Andhra HC (Pre-Telangana)
M/S. Mahabaleswarappa And Sons, ... vs Commissioner Of Land Revenue, Govt. Of ... on 13 August, 1996
Equivalent citations: AIR1997AP85, 1996(4)ALT334, AIR 1997 ANDHRA PRADESH 85, (1996) 4 ANDHLD 1163, (1996) 4 ANDH LT 334, (1996) 29 LS 401
Author: Avinash Somakant Bhate
Bench: Avinash Somakant Bhate
ORDER Y. Bhaskar Rao, J.
1. These writ petitions questioning the assessment under Section 3, the demand raised under Section 4 and the amendment to the Schedule to the Andhra Pradesh Non-Agricultural Lands Assessment Act, 1963 (for short 'the NALA Act') at the first instance came up before a Division Bench of this Court consisting of Syed Shah Mohammed Quadri, J. and G. Bikshapathi, J. The main contentions raised before, the said Division Bench by the petitioners are that amendments to Section 2(d), Section 8 and to the Schedule to the NALA Act are unconstitutional, that the enhanced rate of assessment is arbitrary, excessive and confiscatory in nature and that since vacant non-agricultural lands are being assessed, the decision of the Full Bench of this Court in S.V. Cement Ltd. v. R.D.O. Nandyal, (FB) requires reconsideration. The Division Bench holding that the decision of the Full Bench in S.V. Cement's case (supra) requires reconsideration in view of the observations of the Supreme Court in State of Orissa v. Mahanandi Coalfields Ltd., and India Cement Ltd. v. State of Tamil Nadu, , referred this batch of writ petitions to a Full Bench for an authoritative pronouncement on the above aspects. Therefore, these cases were posted before a Full Bench. The Full Bench referred the matters to a Larger Bench observing that the Full Bench consisting of even number of members cannot reconsider the decision of another Full Bench in S.V. Cement's case (supra). That is how the matters came up before this larger Bench.
2. All these writ petitions give rise to similar points and, therefore, they are being disposed of by this common judgment.
3. The learned counsel for the petitioners contended that Section 3 of the NALA Act is ultra vires of the Act and violative of Arts. 14 and 19 of the Constitution of India, that the classification is per se irrational and not intelligible as it results in uneven assessments.
Assessment is not tevied on land but on the user of the land and that the rate of assessment is confiscatory and extortional and thus violative of Art. 19(1)(g) of the Constitution of India, that the term 'assessment', does not mean 'tax' as commonly understood. The NALA Act can, impose tax only on 'vacant non-agricultural land', but not on the land occupied by buildings, factories or mines including the land appurtenant thereto. Further, according to the leanred counsel, Section 8 is ultra vires the Constitution, and the term 'used' occurring in Section 3 and in the Schedule to the Act should mean 'actually used' and that the NALA Act being a fiscal legislation the provisions should be given strict interpretation. It is also contended that where two interpretations are possible, the one in favour of the assessee must be preferred.
4. The learned Advocate-General contended that the provisions of the NALA Act are not violative of Art. 14 of the Constitution, that the amount of assessment determined is neither confiscatory nor extortional, that the interpretation of the term 'used' as was done by the Full Bench in S.V, Cement's case, (supra) is proper, that the assessment under the NALA Act is not covered by any Central Legislation, that the delegation of power to amend the Schedule as provided under Section 8 is quite proper and legal and that there are no grounds to review the decision of the Full Bench in S.V. Cement's case (supra). The provisions of the NALA Act are neither arbitrary nor irrational and, therefore, the Act is not violative of Art. 14 or 19 of the Constitution of India and that there are no merits in the writ petitions.
5. In S.V. Cement's case, (supra) it was held that the word 'used' occurring in the NALA Act means not only 'actually used', but 'meant to be used' or 'set apart for being used'. It is this interpretation that is primarily assailed in this batch of writ petitions. To appreciate the above contentions, it is relevant to look at some of the provisions of the NALA Act.
6. The NALA Act which provides for levy and assessment on lands used for non-agricultural purposes in the State of Andhra Pradesh, came into force with effect from 1-7-1963. Section 2(d) defines 'industrial purpose'. It reads:
"(d) 'industrial purpose' means any purpose connected with an industrial undertaking where the process of manufacturing any article is carried on with the aid of power and includes a purpose connected with an excavation, underground or otherwise where any operation for the purpose of searching for, or obtaining a mineral has been or is being carried on."
Section 2(g) defines 'non-agricultural land', as under;
"(g) 'non-agricultural land' means land other than the land used exclusively for purpose of agriculture, but does not include the land used exclusively for-
(i) cattle-sheds;
(ii) hay-ricks;"
Section 2(b) defines 'commercial purpose' thus:
"(b) 'Commercial purpose' means a purpose connected with the undertaking of any trade, commerce or business but it does not include an industrial purpose;"
Section 3 of the NALA Act deals with levy and collection of assessment on non-agricultural land and it reads:
"3. (1) In the case of non-agricultural land in a local area with the population specified in column (1) of the Schedule, there shall be levied and collected by the Government for each Fasli Year commencing on the first day of July , from the owner of such land, an assessment, at the rate specified in column (2) where the land is used for any industrial purpose, at the rate specified against it in column (3) where the land is used for any commercial purpose and at the rate specified against it in column (4) where the land is used for any other non-agricultural purpose including residential purpose:
Provided that where assessment is levied and collected in respect of such land under this Act, no land revenue shall be payable in respect of that land and nothing contained in any enactment, regulation, order, bye-law, rule, scheme, notification, or other instrument having the force of law, in operation immediately before the commencement of this Act relating to the assessment, levy and collection of land revenue on non-agricultural land shall apply in respect of that land, except as respect things done or omitted to be done before the commencement of this Act:
Provided further that any amount payable on such land at the commencement of this Act towards the arrears of land revenue may be recovered under the provisions of the Andhra Pradesh Revenue Recovery Act, 1964.
