State of Punjab and others vs Mehta Harbans Singh

Gurdev Singh, J.—In a petition brought under Articles 226 and 227 of the Constitution, a learned Single Judge Judge of this Court has quashed the order levying Special assessment on the respondent Mehta Harbans Singh in respect of his factory situate in Sirhind, District Patiala, on the ground that no specific rate of tax has been prescribed at which the Subordinate Officers have to make an assessment and the levy thus made u/s 48-B of the Punjab Land Revenue Act, 1887 (hereinafter called the Act), is unconstitutional. This decision about the constitutional validity of the levy is now challenged before us in appeal under clause 10 of the Letters Patent by the State of Punjab. It is urged that though the rate is not prescribed by the legislature or under the Rules, there is enough guideline provided for fixing the rate at which the tax is to be assessed.

Section 59 of the Act provides for special assessment by Revenue Officers and specifies the cases in which it can be made. For that purpose, in exercise of its rule-making powers, the State Government on Ist of June, 1958, framed the Punjab Land Revenue (Special Assessment) Rules, 1958 (hereinafter called the Rules) for the assessment of land revenue and the method of assessment. This special assessment is popularly known as ''Maria tax''. The factory and the land under it held by Mehta Harbans Singh, though previously assessed to property tax under the Punjab Urban Immovable Property Tax Act, 1940, at Rs. 486/- per annum since Ist of April, 1963, were also assessed to Maria Tax and he was called upon to pay Rs. 864.22 as special assessment levy together with 5 per cent as collection charges thereon. This demand was made on the 2nd of January, 1964. The respondent disputed his liability to the levy by filing objections before the Extra Assistant Settlement Officer, Patiala Division, which were treated as an appeal. Though these objections were filed as far back as May, 1964, it is admitted that they have not been disposed of uptil now.

The provision for special assessment is contained in section 59 of the Act and this has to be made in accordance with the Rules. There is no dispute about the authority of the State. Government to make the assessment or the liability of the respondent to such assessment under the Rules. The demand for the amount levied as special assessment has been struck down solely on the finding that no specific rate of assessment has been prescribed by the Act or under the rules and Subordinate Officers have been left to their sweet-will to make the assessment at whatever rate they chose to do so, leading to the possibility of arbitrary and discriminatory exercise of that power.

Mr. R.K. Chhibbar, appearing for the State, has argued that though the rates at which the various properties are to be assessed are not prescribed under the Act or the Rules, there is enough guideline provided by the legislature for the assessment and accordingly the levy is perfectly constitutional, and not left to the sweet-will of the Revenue Officers concerned. To appreciate the contention, it is here necessary to refer to the relevant provisions of the Act and the Rules.

The provisions with regard to assessment are contained in Chapter V of the Act. Section 48 bears the heading "Limit of assessment", Section 48-A States the "Basis of assessment" and section 48-B again pertains to "Limit of assessment." Sections 49 to 58 relate to general assessment. The Special assessment is dealt with in section 59 alone and it lays down in what cases it can be made. The provisions of sections 48, 48-A and 48-B apply both to general and special assessments. Section 48-B, which was introduced by the Punjab Land Revenue (Amendment) Act, 1956, reads thus;

48-B. Limit of assessment.-If the land revenue is assessed as fixed annual charge the amount thereof, and if it assessed in the form of prescribed rate of average amount which according to an estimate in writing approved by the State Government will be leviable annually, shall not, in the case of any assessment circle, exceed one-fourth of the estimated money value of the net assets of such assessment circle, or in the case of special assessment on a category and class of sites of land put to non-agricultural use in an assessment circle or part thereof-

(a) exceed one-fourth of the estimated average net letting value; or

(b) exceed two to four per cent of the average market value;

(c) in the case of sites lying vacant and out of use, exceed one per cent of the average market value:

Provided that nothing contained in this section shall affect any assessment in force at the time of the commencement of the Punjab Land Revenue (Amendment) Act, 1928.

