In this write up I am advancing
my argument about the Unconstitutionality of Chapter XI-B, “Provisions Relating
to Local Body Tax” of the Maharashtra Municipal Corporation Act, 1949, which
was inserted by Maharashtra Amendment Act of 2009, Section 7, w.e.f. 31.08.2009;
and of Section 152B r/w 152P of the Maharashtra Provincial Municipal Corporation
Act, 1949; and of Rule 25 of The Maharashtra Municipal Corporation (Local body
Tax) Rules, 2010, at the touchstone of Article 14 and 19 of the Constitution of
India.
BRIEF BACKGROUND
1.
Section
127 of the Maharashtra Provincial Municipal Corporation Act of 1949,
hereinafter referred to as the “said Act”, gives an option to a Local Body to
impose any of the taxes which are enumerated in Sub-section (2) thereof.
2.
Initially
octroi covered by clause (a) was the one such tax which was optional. By the
Maharashtra Act No.3 of 1996, with effect from 31st August 1995,
clause (aa) was introduced in Sub-section (2) of Section 127 of the said Act, which
gave another option to the Local Bodies to levy a cess in lieu of octroi on the
goods imported into the limits of the City for consumption, use, or sale.
Clause (aa) provides that a cess can be levied in lieu of octroi. By the
Maharashtra Act No.4 of 2009 which was brought into force with effect from 3rd
October 2008, a proviso was appended to Clause (aa) which conferred power to
the State Government to direct a particular Local Body to levy the cess on the
entry of the goods into the City for consumption, use or sale therein, in lieu
of octroi.
3.
Thereafter
Maharashtra Act No.27 of 2009 was brought into force from 31st August
2009, and Clause (aaa) was added in Sub Section (2) of Section 127 of the said
Act, which gives an additional option to Local Bodies to levy Local Body Tax,
hereinafter referred to as “LBT”, on the entry of goods brought into the limits
of the City for consumption, use or sale therein, in lieu of octroi or cess.
4.
The Statement of Objects and Reasons of the said Maharashtra
Act No.27 of 2009 reads as –
1. Octroi is an important source of revenue
for the Municipal Corporations in the State. However, it has been brought to
the notice of the State Government that, the method of levy and collection of
octroi often leads to disruption of free movement of goods and is a major
deterrent to the business. Apart from this, there is traffic congestion at the
Octroi Posts, creating traffic problems.
2. To overcome the above difficulties, as an
alternative system, the State Government had introduced Cess in lieu of Octroi
in “D” class Municipal Corporations. However, while implementing the levy and
collection of the Cess, various difficulties were faced, consequent to which
the State Government has allowed the Municipal Corporations to switch over to
the earlier system of octroi.
3. In view of the persistent demand from
the traders to abolish octroi system and evolve an alternative system, the
State Government had decided to introduce a new system of Local Body Tax in
lieu of Octroi in the Municipal Corporation Area of ‘D’ class Municipal
Corporations.
Apart from this, there is rapid urbanization
adjacent to the Municipal Corporation limits due to which there is heavy load
on the existing infrastructure in such rural areas. To develop this
infrastructure, it was necessary to financially strengthen the Panchayats,
Hence, the State Government had decided to
introduce Local Body Tax in such adjacent areas also. The Government,
therefore, considered it expedient to amend the Bombay Provincial Municipal
Corporation Act, 1949 (Bom. LIX of 1949) and the Bombay Village Panchayats Act,
1958 (Bom. III of 1959), suitably.
4. As both Houses of the State Legislature
were not in session and the Governor of Maharashtra was satisfied that
circumstances existed which rendered it necessary for him to take immediate
action further to amend the Bombay Provincial Municipal Corporation Act, 1949
and the Bombay Village Panchayats Act, 1958, for the purposes aforesaid, the
Bombay Provincial Municipal Corporations and the Bombay Village Panchayats
(Amendment) Ordianance, 2009 (Mah. Ord. XXI of 2009), was promulgated by
Governor of Maharashtra on the 31st August 2009.
5. The Bill is intended to replace the said Ordinance
by an Act of the State Legislature.”
5.
