B. N. KIRPAL, C. J. ( 1 ) ). The challenge in these writ petitions is to the validity of Section 2 (1a) (aa) and (aaa), read with Section 2 (54) of the bombay Provincial Municipal Corporations act, 1949 and Rule 7 of the taxation Rules. ( 2 ) BRIEFLY stated, the facts are that the petitioner in Special Civil Application no. 4368 of 1984 had taken on lease premises Nos. 139, 139/1 and 139/9 in a building, called "fadia Chambers". Ashram Road, Ahmedabad. ( 3 ) IN respect of the assessment years 1979-80 to 1982-83, the annual letting value under the said Act had been fixed by the Municipal Authorities. On appeal being filed, the same was drastically reduced by the judgment of the Small causes Court. In respect of the property no. 139, the annual letting value was reduced from Rs. 1,13,527/- to Rs. 42,000/- and in respect of property No. 139/9,ahe reduction was from Rs. 2036/- to Rs. 600/ -. For Plot No. 139/1, the reduction was from Rs. 1,55,479 to Rs. 13,125/ -. ( 4 ) THE definition of the expression "annual Letting Value", on which property tax is charged, underwent a change with the insertion of sub-clauses (aa) and (aaa) to the proviso to Section 2 (1a) (ii) of the said Act. The said provision, as it now exists, and with which we are concerned, reads as follows :"2. 13,125/ -. ( 4 ) THE definition of the expression "annual Letting Value", on which property tax is charged, underwent a change with the insertion of sub-clauses (aa) and (aaa) to the proviso to Section 2 (1a) (ii) of the said Act. The said provision, as it now exists, and with which we are concerned, reads as follows :"2. In this Act, unless there be something repugnant in the subject or context, (1a) "annual letting value" means, - (i) xxx xxx xxx (ii) in relation to any other period, the annual rent for which any building or land or premises, exclusive of furniture or machinery contained or situate therein or thereon, might reasonably be expected to let from year to year with reference to its use; and shall include all payments made or agreed to be made to the owner by a person (other than the owner) occupying the building or land or premises on account of occupation, taxes, insurance or other charges incidental thereto: provided that, for the purpose of sub- clause (ii), (a) xxx xxx xxx (aa) in respect of any building or land or premises, the standard rent of which is not fixed under Section 11 of the Bombay rents, Hotel and Lodging House Rates control Act, 1947, the annual rent received by the,owner in respect of such building or land or premises shall, notwithstanding anything contained in any other law for the time being in force, be deemed to be *the annual rent for which such building or land or premises might reasonably be expected to let from year to year with reference to its use; (aaa) clause (aa) shall not apply to a case where the annual not received by the owner in respect of such building or land or premises is in the opinion of the commissioner less than the annual rent for which such building or land or premises might, notwithstanding anything contained in any other law for the time being in force, reasonably be expected to let from year to year with reference to its use;. . . . . " ( 5 ) THE aforesaid provision came up for consideration before a Full Bench of this court in the case of Municipal corporation, Ahmedabad v. Canara bank, XIII (1) GLH 180 = XXXIII (2) glr 1086. . . . . " ( 5 ) THE aforesaid provision came up for consideration before a Full Bench of this court in the case of Municipal corporation, Ahmedabad v. Canara bank, XIII (1) GLH 180 = XXXIII (2) glr 1086. The question, which arose for consideration in that case was as to whether the amount of taxes and other charges, which are paid by the tenant to the Corporation, are includibl in rent for the purposes of determining the annual letting value. This Court came to the conclusion that any taxes and charges paid by the tenant pursuant to an agreement between the landlord and the tenant would be included in rent while determining the annual letting value. For example, if the agreement of lease provided for Rs. 12,000/- per annum as rent and the tenant had undertaken to pay to the Corporation the Municipal and other taxes in respect of the said property, then the extent of the municipal and other taxes paid or payable was to be added to the aforesaid figure of Rs. 12,000/- for the purposes of determining the acutal rent, which is levied by the landlord for the purposes of finding out the annual letting value. The Full Bench did not consider the validity of sub-clauses (aa) and (aaa) and the said question was left specifically open. It is for this reason that the validity of the said provision has to be examined in the present case. ( 6 ) WHILE on this question of interpretation of Section 2 (1a), in relation to payment of taxes and other charges, the said provision includes all payments made or agreed to be made to the owner, whether on account of occupation, taxes, insurance or other incidental charges, to be part of the annual rent It is clear, therefore, that if