Balvantrai Tulsidas and ors. Vs. State of Gujarat and anr.

Decided On : Jan-10-1991

Court : Gujarat

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Code Context


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			'casenote' => ' -  -  (4) The Act is bad as it results in unjust enrichment. this Court held that demand and/or collection of education cess bad on the ground that as no property tax was levied by the concerned local authorities and as no machinery for assessment and collection was available to the Collector on a true interpretation of Rule 3 of the Gujarat Education Cess Rules, the demand and collection of education cess was without authority of law. Hathi that the levy of education cess having been declared as unlawful by this Court, the Legislature ought to have validated the levy also before it can be said that the Validating Act has effectively validated the collection of the education cess. As held by the Supreme Court, the term 'levy' is wider in its import than the term 'assessment'.It may included both imposition of a tax as well as assessment. [1971]79ITR136(SC) :When a legislature sets out to validate a tax declared by a Court to be illegally collected under an ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively.',
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			'judgement' => '<p style="text-align: justify;">G.T. Nanavati, J.</p><p style="text-align: justify;">1. The common question which arises in both these petition is whether the Gujarat Education Cess (Validation) Act, 1977, which came into force on 24th January, 1978 is a valid piece of legislation. Therefore, at the request of the learned Advocates appearing in these petitions, they are heard together and they are now disposed of by this common judgment.</p><p style="text-align: justify;">2. Special Civil Application No. 2063 of 1978 is filed by owners of lands and buildings situated within the urban area of Junagadh Nagar Palika (now Municipality). Till April 1, 1975, Junagadh Municipality had not levied property tax on the lands and buildings situated within its area. It appears that pursuant to the direction given by the State Government under Section 15(1) of the Gujarat Education Cess Act, 1962 to the Collector of Junagadh, steps were taken by the Collector for collecting the education cess. Pursuant thereto the Mamlatdar, Junagadh issued demand notices in March and April 1978. Those notices were challenged by some of the present petitioners and others by filing a petition in this Court being Special Civil Application No. 768 of 1976. Other property owners who had received such notices had also filed Special Civil Application Nos. 707, 757 to 762.815 and 1541 of 1976. Those petitions were allowed by this Court on June 22, 1977 and it was held that the said demand notices were illegal and invalid, as the levy of education cess was not legal in absence of levy of property tax by the Junagadh Municipality and in absence of the machinery of assessment and collection of the education cess. That decision was followed in Special Civil Application No. 768 of 1976. In respect of other urban areas also, this Court had held the collection of tax on lands and buildings under Section 15(2)(b) of the Act by the Collector, where the local authorities had not imposed property tax as invalid, on the ground that Rules 3 of the Gujarat Education Cess Rules, 1962 prescribing the manner of preparing assessment list could not be invoked as no rules were made by the concerned authorities for the purpose of collection of property tax in such areas. In order to validate the collection of such tax, first an Ordinance was issued and then the Gujarat Education Cess (Validation) Act, 1977 came to be enacted. As the request of the petitioners, based upon the judgment of this Court, to refund the education cess recovered from them was rejected by the State on the ground that the said collection has to be regarded as valid in view of the Validating Act, they have filed these petitions. The petitioners are now challenging the validity of the Validating Act and seek a writ of Mandamus directing the respondents to refund the education cess recovered from them for the years 1962 to 1976.</p><p style="text-align: justify;">3. Petitioners in Special Civil Application No. 2636 of 1978 are owners of lands of buildings situated in Mangrol town of Junagadh District. Levy and collection of education cess from the owners of lands and buildings of that urban area was challenged by such property owners by filing Special Civil Applications Nos. 1239 and 1812 of 1975, 266 of 1976, 610 of 1976, 838 of 1976, 704 and 739 of 1976. this Court followed those petitions for the same reasons, quashed the bills issued to the petitioners and directed the respondent-State to refund the cess, if it was already collected. The Mamlatdar of Mangrol has now issued fresh notices calling upon the petitioners to pay education cess. The petitioners have therefore filed these petitions in the representative capacity. They are also challenging the validity of the Validating Act and want this Court to direct the respondent-State not to enforce the demands made for recovering the education cess and to refund the same, if it has already been collected.</p><p style="text-align: justify;">4. Mr. Deepak M. Shah, learned Advocate appearing for the petitioners in Special Civil Application No. 2063 of 1978 has raised the following contentions:</p><p style="text-align: justify;">(1) The Validating Act is ultra vires and void because what the Legislature has done by enacting the said Act is to overrule or set aside the decision of this Court, as it has attempted to levy cess without removing the defent pointed out by this Court.</p><p style="text-align: justify;">(2) The Validating Act is ultra vires Article 14 of the Constitution.</p><p style="text-align: justify;">(3) The Validating Act is ultra vires Article 19(1)(f) read with Article 31 of the Constitution.