectification or mistakes committed by the Assessing Authority; (3) there is no procedure prescribed for obtaining the opinion of a superior Civil Court on questions of law as is generally found in all taxing statutes and (4) no duty is cast upon the Assessing Authority to act judicially in the matter of assessment proceedings. Nor is there any right of appeal provided to such assessees as may feel aggrieved by the order of assessment. 92. Then the learned Chief Justice considers the attack made on the provisions of the Act before the Court on the ground that they are in fact confiscatory. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ath Baksh Singh v. State of Uttar Pradesh, 1962-46 ITR 169 : (AIR 1962 SC 1563), had occasion to consider their, earlier decision, in 1961 Ker LJ 143 : (AIR 1961 SC 552). Adverting to that decision, the Supreme Court expresses the view that the said decision illustrates how a taxing statute, though ostensibly passed in exercise of the legislative powers conferred on the Legislature, can be struck down as being a colourable exercise Of that power. 95. That a taxing statute can be struck down, it it offends either Article 14 or 19 of the Constitution has again been laid down by the Supreme Court in its decision referred to above, namely, 1962-46 ITR 169: (AIR 1962 SC 1563). In this connection, Mr. Justice Gajendragadkar delivering the judgment of ths Court, observes at p. 178 (of ITR): (at p. 1570 of AIR) as follows:-- This contention raises the familiar problem as to whether a taxing statute is subject to the provisions Of Part III of the Constitution or not; and it arises in regard to a statute which has been passed for the purpose of only raising revenue. The power of taxation is, no doubt, the sovereign right of the State; as was observed by Chief Justice Marshall in McCul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n v. The Town Area Committee, Jalalabad, 1952 SCR 572; (AIR 1952 SC 115), State of Bombay v. United Motors (India) Ltd., 1953 SCR 1069 : (AIR 1953 SC 252), Bengal Immunity Co. Ltd. v. State of Bihar, (1955) 2 SCR 603: ((S) AIR 1955 SC 661), Ch. Tika Ramji v. State of Uttar Pradesh, 1958 SCR 393: ((S) AIR 1956 SC 676), and Balaji v. Income Tax Officer, Akola, (1961) 43 ITR 393 : (AIR 1962 SC 123). Therefore, it must now be taken to be settled that the validity of a tax law can be challenged on the ground that it infringes one or the other of the fundamental rights guaranteed by Part III, and so the argument that the tax with which we are concerned is invalid because it offends against Articles 14 and 19(1)(f) cannot be rejected as inadmissible . 96. Mr. Justice Gajendragadkar again considers broadly the circumstances under which a taxing statute can be held to contravene Article 14 or Article 19 (1) (t) and in this connection at p. 179 (of ITR): (at p. 1570 of AIR) observes as follows : A taxing statute can be held to contravene Article 14 if it purports to impose on the same class of property similarly situated an incidence of taxation which leads to obvious inequality. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulated by Article 31 (1) is obviously the authority of valid law. If the law is not valid because it offends against Article 14 or Article 19 or some other fundamental right guaranteed by Part III, the measure of tax levied by it cannot be said to meet the requirements of Article 31(1), and if the Act is otherwise valid, then Article 31(1) is complied with. It is the further view of the Court that Article 31 (2) would be inapplicable to a taxing statute because the taxing statute does not purport to acquire or requisition any property and that wen though the imposition of tax levied by a statute is excessive and may ultimately lead to the loss of the assessee's property, it cannot be said that by virtue of that statute, the property has been acquired or requisitioned. Finally, the Court winds up the discussion on this aspect by stating that the provisions of Article 31(2) cannot be invoked in impeaching the validity of a taxing statute and a taxing statute which does not offend against any fundamental rights guaranteed by Part III, would justify the Imposition of a tax and would meet the requirements of Article 31(1) and that Article 31(2) is well out of the way. 98. Ultimat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in classifying the subjects for purposes of taxation. I do not think it necessary to consider those passages in any great detail because a similar principle has been laid down by oar own Supreme Court in their earlier decision in the Land Tax Act case, (1961 Ker U 143: AIR 1961 SC 552). In fact, in that decision, the learned Chief Justice takes note of the fact that the guarantee of equal protection of laws, though it extends even to taxing statutes, does not mean that every person should be taxed equally and that different kinds of property may be subjected to different rates of tax so long as there is a rational basis tor the classification. The learned Chief Justice has again, if I may say so with great respect, laid emphasis on another aspect, namely, that the Courts are not concerned with the policy underlying a taxing statute or whether a particular tax could not have been imposed in a different way or in way that the Court might think more just and equitable. Similarly, it is also not necessary for me to consider gain the various passages cited by the learned Advocate General, in particular, from some of these text books regarding the procedure to be adopted for the levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uck down by the majority judgment cannot be branded as a colourable transaction; but the Supreme Court in the later decision in 1962-46 ITR 169: (AIR 1962 SC 1563). specifically refers to the decision in 1961 Ker LJ 143; (AIR 1961 SC 552) as an illustration dealing with a colourable statute. 