Holding

The Court held that, after severing the invalid proviso and with the corrective ordinance, the Rajasthan Urban Lands Tax Act is a valid enactment within the State’s competence under Entry 49 of List II.

Summary

The appellants challenged the constitutional validity of the Rajasthan Urban Lands Tax Act, 1964 as amended in 1973 to levy tax on both lands and buildings, arguing that the amendment exceeded the State's legislative competence and rendered the entire legislation "still‑born." The High Court dismissed the writ petitions, and the appellants appealed. The Supreme Court examined whether the tax fell under Entry 49 of List II (state competence) or Entry 86 of List I (union competence), whether the offending proviso in Section 3 was severable, and whether the corrective Ordinance of 1973 cured the defect. Relying on the doctrine of severability and the constitutional scheme, the Court held that the State could tax lands and buildings separately under Entry 49, that the invalid proviso could be severed, and that the Ordinance restored the Act’s validity. Consequently, the amended Act, with the defective portion removed, was a valid piece of legislation within the State’s competence.

Issues considered

Whether the amendment to the Rajasthan Urban Lands Tax Act imposes a tax under Entry 86 of List I or Entry 49 of List II of the Seventh Schedule of the Constitution.
Whether the second proviso to Section 3 of the Act is severable from the rest of the legislation if the tax is deemed to fall under Entry 86.
Whether the 1973 Ordinance introducing sub‑section (1‑A) retrospectively cures the defect in the amendment and revives the Act.

Legislation cited

Constitution of Indias. Schedule VII, List I Entry 86, s. Schedule VII, List II Entry 49

Subjects

constitutional lawtaxationlegislative competenceseverabilitystate taxurban lands taxamendmentstill‑born legislationList IIList IRajasthan

Judgment

LT. COL. SAWAI BHAWANI SINGH ETC. A
v.
THE STATE OF RAJASTHAN AND ORS.

FEBRUARY 6, 1996

[AM. AHMADI, C.J., MADAN MOHAN PUNCHHI
AND K. RAMASWAMY, JJ.]

The Rajasthan Urban Lands Act, 1964 : Sections 3 and 4 Statute
Law-Taxing statute-Amending Act-Introduced defect in charging provision
of principal act-Thereby rendered the entire principal act invalid-Defective C

- portion deleted by subsequent amendment-Held : Defective portion was
severable from rest of Act thus reviving it-Hence the principal act was within
the legislative competence of the State LeiJislature.

Constitution of India, 1950:
D
Schedule VII-'-List II Entry 49-Legislative competence-Levy of
tax-Land and buildings-Must be levied separately as unit~Value of all
lands and buildings-Levy of tax on-Would fall under List I Entry 8~State
Legislation under List II Entry 49 and Central Legislation under List I Entry
86 (such as wealth tax) in respect of the same lands and buildings can
co-exist. E
Doctrine of Severability-Valid portion of provision severable from
invalid portion-Invalid portion deleted-Held : after deletion the remainder
can be sustained.

The Rajasthan Urban Lands Tax Act, 1964 was enacted to provide for F
levy of tax along on "urban land". The Act did not levy tax on buildings
though within the competence of the State legislature. The Principal Act
was amended bringing about drastic changes in the Act of far reaching
consequences. By virtue of this amendment tax was sought to be levied or
imposed upon both lands and buildings in the urban areas. The appellants G
filed writ petition in the High Court challenging the Constitutional validity
. of the Act as amended. While the writ petition was pending in the High
Court the State Government issued an Ordinance bringing about correc-
tive changes in the Act. The writ petition was dismissed by the High Court.
Aggrieved by the High Court's judgment the appellants preferred the
present appeal. H
145
146 SUPREME COURT REPORTS [1996] 2 S.C.R.

A On behalf of the appellants it was contended that the principal Act
was by itself invalid more so after its amendment by the amending Act and
Ordinance rendering it further void because it was beyond the legislative
competence of the State Legislature; that since levy of tax on all lands and
buildings of a person taken together under Section 3 and 4 of the Act was
outside the competence of the State Legislature; and that the entire
B measure was a piece of "still - born" legislation, incapable, because of its
inseparability of being enlivened after its amendment by the Amending
Ordinance.