</p><p style="text-align: justify;">(4) The Act is bad as it results in unjust enrichment.</p><p style="text-align: justify;">5. Mr. P.V. Hathi, learned Advocate appearing for the petitioners in Special Civil Application No. 2636 of 1978 has raised only two contentions. First contention raised by him is same as that of Mr. Shah. Second contention is that the Validating Act has merely validated the collection already made till the said Act came into force and, therefore, the respondents have no authority to collect the education cess now for the years 1962 to 1976.</p><p style="text-align: justify;">6. Though in the petitions various contentions have been raised, these are the only contentions urged before us. Before we deal with the contentions, it will be useful to refer to the relevant provisions of the Act. As defined by Section 2(iv), 'Education Cess' means a surcharge or tax on lands and buildings levied under the Act. Section 3 provides that there shall be levied and collected in accordance with the provisions of the Act and education cess which shall consist of: (a) a surchage on all lands except lands which are included within a village site and not assessed to land revenue, and (b) a tax on lands and buildings in urban areas. Section 12 provides for levy and collection of tax on lands and buildings situated in an urban area at the rates specified in that section. What is required to be noted is that the rate fixed is a certain percentage of the annual letting value. 'Annual Letting Value' is defined by Section 2(i) to mean the rateable value or annual letting value or gross annual letting value of lands and buildings as determined in accordance with the relevant local authority law and in a case where property tax is assessed on any building or land on its capital value, such percentage of the capital value as may be determined by the State Government. The phrase 'relevant local authority law' is also defined by the Act, and for the purpose of those petitions, it would mean the Gujarat Municipalities Act, 1963. Section 15 specifies the authority competent to collect the tax under Section 12. Except in the case of cantonment of Ahmedabad, in all other urban areas the competent authority is the respective local authority, but it may happen that the local authority may not be for the time being levying a property tax. Therefore, proviso to Sub-section (1) empower the State Government in such cases to direct the Collector to collect the tax.</p><p style="text-align: justify;">7. The levy of education cess, that is, imposition of that tax is by the statute itself. The authorities have to assess and collect the cess in accordance with the provisions of the Act. As stated earlier, the local authorities in these cases were not levying property tax and it was for that reason that the State Government had by an order directed the Collector to collect the tax under Section 12 of the Act. Pursuant to that direction, the Collector had taken some steps and on the basis thereof education cess was demanded from the petitioners and other property owners of the said two urban areas. this Court held that demand and/or collection of education cess bad on the ground that as no property tax was levied by the concerned local authorities and as no machinery for assessment and collection was available to the Collector on a true interpretation of Rule 3 of the Gujarat Education Cess Rules, the demand and collection of education cess was without authority of law. this Court held that if for some reasons machinery under the relevant local authority law was not available then merely by viture of Rule 3 such machinery would not become available and in absence thereof cannot be any valid imposition levy and collection of house tax. Relying upon this reasoning of this Court, it was urged by the learned Advocate for the petitioners that the Validating Act has not removed the defect pointed out by this Court and not validated the imposition and levy of the tax and cess and, therefore, validation of collection only amounts to overruling the decision of this Court. According to the learned Advocates, the Legislature has no power to overrule the decision of this Court and, therefore, the Validating Act must be held as invalid.</p><p style="text-align: justify;">8. this Court in Atmanand Jain Punjab Dharmashala v. State of Gujarat and Ors. (1980) XXI GLR 787, rejected the contention that as the Validating Act did not provide for validation of the assessment lists, unlawful collection of education cess made by the Collector could not have been straightaway validated for the reason that the Validating Act was passed in order to validate the levy and collection of education cess by the Collectors in those areas in which the Municipal limits did not provide machinery for assessment and collection and therefore the question of validating the assessment lists did not arise. this Court held that irrespective of whether the assessment lists prepared by the Collector are valid or not, if any tax is levied unlawfully and collected by the State Government, it is open to the State Legislature to pass a Validating Act and to validate it. If a tax can be imposed by a Legislature by enacting a law, unlawful recovery of tax can also be validated by a Legislature because validation of the collection of unlawful tax which is always retrospective imparts to it the authority of law which it did not have earlier.