Hidayatullah, J. - (1.) These are twelve Writ Petitions by diverse textile mills and other factories of Ahmedabad challenging the imposition of the Education Cess pursuant to the Gujarat Education Cess Act, 1962. As the contents of all petitions are the same, it will be sufficient if we refer to the petition filed by the Ahmedabad Manufacturing and Calico Printing Co. Ltd. (Writ Petition No. 12 of 1967). Before we do so, we shall state the scheme of the Cess Act relevant to the present purpose.
(2.) On October 9, 1962, the Gujarat Education Cess Act, 1962 became law. It is an Act to provide for the creation of a fund to promote education in the State of Gujarat. The Act applies to the City of Ahmedabad as constituted under the Bombay Provincial Municipal Corporations Act, 1949. Under the Cess Act, education cess is levied on lands and buildings which have the meanings given to them under the relevant Local Authority Law, here the Corporation Act. "Land", however, includes things attached to earth or permanently fastened to anything attached to the earth. Education cess is collected either as a surcharge on lands assessed to land revenue or a tax on lands and buildings in urban areas and the charging section reads: "S. 3:For the purpose of providing for the cost of promoting education in the State of Gujarat, there shall be levied and collected in accordance with the provisions of this Act and education cess which shall consist of - (a) a surcharge on all lands except lands which are included within a village site and not assessed to land revenue: (b) a tax on lands and buildings in urban areas". "Village Site" means the site of a village, town or city determined under S. 126 of the relevant Code which in this case is the Bombay Land Revenue Code, 1879 and "urban area" means an area which is for the time being included in the limits of a city, municipal borough etc. The mode of calculation of the surcharge and of the tax and of their collection are contained in chapters III and IV. Chapter III deals with surcharge on land and is divided into two parts A and B. Part A deals with surcharge on agricultural lands and part B deals with surcharge on lands used for non-agricultural purposes. Chapter IV deals with tax on lands and buildings. For the purposes of the present writ petitions, we shall have occasion to refer to S. 5 from Part A and S. 7 from Part B of Ch. III and S. 12 from Ch. IV. Under S. 5, a surcharge is levied at the rate of 20 paise on every rupee of every sum assessed as land revenue on all lands (except lands included within a village site and not assessed to land revenue) which are assessed or held for the purpose of agriculture and not used for any purpose unconnected with agriculture. In simple language, it means the surcharge is 20 per cent of the amount of land revenue assessed on land not within a village site, not assessed to land revenue, and not used for any purpose unconnected with agriculture. Under S. 7, the surcharge is additional to non-agricultural assessment of agricultural lands used for non-agricultural purposes. The surcharge here ranges from 121/2 per cent to 75 per cent of the non-agricultural assessment depending on the kind of non-agricultural use of the land Under Section 12, a tax on lands and buildings situated in urban urea is levied at varying rates depending on the use to which the lands and buildings are put. In every case, the tax is a percentage of the annual letting value which means the rateable value of annual letting value or gross annual letting value of lands and buildings determined in accordance with the relevant local authority law which as stated earlier is the Corporation Act. The rate applicable to lands and buildings used for purposes of trade, commerce, industry, profession or business is 3 per cent of the annual letting value. It has now been raised to 4.5 per cent from October 1, 1965.
(3.) Annual letting value for the purpose of S. 12 is determined upon and pursuant to the preparation of an assessment book relating to the property section under the Corporation Act. According to the assessment book, the-annual letting value for the purpose of levying property tax on textile mills, factories, buildings of universities etc. is made on the basis of a flat rate of a monthly rental of Rs. 6-10 as. for the processing portion and Rs. 5-4 as. for the non-processing portion per 100 sq. foot of the floor area of such property situated in the urban area. Education cess is calculated on the basis of the annual letting value determined in the assessment book by applying the percentage. The details of the working of the system are fully described by our brother Mitter, in his judgment in Writ Petitions Nos. 133, 156-157, 159-171, 178, 206-209, 210 and 234 of 1966 decided on February 21, 1967 where these mills and factories have successfully challenged the assessment book. By the decision of this Court, the floor area method of determining the annual letting value of textile factories in Ahmedabad has been held to be bad, because the contractor's basis which is usually applied in such calculations was not applied and the system actually adopted was likely to lead to discrimination. The inclusion of plant and machinery has also been held to be illegal as the power of the State Legislature to tax lands and buildings does not include a power to tax plant and machinery and the powers of the Corporation are co-terminus with those of the State Legislature by reason of S. 127 (4) of the Corporation Act.;