NEW MANEK CHOWK SPINNING AND WEAVING MILLS CO. LTD. AND ORS. versus MUNICIPAL CORPORATION OF THE CITY OF AHMEDABAD AND ORS.

Citation: [1967] 2 S.C.R. 679 · Decided: 21-02-1967 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Appeal(s) allowed

Cited by 12 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

A 
NEW MANEK CHOWK SPINNING AND WEAVING 
B 
c 
D 
E 
F 
G 
H 
MILLS CO. LTD. AND ORS. 
v. 
MUNICIPAL CORPORATION OF THE CITY OF 
AHMEDABAD AND ORS. 
February 21, 1967 
[K. SuBBA RAO C. J., J. C. SHAH, J. M. SHELAT, V. BHARGAVA 
AND G. K. 
MITTER, JJ.] 
Bombay Provincial Municipal Corporation Act ( 49 of 1949)-Levy 
of pr()[Jerty tax on textile factories a~ fl.at 
rate per 100 sq. ft. of floor 
areas-Method whether 
permissible under 
Act-Whether violative of 
Constitution of India, Art. 14-Machinery specified by Commissioner to 
be included in the term 'land' for the purpose of taxation-Rules 7(2) and 
(3) giving power to Commissioner to specify such machinery without giv-
ing guidance-Rules whether suffer from excessive delegation. 
The petitioners were certain textile mills of Ahmedabad. They filed 
writ petitions under Art. 32 of the Constitution against assessment to 
property tax by the Corporation of the City of Ahmedabad under the 
provisions of the Bombay Provincial Municipal 
Corporation A~t, 1949. 
The following contentions fell for consideration : 
( i) The method of 
adopting a flat rate for a floor area for determining the annual value 
adopted by the Corporation was against the provisions of the Act, as well 
as against all recognised principles of valuation for the purpose of rating; 
it was also violative of Art. 14; (ii) Rules 7(2) and (3) made under the 
Act gave unguided power to the Commissioner to specify machinery to be 
treated as part of the 'land' for the purpose of 
taxat:on and therefore 
were bad due to excessive delegation. They also fell beyond the ambit 
of Entry 49 of List II of the Seventh Schedule. 
HELD : (i) The method of levy of tax on the basis of tloor area was 
against the provisions of the Act and the Rules made thereunder. 
lbe 
latter clearly laid down that the rateable value of the property must be 
assessed after determining the rack rent or the 
annual rental value in 
respect of each premises which is to be computed on the basis of the 
annual rent for which the property might reasonably be expected to let 
from year to year. It did not lie in the mouth of the municipality to say 
that the irregularity was open to correction. [693 G-H; 694 A-B; 684 G-H] 
(ii) It had not been established that condition prerequisite for deter-
mination of annual value of textile factories at Ahmedabad on the basis 
of the rental value per foot super of floor area existed at the relevant 
time, nor had it been shown that the so-called contractor's method was 
adopted by the Municipal authorities of Abmedabad. The method was 
also not one which is generally recognised by authorities on rating. [693E] 
(iii) Applied indiscriminately-as it appeared to have been done in 
ihe present case-the method of taxation on the basis of tloor area was 
sure to give rise to inequalities as there had been no classification of fac· 
tories on any rational basis. 
Further there did not· seem to be any basis 
for diving the factories and the buildings thereof under two 
general 
classes as buildings for processing and buildings for non-processing pur-
poses Article 14 was therefore clearly violated. [693 F-G] 
680 
SUPREMI! COURT REPORTS 
(1967] 2 S.C.R. 
Lokmanya Mills v. The Barsi Borough Municipality, [1962] 1 S.C.R. 
A 
306, relied OD. 
Bhuvaneswarlah v. Stale, A.I.R. 1950 Mys. 170 aod N. Kunha/i Hail 
v. State of Kerala, AI.R. 1966 Ker. 14, referred to. 
(iv) Rules 7(2) and (3) were invalid OD account of excessive delega-
tion of powers by the Legislature. 
UDder these rules the specifica1ion of 
the classes of machinery for the purpose of taxation is doDe by the Com-
B 
mi..;sioner with the approval of lhe Corporation irrespective of the ques· 
tion as to where they arc to be found. 
It therefore depends on the arbi. 
tr.ary will of the Commissioner as to what machinery he 
would specify 
:-n<l what he would not. 
Moreover. he is the. 
only 
person 
who 
can 
e<dmine this question as there is no right of appeal. [701 D-F] 
(v) Entry 49 in List II of !he Seventh Schedule only perm;ttcd levy 
of tax on land and buildings. 
It did not permit the levy of tax on machi-
C 
nery contained in or situate on the building even 
though the machinery 
was there for the use of the building for a particular 
~rrpose. Ru! .. 
7(2) which levied such a tax was therefore bevond the legislative compe-
tence of the State. [70 I A-CJ 
In re. The Central Provinces and Berar Act No. XIV of 1938, [1939) 
F.C.R. IR. Diamond Sugar

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