102. The learned Advocate General again referred me to the observations of the Supreme Court in Hamdard Dawakhana v. Union of India, AIR 1960 SC 554 at p. 560 that the presumption is in favour of the constitutionality of a statute it must be assumed that the legislature understands and appreciates the need of the people and the laws it enacts are directed to problems which are made manifest by experience and that the elected representatives assembled in a legislature enact laws which they consider to be reasonable for the- purpose for which they are enacted. 103. These observations relied upon by the learned Advocate General are certainly entitled to very great respect and consideration at the hands of this Court; but these observations have also to be related to the context in which they have been made. Even otherwise, l do not think the said decision bars the jurisdiction of the Court t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsurveyed lands that classification is not a reasonable classification having any relation to the object of the statute. Again, the classification made by the statute of lands yielding an annual Income of ₹ 10/- and more per year and lands yielding less nan ₹ 10/- as annual income per acre, is no classification at all. In fact, it is urged that the various provisos and Explanations occurring in Section 6 ultimately will result in a uniform levy of ₹ 2/- per acre, without any relation to the income accruing from the lands, it is also urged that there is not even a quasi judicial approach in the matter of assessment, levy and collection of tax. 108. Again, the provisions regarding the making of a provisional assessment to basic tax in the case of unsurveyed lands have also been very severely attacked on the ground that there is no proper and reasonable classification, having due regard to tho object of the statute. It is also urged that these provisions, apart from being discriminatory, also very seriously affect the rights of the owners of property to hold property. 109. Again, the provisions providing for appeals and ashing for reference to the District Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question is whether the attack as against Section 2(2), read with Section 2(3) of the Act can be sustained. 115. The analogous provision, namely, Section 7, of the old Statute which the Supreme Court had to consider was, in my opinion, totally different. That section merely provided that the Act is not applicable to lands held or leased by Government or any land or class of lands which the Government may by notification in the Gazette either wholly or partially exempt from the provisions of the Act. The Supreme Court held that the said provisions are discriminatory, inasmuch as the section vests in the Government arbitrary powers to exempt lands from the operation of the statute without having provided any principle or policy for the guidance for the exercise of the discretion by the Government. 116. But, in my view, the position, so far as the present Sections 2(2) and 2(3) are concerned, is entirely different. Sub-section (2) of Section 2 clearly restricts the power of the Government to exempt lands belonging to any public body or institution and it is hedge'd tn by another condition that the Government should be satisfies that such exemption is necessary in the public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds as occupied and unoccupied and occupied dry lands which are under permanent occupation continued from year to year are assessed to revenue. But unoccupied lands are waste lands or lands cultivated only intermittently with fugitive cultivation, and assessment is levied only on the extent cultivated in each year and no charge is made for lands lying fallow. In the said Gazetteer various other matters are dealt with such as taking into account of various factors for purposes of fixing the wet and dry assessment of lands including the tharam of the lands. Similarly, the manner of revenue assessment in the cochin and Travancore areas has also been referred to me ay Mr. A Madhava Prabhu, learned counsel appearing for the petitioner in O. P. No. 1199 of 1961. The passages in these Manuals also clearly show, according to the learned counsel, that an assessment is made having due regard to the income accruing from the lands, apart from other factors. It will also he seen that though there has been a survey of forest or waste-lands in particular for the purpose of fixing the extent alone, there has been no survey of those lands for the purpose of assessment in the sense that no conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In fact, it is really on the classification made and the rate of assessment based upon such classification, in Section 6 that the learned Advocate General has very strenuously relied to show that there has been a proper classification of lands, according to the income, and the rate of tax also depends upon the income that accrues from the property. But it should be noted that the classification that the supreme Court has referred to and as required under Article 14 of the Constitution is not a kind of arbitrary classification but a reasonable classification having nexus to the object of the enactment. So far as 1 could see, the income from the land envisaged by the Supreme Court and which must ne taken into account for purposes of making a levy or fixing a rate is not the gross income but the net income. 