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PETITIONER:

LT. COL. SAWAI BHAWANI SINGH ETC. ETC.

Vs.

RESPONDENT:

THE STATE OF RAJASTHAN & OTHERS

DATE OF JUDGMENT: 06/02/1996

BENCH:

MADAN MOHAN PUNCHHI, K. RAMASWAMY,

ACT:

HEADNOTE:

JUDGMENT:

J U D G M E N T

Punchhi, J.

When a legislative enactment is caused an amendment

beyond the competence of the legislature and the mistake is

corrected by another amendment to bring the enactment back

within its competence, can the entire legislation, original

as well as ambulatory be said to be "still-born" and thus

unenforceable, is the significant question which falls for

determination in this group of cases.

It will be necessary to refer to the legislative

history of the questioned provisions. In the year 1964, the

Rajasthan State legislature enacted a measure called the

Rajasthan Urban Lands Tax Act (Act No.18 of 1964)

[hereinafter referred to as the "Principal Act"], to provide

for levy of tax alone on "urban lands" in the State of

Rajasthan. The Act then did not levy tax on buildings though

within the competence of the legislature. The Principal Act

was not enforced till l973, when amendment was caused

thereto by the Amending Act No. 15 of 1973 bringing about

drastic changes in the Act, of far reaching consequences. By

virtue of this Amendment Act, tax was sought to be levied or

imposed upon both lands and buildings in the urban areas of

the State of Rajasthan. The Principal Act and the Amending

Act were made enforceable with effect from April 1 l973. A

private corporation challenged the constitutional validity

of the Act as amended, in the High Court of Rajasthan. The

State Government perhaps realizing the flaws in the Amending

Act No. 15 of 1973, had the Governor of the State issue on

June 23, 1973, an Ordinance No. 6 of 1973 bringing about

corrective changes in the provisions, (reference to which

will be made later) which Ordinance was replaced by the

Amending Act No. 18 of 1973, which came into force on

November 10, 1973 but effective from l-4-73. The rates of

tax as applicable with effect from April 1, 1973 were

changed subsequently by the Rajasthan Finance Act of 1977

(Act No.2 of 1977) causing necessary amendments in the

charging section of the Principal Act.

Section 3 of the Principal Act, as it was originally

enacted, reads as under:

"3. Levy of Urban land tax:(1) Subject

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to the other provisions contained in

this Act, there shall be levied and

collected for each year a tax on Urban

lands (hereinafter referred to as the

Urban Land tax) from every owner of

urban Land at such rate not exceeding 2%

of the market value of such urban land

as determined under Section 4, as the

State Government may by Notification in

the Official Gazette declare in this

respect.

Provided that the State Government may

fix graduated rates of tax on different

slabs of market value of urban lands.

Provided further that no tax shall be

levied on any urban land if the owner

thereof or his predecessor in interest

has acquired such land by transfer from

the Government or any local authority

within a period of two years immediately

preceding the year for which the tax is

levied.

(2) The tax shall be in addition to any

other tax for the time being payable in

respect of the urban land or portion

thereof under any other law for the time

being in force.

This Section 3 was subsequently substituted by the following

provision, by Section 4 of the Amending Act No.15 of 1973.

with effect from April 1, 1973.

"3. Levy of lands and buildings tax:(1)

There shall be levied and collected,

with effect on and from 1st April, 1973,

for each year a tax on lands and

buildings situate in an urban area,

(hereinafter referred to as the lands

and buildings tax) from the owner of

such lands and buildings at such rates

not exceeding 2% of the market value

thereof as the State Government may, by

notification in the official gazette

declare in this behalf.

Provided that the State Government may

fix graduated rates of tax on different

slabs of market values of urban lands

and buildings.

