TaxTMI 
TaxTMI 
1967 (2) TMI 98
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....mendment) Act, 1962 (Act 23 of 1962), hereinafter called the Amending Act. For convenience of reference the Principal Act as amended by the Amending Act will be called in the course of the judgment as "the Act". The appellants raised the question of the constitutional validity of the relevant provisions of the Act. The Principal Act was passed on September 27, 1962 and it came into force on July 1, 1962; and the Amending Act was passed on December 24, 1962, and it came into force on July 1, 1962. We are concerned in these appeals only with the Act, i.e. Principal Act as amended by the Amending Act. It is said that the main object in passing the Principal Act was to rationalize the land revenue assessment in the State by bringing uniformity between Telengana and Andhra areas and to raise the rate of revenue in view of the rise in prices and to make the ryots bear equitably their share of the burden of the plans. With that view, as the long title of the Principal Act indicates, the said Act was passed to provide for the levy of additonal assessment on certain classes of land in the State of Andhra Pradesh and for the revision of the assessments leviable in respect of such lands an....
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....nbsp; Rs.nP. Rs.nP. Rs.nP. Rs,nP. 1. 30,000 (a)1 to 5 16to12 20.00 24.00 30.00 36.00 acres (b)6 to 8 111/2 15.00 18.00 22.50 27.00 and (c)9 and to9 81/2 12.00 15.00 18.00 22.50 above above below II. 5,000 (a) 1to 5 16 to 12 15.00 18.00 22.50 27.00 acres (b) 6 and ll1/2 12.00 15.00 18.00 22.50 and above above and but below below 30,000 acres. III.50 acres All All ....
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....range of a fixed maximum and a minimum the rights and remedies of the assesses and the obligation of the Government to survey the lands. In short, the High Court struck down the said provisions on the ground that they offend Arts. 14 and 19 of the Constitution for three reasons, namely (i) in the,, case of dry lands there,. is no reasonable classification at all as the flat minimum rate of 50nP. per acre has no relation to the fertility of the land, (ii) in regard to wet land there is no reasonable relation between the quality of the land and the ayacut to which it belongs, and (iii) the procedure prescribed for the ascertainment of the rate is arbitrary and uncontrolled, The High Court, though it elaborately considered the question whether the revenue assessment was by authority of law within the meaning of Art. 265 of the Constitution, did not express a final opinion thereon. Mr. S. V. Gupte, learned Solicitor General, who appeared in one of the appeals filed by the State, contended broadly that the High Court went wrong in coming to the conclusion that the revenue assessment made under the Act had no reasonable relation to the quality of the soil and pointed out that what the....
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....ppeals, advanced an additonal argument in respect of lands fed by Yeleru river, that in any event the Act would not apply to the said land as they did not fall under any of the three categories covered by the Act, namely, dry land, single-crop wet land and double- crop wet land and that, therefore, no assessment under the Act could be imposed in respect of the said lands. Before we consider the said arguments it would be necessary to know briefly the nature and scope of the previous revenue settlements in Andhra and Telengana. After some experiments in the Madras State it was decided in 1865 that a general revision of assessment should be made based on accurate survey and classification of soils. This is known as Ryotwari Settlement. The Ryotwari Settlement was conducted in seven stages : (1) demarcation of boundaries, (2) survey, (3) inspection, (4) classification of soils, (5) assessment, (6) matters subsequent to assessment, and (7) records of settlement. The first two items were done by the Survey Department and the items Nos. 3 to 7 by the Settlement Department. It will be enough for the purposes of those appeals if we describe briefly how this classification of soils was done....
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....nd others to reduced rates. (ii)The classification of soils is to be as simple as possible, and is to be alike everywhere instead of each village having its own; (iii)The assessment is to be fixed so as not to exceed half the net produce after deducting the expenses of cultivation, etc. (iv)No tax is to be imposed for a second crop on dry land, but wet lands which in all ordinary seasons have an unfailing supply of water for two crops are to be registered as double crop, the charge for the second crop being generally half the first crop assessment. Remissions may be given when the supply of water fails. In cases where water is raised by baling an abatement of half a rupee per acre is allowed : (v) The Tahsildar, or in the course of a resettlement, the Special Settlement Officer or Special Assistant Settlement Officer may allow the charge for second crop to be compounded in respect of all irrigated lands of which the supply of water is not ordinarily unfailing. The rates of composition will be as follows : For wet land irrigated from a second-class irrigation source one third : For wet land irrigated from a third-class irrigation source, one fourth; For wet land ir....