122. Applying these principles, the question is whether the provisions of Section 6 can be sustained as not being violative of Article 14. No doubt, there are other contentions raised, namely, that even on the basis that there is a classification, Section 6 is violative of Article 19 (1) (f) of the Constitution inasmuch as the whole scheme mentioned therein is illusory and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand has been made for payment of the entire land revenue on the properties Of the tarwad and the petitioner urges that inasmuch as there is absolutely no machinery or procedure provided under the Act he is not able to raise all these objections. 126. Again, there is an attack made that there is no machinery provided for fixing the liability as between the landlord and the tenant under the proviso to Sub-section (2) of Section 5. It is also urged that the legislature itself contemplates under the proviso that the assessment of basic tax may be at such a high figure that the landlord will get nothing out of the property because the entire rent received by him will have to be givan for payment of ihe tax and that in some eases at least, even more than the income will have to be paid, though the tenant is made liable for that excess. 127. No doubt, the provisions of Section 6 will make it appear that there is a classification of lands under two heads, namely, (1) lands getting an annual income of ₹ 10/-and more and (2) lands getting an annual income of less than ₹ 10/- per acre. Though Sub-section (1) of Section 6 does not give any indication, nevertheless reading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC 1563) that the validity of a taxing statute cannot be attached merely on the ground hat it imposes an unreasonably high burden. But both the decisions do emphasise that the incidence of taxation should not lead to obvious inequality. 129. It should be remembered that one of the grounds on which the Supreme Court, struck down the Land Tax Act of 1955 was that the said Act obliges every person who holds land to pay the tax at a flat rate prescribed, whether or not he makes any income out of the property or whether or not the property is capable of yielding any income. As I will presently show, the result is the same under Section 6 also, when the provisions of Section 6 are carefully considered. By taking the gross income alone of the property into consideration, it will be seen that there is an unequal burden cast upon the owners of property. Even assuming that a tax levied on the basis of merely gross income can be justified, it will be seen that under Sub-section (1) of Section 6, an owner getting just ₹ 10/- gross income from the property, after incurring heavy expenses, has to pay the same rate of ₹ 2/- per acre as another person more favourably situated and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the petitioner that the attempted classification under Section 6 (1) and Section 6 (2) of the Act stated to be based upon annual Income, at any rate, of ₹ 10/- and more or less than, Rs. IDA, becomes absolutely illusory and without any basis when assessment is made on the basis of this proviso. 134. That is, according to the learned counsel for the petitioner, though the object of the enactment is to levy tax on lands on the basis of lands getting an income of ₹ 10/- or more or levying it at a lower rate when the annual income is less than ₹ 10/-, under this proviso the whole classification, even if it can be called a classification, is given up because an absolute right is given to the Government to levy and collect at a uniform rate of ₹ 2/- though no income is being derived from such lands and notwithstanding the fact that the income obtained by an ewner is actually less than ₹ 10/- per acre per annum. 135. The learned Advocate General, no doubt, urged that the right given under Sub-section (2) of Section 6 is for getting a lower rate fixed on the ground that the actual income is less than ₹ 10/- per acre. The 2nd proviso levies tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der shall be treated as a single unit for calculating the gross income for the purpose of the section. The effect of this Explanation is that if income accrues from part of a survey number a rate of tax in accordance with the provisions of Section 6 (1) or Section 6 (2) can be levied not only in respect of that part of the survey number from which the income accrues but also in respect of the entire area covered by the survey number. The learned Advocate General accepted this position to be correct as following from the Explanation. 