Provided further that until a

notification declaring rates of tax is

issued under this sub-section, the rates

of tax on lands and buildings shall be

as follows:

On First Rs.50,000/- of the market value

of the lands and buildings - NIL

On the balance of the market value of

the lands and buildings - 1/4%

Provided further that if any area is

declared a cantonments, or is

constituted a municipality, after the

commencement of Rajasthan Urban

Land Tax (Amendment) Act, 1973, the tax

on lands and buildings situate in such

area shall be levied and collected with

effect from the commencement of the year

following the year during which the area

is declared a cantonment or is

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constituted a municipality.

Provided also that where more than one

land or building in the same urban area

is owned by the same Person, the land

and building tax shall be assessed on

the market value of all such lands and

building taken together.

(2) The tax shall be in addition to any

other tax for the time being payable in

respect of the land and building or

portion thereof under any other law for

the time being in force."

By Amending Ordinance VI of 1973, which was later replaced

by Amending Act No.18 of 1973, the last proviso to sub-

section (1) of Section 3 was omitted and it was provided

that the same shall be deemed always to have been omitted

and the following sub-section (1)A was inserted

retrospectively after sub-section ((1) of Section 3.

"(1)A - For removal of doubt it is

declared that the tax shall be levied on

land or building or both separately as

units."

Section 4 of the Principal Act, as it was originally enacted

in the year 1964, was under:

"4. Determination of market value:

(1) The Assessing Authority shall

determine in the prescribed manner the

market value of the urban land liable to

be taxed under this Act.

(2) The Assessing Authority in

determining the market value shall have

regard to the following matters, namely:

(a) the locality in which urban land is

situated.

(b) the predominant use to which the

urban land is likely to be put, that is

to say, industrial commercial or

residential.

(c) accessability or proximity to market

dispensary, hospital, railway station,

educational institutions, or

Government offices.

(d) such other matter as may be

prescribed."

This Section was also substituted by the under mentioned

provision by Section 5 of the Amending Act No.15 of 1973:

"4. Determination of market value - For

purpose of this Act, the market value of

any land or building or both shall be

estimated to be the price which in the

opinion of the assessing authority such

land or buildings or both would have

reached, if sold in the open market on

the date of the commencement of the

Rajasthan Urban Land Tax (Amendment)Act,

1973."

The relevant portion of charging Section 3, as it

stands, after the amendments made therein by Act No.18 of

1973 and Act No.2 of 1977, runs as under:

"Provided further that until a

notification declaring rate of tax is

issued under this sub-section, the rate

of tax on lands and buildings shall be

as follows:

On the first Rs.50,000/- of the market

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value of the land and building - NIL

On the balance of the market value of

the land and buildings 1.4%

Provided further that if any area is

declared a cantonment, or is constituted

a municipality, after the commencement

of Rajasthan Urban Land Tax amendment)

Act, 1973, the tax on lands and

buildings situate in such area shall be

levied and collected with effect

from the commencement of the year

following the year during which the area

is declared a cantonment or is

constituted a municipality.

(1-A) For removal of doubt it is

declared that the tax shall be levied on

land or building or both separately as

units."

The challenge was batched up in 42 writ petitions,

which were decided by a common order by a learned Single

Judge of the High Court on May 11, 1979. The learned Single

Judge allowed all the writ petitions in part, leaving both

the writ petitioners as well as the state of Rajasthan

aggrieved. 59 special appeals were thus filed before a

Division Bench of the High Court which was disposed of by a

common order whereby the appeals of the State were allowed.

appeals of the writ petitioners were dismissed and as a

consequence the writ petitions were dismissed in their

entirety. Thus on granting leave in the present batch of

appeals before us, the only question raised by learned

counsel and regarding which written submissions have been

submitted to us is whether or not the Principal Act No.18 of

1964 was by itself invalid, more so after its amendment by

Amending Act No. 15 of 1973 rendering it further void

because it was beyond the legislative competence of the

State Legislature. The argument is that since levy of tax on

all lands and buildings of a person taken together under the

charging sections 3 and 4 in the enacted provisions were

outsides the legislative competence of the State

Legislature, the entire measure was a piece of "still-born"