by agreement, such amount are paid by the tenant to the owner, the same shall form part of the annual rent. Where, however, payment is not made to the owner, but is made to the Corporation, what will be the position? It is in this regard that the Full Bench in the aforesaid decision came to the conclusion that where there were agreements to pay any such amount to the Corporation, then the payment so made will form part of the "annual rent", within the main provision of Section 2 (1a) (ii ). It is in this regard that the Full Bench in the aforesaid decision came to the conclusion that where there were agreements to pay any such amount to the Corporation, then the payment so made will form part of the "annual rent", within the main provision of Section 2 (1a) (ii ). In other words, what was held by the Full Bench of this Court was that any liability, which was discharged by the tenant, which but for the said discharge, would; have been the liability of the owner, would be part of the annual rent. It is possible that there may be certain charges, which are incurred or payments made by the tenant, which may not, ordinarily, or compulsorily be the liability of the owner. In such cases, in the absence of an agreement to pay such charges to the owner, where payment is made by the tenant directly, the same would not form part of the annual rent. To give a concrete example, it is compulsory for the premises, which are let out, to be insured. Any insurance premium paid by the tenant, directly to the Insurance company, will not form part of the annual rent. If, on the other hand, there was a written agreement, which postulated the payment of the insurance premium to the owner in respect of the building, which may have been insured by the owner,. then, certainly, the insurance premium so paid would form part of the annual rent. This is the effect of the judgment of the Full Bench of this court and it is in this background that we have to examine the validity of the said provision. ( 7 ) THE main contention, which has been raised on behalf of the petitioners, is that the provisions of Article 14 of the constitution of India are violated by having two methods for computing the annual letting value of the premises. It was sought to be submitted that under clause (a) of the proviso to Section 2 (1a), the measure for arriving at the annual letting value was the standard rent fixed under the Bombay Rents, Hotel and lodging House Rates Control Act, 1947. It was sought to be submitted that under clause (a) of the proviso to Section 2 (1a), the measure for arriving at the annual letting value was the standard rent fixed under the Bombay Rents, Hotel and lodging House Rates Control Act, 1947. On the other hand, under sub-clause (aa), the annual rent in respect of premises, of which standard rent has not been fixed, the annual rent actually received shall be the amount taken into consideration while fixing the annual letting value. Sub- clause (aaa), on the other hand, gives the power to the Commissioner to disregard the rent actually received by the landlord, in cases where the standard rent has not been fixed, if the actual rent received is less than what may reasonably be expected to be received from year to year. ( 8 ) IN short, the argument was that in respect of the same building, but where there may be two or three flats or tenements in respect of the same, the rateable value cannot be fixed on the basis of the standard rent, while in cases of the other, on the basis of the actual rent received where standard rent has not been fixed. Elaborating the argument further, it was submitted that the property should be taxed only on the uniform basis, viz. , either on the basis of rental income or certain percentage of capital thereof or by any recognised method, like the standard rent. It was submitted that the same class of properties is sought to be mini-divided into two classes : (1) in respect of which standard rent1 is fixed by the Rent Court under Section 11 of the Rent Act and (2) the other where no standard rent is fixed. It was contended that two different standards would be applied for arriving at the annual letting value. In other words, the contention was that the same class of properties could not be sub-divided into two separate classes and such classification was not reasonable because the basic object, which was sought to be achieved, was to tax a building and not income and such classification, even if permissible, had no rational nexus to the object sought to be achieved. ( 9 ) IT is not necessary to discuss at any great length the decisions cited by the learned Counsel, wherein it has been held that tax law can be challenged with reference to Article 14 of the Constitution of India. The fact that a tax law is not immune from the attack on the ground that it violates any of the fundamental rights in Part III of the Constitution or for want of legislative competence is not disputed. ( 10 ) IT was submitted by Mr. Mehta that levy of such exorbitant rate of tax is wholly arbitrary and, therefore, violative of Article 