Dismissing the appeal, this Court
c HELD : 1.1. As per Entry 49 of List II, the State Legislature is
competent to impose tax either on lands or on buildings or on both. A land
or building or both of a person may be subjected to direct tax by the State
Legislature under Entry 49 of List II and may also be subject matter of
-
direct tax as a component of his total assets, like Wealth-tax by the Union
D legislature as mentioned in Entry 86 of List I. These two taxes are separate
and distinct in nature and it cannot be said that there was any overlapping
or that the State Legislature was not competent to levy such tax on lands
and buildings merely on the ground that they have been subjected to
another tax as a component of the total assets of the person concerned.
E [153-C-DJ
Union of India v. H.S. Dhillon, [1972) 2 SCR 33, followed.

D.C. Gouse & Co. v. State of Kera/a & Anr., [1980) 1 SCR 804 and
The Assistant Commissioner of Urban Land Tax and Others v. The Buckin-
gham and Camatic Co. Ltd., [1970) 1SCR268, relied on.
F
B. Shama Rao v. The Union Tenitory of Pondicheny, [1967) 2 SCR
650, referred to.

1.2. The Rajasthan Urban Lands Tax Act, 1964, as it originally stood,
provided for levy of tax on lands only. It could then have no taint of
G unconstitutionality and none could be pointed out to us. It is the Amending
Act which brought about the questioned changes in Sections 3 and 4; which
gave the spill as if levy of tax was being made by the State legislature under
Entry 86 of List I on the premise that the tax was being made leviable on
a person taking into account his total assets in lands and buildings, which
H taint, as identified, was later withdrawn by the Ordin'ance by causing
SAWAIBHAWANISINGHv. STATE 147

certain deletions to keep the remainder complete as a code. Thus it is A
evident that the principal Act could stand on its own and the amendment
caused to it by Amending Act by itself brought a blot by way of substitution
the offending portion of which was later sliced off as much. [154-B-C]

M.P. V. Sunda1'(J Ramaiar and Co. v. State of Andhra Pradesh, [19581
SCR 1442 and R.M.D. Chamarbangwalla v. Union of India, [1957] SCR 930, B
relied on.

2. When the unhealthy part was removed by the Ordinance Sections
3 and 4 got resuscitated, gaining radiance, pristinely legislative, its sparkle
re-doubled by insertion of Sub-section (1) A to section 3 of the Act, so as C
to remove doubts ever existing regarding levy of tax on buildings and
lands. Thus it must be held that the charging Section 3 and the supportive
Section 4, as salvaged, are part of a scheme which was within the legislative
competence of the State Legislature. Nothing was so inextricably fixed up
so that the extricable parts were not severable, or that any damage had
been occasioned to the left out healthy portion rendering it incomplete. D
The afore analysis also demolished the "still born" theory because the
principal Act was by itself a measure existing on the statute book which
had life and breath of its own, irrespective of the date of its enforceability
having been kept for a future date. It is the Amending Act which got to
choke its life but before it could die or be declared dead by a court of E
competent jurisdiction, life was breathed into it by the Amending Or-
dinance with retrospective effect in the manner stated above.
[154-H, D, 155-A-B]
M/s. West Ramnad Electric Distribution Co. Ltd. v. State of Madras,
[1963] 2 SCR 747 and Mahendra Lal Jaini v. The State of Uttar Pradesh F
and Others, [1963] Supp 1 SCR 912, held inapplicable.

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1475-84
of 1980 Etc. Etc.

From the Judgment and Order dated 31.3.80 of the Rajasthan High G
Court in D.B.C.S.A. Nos. 97, 76, 93, 103, 106, 101/79 & 129, 75, 92, 128 of
1979.

Shanti Bhushan, A.K. Sen, B.P. Agarwal, S.M. Jain, V.M. Tarkunde,
Prashant Bhushan, Indeeveer Singh, Capt. K. S. Bhati, Vidhya Sagar, H
148 SUPREME COURT REPORTS [1996) 2 S.C.R.