It is thus evident that this section fixes the maximum rate at which the assessment can be made, and indicates that the assessment can either be on the basis of estimated average net letting value or the average market value. It, however, does not state in which cases the market value has to be taken into account and in which cases the average net letting value. For the basis of assessment we have, however, to turn to section 48-A, which reads thus:

48-A. Basis of assessment.-The assessment of land revenue shall be based on an estimate of-

(a) the average money value of the net assets of the estate or group of estates in which the land concerned is situated; or

(b) in the case special assessment of land put to non-agricultural use in an assessment circle or part thereof-

(i) on the average net letting value of a category and class of sites, or

(ii) where for any reason it is not possible to ascertain the net letting value, on the average market value of sites as determined in the manner prescribed.

Provided that when a special assessment is made u/s 59, notwithstanding the period fixed for the continuance of assessment or the limit provided in section 48-B or the area having been declared to be an urban assessment circle, the land revenue may be assessed as a fixed annual charge payable in a lump sum or by instalments in accordance with the rules made under this Act.

On the basis of these provisions, in assailing the validity of the levy, two objections have been urged on behalf of the respondents:

That by leaving it to the discretion of the Revenue Officers to adopt either the average net letting value or the average market value as basis for assessment, arbitrary power has been conferred on these officers.

That the mere fixation of the maximum rate at which the levy can be made does not provide any guidance to the Assessing Authority and it is left to their sweet-will and discretion to assess the various properties at various rates. This situation it is urged, must lead to arbitrariness and discrimination and thus offends against the provisions of Article 14 of the Constitution.

On behalf of the State it is, however, argued that it is not necessary for the legislature to prescribe the rate at which a tax may be imposed or a levy made and all that is necessary is that there must be some guideline provided to enable the assessing authority to fix the rate and make the assessment. Reliance in this connection has been placed upon a number of decisions of their Lordships of the Supreme Court. The learned Single Judge has not referred to any of these cases or other decided cases and has quashed the special assessment on the ground that the Legislature has not fixed the rate, wide discretion has been left to subordinate officers to levy the tax at any rate within prescribed limits, and that this authority is arbitrary. In summing up his conclusions, the learned Judge observed:

The rate of the tax levied is the core of the special assessment and no specific rate having been prescribed at which the Subordinate Officers have to make the assessment, the levy of special assessment u/s 48-B is unconstitutional.

We are of the opinion that in dealing with the constitutional validity of the levy, we are not to proceed on first impressions or general principles, but keep in mind the extent to which the Legislature can delegate its authority and the principles laid down by their Lordships of the Supreme Court in a number of cases in which similar questions had arisen. We accordingly proceed to consider the same.

The earliest Supreme Court decision that has been cited before us in Khandige Sham Bhat and Others Vs. The Agricultural Income Tax Officer, That case related to assessment of tax on the agricultural income in the State of Kerala under the Travancore-Cochin Agricultural income tax (Amendment) Act, 1957. Under this legislation agricultural income derived from lands situated in the State of Kerala become assessable with effect from assessment year 1957-58. Pursuance to the provisions of that Act the income tax Authorities started proceedings to assess the income derived from lands situated in the Madras area for the year 1957-58. This was because of the reorganisation of States under which Kerala State came into existence. On a petition filed by Khandige Sham Bhat the Kerala High Court held that the State of Kerala had no authority to levy tax on agricultural income which accrued before November 1, 1956, from lands situated in the Madras area and that the assessments for 1957-58 were not sustainable under the Act even in respect of the income which arose after November 1, 1956 on the ground that the previous year, as defined under the Act, was a period of twelve months ending on March 31, preceding the year for which assessment was to be made. The result of the decision was that agricultural income derived from lands in the Madras area was not liable to tax for the assessment year 1957-58, whereas similar income from agricultural lands situated in the Travancore-Cochin area was liable to tax. To remedy this situation the Government of Kerala promulgated on January 12, 1959, the Agricultural income tax (Amendment) Ordinance II of 1959, which was subsequently replaced by the Agricultural income tax (Amendment) Act II of 1959 by the Legislature. The amendment made was challenged on the plea that the relevant provisions of the Act offended, against Article 14 of the Constitution, as the classification of Kerala State into two parts, i.e. the Madras area and the Travancore Cochin area, has no rational relation to the object of the Act, namely, imposition of agricultural income tax, because, as the two parts belong to the same State, no post-amalgamation law can treat assessees of the same State differently in the matter of taxation. In dealing with this matter their Lordships laid down tests for determining if a law offended the equality clause embodied in Article 14 of the Constitution, observing as follows:-

