Gujarat Provincial Municipal Corporations Act, 1949: s. 129, 141AA, 132(1)(b) – Imposition of property tax – Power of Municipal Corporation – Appellants, charitable trusts, running clinics/hospitals seeking exemption from levy of general tax in terms of clause (b) to sub-section (1) of s. 132, in cases where the Corporation has exercised the option to levy property tax on carpet area method u/s.141AA; and challenging r. 8B(4)(i) on the ground that it is unconstitutional, illegal and arbitrary as it violates the principle of equality enshrined u/Art. 14 – Held: ss. 129 to 141A are grouped together and are applicable when property tax is payable on annual letting value/annual rateable value, whereas provisions from ss. 141AA to 141F apply when property tax is payable on the basis of carpet area method – Exemption under clause (b) to sub-section (1) of s.132 only applies when general tax is payable under sub- section
(1) to s.132 rw s. 129 - Clause (b) to sub-section (1) of s.132 per se and ex facie does not apply to taxes payable in terms of s. 141AA on the basis of the carpet area method – Thus, it cannot be held that clause (b) to sub-section (1) of s. 132, which grants exemption to buildings and lands or portions thereof solely occupied and used for public worship or for public charitable purposes, would apply when property tax is calculated and is payable on the basis of the carpet area method, which is to be computed and calculated in accordance with the provisions of s. 141AA to s. 141F – Furthermore, the ‘use factor’ enlisted clause (b) to sub-rule (4) of r. 8B is a separate category; the category being grantable schools run by public charitable trusts, boarding- lodging-hostels run by public charitable trusts, and religious institutions, dharma-shala, ashram, and library – Appellant No.2 Trust cannot claim any parity with the said ‘use factors’, even though the hospital/clinic run by them are run by public charitable trusts – Sub-clause (i) to clause (a) to sub-rule
(4) of Rule 8B enlists all buildings used as hospitals, dispensaries, clinics, maternity homes, etc – All hospitals, dispensaries, clinics, maternity homes etc., have been classified under one head, and thereby the levy of taxation in such cases simplifies and is uniform – Classification made vide sub-clause (i) to clause (a) to sub-rule
(4) of Rule 8B is not discriminatory and violative of Art.14 – Object and purpose is to avoid litigation and complexities which may arise in case there is a distinct and separate taxation of hospitals, clinics, maternity homes, etc., stated and claimed to be run for charitable purpose – Sub-clause (iv) to clause (a) to sub-rule (4) of Rule 8B applies to educational and social institutions run by public charitable trusts for the welfare of women, old people, deaf, dumb, blind, physically handicapped or mentally retarded people – These are separate categories and cannot be confused and treated similarly and at par with hospitals, clinics, maternity homes, etc, as elucidated in sub-clause (i) to clause (a) to sub-rule (4) of Rule 8B – Furthermore, there can be crudities or inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid – Taxation (Amendment) Rules 20019 – r. 8B(4)(i).
Dismissing the appeals, the Court
HELD: 1.1 It is crystal clear that ss. 129 to 141A of the GPMC Act are grouped together and are applicable when property tax is payable on annual letting value/annual rateable value, whereas provisions from Sections 141AA to 141F of the GPMC Act apply when property tax is payable on the basis of carpet area method. There are no good ground and reason to hold that clause (b) to sub-section (1) of Section 132 of the GPMC Act, which grants exemption to buildings and lands or portions thereof solely occupied and used for public worship or for public charitable purposes, would apply when property tax is calculated and is payable on the basis of the carpet area method, which is to be computed and calculated in accordance with the provisions of Section 141AA to Section 141F of the GPMC Act. [Para 2][656D-F]
1.2 Chapter XI of the GPMC Act deals with municipal taxation and sub-section (1) to Section 127 states and gives an option to the Corporation to impose property tax either under Section 129, or under Section 141AA of the GPMC Act. Section 129 states that the property tax shall comprise of the taxes, which shall, subject to the exceptions, limitations and conditions thereinafter provided, be levied on buildings and lands in the city. Section 132 of the GPMC Act states that general tax shall be levied in respect of all buildings and lands in the city, the rateable value of which exceeds Rs.600/-, save when a case is covered by exceptions enumerated and listed in clauses (a), (b) and (c) of sub-section (1) to Section 132 of the GPMC Act. Clause
(b) to sub-section (1) of Section 132 states that buildings and lands, or portions thereof, solely occupied and used for public worship or for public charitable purposes are exempt from payment of general tax leviable under Section 132 of the GPMC Act. In other words, exemption under clause (b) only applies when general tax is payable under sub- section (1) to Section 132 read with Section