EXPLANATION:-- Where the land is used for any industrial or commercial purpose and also for any other non-agricultural purpose, such land shall be assessed at the rates specified in column (2) or column (3) of the Schedule as if it were used solely for any industrial or commercial purpose, as the case may be.
(2) Notwithstanding anything contained in sub-section (1) where the assessment leviable on any non-agricultural land under this Act is less than the land revenue payable on such land, the land revenue alone shall be payable on that land."
The effect of Section 3 is that the Act authorises levy and collection of assessment on non-agricultural lands which are used for industrial, commercial or any other non-agricultural purposes as per the rates specified in the Schedule. It is further manifest that the assessment is on non-agricultural lands and user of such lands is taken for purposes of determining the rates of assessment to be fixed. The first proviso provides that where non-agricultural land assessment is levied, no land revenue shall be levied and collected under any other Act. However, in cases where the land revenue is more than the non-agricultural land assessment under this Act, the former will prevail. It is further clarified through explanation that where the land is used for industrial or commercial purpose, the entire land appurtenant thereto will also be assessed as land used for industrial or commercial purpose, as the case may be. According to Section 4, the Revenue Inspector is empowered to determine the assessment payable by an owner of non-agricultural land after making inquiry and to cause notice of demand to be served on the owner specifying the amount of such assessment. Against the demand under Section 4, an appeal lies to the Tahsildar under Section 5 and a revision to the Revenue Divisional Officer under Section 6, Section 8 was amended A.P. Act. No. 8 of 1994, which came into force with effect from 1-7-1993, and if reads:
"(1) The Government may, by notification, alter, add to or cancel any of the items of the Schedule.
(2) Where a notification has been issued under sub-section (1), there shall, unless the notification is in the meantime rescinded, be introduced in the Legislative Assembly as soon as may be but in any case during the next sessions of the Legislative Assembly following the date of the issue of the notification, a Bill on behalf of the Government, to give effect to the alteration, addition or cancellation as the case may be, of the Schedule specified in the notification and the notification shall cease to have effect when such Bill becomes Law, whether with or without modification but without prejudice to the validity of anything previously done thereunder:
Provided that if the notification under subsection (1) is issued when the Legislative Assembly is in session, such a Bill shall be introduced in the Legislative Assembly during that session:
Provided further that where for any reason a Bill as aforesaid does not become law within six months from the date of its introduction in the Legislative Assembly the notification shall cease to have effect on the expiration of the said period of six months.
(3) All references made in this Act to the Schedule shall be construed as relating to the Schedule as for the time being amended in exercise of the powers conferred by this section."
Section 8 as amended confers power on the Government to alter, add to or cancel any of the items of the Schedule subject to post-approval by the Legislature. Section 10 provides for collection of assessment from the occupier of the land in cases where the owner of the land himself is not an occupier. The Government is also empowered under Section 13 to make rules by notification for carrying out all or any of the purposes of the NALA Act.
7. By reading Section 3 of the Act, it is manifest that non-agricultural land is the subject for levying the assessment and the user of land is taken into consideration to quantify the rate of assessment to be determined. Therefore, we have to consider the meaning of the word 'used' in the context in which it is employed in the Act.
8. Turning to the case-law on the subject, to start with, in Income-tax Commr., Bombay v. V. B. Sathe, AIR 1937 Bombay 493, the interpretation of the word 'used' occurring in sub-clause (iv) of Section 10(2) of the Income-tax Act, 1922 fell for consideration of a Division Bench of Bombay High Court and the Division Bench while construing the word 'used' observed:
"But that does not dispose of the question whether, when machinery is kept ready for use at any moment in a particular factory under an express contract from which taxable profits are earned, the machinery can be said to be used for the purposes of the business which earns the profits, although it is not actually worked. To my mind it is so used......
But I think that the word 'used' in this section may be given a wider meaning and embrace passive as well as active user."
9. A Division Bench of Allahabad High Court in Niranjan Lal Ram Chandra v. Commissioner of Income-tax, (1963) 49 ITR 177. While considering' the meaning of the word 'used' occurring in Income-tax Act held that the word 'used' is susceptible of wide interpretation and that if the trucks are capable of being put into motion or waiting to be put into motion, though not actually in motion, it can be said that the trucks are being used for the purpose of business.
10. In Capital Bus Service (P) Ltd. v. Commr, of Income-tax, New Delhi, , a Division Bench of Delhi High Court while considering the import of the word 'used' employed in the Income-tax Act for the purpose of business, held (Para 13 of Tax LR):
"The above survey of the decisions on the subject clearly shows that the consensus of judicial opinion is in favour of adopting the liberal interpretation. We are also of opinion that in the context in which the expression occurs and also having regard to the various types of cases that could arise, the wider interpretation has to be placed on this expression. The decided cases, which have been earlier referred to, have arise in different contexts which clearly indicate that the wider and more liberal interpretation of the provisions would in the context of Section I0(2)(vi) and (vii) may be appropriate."
11. The expression 'already paid' occurring in the Notification issued by the Central Government exempting steel ingots under item No. 26 of the First Schedule to the Central Excises and Salt Act, 1944 from the whole of the duty of excise leviable thereon; came up for consideration before the Patna High Court in Tata Yodogawa Limited v. U.O.I., (1987) 32 ELT 521 (Patna). Though the term is different from the one on hand, still, as a measure of analogy, it is useful to note that the Division Bench of the Patna High Court to which one of us i.e., Prabha Shankar Misra, C.J., was a Member, held that the expression 'already paid' used in the notification does also mean 'contracted to be paid' or 'ought to have been paid.'
12. Applying the above principle laid down in different decisions to the facts of the present case, the word 'used' has to be interpreted to connote a wider meaning. If that interpretation is adopted, non-agricultural lands not only 'actually used' but are 'meant to be used' or 'set apart for being used' are also liable for assessment under the Act.
