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2025 DIGILAW 1230 (RAJ)

Modern Insulators Limited v. State of Rajasthan

2025-05-02

CHANDRA PRAKASH SHRIMALI, PUSHPENDRA SINGH BHATI

body2025
JUDGMENT : Per Dr. Pushpendra Singh Bhati, J: 1. This Writ Petition under Article 226 of the Constitution of India has been preferred claiming the following reliefs: “It is, therefore, humbly prayed that the Writ Petition may kindly be allowed and by an appropriate, order or direction- (i) declare Part VII of the Rajasthan Finance Act, 2006 imposing Land Tax and the Rules framed thereunder and consequential notifications as ultra vires and the same may be struck down. (ii) hold that the State legislature has no jurisdiction to impose the impugned tax on agricultural land in the State. (iii) impugned Assessment Order dated 27/12/2006 (Annexure 3) & Demand Notice dated 2/3/2007 (Annexure 4) may kindly be quashed and set-aside. (iv) hold that in any case no tax can be levied and collected for the Financial Year 2006-2007. (v) Any other order or direction which this Hon’ble Court deems just and proper may kindly be passed.” 1.1. At the outset, it has been brought to the notice of this Court that the challenge to the validity of the Act of 2006 in the present petition, has already been given up by the petitioner, which is reflected in the order dated 10.07.2017 passed by this Hon’ble Court; the said order reads as under: “Learned counsel for the petitioner submits that the petitioner is not pressing the prayer No.1 that is to declare Part VII of the Rajasthan Finance Act, 2006 ultra vires, hence, the matter is nor required to be adjudicated by the learned Single Bench. In view of the statement made by learned counsel appearing on behalf of the petitioner, the writ petition so far as the prayer No.1 is concerned is dismissed as not pressed. For the remaining causes, let this writ petition be listed before learned Single Bench for adjudication.” 2. Before unraveling the remaining controversy in the present case, it is pertinent to underscore the provision of law application whereof the controversy arose. 2.1. The State of Rajasthan enacted Rajasthan Finance Act, 2006 (hereinafter referred to as ‘Act of 2006’), which was then published in the Official Gazette on 31.03.2006. The State Government, in exercise of powers conferred by Section 61 under Chapter VII of the Act of 2006, also framed the Rajasthan Land Tax Rules, 2006 (hereinafter referred to as ‘Rules’), and notified the same in the Official Gazette on 25.09.2006. 2.2. The State Government, in exercise of powers conferred by Section 61 under Chapter VII of the Act of 2006, also framed the Rajasthan Land Tax Rules, 2006 (hereinafter referred to as ‘Rules’), and notified the same in the Official Gazette on 25.09.2006. 2.2. The Act of 2006 under its Chapter VII provided for levy of tax in the State of Rajasthan, on certain classes of land. The provisions of the Act were applicable on the lands as defined under Section 38(c), and the Scheme of levy and collection of tax was as such that under Section 39 of the Act of 2006, the State Government was to prescribe by a notification in the Official Gazette, the levy of tax on the classes of lands at such rates as were to be notified by the State Government from time to time in the Official Gazette. 2.3. Furthermore, Section 40(1) of the Act of 2006 read with Rule 4 of the Rules, provided for preparation of a provisional assessment list (in short “provisional list”) by the assessing authority (defined under Section 38 (b) of the Act of 2006), of all lands liable to pay the prescribed tax. After preparation of the provisional list, a public notice has to be given as per Section 40(3) of the Act of 2006 and Rule 5(1) of the Rules, which contained the particulars as prescribed by the State Government, and that the said list has to be open for inspection by every person claiming to be the land holder of the land mentioned in the list. Section 41 read with Rule 5(4) of the Rules, provided for objections to the entries in the list by any person aggrieved by any entry in the provisional list, and Section 42 read with Rule 5(7) of the Rules, provided for finalization of the assessment list, after the provisional list being duly authenticated by the assessing authority, and the list so authenticated shall be kept open for inspection by holders of the land or their agents. Then as per Section 47 of the Act of 2006 read with Rule 10 of the Rules, a notice of demand (in short “Demand Notice”) has to be issued and served on the land holder, and that Section 49, provided for a penalty in default of payment of tax mentioned in the Demand Notice. 3. Then as per Section 47 of the Act of 2006 read with Rule 10 of the Rules, a notice of demand (in short “Demand Notice”) has to be issued and served on the land holder, and that Section 49, provided for a penalty in default of payment of tax mentioned in the Demand Notice. 