</p><p style="text-align: justify;">9. Moreover, if we turn to Section 3 of the Validating Act, it becomes clear that apart from providing that the collection shall be deemed to be and to have always been validly made, the Legislature has further provided that it shall be deemed to have been made, as if at all material times when such collection or recovery was made, Clause (b) of Sub-section (2) of Section 15 had provided that where a direction under the proviso to Clause (b) of Sub-section (1) of Section 15 has been issued, the collection of tax (including any penalty) shall be made in such manner as the Collector may, having regard, as far as possible, to the provisions relating to the assessment and collection of property tax in the relevant local authority law, consider reasonable, proper and appropriate in the circumstances of the case. It is also provided that the validity of the collection of such tax shall not be called in question merely on the ground, (i) that no valid or effective rules were made or prescribed for the purpose of collection of such tax, or (ii) that the Collector had collected the tax or penalty in such manner as he deemed reasonably proper or appropriate, or in accordance with the provisions of, or the principles underlying the provisions of, the relevant local authority law relating to the assessment or collection of property tax. As pointed out earlier, so far as imposition of the case is concerned, it is by the Statute itself. Thus, there was no defect in respect of imposition of the cess. Only defect which was noticed by this Court was the absence of provision for assessment and collection of the cess. That view was taken as the concerned local authorities were not levying property tax and thus the assessment list and other provisions for collection of property tax were not available to the Collector for assessing by the Collector towards preparation of assessment lists and determination of education cess it had to be conceded by the learned Advocates that the assessment lists were prepared by the Collector and for each tax payer education cess was assessed before issuing a demand notice. If the Collector had not taken such steps then the Mamlatdar could not have issued notices demanding specific amounts from the owners of lands and buildings. In view of Section 3 of the Validating Act, we will have to proceed on the basis that the said assessment lists were prepared by him by following the procedure which was reasonable and proper, and that valid assessment list were available to the Collector for assessing the education cess. The contention raised to the contrary that no machinery was available to him for the purpose of assessment and collection of education cess has to be rejected.</p><p style="text-align: justify;">10. It was urged by Mr. Hathi that the levy of education cess having been declared as unlawful by this Court, the Legislature ought to have validated the levy also before it can be said that the Validating Act has effectively validated the collection of the education cess. In our opinion, the learned Advocate has misunderstood the meaning of the word 'levy' used by this Court in the judgments by which levy of education cess was held to be illegal. As held by the Supreme Court, the term 'levy' is wider in its import than the term 'assessment'. It may included both imposition of a tax as well as assessment. The term 'imposition' is generally used for the levy of tax or duty by a legislative provision indicating the subject-matter of the tax and the rates at which it has to be taxed. The term 'assessment' is generally used for the actual procedure adopted in fixing the liability to pay a tax and determining its amount. Therefore, when this Court held levy of education cess as illegal what it illegal was the assessment part of it and not the imposition part as the imposition of cess is by the Act itself and that provision was never under challenge. So far as the assessment part of it is concerned, the Legislature now by the Validating Act has provided that whatever procedure the Collector might have followed for that purpose it shall be regarded as reasonable and proper and the demand made on the basis of such assessment must be regarded as valid. It is, therefore, not possible to agree with the contention that what the Legislature has done by validating the Act is merely to overrule the decision of this Court and that it has not passed the Validating Act in the manner in which it is required to be passed.</p><p style="text-align: justify;">11. The learned Advocates for the petitioners relied upon two decisions of the Supreme Court in support of their contention. Mr. Shah relied upon the following observations made in Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality and Ors. : [1971]79ITR136(SC) :</p><p style="text-align: justify;">When a legislature sets out to validate a tax declared by a Court to be illegally collected under an ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively. The most important condition, of course, is that the legislature must process the power to impose the tax, for, if it does not, the action must ever remain ineffective and illegal. Granted legislative competence, it is not sufficient to declare merely that the decision of the Court shall not bind for that is tantamount to reversing the decision in exercise of judicial power which the legislature does not possess or exercise. A Court's decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances....</p><p style="text-align: justify;">In our opinion, the test laid down by this decision is complied with in this case, and therefore, this decision can be of no help to him.</p><p style="text-align: justify;">12. Mr. Hathi relied upon the decision in Janapada Sabha, Chhindwara v. The Central Provinces Syndicate Ltd. : [1970]3SCR745 . In that case, the Validation Act did not set out the amendments intended to be made in the earlier enactments, nor did it provide that the notifications issued whereby rates of cess on coal were increased, without the sanction of the State Government shall be deemed to have been issued validly. For that reason, the Supreme Court observed that what the Legislature did was to attempt to overrule or set aside the decision of the Supreme Court. The Supreme Court held that it is open to the Legislature within certain limits to amend the provisions of an Act retrospectively and to declare what the law shall be deemed to have been, but it is not open to the Legislature to say that a judgment of a Court properly constituted and rendered in exercise of its powers in a matter brought before it shall be deemed to be ineffective and the interpretation of law shall be otherwise then as declared by the Court. That being not the position in our case, this decision cannot assist the petitioners.