13. The learned counsel for the petitioners relied on an unreported decision of this Court in Writ Petition No. 290 of 1965 and batch dated 22-4-1970 and also of a Division Bench in Associated Cement Companies Ltd. v. Govt. of A.P., , for the proposition that when the land is not actually put to use, the question of subjecting it to assessment does not arise and that the word 'used' in Section 3 means 'actually used.'
14. In Writ Petition No. 290/65 and batch, the Division Bench while upholding the constitutional validity of the NAL A Act, held that lands covered by mining operation are not leviable for assessment under the NALA Act. In view of this decision, the scope of Section 2(d) was enlarged by including the lands under mining operations also, as lands used for 'industrial purpose' through Amendment Act 28 of 1974 by the Legislature. This amendment to Section 2(d) was also subject-matter of challenge in this Court. A Division Bench of this Court in Associated Cement Company's case (supra) while upholding the amended Section 2(d) interpreted the word 'used' in Section 3 as 'actually used' only. It has to be noticed that in the above two cases, different decisions referred to by the Full Bench in S. V. Cement's case (1993 (2) Andh LT 32) (supra) were not brought to the notice of the Court. Therefore, the above two decisions are not exhaustive on the subject.
15. It is next contended that fiscal legislation must be strictly interpreted and if two interpretations are possible, the one favourable to assessee shall prevail. On the other hand, the learned Advocate General contended that as decided by a catena of decisions there can be no difference in interpretation of fiscal and other legislations.
16. The rule of construction applicable to the taxing statute has been stated in the case of Cape Brandy Syndicate v. Inland Revenue Commissioners, (1921) 1 KB 64(71), in the following words:
"In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can look fairly at the language used."
17. Further, in A.V. Fernandez v. State of Kerala, the Supreme Court laid down (Para 29):
"If ...... the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the Legislature and by considering what was the substance of the matter."
18. Further, a Full Bench of the Patna High Court in Jamunadas Nannalal v. C.I.T., to which one of us i.e., P. S. Mishra, C.J., was a Member, held that the fundamental rule of construction is the same for all statutes, whether fiscal or otherwise, and to arrive at the real meaning one has to get at the exact conception of the aim, scope and object of the Act.
19. The learned counsel for the petitioners contended that inasmuch as the Legislature through Amendment Act No. 28/74 though enlarged the scope of Section 2(d) in order to include the lands covered by mining operations so as to overcome the decision of the Division Bench in W. P. No. 290/65 and batch and it, since, did not bring in any amendment to Section 3, though the word 'used' was given a strict interpretation in the above W.P. as 'actually used' and in Associated Cement Company's case (AIR 1983 Andh Pra 324) (supra), the law laid down as regards interpretation of the word 'used' by the two Division Benches alone will hold the field. In support of this contention, the learned counsel sought to place reliance upon Indian Oxygen Ltd. Their Workmen, , Raj Narain Pandey v. Sant Prasad Tewari, , and Union of India v. Kokil, , wherein it is held that if the Legislature and the Parliament intended to make a departure from the principles laid down by the decisions of the Court, the Legislature definitely could have amended the Act and when the Legislature has not done so the law laid down by the decisions of the Court still holds the field. There is no dispute with regard to the principle laid down in the decisions of the Supreme Court. In the case on hand, it is to be noticed that the matter was being agitated since 1965 onwards. Even after interpretation of the term, 'used' by the two Division Benches, the matter was referred to Full Bench. The Preamble of the Act says that to augment resources, assessment has to be levied on non-agricultural lands used for the purposes mentioned in Section 3, Even the object of the Act is to provide for levy of assessment on non-agricultural lands. Land revenue is imposed on agricultural lands. If a land is converted into non-agricultural land, the same is not liable to land revenue and is liable to be assessed under the NALA Act. Entire non-agricultural lands an; covered by the NAL-A Act. So, the contention that the word 'used' has to be given the limited meaning of 'actually used' is not in tune with the intendment of the Legislature.
20. It is next contended by the learned counsel for the petitioners that in matter of Motor Vehicles Taxation Act the Legislature has amended the Act to enlarge the scope 06 the word 'used' occurring in that legislation so as to include the vehicles kept for use. Therefore, according to the learned counsel, if the Legislature intended, it could have amended Section 3 of the NALA Act in order to give wider meaning to the word 'used'. When it has not done so, it is contended, the Court has to interpret the word by upholding the meaning given by the earlier two Division Benches.
21. The Motor Vehicles Taxation Act levies taxes on motor vehicles, whereas the NALA Act determines assessment on non-agricultural lands. Both the Acts are different and one cannot be compared with the other. While enacting the Motor Vehicles Taxation Act, the Legislature probably wanted to have the provision clearly explained for proper understanding. For that reason, it is not obligatory to interpret the word 'used' occurring in Section 3 of the NALA Act by taking the said analogy in order to give it a restricted meaning. The Legislature has intended the word 'used' to 'meant to be used' or 'set apart for being used'. Further, the interpretation of the word 'used' made by the Full Bench of this Court in S. V. Cement's case (1993 (2) Andh LT 32) (supra) after reference to various, decisions of the Supreme Court and other High Courts, as 'meant to be used' or 'set apart for being used' does not suffer from any infirmity or illegality and is well in consonance with the intendment of the Legislature. Therefore, we see no grounds to take a different view from the one expressed by the Full Bench.
22. Now, turning to the contention that Section 3, Section 8 (as amended) and the Schedule (as amended) to the NALA Act are unconstitutional and ultra vires the Constitution, it is to be noticed that this contention analysed by different facets as dealt with hereunder.