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.... roads and markets, and, in the case of wet lands, with reference to the nature and quality of the water supply. This accounts for different rates of assessment being imposed on lands of similar soils, but situated in different groups or under different classes of irrigation." The broad principles of Ryotwari system may be stated thus (1) Under that system the soil itself is taxed and the assessment is fixed on the land; (2) Lands are classed into two general heads, namely, wet and dry; (3) The soils of similar grain values are bracketed together in orders called "Tarams" each with its own rate of assessment; (4) The rates are further adjusted, in the case of dry lands, with reference to the nature and quality of water supply. This system had been followed from time immemorial and had the general approval of the public. It has a scientific basis and throws equitable burden on the different classes of land. The system followed in Telengana which formed part of the erstwhile Hyderabad State was as follows. The relative scale of soils in respect of classification was in annas or "annawari". The existing or the former rates were taken as the basis and were adjusted having regard ....
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....ld be fixed as a percentage of the net produce. No. 53. As periodical settlements or re- settlements are not recommended and as revisions in future will be based on prices and other relevant factors, it is not necessary to give an opinion as to what percentage of the net produce, the share of the Government should be. No. 71. In future, the assessment on irrigated land should be fixed on the basis of the dry land potential and the charge for irrigation should be on the basis of a charge, for service, by the Government. No. 72. The productivity of the soils, the capacity of the source based on the duration of supply and the ability of the ryots to bear the charge, are the chief factors which should be considered in determining the water charges. No. 73. In future, the assessment on irrigated land should consist of dry assessment depending on the quality of soil and the charge for irrigation, based on the quantum of service rendered by the Government. Even though, the income from irrigated land is several times that of dry land, still for the service done, it is not suggested to levy a uniform rate, but graduated rates, related to the soil value of the lands, on which the yi....
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....e assessment payable in respect of an acre of land forming part of that ayacut. The system of periodical ryotwari settlement held by the British Government on a scientific basis of quality and productivity of the soil with marginal adjustments on the foot of the duration of water supply in the case of wet lands and grouping of villages in the case of dry lands was given up. The scheme of surcharge on pre-existing rates, earlier accepted, was not adopted. The recommendation of the Committee that the assessment should be based on the dura- tion of water supply among others was not followed. Instead the Act introduced in the case of both dry and wet lands an unscientific and arbitrary method of assessment imposing a minimum flat rate irrespective of the tarams. In the case of wet lands an additional irrational factor is laid down, viz., the rate is linked with the extent of the ayacut. In the case of wet land, a minimum flat rate with some variations within different groups in classes I and II and a minimum flat rate in respect of the groups in classes III and IV is fixed without any rational connection between the two. Mr. P. A. Choudhury contended that the scheme accepted by the Act....
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....facts placed before us. Wet Lands.some tabular statements under the headings "average test" and "majority test" have been placed before us in support of the contention. The following are the figures under the "Average test" :- "A" AVERAGE TEST Average Average AverageAverage Sl. Name of Taluk for less for bet-for bet-for more NO. than 3 ween 3 ween 5than 8 months and 5 and 8months months months 1. Anantapur 26.4 50.5 120.8 ..... 2. Dbarmavaram 13.7 49.0 120.1 ..... 3. Tadipartri 16.4 62.0 126.0 ..... 4. Gooty 9.5 48.3 &....
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....p; ween 3 ween 5 and 5 and 8 months months 1. Ichapuram &nb....
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....; Average Average Average No Name of Taluk for less for bet- for bet for more than 3 ween 3 ween 5 than 8 months and 5 and 8 months months months 1. Mahabooba 4.8 26.8 60.6 .... 2. Mulug 25.1 171.6 370.86086.46 The averages mentioned under different columns are the average extent of the ayacuts in each taluk correlated with particular months of water supply. If we take the average for less than 3 months in respect of different taluks in the Rayalaseema area, which is part of the Andhra, the extents of the ayacuts vary from 9 acres to 26 acres. In regard to the duration of water supply between 3 and 4 months, they vary from 43 to 62 acres. In regard to the duration of water supply between 5 and 8 months, they vary bet M4SupCI-67-4 ween 108 and 152 acres. So too in some of the taluks of the Andhra area the same variations are found. It is, therefore, not possible from the average test to hold that particular months of supply corresponded with particular extent of the ayacut. The following tabular form represents the "Majority test" "B" MAJORITY TEST ---------------------------....
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....bsp; 15 30 19 19 2. Dbaramavaram 23 32 14 14 3. Tadapatri 7 9 1 1 4. Gooty 31 &n....
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....; Below 5 months duration Between 5 & 8 months ----------------------------------------- Sl . Name of Taluk NO. of Total No No of Total No irrigation of irri- irrigat- of irriga- sources &....
