GUMAN MAL LODHA, J. - (1.) THESE sixty five writ petitions the particulars of which are given in the Schedule 15 and annexed to this order, raises question of law relating to constitutional validity of the provisions of Rajasthan Land and Buildings Taxes Act, 1964 (Act XVIII of 1964) as amended from time to time (hereinafter called 'the Act'). The land and building owners filed separate writ petitions in this Court challenging the validity of the Act.
(2.) THE first bunch of 46 writ petitions was decided by a Single Bench at Jaipur on May 11,1979. (S.B.C.W. No. 877/1973, S.M.S. Investment Corpora Hon Pvt. Ltn. v. State of Rajasthan The learned Single Judge allowed all the writ petitions in part and his findings were as under: (a) The original Section 3 of the Rajasthan Land and Building Tax Act, 1964 as it was enacted by the Legislature in 1964 is valid and cover -ded by entry No. 49 of List II of Schedule VII of the Constitution. (b) Second proviso of Section 3 as introduced by the Rajasthan Amendment Act No. 15/78 by which the market value of such lands and buildings were to be taken together, is ultra vires as it was outside the legislative competence of the State Legislature, to have eneacted law under entry 86 of List I of the Schedule VII. This proviso levies tax on aggregated or total or composite market value of all lands and buildings of a citizen and is, therefore, outside the scope of entry 49 of List II of Schedule VII. (c) Section 2 as amended by Act No. 15 of 1973 is still intra vires, because the'above proviso is severable from the rest of the charging Section 3. The doctrine of severability can be applied even though the proviso has been declared ultra vires because of legislative incompetence, This proviso has been deleted by Act No. 18 of 1973. (d) Section 3 as it stands in the present form after Amendment Act No. 18 of 1973, is within legislative competence of State Legislature, being covered by entry 49 of List II of Schedule VII. (e) Clause (A -1) of Section 3 as it now stands mentioning that for removal of doubt, it is declared that the tax shall be levied on lands or buildings or both separately as units, is violative of Article 14 of the Constitution as units are not defined and the use of the word 'both' makes the meaning of it obscure, giving arbitrary and naked discretion to the assessing authority to discriminate between the assessee at their whims and caprice. In that view of the matter this Sub -section (A -l) can permit aggregation of the market value of all lands or buildings and, therefore, is also outside legislative competence of entry 49. (f) The absence of definition of 'unit' has created obscurity and resulted in contradictory judgments of assessing authorities but on that account, Section 3 cannot be declared invalid. The Government circulars dated 16 -12 -74 of Dy. Director of Lands and Buildings Tax Deptt. Rajasthan, Jaipur and dated 27 -12 -74 of Director of Lands and Buildings Tax Deptt. Rajasthan Jaipur for treating all lands and buildings as one unit which are used for one common functional purpose of one owner, are against the charging section 3 and, therefore, are quashed. (g) Section 3 as covered by entry 49 levies tax on each land and each building as separate unit, and neither two lands nor two buildings nor two or more lands and buildings can be aggregated or joined together for assessment for market value. (h) The assessing authorities can keep building and the land appurtenant there to the extent it is required to be kept open by the rules or bye laws of the local authorities only, as one unit and the additional land is to be treated as separate unit. So also merely beeause there are many buildings joined together but each one will have to be treated separate unit; (i) Section 4 of the Rajasthan Land and Building Tax Act or 1964 as amended upto date, it not violative of Article 14 of the Constitution of India and is consequently declared intra vires; (j) Provision of appeal and revision contained in Sections 16, 18 and 19 of the above Act are also valid of the Act and can not be declared invalid simply because the law requires that tax is to be deposited as a pre -requisite condition for filing the appeal or revisions; (k) The respondents are directed to rec insider the impugned orders of assessments of the petitioners, in order to give effect to the principles enunciated above in this judgment to the extent they apply to the individual cases of the petitioners. The learned Advocate General has also undertaken to get them reconsidered as per this judgment; (l) All other objections raised in individual writ petitions, which have not been decided by this judgment, have neither been waived nor deemed to be rejected. It would be open to the petitioners to raise them in future separate proceedings, including writ petitions and leave is granted for the same. Both the State of Rajasthan and the petitioners in those cases feeling aggrieved from the aforesaid order of the single Judge filed 58 special appeals which were decided by a Division Bench at Jaipur on March 31,1980. (D.B. Civil Special Appeal No, 75/1979, S.M.S. Investment Corporation Pvt. Ltd. v. State of Rajasthan. That Division Bench reversed the judgment of the Single Bench and held that the provisions of the Act including the various amendments were valid.