The
powers to levy LBT are derived from section 127(2) (aaa) of the Bombay
Provincial Municipal Corporation Act, 1949 (Now The Maharashtra Municipal
Corporation Act, 1949. In exercise of the powers conferred by sub section (1)
of Section 152T and of all other powers enabling it in that behalf, the
Government of Maharashtra, made rules vide Noti. No. LBT-0209/CR-65/09/UD-34,
dt. 25th March 2010 namely “Bombay Provincial Municipal
Corporations (local body tax) Rules, 2010” (Now The Maharashtra Municipal
Corporation (Local body Tax) Rules, 2010), hereinafter referred to as the “said
Rules”.
6. The LBT is
another name of octroi. Octroi is collected at check posts. In LBT check posts
are supposed to be removed. It is a tax which can be collected by Corporations
on the basis of books of accounts like VAT. Any goods which are brought into the Corporation area (import) from
outside Corporation area for use, consumption or sale are liable for LBT.
Nature of Levy
7.
The incidence of taxation is the “Registration of
dealers” provided under Section 152B to be read with Rule 3 of the said LBT
Rules. The charge of this tax (LBT) is based on Entry 52 in List II of the VII
Schedule of the Constitution of India. Section 127(2)(aaa) and Section 152P of
the said Act empowers the Local bodies to impose this Tax.
8.
It
is a tax on purchase and not on the sale of goods.
9.
It
is a self-assessment account based tax.
10 (A) The illegality in Section 152B r/w Section
152P
i.
Section
152B inter alia, incorporates the incidence of taxation, i.e. to say, the
category of persons who satisfies certain conditions, as prescribed under the
law, who would be liable to pay Cess; and by virtue of Section 152P, the
framework of Section 152B is made applicable to levy of LBT; and Section 152B
encompasses almost every person, as explained hereinafter.
ii.
It
is submitted that, unarguably “Non-Importing Dealers” constitute a “Class” by
itself; and in fact, it constitutes a majority class among the broad class of
dealers.
iii.
The
Section 152B r/w Rule 3(1)(b) of said Rules, obliges “every dealer” to obtain
“Registration” whose turnover or who have an annual purchase or sale of
Rs.5,00,000=00, notwithstanding that the said “dealer” might have nothing to do
with the import of goods in the “Municipal limits”, and thereby subjecting the
said dealer to regime of LBT.
iv.
It
is submitted that those “Non-importing dealers” who have no business to import
goods into the municipal limits, and who meet their business needs by procuring
goods within the municipal limits, are subjected to LBT regime, although they
may not be liable to pay LBT on the goods purchased within the municipal
limits.
v.
The natural and irresistible inference of this section
would be that even Service providers and Professionals like Doctors and
Lawyers, who have no business to import goods, are now obliged to file Returns
of LBT, although they may not be liable to pay LBT.
vi.
The Section 152B envisage a situation where a dealer
(Dealers include Professionals like Doctors, Lawyers, Architect etc. and
Service providers) who has the purchase of “goods” may be for self-consumption,
of about Rs.5,00,000/- and above, in and during any financial year, would be
liable for Registration under this Regime.
vii.
It
is further submitted that, whereas the service providers like the Educational
Institutions, Coaching Classes, Travel Agencies, Courier Services, Banks, Hair
cutting saloons, even Cooperative Societies, are “dealers” (when read with the
definition of “Business”) within the meaning contained in the said Act, they
all would now be subjected to this regime of taxation, although they have no
business in dealing with goods, leave alone importing the goods.
viii.
It
is submitted that the said Section thus frustrate the mandate of Article 14 of
the Constitution of India.
ix.
It
is a palpable / overt case of a classification of “over-inclusive” with no
rational nexus to the objects sought to be achieved, wherein it includes not
only those who are similarly situated with respect to the purpose but other who
are not so situated as well. In other words, this type of classification
imposes a burden upon a wider range of individuals than are included in the
class of those attended with mischief at which the law aims.
10(B)
The illegality in Rule 25: Determination of Fair Market Price:
i.
The
Rule 25 of the said Rules mandates that the goods must be sold at “fair market
price”. It is submitted that first of all, what is a “fair market price” is
purely subjective; and secondly the dealer has every right to sell the goods
other than “fair market price”. This is patently “unreasonable restriction” /
interference on the fundamental of a Citizen to carry on any trade or business,
as conferred under Article 19(1)(g) of the Constitution of India. Further, the
sais Rule is enacted without any specific source, i.e. there is no legislative
policy in this respect, by reason of which the Govt. is empowered to frame such
Rule.
ii.