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....; 3. Cheepurapalli 1,799 1,905 39 39 4. Srikakulam 465 470 127 129 5. Sompeta 1,082 1,099 125 131 6. Salur 594 614 ... ... 7. Bobbili 1,629 1,771 ... ... ....
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.... for more than 8 months-2 Total No. of Irrigation sources do-3 -------------------------------------------------------------- By majority test it is meant to convey that in each taluk the majority of the irrigation sources with a particular duration have a proportionate relation to the different extent of the ayacut mentioned in the Act. But the aforesaid tabular form does not support that assertion. In regard to water sources of below 5 months duration with an ayacut of below 50 acres, a comparison of the first two columns shows that, except in a few cases, the test com- pletely fails. No doubt in regard to irrigation sources supplying water for between 5 and 8 months of ayacut of 5,000 to 50,000 acres, the test appears to be satisfied. But the table itself is confined only ....
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....ngamamaheswarapuram tank system has only 246 acres. Yerur Tank system has 1,500 acres, and Ponnalur tank system has 987 acres. Under S. 4 all these water sources fall under class III. It is not necessary to multiply instances. The High Court has carefully considered this aspect. Enough has been said to make the point that classification based on ayacut has no reasonable relation to the duration of water supply. It is, therefore, clear that the ayacuts do not correspond to the number of months of water supply; indeed, many tanks which supply water for a longer duration have smaller ayacuts. Tanks supplying water for equal durations fail under different classes. In a large number of cases the minimum rate is more than 100 per cent of the earlier assessment indicating thereby that the minimum rate has no relation to the quality or the productivity of the soil. In short, both ss. 3 and 4 in fixing the minimum flat rate for dry or wet lands, as the case may be, have ignored the well established taram principle; and in the case of wet lands an attempt has been made to classify different systems on the basis of the ayacuts but the said test is unreasonable and has no relation to either....
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....venue. An assessment becomes payable only after it is assessed. The section, therefore, does not deal with a stage prior to assessment. The amount payable towards assessment may be recovered in the manner the land revenue is recovered. For the same reason it is not possible to read into the section the entire gamut of the Standing Orders of the Board of Revenue which deal with the mode of assessment; for the said machinery also deals with a stage before - the assessment becomes due. If it was the intention of the Legislature that the Standing Orders of the Board of Revenue should be brought into the Act by incorporation, it would have certainly used appropriate words to convev that idea. It would not have left such an important provision so vague and particularly when the Legislature may be presumed to know that the question whether the Standing Orders are law was seriously raised in many proceedings. Therefore, if S. 6 is put aside, there is absolutely no provision in the Act prescribing the mode of assessment. Sections 3 and 4 are charging sections and they say in effect that a person will have to pay an additional assessment per acre in respect of both dry and wet lands. They....
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.... or not he made any income out of the property, or whether or not the property was capable of yielding any income. It was pointed out that that was one of the cases where the lack of classification created inequality. In East India Tobacco Co. v. State of Andhra Pradesh([1963] 1 S. C. R. 404.) though this Court again held that taxation laws also should pass the test of Art. 14 of the Constitution gave the caution that in deciding whether such law was discriminatory or not it was necessary to bear in mind that the State had a wide discretion in selecting the persons or things it would tax. The applicability of Art. 14 to taxation statute again arose for consideration in Khandige Sham Bhat v. The Agricultural Income Tax Officer([1963] 3 S. C. R. 899, 817.) and this Court affirmed the correctness of the decision in K. T. Moopil Nair's case(1). In the context of a taxation law this Court held "Though a law ex-facie appears to treat all that fall within a class alike, if in effect it operates unevenly on persons or property similarly situated, it may be said that the law offends the equality clause. It will then be the duty of the court to scrutinize the effect of the law carefully ....
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.... of the tax was different for different classes of owners. That contention, for the reasons given therein, was negatived. In the said Madras Acts a surcharge was imposed in addition to the previous rates and the previous rates had been made on the basis of ryotwari settlements which did not offend Art. 14 of the Constitution and, therefore, a small addition to the said rates could not likewise infringe the said article. The present question did not arise in that case. Nor has the decision of the Mysore High Court in H. H. Vishwasha Thirtha Swamiar or Sri Pejawar Mutt v. The State of Mysore([1966] 1 Mys. L.J. 351,359.) in regard to the Mysore Land Revenue Surcharge Act (13 of 1961) any bearing on the present question. There, as in the Madras Acts, the revenue surcharge levied wag an additional imposition of land tax and, therefore, the Mysore High Court held that it did not offend Art. 14 of the Constitution. In holding that Art. 14 was not infringed, the Court said: "We have before us a temporary measure. That is an extremely important circumstance. The State, not unreasonably, proceeded on the basis that a temporary levy could be made on the basis of existing rates. We can thin....