23. One of the facets of this contention is that the assessment proposed to be levied is in substance an impost on the user of the land instead of on the land itself, which relates to Entry 86 of Lists I of VII Schedule in respect of which the Parliament is competent to legislate, and therefore, the State is incompetent to legislate the present Act. To appreciate this contention, it is necessary to analyse Section 3 of the NALA Act. Sections empowers the State to determine assessment on non-agricultural lands and for the purpose of quantifying the assessment, user of the land i.e., industrial, commercial or non-agricultural, will be taken into consideration. From the plain language employed in Section 3, it is vivid that the assessment is on the land itself, subject of course to the classification into different categories of the region on the basis of population and the purpose for which it is put to use. According to Entry 49 of Lists 11 to VII Schedule read with Art. 246(3) of the Constitution, the State Legislature is competent to make laws with respect to levying taxes on lands and buildings. The assessment under the NALA Act is on the land and not on the purpose for which it is used. The aim and object of the Act can also be seen from the preamble itself. The unambiguous language employed in the preamble would reveal that the assessment is on the lands and not on the use to which they are put and that the intention of the Legislature is to assess non-agricultural lands. Further, a reading of Entries 18, 45, and 49 of the List II would reveal that the State Legislature is competent to legislate in respect of land, the rights in or over the land, its tenure, with regard to revenue including assessment, collection of revenue and also with regard to levy of tax on lands and buildings. This power is exclusively vested in the State Legislature to levy tax on the land, whether agricultural or non-agricultural.
24. The learned counsel for the petitioners incidentally contended that the Act provides for levy of assessment on the lands used for non-agricultural purposes, that the term 'assessment' indicates sharing of liability Or conferment of benefit or service by the State and thus is not a tax as commonly understood, that the tax should be equally borne by all the citizens and there is inequality in sharing the tax, that the State is not supposed to levy tax on non-agricultural lands when most of the agricultural lands are exempt from tax merely because the nature of the land is changed, that the assessment levied under the Act being a composite tax falls under Entry 86 of Lists I of VII Schedule to the Constitution and not under Entry 49 of Lists II of VII Schedule and that, therefore, the Slate Legislature is incompetent to make law in respect of assessment on non-agricultural lands. On the other hand, it is contended by the learned Advocate General that the 'assessment' is a general term used in various statutes to mean only tax and that it is as per the long legislative practice and that in construing the words a reference may rightly have to be made to the legislative practice.
25. Adverting to the meaning of 'assessment', it is to be noticed that the word is generally used for levy of tax. In law Lexicon of P. Ramanatha Aiyar, 'assessment's' meaning is given:
"determining the value of man's property or occupation for the purpose of levying a tax; determining a share of the tax to be paid by an each individual i.e., according to Vouvier Law Dictionary; levying a tax as a land revenue assessment; assessment is popularly used as a synonym for taxation in general; the authoritative imposition of a rate or duty to be paid; it is also held that the assessment and tax are not synonymous; assessment is a doubtless tax but the term implies something more; it implies a tax of particular kind, predicated on the principle of equivalents or benefits which are peculiar to persons or property charged therewith, etc."
According to Black's Law Dictionary, 'assessment' means:
"In a general sense, the process of ascertaining and adjusting the shares respectively to be contributed by several persons towards a common beneficial object according to the benefit received. A valuation or a determination as to value of property. It is often used in connection with assessing property tax or levying of property tax. Also the amount assessed."
26. Thus, the word 'assessment' has been given different meanings. The meaning of the word has to be understood according to the context in which it is used. Further, it is settled principle of law that where a particular word is understood in legal parlance in a particular manner, the same meaning has to be given wherever it occurs in different provisions of the enactment.
27. The Supreme Court in State of Madras v. Gannon Dunkerley and Co., , while interpreting the term 'sale of goods' held that it was a term of well recognised legal import in general law relating to sale of goods and in legislative practice that topic must be interpreted to relate to Entry 48 in List II in Schedule VII of the Act and that the term carries the same meaning as in the Sale of Goods Act, 1930.
28. A Constitution Bench of the Supreme Court in the case of Gordhandas v. Municipal Commr., , while interpreting the word 'rate' occurring in Section 73(1) of the Bombay Municipal Boroughs Act, held (Para 31):
"Therefore, when in 1925, Section 73(1) of the Act, while specifying taxes which could be imposed by a municipal 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 both in India and England before that date ..... But the use of the word 'rate' in that clause definitely means that it is that particular kind of tax which in legislative history and practice was known as a 'rate' which the municipality could impose and not any other kind of tax."
29. A Division Bench of this Court in V. Sesha Sarma v. State of A. P., , held that the expression 'revenue assessment' has used in the Andhra Inams (Assessment) Act in accordance with long legislative practice and according to the usage, the word 'assessment' connotes only tax though it is termed as assessment.
30. Therefore 'assessment' levied under the NALA Act cannot be said to be an assessment alone, but it is more of a tax. The contention that there is no power to the State to legislate the enactment imposing assessment as it relates to Entry 86 of List I is not tenable. We, therefore, hold that the State is competent to make the law to determine assessment on non-agricultural lands.
31. It is next contended that the classification made for the purpose of determining assessment on the basis of population and the use of the land is not based on any intelligible differentia and, therefore, creates inequality among holders of the non-agricultural lands.
32. Rates are prescribed in the Schedule to the NALA Act for levying assessment on non-agricultural lands. For the purpose of arriving at the rate of assessment to be levied, the factors to be taken into account are (if population of local area in which lands are situate, and (ii) the purpose for which the land is used. Non-agricultural lands are divided into five categories based on the population of local area. The Schedule to the NALA Act is:
Local areas and its popula-tion according lo the latest census.
Rates of a sessment per sq. metre of land used For industrial purpose per Fasli year For commercial purpose per Fasli year For any other Non-agricultural purpose includ-ing residential purpose per Fasli year.