(3.) IN other respects a number of findings of the single Judge were confirmed by the Division Bench. Apart from holding that the Act is valid, the finding of the Division Bench can be extracted as under:.This land may separately be taxed as a unit and similarly a building can separately be taxed as a unit. But land and building both shall be taxed together only with they form one unit, namely when land in form of garden or ground is appurtenant to the building and forms an integra part thereof. In the last mentioned case, the land or building cannot be separately taxed, as they together constitute one unit..' (b) ...It may be made clear that Section 3(1A) does not permit the aggregation or clubbing together of units, but what it merely allows is the inclusion of such land, which is either enclosed by walls or is annexed to the building or a compund or a garden appurtenant to the building and which forms an integral part of the building as a unit.... (e) ...The emphasis is on the levy of tax on unit and as held by the learned Single Judge himself that each land is liable to be taxed as a separate unit and each building is similarly liable to be taxed as a unit, but land and building can be taxed together only in case they form one unit. ] (d) ...In our view, the land constituting as integral part of the building, such as garden or ground appurtenant to the building and has been used for the purposes of the main building, such as gar -rages, servant quarters, lawns, tennis or Badminton courts, passages etc. which are necessary for the proper enjoyment of the building or is otherwise appurtenant thereto, can be joined along with the building so as to constitute one unit and that is why Sub -section (1 A) purposefully speaks of 'land and building' both as a unit'. If land and building do not together form a unit, then they cannot be clubbed together but such ground or garden which is appurtenant to the building so as to form part and parcel of the building can only be aggregated along with it so as to constitute one unit....' (e) ...Land and building which are incapable of yielding rent profit, are also exempted from payment of tax. But the industrial establishments cannot be taken out of the purview of the enactment....' (f) ...Thus, if lands and buildings stand separately then naturally they would not form one unit. In the Anand Mills Co. Ltd. etc. v. The State of Gujarat (15) it was held that Entry 49 of List II contemplates a levy of tax on lands and buildings or both as units, and such a tax is directly imposed on lands and buildings. In that case, question was as to whether land extends upwards and also down wards and it was held that land must be under stood in the widest possible sense and it includes not only the surface of the earth, but every thing under it or over it and that land exists upwards as well as downwards. n In the case of Government of Andhra Pradesh and another vs. Hindustan Machine Tools Ltd. (16), the matter related to the levy of sales tax by a Gram Panchayat, it was held by their Lordships of the Supreme Court that the levy of house tax on buildings came within the scope of Entry 49 of List II. If tax is levied only on the buildings of a factory and not on the machinery and furniture, then such tax would fall under entry 40 of the list II. Their Lordships also held that the power of tax a building could be exercised without reference to the use to which the building is put and it is irrelevant for that purpose that the building is occupied by factory which cannot conduct its activities without the machinery and furniture. As building falls legitimately within the scope of entry 49 of list II, the building of a factory can lawfully form the subject matter of legislation by the State Legislature, so long as no attempt is made to levy or collect tax in respect of machinery and furniture of such factory. Thus, an industrial establishment would squarely fall within the definition of building, as contained in Section 2 of the Act, so far as the structure and the land over which it is standing and the land enclosed within such structure or appurtenant there to and occupied by such industrial establishmrnt, cannot constitute part of the building for the purpose of imposing tax under the Act.... (g) ...If the State Government or a local authority is the owner of such land on which the depots of Indian Oil Corporation are situated such lands may be exempted from payment of tax under the Act, unless they may fall within the proviso to Clause (10) of Section 2 of the Act. (h) In the case of land or building owned by the State Government, a licensee or a grantee there of from the State Government shall be deemed to be the owner of such land or building for the purposes of the Act and the Indian Oil Corporation as a licensee or grantee holding land fromt he State Government, will not be entitled to get the benefit of the provisions of Section 6 of the Act, unless it holds a lease of the land in question. However, if the Indian Oil Corporation does not hold the land as a lessee: or grantee from the State Government but it holds the same as a lessee of the Central Government or of the Urban Improvement Trust, then it would be deemed to be the owner of such land if it holds a lease for a term of 30 years or more.... (i) ...Thus, in a case of licence or lease from the Central Government or a local authority for a period not less than 30 years, the tax under the Act does not become not payable. But if the lease is for a period of 30 years or for a period exceeding 30 years, the lessee shall be deemed to be the owner of such land or building for the purposes of the Act and would be liable to the payment or tax under the Act (j) ...It follows that the assessing authority is required to find out the value which the building, including the super -structure and the land underneath and appurtenant to the building would fetch if the same is sold as one unit in the open market. In our view, where a number of buildings are situated within the same compound or the buildings are constructed without any compound, the unit must have nexus to the object of taxation, which as we have already observed above, is land alone or a building alone or land and building both forming one unit. Building or land has to be taxed separately and only with a building, which is either enclosed within it or is appurtenant thereto such land can be aggregated as to constitute an interal part of the said building, forming one unit.... (k) ...We are, therefore, unable to accept the interpretation sought to be placed both by the Director as well as by the Deputy Director of the Lands and Buildings Department, in their afore said circulars, as the said circulars do not correctly interpret the provisions of Section 3 of the Act. (l) ...tax can be levied separately on land alone or on building alone or on land and building both constituting one unit, inclusive of the fabric and the ground on which the walls of the structure stand and the land enclosed within such walls and the appurtenant thereto so as to form an internal part thereof and an artificial delimitation in accordance with the Municipal bye -laws or rules or bye -laws of other local authorities cannot be utilised for demarcating portions of land appurtenant to a building in two separate units. The assessing authority shall have to investigate in each case as to how much of the land appurtenant to the building so as to constitute one unit. The circular issued by the Director and the Deputy Director of the Lands and Buildings Department, Rajasthan, Jaipur referred to above are quashed. After levying down the above principles the Division Bench observed as Under, - -.If the assessment orders passed in the cases of the writ petitioners are not in accordance with the principles enunciated above, the petitioners would be at liberty to approach the concerned assessing authority for reconsideration of those assessment orders in the light of the legal position explained above. All other objections raised by the writ -petitioners except those relating to the question of validity of the Act have been left open by us, as was done by the learned Single Judge and it would be open to the writ petitioners to raise all such objections before the concerned authorities in any pending or future proceedings. ;