Gujarat High Court
Atc Telecom Infrastructure Private ... vs State Of Gujarat & 5 on 24 April, 2017
Bench: M.R. Shah, B.N. Karia
C/SCA/6675/2017 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 6675 of 2017
For Approval and Signature:
HONOURABLE MR.JUSTICE M.R. SHAH Sd/
and
HONOURABLE MR.JUSTICE B.N. KARIA Sd/
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1 Whether Reporters of Local Papers may be allowed to see No
the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of the No
judgment ?
4 Whether this case involves a substantial question of law as No
to the interpretation of the Constitution of India or any
order made thereunder ?
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ATC TELECOM INFRASTRUCTURE PRIVATE LIMITED....Petitioner(s)
Versus
STATE OF GUJARAT & 5....Respondent(s)
=============================================
Appearance:
MR NIKHIL S KARIEL, ADVOCATE for the Petitioner(s) No. 1
MR PRAKASH K JANI, ADDITIONAL ADVOCATE GENERAL with MS MANISHA LAVKUMAR,
GOVERNMENT PLEADER with MR CHINTAN DAVE, ASSITANT GOVERNMENT PLEADER for
the Respondent(s) No. 1
=============================================
CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE B.N. KARIA
Date : 24/04/2017
CAV JUDGMENT
(PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0] By way of this petition under Article 226 of the Constitution of India, petitioner - Telecommunication Service Provider has challenged the constitutional validity of section 200(1) of the Gujarat Panchayat Act, 1993 (hereinafter referred to as "Act, 1993") and to declare section Page 1 of 20 HC-NIC Page 1 of 20 Created On Tue Aug 15 21:46:34 IST 2017 C/SCA/6675/2017 CAV JUDGMENT 200(1) of the Act, 1993 as unconstitutional and unenforceable as being inconsistent with Articles 243 H and 265 of the Constitution of India. The petitioner - Telecommunication Service Provider has also prayed for an appropriate writ, direction and order declaring section 200(1)(ia) of the Act, 1993 levying tax on Mobile Towers as unconstitutional and unenforceable as being inconsistent with Articles 243H and 265 of the Constitution of India. The petitioner - Telecommunication Service Provider has also prayed to quash and set aside the impugned demand notice / bills raising demand of tax in respective Mobile Towers as illegal and unconstitutional.
[2.0] At the outset it is required to be noted that this is second round of litigation and attempt on the part of the petitioner - Telecommunication Service Provider to avoid payment of property tax on Mobile Towers. Earlier the Telecommunication Service Provider like the petitioner raised the question of levy of property tax on Mobile Towers and also challenged the vires of section 145A of the Gujarat Provincial Municipal Corporation Act, 1949 (hereinafter referred to as "GPMC Act") as well as the relevant provisions of the Act, 1993 (which is under challenge in the present petition) before this Court. The respective Telecommunication Service Providers like the petitioner succeeded before this Court and the Division Bench of this Court declared the relevant provisions of the GPMC Act as well as Act, 1993 levying the property tax on Mobile Towers as ultra vires to the Constitution of India more particularly legislative Entry 49 of List II and held that the Mobile Towers cannot be termed as "building" and therefore, to levy the property tax on Mobile Towers treating the same as "building", is beyond the competence of State Legislature to provide for taxation. That by common judgment and order dated 16.12.2016 passed in the case of Ahmedabad Municipal Corporation vs. GTL Infrastructure Ltd. & Ors. (Civil Appeal No.5360 -
Page 2 of 20HC-NIC Page 2 of 20 Created On Tue Aug 15 21:46:34 IST 2017 C/SCA/6675/2017 CAV JUDGMENT 5363 of 2013), the Hon'ble Supreme Court has allowed the said appeals and has quashed and set aside the decision of this Court and has held "Mobile Towers" as "land and building" and therefore, it is held that the State is having the competence to enact the law to levy tax on Mobile Towers.
At this stage it is required to be noted that during the pendency and final disposal of Appeals before the Hon'ble Supreme Court against the decision of the Division Bench of this Court, the Hon'ble Supreme Court stayed the judgment and order passed by the Division Bench of this Court and stayed the order of refund passed by the High Court, on condition that the respective Corporations / Panchayats deposit the amount already collected, before the Hon'ble Supreme Court. The Hon'ble Supreme Court also also clarified that respective Corporations / Panchayats may determine the tax on Mobile Towers and raise the demand on respective Mobile Towers, however, such demand shall not be enforced until disposal of the Appeals. The Hon'ble Supreme Court also observed that the determination of such tax shall be subject to the final decision in the Appeals. Consequently, during the pendency of the Appeals before the Hon'ble Supreme Court, the recovery of demand was kept in abeyance. That thereafter the Hon'ble Supreme Court set aside the order passed by the Division Bench of this Court and held against the respective Telecommunication Service Provider and upheld the vires of the relevant provisions of the GPMC Act as well as Act, 1993, when the respective Panchayats have raised the demand of the property tax on the Mobile Towers for the past period as well as current period, at that stage again the petitioner - Telecommunication Service Provider has preferred the present Special Civil Application again challenging the demand of property tax on Mobile Towers, which is the subject matter of present petition.