If there is equality and uniformily within each group, the low will not be condemned as discriminative, though due to some fortuitous circumstance arising out of a peculiar situation some included in a class get an advantage over others, so long as they are not singled out for special treatment. Taxation law is not an exception to this doctrine vide Purshottam Govindji Halai Vs. Shree B.M. Desai, Additional Collector of Bombay and Others, and Kunnathat Thathunni Moopil Nair Vs. The State of Kerala and Another, ). But in the application of the principles, the courts, in view of the inherent-complexity of fiscal adjustment of diverse elements, permit a larger discretion to the Legislature in the matter of classification, so long it adheres to the fundamental principles underlying the said doctrine. The power of the Legislature to classify is of wide range and flexibllity so that it can adjust its system of taxation in all proper and reasonable ways.

In this connection, their lordships referred to an earlier decision of that Court in Ram Krishna Dalmia Vs. Shri Justice S.R. Tendolkar and Others, wherein dealing with Article 14 of the Constitution it was stated as follows:

It is row well-established that while Article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. 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 inteligible differentia which distinguished persons or things that are grouped together from others left out of the group and, (ii) that that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different basis, namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be annexus between the basis of classification and the object of the Act under consideration.

In Khandige Sham Bhat and Others Vs. The Agricultural Income Tax Officer, it was further laid down:

It is true taxation law cannot claim immunity from the equality clause of the Constitution. The taxation statute shall not also be arbitrary and oppressive, but at the same time the Court cannot, for obvious reasons meticulously scrutinize the impact of its burden on different persons or interests. Where there is more than one method of Assessing tax and the Legislature selects one out of them, the Court will not be justified to strike down the law on the ground that the Legislature should have adopted another method which, in the opinion of the Court, is more reasonable, unless it is convinced that the method adopted is capricious, fanciful, arbitrary or clearly unjust.

The case which is directly in point is Gopal Narain Vs. State of Uttar Pradesh and Another, In this case the Court was dealing with the constitutional validity of section 128(1) of the M.P. Municipalities Act (2 of 1916), under which power had been given to the Municipal Boards to levy tax in a part of the municipality. In assailing this provision it was urged that the power was arbitrary and unguided and was thus violative of Article 14 of the Constitution. Their Lordships rejected the contention and held that the power vested in the Board to select part of the municipality within which to levy a tax was not an arbitrary power but one which is controlled by the purpose which was intended to be achieved by the Act itself, observing as under:

A fair reading of these three provisions makes it clear that the amounts collected by the Municipal Board by way of taxes are mainly intended to enable the Board to discharge its duties in the municipal area or a part of the municipal area, as the case may be. It is contended that while no doubt a combined reading of the said provisions may indicate the purpose of taxation, it does not disclose any policy how and under what circumstances the Municipal Board can select a part of the municipal area for the imposition of a tax or taxes. We do not agree. Sections 7 and 8 enumerate the obligatory duties and discretionary functions of a municipality. These duties and functions need not necessarily be discharged or performed in the entire area of the municipality at once. They may have to be introduced gradually, starting from one part of the area in the municipality with a view to cover the entire area in due course. It may also be that the amenities required in one part of the municipal area may be different from those required in another part of the municipality...........if so much is conceded, that is, different parts of a municipality may require special treatment in the matter of provisions of amenities, it would be reasonable to collate the power of taxation in a part of a municipality with such separate treatment. While the former two sections, by necessary implication, enable a municipality to provide special amenities in a part of the municipality, the latter section empowers it to impose taxes in that part. If so understood, the legislative guidance is apparent from the said three provisions, that is to say, a municipality can impose tax in a part of a city, if that part, because of its peculiar situation or otherwise, has to be provided with special amenities throwing a heavy financial burden on the municipality.

Looking at the policy disclosed by Ss. 7 and 8 and S. 128 of the Act and applying the liberal view a law of taxation receives in the application of the doctrine of classification it is not possible to say that the policy so disclosed infringes the rule of equality. this Court in more than one decision held that equality clause does not forbid geographical classification, provided the difference between the geographical units has a reasonable relation to the object sought to be achieved.

