D. C. GOUSE AND CO. ETC. versus STATE OF KERALA & ANR. ETC.

Citation: [1980] 1 S.C.R. 804 · Decided: 21-09-1979 · Supreme Court of India · Bench: Y.V. CHANDRACHUD · Disposal: Dismissed

Cited by 6 judgment(s) · cites 6 · see the full citation network in Lexace

Judgment (excerpt)

804 
D. C. GOUSE AND CO. ETC. 
v. 
STATE OF KERALA & ANR. ETC. 
September 21, 1979 
B 
(Y. V. CHANDRACHUD, C.J., V. R. KRISHNA !YER, N. L. UNTWALIA, 
P. N. SHINGHAL AND A. D. KOSHAL, JJ.J 
Kera/a Building Tax Act, 1975-Constitutional validity of-Act itnposed a 
non-recurring tax based on capital value-State Legislature if competent to 
impose. 
The Kcrala Building Tax ,,'\ct, 1975 passed by the State 
Legislature under 
C 
Entry 49 of List II (Taxes on lands and buildings) is imposed as a non-recur-
rine tax on buildings, constructed on or after April 1, 1973, the "capital value'" 
of which exceeds Rs. 2,0,000 /-. The term "capital value" is defin~d to mean the 
value arrived at by multiplying th.e "annual value" of a building 
by sixteen. 
"Annual value" means the gross annual rent on which the buildin& may, at the 
tim~ of completion, be expected to let from month to month or from year ro 
year. Section 6 prdVides that the anoual value of a building shall be the annual 
D 
value fixed for that building in the assessment books of the local 
authority 
(which includes a Municipal Corporation or a municipality and so on) within 
whose area the building is situate. Section 6(4) provides that in determining the 
annual value of a building regard, must be had to the location of the building, 
the nature and quality of the structure of the building, the capability of the 
building and so on. An assessee objecting to the assessment of building 
ta"t 
assessed or denying the Jiability may appeal to the Appellate Authority under 
E 
s. 11. But no appeal lies unless the building tax due has been paid. Although 
no appeal lies from the decision of the Appellate Authority, provision is made 
for reference to the District Court on a question of law and the District Collec-
tor is given power to vevise the order of the Appellate Authority and the Gov-
ernment has the power of revision against the order of the District Collector. 
Jurisdiction of Civil Court is barred by s. 27 of the Act. 
F 
G 
H 
The High Court, having upheld the validity of the Ac4 the appellants 
in 
their appeals impµgned the view of the High Court. 
It WM contended on behalf of the appellants that (I) the tax levied on 
buildings being a tax on the capital value of the assets falls within the scope 
of entry 86 of List I of the Seventh Schedule and, therefore, is 
beyond the 
legislative competence of the State Le~islature; (2) 
th~ Act was unconstitu· 
tional in that it imposed a tax on buildings retrospectively (over a period of 2 
yea.rs of its enactment); (3) it was not merely a_ tax on buildings but a t<\X on 
the buildings, and lands of those buildings; ( 4) the method of determining the 
capital value of a building on the basis "of its annual value is hypothetical and 
arbitrary and is, therefore, unconstitutional. 
HEID : 1 There is no force in the argument that the State Legislature was 
not competent to impose a tax on the buildings under entry 49 of List II. 
[818 BJ 
(a) Article 366(28) defines tax to, include imposition of any tax whether 
general, local or special. The word "tax" in its widest sense includes all money 
\ 
/ 
D. C, GOUSE V. KERALA 
805 
raised by taxation and includes tax levied both by the Central and State Legis· 
A 
Iatures as well as rates and charges levied by local autho~ities. [815 D-E] 
(b) The term "asset&" referred to in entry 86 of List I means "Property iJl 
general, all that one owns." If a tax is levied on "all that one owns" or his total 
assets, it would fall within the pllrview of entry 86 and therefore 
would 
be 
outside the.legislative competence of the State Legislature. On the other hand, if 
~ tax is directly imposed on "buildings" it will bear direct relation to 
the 
'uildings owned by the assessee. Though the building owned by an· assessee is a 
B. 
component of his total assets, the tax under entry '86 will not bear any direct 
or definable relation to his building. A tax on "huildings" is, therefore, a direct 
tax on buildings as such. It is not a personal tax without reference to any parti-
cular. property. [815 H, 816 A-BJ 
\ 
(c) A tax has two elements : the person, thing or activity on which it is 
imposed anJ the amount of the tax. The amount of tax· may be measured in 
many ways. There is a distinction between the subject matter of a tax and the 
standard by which the amount of tax is measured. Thus a building may be the 
subject matter of a tax like wealth tax (entry 86 List I) or it may also b

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