Summary
The Bombay Building Repairs and Reconstruction Board Act,
XLVII of 1969 was brought into force on October 1, 1969. It was enacted as a temporary measure and was to expire on December 31, 1970. The preamble of the Act recites collapses of residential buildings, acute shortage of housing accommodation and the problem of law and order arising from the increasing influx of persons into the city of Bombay in search of work as having necessitated its enactment. It also recites the recommendations, suggestions and objections received by the government in response to the proposals made by it and its conclusion after considering them, as to the necessity for establishing a Board to deal with the problems. The Act is confined to residential buildings occupied by tenants at the time of the commencement of the Act. Section 28 cls. (a) to (J) exempts buildings exclusively occupied by the owners, buildings exclusively used for non-residential purposes, buildings exclusively occupied on leave and licence, open land not built upon, buildings vesting in or leased to cooperative societies and buildings which might be erected after the commencement of the Act. Section 27 provides for the levy of tax on buildings and lands, save those exempted under s.28, at rates of percentum of the rateable value of the properties as laid down in the Schedule to the Act, Section 29 divides the buildings so taxed into categories A, B and C.Buildings built prior to September 1, 1940 fall into category A; those built between September 1, 1940 and December 31, 1950 fall into category B; and those built between January 1, 1951 and the date on which the Act was brought into force fall into category C, Varying percentage of the rateable value of the buildings is charged as a basic levy and at a higher rate when any such building is structurally repaired. The Act thus makes three kinds of classifications namely, (1) by confining the tax to the residential tenanted buildings it classifies buildings which are used for residential purposes and are tenanted, from the rest; (2) by confirming the tax to such existing building it classifies them from those built after the date on which the Act is brought into force and (3) by dividing those which are liable to tax into three categories according to the three periods in which they were constructed. The amount recovered under the levy 258is to be first credited to the Consolidated Fund of the State, and, thereafter, to be transferred by a suitable appropriation to the fund designated as the Bombay Building Repairs and Reconstruction Fund. An owner who is required to pay the tax pays only 10% of the rateable value of .the building and is entitled to recover the balance from the tenant by making a corresponding increase in the rent payable by such tenant. During the life of the Act such an owner is not bound to keep the premises let in good and tenantable repair.Owners of two residential buildings in the city of Bombay neither of which was, by reason of its having been recently constructed, either dilapidated or in dangerous condition challenged the constitutionality of the Act on the grounds (i) the tax amounted to unreasonable restriction and could not be said to be for a public purpose in that it benefited neglectful and defaulting owners, and, therefore, violated Art. 19(1)(f) of the Constitution; (ii) the Act was discriminatory and, therefore, infringed Art. 14 because, (a) the classification of buildings into three categories and imposition of different rates of tax was not based on any rational principle; and (b) the exemption given to buildings under cls. (g), (h), (i) and (i) of s. 28 and the classification between buildings constructed before the Act and those constructed thereafter was irrational without being founded on any principle.HELD : The Act is valid and the petitions unsustainable.(1) The principles arising from the decisions of this Court wherein the question of validity of taxing statutes have arisen are : (i) in order that a tax may be valid it must be, first, within the competence of the Legislature imposing it, secondly, it must be for a public purpose and thirdly, it should not violate the fundamental rights guaranteed by Part III of the Constitution. (ii) a taxing statute is as much subject to Art. 14 as any other statute; but in view of the inherent complexity of fiscal adjustment of diverse elements a larger discretion has to be permitted to the legislature for classification so long as there is no. transgression of the fundamental principle underlying the doctrine of classification; (iii) a taxing statute is not invalid on the ground of discrimination merely because other objects could have been, but are not taxed by the legislature; (iv) when a statute divides the objects of tax into groups or categories so long as there is equality and uniformity within each group the tax cannot be attacked on the ground of its being discriminatory; and (v) the mere fact that a tax falls more heavily on some in the same group or category is by itself not a ground for its invalidity.