The
said Rule confers undefined discretion, without any legislative guidance, upon
the Commissioner to himself determine fair market price of any commodity
imported into the city by a related person or not against consideration, if he
feels that the declared value does not reflect the fair market price; and no
mechanism to determine the fair market price in such cases has been provided,
which means that any arbitrary value that is fixed would be final in the
absence of any sound parameters to arrive at the same.
iii.
Therefore,
it is submitted that Rule 25 frustrate the mandate of Articles 19(1)(g) and 14
of the Constitution.
10 (C) The irrationality in the LBT Regime
i.
It
is submitted that it is a self-assessment account based tax. This regime
requires the “dealer” to make a self assessment of the tax (LBT) that is to be
paid, and file returns accordingly, with the authority concerned.
ii.
Whereas, admittedly, there were a massive and rampant
evasion of octroi by the Traders Community, at the Octroi Check Posts, it is
irrational to introduce a regime of taxation, which is trust based, i.e.
“Self-assessment Accounts based” taxation. Therefore, instead of plugging the
evasion, the cork of the bottle is rendered open, by the force of law.
iii.
Therefore,
we have a situation where the State alleges that Traders are massively evading
octroi, and therefore, these Traders are now called upon to “Self Assess” their
tax liability payable under octroi, and file Returns periodically. The argument
of the State that effective “check” is provided under new Regime, is
misconceived, for, in the old regime of octroi, the Local bodies does have all
the powers of effective “checks”, which are available under the new regime.
iv.
In
addition to above argument, it is further submitted that, in this regard, we
must get back to the basics of taxation. A tax is an compulsory exaction of
money by a Public authority for public purposes, the payment of which is
enforceable by law.
v.
Tax,
cess, duty, fee, constituting a class denotes various kinds of imposts by the
“State” in its Sovereign power of taxation to raise revenue for the State.
Within the expression of each specie, each expression denotes a different kind
of impost depending upon the purpose for which it is levied.
vi.
Tax,
as a matter of principle and expediency, should be assessed by the Authority
concerned, and where, it is practically impossible for the authority concerned
to assess the tax liability of the person concerned, the assessment of tax
liability may be burdened upon the person concerned, to assess his own tax
liability and pay accordingly.
vii.
It
thus requires to be studied the nature of tax to be imposed, so as to arrive
whether the tax is to be recovered by way of “Self assessment” or by way of
“assessment by the authorities”. For this, we need to study and understand the
inherent nature of transaction which attracts the “tax”.
viii.
The
transactions which are peculiar to the very exclusive knowledge of the “person
concerned liable to pay tax”, then, there has to be assessment of tax by the
said person only. Income tax, Sales tax, Excise etc. may be relevant
illustrations to demonstrate the proposition advanced, herein.
ix.
However,
where the transaction which has the “State intervention” and can be profoundly
controlled and supervised by the Authority concerned, the tax, as a matter of
principle and expediency, should be assessed and collected by the Authority
itself, or else, there is inherent danger of squandering of State revenue. The
Property taxes / Excise / Custom Duty collected
assessed and collected by the Authority concerned may be relevant
illustration to demonstrate the proposition advanced, herein.
x.
Therefore,
it is submitted that the LBT regime is irrational on the face of it, and thus
invariably frustrate the mandate of Article 14 of the Constitution.
(11) Submissions on Article 14 of the
Constitution
Article 265 of
the Constitution imposes a limitation on the taxing power of the State, in so
far as it provides that the State shall not levy or collect a tax, except by
authority of law, that is to say, a tax cannot be levied or collected by a mere
executive fiat. It has to be done by authority of law, which must mean valid
law enacted by the competent Legislature.
In order that
the law may be valid, the tax proposed to be levied must be within the
legislative competence of the Legislature imposing a tax and authorizing the
collection thereof; and, secondly, the tax must be subject to the conditions
laid down in Article 13 of the Constitution. One of such condition envisaged by
Article 13(2) is that the Legislature shall not make any law which takes away
or abridges the equality clause in Article 14, which enjoins the State not to
deny to any person, equality before the law or the equal protection of the laws
of the country. It cannot be disputed that if the Act / any provision of law infringe
/ abridge the mandate of Article 14 of the Constitution of India, it must be
struck down as unconstitutional.