legislation,

incapable, because inseperatability of being enlivened after

its amendment by the Amending Ordinance No. 6 of 1973 and

the subsequent Amending Act 13 of 1973. The view of the

learned Single Judge was that the Principal Act as enacted

in 1964 was a valid piece of legislation and was fully

covered by Entry 49, List II as it stood in the 7th Schedule

of the Constitution. The learned Single Judge was further of

the view that the Amending Act 15 of 1973 had brought in the

Principal Act the offensive material which was beyond the

legislative competence to the State Legislature, but since

that material was severable from the remaining provisions of

the charging Section 3, therefore the healthy portion of

Section 3 together with the other provisions of the Act was

valid, except the last proviso to Section 3(1), which was

subsequently deleted by Amending Act 18 of 1973. The Hon'ble

Judges of the Division Bench, improving the view of the

learned Single Judge, went on to say that the last proviso

to Sub-section (1) of Section 3 was also separable from the

rest of the provisions of the said Section and after

striking out the invalid portion, namely, the last proviso

to Sub- section (1) of Section 3, the remaining portion of

Section 3 contains a complete Code in itself and is workable

without reference to and notwithstanding that a portion

thereof is unenforceable. The Bench also took the view that

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for the purpose of separability, it was immaterial as to

whether the invalid and valid portions sere enacted in the

same Section or in different sections, because what is

important is the substance of the matter, the form being

immaterial. Noticeably Ordinance 6 of 1973/Act 18 of 1973

had omitted the last proviso to Sub-section (1) of Section 3

with retrospective effect, thus keeping the remaining

portion of Section 3 presenting a workable scheme without

affecting its validity. On the deletion of the last proviso

to Sub-section (l) of Section 3, the charging provision was

expressly clarified by adding a new Sub-section (1)A thereto

which declared that the tax shall be levied on lands and

buildings or on both separately as units.

It is now well settled that as per Entry 49 of List II,

the State Legislature is competent to impose tax either on

lands or on buildings or on both. A land or building or both

of a person may be subjected to direct tax by the State

legislature under Entry 49 of List II and may also be

subject matter of direct tax as a component of his total

assets, like Wealth-tax by the Union legislature as

mentioned in Entry 86 of List I. These two taxes are

separate and distinct in nature and it cannot be said that

there was any overlapping, or that the State Legislature was

not competent to levy such tax on lands and buildings merely

on the ground that they have been subjected to another tax

as a component of the total assets of the person concerned.

See in this connection, a seven member Bench decision of

this Court in Union of India vs. H.S. Dhillon [1972(2) SCR

33]. This Court clearly said that for a tax to be under

Entry 49 of List II, three conditions must be satisfied,

i.e. (i) it must be a tax on units i.e., land and buildings

separately as units; (ii) the tax cannot be a tax on

totality i.e., it is not a composite tax on the value of all

lands and buildings; and (iii) the tax is not concerned with

the division of interest in the building or land; in another

words, the tax was not concerned whether one person owned or

occupied the land or building or two or more persons occupy

or own it. In pith and substance, it was a tax on property

and not a personnel tax. Other cases of the same nature

being D.C. Gouse & Co. etc. vs. State of Kerala & Anr. etc.

[1980(1) SCR 268], which are of the same species, may be

turned to with advantage. B. Shama Rao vs. The Union

Territory of Pondicherry [1967(2) SCR 650], pressed into

service by learned counsel for the appellants, which was a

case under the Pondicherry General Sales Tax Act, enlightens

us that the core of the taxing statute is in the charging

Section of the provisions levying such tax and defining

persons who are liable to pay such tax. Understandably if

the core disappears, the remaining provisions have no

application. This is well understood.

