1964 (9) TMI 75 - HC - Indian Laws

Unconstitutional Act repealed for inequality & improper delegation

P. Bhuvaneswaraiah and Ors. Versus State of Mysore and Ors.

The court struck down the Mysore Buildings Tax Act, 1962, as unconstitutional due to its violation of Article 14 and the improper delegation of ... - Issues Involved:1. Legislative Competence of the State Legislature2. Colorable Legislation3. Vagueness and Enforceability of Section 4 (Charging Section)4. Delegation of Legislative Function in Section 325. Double Taxation6. Violation of Article 14 by Section 3(2)7. Violation of Article 14 by Section 48. Restrictions on Trade, Commerce, and Intercourse under Article 304(b)Detailed Analysis:I. Legislative Competence of the State LegislatureThe petitioners argued that the Mysore Buildings Tax Act, 1962, in essence, imposed a tax on income or capital value of assets, which falls under the Union List, and thus, the State Legislature lacked the competence to enact it. The court, however, held that the tax levied under the Act was indeed a tax on buildings, falling within Entry 49 of the State List, and thus within the legislative competence of the State Legislature. The court emphasized the importance of interpreting the statute to understand its true scope and effect, concluding that the tax was not on income or capital assets but on buildings, using floorage as a measure for tax liability.II. Colorable LegislationThe petitioners contended that the Act was a colorable piece of legislation, aiming to tax unearned income and speculative gains rather than buildings. The court rejected this contention, stating that the motive behind the legislation is irrelevant as long as the legislature is competent to enact the law. The court examined the substance of the Act and found it to be within the legislative competence of the State Legislature, thus not a colorable legislation.III. Vagueness and Enforceability of Section 4 (Charging Section)The petitioners argued that Section 4 of the Act was vague and unenforceable. The court disagreed, stating that although the section was not drafted with clarity, it was capable of judicial interpretation. The court held that the charging section was not vague and could be enforced.IV. Delegation of Legislative Function in Section 32The petitioners challenged the power conferred on the State Government under Section 32 to alter Schedule I, arguing it was an unconstitutional delegation of legislative power. The court held that once the legislative policy was laid down, the legislature could delegate the power to implement that policy to the government. The power conferred under Section 32 was not considered a delegation of essential legislative function but a permissible delegation to carry out the legislative policy.V. Double TaxationThe petitioners claimed that the Act resulted in double taxation, as local bodies were already empowered to levy house tax. The court found no principle of law that interdicted double taxation, stating that the power to tax is extensive and subject only to the wisdom of the legislature and the fear of popular resentment. The court held that there was no legal basis for the contention that double taxation was impermissible.VI. Violation of Article 14 by Section 3(2)Section 3(2) of the Act, which granted the government the power to exempt any class of buildings from tax, was challenged as violating Article 14. The court agreed, stating that the power to exempt without any guidance or principles was an unguided and uncontrolled delegation of legislative power, introducing inequality before law. The court struck down Section 3(2) as unconstitutional.VII. Violation of Article 14 by Section 4The petitioners argued that the classification of buildings based on floorage for tax purposes was irrational and resulted in unequal burdens on similarly situated assessees, violating Article 14. The court agreed, stating that the floorage basis was an arbitrary and mechanical method of taxation that did not conform to known principles of taxation. The court held that the Act lacked rational classification and resulted in substantial inequality, thus violating Article 14.VIII. Restrictions on Trade, Commerce, and Intercourse under Article 304(b)The petitioner in W.P. No. 1095/64 argued that the Act placed restrictions on trade, commerce, and intercourse, violating Article 304(b) as the Bill did not receive the previous sanction of the President. The court held that the restrictions imposed by the Act did not directly and immediately affect trade, commerce, or intercourse and thus were not within the mischief of Article 301. Consequently, the Act was not invalid under Article 304(b).Conclusion:The court struck down the Mysore Buildings Tax Act, 1962, as unconstitutional due to its violation of Article 14 and the improper delegation of legislative power under Section 3(2). The court held that the Act's basis of taxation was irrational and resulted in substantial inequality, thus failing to meet constitutional requirements.