139. To take a concrete instance, the petitioner in O. P. No. 399 of 1962 has specifically stated that Sy. No. 79 is of an extent of 21842 acres. The demand upon him is at the flat rate of ₹ 2/- per acre per annum on this survey number as also in respect of other properties owned by him. If the petitioner is able to satisfy, under Section 6 (2) that he is getting a gross income of less than ₹ 10/- per acre per annum from a very negligible portion of this survey number, nevertheless in view of Explanation 2, the rate of tax that may be fixed for the portion from which he is getting some income can be enforced against the entire 21842 acres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed provisional assessment. Under Sub-section (6) there is a provision to the effect that within a period of five years from the date of the publication of the Act in the Gazette a survey has to be conducted of the un-surveyed lands and for making a regular assessment to basic tax and there are certain other consequential provisions therein, making the provisions of Section 6 applicable to the regular assessment and providing for making an application for fixation of basic tax within 4 months from the date of the completion of the survey. There is also provision made for refunding any excess amounts that may be found due on the basis of a regular assessment. 144. In reply to my view, the provisions of Section 7 do not stand on any different footing from the provisions of Section 6. No doubt, there is a provision made for calling upon the landholder for furnishing a return and for an opportunity being given to him before a provisional assessment is made. Apart from the fact that there is nothing placed before me to show the basis for making such a classification, in my view, such a classification has been made only for the purpose of satisfying the criticism levelled by the Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability for payment of tax between the land holder and the tenant are to be resolved. Though Sub-section (2) of Section 5 creates a liability on the landholder to pay the tax, there is no provision providing for rectification of any mistakes or giving a right to the party sought to be assessed to challenge either his liability or the correctness of the matters mentioned in the assessment order and this will directly come within the observations of their Lordships of the Supreme Court in 1962-46 ITR 169 at p. 179 : (AIR 1962 SC 1563 at p. 1570) to the effect that if a taxing statute does not make any provision about the machinery to recover tax and the procedure to make the assessment of tax, the imposition of the tax can be considered to be an unreasonable restriction under Article 19 (5) of the Constitution and that an imposition of tax in the absence of a prescribed machinery and prescribed procedure will also partake a character of a purely administrative affair and will be hit by Article 19 (1) (f) also. Therefore, under both Articles 19 (5) and 19 (1), Section 5 will have to be held to be invalid. 147. That there is no machinery provided under Subsection (1) of Section 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application in 1961 under Sub-section (2) of Section 6 of the Act, will nevertheless be faced with a liability to pay for nearly five years the tax at the full rate with the penal consequences attached to the same. 149. Again, under Sub-section (3) of Section 6, it is provided that an application for fixing a rate of basic tax under Sub-section (2) is to be in the form specified by the Government by notification in the Gazette and shall be made to the prescribed authority within four months from the date of publication of the Act, in the Gazette. It; will be noted that the Act has prescribed a very short period of limitation for persons intending to seek relief under Section 5 (2). No doubt, the fixation of such a short period itself has been attacked as an unreasonable restriction. Though I may not be inclined to accept such a large contention, from what I am saying immediately it will be seen that the right given under Sub-section (2) read with Sub-section (3) of Section 6 has become absolutely unworkable and futile due to the inaction of the State Govern-ment in prescribing the authority to whom the application is to be made and more than that in n.ot having specified t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sildar or of being given an opportunity to substantiate the stand taken by them in their applications. Sub-section (4) of Section 6, no doubt, provides that the prescribed authority is to pass orders on the applications as far as practicable within six months from the date of first appearance of the applicant. As to when the date of first appearance of the applicant is to be fixed, there is absolutely no indication. Then there is Subsection (5) to Section 6 to the effect that the order of the prescribed authority fixing the basic tax is to be communicated to the landholder concerned and any other person liable to pay the tax. 153. Therefore, as it is, the party who wants to seek relief under Section 6 (2) files an application under Section 6 (3) within four months and he merely gets a communication from the prescribed authority fixing the basic tax. There is absolutely nothing in the section giving any right, as I mentioned earlier, to the said parties to participate in the enquiry. 