14 of the Constitution. While it is true that an arbitrary action would be regarded as being discriminatory, the learned Counsel has not been able to bring to our notice a decision of any court, which has taken the view that an act of the Parliament or the State legislature can be successfully impugned on the ground of it being arbitrary. An act of the Legislature can, certainly, be challenged as being violative of Article 14 of the Constitution, if it creates unreasonable classification in the sense that dissimilar persons are treated similarly or similar persons are treated dissimilarly, but it is not open to contend that the court should strike down an Act or a provision thereof, because on the face of it, the provision itself is arbitrary. An arbitrary exercise of power by a functionary is, certainly, not immune to challenge on the ground that the same is, per se, discriminatory and, therefore, violative of Article 14, but such arbitrary exercise of power cannot be equated with an Act of the Parliament or the legislature enacting a law. ( 11 ) IN our opinion, however, Article 14 of the Cpnstitution does not come into play in the present case. We are unable to accept the submission that, in the present case, there is any. mini-sub-division, as has been submitted by the learned counsel. Section 2 (1a) (ii) provides that the annual letting value is to be the annual rent, for which any building or premises may be expected to be let from year to year. If the sub-section had not provided for anything more, then the decisions of the Supreme Court in the case of Devon Daulat Rai Kapoor v. New delhi Municipal Committee and Another, air 1980 SC 541 , and Dr. If the sub-section had not provided for anything more, then the decisions of the Supreme Court in the case of Devon Daulat Rai Kapoor v. New delhi Municipal Committee and Another, air 1980 SC 541 , and Dr. Balbir Singh and Others, AIR 1985 SC 339 , and the earlier decisions relied on therein would be applicable and the effect would be that the rateable value would not be more than the standard rent, which could be fixed. The proviso, however, makes a specific provision with regard to the premises, which are let out and rent is received. Normally, in such a case, the annual letting value would be the contractual rent received by the landlord, in view of the provisions of sub-clause (aa ). Where, however, the standard rent is fixed, sub- clause (a) comes into the picture. Once the standard rent is fixed, the landlord would not be entitled to receive the contractual rent, for, he would then receive only the standard rent fixed under the Rent Act. Sub-clauses (a) and (aa) read together, therefore, provide that the actual rent which is received by the landlord, whether it be by reason of an order passed by the Controller, or whether it be by reason of the contract between the landlord and tenant, shall alone be the measure for fixing the annual letting value. The learned Counsel for the petitioner is, therefore, not correct in submitting that the measure for fixing the annual letting value is different. The basis for arriving at the annual rent is only one, where the property is let out, and that is the rent, which actually goes into the pocket of the landlord. Sub- clause (aaa), of course, deals with cases, where deliberately or for ulterior purposes, or for some extraneous reasons, the contractual rent actually fixed is lower than the rent, which may be reasonably expected from year to year. Here, the concept of a hypothetical letting out would come into the picture, because, the Commissioner will have to estimate the rent, which may Be reasonably expected and there, possibly, such rent would be higher than the standard rent. Sub-clause (aaa) is, in a sense, an exception to the rule, which rule is that the actual rent received by the landlord shall be the basis for fixing the annual letting value. Sub-clause (aaa) is, in a sense, an exception to the rule, which rule is that the actual rent received by the landlord shall be the basis for fixing the annual letting value. That actual rent may be received either by reason of the contract between the landlord and the tenant or as a result of standard rent having been fixed under the Rent Law. It is clarified that in this particular case, the court is not concerned with the premises, which are occupied by the owner, because in such a case, the proviso and sub-clauses (a), (aa) and (aaa) would have no application. ( 12 ) A submission was then made that by including the tax, which is paid by the tenant in the annual rent for determining the annual letting value, the effect is that there is tax on tax. The submission made was that if the rent of the premises is Rs. 12,000/- per annum and the agreement postulates that the tenant would pay to the municipal Corporation directly, the house tax and other charges, the effect would be as follows :- on the rent of Rs. 12,000/-per annum, the amount of taxes, etc. , representing about 54% of the rent, amounting to Rs. 5,832/- would have to be paid by the tenant to the Corporation. For the purposes of calculating the annual letting value, and in view of the aforesaid Full bench decision of this Court, the gross rateable value will be taken to be Rs. 17,832/- (Rs. 12,000/- + Rs. 5,832/ ). After giving the necessary deductions of 10% as per, Rule 7, the net rateable value would come to Rs. 16,049/- and the taxes, including the Education Cess, would be levied thereon. The result of this would be that there would be tax on tax. The submission was that, on the sum of Rs. 5,832/-, representing the tax and other charges payable by the tenant, on being added to the rent of Rs. 12. 