</p><p style="text-align: justify;">13. For the reasons stated above, we reject the contention raised on behalf of the petitioners that the Validating Act is not a valid piece of legislation.</p><p style="text-align: justify;">14. We will now deal with the other contentions raised by Mr. Shah. It was urged that the Validating Act is violative of Article 14 of the Constitution, inasmuch as it leads to discrimination between those who have paid the cess and those who have not paid the same. He submitted that as a result of the Validating Act collection of cess has been made legal. Therefore, those who have paid the cess stand to lose as against those who have not paid it. This submission of Mr. Shah proceeds on the assumption that what is validated is only the collection of amount recovered as education cess. As pointed out above, what has been validated is not merely the collection of the amount but the whole machinery for assessment and collection of the education cess. Therefore, it will be open to the competent authority to take steps for the purpose of recovering education cess from those persons who have not paid the same. As the contention proceeds upon a misconception of the correct position it has to be rejected as without any substance.</p><p style="text-align: justify;">15. Mr. Shah also submitted that the Validating Act is violative of Article 19(1)(f) read with Article 31 of the Constitution. Articles 19(1)(f) and 31 have been repealed. Therefore, there is no question of declaring the said Act as ultra vires Article 19(1)(f) read with Article 31 now. No other contention was raised in this behalf by the learned Advocates.</p><p style="text-align: justify;">16. It was also submitted that the Validating Act is illegal inasmuch as it results in unjust enrichment. In support of this contention, the learned Advocate referred to Sections 70 and 72 of the Indian Contract Act. As we have held that the payments were not made under a mistake of law, the question of unjust enrichment does not arise. Therefore, this contention also has to be rejected.</p><p style="text-align: justify;">The second contention raised by Mr. Hathi also deserves to be rejected as what is validated by the Validating Act is the assessment and collection of the education cess. This is the view which we have taken on true interpretation of Section 3 of the Validating Act.</p><p style="text-align: justify;">17. As we do not find any substance in any of the contentions raised on behalf of the petitioners, these petitions are dismissed. Rule in each of these petitions is discharged with no order as to costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
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	'Judgement' => array(
		'id' => '743056',
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		'appellant' => 'Balvantrai Tulsidas and ors.',
		'authreffered' => '',
		'casename' => 'Balvantrai Tulsidas and ors. Vs. State of Gujarat and anr.',
		'casenote' => ' -  -  (4) The Act is bad as it results in unjust enrichment. this Court held that demand and/or collection of education cess bad on the ground that as no property tax was levied by the concerned local authorities and as no machinery for assessment and collection was available to the Collector on a true interpretation of Rule 3 of the Gujarat Education Cess Rules, the demand and collection of education cess was without authority of law. Hathi that the levy of education cess having been declared as unlawful by this Court, the Legislature ought to have validated the levy also before it can be said that the Validating Act has effectively validated the collection of the education cess. As held by the Supreme Court, the term 'levy' is wider in its import than the term 'assessment'.It may included both imposition of a tax as well as assessment. [1971]79ITR136(SC) :When a legislature sets out to validate a tax declared by a Court to be illegally collected under an ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively.',
		'caseanalysis' => null,
		'casesref' => 'Chhindwara v. The Central Provinces Syndicate Ltd.;',
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		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Gujarat',
		'court_type' => 'HC',
		'decidedon' => '1991-01-10',
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		'judge' => ' G.T. Nanavati and; J.M. Panchal, JJ.',
		'judgement' => '<p style="text-align: justify;">G.T. Nanavati, J.</p><p style="text-align: justify;">1. The common question which arises in both these petition is whether the Gujarat Education Cess (Validation) Act, 1977, which came into force on 24th January, 1978 is a valid piece of legislation. Therefore, at the request of the learned Advocates appearing in these petitions, they are heard together and they are now disposed of by this common judgment.