JAGAT NARAIN, J. - (1.) THIS is a writ petition under Article 226 of the Constitution of India by one Mohanlal Daga in which the constitutionality of Section 104 of the Rajasthan Municipalities Act, 1959, has been challenged. The petition has been referred for decision by a learned Single Judge to the Division Bench. Section 104 runs as follows: 104. Obligatory taxes - -Every Board shall levy, at such rate and from such date as the State Government may in each case direct by notification in the official Gaeztte and in such manner as is laid down in this Act and as may be provided in the rules made by the State Government in this behalf, the following taxes, namely: (1) a tax on the annual letting value of buildings or lands or both, situated within the municipality: (2) an octroi on goods and animals brought within the limits of the municipality for consumption, use or sale therein; and (3) a tax on professions and vocations: provided that - - (a) the tax under clause (i) shall not be levied - - (i) on kham houses, or (ii) on buildings or lands or both, of which annual letting value is less than one hundred and eighty rupees. (b) the tax under Clause (2) shall not be on a motor vehicle as defined in the Motor Vehicles Act, 1939 (Central Act IV of 1939) or any other mechanically propelled vehicle, and; (c) the tax under Clause (3) shall not be levied on artisans: Provided further that, upon a representation made to it by, and at the request of a Board, the State Government, if it is satisfied that circumstances exist which sufficiently provide the justification for a Board not to levy, or to stop the levy of any of the taxes mentioned in this section, may, by special order published in the official Gazette, along with the reasons for making such order, permit the Board not to levy, or to stop the levy of, any such tax.
(2.) THE contention on behalf of the petitioner is that under the section the Legislature has practically effaced itself in the matter of fixation of rates and it did not give any guidance either under the section or under any of the provisions of the Act. Under the Rajasthan Municipalities Act, 1959, taxes have been classified into obligatory taxes and optional taxes. Section 104 deals with obligatory taxes which every Board is required to impose, at such rate and from such date as the State Government may direct. Section 105 deals with optional taxes which the Board may impose or may not impose. With regard to the optional taxes detailed procedure is prescribed for imposing them. The Board is required to pass a resolution at a general meeting proposing the tax This resolution has to be published and objections invited against it. The Board is required to consider these objections and submit its final proposals to the State Government for approval. The State Government have power to refuse to sanction the proposals or to modify them. It is after undergoing this quasi judicial procedure that the tax can be levied. In the case of obligatory taxes, the State Government is not required to consult the residents of the municipality before imposing them. Several decided cases were referred to by the learned counsel for the petitioner.
(3.) IN Gopal Narain v. State of Uttar Pradesh : [1964]4SCR869 , the validity of Section 131. of the U P. Municipalities Act was upheld inter aliaon the ground that the rate to be imposed and the persons or the class of the persons liable to pay the same are ascertained by a quasi judicial procedure after giving opportunity to the parties affected, subject to the revision by the State Government and it cannot, therefore, be said that the power conferred upon the Municipal Board is an arbitrary power offending Article 14 of the Constitution. In M/s. Devi Das v. State of Punjab : [1967]3SCR557 under Section 5 of the Punjab General Sales Tax Act, 1948, as it originally stood, power was conferred on the Provincial Government to levy every year on the taxable turnover of a dealer a tax at such rates as the said Government might direct. It was held that the Legislature practically effaced itself in the matter of fixation of rates and it did not give any guidance either under the section or under any other provisions of the Act. Section 5 was accordingly declared to be void. In this case a reference was made to the decision in Corporation of Calcutta v. Liberty Cinema : [1965]2SCR477 , which related to a levy imposed on cinema houses under the Calcutta Municipal Act. The Act left it to the discretion of the Corporation to fix the rate. The majority held in that case that guidance was found in the monetary needs of the Municipality for discharging the functions entrusted to it under the Act. Sarkar J., speaking for the majority said thus: It has to perform various statutory functions It is often given power to decide when and in what manner the functions are to be performed. For all this it needs money and its needs will vary from time to time with the prevailing exigencies. Its power to collect tax, however, is necessarily limited by the expenses required to discharge those functions. It has, therefore, where rates have not been specified in the statute to fix such rates as may be necessary to meet its needs. That, we think, would be sufficient guidance to make the exercise of its power to fix the rates valid.;