1. Local area with a population 10,000 and less.
50 paise _ _
2. Local area with a population exceeding 10,000 but not exceeding 15,000.
50 paise 25 paise _
3. Local area with a population exceeding 15,000 but not exceeding 50,000.
50 paise 50 paise 5 paise
4. Local area with a population exceeding 50,000 but not exceeding 2 lakhs.
75 paise 75 paise 15 paise
5. Local area with a population exceeding 2 lakhs.
100 paise 100 paise 20 paise
33. Thus, it is evident from the Schedule and Section 3 of the NALA Act that assessment is determined on different lands used for different purposes at different rates and the same is not, therefore, discriminatory or arbitrary to attract Articles !4 and 19 of the Constitution. It is not the case of the petitioners that there is a difference in assessment on the lands similarly situate and in the same locality and used for the same purpose. Value of the lands vary from place to place depending on the population. Smaller the villages, lesser the demand and greater the availability of land. In towns and bigger places, the demand for non-agricultural lands will be more and so lands value more. Thus, there is difference between the utility, worth and value of the land situate in small villages as against bigger towns and cities and it would be unreasonable if a uniform rate of assessment is levied on all the lands. If the same rate of assessment is determined on all non-agricultural lands, it will result in inequality since different classes of lands would be put to the same rate of assessment. Thus, the Act rightly prescribed different rates of assessment based on population of the local area in which the lands are situate besides also as per the user of the land. At this stage, the learned counsel for the petitioners contended that there is no inter se classification of the lands in one locality though utility, worth and value differ from one portion of the area to another portion of the local area. It is to be borne in mind that there can never be meticulous mathematical accuracy in the matter of determining the rate of assessment and absolute equality is impracticable and that there is bound to be some element of arbitrariness in every classification, but so long as the broad principle on the basis of which the classification is made is not irrational and unintelligible, it cannot be said that such a classification is arbitrary and discriminatory. Further, classification of lands based on the population of the local area and the user of the land has substantial nexus to the object sought to be achieved by the enactment. The classification is also unassailable when it intends to make equitable distribution of assessment. It is also a known fact that the lands used for industrial purpose would normally fetch more income than the lands used for non-agricultural purpose simpliciter. Further, if the lands used for industrial, commercial or any other non-agricultural purpose are assessed at same rate, it amounts to failure in making a reasonable classification.
34. Now, adverting to the case law on the subject, it is to be noticed that in D.G. Bose and Co. v. State of Kerala, , the method of valuation of buildings for purposes of levying tax under the Kerala Buildings Tax Act, 197S came up for consideration of a Constitution Bench of the Supreme Court. In that case, the Supreme Court upheld the competency of the State Legislature in enacting the said Act and in imposing tax on buildings under Entry 49 of List II. Under the Kerala Buildings Tax Act, for fixation of building tax the method of assessment on the basis of 'capital value' of the building was to be arrived at by multiply-ing 'annual value' with 'sixteen'. The Supreme Court upheld the said method as reasonable and not arbitrary or colourable and held that once a taxing statute is held to be within the legislative competence, it is for the Legislature to decide the method of levying the tax and the reasonableness of such levy is not open to challenge in Court unless it is confiscatory or extortionate in nature. The principle laid down in the above decision amply supports the view taken by us.
35. In Federation of Hotel & Restaurant v. Union of India, white upholding the legislative competence in enacting the Expenditure Tax Act, 1987, the Supreme Court, as regards the classification made by the Legislature, held that the Legislatures have very wide discretion in selection of persons, subject-matters, events, etc., in formulation of fiscal policy for the purpose of taxation and unless hostile discrimination is shown, classification made by Legislature is not to be interfered with by Court. Dealing with the contention that Sections 2, 3,4 and 5 of the Expenditure Tax Act, 1987 are violative of Art. 19(1)(g) of the Constitution, it was held that the taxing statute per se does not amount to a restriction on freedom guaranteed under Art. 19(1)(g) as consequent hardships in individual cases, excessiveness of tax or diminution of earnings or profits would not constitute violation of Art. 19(1)(g).
36. The learned counsel for the petitioners relied on the decision of the Surpeme Court in K.T. Moopil Nair v. State of Kerala, , for the proposition that the classification on the basis of population of local area and the use of the land is irrational and has no relation to the object of the Act. In that case, the Constitution Bench of the Supreme Court was considering Sections 4, . 5 A and 7 of the Travancore-Cochin Land Tax Act, 1955 which were challenged as confiscatory, discriminatory and imposing unreasonable restrictions. Sinha, C.J., speaking for the Bench held (at p. 557, Para 7):
"If the taxation, generally speaking, imposes a similar burden on every one with reference to that particular kind and extent of property, on the same basis of taxation, the law shall not be open to attack on the ground of inequality, even though the result of the taxation may be that the total burden on different persons may be unequal. Hence, if the Legislature has classified persons or properties into different categories, which are subjected to different rates of taxation with reference to income or property, such a classification would not be open to attack on inequality on the ground that the total burden resulting from such a classification is unequal. Similarly, different kinds of property may be subjected to different rates of taxation, but so long as there is a rational basis for the classification, Art. 14 will not be in the way of such a classification resulting in unequal burdens on different classes of properties."
In that decision, the Supreme Court held that classification of properties into different categories which are subject to different rates of assessment made by the Legislature is not open to attack on the ground of inequality and further held that different kinds of properties may be subjected to different rates of taxes. In this case, we have already held that the classification made for the purpose of determining assessment on' the basis of population and user of the land is on a rational basis and has nexus to the object of the Act and so the classification is neither arbitrary nor discriminatory. The above decision, on the other hand, squarely repels the present contention.
37. The learned counsel for the petitioners relied on another decision of the Supreme Court in M.C.S. & W. Mills v. Ahmedabad Municipality , wherein the question was whether flat rate method according to floor area adopted for determining rent is reasonable. It was held that the said method is discriminatory as there was no classification of the factories involved therein on any rational basis, which leads to inequality. That decision is also not of any help to the petitioners herein because in the present case there is a reasonable classification of non-agricultural lands into five different categories basing on the population of local area.
