Pith and substance upheld municipal land tax based on capital value as a valid levy on lands, not capital levy.

The charging provisions for municipal taxation authorised a rate on buildings and lands, and the explanation to Section 75 permitted capital value to be used as a valuation basis for land. Applying pith and substance, the impost remained a tax on lands because its essential character was determined by the charging section and statutory scheme, not by the assessment method. A tax on land may be correlated to capital value for fixing a reasonable rate without becoming a tax on capital value itself. Rule 350A was therefore intra vires, and the levy on open lands was valid.

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Issues: Whether Rule 350A of the Ahmedabad Municipal Corporation taxation rules and the related explanation to Section 75 of the Bombay Municipal Boroughs Act, 1925 were ultra vires on the ground that the levy on open lands based on capital value was in substance a capital levy falling within the Central legislative field.

Analysis: The charging provisions authorised a rate on buildings or lands, and the explanation to Section 75 permitted capital value to be used as the basis of valuation for lands. The essential character of the impost had to be determined from the charging section and the scheme of the Act, not from the mere mode of assessment. A tax on land may validly be correlated to capital value as a measure for fixing a reasonable rate without thereby becoming a tax on capital value itself. Applying the doctrine of pith and substance, the levy remained a tax on lands within the provincial sphere under Entry 42 of List II, while Entry 55 of List I was not trespassed upon. Legislative practice and prior municipal enactments also supported the validity of using capital value as a basis of valuation.

Conclusion: Rule 350A was intra vires, and the tax on open lands was validly imposed as a tax on lands, not as a capital levy.

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