There can be Crudities or Inequities in Complicated Experimental Economic Legislation but on that Account Alone it cannot be Struck Down as Invalid: Supreme Court, law, legislation,

The Supreme Court ruled that there can be crudities or inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid.


Section 127 of the Gujarat Provincial Municipal Corporations Act, 1949, as applicable to the State of Gujarat, post the Gujarat Act 2007, empowers a Municipal Corporation to impose property tax either under Section 129 based on the rateable value of buildings and lands, or under Section 141AA based on the carpet area of the buildings and lands. 

The common question of law which arises in the appeals is whether the appellants, namely, Parivar Seva Sanstha and Bai Gulab Hargovandas Jagjivandasni Dikarina Dikarina Will Trust, are entitled to exemption from levy of general tax in terms of clause (b) to sub-section (1) of Section 132 in cases where the Corporation has exercised the option to levy property tax on carpet area method under Section 141AA of the GPMC Act. 


The division bench of Justice Sanjiv Khanna and Justice J.K. Maheshwari observed that there is hardly any scope to urge and argue that clause (b) to sub-section (1) of Section 132 of the GPMC Act, which relates to and grants exemption from payment of general tax when rateable value is computable under Section 129 read with Section 132 of the GPMC Act, would apply in cases where property tax is payable by the carpet area method. General tax in terms of clause (c) to Section 141AA has to be computed subject to such exceptions, limitations and conditions provided in Sections 141B or thereinafter.

The bench held that provisions from Section 141AA to Section 141F form a complete code when tax has to be computed and paid on the carpet area method, and for such computation, reference cannot be made to the provisions of Sections 129 to 133 which relate to property tax payable on annual rateable value.

The court said that it do not think that the classification made vide sub-clause (i) to clause (a) to sub-rule (4) of Rule 8B of the Taxation Rules is discriminatory and violative of Article 14 of the Constitution of India. 

It was added that the object and purpose of this classification is to avoid litigation and complexities which may arise in case there is a distinct and separate taxation of hospitals, clinics, maternity homes, etc., stated and claimed to be run for charitable purposes.

The bench said that it had taken into account the total quantum of tax being paid in terms of the method of calculation as prescribed by sub-clause (iv) to clause (a) to sub-rule (4) of Rule 8B of the Taxation Rules. The bills raised are not substantial so as to warrant any interference.

The court dismissed the appeal. 

Case title: Parivar Seva Sanstha v/s Ahmedabad Municipal Corporation 

Citation: Civil appeal no. 2773 of 2012

Date: 24.11.2022

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