A Aruneshwar Gutpa, A.K. Gupta, Sushil K. Jain, Badridas Sharma, Indra
Makwana: and G. Parakash for the appearing parties.

The Judgment of the Court was delivered by

PUNCHI, J. When a legislative enactment is c<1used an amendment
B beyond the competence of the legislature and the mistake is corrected by
another amendment to bring the enactment back within its competence,
can the entire legislation, original as well as amendatory be said to be
"still-born" and thus unenforceable, is the significant question which falls
for determination in this group of cases.
c It will be necessary to refer to the legislative history of the questioned
provisions. In the year 1964, the Rajasthan State legislature enacted a
measure called the Rajasthan Urban Lands Tax Act (Act No. 18 of 1964)
(hereinafter referred to as the "Principal Act"), to provide for levy of tax
alone on "urban lands" in the State of Rajasthan. The act then did not levy
D tax on buildings though within the competence of the legislature. The
Principal Act was not enforced till 1973, when amendment was caused
thereto by the Amending Act No. 15 of 1973, bringing about drastic
changes in the Act, of far reaching consequences. By virtue of this Amend-
ment Act, tax was sought to be levied or imposed upon both lands and
E buildings in the urban areas of the State of Rajasthan. The Principal Act
and the Amending Act were made enforceable with effect from April 1,
. 1973. A private corporation challenged the .constitutional validity of the Act
as amended, in the High Court of Rajasthan. The State Government
perhaps realising the flaws in the Amending Act No. 15 of 1973, had the
Governor of the State issue on June 23, 1973, an Ordinance No. 6 of 1973
F bringing about corrective changes in the provisions, (reference to which
will be made later) which ordinance was replaced by the Amending Act
No. 18 of 1973, which came into force on November 10, 1973 but effective
from 1.4.73. The rates of tax as applicable with effect from April 1, 1973
were changed subsequently by the Rajasthan Finance Act of 1977 (Act
G Nos. 2 of 1977) causing necessary amendments in the charging section of
the Principal Act.

Section 3 of the Principal Act, as it was originally enacted, reads as
under:

H "3. Levy of Urban land tax : (1) Subject to the other provisions
SAWAI BHAWANI SINGHv. STATE [PUNCHHl,J.] 149

contained in this Act, there shall be levied and collected for each A
year a tax on Urban lands (hereinafter referred to as the Urban
Land Tax) from· every owner of urban land at such rate not
exceeding 2% of the market value of such urban land as deter-
mined under Section 4, as the State Government may by Notifica-
tion in the official Gazette declare in this respect.
B
Provided that the State Government may fix graduated rates of tax
on different slabs of market value of urban lands.

provided further that no tax shall be levied on any urban land if
the owner thereof or his predecessor in interest has acquired such C
land by transfer from the Government or any local authority within
a period of two years immediately preceding the year for which
the tax is levied.

(2) The tax shall be in addition to any other tax for the time being
payable in respect of the urban land or portion thereof under any D
other law for the time being in force.

This Section 3 was subsequently substituted by the following provision, _by
Section 4 of the Amending Act No. 15 of 1973, with effect from April 1,
1973.
E
"3. Levy of lands and buildings tax: (1) There shall be levied and
collected, with effect on and from 1st April, 1973, for each year a
tax on lands and buildings situate in an urban area, (hereinafter
referred to as the lands and buildings tax) from the owner of such
lands and buildings at such rates not exceeding 2% of the market
F
value thereof as the State Government may, by notification in the
official gazette declare in this behalf.

Provided that the State Government may fix graduated rates of tax
on different slabs of market values of urban lands and buildings.
G
Provided further that until a notification declaring rates of tax is
issued under this sub-section, the rates of tax on lands and build-
ings shall be as follows :

On First Rs. 50,000 of the market value of the lands
and buildings -NIL H
'
'

150 SUPREME COURT REPORTS [1996] 2 S.C.R. -

A On the balance of the market value of
the lands and buildings. - 1/4%

Provided further that if any area is declared a cantonments, or is
constituted a municipality, after the commencement of Rajasthan
Urban Land Tax (Amendment) Act, 1973, the tax on lands and
B buildings situate in such area shall be levied and collected with
effect from the commencement of the year following the year
during which the area is declared a cantonment or is constituted
a municipality.

