AHMEDABAD MANUFACTURING AND CALICO PRINTING CO LIMITED AHMEDABAD Vs. STATE OF GUJARAT

JUDGEMENT

(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:

(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.