The objection that the provision relating to taxation was void because it did not specify any rate of tax and enabled the Board to impose a tax of any amount and against any person or persons without giving any guidance with regard to the fixation of rate of tax or the persons liable to pay it, was disposed of by their Lordships thus;

It is said that the said power conferred upon the Municipal Board is an unguided and naked power. Section 131 does not confer any power on the Board to impose a tax. Section 128 confers such a power and that section with meticulous care enumerates the subjects of taxation. Section 131 provides a machinery for imposing the said taxes. The said taxes cannot be imposed in vaccum. There should be some machinery for ascertaining the rate of taxation and the persons or the class of persons liable to pay the same. If S. 131 stood alone, there may be some justification for the comment, but if it is read along with section 128 it posits a reasonable nexus between the tax in respect of a subject and the rate payable and the persons or class of persons liable to pay the same.

Then after examining sections 132 and 133 of the Act, which dealt with the taxation, their Lordships found that they disclosed that there was a reasonable relation between the subjects taxable and the rate to believed as well as the persons or class of persons to pay the same. They further observed;

The said rate to be imposed and the persons or the class of persons liable to pay the same are ascertained by a quasi-judicial procedure after giving opportunity to the parties affected, subject to revision by the State Government. We cannot, therefore, say that the power conferred upon the Municipal Board is an arbitrary power offending Art. 14 of the Constitution.

The extent of permissible delegation of legislative powers relating to taxation was considered in Corporation of Calcutta and Another Vs. Liberty Cinema, . In that case the validity of section 548 of the Calcutta Municipal Act was attacked on the ground that it amounted to illegal delegation of legislative functions to the Corporation, because it left it entirely to the latter to fix the amount of tax without providing any guidance for that purpose. After reiterating the rule that a statute has to be read so as to make it valid and, if possible, an interpretation leading to a contrary position should be avoided, and that a legislation has to be construed ut res magis valeat quam nareat, Sarkar J, delivering the majority judgment, summed up the legal position in these words:

This case Pandit Banarsi Das Bhanot Vs. The State of Madhya Pradesh and Others, would appear to be express authority for the proposition that fixation of rates of taxes may be legitimately left by a statute to a non-legislative authority, for we see no distinction in principle between delegation of power to fix rates of taxes to be charged on different classes of goods and power to fix rates simplicitor, if power to fix rates in some cases can be delegated then equally the power to fix rates generally can be delegated.

His Lordship, however, emphasised that "when the power to fix rates of taxes is left to another body, the legislature must provide guidance for such fixation", but warned:

The validity of the guidance cannot be tested by a rigid uniform rule; that must depend on the object of the Act giving power to fix the rate. It is said that the delegation of power to fix rates of taxes authorised for meeting the needs of the delegate to be valid, must provide the maximum rate that can be fixed, or lay down rules indicating that maximum. We are unable to see how the specification of the maximum rate supplies any guidance as to how the amount of the tax which no doubt has to be below the maximum, is to be fixed. Provision for such maximum, only sets out a limit of the rate to be imposed and a limit is only a limit and not a guidance.

It seems to us that there are various decisions of this Court which support the proposition that for a statutory provision for raising revenue for the purposes of the delegates, as the section now under consideration is, the needs of the taxing body for carrying out its functions under the statute for which alone the taxing power was conferred on it, may afford sufficient guidance to make the power to fix the rate of tax valid.

Further, dealing with the question of delegation, Sarkar J. said that the guidance furnished must be held to be good if it leads to the achievement of the object of the statute which delegated the power, and the validity of the power to fix rates of taxes delegated to the Corporation must be judged by the same standard, and observing that its power to collect tax however, is necessarily limited by the expenses required to discharge those functions, the learned Judge considered that this would be a sufficient guidance to make the exercise of its power to fix the rates valid. Thereafter, it was laid down:

In the case of a self-governing body with taxing power, a large amount of flexibility in the guidance to be provided for the exercise of that power must exist. It is hardly necessary to point out that, as in the cases under Essential Supplies (Temporary Powers) Act, 1946, so in the case of a big municipality like that of Calcutta, its needs would depend on various and changing circumstances......These considerations lead us to the view that S. 548 is valid legislation. There is sufficient guidance in the Act as to how the rate of the levy is to be fixed.

