1959 (10) TMI 45 - HC - Indian Laws

Validity of U.P. Land Tax Act, 1957 Upheld

Oudh Sugar Mills Ltd., Hargaon Versus State of U.P. and Anr.

Oudh Sugar Mills Ltd., Hargaon Versus State of U.P. and Anr. - TMI Issues Involved:1. Competency of the U.P. Legislature to enact the U.P. Large Land Holdings Tax Act, 1957.2. Delegation of essential legislative functions.3. Confiscatory nature of the tax and unreasonable restrictions on fundamental rights.4. Nature of the tax as land revenue.5. Discrimination under Article 14 of the Constitution.Comprehensive, Issue-wise Detailed Analysis:1. Competency of the U.P. Legislature to Enact the Act:The primary issue was whether the U.P. Legislature was competent to enact the U.P. Large Land Holdings Tax Act, 1957. The petitioners argued that the tax was on the capitalized value of land, which the U.P. Legislature was not competent to impose. The court analyzed Section 3 of the Act, which is the charging section, and concluded that the tax was on the holding itself and not on its annual value or capitalized value. The court stated, 'It is obvious, therefore, that on a correct and careful reading of the sub-section in a manner consistent with the rules of grammar there can be only one answer and that is that the tax is on holding and the annual value is only a measure or the yardstick.' The court further held that Entry No. 49 in the State List empowered the State Legislature to enact the law, stating, 'The words 'Tax on land' must be given their widest connotation and it has got to be held that it is open to the State Legislature under the sanction of Entry No. 49 of List II to impose any kind of tax on land.'2. Delegation of Essential Legislative Functions:The petitioners contended that the Act involved the delegation of essential legislative functions to the State Government, particularly in fixing the multiple for calculating the annual value of land holdings. The court rejected this argument, stating that the power to fix the multiple had not been delegated and that the principles for areas without hereditary rates were to be prescribed by the State Government. The court held, 'Therefore in the first place the power either to fix the multiple or the principles in cases where there are no hereditary rates fixed has not been delegated to any one and consequently the petitioners can have no cause of complaint.' The court also noted that the rules made under the Act would be subject to scrutiny by the State Legislature, ensuring no excessive delegation of legislative functions.3. Confiscatory Nature of the Tax and Unreasonable Restrictions on Fundamental Rights:The petitioners argued that the tax was confiscatory in nature and imposed unreasonable restrictions on their fundamental rights under Article 19(1)(f) and (g) of the Constitution. The court dismissed this contention, stating that there was no data to support the claim that the tax was excessive. The court emphasized, 'In the absence of necessary facts and figures it is not possible to accept the argument of the learned counsel that in the present case the incidence of taxation is so high as to amount to unreasonable restrictions on the rights guaranteed by Article 19(1) clauses (f) and (g) of the Constitution.'4. Nature of the Tax as Land Revenue:One of the petitioners argued that the tax was essentially land revenue, which could not be increased under the U.P. Zamindari Abolition and Land Reforms Act. The court rejected this argument, stating that the tax was on land and not land revenue. The court clarified, 'The land revenue may in a very wide sense be a tax on land but for the purpose of the Constitution the two have been considered as quite separate and totally different.'5. Discrimination under Article 14 of the Constitution:The petitioners contended that the Act was discriminatory as it imposed different taxes on large and small holdings, agricultural and non-agricultural land, and land and other forms of property. The court rejected this argument, stating that the classification was reasonable and had a rational basis. The court held, 'The agricultural land is a class by itself. If the Legislature did not think it proper to tax non-agricultural land but only agricultural land the Act cannot be said to be discriminatory.'Conclusion:The court concluded that the U.P. Large Land Holdings Tax Act, 1957, was validly passed and was intra vires of the State Legislature. All the petitions and the special appeal were dismissed with costs. The court also noted that other questions raised by the petitioners, which did not affect the constitutionality of the Act, could be raised before appropriate authorities.