3. Brief facts of the case giving rise to the instant controversy are that in exercise of the powers under Section 39 the State Government notified the classes of land and the rate of tax, which was payable for each year under Chapter VII of the Act of 2006. Thereafter, a Public Notice dated 07.11.2006 (Annexure-1) was issued by the assessing authority, which was admitted to be received by the petitioner. The said notice informed the land holders that a provisional assessment list of the tax on lands situated in the village Amthala, Tehsil Abu road, District Sirohi has been prepared, and was open for inspection at the office of the Assessing Authority (Sub Registrar) Abu Road, Sirohi for a period of 30 days from the date of publication of the said notice. The Notice further sought filing of objections by the land holders, against the provisional assessment list within a period of 30 days. 3.1. The petitioner perturbed by the levy of tax submitted its preliminary objections dated 30.12.2006 (Annexure-2), in pursuance to the said notice. 3.2. The Respondent no. 3, subsequently, issued the impugned Public Notice (Annexure-3) on 27.12.2006 under Section 42 of the Act of 2006, whereby it was informed that the provisional assessment as arrived by the respondents was duly authenticated by the Assessing Authority and thus, the list was final as per Section 42 of the Act of 2006; thereafter on 02.03.2007, respondent no. 3 issued the impugned Demand Notice (Annexure- 4) under Section 47 or/and 49 of the Act of 2006 to the petitioner, whereby a demand of Rs.4,07,868/- was raised. The Demand Notice asked for the compliance of the same, failing which coercive measures for recovery would be adopted by the respondents. 3.3. Aggrieved by the Notice of finalization of the provisional assessment list (Annexure-3) and Demand Notice(Annexure-4), the petitioner-Company filed the instant writ petition, claiming the afore-quoted reliefs. 4. Mr. The Demand Notice asked for the compliance of the same, failing which coercive measures for recovery would be adopted by the respondents. 3.3. Aggrieved by the Notice of finalization of the provisional assessment list (Annexure-3) and Demand Notice(Annexure-4), the petitioner-Company filed the instant writ petition, claiming the afore-quoted reliefs. 4. Mr. Pranjul Mehta, learned counsel for the petitioner, submitted that the ambit and purview of ‘land’ as defined under Section 38(c) of the Act of 2006 is limited in the sense that it excluded the land held or used exclusively for agricultural or residential purposes or an urban land as defined The Rajasthan Lands and Buildings Tax Act, 1964 (hereinafter referred to as the Act of 1964) or an abadi land as defined under the Rajasthan Land Revenue Act, 1956. It was further contended that the petitioner’s land is situated in Amthala, Abu Road, which is an urban area, falling within the municipal limits and therefore would be governed by the Act of 1964 and not by the Act of 2006. 4.1. Learned counsel for petitioner also submitted that the Respondent No. 3 had neither provided any opportunity of hearing to the petitioner, nor has considered the objections dated 30.12.2006, raised by the petitioner to the notice dated 07.11.2006, while finalizing the assessment list, and thus has not complied with the mandate of Section 42(2) of the Act of 2006, which specifically mandates to provide an opportunity of hearing before passing any order of assessment. 4.2. Learned counsel further submitted that after finalization of the assessment list as per the provisions of the Act of 2006, the list so finalized were to take effect and come into force w.e.f. 1 st day of April following the date on which it had been finalized and the same were to remain in force till a new list comes into existence as per law. However, the proviso to the Section 42(4) of the Act of 2006, lays down that the first list finalized after the enforcement of the Chapter VII of the Act of 2006 shall only take effect from such date as may be notified by the State Government. The Chapter VII of the Act of 2006 was notified on 25.09.2006, thus the first list finalized could not take effect any date prior to the said notification. The Chapter VII of the Act of 2006 was notified on 25.09.2006, thus the first list finalized could not take effect any date prior to the said notification. Consequently, the respondents have not made adherence to proviso to Section 42(4) of the Act of 2006, and that the said list could not take effect from 01.04.2006. 4.3. Learned counsel also submitted that the Chapter VII incorporating land tax in the Act, was notified on 25.09.2006 and thus, the same cannot have any retrospective application, therefore, there could not have been any land tax for the financial year 2006-07, which commenced on 01.04.2006. Hence, tax levied for the financial year 2006-2007 is not just and proper under the law. 5. Per Contra, Mr. Harshvardhan Singh appearing for Mr. Mahaveer Bishnoi, AAG, while opposing the aforesaid submissions made on behalf of the petitioner, submitted that due process of law has been followed while passing the impugned notice and issuance of the impugned demand notice. 5.1. Learned Counsel further submitted that the spirit of the Act of 1964 and the Act of 2006 is different in essence and therefore, both of them cannot be equated for the purpose of adjudicating the prayers in question. 