V.Bhargava, J. - (1.) I have had the benefit of reading the judgment proposed to be delivered by my brother J. Sahai, J., and I entirely agree with him on all the points dealt with by him and the reasons given by him. I may, however, add, that I have felt considerable difficulty on one aspect of the case which relates to the submission of Messrs, Pathak and Jagdish Swarup that the provisions of the U.P. Large Land Holdings Tax Act, 1957 (hereinafter referred to as the Act) as also the schedule to the Act show that it is a lax not on land but on the person who holds the land. The Act undoubtedly lays down that a person having a small area of land has to pay proportionately a small amount of tax but, if the same and is held by another person who already holds a vast area of land, that very small portion of land would be assessed to a higher amount of tax. The incidence of tax is thus not dependent entirely on characteristics of the land itself, such as its area, quality of soil or value whether rental, annual or capitalised. Such characteristics remaining common, the same parcel of land under the Act gives rise to a larger liability of tax if it happens to be held by a person who already holds other lands as compared with the liability when the land is held by a person who does not hold any other lands, IB would appear in these circumstances that the manner, in which the tax incidence has been imposed by the Act, lends support to the view that this Act taxes not the land itself but the person holding the land, treating the land as an asset held by him; The question that arises is whether such a tax still is a tax on land and not a tax on an individual in respect of his capital assets comprised of land. It also appeared to me that this argument finds some support from the judgment of the Bombay High Court in Municipal Commissioner, Ahmedabad v. Gordhandas Hargovandas, AIR 1954 Bom 188, where the vires of Rule 350 A, which was framed under Section 73 of Bombay Act XVII of 1926, was challenged. The plaintiffs in that case were owners of open land within the jurisdiction of the Corporation and were assessed to tax on the basis of that rule. The contention before the Bombay High Court was that the tax, which was sought to be levied, was in the nature of a capital levy and the Bombay Legislature was not authorised to impose such a tax under entry No. 42 of List II of Schedule VII at the Government of India Act, 1935, and that the relevant entry, under which such a tax could be imposed, was entry No. 55 of List I of Schedule VII of the Government of India Act, 1935, so that the Central Legislature alone had the power to impose such a fax. When discussing this aspect of the case, Gajendragadkar J. held as follows : "I am disposed to hold that a distinction must be made between a rate or tax which is levied on land on the basis of its capital value and a tax which is levied on the capital value of the land treating it as an asset itself." Reliance was placed on this comment for the submission that, in the present case, the fact that the incidence of tax varies with the extent of holdings of lands by an individual means that the Act taxes the landholdings treating them as assets of the landholders and is, therefore, beyond the competence of the State Legislature which could only Impose a tax on land. On a careful consideration of this submission, however, I have felt inclined to take the view that this argument must also be rejected. The first reason is that, as pointed out by my brother J. Sahai, J., there is no material For coming to a finding that the annual value of a landholding, as calculated under the provisions of the Act, does represent the capital value of the landholding. The second reason, which has appealed even more to me, is that it is difficult to hold that the mere fact that the incidence of tax is made dependent on the extent of landholding of a particular landholder would convert a tax, which otherwise would be a tax on land, into a tax on the capital assets of the landholder in respect of his land-holdings. In this connection, a parallel is provided by the entry relating to taxes on income under which the Indian Income-tax Act was enacted. That entry also does not contain any provision that the tax to be imposed must be a tax on a person in respect of his income. The entry specifically permits imposition of taxes on income. In the case of the Central Legislature, the entry is No. 82 of. List I in the Seventh Schedule to the Constitution permitting imposition of taxes on income other than agricultural income. In the case of the States, the entry is No. 46 of List II of the Seventh Schedule to the Constitution permitting imposition of taxes on agricultural income. The Indian Income-tax Act, 1939, which was enacted under entry No. 54 of List I of Schedule VII of the Government of India Act, 1935, corresponding to entry No. 82 of List I of the Seventh Schedule to the Constitution, in prescribing the incidence of tax of incomes, follows a scheme which is very similar to the scheme for imposition of tax on landholdings under the Act. The amount of income-tax on a particular income under the Income-tax Act does not depend entirely on the various characteristics of income itself, such as the extent of the income or the source of the income. Under the slab system introduced in that Act, the amount of tax imposed on the same income from the same source can be larger if the income is earned by an individual who has larger income from other sources whereas it would be smaller if the income is earned by another person who has no other source of income. If the submission made by Messrs. Pathak and Jagdish Swarup were to be accepted it would have to be held that even the Income-tax Act imposes a tax which is not covered by entry No. 82 of List I of the Seventh Schedule to the Constitution which permits imposition of taxes on income but imposes a tax on a person depending upon the amounts of income earned by him. It has, however, never been disputed that the tax on income imposed by the Income-tax Act is not a tax on income, so that the mere fact that the incidence of tax on an income is made dependent on other incomes being held by the person in whose hands the income is sought to be taxed does not change the nature of the tax and it continues to be a tax on income. On that analogy, a tax, which is a tax on land, will continue to be a tax on land even though the incidence of the tax on the land depends upon the extent of holdings of land by the landholder. I have indicated these additional reasons which have impelled me to agree with the conclusions arrived at by my brother J. Sahai, J. Jagdish Sahai, J.