</p><p style="text-align: justify;">2. Special Civil Application No. 2063 of 1978 is filed by owners of lands and buildings situated within the urban area of Junagadh Nagar Palika (now Municipality). Till April 1, 1975, Junagadh Municipality had not levied property tax on the lands and buildings situated within its area. It appears that pursuant to the direction given by the State Government under Section 15(1) of the Gujarat Education Cess Act, 1962 to the Collector of Junagadh, steps were taken by the Collector for collecting the education cess. Pursuant thereto the Mamlatdar, Junagadh issued demand notices in March and April 1978. Those notices were challenged by some of the present petitioners and others by filing a petition in this Court being Special Civil Application No. 768 of 1976. Other property owners who had received such notices had also filed Special Civil Application Nos. 707, 757 to 762.815 and 1541 of 1976. Those petitions were allowed by this Court on June 22, 1977 and it was held that the said demand notices were illegal and invalid, as the levy of education cess was not legal in absence of levy of property tax by the Junagadh Municipality and in absence of the machinery of assessment and collection of the education cess. That decision was followed in Special Civil Application No. 768 of 1976. In respect of other urban areas also, this Court had held the collection of tax on lands and buildings under Section 15(2)(b) of the Act by the Collector, where the local authorities had not imposed property tax as invalid, on the ground that Rules 3 of the Gujarat Education Cess Rules, 1962 prescribing the manner of preparing assessment list could not be invoked as no rules were made by the concerned authorities for the purpose of collection of property tax in such areas. In order to validate the collection of such tax, first an Ordinance was issued and then the Gujarat Education Cess (Validation) Act, 1977 came to be enacted. As the request of the petitioners, based upon the judgment of this Court, to refund the education cess recovered from them was rejected by the State on the ground that the said collection has to be regarded as valid in view of the Validating Act, they have filed these petitions. The petitioners are now challenging the validity of the Validating Act and seek a writ of Mandamus directing the respondents to refund the education cess recovered from them for the years 1962 to 1976.</p><p style="text-align: justify;">3. Petitioners in Special Civil Application No. 2636 of 1978 are owners of lands of buildings situated in Mangrol town of Junagadh District. Levy and collection of education cess from the owners of lands and buildings of that urban area was challenged by such property owners by filing Special Civil Applications Nos. 1239 and 1812 of 1975, 266 of 1976, 610 of 1976, 838 of 1976, 704 and 739 of 1976. this Court followed those petitions for the same reasons, quashed the bills issued to the petitioners and directed the respondent-State to refund the cess, if it was already collected. The Mamlatdar of Mangrol has now issued fresh notices calling upon the petitioners to pay education cess. The petitioners have therefore filed these petitions in the representative capacity. They are also challenging the validity of the Validating Act and want this Court to direct the respondent-State not to enforce the demands made for recovering the education cess and to refund the same, if it has already been collected.</p><p style="text-align: justify;">4. Mr. Deepak M. Shah, learned Advocate appearing for the petitioners in Special Civil Application No. 2063 of 1978 has raised the following contentions:</p><p style="text-align: justify;">(1) The Validating Act is ultra vires and void because what the Legislature has done by enacting the said Act is to overrule or set aside the decision of this Court, as it has attempted to levy cess without removing the defent pointed out by this Court.</p><p style="text-align: justify;">(2) The Validating Act is ultra vires Article 14 of the Constitution.</p><p style="text-align: justify;">(3) The Validating Act is ultra vires Article 19(1)(f) read with Article 31 of the Constitution.</p><p style="text-align: justify;">(4) The Act is bad as it results in unjust enrichment.</p><p style="text-align: justify;">5. Mr. P.V. Hathi, learned Advocate appearing for the petitioners in Special Civil Application No. 2636 of 1978 has raised only two contentions. First contention raised by him is same as that of Mr. Shah. Second contention is that the Validating Act has merely validated the collection already made till the said Act came into force and, therefore, the respondents have no authority to collect the education cess now for the years 1962 to 1976.</p><p style="text-align: justify;">6. Though in the petitions various contentions have been raised, these are the only contentions urged before us. Before we deal with the contentions, it will be useful to refer to the relevant provisions of the Act. As defined by Section 2(iv), 'Education Cess' means a surcharge or tax on lands and buildings levied under the Act. Section 3 provides that there shall be levied and collected in accordance with the provisions of the Act and education cess which shall consist of: (a) a surchage on all lands except lands which are included within a village site and not assessed to land revenue, and (b) a tax on lands and buildings in urban areas. Section 12 provides for levy and collection of tax on lands and buildings situated in an urban area at the rates specified in that section. What is required to be noted is that the rate fixed is a certain percentage of the annual letting value. 'Annual Letting Value' is defined by Section 2(i) to mean the rateable value or annual letting value or gross annual letting value of lands and buildings as determined in accordance with the relevant local authority law and in a case where property tax is assessed on any building or land on its capital value, such percentage of the capital value as may be determined by the State Government. The phrase 'relevant local authority law' is also defined by the Act, and for the purpose of those petitions, it would mean the Gujarat Municipalities Act, 1963. Section 15 specifies the authority competent to collect the tax under Section 12. Except in the case of cantonment of Ahmedabad, in all other urban areas the competent authority is the respective local authority, but it may happen that the local authority may not be for the time being levying a property tax. Therefore, proviso to Sub-section (1) empower the State Government in such cases to direct the Collector to collect the tax.