129 of the GPMC Act. Clause (b) to sub-section (1) of Section
132 per se and ex facie does not apply to taxes payable in terms of Section 141AA on the basis of the carpet area method. [Para 3][657-B-D; 658-A]
1.3 Section 141AA, which is an alternative mode of taxation and an option available to the Corporation to impose tax on the basis of the carpet area method, states that the property taxes shall comprise of the taxes which shall, subject to exceptions, limitations and conditions thereinafter provided, be levied on buildings and lands in the city. Clause (c) to Section 141AA states that a general tax may be levied in accordance with the provisions of Section 141B, if the Corporation so determines, on a graduated scale. Sub-section (1) to Section 141B states that for the purpose of clause (c) to Section 141AA of the GPMC Act, general tax, subject to such exceptions, limitations and conditions thereinafter provided (and not thereinbefore provided), shall be levied annually on the buildings and lands in the city at such rate per square meter of the carpet areas of the buildings and of the areas of land, which thereinafter in the enactment has been referred to as ‘the rate of tax’, as the Corporation may determine. Sub-section
(2) to Section 141B states that for the purpose of levy of tax on buildings in the city under sub- section (1) to Section 141B, the buildings may be classified into ‘residential’ and ‘buildings other than residential’ and the Corporation may determine one rate of tax for residential buildings and the other rate of tax for buildings other than residential. The proviso states that it shall be lawful for the Corporation to determine for residential buildings, the carpet area of which does not exceed 40 square meters, such rate of tax as is lower than the rate of tax determined for residential buildings. Sub-section (3) to Section 141B states that the rate of tax determined under sub-section (1) read with subsection (2) to Section 141B shall not, in respect of the residential buildings, be less than Rs.10/- per square meter of carpet area and more than Rs.40/- per square meter of carpet area. In respect of buildings other than residential, it shall not be less than Rs.20/- per square meter of carpet area and not more than Rs.80/- per square meter of carpet area. Sub-section (4) to Section 141B states that the Corporation, subject to the Taxation Rules, may increase or decrease or neither increase nor decrease the rate of tax determined under sub-section (1) read with sub-section
(2) and sub-section (3) to Section 141B in the case of residential buildings having regard to factors, like, market value of the land where the building is situated, the year of construction of the building, type of the building, the duration of existence of the building, the type of building, and whether the building is selfoccupied or tenanted. Similarly, in the case of buildings other than residential, the following factors, namely, market value of the land in the area in which the building is situated, the duration of existence of the building, the purpose for which the building is used, and whether the building is self-occupied or tenanted are to be taken into consideration. [Para 4][658-B-H; 659-A-B]
1.4 There is hardly any scope to urge and argue that clause
(b) to sub-section (1) of Section 132 of the GPMC Act, which relates to and grants exemption from payment of general tax when rateable value is computable under Section 129 read with Section
132 of the GPMC Act, would apply in cases where property tax is payable by the carpet area method. General tax in terms of clause
(c) to Section 141AA has to be computed subject to such exceptions, limitations and conditions provided in Sections 141B or thereinafter. It would be, therefore, correct to hold that provisions from Section 141AA to Section 141F form a complete code when tax has to be computed and paid on the carpet area method, and for such computation, reference cannot be made to the provisions of Sections 129 to 133 which relate to property tax payable on annual rateable value. This position is also made clear by Section 141F, which states that provisions of Section
140 and 141A shall apply in relation to property taxes levied under Section 141AA, subject to modifications specified in Appendix I-A. Therefore, only provisions of Section 140 and Section 141A have been made applicable when property tax is levied and is payable in terms of Section 141AA of the GPMC Act. Clause (b) to sub-section (1) of Section 132 of the GPMC Act is not attracted and cannot be relied upon when property tax is payable under Section 141AA of the GPMC Act. [Para 5][659B-F]
