ORDER
BILAL NAZKI, J.
1. It is submitted that the petitioner Academy is a charitable institution and is being run on the amounts donated by various persons and is not a profit making institution. It has granted a certificate under Section 80-G of the Income tax Act and the donations received by the Academy are exempt from payment of Income tax. It claims to be a premier educational institution engaged in rendering service to the society. In furtherance of its objects the petitioner had purchased lands in Vijayawada etc., and had constructed various buildings to house the educational institutions and hostels for imparting education. The petitioner academy owns certain lands situated at Vijayawada. The academy had already constructed a Girls hostel for the students of Sree Durga Malleswara Siddartha Mahila Kalasala. This building was constructed during theperiod 1984 to 1987 and in view of the increase in the students, to increase the hostel facilities, the academy had decided to increase the room strength of the hostel.
2. The construction, development etc., of the land within urban areas has been regulated by A.P. Urban Areas (Development) Act, 1975 (hereinafter referred to as 'the Act'). The Act has been promulgated with the object of regulating the commercial exploitation of land in the urban areas. The petitioners are aggrieved of an amendment carried in the Act. Section 28 of the Act has been amended and a proviso has been substituted for the first proviso of sub-section (2) of Section 28. The grievance of the petitioner is that, before the amendment while levying development charges the statute has provided a maximum ceiling of Rs.40,000/- per hectare in case of development of land and Rs.10/- per Sq. metre in case of development of building. In the year 1996 the petitioner academy approached the second respondent and had applied permission for construction of girls hostel consisting 3+1 floors having built up area of 3960 Sq. meters. According to the petitioner after the amendment, the power to fix the rates was delegated to the Government and the Government issued G.O. Ms. No.51 dated 5-2-1996 and if the petitioner is charged in accordance with the G.O. issued on the strength of amendment in the Act it will have to pay a tax of Rs.1,34,175/- which is almost had four times what is would have to pay there not been G.O. Ms. No.51.
3. The argument of the learned Counsel for the petitioner is that, the power to fix the rates in the absence of ceiling being prescribed in the Act is arbitrary, is conferring unguided and uncanalised power on the delegatee, hence it is unconstitutional. Second arguments that was made at the Bar was that the educational institution which is being run onno profit basis would not be a commercial institution within the meaning of 'commerce' or 'commercial use' as defined in Rule 2(c) and 2(d) of the Urban Development Rules framed in exercise the Rule making power of the Act.
4. The respondents on the other hand in their counter have stated that the prices of the lands and prices for effecting the development have sky reckoned and therefore the amendment was necessary. The State is bound to develop the areas and with a view to provide the facilities which are necessary for a healthy atmosphere of the urban areas this amendment had been effected and the power had been delegated to the Government to prescribe the rates for various types of development. It is further stated that the petitioner has no cause of action as it has not applied for any fresh permission with regard to any proposed construction.
5. Before coming to the rival arguments it will be profitable to refer to certain provisions of the A.P. Urban Areas (Development) Act, 1975. This Act has been enacted 'to provide for the development of urban areas in the State of Andhra Pradesh according to plan and for matters ancillary thereto'. It is supposed to provide amenities which are defined in Section 2(a). Section 2(a) is reproduced:
'2.(a) 'amenity' includes road, water supply, street lighting, drainage, sewerage, public works, tourists sports, open spaces, parks and play fields and such other convenience as the Government may, by notification, specify to be an amenity for the purposes of this Act.
Under Section 2(a) 'development' is also defined.
'2.(e) 'development' with its grammatical variations means the carrying out of all or any of the works contemplated in themaster plan or zonal development plan referred to in this Act, and the carrying out of building, engineering mining or other operations in, on, over or under land, or the making of any material change in any building or land and includes redevelopment:'
Under Section 28(1)(a) the use of land and building for the purpose of assessing the development charges have been categorised into;
(i) Industrial
(ii) Commercial (iii) Residential (iv) Agricultural, and
(v) Miscellaneous
The original Act had a proviso which reads as under:
'Provided that such rates shall not exceed Rs.40,000/- per hectare in the case of development of land and Rs.10/- per square metre in the case of development of building.'