000/- actually received, tax would be levied again. ( 13 ) IT is not unknown that in taxing statutes, sometimes tax on tax is levied. This, however, does not seem to be the case here. 5,832/-, representing the tax and other charges payable by the tenant, on being added to the rent of Rs. 12. 000/- actually received, tax would be levied again. ( 13 ) IT is not unknown that in taxing statutes, sometimes tax on tax is levied. This, however, does not seem to be the case here. For reasons best known to the landlord and tenant, and which need not be speculated, the liability to pay the house tax and other charges is on the tenant, by virtue of an agreement between him and the landlord. If this agreement was not there, the effect would be that such charges relatable to the property in question would have to be borne by the landlord. The Act presumes, and in our opinion rightly so, that if such liability is not required to be borne by the tenant, then the rent, which would be fixed, would be considerably higher. In the example given above, if the municipal taxes was not to be paid by the tenant, then instead of Rs. 12,000/- per annum, the landlord would possibly have charged not less than Rs. 17,932/- per annum. It is for this reason that grossing up is done and the annual letting value is calculated by taking the rent payable by the tenant into consideration. We find no constitutional provision being violated by the Act so providing for grossing up. It is possible that the reason for requiring the house tax and the other charges to be paid by the tenant may be an effort by the landlord to reduce the quantum of rent actually received by him, in an effort to depress the annual letting value and it is for this reason, the Legislature felt that the liability of the owner, which is discharged by the tenant, should be added to the money actually received by the landlord from the tenant for the purposes of determination of the annual letting value. ( 14 ) WE, therefore, do not find any merit in this contention. It was also sought to be contended that, in pith and substance, the house tax is a tax on the income from the property. ( 14 ) WE, therefore, do not find any merit in this contention. It was also sought to be contended that, in pith and substance, the house tax is a tax on the income from the property. While seeking to rely on the decision of the Rajashthan high Court in Ratnachand v. Panchayat samiti, AIR 1967 Rajasthan 142, it was sought to be contended that where the actual income is sought to be taxed, where there is no fixation of standard rent, then, what is sought to be recovered is income tax and this is beyond the legislative competence of the State government. We are unable to agree with this submission. The annual letting value has always been regarded as a measure for determining the rateable value, on which tax is leviable. As far back as in 1949, the Federal Court in the case of ralla Ram, v. The Province of East punjab, AIR (36) 1949 Federal Court 81, dealing with List II, Item 42, of the government of India Act, Schedule VII, which is analogous to Entry 49 of List II to the Second Schedule of the constitution held that where the annual value of property is the basis of a tax, then that tax does not necessarily become a tax on income. In that case also, the submission which was made was that property tax, which is calculated with reference to the rent, which is received, in effect becomes a tax on income. Repelling this contention, the Federal court held that such tax was not on income, although the basis of the tax was the anuual value of the building. ( 15 ) DURING the course of arguments, the question of validity of levy of Water tax and Education Cess also came up for consideration. With regard to Education cerss, reference need be made only to the decision of the Bombay High Court in the case of Ramchand Maroti Mandwale v. Malkapur Municipal Council, AIR 1970 bombay 154, where it was held that education Tax is an incidence, which falls on lands and buildings and that the state Legislature was competent to impose this tax under Entry 49. We are in respectful agreement with the said decision. We are in respectful agreement with the said decision. With regard to Water Tax, we find that Section 130 of the Bombay provincial Municipal Corporations Act, 1949 provides that tax will be levied only on those premises, to which private water supply is furnished from, or connected with the municipal water works in