1.5 Rule 8B of the Taxation Rules, which relates to the increase and decrease of rate of property tax determined for ‘buildings other than residential’, refers to several factors which result in an increase or decrease, or neither increase nor decrease, in the rate of tax applicable to the carpet area. Subrule (1) to Rule 8B states that for the purpose of determining the rate of tax for buildings other than residential, the increase and decrease, or neither increase nor decrease, shall be in terms of sub-rules (2), (3), (4) and (5) to Rule 8B. Sub-rule (2) to Rule 8B relates to the ‘location factor’, sub-rule (3) to Rule 8B relates to the ‘age factor’, sub-rule (4) to Rule 8B deals with the ‘use factor’, and sub-rule (5) to Rule 8B deals with the ‘occupancy factor’. The said sub-rules (2) to (5) to Rule 8B specify the rate by the multipliers specified therein. In some cases, as in clause (b) to sub-rule (4) of Rule 8B relating to the ‘use factor’, it is stated that the designated rate shall be neither increased nor decreased, in respect of buildings used as specified therein, and in clause (c) to sub-rule (4) to Rule 8B, it is stipulated that the designated rate shall be decreased by a multiplier of 0.0 in respect of buildings used as specified therein. There are illustrations in sub-rule (7) to Rule 8B of the Taxation Rules, which elucidate the manner in which the computation is to be made under Rule 8B of the Taxation Rules. Sub-rule (2) to Rule 8D states that for the purpose of sub-rule (2) to Rule 8B, the Commissioner shall classify the area of the city in which the buildings other than residential buildings are situated into four classes, namely, I, II, III, and IV, having regard to the market value of the lands in the area. The classification so made shall be revised once every four years. Sub-rule (5) to Rule 8D states that for the purpose of sub-rule (4) to Rule 8B, the Commissioner shall have the power to decide which property would fall in the category mentioned in sub-rule (4)(a)(i)(ii)(iii) and (iv) and sub-rule (4)(b) and (c) of Rule 8B of the Taxation Rules. Rule 8C of the Taxation Rules deals with property tax for commercial and industrial units and states that the property tax shall be levied at the rates stipulated therein. [Para 6][659-G-H; 660-A-E]
1.6 Appellant No. 2 Trust was using portions of the property/building as a hospital or a clinic. In view thereof, sub-clause (i) to clause (a) to sub-rule (4) of Rule 8B of the Taxation Rules would be applicable and thereby, the designated rate has to be increased by applying the multiplier of 7.0. The contention of Appellant No.
2 Trust is that their clinic/hospital is being used for charitable purposes as the fee demanded from the patients and users is not the actual market fee. Reference in this regard is made to subclause (iv) to clause (a) to sub-rule (4) of Rule 8B of the Taxation Rules, whereby a multiplier of 2.0 is to be applied in respect of social institutes run by a public charitable trust for the welfare of women, old people, deaf, dumb and blind, physically handicapped and mentally retarded people. Clause (b) to sub-rule 4 of Rule 8B of the Taxation Rules, states that the designated rate shall neither be increased nor decreased when the building is used as grantable schools run by public charitable trusts, boardinglodging- hostels run by public charitable trusts, and religious institutions, dharma-shala, ashram, and library. As far as clause
(b) to sub-rule (4) of Rule 8B of the Taxation Rules is concerned, the same is clearly distinguishable, and the ‘use factor’ enlisted thereunder is a separate category; the category being grantable schools run by public charitable trusts, boarding- lodging-hostels run by public charitable trusts, and religious institutions, dharmashala, ashram, and library. Appellant No.2 Trust cannot claim any parity with the aforesaid ‘use factors’, even though the hospital/clinic run by them are run by public charitable trusts. Sub-clause
(i) to clause (a) to sub-rule (4) of Rule 8B of the Taxation Rules enlists all buildings used as hospitals, dispensaries, clinics, maternity homes, etc. They have all been classified under one head. No distinction is made whether they are run by public charitable trusts or not. The legislature is entitled to club and treat the buildings as per the ‘use factor’ alike without falling foul of the right to equality, as enshrined under Article 14 of the Constitution of India. [Paras 9-11][661-C-H; 662-A-B]
Manish Kumar v. Union of India and Others (2021) 5 SCC 1; State of Gujarat and Another v. Shri Ambica Mills Ltd., Ahmedabad and Another (1974) 4 SCC 656 : [1974] 3 SCR 760; State of Jammu and Kashmir v. Shri Triloki Nath Kosa and Others (1974) 1 SCC 19 : [1974] 1 SCR 771; Municipal Corporation of Delhi v.Children Book Trust (1992) 3 SCC 390 : [1992] 2 SCR 535; State of Bihar and Others v. Sachchidanand Kishore Prasad Sinha and Others (1995) 3 SCC 86 : [1995] 1 SCR 256; Twyford Tea Co. Ltd. and Another v. The State of Kerala and Another (1970) 1 SCC 189 : [1970] 3 SCR 383; R. K. Garg v. Union of India and Others (1981) 4 SCC 675 : [1982] 1 SCR 947; State of Kerala v. Haji K. Haji K. Kutty Naha and Others Etc. [1969] 1 SCR 645; Deputy Commissioner of Income Tax and Another v. Pepsi Foods Limited (2021) 7 SCC
413 : [1969] 1 SCR 645; State of Uttar Pradesh and Others v. Deepak Fertilizers & Petrochemical
Corporation Ltd. (2007) 10 SCC 342 : [2007] 6 SCR 525; Union of India and Others v. N.S. Rathnam and Sons (2015) 10 SCC 681 : [2015] 8 SCR 751; Ganga Sugar Corporation Ltd. v. State of Uttar Pradesh and Others (1980) 1 SCC 223 : [1980] 1 SCR 769 –
referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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