This Section 28 has been enacted in order to give effect to Section 27. Both Sections 27 and 28 and some other sections which are contained in Chapter -VII of the Act deal with levy, assessment and recovery of Development charges. Section 27 authorises the authority created under the Act to levy development charges on the institution of use or change of use of land or building or development of any land or building for which permission is required under the Act. So, under the scheme the development charges would be levied for development of land or building in terms of the mechanism prescribed under Section 28 of the Act but the maximum that could be levied was Rs.40,000/- per hectare in the case of development of land and Rs.10/- per Sq.metre in the case of development of building. This proviso, now by Act 13 of 1996, has been substituted with the following:
'Provided that the development charges may be levied at different rates for different institutions of use as may be prescribed from time to time to which the land, or as the case may be the building, is used.'
In pursuance of this amendment the impugned notification has been issued. Admittedly this amendment neither prescribes a limit nor lays down any guidelines to the delegatee.
6. Now, the question before this Court is, whether such delegation would be permissible in a taxing statute. The matter is concluded by a Constitutional Bench judgment of Supreme Court reported in M/s. Devi Das v. State of Punjab, : [1967]3SCR557 . In this case the Supreme Court dealt with amendment carried to Section 5 of East Punjab General Sales Tax Act, 1948 (Act 46 of 1948). East Punjab General Sales Tax Act contained Section 5 which read as under: -
'5. Subject to the provisions of this Act, there shall be levied on the taxable turnover every year of a dealer a tax at such rates as the Provincial Government may by notification direct.'
This was the position of Section 5 in the original Act which was promulgated in the year 1948. In 1952 amendment was effected in Section 5 in following terms:
'In sub-section (1) of Section 5 of the East Punjab General Sales Tax Act, 1948, after the word 'rates' the following words shall be inserted and shall be deemed always to have been so inserted, namely, 'not exceeding two pice in a rupee.'
The High Court of Punjab held that Section 5 of the Act was void as it gave an unlimitedpower to the executive to levy sales tax at a rate which is thought fit. But the Court held that amendment of Section 5 by the Punjab Act 19 of 1952 cured the defect in the said Act and had the effect of giving a new life to it. In view of this factual position there were to questions before the Supreme Court. The first one was, whether Section 5 of the East Punjab General Sales Tax Act, 1948 as it originally stood was void. Second question was that, if the said section was void whether the amendment could give life to it. In the factual matrix of the present case we are concerned with the first question. The Supreme Court while deciding the controversy referred with approval to case in Corporation of Calcutta v. Liberty Cinema, : [1965]2SCR477 . The Supreme Court not only approved the said decision but also observed that the law on the subject was fairly settled after the 1965 judgment. In this case the Supreme Court by majority held that fixation of rates might be left to a non-legislative body but when it was left to such a body the legislature must provide guidance for such fixation. Justice Sarkar who spoke for the majority in Corporation of Calcutta case, : [1965]2SCR477 , said:
'It (the Municipal Corporation) has to perform various statutory functions. It is often given power to decide when and in what manner the functions are to be performed. For all this it needs money and its need will vary from time to time, with the prevailing exigencies. Its power to collect tax, however, is necessarily limited by the expenses required to discharge those functions. It has, therefore, where rates have not been specified in the statute, to fix such rates as may be necessary to meet its needs. That, we think, would be sufficient guidance to make the exercise of its power to fix the rates valid.'