(2.) These are 66 writ petitions and one special appeal in which the validity of the U. P. Large Land Holdings Tax Act, 1957, (hereinafter called the Act) has been challenged on several grounds. We have heard Messrs. G.S. Pathak, Jagdish Swarup, Rama Shanker Prasad and S. C. Khare on behalf of the petitioners. The other counsel appearing in these petitions made a statement that they had nothing to add to the arguments already addressed by the learned counsel mentioned above. Mr. Pathak who has led the arguments has challenged the validity of the Act on the following three grounds : -- (1) that the tax was on the capitalised value of land and the U. P. Legislature was not competent to pass the Act; (2) that there is a delegation of essential legislative functions by the U. P. Legislature and as such the impugned Act is ultra vires; and (3) that the incidence of taxation is so high that the tax is confiscatory in nature and imposes unreasonable restrictions on the fundamental rights guaranteed to the petitioners under Clauses (f) and (g) of Article 19 (1) of the Constitution of India. Mr. Jagdish Swarup has also made the same submissions but in a different way, Mr. Rama Shanker Prasad contended that the tax to be levied by the impugned Act is nothing but land revenue and inasmuch as Ss. 251 and 267 of the U. P. Zamindari Abolition and Land Reforms Act provided that the land revenue of a Bhumidar cannot be increased, the effect of the Act would be that the same would be considerably increased in the name of a tax. It is also contended by him that there cannot be two statutes for the recovery of the same tax and, in any case, the land revenue cannot be recovered twice over from the same person. In the end he has submitted that inasmuch as Section 7 of the Act gives the power of making assessment to the same person who issues the notice asking for the return, the assessing authority becomes a judge of his own cause and on that ground the provisions of Section 7 are invalid. Mr. Khare submitted that the Act is hit by Article 14 of the Constitution of India inasmuch as there is discrimination between the agricultural and non-agricultural land and between land and other forms of property. He has also reiterated the submissions of Mr. Pathak.
(3.) I will first take the submissions of Mr. Pathak about the competency of the U. P. Legislature to enact the law. The long title of the Act is as follows : "An Act to provide for the imposition and collection of a tax on large land holdings." The preamble of the Act is as follows-: "Whereas it is expedient to provide for the imposition and collection of a tax on large land holdings; It is hereby enacted in the Eighth year of the Republic of India as follows :" The Act received the assent of the President on 15th October, 1957. Section 3 of the Act which is the charging section falls under Chapter II which is headed as "Imposition of Holding Tax". The said section reads as follows : "3 (1) There shall, save as hereinafter provided, be charged, levied and paid, for each agricultural year, on the annual value of each land holding, a tax, hereinafter called the 'Holding Tax' at the rates specified in the Schedule : Provided that no such tax shall be charged on any land holding the area whereof does not exceed thirty acres. (2) The State Government may, by notification in the official Gazette, exempt or remit in whole or in part, for such period as it may think fit and as often as it may consider necessary, the Holding Tax chargeable under Sub-section (1) in respect of any class or classes of land holding as may be prescribed. . (3) For the purposes of computing the area of land under the proviso to Sub-section (1) the land covered by building with the area appurtenant thereto, but not exceeding five acres shall be excluded," The submission of Mr. Pathak is that the language of Section 3, i.e., the charging section, is unambiguous and a correct reading of the section leads to the conclusion that the object of taxation is the annual value of the holding and not the holding itself. In this connection it is submitted that the annual value is actually the capital value of the holding and as such the tax could not be imposed by the U, P. Legislature. Mr. Pathak has also contended that it is a well known rule of interpretation of fiscal statutes that for the determination of the question as to what is the object of the tax, the charging section alone must be looked into if the language of that section is unambiguous and it is not permissible to look into the machinery sections in order to find out as to what is the subject-matter of taxation. Mr. Pathak has also submitted that even the proviso to Sub-section (1) of Section 3 should not be looked into for determining the object of the tax, because, according to him, the proviso is redundant for contradictory to the enacting clause in Section 3 (1) of the Act. I will come to the question as to whether or not it is permissible to look to the Act as a whole to find out as to what is the object of taxation and also to the effect of the proviso in the present case at a later stage, and for the present would content myself with the consideration of the language of Section 3 (1) of the Act without the proviso. After having carefully examined the provisions of Section 3 of the Act I have come to the conclusion that the object of the tax is not the annual value of each land holding but the holding itself or, in other words, the land. I will for the present even leave aside the effect of the proviso to Sub-section (1) of Section 3 of the Act.;