38. The learned counsel for the petitioners next relied on adecision of Mysore High Court in Bhuvaneswariah v. State, (AIR 1965 Mysore 170). It is a case wherein the Mysore Buildings Tax Act was challenged as colourable piece of legislation and Section 4 of it was violative of Articles 14 and 19 of the Constitution because of lack of rational classification. In those circumstances, the High Court of Mysore held that levy of tax on the basis of the classification based on floorage of the building is irrational and has no nexus to the object of the Act. The learned counsel also relied in this behalf on a decision of the Supreme Court in State of Kerala v. Haji K. Kutty, . In that case, the Supreme Court considering Section 4 and the Schedule to the Kerala Buildings Tax Act held that the equality clause of the Constitution is violated and, therefore, the same is ultra vires. These two decisions are distinguishable from the facts and circumstances of the present case. In these circumstances, the classification made, as envisaged by Sections of the NALA Act, through the Schedule cannot be said to be arbitrary, discriminatory or violative of Articles 14 and 19 of the Constitution of India.
39. It is next contended by the learned coansel for the petitioners that S.8 of the NALA Act is ultra vires and delegation of power to the Government thereunder amounts to delegation of essential legislation without any guidelines or policy and hence violative of Art. 14 of the Constitution and that the provision conferring power on the Government to amend the Schedule is, in a way, likely to result in colourable exercise of legislative function. On the other hand, it is contended by the learned Advocate General that S. 8 is exactly not an incidence of delegation of legislative function as is conveniently understood in the sphere of administrative law, that the very section postulates that whatever amendment is made by the Government has to be confirmed by the Legislature and that no unbriddled power is conferred on the Government and so the same is not arbitrary and violative of Art. 14 of the Constitution.
40. Section 8 of the NALA Act empowers the Government to alter, add to or cancel any of the items of the Schedule by issuing notification. The notification has to be placed before the Legislative Assembly in the following session to give effect to alteration, addition or cancellation of the Schedule specified in the Notification. When such Bill becomes law, the notification shall cease to have effect but without prejudice to the validity of anything previously done thereunder. It is further provided that if the notification is issued during the session of the Legislative Assembly, such a Bill has to be introduced during that session only. It is also provided that if the Bill does not become law within six months from the date of its introduction in the Legislative Assembly, the notification shall cease to have effect on the expiry of said period of six months. The Legislature has taken adequate safeguards in conferring power on the Government to alter, add to or cancel the different items in the Schedule. The Bill placed before the Legislative Assembly pursuant to the notification modifying the Schedule will come into force only after the Legislature passed it, that too with the alterations if any made by the State Legislature. The Bill so passed will become law and it will have effect, no doubt, from the date of issuance of the notification. By that reason itself, it cannot be said that the Legislature had abdicated its power and the delegation is an excessive one. It is a fact that the Government has power to alter the Schedule and collect the levied assessments, before the notification is made a law. But the same is subject to confirmation of the Legislature. Thus, the delegation under S. 8 cannot be said to be an excessive one.
41. The next contention is as regards the retrospectivity given to the legislation. The Legislature has got ample power to make law, including on fiscal matters, with retrospective effect. In the present case, the assessment, levy and collection are made after issuance of the notification by the Government. However, it is only after confirmation of the notification it becomes law and the date of commencement of the enactment will be from the date of notification. In Goodricke Group Ltd. v. State of W.B., 1995 Supp (1) SCC 707 : (1995 AIR SCW 123), the question was whether the Legislature has got power to levy tax on land taking the produce of the land for assessment, The land involved thereunder was 'tea gardens'. The Supreme Court considered therein the effect of retrospectivity of the taxing statute and held (para 63 of AIR):
"There is no substance in the challenge to the validity of the retrospective effect given to the impugned enactment. If the act is good, it is good both prospectively and retrospectively. Retrospective effect is given for the period covered by the anterior provisions which were struck down in Buxa Dooars Tea Co. Ltd. v. State of W.B., . Once the defect pointed out in Buxa Dooars is rectified and remedied in the impugned enactment, it can certainly be given retrospective effect to cover the period by the earlier enactment which is not only a well-known but a frequently adopted measure by all the Legislatures."
42. Therefore, when the Legislature has got power to enact law giving retrospective effect covering the period during which the earlier statute, struck down, was holding the field, it can as well be said that the present situation is an a fortiori one inasmuch as the Government issues notification under S. 8 to alter the items in the Schedule providing for rates of assessment and such issuance was not resultant of any struck down law. Further, the Legislature has t& necessarily approve and till then it does not become a law. The limited delegation to alter, add to or cancel any of the items of the Schedule is only for an interregnum period i.e., from the date of notification to the date of approval of such notification by the Legislature. Therefore, delegation of such power cannot be said to be excessive or amounts to abdication of legislative power. The doctrine of separation of powers among Legislature, Judiciary and Executive as enshrined in Art. 50 of the Constitution, thus it is not attracted so as to give rise to an argument, that there was any overlapping or entrenchment into the powers of the other wing.
43. It is further contended that the rate of assessment covered by the Schedule is in the nature of confiscatory and extortional and so Ss. 3 and 8 have to be struck down. On the other hand, it is contended by the learned Advocate General that the assessment is not extortional or confiscatory in nature and that the constitutional validity of the NALA Act has been upheld by this Court.
44. The NALA Act provides for determination of assessment on non-agricultural lands used for industrial, commercial or any other non-agricultural purposes basing on the population of the local area mentioned in the Schedule. If non-agricultural lands are situated in places where the population is less than 10,000, they are not assessable. The assessment can be made only on the lands situated in the local area where population is more than 10,000. Determination of assessment at the rates specified in the Schedule depends on two factors -- population of the local area and the purpose for which the land is used. Rate of assessment is more in respect of lands used for industrial purpose than for commercial purpose, and is lesser for lands used for other non-agricultural purpose for every fasli year. Therefore, determination of assessment based on population of local area and the purpose for which the land is used cannot be said to be irrational and the rates prescribed in the Schedule cannot be said to be extortional or confiscatory. Further, except the bald allegation that the assessment is confiscatory and extortional, no concrete case is put-forth placing factual material before this Court.