The instrument
of taxation is not merely a means to raise revenue in India; it is, and ought
to be, a means to reduce inequalities. You don't tax a poor man. You tax the
rich and the richer one gets, proportionately greater burden he has to bear.
The Constitutional mandate under Article 14 and other submissions
The Indian
Constitution, most noticeable under Article 14 and 19 permitted Courts to
undertake inquiries into the substantive fairness of the legislations, which
Courts undertook under classification and reasonableness tests respectively.
"It is now
well established that whilst article 14 forbids class legislation, it does not
forbid reasonable classification. In order, however, to pass the test of
permissible classification two conditions must be fulfilled, namely, (i) that
the classification must be founded on an intelligible differential which
distinguished persons or things that are grouped together from others left out
of the group and, (ii) that differentia must have a rational relation to the
object sought to be achieved by the statute in question. It must be appreciated
that the differentia which is the basis of the classification and the object of
the Act are two distinct things.
The phrase
"equal protection of the laws" means in essence the right to equal
treatment in similar circumstances. Article 14 requires that all persons
subjected to such legislation shall be treated alike under like circumstances
and conditions both in the privileges conferred and in the liabilities imposed.
Equality
before law is a dynamic concept having many facets. One facet - the most
commonly acknowledged - is that there shall be no privileged person or class
and that none shall be above law.
Explanation to the principle inhere in
Article 14
·
Classification
means segregation in classes which have a systematic relationship, usually
found in common properties and characteristics. It postulates a rational basis
and does not mean hording together of certain persons and classes arbitrarily.
·
The
classification may be founded on different bases, namely, geographical, or
according to objects or occupations or the like. What is necessary is that
there must be a nexus between the basis of classification and the object of the
Act under consideration.
·
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 to ascertain its real
impact on the persons or property similarly situated. Conversely, a law may
treat persons who appear to be similarly situated differently; but on
investigation they may be found not to be similarly situated. To state it
differently, it is not the phraseology of a statute that governs the situation
but the effect of the law that is decisive.
·
What
is necessary is that there must be a nexus between the basis of classification
and the object of the Act under consideration. In substance, the differentia
required is that it must be real and substantial, bearing some just and
reasonable relation to the object of the legislation. The fact that the
classification by itself is reasonable is not enough to support it unless there
is nexus between the classification and the object to be achieved. Art. 14
certainly apply where equals are treated differently or unequals are treated
equally, without any reasonable basis.
·
A
reasonable classification is one which includes all who are similarly situated
and none who are not. The question then is: what does the phrase 'similarly
situated' mean ? The answer to the question is that we must look beyond the
classification, to the purpose of the law. A reasonable classification is one
which includes all persons who are similarly situated with respect to the
purpose of the law. The purpose of a law may be either the elimination of a
public mischief or the achievement of some positive public good.
·
A
classification is under -inclusive when all who are included in the class are
tainted with the mischief but there are others also tainted whom the
classification does not include. In other words, a classification is bad as
under -inclusive when a State benefits or burdens persons in a manner that
furthers a legitimate purpose but does not confer the same benefit or place the
same burden persons on others who are similarly situated. A classification is
over-inclusive when it includes not only those who are similarly situated with
respect to the purpose but other who are not so situated as well. In other
words, this type of classification imposes a burden upon a wider range of individuals
than are included in the class of those attended with mischief at which the law
aims.
Approach of the Court in applying facts of
the case at the touchstone of the principle enshrined under Article 14
·
The
constitutional standards by which the sufficiency of the differentia which
forms a valid basis for classification may be measured, has been repeatedly
stated by the courts. If it rests of a difference which bears a fair and just
relation to the object for which it is proposed, it is constitutional. To put
it differently, the means must have nexus with the ends.
·
If
a legislation discriminates one person or class of persons against others
similarly situated and denies to the former the privileges that are enjoyed by
the latter, it may be regarded as "hostile" in the sense that it
affects injuriously the interests of that persons or class.
·
That
while good faith and knowledge of the existing conditions on the part of a
Legislature are to be presumed, if there is nothing on the face of the law or
the surrounding circumstances brought to the notice of the Court on which the
classification may reasonably be regarded as based, the presumption of
constitutionality cannot be carried to the extent of always holding that there
must be some undisclosed and unknown reasons for subjecting certain individuals
or corporations to discriminating legislation.