Page 3 of 20HC-NIC Page 3 of 20 Created On Tue Aug 15 21:46:34 IST 2017 C/SCA/6675/2017 CAV JUDGMENT [3.0] Shri Nikhil Kariel, learned Advocate has appeared on behalf of the petitioner. Shri P.K. Jani, learned Additional Advocate General has appeared with Ms. Manisha Lavkumar, learned Government Pleader and Shri Chintan Dave, learned Assistant Government Pleader appearing on behalf of the State of Gujarat.
[4.0] We have heard the learned Counsel appearing on behalf of the respective parties at length.
[5.0] Shri Kariel, learned Counsel appearing on behalf of the petitioner has submitted that it is true that the Hon'ble Supreme Court has upheld the relevant provisions of the Act, 1993 levying the property tax on Mobile Towers. However, the Hon'ble Supreme Court has treated and/or considered the "Mobile Tower" as "land and building" only for the purpose of Entry 49 of List II of the Constitution of India. It is submitted that while upholding the levy of property tax on "Mobile Towers" and declaring the relevant provisions of the GPMC Act and Act, 1993 constitutionally valid, the Hon'ble Supreme Court has not specifically observed that "Mobile Towers" shall be treated and/or considered as "land and building" for the purpose of levy of property tax under the Act, 1993. It is submitted that only for the purpose of considering the legislative competence of the State to impose tax on Mobile Towers, "Mobile Towers" are held to be "land and building" within the meaning of Entry 49 of List II of 7th Schedule to the Constitution of India.
[5.1] It is further submitted by Shri Kariel, learned Counsel appearing on behalf of the petitioner has submitted that even otherwise section 200 of the Act, 1993 is ultra vires Articles 243H and 265 of the Constitution of India.
Page 4 of 20HC-NIC Page 4 of 20 Created On Tue Aug 15 21:46:34 IST 2017 C/SCA/6675/2017 CAV JUDGMENT [5.2] It is vehemently submitted by Shri Kariel, learned Counsel appearing on behalf of the petitioner that section 200(1) of the Act, 1993 is ultra vires Article 243H of the Constitution of India because Article 243H authorizes the Panchayat to levy tax in accordance with such procedure and subject to such limits as may be specified in the law made by the State Legislature. It is submitted that the word "law" in Article 243H means primary legislation. It is submitted that however section 200 of the Act, 1993 authorizes the State Government to make an order (special or general) to fix the minimum and maximum rates of tax. It is submitted that in other words, Article 243H mandates that the limit of tax be prescribed by the State Legislature. It is submitted that however section 200 of the Act, 1993 allows the State Government to make an order to set the limits of tax. It is submitted that thus viewed, section 200 is inconsistent and incompatible with Article 243H of the Constitution of India. Relying upon the decision of the Hon'ble Supreme Court in the case of Mathuram Agrawal vs. State of Madhya Pradesh reported in (1999) 8 SCC 667, it is submitted that as held by the Hon'ble Supreme Court in the said decision, where the Statute does not set out the right of tax, the same is unconstitutional.
[5.3] It is further submitted by Shri Kariel, learned Counsel that Article 243H requires the limits of a tax to be fixed by exercise of law making power. It is submitted that Section 200 allows the limits of a tax to be fixed by exercise of executive power. In other words, Article 243H requires section 200(1) to set the maximum and minimum rates of tax. However, section 200(1) allows the State Government to set the maximum and minimum rates of tax. It is submitted that clearly section 200 is in tension with Article 243H of the Constitution of India.
[5.4] It is further submitted that the word "limits" in Article 243H Page 5 of 20 HC-NIC Page 5 of 20 Created On Tue Aug 15 21:46:34 IST 2017 C/SCA/6675/2017 CAV JUDGMENT obviously refers to maximum and minimum rates of tax. It is submitted that the mention of the words "minimum and maximum rates of a tax"
in Section 200 is a clear pointer that the "limits" in Article 243H refers to monetary limits. It is submitted that to the extent Section 200 authorizes the State Government to make an order for fixing the minimum and maximum rates of a tax, without any guidance and control, it suffers from the vice of excessive delegation. It is submitted that section 200 cannot abnegate the State Legislature's power to set the limits of a tax and permit delegation of that power to the State Government. In support of his above submissions, he has heavily relied upon the decision of the Hon'ble Supreme Court in the case of Delhi Race Club Ltd. vs. Union of India and Ors. reported in (2012) 8 SCC 680.