respect of those premises in a portion of the City, where water supply is arranged from municipal water works by means of private water connection, fountains etc. Therefore, no Water Tax is to be levied on the premises, which has no connection with supply of water by the Municipality. Looking at the scheme of the Bombay provincial Municipal Corporations Act, 1949, it appears that the word tax is a misnomer. The Water Tax, which is levied is, in essence, a cess and would be in the nature of a fee and would be covered by Entry 66, read with Entry 17 of the State List. ( 16 ) IT was lastly submitted that the tax, which is levied along with the Education cess, is confiscatory in nature. After the amendment of the Constitution of India and deletion of Article 19 (l) (f) from the constitution, such an argument is not open to the petitioners. What is the rate of tax to be imposed is for the Legislature to decide. In fact, this Court in Shri Prithvi cotton Mills Ltd. v. Broach Borough municipality and Others, AIR 1968 gujarat 124, which was affirmed by the supreme Court in AIR 1970 SC192, has even upheld levy of such tax to the extent of 75% of the rent receipt. . ( 17 ) WHILE it is not possible to strike down the rate of tax, which is levied, it would, however, appear that the incidence of municipal taxes is very high, which itself has led to devices being adopted, with a view to reducing the tax liability. This has also resulted in a very large number of house tax appeals, which have been filed by the owners from time to time. The imposition of 64% to 72% of the rent actually received by way of municipal tax and the balance amount being subjected to income tax would mean that a very small percentage of the rent, which is received would remain with the owner. The imposition of 64% to 72% of the rent actually received by way of municipal tax and the balance amount being subjected to income tax would mean that a very small percentage of the rent, which is received would remain with the owner. It is pertinent to note that in calculation of 10% under Rule 7, no other expenses are allowed to be deducted, like repairs, etc. , even if such expenses exceed 10% of the recent received. Such heavy taxation, apart from encouraging owners to evade tax, may also result in reducing the construction and further development of the City, which will have the effect of creating artificial shortages. Perhaps, time has come for the State Government to have a fresh look at the relevant provisions of the Act. It is to be borne in mind that for determining the house tax, which is payable two factors are alone relevant, viz. , the annual letting value and the rate of tax. The rate of tax is fixed by the legislature or by the Corporation under the Act, and the same is normally, not subject to challenge. Most of the litigation and the dispute between the parties arises with regard to the fixation of the annual letting value. If a method of fixing the annual letting value is adopted, which does hot give rise to dispute qua the fixation of the annual letting value, much of the litigation pending in the courts Would come to an end and actual revenue would flow into the cofferes of the Corporation. Mr. Tanna informed the Court that some proposals have been submitted, in this regard, to the State Government and the same are awaiting their consideration. ( 18 ) A grievance was also sought to be raised to the effect that the Municipal authorities are not given effect to the decisions of the Court. If this is so, it is, indeed, unfortunate. We do not expect the municipal Authorities to disregard decisions of the Court, where annual letting value have been fixed and have become final. Annual letting value once fixed is usually the basis for fixation in the subsequent years. It is possible that the annual Idling value first fixed in respect of a premises may be subject of litigation. We do not expect the municipal Authorities to disregard decisions of the Court, where annual letting value have been fixed and have become final. Annual letting value once fixed is usually the basis for fixation in the subsequent years. It is possible that the annual Idling value first fixed in respect of a premises may be subject of litigation. In such a case, perhaps, the municipal authorities will be following its earlier decision till the matter is settled or as a result of the decision of the Court, we would not expect the Municipal corporation to accept the final verdict, but to keep on insisting on fixing the annual letting value at a figure, which has not been accepted by the Court. ( 19 ) FOR the aforesaid reasons, we do not find any merit in Special Civil application No. 4368 of 1984 and the same is accordingly dismissed. Rule is discharged. There will be no order as to costs. ( 20 ) IN view of the dismissal of Special civil Application No. 4368 of 1984, other companion Special Civil Applications are also dismissed. Rule issued in each matter is discharged. Interim orders are vacated. . ( 21 ) BALANCE of tax to be paid within two weeks from today. Rule discharged. .