The Principal Act, as it originally stood, provided for

levy of tax on lands only. It could then have no taint of

unconstitutionally and none could be pointed out to us. It

is the Amending Act No.15 of 1973 which brought about the

questioned changes in Section 3 and 4, which gave the spill

as if levy of tax was being made by the State legislature

under Entry 86 of List l on the premise that the tax was

being made leviable on a person taking into account his

total assets in lands and buildings, which taint, as

identified, was later withdrawn by Ordinance 6 of 1973/Act

18 of 1973 by causing certain deletions to keep the

remainder complete as a code. Thus it is evident that the

Principal Act could stand on its own and the amendment

caused to it by Amending Act No.l5 of 1973, by itself

brought a blot by way of substitution the offending portion

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of which was later sliced off as much. Nothing was so

inextricably mixed up so that the extricable parts were not

severable, or that any damage had been occasioned to the

left out healthy portion rendering it incomplete. This court

in M.P.V.Sundara Ramaiar and Co.vs. State of Andhra Pradesh

[l958 SCR 1442] and R.M.D. Chamarbaugwalla vs. Union of

India [1957 SCR 930 at page 950] has laid down the

principles that in determining whether the valid parts of

the statute are separable from its invalid parts, it is the

intention of the legislature that is the determining factor.

The test to be applied is whether the legislature would have

enacted the valid part if it had known that the rest of the

statute was invalid. If the valid and invalid provisions are

so inextricably mixed up that they cannot be separated from

one another, then the invalidity of a portion must result in

the invalidity of the Act in its entirety. This Court

further took the view that if on the other hand those valid

and invalid portions were so distinct and separate that

after striking out what is invalid, what is itself a

complete code, independent of the rest,then it will be the

subsisting object, notwithstanding that the rest has become

unenforceable. In the light of the aforesaid principles it

is clear that the charging section 3, which to begin with

was unquestionably valid, was replaced with the amendment

made by Amending Act 15 of 1973, making it in that state

unenforceable, but when the unhealthy part was removed by

Ordinance 6 of 1973. Amending Act 18 of 1973, Sections 3 and

4 got resuscitated, gaining radiatance, pristinely

legislative, its sparkle re-doubled by insertion of Sub-

section (1)A to Section 3, so as to remove doubts ever

existing regarding levy of tax on buildings and lands. Thus

it must be held that the charging Section 3 and the

supportive Section 4, as salvaged, are part of a scheme

which was within the legislative competence of the Rajasthan

State Legislature. The afore-analysis also demolishes the

"stillborn" theory because the Principal Act was by itself a

measure existing on the statute book which had life and

breath of its own, irrespective of the date of its

enforceability having been kept for a future date. It is the

Amending Act No.15 of l973 which got to choke its life but

before it could die or be declared dead by a court to

competent jurisdiction, life was breathed into it by the

Amending Ordinance 6 of 1973 and Amending Act 18 of 1973

with retrospective effect in the manner stated above. The

cases relied upon - M/s. West Ramnad Electric Distribution

Co. Ltd. vs. State of Madras [1963(2) SCR 747] and Mahendra

Lal Jaini vs. The State of Uttar Pradesh and others [1963

Supp.(1) SCR 912], would not serve the purpose for which

they have been pressed forward by learned counsel for the

appellants to incapacitate the State Legislature to correct

its own wrongs, well in time and before a judicial verdict.

On the basis of the aforesaid analysis and reasoning

the question posed at the outset and the three questions

summarized in the written submission, namely:

(i) whether the Amendment Act of 1973

(Rajasthan Act XV to 1973) in pith and

substance imposes a tax which is

relatable to Entry 86 of List I or Entry

49 of List II?;

(ii) If the Amendment Act of 1973 in

pith and substance imposes a tax under

Entry 86 of List I and not under Entry

49 of List II, whether the second

proviso to Section 3 is severable from

the rest of the Act?; and

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(iii) Whether the Ordinance VI of 1973

introducing Sub-Section 1(A) to Section

3 would have the effect of

retrospectively curing the defect of the

Amendment Act of 1973 and thus revives

it?,

would stand appropriately answered, without further

elaboration, in favour of the State of Rajasthan and

against the appellants.

No other question was raised besides those afore-

referred to.

As a result, these appeals fail and are hereby

dismissed with no order as to costs.