Property tax valuation must follow annual letting value principles; flat floor-area rates and unguided plant-inclusion rules are invalid.

Property tax on lands and buildings must be assessed by a recognised valuation method tied to annual letting value, not by a uniform floor-area rate that ignores relevant factors such as age, location, construction and condition. A flat-rate method applied indiscriminately was therefore invalid, and the assessment entries based on it could not stand. The text also states that plant and machinery could not be brought within the tax by deeming provisions or a rule giving the Commissioner unguided power to specify classes of plant and machinery, because the taxing entry covered only lands and buildings. The inclusion of plant and machinery and the related rule were accordingly invalid.

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Issues: (i) Whether the municipal corporation could determine the rateable value of textile mill properties on a flat rate per square foot of floor area instead of by recognised methods of valuation based on annual letting value. (ii) Whether the inclusion of plant and machinery in the assessment and the rule conferring power on the Commissioner to specify classes of plant and machinery were within legislative competence and valid.

Issue (i): Whether the municipal corporation could determine the rateable value of textile mill properties on a flat rate per square foot of floor area instead of by recognised methods of valuation based on annual letting value.

Analysis: The statutory scheme required assessment of property tax on buildings and lands by reference to rateable value, which in turn had to be fixed in accordance with the Act and rules on the basis of the rent that the property might reasonably be expected to fetch from year to year. A uniform floor-area rate, applied indiscriminately to mills differing in age, location, construction and condition, ignored relevant valuation factors and did not reflect the rent a hypothetical tenant would reasonably pay. The method also produced unequal treatment without rational classification and deprived assessees of an effective challenge to the valuation.

Conclusion: The flat-rate floor-area method was invalid and the assessment book entries based on it were unlawful, in favour of the assessee.

Issue (ii): Whether the inclusion of plant and machinery in the assessment and the rule conferring power on the Commissioner to specify classes of plant and machinery were within legislative competence and valid.

Analysis: The constitutional entry authorised tax only on lands and buildings, and the rule-making scheme could not enlarge that subject-matter to include plant and machinery as part of land. The provision deeming selected plant and machinery to form part of the building lacked a principled basis for classification and left the matter to unguided administrative discretion. That amounted both to transgression of legislative competence and to excessive delegation.

Conclusion: The provision including plant and machinery and the rule conferring unguided specification power were invalid, in favour of the assessee.

Final Conclusion: The assessment entries relating to the special property section could not stand, and fresh assessment lists were required to be prepared in accordance with law.

Ratio Decidendi: For property tax on lands and buildings, the rateable value must be determined by a recognised and rational valuation method linked to annual letting value, and a rule cannot enlarge the taxing field beyond the legislative entry or confer unguided power to classify property for taxation.

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