[5.5] It is further submitted that under section 200(1) the competence of a village Panchayat to levy tax is subject to State Government's general or special order fixing the minimum and maximum rates of a tax. It is submitted that without such order, the levy of tax by village Panchayat would fall foul of Section 200. It is submitted that in the present case, there is no such order of the State Government fixing the minimum and maximum rates of a tax.
[5.6] It is further submitted by Shri Kariel, learned Counsel that sub sections (1) and (3) of Section 200 do not authorize a village Panchayat to levy tax on Mobile Towers, given the presence of State Government's order fixing the minimum and maximum rates of tax, without rules being made in that behalf. It is submitted that here, no rules are made by the concerned village Panchayat under subsection (3) of section 200 for prescribing the manner of levying tax. It is submitted that without rules framed under subsection (3) and an order of the State Government fixing the minimum and maximum rates of a tax, no tax Page 6 of 20 HC-NIC Page 6 of 20 Created On Tue Aug 15 21:46:34 IST 2017 C/SCA/6675/2017 CAV JUDGMENT under Section 200(1) can be levied.
[5.7] It is further submitted by Shri Kariel, learned Counsel that Article 265 says that no tax shall be levied or collected except by authority of law. It is submitted that for levy and collection of tax, determination of rate of tax is prerequisite. It is submitted that the rate has to be determined by law. It is further submitted that law only mean primary legislation like Statute. It is submitted that in the present case the tax rate is not prescribed in the primary legislation (Section 200). It is submitted that tax rate cannot be determined by delegated legislation. It is submitted that even where tax is determined by delegated legislation, the primary legislation must provide guidance to the delegatee for determining the tax rate. It is submitted that in the present case, the levy of tax is based on neither of the above and so ultra vires Article 265 of the Constitution of India.
[5.8] It is further submitted by Shri Kariel, learned Counsel appearing on behalf of the petitioner that illegal levy of tax made by the village Panchayat under Section 200(1) is an infringement of the petitioner's fundamental right to do business under Article 19(1)(g) of the Constitution of India.
[5.9] It is further submitted that illegal levy of tax made by the village Panchayat under Section 200(1) is arbitrary and violative of Article 14 of the Constitution of India. The petitioner has also challenged the impugned demand of property tax and the impugned bills also on the ground that retrospective levy of tax by the respective Panchayat for unknown years of the past is in violation of Rule 8 of the Gujarat Gram and Nagar Panchayat Taxes and Fees Rules, 1964 (hereinafter referred to as "Rules, 1964"). However, as there can be different factors with Page 7 of 20 HC-NIC Page 7 of 20 Created On Tue Aug 15 21:46:34 IST 2017 C/SCA/6675/2017 CAV JUDGMENT respect to different respective Panchayat for which the individual case qua each Panchayat is required to be considered, we relegate the petitioner to challenge the respective bills / demand before appropriate Forum / Appellate Authority / Court and the present petition be restricted to challenge to the constitutional validity of section 200(1) of the Act, 1993 to levy the property tax on Mobile Towers only and as and when such bills are challenged before the appropriate Authority / Court / Forum, the same be considered in accordance with law and on its own merits.
[6.0] Present petition is vehemently opposed by the Shri Prakash K. Jani, learned Additional Advocate General appearing on behalf of the State. Shri Jani, learned Additional Advocate General has vehemently submitted that as such the issue involved in the present petition is squarely covered against the petitioner - Telecommunication Service Providers in light of the decision of the Division Bench of this Court rendered in Special Civil Application Nos.4541/2017 and 5322/2017. It is submitted that by the aforesaid decisions the Division Bench of this Court has upheld the constitutional validity of relevant provisions of the GPMC Act and has also upheld the demand of property tax on Mobile Towers.