·
A
statute may direct its provisions against one individual person or things or to
several individual person or things; but no reasonable basis of classification
may appear on the face of it or be deducible from the surrounding
circumstances; or matters of common knowledge. In such a case the Court will
strike down the law as an instance of naked discrimination.
·
In
determining the validity or otherwise of a statute or of the statutory
provision, the Court have to examine whether such classification is or can be
reasonably regarded as based upon some differentia which distinguishes such
persons or things grouped together from those left out of the group; and
whether such differentia has a reasonable relation to the object sought to be
achieved by the statute.
·
In
determining the impact of State action upon constitutional guarantees which are
fundamental, it follows that the extent of protection against impairment of a
fundamental right is determined not by the object of the Legislature nor by the
form of the action, but by its direct operation upon the individual's rights,
that is to say, It is not the object of the authority, making the law, nor the
form of action, it is the effect of the law and of the action upon the right
which attracts the jurisdiction of the Court to grant relief.
·
The instructive and notable observations of the
Supreme Court in a case [AIR 1992 SC 999] are reproduced for the due assistance
of the Hon’ble Court:
Article 14 of the Constitution enjoins upon
the State not to deny to any person 'Equality before law' or 'the equal
protection of laws' within the territory of India.
Equality before law is a dynamic concept
having many facets. One facet - the most commonly acknowledged - is that there
shall be no privileged person or class and that none shall be above law.
The instrument of taxation is not merely a
means to raise revenue in India; it is, and ought to be, a means to reduce
inequalities. You don't tax a poor man. You tax the rich and the richer one
gets, proportionately greater burden he has to bear.
To bring out the principle, it would be
sufficient if we refer to two of them namely, S. K. Datta, I.T.O. V/s. Lawrence
Singh Ingty, (1968) 2 SCR 165 and Elel Hotel and Investments Ltd. V/s. Union of
India, (1991) 2 SCC 166. In the former case, this court observed:
"It is not in dispute that taxation
laws must also pass the test of Art. 14. That has been laid down by this Court
in Moopil Nair V/s. State of Kerala, (1961) 3 SCR 77. But as observed by this
Court in East India Tobacco Co. V/s. State of Andhra Pradesh, (1963) 1 SCR 404,
in deciding whether a taxation law is discriminatory or not it is necessary to
bear in mind that the State has a wide discretion in selecting persons or
objects it will tax, and that a statute is not open to attack on the ground
that it taxes some persons or objects and not others; it is only when within
the range of its selection, the law operates unequally, and that cannot be
justified on the basis of any valid classification, that it would be violative
of Art. 14. It is well settled that a State does not have to tax everything in
order to tax something. It is allowed to pick and choose districts, objects,
persons, methods and even rates for taxation if it does so reasonably."
13 Similarly,
it was observed in the other case by one of us (Venkatachaliah, J.):
"It is now well settled that a very
wide latitude is available to the legislature in the matter of classification
of objects, persons and things for purposes of taxation. It must need to be so,
having regard to the complexities invoiced in the formulation of a taxation
policy. Taxation is not now a mere source of raising money to defray expenses
of Government. It is a recognised fiscal tool to achieve fiscal and social
objectives. The differentia of classification presupposes and proceeds on the
premise that it distinguishes and keeps apart as a distinct class hotels with
higher economic status reflected in one of the indicia of such economic
superiority. The presumption of constitutionality has not been dislodged by the
petitioners by demonstrating how even hotels, not brought into the class, have
also equal or higher chargeable receipts and how the assumption of economic
superiority of hotels to which the Act is applied is erroneous or
irrelevant."