[268 E-269 D]K. T. Moopil Nair v. State of Kerala, [1961] 3 S.C.R. 77, Raja Jagannath v. U.P., [1963] 1 S.C.R. 220, East India Tobacco Co. v. Andhra Pradesh, [1963] 1 S.C.R. 404, Khandige Sham Bhatt v. Agricultural income-tax Officer, [1963] 3S.C.R. 809, Andhra Pradesh v. Nalla Raja Reddy, [1967] 3S.C.R. 28, Ravi Varma v. Union of India. [1969] 3 S.C.R.827, and Twyford Tea Co. Ltd. v. State of Kerala, [1970] 3S.C.R. 282, referred to.Where the object of a tax is directly private, indirect and incidental benefits which may result to the public do not make a public purpose. But the purpose of a tax would not be regarded as private merely because some persons might receive more benefits from the use of its proceeds than others or, is imposed for a purpose other than revenue.But. the principle that funds raised by taxation cannot be expended for private use does not prevent the legislature from looking at the ultimate rather than the immediate result of the expenditure, and incurring an expense 259or creating a liability on the part of the public which it was under no constitutional obligation to incur or create if the ultimate effect will be beneficial to the public. The fact that a statute authorising an expenditure of public tunas for a public purpose may foster another enterprise which is not a public one does not invalidate the statute if the purpose of the expenditure is legitimate because it is public. The test is not as to who receives the money but the character of the purpose for which it is expended. What is to be borne in mind is the distinction between the purpose and the method of its implementation. [272 B-E) Cooley on Taxation (4th ed.), Vol. 1, Ch. 4, Arts. 174 to 221; American Jurisprudence Vol. 51, paras 321 and 329. lbid, para 330 at p. 381; and Carmichael v. Southern Coal a Coke Co. 81 L. Ed. 1245 and American Jurisprudence, Taxation, Vol, 51 para 353 at 396.The incidence of tax may fall upon a class or individuals who derive no benefit from its expenditure or who are not responsible for the mischief to remedy which the tax is imposed.. Besides, in the present case the doctrine of benefits cannot apply first, because the cess goes directly to the Consolidated Fund and, secondly, because the legislature has the power to authorise expenditure out of the consolidated fund on any public purpose. [272 G]Carmichael v. Southern Coal & Coke Co., 81 L. ed 1245, at pp. 1261 and 1265, referred to.Both the purpose of the tax and its use are, without doubt, for public purpose., The purpose is to prevent collapses and the suffering they must cause. The use is for preservation and prolonging the life of teh buildings existing at the date of the enactment. if, in implementing the purpose, which is demonstrably public, some benefit reaches particular individuals, the statute which does not directly purport so to do, cannot be invalidated. [273 C](ii) When a combination of various factors raised problems which are of imminent concern to the state as well as the municipal authorities, if the legislature took a policy decision to give priority to the residential tenanted premises, in respect of which in its opinion, the danger was graver and imminent no challenge to the division between residential and non-residential premises can be sustainable particularly when dealing with a part of the problem and confining its treatment to residential premises only was considered feasible. In the light of the studies undertaken by the government and the corporation if legislature thought it best to preserve and prolong the life of existing structures no challenge on the ground of discrimination or arbitrariness can legitimately be made. Therefore the classification of residential premises from the rest and that between those existing at the time when the Act was brought into force from the new ones which might be built thereafter can be regarded as based on intelligible differentia and related to the objectives and their feasibility which the legislature bad in mind while undertaking the questioned legislation. [275 A-G]The classification of buildings into three categories is based on their age and the construction current during the period of their erection. It is therefore based on intelligible differentia and is closely related to the objects of the legislation. There is, therefore, no question of unequals being treated as equals as each building in respect of which the tax is payable falls within the surveillance of the Board and has to be structurally repaired if the need were to arise. Further, the tax is payable on 260the rateable value of each building which differs from building to building and it is distributed between owners and the tenants, the former bearing 10% of it only. [275 H, 276 C, 277D]The grievance that individual tax-payers get more or less return from the tax proceeds would not be a sustainable ground for a challenge against its constitutional validity.The primary object of the Act is not to repair all buildings subject to cess but to prevent the annually recurrent mischief of