[6.1] It is further submitted by Shri Jani, learned Additional Advocate General that even otherwise when the Hon'ble Supreme Court has considered and held the Mobile Towers as "land and building" and has upheld the constitutional validity of the relevant provisions of the Act, 1993 to levy the property tax on Mobile Towers, thereafter it is now not open for the petitioner to again contend that the "Mobile Towers" cannot be termed as "land and building" and it will not be open for the petitioner - Telecommunication Service Providers to challenge the levy Page 8 of 20 HC-NIC Page 8 of 20 Created On Tue Aug 15 21:46:34 IST 2017 C/SCA/6675/2017 CAV JUDGMENT of property tax on Mobile Towers. It is submitted that as such this is another attempt on the part of the Telecommunication Service Providers to avoid the demand of property tax on Mobile Towers, despite the decision of the Hon'ble Supreme Court in the case of GTL Infrastructure Ltd. & Ors. (Supra).
[6.2] It is further submitted that even otherwise the levy of property tax on Mobile Towers and the impugned demand of property tax on Mobile Towers is after following due procedure as required under the provisions of the Act, 1993 as well as the Rules, 1964.
[6.3] It is further submitted by Shri Jani, learned Additional Advocate General appearing on behalf of the State that section 200(1) of the Act, 1993 authorizes the village Panchayat to levy the tax on buildings / Mobile Towers. It is submitted that in exercise of powers conferred by section 232 of the Gujarat Panchayat Act, 1961, the Government of Gujarat has made the Rules, namely, The Gujarat Gram and Nagar Panchayat Taxes and Fees Rules, 1964. It is submitted that Part II of the Rules, 1964 is with respect to tax on buildings and lands. It is submitted that Rule 7 of the Rules, 1964 provide for the rate of tax on buildings and lands. It is submitted that under Rule 7 of the Rules, 1964, the rate of tax which a Panchayat may levy on buildings and lands shall be such as may be fixed by it either on the capital value or on the Annual Letting Value of the building or the land but not below the minimum and not extending the maximum rate specified in the Schedule annexed to Part II. It is submitted that before imposing tax / levying the tax, procedure as required to be followed under Rules 9 to 15 is required to be followed. It is submitted that as per Schedule to Part II of the Rules, 1964, the minimum and maximum rate of tax are prescribed. It is submitted that therefore, section 200(1) of the Act, 1993 cannot be said Page 9 of 20 HC-NIC Page 9 of 20 Created On Tue Aug 15 21:46:34 IST 2017 C/SCA/6675/2017 CAV JUDGMENT to be ultra vires to Article 243H and 265 of the Constitution of India as sought to be contended on behalf of the petitioner. [6.4] It is further submitted that even the aforesaid issue is also squarely covered against the petitioner in light of the decision of the Division Bench of this Court in the case of Adani Gas Limited vs. Ahmedabad Municipal Corporation rendered in Special Civil Application No.11459/2012. It is submitted that in the aforesaid decision a similar challenge was made with respect to the relevant provisions of the GPMC Act and it was contended that section 141B of the GPMC Act to levy the general property tax is unconstitutional and ultra vires to Article 243X of the Constitution of India and the same has been negatived by the Division Bench of this Court in the said decision - Adani Gas Limited (Supra).
Making above submissions it is requested to dismiss the present petition and uphold the constitutional validity of section 200(1) of the Act, 1993.
[7.0] In rejoinder Shri Kariel, learned Counsel appearing on behalf of the petitioner has submitted that two decisions of this Court dated 21.03.2017 and 23.03.2017 rendered in Special Civil Application Nos.5322/2017 and 4541/2017 respectively, wherein the Court has upheld the constitutional validity of section 141B of the GPMC Act cannot be made applicable in the facts of the present case for deciding the constitutional validity of section 200(1) of the Act, 1993 as there is a material difference between section 141B of the GPMC Act and section 200 of the Act, 1993. It is submitted that section 141B of the GPMC Act has a ceiling limit for determining rate of tax, however section 200 of the Act, 1993 has no such ceiling limit.
[7.1] It is submitted that subsection (4) of section 141B of the GPMC Page 10 of 20 HC-NIC Page 10 of 20 Created On Tue Aug 15 21:46:34 IST 2017 C/SCA/6675/2017 CAV JUDGMENT Act permits the Corporation subject to Rules, to increase or decrease the rate of tax, however section 200 of the Act, 1993 has no such check. [7.1.1] That subsection (1), (2) and (3) of section 141B contains specific guidelines while determination and/or increasing or decreasing the rate of tax on building. There is no such guidelines provided in section 200 of the Act, 1993.
[7.1.2] That subsection (2) of section 141B of classifies buildings into residential and nonresidential. Section 200 does not classify any category at all. So, the classification is left to different Panchayats without any guidance.
[7.1.3] That the Taxation Rules framed by the Corporations under Section 254 of the GPMC Act, make a specific reference to Mobile Towers. However, the Panchayat Rules do not make any reference to Mobile Towers.