45. It is further contended that the assessment under the NALA Act would result in double taxation since the Municipality or Gram Panchayat levies taxes on buildings and lands. It is to be noticed that it is clearly laid down in S. 3 of the NALA Act that no land revenue shall be payable in respect of land on which assessment is levied and collected under the Act. Further, Art. 265 of the Constitution authorises imposition of taxes by authority of law. There is also no bar in the Constitution for imposing double tax. In Lt. Col. Sawai Bhawani Singh v. State of Rajasthan, , the Supreme Court observed that the State Legislation relating to tax on lands and buildings and Central Legislation relating to composite tax on value of all lands and buildings can coexist.
46. The next contention is with reference to S.2(d) as amended. It is stated that the lands wherein mining operations are carried on are covered by the Mines and Minerals (Regulation and Development) Act, 1957 (for short 'Act 67 of 1957'), that the said Act is made by virtue of the power conferred under Entry 54 of List I and that if the field is occupied by a Central Legislation, the State Legislature is not competent to make law as it amounts to encroaching upon Central field. It is further contended that the power of the State under Entries 23 and 50 of List II is subject to Entry 54 of List I and that once the Centre has enacted a law with regard to that subject, the State is denuded of its power to make law on that subject. On the other hand, the learned Advocate General contended that the concept of 'occupied field' has no application to the interpretation of the NALA Act, that the doctrine of 'pith and substance' has to be applied to test whether a legislation falls under the Central or State List and that the Central Act 67 of 1957 cannot be said to have covered the field of assessment, on non-agricultural land as distinguished from various imposts, such as tax on mining, royalty, cess on royalty, etc.
47. In view of the above, the question is whether inclusion of lands covered by mining operations in the definition of 'industrial purpose' in S. 2(d) of the NALA Act (as amended by Act 28/ 74) is ultra vires Arts. 246 and 254 of the Constitution.
48. The NALA Act has been enacted by virtue of the power conferred on the State under Entry 49 of List II of VII Schedule to the Constitution. When this Court in W.P. No. 290/65 and batch dated 22-4-1970 held that the lands covered by mining operations do not fall under 'industrial purpose' an amendment vide Act No. 28 of : 1974 was brought jn by including the lands covered by mining operations also in the definition of 'industrial purpose'. Now S. 2(d) is challenged on the ground that it has entrenched on Central field covered by Act 67 of 1957.
49. With regard to competence of the Parliament and the State Legislatures to enact laws in respect of the subjects enumerated in the lists of the VII Schedule, it would be relevant to look at some decided cases. In Hingir-Rampur Coal Co. v. State of Orissa, , the Supreme Court while considering the constitutional validity of the Orissa Mining Areas Development Fund Act, 1952 held that the impugned Act is relatable to Entries 23 and 66 of List II of VII Schedule and its validity is not impaired or affected by Entries 52 and 54 of List I read with Act LXV of 1951 and Act LIII of 1948 respectively. Jn State of Orissa v. M. A. Tulloch & Co., , the Supreme Court laid down the principle that the Parliamentary enactment supersedes the State Law and the State Legislature is denuded of its power to legislate. S. M. Sikri, C.J., speaking for the Bench in the Kannan Devan Hills Produce Co. Ltd. v. State of Kerala, , held that the State has legislative competence to legislate on Entry 18 of List II and Entry 42 of List III and this power cannot be denied on the ground that it has some effect on an industry controlled under Entry 52 of List I. Constitution Bench of the Supreme Court in India Cements Ltd. v. State of Tamil Nadu, , considering the Tamil Nadu Panchayat Act held that cess on royalty being a tax on royalty is beyond the competence of the State Legislature because S. 9 of the Central Act covers the field and the State Legislature is denuded of its competence under Entry 23 of List II of VII Schedule. In State of Orissa v. Hahanadi Coal Fields Ltd (supra), the Supreme; Court observed that under List II, Entry 23 the State Legislature can enact a law relating to regulation of mines and mineral development, but it is subject to the provisions of List I.
50. It can be deduced from the above decisions that whenever the Parliament enacts any law with respect to subjects under Entries 52 and 54, the State Legislature is denuded of that power. The question now is whether the Central Act 67 of 1957 covers the field or not. If the Central Act does not cover the field, there is no bar for the State: Legislature to make a law under Entries, which are not subject to control of the Entries: in List I of VII Schedule. This Court in Writ Appeal No. 829 of 1989 and batch dated 17-4-1996 has elaborately considered the scope of legislative power of the State to; enact law relating to Entries in List II and held that:
1) where the provincial legislative power with regard to subjects enumerated in List II is with a restriction and when Parliament legislates on such subjects, the State Legislature is denuded of its power in entirety,
2) the Parliamentary enactment supersedes the enactment made by State Legislature, and
3) where the State's Legislative power under List II is without any restriction, the State Legislature is free to legislate without encroaching upon Parliamentary field. Keeping the above principles in view, we have to examine the pith and substance of the legislation covered by S. 2(d).
51. Section 3 of the NALA Act is the charging section providing for determination of assessment on non-agricultural lands, which include the lands used for mining, operations, also as per S. 2(d), S. 3 of the Central Act 67 of 1957 deals with definitions. Section 3(d) defines 'mining operations' as any operation taken up for winning any mineral. Section 4 deals with prospecting licences and mining leases. Section 4-A provides for termination of prospecting licences and raining leases. Section 9 is in respect of payment of royalty for any mineral removed or consumed at the rate specified in the Schedule in respect of that mineral. Section 9-A provides for payment of dead rent by the lessee every year to the State Government as specified in the third Schedule. Section 13 empowers the Central Government to make rules in respect of minerals. Section 15 confers power on the State Government to make rules in respect of minor minerals. Section 16 deals with the power to modify the mining leases. Thus, by reading the above provisions, it is evident that the lands which are used for mining operations are covered by Central Act 67 of 1957. Act 67 of 1957 provides for conducting of mining operations, for collecting royalty and dead-rent, etc., and conditions for lease as per the Rules framed under the Act. As per Section 13(2)(i), the Central Government may make rule providing for fixation and collection of fees for prospecting licences or mining leases; surface rent, security deposit, fines, other fees or charges and the time within which and the manner in which the dead-rent or royalty shall be payable. Rule 27(d) of the Mineral Concession Rules, 1960 obligates the lessee of mining lease to pay surface rent for the surface area used by him for the purpose of mining operation and water rate as may be specified by the State Government in the lease. This is one of the conditions of mining lease.