14 We
shall now proceed to examine the contentions before us in the light of the
above principles, but before we do that we think it appropriate to remind
ourselves of the following dictum:
"... ... in the ultimate analysis, we
are not really to concern ourselves with the hollowness or the
self-condemnatory nature of the statements made in the affidavits filed by the
respondents to justify and sustain the legislation. The deponents of the
affidavits filed into Court may speak for the parties on whose behalf they
swear to the statement. They do not speak for the Parliament. No one may speak
for the Parliament and Parliament is never before the Court. After Parliament
has said what it intends to say, only the Court may say what the Parliament
meant to say. None else. Once a statute leaves Parliament House, the Court's is
the only authentic voice which may echo (interpret) the Parliament. This the
Court will do with reference to the language of the statute and other
permissible aids. The executive Government may place before the Court their
understanding of what Parliament has said or intended to say or what they think
was Parliament's object and all the facts and circumstances which in their view
led to the legislation. When they do so, they do not speak for Parliament. No
Act of Parliament may be struck down because of the understanding or misunderstanding
of Parliamentary intention by the executive Government or because their (the
Government's) spokesmen do not bring out relevant circumstances but indulge in
empty and self-defeating affidavits. They do not and they cannot bind
Parliament. Validity of Legislation is not to be judged merely by affidavits
filed on behalf of the State, but by all the relevant circumstances which the
court may ultimately find and more especially by what may be gathered from what
the legislature has itself said. We have mentioned the facts as found by us and
we do not think that there has been any infringement of the right guaranteed by
Art. 14." Sajeev Coke Manufacturing Company V/s. Bharat Coking Coal Ltd.
(1983) 1 SCR 1000.
·
The instructive and notable observations of the Supreme
Court in a case [AIR 1951 SC 41] are reproduced for the due assistance of the
Hon’ble Court:
One
who assails a classification must carry the burden of showing that it does not
rest upon any reasonable basis."
"Many
different classifications of persons have been upheld as constitutional. A law
applying to one person or one class of persons is constitutional if there is
sufficient basis or reason for it."
There can be no doubt that Art. 14 provides
one of the most valuable and important guarantees in the Constitution.
The
inhibition of the Article that the State shall not deny to any person equality
before the law or the equal protection of the laws was designed to protect all
persons against legislative discrimination amongst equals and to prevent any
person or class of persons from being singled out as a special subject for
discriminating and hostile legislation.
It
does not, however, mean that every law must have universal application, for all
persons are not, by nature, attainment or circumstances, in the same position.
The
varying needs of different classes of persons often require separate treatment
and it is, therefore, established by judicial decisions that the equal
protection clause of the Fourteenth Amendment of the American Constitution does
not take away from the State the power to classify persons for legislative
purposes.
This
classification may be on different basis. It may be geographical or according
to objects or occupations or the like.
If
law deals equally with all of a certain well-defined class it is not obnoxious
and it is not open to the charge of a denial of equal protection on the ground
that it has no application to other persons, for the class for whom the law has
been made is different from other persons and, therefore, there is no
discrimination amongst equals. It plain that every classification is in some
degree likely to produce some inequality, but mere production of inequality is
not by itself enough. The inequality produced, in order to encounter the
challenge of the Constitution, must be "actually and palpably unreasonable
and arbitrary". Said Day J. in Southern Railway Co. V/s. Greane :
"While
reasonable classification is permitted, without doing violence to the equal
protection of the laws, such classification must be based upon some real and
substantial distinction, bearing a reasonable and just relation to the things
in respect to which such classification is imposed; and the classification
cannot be arbitrarily made without any substantial basis. Arbitrary selection,
it has been said, cannot be justified by calling it classification."
Quite conceivable there may be a law
relating to a single individual if it is made apparent that, on account of some
special reasons applicable only to him and inapplicable to any one else, that
single individual is a class by himself. In Middleton V/s. Texas Power and
Light Co., 1918 249 US 152, it was pointed out that there was a strong
presumption that a Legislature understood and correctly appreciated the needs
of its own people, that its laws were directed to problems made manifest by
experience and that the discriminations were based upon adequate grounds. It
was also pointed out in that case that the burden was upon him who attacked a
law for unconstitutionality.
In Lindsley V/s. Natural Carbonic Gas Co.,
1910 220 US 61, it was also said that one who assailed the classification made
in a law must carry the burden of showing that it did not rest upon any
reasonable basis but was essentially arbitrary.
If there is a classification, the Court will
not bold it invalid merely because the law might have been extended to other
persons who in some respects might resemble the class for which the law was
made, for the Legislature is the best judge of the needs of the particular classes
and to estimate the degree of evil so as to adjust its legislation according to
the exigency found to exist.