[7.1.4] That the Corporation Taxation Rules viz. Rules 8A, 8B, 8C, 8D and 8E provide the complete guidance and machinery for determining the rate of tax, for example, extensive use of different factor to determine the rate of tax. The Rules, 1964 do not make use of any such factors.
It is submitted that therefore, the aforesaid two decisions of the Division Bench of this Court in Special Civil Application Nos.5322/2017 and 4541/2017 cannot be made applicable in the facts of the present case for deciding the constitutional validity of section 200 of the Act, 1993.
Making above submissions and relying upon above decisions, it is requested to allow the present petition and declare section 200 of the Act, 1993 as unconstitutional and ultra vires to Articles 243X and 265 of Page 11 of 20 HC-NIC Page 11 of 20 Created On Tue Aug 15 21:46:34 IST 2017 C/SCA/6675/2017 CAV JUDGMENT the Constitution of India.
[8.0] Heard learned Counsel appearing for respective parties at length.
At the outset it is required to be noted that the issue whether on the "Mobile Towers" the property tax is leviable or not, treating the "Mobile Towers" as "land and building" is squarely covered by the decision dated 07.03.2017 of the Division Bench of this Court in the case of ATC Telecom Tower Corporation Private Limited & Anr. vs. State of Gujarat & Anr. (Special Civil Application No.2693/2017 and other allied matters) as well as the the subsequent decisions in the case of Vodafone Mobile Services Limited vs. State of Gujarat & Anr. (Special Civil Application No.4541/2017) and in the case of Reliance Jio Inforcomm Limited vs. State of Gujarat & Anr. (Special Civil Application No.5322/2017), by which similar challenge to the levy of property tax on Mobile Towers has been negatived by this Court, considering the decision of the Hon'ble Supreme Court rendered in Civil Appeal Nos.5360 - 5363/2013 by which the Hon'ble Supreme Court has upheld the relevant provisions of the GPMC Act, Gujarat Municipalities Act and Gujarat Panchayat Act to levy the property tax on "Mobile Towers" by holding that the "Mobile Towers" are "buildings". Under the circumstances, when once the Hon'ble Supreme Court has upheld the validity of levy of property tax on "Mobile Towers" treating / considering it as "buildings" and has upheld the relevant provisions of the Act, 1993 also by which the property tax is levied on "Mobile Towers", thereafter it is not open for the petitioner again now to contend that the property tax on "Mobile Towers" is not leviable.
[8.1] Even otherwise even considering the definition of "Mobile Towers"
contained in Section 2(12A) of the Act, 1993, "Mobile Tower" can be said to be "Building". At this stage definition of "Mobile Tower" as Page 12 of 20 HC-NIC Page 12 of 20 Created On Tue Aug 15 21:46:34 IST 2017 C/SCA/6675/2017 CAV JUDGMENT mentioned in the Ac,t 1993 is required to be referred to and considered. Section 2(12A) of Act, 1993 defines "Mobile Tower", which reads as under:
"Section 2(12B). "mobile tower" means a temporary or permanent structure, equipment or instrument erected or installed on land or upon any part of the building or premises for providing telecommunication services."
[9.0] Now, so far as challenge to the constitutional validity of section 200(1) and section 200(1)(ia) of the Act, 1993 is concerned, it is the case on behalf of the petitioner that the same are ultra vires to Article 243H and 265 of the Constitution of India. The grounds on which the constitutional validity of sections 200(1) and section 200(1)(ia) of the Act, 1993 is challenged, are stated hereinabove. Even the aforesaid issue is also now concluded against the petitioner - Telecommunication Services Providers in view of the decision of the Division Bench of this Court rendered in Special Civil Application Nos.4541/2017 and 5322/2017. Even considering the relevant provisions of the Act, 1993 more particularly section 200 and the relevant provisions of Rules, 1964, it cannot be said that sections 200(1) and 200(1)(ia) of the Act, 1993 are ultra vires to Article 243H and 265 of the Constitution of India. As per section 200(1) of the Act, 1993, subject to any general or special order (including an order fixing minimum and maximum rates of tax or fee) which the State Government may make in this behalf, it shall be competent to a Village Panchayat to levy the tax and fee at such rates as may be decided by it, a tax on buildings and a tax on Mobile Towers. In exercise of powers under Section 232 of the Gujarat Panchayat Act, 1961, the Government of Gujarat has framed the Rules called the Rules, 1964. Part II of the Rules, 1964 pertains to the tax on buildings and lands. Rule 7 prescribes the rate of tax on buildings and lands and Rule Page 13 of 20 HC-NIC Page 13 of 20 Created On Tue Aug 15 21:46:34 IST 2017 C/SCA/6675/2017 CAV JUDGMENT 7 provides that the rate of tax which a Panchayat may levy on buildings and lands shall be such as may be fixed by it either on the Capital Value or on the Annual Letting Value of the building or the land but not below the minimum and not exceeding the maximum rate specified in the Schedule annexed to Part II. As per Schedule to Part II the minimum and maximum rate of tax are prescribed which reads as under:
"SCHEDULE (See Rule 7) Rate of Tax on buildings and lands Minimum Maximum Rate of tax 20 paise per every Rs.1.20 paise per based on rupees one hundred of every rupees one capital value. the capital value of hundred of the value fraction thereof. on fraction thereof.
