1939 (9) TMI 8 - HC - Indian Laws

Bombay Finance Act Upheld: Urban Property Tax Valid, Plaintiff's Suit Dismissed

Byramjee Jeejeebhoy Versus The Province of Bombay

The court held that Part VI of the Bombay Finance Act, 1932, as amended by the Bombay Finance (Amendment) Act, 1939, was constitutional and not ultra ... - Issues Involved:1. Jurisdiction of the High Court under Section 226 of the Government of India Act, 1935.2. Constitutionality of Part VI of the Bombay Finance Act, 1932, as amended by the Bombay Finance (Amendment) Act, 1939.3. Nature of the urban Immovable property tax: whether it is a tax on income or on lands and buildings.4. Applicability of the tax collection provisions by the Bombay Municipality.Issue-Wise Detailed Analysis:1. Jurisdiction of the High Court under Section 226 of the Government of India Act, 1935:The first point raised by the Government was that the High Court had no jurisdiction to hear the suit due to Section 226 of the Government of India Act, 1935, which restricted the High Court's original jurisdiction in matters concerning revenue. The court noted that before applying this section, it must be determined whether the tax in question is legal. If the tax is not legal, its imposition does not concern revenue but is a nullity. The Advocate General did not seriously contest this point.2. Constitutionality of Part VI of the Bombay Finance Act, 1932, as amended by the Bombay Finance (Amendment) Act, 1939:The plaintiff challenged the constitutionality of Part VI of the Bombay Finance Act, 1932, as amended by the 1939 Act, arguing it was ultra vires of the Bombay Provincial Legislature. The court examined the legislative powers under the Government of India Act, 1935, particularly Section 100 and the Seventh Schedule. It was determined that the impugned tax fell within item 42 of the Provincial List, which includes 'Taxes on lands and buildings,' unless it was excluded by falling within the Federal List.3. Nature of the urban Immovable property tax: whether it is a tax on income or on lands and buildings:The court had to decide whether the urban Immovable property tax was a tax on income (which would fall under the Federal List) or a tax on lands and buildings (which would fall under the Provincial List). The court referred to various legal precedents and principles, including the pith and substance doctrine, which requires looking at the essence of the tax rather than its form. The court concluded that the impugned tax was not a tax on income but a tax on lands and buildings based on their annual letting value. The tax was not considered a tax on income because it did not depend on the actual income of the property but on an arbitrary value.4. Applicability of the tax collection provisions by the Bombay Municipality:The plaintiff also challenged the validity of the notices served by the Bombay Municipality under Section 202 of the City of Bombay Municipal Act for the collection of the urban Immovable property tax. The court found that if the tax was valid, the collection provisions were a matter concerning revenue, and the jurisdiction of the High Court to determine this question was barred by Section 226 of the Government of India Act, 1935. The court also noted that the term 'municipality' in Section 24 of the impugned Act should be interpreted to mean the appropriate municipal authorities, despite any drafting defects.Conclusion:The court held that Part VI of the Bombay Finance Act, 1932, as amended by the Bombay Finance (Amendment) Act, 1939, was not ultra vires the Provincial Government. The urban Immovable property tax was a valid tax on lands and buildings, not on income. Consequently, the High Court's jurisdiction to address the collection provisions was barred by Section 226 of the Government of India Act, 1935. The plaintiff's suit was dismissed.