Municipal rate on open lands must follow annual value, not direct capital value, absent express statutory authority.

A municipal rule imposing a levy on open lands as a percentage of capital value was held beyond the authority of sections 73 and 75 of the Bombay Municipal Boroughs Act, 1925. The statutory term "rate" was construed as a tax on annual value of lands and buildings, consistent with settled legislative history, and not as a direct tax on capital value. The explanation to section 75 permitted capital value only as a valuation method for determining annual value, not as the taxable base itself. The rule therefore altered the true incidence of the tax and was ultra vires; the assessment under it was invalid.

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Issues: Whether a municipal rule fixing a rate on open lands at a percentage of capital value was valid under sections 73 and 75 of the Bombay Municipal Boroughs Act, 1925.

Analysis: The statutory expression "rate" in section 73 was construed in light of its settled legislative history in England and India as a tax on the annual value of lands and buildings, not on capital value directly. The explanation to section 75, permitting capital value as a basis of valuation for lands, was held to refer only to a recognised method of arriving at annual value and not to authorise the levy itself as a percentage of capital value. A direct levy on capital value was treated as altering the true incidence of the tax and as going beyond the authority conferred by the Act.

Conclusion: The impugned rule was ultra vires sections 73 and 75 of the Act, and the assessment made under it was invalid.

Final Conclusion: The appeal succeeded and the municipal levy on open lands, insofar as it was based directly on capital value, was struck down.

Ratio Decidendi: Where a statute authorises a municipal "rate" on lands, the levy must be imposed on annual value unless the statute expressly permits taxation directly on capital value; a valuation basis cannot be converted into the taxable measure itself by rule.

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