5.2. Learned Counsel also submitted that though the definition of land under Section 38(c) of the Act of 2006 excludes the land held or used exclusively for agricultural or residential purposes from the ambit of levy of the said tax; however, the word “exclusively” clearly signifies the exclusion of land for said purposes only when they are actually being used for agricultural or residential purposes. Merely stating that the nature of land is agricultural/residential, and using the same for other purposes, or vice-versa, does not bring the same under the ambit of the said exclusion. Therefore, as per the learned Counsel, any kind of importation of definition of the term ‘land’ from other Statutes, would be detrimental to the cause of justice. 5.2.1. Learned Counsel also submitted that the State by defining the ‘land’ for the purpose of levying land tax has already excluded the land used for agricultural and residential purposes and also for the urban land as defined in the Act of 1964 as well as Abadi land. It was further submitted that the petitioner’s land neither fell in the category of urban land nor Abadi land nor is used for agricultural or residential purposes. 5.3. It was further submitted that the petitioner’s land neither fell in the category of urban land nor Abadi land nor is used for agricultural or residential purposes. 5.3. Learned counsel further submitted that a fair and equal opportunity of hearing was given to the petitioner. It was highlighted that before passing the order dated 27.12.2006, a notice was served on the petitioner on 07.11.2006 which clarified that provisional list of tax was open for inspection and objections against the same maybe filled, if any, within 30 days from the date of publication of notice. 5.4. Learned Counsel further contended that Section 42 of the Act of 2006 pertains to the finalization of the assessment list, which serves as the basis for the crystallization of lands. It was further submitted that while sub-section (4) of Section 42 stipulates that the finalized assessment list shall take effect from the 1st day of April following the date of its finalization and shall remain in force until a new list is prepared and enforced; the legislature has incorporated a specific proviso to address exigencies arising in the first year of the enactment. The said proviso expressly provides that the initial finalized assessment list, post-enforcement of the Chapter, shall take effect from the date specified by the State Government through notification in the Gazette. This demonstrates that the legislature has expressly created an exception for the first assessment list, enabling its enforcement from a date notified by the State Government, rather than the default date of 1st April following its finalization. Accordingly, the petitioner’s contention that the provisional assessment list can only be applied from 1st April 2007 is erroneous and without merit. 5.5. Learned counsel also submitted that if the petitioner has any grievance with respect to the procedure followed by the relevant authorities including issuance of the impugned notice and the demand notice, an efficacious and speedy remedy lies in raising the same before the appellate authority as has been provided under Section 48 or Section 50 of the Act of 2006, depending upon the nature of grievance, after fulfilling the required conditions stated therein. 6. Heard learned counsel for the parties at length as well as perused the record of the case. 7. Since the matter pertains to taxation, therefore, as per the Notification issued by this Hon’ble Court, the same continues to be listed before the Division Bench. 8. 6. Heard learned counsel for the parties at length as well as perused the record of the case. 7. Since the matter pertains to taxation, therefore, as per the Notification issued by this Hon’ble Court, the same continues to be listed before the Division Bench. 8. At this juncture, this Court finds that in light of the aforementioned order dated 10.07.2017, the present adjudication shall be made on the issues raised herein, except the issue pertaining to challenge to the validity of Act of 2006, as the same has already been given up by the petitioner. 9. This Court further observes that the term ‘land’ has been defined under Section 38(c) of the Act of 2006 and Section 2(5) of the Act of 1964, which are reproduced as hereunder: Section 38 (c) of the Act of 2006 ““land” shall not include the land held or used exclusively for agricultural or residential purposes or an urban land as defined in the Rajasthan Land and Building Tax Act, 1964 (Act No. 18 of 1964) or an abadi land as defined in clause (b) of section 103 of the Rajasthan Land Revenue Act, 1956 (Act No. 15 of 1956)” Section 2(5) of the Act of 1964: ““land" means land which is, or is capable of being, used as a building site, and includes garden or ground appurtenant to a building, but does not include a holding as defined in the Rajasthan Tenancy Act, 1955 (Rajasthan Act 3 of 1955), provided the improvement referred to in sub-clause (a) of clause (19) of section 5 of the said Act over such holding does not exceed such area as has been prescribed for purposes of the second proviso to sub- section (1) of section 66 or the second proviso to section 67 of the said Act” 9.1. This Court further observes that while both enactments pertain to the taxation of land, where the Act of 2006 adopts a more comprehensive approach by encompassing a wider range of land classifications within its ambit of taxation. In contrast, the Act of 1964 was specifically designed to regulate the taxation of urban and developed lands, primarily for municipal revenue purposes. 