LexPATEL GORDHANDAS HARGOVINDAS versus MUNICIPAL COMMISSIONER, AHMEDABAD
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1963 Match 28 608 SUPREME COURT REPORTS [1964]VOL. PATEL GORDHA:"lDAS HARGOVJNDAS v. MUNICIPAL COMMISSIONER, AHMEDABAD (B. P. SINHA c. ]., s. K. DAS, A. K. SAU KAR K. N. vVA:\'CI!OO, and K. c. DAS GUPTA JJ.) Municipality-lmpoaitt'.on of rate on vacant land-ll'h,thu rnt. to be based on annual wlue or capital ralue of land- Whether rules ultra vires-llistory of rates in England and Inclia-Gf)1:er111ncnl of [11dir1 Act 1 JfJ.)5 (2U Geo. 5 ch. 2), Set:ent!t ._)'r::liulufr, /.,ist 1.ihm 6.j, Liat 11, ite1n 42-Brnnbay .lfunicipal lloroag/,s Act, Jf/25 (li01n. 18 of zn6), 88. 73, 76 llule• 243, 3-50-A. ' A suit was filed by the appellant• to challenge the imposi- tion of a rate by the Municipal Corporation of Ahmedabad on vacant lands situate within the municipal limits. The rate was levied under section 73 of the Bombay Municipal Boroughs Act, 1925, rca<l \vith E~planati'->11 to s. 75 of the Act. The Municipality framed rule 350-A for rating open lands which provides that the rate on the area of open lands shall be levied at 1 per centum on the valuation based upon capital. The contention of the appellants was that reading the two rules together, the rate was levied at a percentage of the capital value of open lands and that the municipality could not do. Rule 350-A read with rule 243 wa. ultra vires ss. 73 and 75 inasmuch as it pcrtnirte<l tlie fixation of rate at a percentage of capital ,·alue and that was not permitted by the Act. 'l'he word "rate-'' 11'.\ed in s.73 had acquired a special meaning by the time the Act came to be passed and meant a tax on the annual value of land< and buildings and not on their capital value. It was also contended that if the Act permitted the levy of a rate on a percentage of capital value of the lands and buildings, that "'as 11ltra 1:ires the Provincial Legislature. It was further contended that the assessment ba.!cd on rule 350·A read \Yith rule 243 was u..ltrfl i·irea and the assc!sment list prepared pursuant to the said rule wa. illr,gal and void The trial court held that rule 350-A read with rule 243 was illegal and void and beyond the authority given to munici- pality under s. 73 of the Act. The trial Court granted the relief claimed by the appellants. The High Court reversed the erder 2 S.C.R. SUPREME COURT REPORTS 609 of the trial court and the appellants came to this court after getting a certificate. H.Zd (Slrkar J., dissenting), that rule 350-A read with rule 243 is ultra vircs s. 73 of the Bombay Municipal Boroughs Act, 1925, read with Explanation to s. 75. The assessment list for the year 1947°48 published by the municipality for levying the said tax in so for as it was prepared under rule 350-A is illegal, ultra vires and void. The municipality was restrained from recovering the said tax on the open lands from the appellants. The word "rate" had acquired a special meaning in English legislative history and practice and also in Indian legislation where that word was used and it meant a tax for local purposes imposed by local authorities. The basis of the tax was the annual value of the lands or buildings on or in connection with which it was imposed, arrived at in one of the three ways, namely, (1) actual rent fetched by land or building where it is actually let, (2) where it is not let, rent based on hypothetical tenancy, particularly in the case of buildings, and (3) where either of these two mode• is not available, by valua· tion based on capital value from which annual value has to be found by applying a suitable percentage which may not be the same for lands and buildings. When in 1925, s. 73 (1) of the Act while specifying taxes which could be imposed by a munici- pal borough, used the word 'rate' on buildings or lands situate within the municipal borough, the word 'rate' must have been used in that particular meaning which it had acquired in the legislative history and practice hath in England and India before that date. The use of the word 'rate' in cl. (i) definitely means that it was that particular kind of tax which in legisla- tive history and practice was known as a 'rate' which the mu- nicipality could impose and not any other kind of tax. That though mathematically it may be possible to arrive at the same figure of the actual tax to be paid as a rate whether based on a capital value or based on annual value, the levying of the rate as a percentage of the capital value woul
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