Provided also that where more than one land or building in the same
c urban area is owned by the same person, the land and building tax
shall be assessed on the market value of all such lands and buildings
taken together.

(2) The tax shall be in addition to any other tax for the time being
D payable in respect of the land and building or portion thereof
. under any other_ law for the time being in force."

By Amending Ordinance VI of 1973, which was later replaced by Amend-
ing Act No. 18 of 1973, the last proviso to sub-section (1) of Section 3 was
omitted and it was provided that the same shall be deemed always to have
E been omitted and the following sub-section (l)A was inserted retrospec-
tively after sub-section (1) of Section 3.

"(l)A - For removal of doubt it is declared that the tax shall be
levied on land or building or both separately as units."

F Section 4 of the Principal Act, as it was originally enacted in the year 1964,
was as under :

"4. Determination of market value:
(1) The Assessing Authority shall determine in the prescribed
G manner the market value of the urban land liable to be taxed under
this Act.

(2) The Assessing Authority in determining the market value shall
·have regard to the following matters, namely :

H (a) the locality in which urban land is situated.
SAWAIBHAWANISINGHv. STATE [PUNCHHl,J.) 151

(b) the predominant use to which the urban land is likely to be A
put, that· is to say, industrial commercial or residential.

(c) accessibility or proximity to market dispensary, hospital, railway
station, educational institutions, or Government offices.

(d) such other matter as may be prescribed." This Section was also B
substituted by the under-mentioned provision by Section 5 of the
Amending Act No. 15 of 1973 :

"4. Determination of market value - for purpose of this Act, the
market value of any land or building or both shall be estimated to C
be the price which in the opinion of the assessing authority such
land or buildings or both would have reached, if sold in the open
market on the date of the commencement of the Rajasthan Urban
Land Tax (Amendment) Act, 1973."

The relevant portion of charging Section 3, as it stands, after the D
· amendments made therein by Act No. 18 of 1973 and Act No. 2 of 1977,
runs as under :

"Provided further that until a notification declaring rate of tax is
issued under this sub-section, the rate of tax on lands and buildings
shall be as follows : E
On the first Rs. 50,000 of the market
value of the land and building - NIL

On the balance of the market value of
the land and building - 1/2% F

Provided further that if any area is declared a cantonment, or is
constituted a municipality, after the commencement of Rajasthan
Urban Land Tax (Amendment) Act, 1973, the tax on lands and
buildings situate in such area shall be levied and collected with G
effect from the commencement of the year following the year
during which the area is declared a cantonment or is constituted
a municipality.

(1-A) for removal of doubt it is declared that the tax shall be
levied on land or building or both separately as units." H
152 SUPREME COURT REPORTS [1996] 2 S.C.R.

A The challenge was batched up in 42 writ petitions, which were
decided by a common order by a learned Single Judge of the High Court
on May 11, 1979. The learned Single Judge allowed all the writ petitions
---
in part, leaving both the writ petitioners as well as the State of Rajasthan
aggrieved. 59 special appeals were thus filed before a Division Bench of
B the High Court which was disposed of by a common order whereby the
appeals of the State were allowed, appeals of the writ petitioners were
dismissed and as a consequence the writ petitions were dismissed in their
entirety. Thus on granting leave in the present batch of appeals before us,
the only question raised by learned counsel and regarding which written
submissions have been submitted to us is whether or not the Principal Act
C No. 18 of 1964 was by itself invalid, more so after its amendment by
Amending Act No. 15 of 1973 rendering it further void because it was
beyond the legislative competence of the State Legislature. The argument
is that since levy of tax on all lands and buildings of a person taken together
under the charging sections 3 and 4 in the enacted provisions were outside
D the legislative competence of the State Legislature, the entire measure was
a piece of "still-born" legislation, incapable, because of its inseperatability
of being enlivened after its amendment by the Amending Ordinance No. 6
of 1973 and the subsequent Amending Act 18 of 1973. The view of the
learned Single Judge was that the Principal Act as enacted in 1964 was a
E valid piece of legislation and was fully covered by Entry 49, List II as it
stood in the 7th Schedule of the Constitution. The learned Single Judge
was further of the view that the Amending Act 15 of 1973 had brought in
the Principal Act the offensive material which was beyond the legislative
competence of the State Legislature, but since that material was severable
from the remaining provisions of the charging Section 3, therefore the
F healthy portion of Section 3 together with the other provisions of the Act
was valid, except the last proviso to Section 3(1), whtch was subsequently
deleted by Amending Act 18 of 1973. The Hon'ble Judges of the Division
Bench; improving on the view of the learned Single Judge, went on to say
that the last proviso to Sub-section (1) of Section 3 was also separable from
G the rest of the provisions of the said Section and after striking out the
invalid portion, namely, the last proviso to sub-section (1) of Section 3, the
remaining portion of Section 3 contains a complete Code in itself and is
workable without reference to and notwithstanding that a portion thereof
is unenforceable. The Bench also took the view that for the purpose of
H separability, it was immaterial as to whether the invalid and valid portions
SAWAIBHAWANISINGHv. STATE[PUNCHHl,J.] 153