Rate of tax 2½ per cent of the 15 per cent of the
based on annual letting value. annual letting value.
annual letting
value.
[9.1] Thus, the Rules are framed by the State Government for tax on buildings and lands, even the maximum and minimum rates are also prescribed under the Rules, 1964. It also permits to levy the tax at the rate either on Capital Value or on the Annual Letting Value. Therefore, sufficient guidelines is provided while imposing the tax on buildings and lands. Merely because there is no classification with respect to the residential and/or nonresidential building, the provision shall not become unconstitutional.
As observed hereinabove, section 200 permits the Panchayat to levy the tax on buildings and Mobile Towers subject to any general or special order (including an order fixing the minimum and maximum rates of tax or fee) which the State Government may make in this behalf. As observed hereinabove, the State Government has framed the Rules which also provides the minimum and maximum rates of tax. Thus, from Page 14 of 20 HC-NIC Page 14 of 20 Created On Tue Aug 15 21:46:34 IST 2017 C/SCA/6675/2017 CAV JUDGMENT the aforesaid provisions of the Act, 1993 and Rules, 1964, section 200 can be termed as charging provision which provides for levy of tax and even the rate of fixation as well as subject thereof, (subject to the Rules and/or special order made by the Government) and the Rules provide for machinery and calculation of tax. It cannot be disputed that the Act, 1993 itself provides for levy of tax as per the special and general order or the Rules framed by the Government and the Rules are framed under Section 232 of the Gujarat Panchayat Act, 1961 which also further provide to levy the tax at the rate either on Capital Value or Annual Letting Value and it also provides the minimum and maximum rates which can be determined.
[9.2] That section 200 of the Act, 1993 is sought to be held ultra vires on the ground that the same is in violation of Article 243 H of the Constitution of India. As stated above, it is the case on behalf of the petitioner that under Article 243 H of the Constitution of India, legislature of a State, may, by law authorize the Panchayat to levy, collect and appropriate such Taxes, duties, tolls and fees in accordance with such procedure and subject to such limits as may be specified in law. Thus, according to the petitioner the law authorizing the Panchayat to levy, collect and appropriate Tax must have been passed by the legislature of the State and that the legislature itself must prescribe procedure and the limits. It is the case on behalf of the petitioner that for the purpose of Article 243 H of the Constitution of India, the law will not include rules, regulations, notifications etc. According to the petitioner, no limits are prescribed in Section 200 of the Act, 1993 for property Tax on land as the State legislature has prescribed the limits in Section 200 of the Act, 1993 for property Tax on building only. Thus, it is the case on behalf of the petitioner that with respect to the property Tax on land no limits are prescribed and therefore, the levy of property Tax on land is Page 15 of 20 HC-NIC Page 15 of 20 Created On Tue Aug 15 21:46:34 IST 2017 C/SCA/6675/2017 CAV JUDGMENT violative of Article 243 H of the Constitution of India. However, on fair reading of Article 243 H of the Constitution of India, it appears that said Article provides that the legislature of a State may by law authorize the Panchayat to levy, collect and appropriate such Taxes, duties, tolls and fees in accordance with such procedure and subject to such limits as may be specified in law. Thus, it is enabling provision to empower the Panchayat to provide funds through Taxes, tolls etc. It does not provide as to which procedure has to be laid down and what limits are required to be specified. It also does not prescribe any maximum limit. The Constitution only provides an outline of the Scheme for levy and imposition of Tax, fees.
At this stage, Article 243 H of the Constitution of India in which the word "law" is used, is also required to be referred to. The word "law"
as used in clause (a) of Article 243 W is necessarily to mean that the law enacted by the State legislature because of usage of the word such immediately preceding the word "law". However, so is not the case under Article 243 H because under Article 243 H the word "law" is not qualified by the word such.