In Jan Mohammad Noor Mohammad Begban Vs. State of Gujarat and Another, the Court dealing with section 27(2) of the Gujarat Agricultural Produce Markets Act, 1964, held that the power conferred u/s 27(2) of that Act to charge licence fee without prescribing the maximum was valid as the provision clearly contemplated fixation of maximum by the Rules made u/s 59 of the Act.

Levy of profession tax under Bihar and Orissa Municipal Act (7 of 1922) was assailed before the Supreme Court in Ram Bachan Lal Vs. The State of Bihar, Section 82 of the Act, which conferred on the municipalities power to impose tax, provided inter alia:

a tax on the trades, professions, callings and employments specified in the Fourth Schedule at such rates not exceeding the rates specified therein as may from time to time be determined by the Commissioners at a meeting:

Provided that the rates determined by the Commissioners at a meeting shall be subject to the approval of the State Government...

A proviso to this provision made it incumbent upon the Commissioners, if so desired by the State Government by notification, to impose within limits of a municipality certain taxes at such rates subject to the maximum specified in sections 84 and 85 and the First and the Fourth Schedules, and from such dates not with standing anything contained in this Act, as may be specified in the notification. The validity of this proviso was challenged and it was urged that it was void because it did not give any indication as to the circumstances under which the Government should direct the Commissioners to levy the tax u/s 82(1)(ff) of the Act. It was further urged that the proviso to section 82(1)(ff) enabled the Government to exempt any class of persons, trades, professions, callings and employments without giving any guidance as to, which class should be exempt. All these objections were rejected by their Lordships of the Supreme Court, with these words:

We did not find it necessary to deal with this academic point because, first, the Government has not exercised this power and, secondly, even if we were to hold this proviso to be violative of Article 14, it would be severable and, would not give any relief to the petitioner. The second ground of attack is that the rate of tax to be levied has been left to the discretion of the Commissioners u/s 82(1)(ff) and of the Government under proviso (iv) to S. 82(1) without giving any guidance as to the amount of tax. We see no force in this contention. Schedule IV specifies the maximum amount of tax that can be levied and section 150-D lays down the purposes for which the tax can be utilised. This in our view gives sufficient guidance to the Commissioners of the State Government to fix the rate of tax.

Reliance in this case was placed upon an earlier decision of that Court in The Corporation of Calcutta and Another Vs. Liberty Cinema,

Section 150 of the Delhi Municipal Corporation Act, 1957, confers powers on the Corporation to levy any of the optional taxes by prescribing rates of tax to be levied; to fix class or classes of persons or the description or descriptions of articles and properties to be taxed and to lay down the system of assessment and exemptions, if any, to be granted. The validity of this provision has been upheld in The Municipal Corporation of Delhi Vs. Birla Cotton, Spinning and Weaving Mills, Delhi and Another, . The principles that should guide the Court in judging the validity of such a provision were stated by Wanchoo C.J. thus on review of various authorities bearing on the point:

A review of these authorities therefore leads to the conclusion that so far as this Court is concerned the principle is well established that essential legislative function consists of the determination of the legislative policy and its formulation as a binding rule of conduct and cannot be delegated by the legislature. Nor is there any unlimited right of delegation inherent in the legislative power itself. This is not warranted by the provisions of the Constitution. The legislature must retain in its own hands the essential legislative functions and what can be delegated in the task of subordinate legislation necessary for implementing the purposes and objects of the Act. Where the legislative policy is enunciated with sufficient clearness or a standard is laid down, the courts should not interfere. What guidance should be given and to what extent and whether guidance has been given in a particular case at all depends on a consideration of the provisions of the particular Act with which the Court has to deal including its preamble. Further it appears to us that the nature of the body to which delegation is made is also a factor to be taken into consideration in determining whether there is sufficient guidance in the matter of detection.

After laying down these general principles regarding delegation of legislative functions, the learned Chief Justice, adverting to the impugned provision, observed thus;

As we are concerned in the present case with the field of taxation, let us look at the nature of guidance necessary in this field. The guidance may take the form of providing maximum rates of tax up to which a local body may be given the discretion to make its choice, or it may take the form of providing for consultation with the people of the local area and then fixing the rates after such consultation. It may also take the form of subjecting the rate to be fixed by the local body to the approval of Government which acts as a watch-dog on the actions of the local body in this matter on behalf of the legislature. There may be other ways in which guidance may be provided. But the purpose of guidance, what so ever may be the manner thereof, is to see that the local body fixes a reasonable rate of taxation for the local area concerned. So long as the legislature has made provision to achieve that reasonable rates of taxation are fixed by local bodies, whatever may be the method employed for this purpose-provided it is effective, it may be said that there is guidance for the purpose of fixation of rates of taxation.