were enacted in the same Section or in different sections, because what is A
' ' important is the substance of the matter, the form being immaterial.
Noticeably Ordinance 6of1973/Act 18of1973 had omitted the last proviso
to sub-section (1) of Section 3 with retrospective effect, thus keeping the
remaining portion of Section 3 presenting a workable scheme without
•<
affecting its validity. On the deletion of the last proviso to Sub-section ( 1) B
of Section 3, the charging provision was expressly clarified by adding a new
sub-section (l)A thereto which declared that the tax shall be levied on
lands and buildings or on both separately as units.

It is now well settled that as per Entry 49 of List II, the State
Legislature is competent to impose tax either on lands or on buildings or c
on both. A land or building or both of a person may be subjected to direct
tax by the State legislature under Entry 49 of List II and may also be subject
matter of direct tax as a component of his total assets, like Wealth-tax by
the Union legislature as mentioned in Entry 86 of List I. These two taxes
are separate and distinct in nature and it cannot be said that there was any D
overlapping, or that the State Legislature was not competent to levy such
· tax on lands and buildings merely on the ground that they have been
subjected to another tax as a component of the total assets of the person
concerned. See in this connection, a seven member Bench decision of this
Court in Union of India v. H.S. Dhillon, [1972) 2 SCR 33. This Court clearly
said that for a tax to be under Entry 49 of List II, three conditions must E
be satisfied, i.e. (i) it must be a tax on units i.e., land. and buildings
separately as units; (ii) the tax cannot be a tax on totality i.e., it is not a
composite tax on the value of all lands and buildings; and (iii) the tax is
not concerned with the division of interest in the building or land; in other
words, the tax was not concerned whether one person owned or occupied F

- the land or building or two or more persons occupy or own it. In Pith and
substance, it was a tax on property and not a per:sonal tax. Other cases of
the same nature being D.C. Gouse & Co. Etc. v. State of Kera/a & Anr. Etc.,
(1980) 1 SCR 804 and 17ie Assistant Commissioner of Urban Land tax and
Others v. The Buckingham and Camatic Co. Ltd. Etc., (1970) 1 SCR 268, G
which are of the same species, may be turned to with advantage. B. Shama
Rao v. The Union Territory of Pondicheny, (1967) 2 SCR 650, pressed into
service by learned counsel for the appellants, which was a case under the
Pondicherry General Sales Tax Act, enlightens us that the core of the
taxing statute is in the charging Section of the provisions levying such tax
and defining persons who are liable to pay such tax. Understandably if the H
154 SUPREME COURT REPORTS (1996) 2 S.C.R.

A core disappears, the remaining provisions have no application. This is well
understood.