154. The rules that have been framed on this aspect provide very interesting reading Rule 5 provides for the prescribed authority to whom an application under Section 6 (2) is to be made. Rule 6 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocate General. No doubt, there is an appellate authority provided under Section 3 and a right is given to a party aggrieved by orders passed under Sub-section (2) of Section 6 or Sub-section (3) of Section 7 to appeal to the District Collector. But there again it is stated clearly, that no appeal shall lie unless the tax has been paid. The provision for an appeal is, in my view, absolutely illusory and serves no purpose whatsoever in fact. The entire tax has to be paid and even otherwise when a party had no Opportunity of challenging the materials that have been collected by the prescribed autho-rity, he can hope to get no relief whatsoever at the hands of the appellate authority. On the other hand, the appellate authority, however considerate and willing he may be, can only dispose of the appeal on the basis of the materials placed before him by the prescribed authority. He cannot certainly entertain a grievance that the petitioner has not been given an opportunity to participate in the enquiry because neither the statute nor the rules give such a right to the party. Therefore, in my view, though as a formality, a right or appeal is given, that appeal, apart from the hardship O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate authority may, within sixty days of the receipt of such requisition, draw up a statement of the case and refer it to the District Court. (2) if the District Court is not satisfied that the state-ment in a case referred under this section are sufficient to enable it to determine the question raised thereoy, the Court may refer the case back to the appellate authority to make such additions thereto or alterations therein as-the Court may direct in that behalf. (3) The District Court Upon the hearing of any such case shall decide the questions of law raised thereby and shall deliver its judgment thereon containing the grounds on which such decision is founded and shall send a copy of such judgment under the seal of the Court to the appellate authority which shall pass such orders as are necessary to dispose of the case conformably to such judgment. (4) The decision of the District Judge on such reference shall be final. (5) Notwithstanding that a reference has been made under this section to the District Court, basic tax shall be payable in accordance with the assessment made in the case . Provided that if the amount of assessment is raduced as a result of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Wo doubt, this aspect may nave to be taken into account, if the provisions in the statute have themselves sateguarded the right of land-holders to participate in the enquiry to be conducted by the prescribed authority and if a right had been given to them of being furnished with the materials that may be collected by the prescribed authority and a further right to challenge the same had also been given. But inasmuch as no such right has been given in the statute itself, there is no purpose in striking down the rules alone. 165. Without the Act, the rules cannot stand and the Ketala Land Tax Act Rules, 1961 will have also to be struck down. 166. I have already shown that Sections 9, 10 and 11 are absolutely illusory and they have to be struck down. In any event, they cannot remain in the statute, when the main Sections 5, 6 and 7 are struck down. It may also indicate that there is a bar in Section 17 in the way of instituting any suit against Government in any Civil Court in respect of anything done or any order passed under that Act. That means, notwithstanding that the statute here and there states that any excess amounts that may have been collected from landholders have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment, has referred to this aspect and has ultimately held that under Entry 49 .taxation of land on which a forest stands is permissible and legal. Inasmuch as there has been no adjudication by the majority on this aspect, I am bound by the decision of Mr. Justice Sarkar on this aspect and I have to hold that the contention Of the petitioners regarding the competency of the legislature to enact the measure in question, if the Act' is otherwise valid, nas to bo rejected. 171. It is rather regrettable to note that notwithstanding the clear guidance and lead given by their Lordships of the Supreme Court in the previous decision, that has not been properly availed of when this Act, in question, was enacted. 172. In the result, all these writ petitions are allowed and the proceedings challenged therein are quashed and a writ of mandamus will issue forbearing the respondent therein from taking further ation on the basis of the Kerala Land Tax Act, 1961, Act 13 of 1961, or the rules framed thereunder. 173. In reply to view of the fact that the writ petitions are allowed because of the Act being declared unconstitutional, I am not expressing any opinion regarding any other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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