9.2. This Court also notes that despite the identical terminology employed in both statutes, the legislative intent underlying each enactment differs significantly. In contrast, the Act of 1964 was specifically designed to regulate the taxation of urban and developed lands, primarily for municipal revenue purposes. 9.2. This Court also notes that despite the identical terminology employed in both statutes, the legislative intent underlying each enactment differs significantly. The Act of 2006, while classifying different categories of land and corresponding taxation liability, encompasses all taxable lands, irrespective of whether they are situated in rural or urban areas, in accordance with the state’s taxation policies. Moreover, it expressly excludes from the purview of taxation any land that is exclusively utilized for agricultural or residential purposes. 9.3. This Court in light of the aforesaid discussion, finds that the exclusion sought by the petitioner from leviability of tax on the land in question under the Act of 2006, does not fall within the ambit of law. The exclusion is for fixed purposes for actual use, which included agricultural, urban, Abadi & residential, whereas the petitioner’s land does not fall in either of the excluded categories for actual purposes fixed by the State. 10. This Court reiterates and emphasizes that the term “exclusively” used in the said provision to exempt certain lands from its applicability necessitates a thorough examination of the “purpose” for which such land is utilized. The mere assertion of an exemption cannot override the actual usage of the land. For instance, an agricultural land that is utilized for commercial activities cannot seek exemption solely on the grounds of its classification as agricultural land, nor can a non-agricultural land be deemed otherwise merely by its designation, without regard to its functional use. 10.1. It is thus, crucial to consider the intended use of the land in question at all times. This Court finds that the exclusion under the said provision of the Act of 2006, is expressly limited to specific categories, namely agricultural, urban, abadi, and residential purposes. As the petitioner’s land does not fall within any of these defined categories, the claim for such exclusion is also untenable and devoid of merit. 11. This Court finds that the exclusion under the said provision of the Act of 2006, is expressly limited to specific categories, namely agricultural, urban, abadi, and residential purposes. As the petitioner’s land does not fall within any of these defined categories, the claim for such exclusion is also untenable and devoid of merit. 11. This Court also finds that the respondent no.3 passed an order dated 27.12.2006 raising the demand in question against the petitioner, after serving notices upon the petitioner 07.11.2006, further giving them 30 days from the said notice to file objections, if any; therefore, the requirements of Section 42(2) of the Act of 2006 have been complied with by the respondent in issuing the notice in question. It is further observed that the provisional assessment is also in accordance with law. 12. As regards the contention raised on behalf of the petitioner that in the present case, the respondents have not made due adherence to the provision of Section 42 of the Act of 2006, this Court observes that in view of the exception as carved out by the legislation in the form of the proviso to Section 42(4) of the Act of 2006, the list finalized for the first time after the enforcement of this Chapter, i.e., Chapter VII, shall take effect and be deemed to have come into force with effect from such date as notified by the State Government in the Official Gazette. Thus, this Court is not convinced with the argument raised on behalf of the petitioner that land tax in question could not have been imposed with effect from any date prior to the ensuing financial year which in the present case commenced from 01.04.2007, i.e., financial year 2007-08. 13. This Court further finds that an efficacious and proper remedy lies before the appellate authority provided under Section 48 or/and 50 of the Act of 2006 with respect to grievances raised by the petitioner in this writ petition. 14. This Court further finds that the Statute, challenge to which has been given up, is exhaustive in nature, and once the Statute survives and the challenge to the same has been given up by the petitioner, the petitioner has to adhere to the assessment in question as well as the notice given. 14. This Court further finds that the Statute, challenge to which has been given up, is exhaustive in nature, and once the Statute survives and the challenge to the same has been given up by the petitioner, the petitioner has to adhere to the assessment in question as well as the notice given. The notice for the land located at village Amthala is amenable to the tax because the purpose of that land is important and not the location of the land, and that the purpose is not in dispute. 15. In view of the above, this Court does not find it a fit case so as to grant any relief to the petitioner in the instant petition. 16. Consequently, the present petition is dismissed . All pending applications stand disposed of.