The Principal Act, as it originally stood, provided for levy of tax on
lands only. It could then have no taint of unconstitutionality and none could
be pointed out to us. It is the Amending Act No. 15 of 1973 which brought
B about the questioned changes in Section 3 and 4, which gave the spill as if
levy of tax was being made by the State legislature under Entry 86 of List
I on the premise that the tax was being made leviable on a person taking
into account his total assets in lands and buildings, which taint, as iden-
.........
IJ tified, was later withdrawn by Ordinance 6 of 1973iAct 18 of 1973 by f

C causing certain deletions to keep the remainder complete as a code. Thus
it is evident that the Principal Act could stand on its own the amendment
caused to it by Amending Act No~ 15 of 1973, by itself brought a blot by
way of substitution the offending portion of which was later sliced off as
much. Nothing was so inextricably mixed up so that the extricable parts
were not severable, or that any damage had been occasioned to the left out
D healthy portion rendering it incomplete. This court in M.P. V. Sundara
Ramair and Co. v. State of Andhra Pradesh, (1958) SCR 1442 and RM.D.
Chamarbaugwalla v. Union of India, (1957) SCR 930 at page 950 has laid
down the principles that in determining whether the valid parts of the
statute are separable from its invalid parts, it is the intention of the
E legislature that is the determining factor. The test to be applied is whether
the legislature would have enacted the valid part if it had known that the
rest of the statute was invalid. If the valid and invalid provisions are so
inextricably mixed up that they cannot be· separated from one another, then ..........
the invalidity of a portion must result in the invalidity of the Act in its
entirety. This Court further took the view that if on the other hand those
F valid and invalid portions were so distinct and separate that after striking
out what is invalid, what remains is in itself a complete code, independent
of the rest, then it will be the subsisting object, notwithstanding that the
rest has become unenforceable. In the light of the aforesaid principles It is
clear that the charging Section 3, which to begin with was unquestionably
valid, was replaced with the amendment made by Amending Act 15 of
G 1973, making it in that state unenforceable, but when the unhealthy part
was removed by Ordinance 6 of 1973/Amending Act 18 of 1973, Sections
3 and 4 got resuscitated, gaining radiance, pristinely legislative, its sparkle
re-doubled by insertion of Sub-section (l)A to Section 3, so as to remove
doubts ever existing regarding levy of tax on buildings and lands. Thus it
-
H must be held that the charging Section 3 and the supportive Section 4, as
--
SAWAIBHAWANISINGHv. STATE[PUNCHHl,J.] 155

salvaged, are part of a scheme which was within the legislative competence A
of the Rajasthan State Legislature. The afore-analysis also demolishes the
"still-born" theory because the Principal Act was by itself a measure
existing on the statute book which had life and breath of its own, irrespec-
tive of the date of its enforceability having been kept for a future date. It
is the Amending Act No. 15 of 1973 which got to choke its life but before

- it could die or be declared dead by a court of competent jurisdiction, life B
was breathed into it by the Amending Ordinance 6 of 1973 and Amending
Act 18 of 1973 with retrospective effect in the manner stated above. The
cases relied upon - Mis. West Ramnad Electric Distribution Co. Ltd. v. State
of Madras, [1963) 2 SCR 747 and Mahendra Lal Jaini v. The State of Uttar
Pradesh and others, [1963] Supp. (1) SCR 912, would not serve the purpose C
for which they have been pressed forward by learned counsel for the
appellants to incapacitate the State Legislature to correct its own wrongs,
well in time and before a judicial verdict.

On the basis of the aforesaid analysis and reasoning the question
posed at the outset and the three questions summarized in the written D
submission, namely :

(i) whether the Amendment Act of 1973 (Rajasthan Act XV of
1973) in pith and substance imposes a tax which is relatable to
Entry 86 of List I or Entry 49 of List 11?;
E
(ii) If the Amendment Act of 1973 in pith and substance imposes
a tax under Entry 86 of List I and .not under Entry 49 of List II,
whether the second proviso to Section 3 is severable from the rest
of the Act?; and

(iii) Whether the Ordinance VI of 1973 introducing sub-section F
l(A) to Section 3 would have the effect of retrospectively curing
the defect of the Amendment Act of 1973 and thus revives it?,

would stand appropriately answered, without further elaboration, in favour
of the State of Rajasthan and against the appellants.
G
No other question was raised besides those afore-referred to.

As a result, these appeals fail and are hereby dismissed with no order
as to costs.

v.s.s. Appeal dismissed.