house collapses and the human tragedy and deprivations they cause. The tax being thus levied to prevent such disasters, there is no question of unequal treatment between one class of owners and another. [276 F]Moopil Nair v. State of Kerala, [1961] 3 S.C.R. 77, New Manck Chowk Spinning & Weaving Mills Co. Ltd. v. Municipal Corporation of the City of Ahmedabad, [1967] 2 S.C.R. 679 and Railroad Retirement Board v. Alton Railroad Co., 79L.ed. 1468, held inapplicable.The buildings in each of the categories exempted under s 28, form a distinct class by themselves., Buildings in cls. (a) to (f) are buildings to which Rent Act does not apply and therefore the considerations for which the cess is levied do not apply to them. Buildings used for nonresidential purposes do not fall within the scope of the Act and therefore had to be excluded from the levy of the cess, Buildings vesting in or leased to cooperative societies form a class by themselves and cannot be equated with buildings built by individuals. The relation between a society and its members are not the same as those between landlords and tenants and besides, there is considerable control by the registered over .the administration of the funds of the societies and overall supervision over their affairs. The premises occupied by licences form a distinct class by themselves, and could not have been lumped together with tenanted premises without the danger of a challenge under Art. 14. The circumstances which led to the imposition of the cess do not apply to premises in the occupation of licensees because such licensees have no rights such as the tenants have, namely, irremovability and the freezing of rents, and the consequential reluctance or inability of the landlords to maintain their premises tenantable repairs. If buildings used for non-residential purposes on the basis of leave and licence are validly treated differently, buildings, if used partly for one and partly for another such purpose or purposes can also be similarly treated provided that no part or parts thereof are occupied or used for a purpose other than those specified in the three clauses. Since these buildings form separate classes by themselves from the tenanted residential premises, the provisions for exempting them cannot be held as violative of the equal protection clause. [277 F-278 G]See the full content of this document
Extract
Vivian Joseh Ferreira & Anr. VS. Municipal Corporation Of Greater Bombay & Ors.
PETITIONER: VIVIAN JOSEH FERREIRA & ANR.Vs.RESPONDENT: MUNICIPAL CORPORATION OF GREATER BOMBAY & ORS.DATE OF JUDGMENT04/11/1971BENCH: SHELAT, J.M.BENCH: SHELAT, J.M.SIKRI, S.M. (CJ)DUA, I.D.ROY, SUBIMAL CHANDRAMITTER, G.K.CITATION: 1972 AIR 845 1972 SCR (2) 257 1972 SCC (1) 70CITATOR INFO : R 1972 SC1982 (47)R 1976 SC 670 (24)RF 1987 SC1527 (21)ACT: Constitution of India, 1950, Articles 14 and 19(1) (f)--Bombay Building Repairs and Reconstruction Board Act,XLVII of 1969--Ss. 27, 28, 29--Enactment to solve housing problem in the city and the danger arising from collapse of old buildings--Tax on all residential buildings occupied by tenants at the time of the commencement of the Act--Classi- fication of buildings according to age and type of construction--Varying percentage of the rateable value of buildings charged as basic levy--Constitutional validity of.Bombay Building Repairs and Reconstruction Board Act XLVII of 1969--Constitutional validity of.Taxing Statute--Principle for determination of the validity of.JUDGMENT: ORIGINAL JURISDICTION : Writ Petitions Nos. 187 and 188 of 1970.Petition under Art. 32 of the Constitution of India for enforcement of the fundamental rights.S. J. Sorabjee and B. R. Agarwala, for the petitioner (in both the petitions).M. C. Bhandare, P. C. Bhartari, J. B. Dadachanji and 261Ravinder Narain, for respondent no. 1 (in W.P. No. 187 of 1970).P . C. Bhartari, J. B. Dadachanji and Ravinder Narain, for respondent no. 1 (in W.P. No. 188 of 1970).M. C. Setalvad, P. K. Chatterjee and B. D. Sharma, for respondent no. 3 (in W.P. No. 187 of 1970).M. C. Bhandare and B. D. Sharma, for respondent no. 3 (in.W.P. No. 188 of 1970).S. J. Sorabjee, R. D. Diwan and 1. N. Shroff, for the intervener(in W.P. No. 187 of 1970).The Judgment of the Court was delivered by Shelat, J. These petitions by owners of two residential buildings, in the city of Bombay, neither of which is, by reason of its having been recently constructed, either dilapidated or in dangerous condition, challenge the validity of the Bombay Building Repairs and Reconstruction Board Act, XLVII of 1969.The preamble of the Act recites collapses of residential buildings, acute shortage of housing accommodation, and the problems of law and order arising from the unceasing influx of persons into the city of Bombay in search of work as having necessitated its enactment. It also recites the recommendations, suggestions and objections received by Government in response to the proposals made by it and its conclusion after considering them as to the n...
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