In this case, the question of delegated legislation was considered at length and out of the five learned Judges who subscribed to the majority view, three actually recorded separate judgments. Sikri J. (as he then was) while upholding the validity of the power conferred on the Delhi Municipal Corporation to levy tax u/s 150, summed up the legal position in these words:

Apart from authority, in my view Parliament has full power to delegate legislative authority to subordinate bodies. This power flows, in my judgment, from Article 246 of the Constitution. The word "exclusive" means exclusive of any other legislature and not exclusive of any subordinate body. There is, however, one restriction in this respect and that is also contained in Article 246. Parliament must pass a law in respect of an item or items of the relevant list. Negatively this means that Parliament cannot abdicate its functions...

The Act has pointed out the objectives or the results to be achieved, and taxation can be levied only for the purpose of achieving the objectives or the results. This, in my view, is sufficient guidance especially to a self-governing body like the Delhi Municipal Corporation.......

There is no need to think that delegations of the present type will lead to arbitrary taxation or rules. First, we must have faith in our representative bodies, and secondly, I agree with the learned Chief Justice and Hidayatullah, J., that in suitable cases taxation in pursuance of delegated powers by a Municipal Corporation can be struck down as unreasonable by Courts. If Parliament chooses to delegate wide powers it runs the risk of the bye laws or the rules framed under the delegated power being challenged as unreasonable.

The latest case on the point is Gulabchand Bapalal Modi Vs. Municipal Corporation of Ahmedabad City, , wherein even the absence of provision prescribing the maximum rate in the Act which delegates power to the Corporation to levy property tax, was held to be not per se rendering such delegation in any manner arbitrary or excessive. Their Lordships were dealing with section 129 of the Bombay Provincial Municipal Corporation Act, 1949, which conferred power on the Corporation to tax without laying down the maximum rate. Holding this provision to be valid, Shelat J., delivering the judgment of the Court, after reviewing the case law, referred to the judgment of Wanchoo C.J., in the Municipal Corporation of Delhi v. Birla Mills, (supra) and accepted the factors, which according to Wanchoo C.J., provided sufficient guidance preventing the legislation from being invalid. Among these factors are:

(1) That the impugned law itself contained a provision which required the maximum rate to be fixed;

(2) that the limits of taxation were to be found in the purposes of the Act for which the taxes could be raised; and

(3) that there was a check by the Courts of law where the power of taxation is used unreasonably or in non-compliance or breach of the provisions and objects of the legislation.

Having thus noticed the tests laid down in the various authorities of the Supreme Court for determining the validity of the provisions regarding taxation and other levies and the extent of the authority that can be delegated, we have to examine the relevant provisions of the Act and the Rules under which the impugned special assessment is made. As noticed in an earlier part of this judgment, the authority to make special assessment is contained in section 59 of the Act. It lays down various situations in which such assessment may become necessary. They include cases in which assessment of land revenue requires revision in consequence of the land being put to a use different from that for which an assessment is in force, when the land has been put to use for non-agricultural purposes such as brick-kilns, factories, cinemas, shops, hotels, houses, landing grounds and other similar purposes, and when lands are sold, leased or granted by the Government. Though the power to make assessment is vested in the Revenue Officers, the authority to confirm the same, however, lies with the Financial Commissioner under sub-section (2) of section 59. As a further safeguard against arbitrary exercise of power sub- section (3) thereof authorises the Financial Commissioner to prescribe by executive instructions, issued under the provisions of 60C of the Act, to regulate the procedure of Revenue Officers making special assessments. Section 60 of the Act, which confers power on the State Government to make Rules, lays down that the Rules may prescribe;

(a) the method by which the estimate of the money value of the net assets of an estate or group of estates shall be male;

(b) the method by which assessment to land revenue shall be made;

(c) the principles on which exemption from assessment shall be allowed for improvements;

(d) the manner in which assessment shall be announced;

(e) the manner in which the rate of incidence of the land revenue is to be calculated for the purpose of sub-section (3) of section 51.