[9.3] Identical question came to be considered by the Full Bench of the Madhya Pradesh High Court in the case of Anil Kumar Gulati (Supra), in para 22 and 24 the Full Bench of the Madhya Pradesh High Court has observed and held as under:
"22. The next contention that has been putforth is relatable to realm of excessive delegation. Submission of learned counsel for the petitioners is that the Legislature while engrafting the provisions, namely, Section 126 of the Municipality Act and Section 138 of the Municipal Corporation Act in subsection (1) has used the words 'as may be made by the State Government in this behalf ' and such a prescription in the said enactments is not permissible inasmuch as the constitutional command is in favour of the Legislature alone. It is urged that the Legislature has abdicated its basic legislative powers. On a Xray of the anatomy of both the provisions, it is luminescent that the Legislature after providing certain parameters in subsection Page 16 of 20 HC-NIC Page 16 of 20 Created On Tue Aug 15 21:46:34 IST 2017 C/SCA/6675/2017 CAV JUDGMENT (1) of Section 128 as well as in subsection (1) of Section 126 has mentioned 'subject to the rules, as may be made by the State Government in this behalf'. The Constitution has allowed the State Legislature to endow such powers by law. The term "law" has been defined under Article 13(3)(a) of the Constitution and the said definition stipulates that law includes any Ordinance, order, byelaw, rule, regulation, notification, custom or usage in the territory of India to have the force of law. The rules which are statutory have the force of law. The Municipalities Act as well as the Corporation Act has the provisions authorising the State Government to make rules. Section 138 of the Municipal Corporation Act and Section 126 of the Municipalities Act stipulate subject to such rules. The rule making power is vested with the State Government. When the procedure is so laid down and is a part of the enactment and it comes within the definition of the term "law" as per the Constitution. The real crux of the matter is whether the Legislature should have itself said everything and dealt with every spectrum in the statute or left some aspects to be filled up or supplemented or backed by the rules. It is contended with vehemence that by such prescription not only there is violation of the provisions of the Constitution but there is abdication of the essential power of the legislative functions of the State Legislature. As far as the first facet of this contention is concerned, we are not at all impressed as the provisions in the Constitution use the word "law" made by the legislature. Legislature itself has authorised under the statute the State Government to made rules. The second question that forms a part of this submission is whether such a power could have been delegated. It is well settled in law that the Legislature cannot visualize all circumstances. Some power has to be conferred on the rule making authority for carrying out the purposes of the Act. There are certain parameters and guidelines to which we shall advert to at a later stage. The decisions rendered in the cases of In re Art. 143, Constitution of India and Delhi Laws Act (1912), AIR 1951 332; WesternIndia Theatres Ltd. v. Municipal Corporation of the City of Poona, AIR 1959 SC 586; Banarsi Das v. State of M. P., AIR 1958 SC 909; D. S. Garewal v. The State of Punjab, AIR 1959 SC 512; The Corporation of Calcutta v. Liberty Cinema, AIR 1965 SC 1107; The Municipal Corporation of Delhi v. Birla Cotton, Spinning and Weaving Mills, Delhi, AIR 1968 SC 1232; State of Mysore v. M. L. Nagade and Gadag (1983) 3 SCC 253 : (AIR 1983 SC 762), Darshanlal Mehra v. Union of India, (1992) 4 SCC 28 : (AIR 1992 SC 1848), Almitra H. Patel v. Union of India, (1998) 2 SCC 416 : (AIR 1998 SC 993) support the proposition that the executive authority can be authorised to frame rules and work under the rules but the said rules should not transgress any of the constitutional provisions and should not travel beyond the scheme of the enactment as that is the source from which they draw their power. In this context, we may profitably refer to the decision rendered in the case of Darshan Lal Mehra (supra) wherein a contention was raised that Section 172(2) Page 17 of 20 HC-NIC Page 17 of 20 Created On Tue Aug 15 21:46:34 IST 2017 C/SCA/6675/2017 CAV JUDGMENT of the U.P. Nagar Mahapalika Adhiniyam, 1959 is unconstitutional because the Legislature has abdicated its basic function by delegating the essential legislative powers upon the Municipality to levy the Taxes enumerated in the Section. It was contended before the Apex Court that the said power was unguided and uncanalised. In that context the Apex Court held as under (para 7 of AIR 1992 SC) :
"Section 172(2) of the Act authorises the Mahapalikas to impose the Taxes mentioned therein, "for the purposes of this Act". The objections and functions cast upon the Mahapalikas are laid down in various provisions of the Act. The Taxes under Section 172(2) of the Act, therefore, can be levied by the Mahapalikas only for implementing those purposes and for no other purpose. The Mahapalikas have to provide special civic amenities at the places where cinemas/theatres are situated. So long as the Tax has a reasonable relation to the purpose of the Act the same cannot be held to be arbitrary. The rate of Tax to be levied and the persons or the class of persons liable to pay the same is determined by inviting objections which are finally considered and decided by the State Government. There is no force in the argument that the legislature has abdicated its function to the Mahapalikas. The Tax is levied in accordance with the statutory rules framed by the State Government and the said rules are laid before each House of the State Legislature for not less than 14 days and are subject to such modifications as the legislature may make during the session they are so laid. In the view we have taken, we are supported by the judgments of this Court, in Gopal Narain v. State of U. P. (1964) 4 SCR 869 : AIR 1964 SC 370 and Western India Theatres Limited v. Municipal Corporation of the City of Poona, (1959) Supp (2) SCR 71 : AIR 1959 SC