</p><p style="text-align: justify;">7. The levy of education cess, that is, imposition of that tax is by the statute itself. The authorities have to assess and collect the cess in accordance with the provisions of the Act. As stated earlier, the local authorities in these cases were not levying property tax and it was for that reason that the State Government had by an order directed the Collector to collect the tax under Section 12 of the Act. Pursuant to that direction, the Collector had taken some steps and on the basis thereof education cess was demanded from the petitioners and other property owners of the said two urban areas. this Court held that demand and/or collection of education cess bad on the ground that as no property tax was levied by the concerned local authorities and as no machinery for assessment and collection was available to the Collector on a true interpretation of Rule 3 of the Gujarat Education Cess Rules, the demand and collection of education cess was without authority of law. this Court held that if for some reasons machinery under the relevant local authority law was not available then merely by viture of Rule 3 such machinery would not become available and in absence thereof cannot be any valid imposition levy and collection of house tax. Relying upon this reasoning of this Court, it was urged by the learned Advocate for the petitioners that the Validating Act has not removed the defect pointed out by this Court and not validated the imposition and levy of the tax and cess and, therefore, validation of collection only amounts to overruling the decision of this Court. According to the learned Advocates, the Legislature has no power to overrule the decision of this Court and, therefore, the Validating Act must be held as invalid.</p><p style="text-align: justify;">8. this Court in Atmanand Jain Punjab Dharmashala v. State of Gujarat and Ors. (1980) XXI GLR 787, rejected the contention that as the Validating Act did not provide for validation of the assessment lists, unlawful collection of education cess made by the Collector could not have been straightaway validated for the reason that the Validating Act was passed in order to validate the levy and collection of education cess by the Collectors in those areas in which the Municipal limits did not provide machinery for assessment and collection and therefore the question of validating the assessment lists did not arise. this Court held that irrespective of whether the assessment lists prepared by the Collector are valid or not, if any tax is levied unlawfully and collected by the State Government, it is open to the State Legislature to pass a Validating Act and to validate it. If a tax can be imposed by a Legislature by enacting a law, unlawful recovery of tax can also be validated by a Legislature because validation of the collection of unlawful tax which is always retrospective imparts to it the authority of law which it did not have earlier.</p><p style="text-align: justify;">9. Moreover, if we turn to Section 3 of the Validating Act, it becomes clear that apart from providing that the collection shall be deemed to be and to have always been validly made, the Legislature has further provided that it shall be deemed to have been made, as if at all material times when such collection or recovery was made, Clause (b) of Sub-section (2) of Section 15 had provided that where a direction under the proviso to Clause (b) of Sub-section (1) of Section 15 has been issued, the collection of tax (including any penalty) shall be made in such manner as the Collector may, having regard, as far as possible, to the provisions relating to the assessment and collection of property tax in the relevant local authority law, consider reasonable, proper and appropriate in the circumstances of the case. It is also provided that the validity of the collection of such tax shall not be called in question merely on the ground, (i) that no valid or effective rules were made or prescribed for the purpose of collection of such tax, or (ii) that the Collector had collected the tax or penalty in such manner as he deemed reasonably proper or appropriate, or in accordance with the provisions of, or the principles underlying the provisions of, the relevant local authority law relating to the assessment or collection of property tax. As pointed out earlier, so far as imposition of the case is concerned, it is by the Statute itself. Thus, there was no defect in respect of imposition of the cess. Only defect which was noticed by this Court was the absence of provision for assessment and collection of the cess. That view was taken as the concerned local authorities were not levying property tax and thus the assessment list and other provisions for collection of property tax were not available to the Collector for assessing by the Collector towards preparation of assessment lists and determination of education cess it had to be conceded by the learned Advocates that the assessment lists were prepared by the Collector and for each tax payer education cess was assessed before issuing a demand notice. If the Collector had not taken such steps then the Mamlatdar could not have issued notices demanding specific amounts from the owners of lands and buildings. In view of Section 3 of the Validating Act, we will have to proceed on the basis that the said assessment lists were prepared by him by following the procedure which was reasonable and proper, and that valid assessment list were available to the Collector for assessing the education cess. The contention raised to the contrary that no machinery was available to him for the purpose of assessment and collection of education cess has to be rejected.