If, however, there is, on the face of the
statute, no classification at all or none on the basis of any apparent
difference specially peculiar to any particular individual or class and not
applicable to any other person or class of persons and yet the law bits only
the particular individual or class it is nothing but an attempt to arbitrarily
single out an individual or class far discriminating and hostile legislation.
The presumption in favour of the Legislature
cannot in such a case be legitimately stretched so as to throw the impossible
onus on the complainant to prove affirmatively that there are other individuals
or class of individuals who also possess the precise amount of the identical
qualities which are attributed to him so as to form a class with him.
As pointed out by Brewer J. in the Gulf
Colorado and Santa Fe' Railway V/s. W. H. Ellis, 1896 165 US 150, while good
faith and a knowledge of existing conditions on the part of a Legislature was
to be presumed, yet to carry that presumption to the extent of always holding
that there must be some undisclosed and unknown reason for subjecting certain
individuals or corporations to hostile and discriminating legislation was to
make the protecting clause a mere rope of sand, in no manner restraining State
action,
The above
principles may be considered by the Hon’ble Court whilst they adjudicate the
constitutionality of law attacked as discriminatory and violative
of the equal protection of the laws.
Concluding
remarks
a)
The law of the Constitution is not only for those who
govern, and, for the theorist, but also for the bulk of the people, for the
common man, for whose benefit & pride, and, safeguard, the Constitution has
also been written.
b)
The law’s violence to “Concept of Equality”
enshrined and guaranteed under Article 14 of the Constitution, is patent and
palpable.
c)
The mere solemn object of the legislation is no
justification for its enactment; and the law enacted has to pass the test of
Constitutional norms and standards.
d) Notwithstanding,
the enacted law may have been emanated from the “Body of wisdom”, the wisdom of
the Constitution would prevail.
e)
Whereas classification is implicit in the concept of
Equality; and whereas the Constitution of India under Article 14, guarantees
equality before law and further guarantees the equal protection of laws to all
the persons, the mandate of section 152B sought to equally subject /
burdens two distinct classes of persons, although both the classes are patently
distinct, and not equally situated and not equally circumstanced, as explained
in Para 10(A) of the Petition.
f)
The Rule 25 of The Maharashtra Municipal
Corporation (Local body Tax) Rules, 2010, frustrate Article 14 and abridges
Article 19(1)(g) of the Constitution, as explained in Para 10(B) of the
Petition.
a)
Classification is implicit in the concept of
Equality. Equality means equality among equals. Equality before law means that
amongst equals, the law should be equal.
b)
The principle of equality means that a law may not
have universal application towards all persons, and may not be applicable to
such persons who by nature, attainment or circumstances, are not in the same
position as to others.
c)
Equality
is likeness in possessing the same rights, privileges and immunities and being
liable to same duties. Equality conveys the idea of identity in size and form;
and unequals cannot be clubbed.
d) Equality
of treatment under Article 14 is an objective test it is not the test of
intention.
e)
The law, in fact, would aggravate inequality. This
is a clear case of Hostile over-inclusion. It seeks to treat unequals equally,
which itself is a negation of the guarantee of equal protection of laws.
f)
The sudden change brought about by the Act has
dealt a severe blow to them and has put their very continued existence in
peril.
g)
Article 14 of the Constitution enjoins upon the State
not to deny to any person 'Equality before law' or 'the equal protection of
laws' within the territory of India.
h)
Equality
before law is a dynamic concept having many facets. One facet - the most
commonly acknowledged - is that there shall be no privileged person or class
and that none shall be above law.
i)
The
instrument of taxation is not merely a means to raise revenue in India; it is,
and ought to be, a means to reduce inequalities. You don't tax a poor man. You
tax the rich and the richer one gets, proportionately greater burden he has to
bear.
j)
The concept of equality permits rational
discrimination; and conferment of special benefits / privileges to a class of
persons for rational reasons, is implicit in the concept of equality.
k)
The concept of equality, in particularly the expression
“equal protection of laws” implies that among equals, the law should be equal,
and the likes should be treated alike. Article 14 proceeds on the premise that
equality of treatment is required to be given to persons who are equally
circumstanced; and the persons who are in fact unequally situated /
circumstanced, cannot be treated at par.
l)
The principle of equality is the essence of democracy
and is a basic feature of our Constitution.
Sandeep Jalan
Advocate
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