586. We, therefore, reject the contention raised by the learned counsel for the petitioners."
24. In view of the aforesaid enunciation of law what emerges is that the basic inherent legislative powers cannot be delegated but to have a functional measure to carry out the purposes of the Act, delegation to that extent is permissible. It is worth noting here that what is canvassed before us is a different kind of proponement. It is urged with rigorous vehemence that the Legislature should have enacted the law itself and should not have left it to the executive. If the aforesaid submission is tested on the touchstone of the aforesaid pronouncement of law, in our considered opinion, the aforesaid argument is totally without any substance inasmuch as the Legislature itself has enacted the provision and in the provision itself has authorized the State Government to make rules. No basic legislative function has been abdicated and, therefore, the said submission does not Page 18 of 20 HC-NIC Page 18 of 20 Created On Tue Aug 15 21:46:34 IST 2017 C/SCA/6675/2017 CAV JUDGMENT merit any consideration and we unhesitatingly repel the same..
[9.4] Considering the aforesaid fact and circumstances, we are of the opinion that section 200(1) cannot said to be ultra vires Article 243 H of the Constitution of India on the ground that in the Act, 1993, with respect to tax on "land and building", no limit of tax is provided. We are of the view that in the present case and while enacting section 200(1) of the Act, 1993 i.e. levy and assessment of general taxes on the land and by enacting the Rules, 1964, the provisions of Article 243 H of the Constitution of India are complied with as the said legislature enacted the law i.e. Act, 1993 for levy of tax on the building and Mobile Towers and the land and the said law provide for framing the Rules for machinery and calculation of tax and accordingly Rules, 1964 are framed.
[9.5] Similarly, challenge to section 200(1)(ia) of the Act, 1993 to levy the tax on Mobile Towers also must fail inasmuch as once the Hon'ble Supreme Court as well as this Court has held that the "Mobile Towers"
are "buildings" and therefore, on "Mobile Towers" whatever the tax on building are leviable, it cannot be said that section 200(1)(ia) of the Act, 1993 is ultra vires to Article 243 H of the Constitution of India and/or the same is unconstitutional.
[9.6] Now, so far as the challenge to the impugned demand on the ground that the retrospective levy / demand is not permissible is concerned, it is required to be noted that the aforesaid is required to be considered case by case and with respect to each Panchayat and the facts with respect to each Panchayat shall differ. It is also required to be noted that in the earlier round of litigation which reached upto the Hon'ble Page 19 of 20 HC-NIC Page 19 of 20 Created On Tue Aug 15 21:46:34 IST 2017 C/SCA/6675/2017 CAV JUDGMENT Supreme Court, the Hon'ble Supreme Court permitted the respective Panchayat to raise the demand but actual recovery was stayed. Therefore, the aforesaid is also required to be considered with respect to each Panchayat individually. Therefore, in the present petition we restrict the challenge to the constitutional validity of sections 200(1) and 200(1)(ia) of the Act, 1993 and the levy of property tax on "Mobile Towers" only and we relegate the petitioner to challenge the demand on the ground of retrospective levy of tax before appropriate Court / Forum by joining the Panchayat individually. As and when such proceedings are initiated the same be considered in accordance with law and on its own merits for which we have not expressed anything on merits.
[10.0] In view of the above and for the reasons stated above, challenge to the levy of property tax on Mobile Towers under the provisions of the Rules, 1964, challenge to the constitutional validity of sections 200(1) and 200(1)(ia) of the Act, 1993 fail and the present petition deserves to be dismissed and is, accordingly, dismissed.
Sd/ (M.R. SHAH, J.) Sd/ (B.N. KARIA, J.) Ajay Page 20 of 20 HC-NIC Page 20 of 20 Created On Tue Aug 15 21:46:34 IST 2017