52. From the above, it is clear that the non-agricultural lands on which mining operations are conducted are entirely within the purview of Central Legislation for payment of dead-rent, royalty, surface rent, security deposit, etc. The royalty and dead-rent are collected on the minerals produced from the mines, whereas surface rent and water cess are collected on the land itself.
It is further provided in Rule27(d) that collection of surface rent and water cess should not be more than the land revenue. Thus, the Rules make it clear that surface rent and water cess are levied and collected by the State Government as per the terms and conditions of the lease. It, thus, amounts to determination of assessment by the State Government on non-agricultural land used for mining operations. When the State Government collects tax by virtue of the power conferred under the Central Act, the field is completely occupied by the Centre. The State cannot collect any other tax, unless it is incorporated in the lease deed as one of the terms. Therefore, no assessment can be levied and collected on non-agricultural lands used, for mining operations, unless ,it is provided in the lease deed itself as one of the terms. Section 2(d) of the N ALA Act has, therefore, to be read down, to the extent, that the lands covered by mining operations will be determined for assessment as per the terms and conditions in the lease deed only.
53. It is lastly contended that waste lands and lands incapable of being put to use can be found in the category of non-agricultural lands and the assessment under the NALA Act for such lands cannot be determined.
54. Whether a particular non-agricultural land is a waste land or incapable of being used for any non-agricultural purpose, it is a pure question of fact to be decided according to the facts of each case. When the land is a waste land or incapable of being used, no assessment can be made by treating it as non-agricultural land. However, as we have already held the non-agricultural land used 'actually' or 'meant to be used' or 'set apart for being used' have to be assessed under the NALA Act. The question of exclusion of waste land from the purview of assessment has to be decided by the Revenue Inspector under S. 4 of the Act while determining assessment on non-agricultural lands, The assessees have got a right to prove before the Revenue Inspector that the land is not capable of being used for non-agriculture 'purpose including commercial as well as industrial purposes. If it is proved in a given case that a part of the land is waste land, the same should be excluded from the purview of assessment.
55. It is incidentally contended that the petitioners are coming to know of the assessment only after the service of order of assessment as no notice is being issued or enquiry is being made before making assessment and they have no opportunity of explaining the nature of the land.
56. According to S. 4 of the NALA Act, the Revenue Inspector has to determine the assessment payable on non-agricultural land after making enquiry as laid down by the Rules. Rule 3(a) of the Rules provides for procedure for making enquiry under the Act. As per Rule 4, notice in Form No. 1 has to be issued to furnish such information or produce such other documents as may be required for assessment and the person is obliged to submit such information on the day fixed before the Revenue Inspector and in default assessment shall be made on the land. After completing the assessment as per Rule, the Revenue Inspector shall determine the assessment and prepare a demand. Rule 8 provides the mode of service of notice. Thus, it is evident that before making assessment of any non-agricultural land, a notice in Form No. 1 has to be given to the owner/ occupier of the land for furnishing details. On furnishing of details, the Revenue Inspector can make assessment. Any assessment made without issuing notice in Form No. 1 is in violation of Rules 3 and 4 of the Rules and S.4 of the NALA Act. There is, therefore, an obligation cast on the Revenue Inspector to issue notice and follow the procedure laid down by the Rules to determine assessment on non-agricultural land.
57. In view of the above discussion, we hold:
1) The decision of the Full Bench in S. V. Cement's case (supra) does not call for any interference and it is affirmed;
2) Sections 3, 8 and the Schedule to the ALA Act are not ultra vires Articles 14 and 19 of the Constitution;
3) Section 2(d), in so far as the lands covered by 'mining operations' are concerned, has to be read down by empowering the State Government to levy and collect assessment only in accordance with the terms of the lease as contemplated under Rule 27(d) of the Mineral Concession Rules, 1960;
4) 'Waste lands', which are unfit for use are not liable for assessment under the NALA Act and this aspect has to be decided by the Revenue Inspector under S. 4 of the NALA Act;
5) There is an obligation on the Revenue Inspector to issue notice in Form No. 1 before making assessment, failing which it would be in violation of Rules 3 and 4 of the Andhra Pradesh Non-Agricultural Lands Assessment Rules, 1960 and S. 4 of the NALA Act.
6) The demand notices impugned in Writ Petitions Nos. 13764/87, 7414/87, 10342/94, 11711/94, 17515/94, 20563/94, 22314/94, 22498/94, 975/95, 1083/95, 1810/95, 2381/ 95, 3762/95, 4306/95, 6304/95, 10024/95, 10699/95,23129/95,23130/95,25619/95 and 3075/96 are hereby quashed since not contemplated by the raining lease. It is open to the respondents to act in accordance with Rule 27 of the Mineral Concession Rules.
7) In some cases, it is contended, no notices were issued in Form No. 1 by the Revenue Inspector. We have held that issuance of notice by the Revenue Inspector is mandatory according to Rules 3 and 4 read with S. 4 of the Act. But, in the present cases, most of the matters are carried in appeal to the Tahsildar and after their disposal, the present writ petitions were filed. The questions that were raised by the petitioners were decided by the said authorities. In these writ petitions, we have decided all the points raised by the petitioners. It is, therefore, not necessary to direct the authorities to issue notices again in the present cases. However, in cases where the land is 'waste land', it is open to the petitioners to bring it to the notice of the Revenue Inspector by filing a petition and setting out details thereof with supporting material thereto. On filing of such a petition, the concerned Revenue Inspector shall dispose of the same after conducting enquiry and pass appropriate orders. If the petitioners have paid assessment even in respect of 'waste land', it is open to the authorities to adjust the same for subsequent assessment years in case it is found that such land is 'waste land'.
The writ petitions are accordingly disposed of. There will no order as to costs.
58. Order accordingly.