After considering various judgments the Supreme Court observed, 'Under Section 5of the Punjab General Sales Tax Act, 1948 as it originally stood, an uncontrolled power was conferred on the provincial Government to levy every tax at such rates as the said Government might direct. Under that section the Legislature practically effaced itself in the matter of fixation of rates and it did not give any guidance either under that section or under any other provisions of the Act.....no other provision was brought to our notice. The argument of the learned Counsel that such a policy could be gathered from the constitutional provisions cannot be accepted, for, if accepted, it would destroy the doctrine of excessive delegation. It would also sanction conferment of power by Legislature on the executive Government without laying down any guidelines in the Act. The minimum we expect of the Legislature is to lay down in the Act conferring such a power of fixation on rates clear legislative policy or guidelines in that regard. As the Act did not prescribe any such policy, it must be held that Section 5 of the said Act, as it stood before the amendment, was void.'
7. Going by the said judgment we tried to go through the whole Act in order to come to a conclusion that even if the maximum rates are not prescribed as they were prescribed in the original Act whether there are any guidelines in the statute which would guide the delegate in fixing the rates, but no such provision was found in the Act. The learned Counsel for the respondents could not show us any such power either. He could not also show us any judgment which would suggest that the M/s. Devi Das's judgment (supra) has been ever over ruled. However, he states that the impugned notification has been issued not on the strength of amendment of proviso to Section 28 but has been issued on the strength of Section 58 of the Act. Section 58 is rule making power of theGovernment. This section gives power to the Government to make rules to carry out the purpose of the Act. Sub-section (1) of Section 28 lays down the prescription of rates for the purpose of assessment and collection of development charges. The learned Counsel submits that even the notification refers to Section 58 and therefore the source of power of notification is Section 58 and not Section 28. The rule making power given to the Government under Section 58(1) has to be appreciated in the light of proviso to Section 28 as it existed before the amendment. Before amendment of Section 28 the maximum had been prescribed. So, one could safely conclude that the rates could be prescribed by the Government in consultation with the authority within the maximum laid down by Section 28. Now that Section 28 has been amended and there is no maximum prescribed the Government cannot prescribe the rates under the power of delegation because it would remain an uncontrolled power and would not stand the judicial scrutiny in view of the judgment of Supreme Court referred to above.
8. Coming to the second argument of the learned Counsel for the petitioner that the petitioner institution was an educational institution which was not being run on profit basis and therefore would not be a commercial institution within the meaning of 'commerce' or 'commercial use' as defined in Rule 2(c) and 2(d) of the Urban Development Rules, this argument cannot be accepted on the simple ground that when the petitioner applied for permission before the amendment to Section 28 it was charged as a commercial institution and it had accepted that position, besides it would be a question of fact whether the institution is being run on profit basis or not.
9. The learned Counsel for the petitioner relied on Mathuram Agarwal v. State of Madhya Pradesh, : AIR2000SC109 . This judgment merely lays down interpretation of a taxing statute. Since the issue before us is directly covered by the judgment of Constitutional Bench (supra) we need not try to interpret the amendment made to the Act.
10. There were certain other arguments, made, but since the points discussed above are directly covered by the judgment of the Constitutional Bench of the Supreme Court (supra) we do not want to go into the other issues. The learned Counsel for the respondents however states that petitioner has no cause of action and he vehemently argued that in the absence of cause of petitioner could not challenged vires of the amending Act. He further stated that, at no point of time any application was made by the petitioner for grant of permission. If this Court sees this argument in the narrow technical sense the Counsel for respondents is correct, but the fact remains that even if the petitioner has not applied and if he applies now he will be charged in terms of the impugned notification whereby the rates have been laid down which are 400% more than what could be levied before the amendment to Section 28 of the Act. The writ petition has been pending for the last five years and it will not be just to dismiss the writ petition and ask the petitioner to apply and come back to the Court again when he is charged at new rates prescribed under the impugned notification by virtue of amendment in Section 28 of the Act.
11. For these reasons, we hold that the amendment to proviso to Section 28 of the Act carried by Amending Act 13 of 1996 is void and ultra vires and is as such struck down.
12. The writ petition is accordingly allowed. No order as to costs.