</p><p style="text-align: justify;">10. It was urged by Mr. Hathi that the levy of education cess having been declared as unlawful by this Court, the Legislature ought to have validated the levy also before it can be said that the Validating Act has effectively validated the collection of the education cess. In our opinion, the learned Advocate has misunderstood the meaning of the word 'levy' used by this Court in the judgments by which levy of education cess was held to be illegal. As held by the Supreme Court, the term 'levy' is wider in its import than the term 'assessment'. It may included both imposition of a tax as well as assessment. The term 'imposition' is generally used for the levy of tax or duty by a legislative provision indicating the subject-matter of the tax and the rates at which it has to be taxed. The term 'assessment' is generally used for the actual procedure adopted in fixing the liability to pay a tax and determining its amount. Therefore, when this Court held levy of education cess as illegal what it illegal was the assessment part of it and not the imposition part as the imposition of cess is by the Act itself and that provision was never under challenge. So far as the assessment part of it is concerned, the Legislature now by the Validating Act has provided that whatever procedure the Collector might have followed for that purpose it shall be regarded as reasonable and proper and the demand made on the basis of such assessment must be regarded as valid. It is, therefore, not possible to agree with the contention that what the Legislature has done by validating the Act is merely to overrule the decision of this Court and that it has not passed the Validating Act in the manner in which it is required to be passed.</p><p style="text-align: justify;">11. The learned Advocates for the petitioners relied upon two decisions of the Supreme Court in support of their contention. Mr. Shah relied upon the following observations made in Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality and Ors. : [1971]79ITR136(SC) :</p><p style="text-align: justify;">When a legislature sets out to validate a tax declared by a Court to be illegally collected under an ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively. The most important condition, of course, is that the legislature must process the power to impose the tax, for, if it does not, the action must ever remain ineffective and illegal. Granted legislative competence, it is not sufficient to declare merely that the decision of the Court shall not bind for that is tantamount to reversing the decision in exercise of judicial power which the legislature does not possess or exercise. A Court's decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances....</p><p style="text-align: justify;">In our opinion, the test laid down by this decision is complied with in this case, and therefore, this decision can be of no help to him.</p><p style="text-align: justify;">12. Mr. Hathi relied upon the decision in Janapada Sabha, Chhindwara v. The Central Provinces Syndicate Ltd. : [1970]3SCR745 . In that case, the Validation Act did not set out the amendments intended to be made in the earlier enactments, nor did it provide that the notifications issued whereby rates of cess on coal were increased, without the sanction of the State Government shall be deemed to have been issued validly. For that reason, the Supreme Court observed that what the Legislature did was to attempt to overrule or set aside the decision of the Supreme Court. The Supreme Court held that it is open to the Legislature within certain limits to amend the provisions of an Act retrospectively and to declare what the law shall be deemed to have been, but it is not open to the Legislature to say that a judgment of a Court properly constituted and rendered in exercise of its powers in a matter brought before it shall be deemed to be ineffective and the interpretation of law shall be otherwise then as declared by the Court. That being not the position in our case, this decision cannot assist the petitioners.</p><p style="text-align: justify;">13. For the reasons stated above, we reject the contention raised on behalf of the petitioners that the Validating Act is not a valid piece of legislation.</p><p style="text-align: justify;">14. We will now deal with the other contentions raised by Mr. Shah. It was urged that the Validating Act is violative of Article 14 of the Constitution, inasmuch as it leads to discrimination between those who have paid the cess and those who have not paid the same. He submitted that as a result of the Validating Act collection of cess has been made legal. Therefore, those who have paid the cess stand to lose as against those who have not paid it. This submission of Mr. Shah proceeds on the assumption that what is validated is only the collection of amount recovered as education cess. As pointed out above, what has been validated is not merely the collection of the amount but the whole machinery for assessment and collection of the education cess. Therefore, it will be open to the competent authority to take steps for the purpose of recovering education cess from those persons who have not paid the same. As the contention proceeds upon a misconception of the correct position it has to be rejected as without any substance.</p><p style="text-align: justify;">15. Mr. Shah also submitted that the Validating Act is violative of Article 19(1)(f) read with Article 31 of the Constitution. Articles 19(1)(f) and 31 have been repealed. Therefore, there is no question of declaring the said Act as ultra vires Article 19(1)(f) read with Article 31 now. No other contention was raised in this behalf by the learned Advocates.</p><p style="text-align: justify;">16. It was also submitted that the Validating Act is illegal inasmuch as it results in unjust enrichment. In support of this contention, the learned Advocate referred to Sections 70 and 72 of the Indian Contract Act. As we have held that the payments were not made under a mistake of law, the question of unjust enrichment does not arise. Therefore, this contention also has to be rejected.</p><p style="text-align: justify;">The second contention raised by Mr. Hathi also deserves to be rejected as what is validated by the Validating Act is the assessment and collection of the education cess. This is the view which we have taken on true interpretation of Section 3 of the Validating Act.</p><p style="text-align: justify;">17. As we do not find any substance in any of the contentions raised on behalf of the petitioners, these petitions are dismissed. Rule in each of these petitions is discharged with no order as to costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
