LexSPENCER & CO. versus STATE OF MYSORE & OTHERS
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602 SPENCER & CO. v. STATE OF MYSORE & OTHERS April 27, 1971 B [S. M. SIKRI, C. J ., G. K. MITTER, C. A. VAIDIALINGAM, c D E F G H P. JAGANMOHAN REDDY AND I. 0. DUA, JJ,] City of Bangalore Municipal Corporation Act, 1949 as amended by City of Bangalore Municipal Corporation Act, 1964, ss. 98, 99 and 100- Levy of property tax-Vacant land taxed at uniform rate on niarket value of land-Provisions whether discriminatory-Whether procedure in s. 98 relating to levy of new tax ought to have been followed. The appellant company owned a hotel at Bangalore. The vacant land apppurtenant to the building was used for the beneficial enjoyment of the building as gardens and lawns. Under s. 99(2) (b) of the City of Bangalore Municipal Corporation Act, 1949 as amended in 1964 land appurtenant to a building not exceeding thrice the area occupied by the building was to be taxed as a part of the building, land in excess of that limit was to be taxed at a uniform rate of 0.4 per cent of its market value. A notice was issued to the appellant on March 20, 1966 demanding tax on the vacant land in excess of thrice the area occupied by the hotel building. The appellant challenged the levy in the High Court but its petition under Art. 22.6 was dismissed. In this Court the questions that fell for considerations were: (i) whether for the reasons canvassed by the appellant the tax was discriminatory; (ii) whether the levy was invalid on the ground that the procedure in s. 98 for the levy of a new tax bad not been folldwed. HELD: (i) The Act is not discriminatory. The scheme of the Act is that the market value of the land is first ascertained and then the tax at 0.4 per cent is levied. Under sub-s. (3) of s. 99 the Commissioner has to determine the market value of the land and sub-s. (3) of s. 100 gives guidance as to how to determine the market value of the land. The expressions •estimated value' and the word 'area' in s. 100(3) are not vague. In the context of determining the market value of the land, which has a well-known connotation the Commissioner is directed to look at the lands in the area of the land which is being assessed. In the context he can only look at land~ which are similarly situate and are ~imilar in nature to the lands being assessed, and the area must mean the locality in which the land is situate and the extent of the locality would be determin- ed by the well-known characteristics such as commercial area, residential area or factory area etc. In other words the sub-section is drawing the attention of the Commissioner to the well-known principle, which is followed in assessing the market value, that lands similarly situate and of similar potentiality should be taken as exemplars. (ii) This Court has held that the State legislatures have power to levy property tax by assessing the market value of it and levying a percentage on it. If all lands are assessed to the same rate of taxation it cannQt be held that there is per se any discrimination. Mar~et value of land always bears a definite relationship to the actual or potential income being deriv- ed or derivable from the . land and there cannot be any obji;ction to a levy at uniform rate on market value. Moopil Nair's case where no at- tention was paid at all to income of th:C land was therefore distinauish- able. SPBNCBR & CO. v. MYSORB (Sikri, C.J.) K11nnathat Thathunni Moopil Nair v. State of Kera/a, [1961] 3 S.C.R. 77, 91 and State of Kera/a v. Haii K. Kutty, (1969) I S.C.R. 645, dis· tinguished. (iii) No discrimination can be said to result from the fact that land appurtenant to a building not exceeding thrice the area occupied by such building bas been treated as a part of the building and taxed as such whereas land in excess of thrice the area of a building and other lands not appurtenant to buildings have been classified separately. In cities like Bangalore where land is scarce, · excessive use of land as gardens and grounds is not in the ·public interest arid the legislature can validly tax the excess land on a different and higher basis. It may in a particular case cause hardship but the legislature carinot be denied the right to clasw sify the lands in such a manner. Three times the area occupied by a building is not a small area and it cannot be held that this figure is not reasonable. It was not necessary to specify as to which land would be treated as surplus because the idea is to
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