As a safeguard against arbitrary exercise of power to make Rules the Legislature has in section 60-A of the Act prescribed the procedure for making such Rules. It provides that in addition to observing the procedure laid down in section 21 of the Punjab General Clauses Act, 1898, the State Government shall "publish by notification a draft of the proposed rules for the information of persons likely to be affected thereby at least thirty days before a meeting of the Punjab Legislative Assembly. The State Government shall defer consideration of such Rules until after the meeting of the Punjab Legislative Assembly next following the publication of the draft, in order to give any member of the Assembly an opportunity to introduce a motion for discussing the draft". It is apparent that the Rules thus made have the approval of the Legislature itself. Even the power conferred on the Financial Commissioner to issue instructions for the guidance of the Revenue Officer u/s 60-C is subject to the approval of the State Government and it is expressly provided that such instructions shall be consistent with the provisions of the Act and the Rules made thereunder.

It is under the above provisions of the Act that the Rules were made and promulgated on the 1st of June, 1959. These Rules lay down detailed and elaborate procedure for special assessment. In Part B thereof while setting out the method of special assessment, provision is made for division of sites into various categories, and the groupings of such sites into classes, Rules 6 and 7 lay down the manner of calculating the net letting value and to ensure its proper fixation. Rule 8 provides for obtaining the relevant information from every owner and lessee of his selected representative site. It is provided under Rule 9 that in calculating the net letting value the following deductions have to be made:

(i) fair remuneration at six per cent for the capital invested on building or machinery or both after deducting from the depreciation on their value;

(ii) house-tax;

(iii) property tax;

(iv) maintenance charges not exceeding one month''s gross rent.

The manner in which the average market values of sites is to be determined is given in Rule 10 and it is thereafter that the provision for fixing the scale of special assessment u/s 48-B is laid down in Rule 11, which provides:

Scale of special assessment (Section 48-B).-The Revenue Officer-in-charge of special assessment or subsequent revision thereof will then work out the scale of levy of special assessment for each class in the block or assessment circle according to the scales laid down in section 58-B of the Act.

The special assessment report has to be made thereafter and submitted to the Financial Commissioner. It is required to contain, inter alia, in respect of each block or assessment circle the average net letting value for each class under various categories, the average market value in the case of sites, the net letting value of which cannot be determined, and the scale of special assessment proposed.

To further prevent the abuse of this power and ensure fair and equitable levy, Rule 15 then enjoins upon the Revenue Officers-in-charge of assessment to prepare brief abstract in the language prevailing in the locality, of the report, as approved or modified by the Financial Commissioner, incorporating:

(i) the basic data on which the net letting value of sites has been calculated, deductions allowed and the value of land under various categories and belonging to different classes, as disclosed by sales;

(ii) the total assessment and the average revenue rates proposed for each class under various categories with such brief explanation as may be necessary including the clear proviso that the rates proposed for any particular estate are liable to be varied before the special assessment is finalised;

(iii) the general consideration on which the pitch and amount of the total actual assessment proposed are based, namely, rise in price, new development and greater return from the land.

Again to avoid prejudice to the parties likely to be affected by the assessment, provision is made for publication and hearing of objections in sub-rules (2) and (3) of Rule 15, reproduced below:

(2) Copies of all this abstract shall be supplied by post to all Sarpanches, Lambardars, Organisations of landowners of the area concerned, Members of the Lok Sabba, Rajya Sabha, Vidhan Sabha, State Legislative Council and Local Bodies representing the said area, with the intimation that representations against, or objection to, the proposed assessment should be sent to the Revenue Officer-in-charge of assessment within 15 days from the date of posting.

(3) All such representations and objections will be considered by the Revenue Officer-in-charge of assessment who shall forward them with his views and the final report to the Financial Commissioner through the Commissioner.

This examination of the relevant provisions of the Act and the Rules made thereunder with regard to special assessment, which have the approval of the Legislature, haves no doubt in our mind that the Legislature has provided ample guidance for fixing the rates for levying the special assessment, and abundant care has been taken to guard against arbitrary exercise of the authority conferred on the officials concerned. Being thus unable to agree with the learned Single Judge, we reverse his judgment and accepting the appeal, dismiss the respondent''s writ-petition with costs.