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			'casename' => 'Balvantrai Tulsidas and ors. Vs. State of Gujarat and anr.',
			'casenote' => ' -  -  (4) The Act is bad as it results in unjust enrichment. this Court held that demand and/or collection of education cess bad on the ground that as no property tax was levied by the concerned local authorities and as no machinery for assessment and collection was available to the Collector on a true interpretation of Rule 3 of the Gujarat Education Cess Rules, the demand and collection of education cess was without authority of law. Hathi that the levy of education cess having been declared as unlawful by this Court, the Legislature ought to have validated the levy also before it can be said that the Validating Act has effectively validated the collection of the education cess. As held by the Supreme Court, the term 'levy' is wider in its import than the term 'assessment'.It may included both imposition of a tax as well as assessment. [1971]79ITR136(SC) :When a legislature sets out to validate a tax declared by a Court to be illegally collected under an ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively.',
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			'judgement' => '<p style="text-align: justify;">G.T. Nanavati, J.</p><p style="text-align: justify;">1. The common question which arises in both these petition is whether the Gujarat Education Cess (Validation) Act, 1977, which came into force on 24th January, 1978 is a valid piece of legislation. Therefore, at the request of the learned Advocates appearing in these petitions, they are heard together and they are now disposed of by this common judgment.</p><p style="text-align: justify;">2. Special Civil Application No. 2063 of 1978 is filed by owners of lands and buildings situated within the urban area of Junagadh Nagar Palika (now Municipality). Till April 1, 1975, Junagadh Municipality had not levied property tax on the lands and buildings situated within its area. It appears that pursuant to the direction given by the State Government under Section 15(1) of the Gujarat Education Cess Act, 1962 to the Collector of Junagadh, steps were taken by the Collector for collecting the education cess. Pursuant thereto the Mamlatdar, Junagadh issued demand notices in March and April 1978. Those notices were challenged by some of the present petitioners and others by filing a petition in this Court being Special Civil Application No. 768 of 1976. Other property owners who had received such notices had also filed Special Civil Application Nos. 707, 757 to 762.815 and 1541 of 1976. Those petitions were allowed by this Court on June 22, 1977 and it was held that the said demand notices were illegal and invalid, as the levy of education cess was not legal in absence of levy of property tax by the Junagadh Municipality and in absence of the machinery of assessment and collection of the education cess. That decision was followed in Special Civil Application No. 768 of 1976. In respect of other urban areas also, this Court had held the collection of tax on lands and buildings under Section 15(2)(b) of the Act by the Collector, where the local authorities had not imposed property tax as invalid, on the ground that Rules 3 of the Gujarat Education Cess Rules, 1962 prescribing the manner of preparing assessment list could not be invoked as no rules were made by the concerned authorities for the purpose of collection of property tax in such areas. In order to validate the collection of such tax, first an Ordinance was issued and then the Gujarat Education Cess (Validation) Act, 1977 came to be enacted. As the request of the petitioners, based upon the judgment of this Court, to refund the education cess recovered from them was rejected by the State on the ground that the said collection has to be regarded as valid in view of the Validating Act, they have filed these petitions. The petitioners are now challenging the validity of the Validating Act and seek a writ of Mandamus directing the respondents to refund the education cess recovered from them for the years 1962 to 1976.</p><p style="text-align: justify;">3. Petitioners in Special Civil Application No. 2636 of 1978 are owners of lands of buildings situated in Mangrol town of Junagadh District. Levy and collection of education cess from the owners of lands and buildings of that urban area was challenged by such property owners by filing Special Civil Applications Nos. 1239 and 1812 of 1975, 266 of 1976, 610 of 1976, 838 of 1976, 704 and 739 of 1976. this Court followed those petitions for the same reasons, quashed the bills issued to the petitioners and directed the respondent-State to refund the cess, if it was already collected. The Mamlatdar of Mangrol has now issued fresh notices calling upon the petitioners to pay education cess. The petitioners have therefore filed these petitions in the representative capacity. They are also challenging the validity of the Validating Act and want this Court to direct the respondent-State not to enforce the demands made for recovering the education cess and to refund the same, if it has already been collected.</p><p style="text-align: justify;">4. Mr. Deepak M. Shah, learned Advocate appearing for the petitioners in Special Civil Application No. 2063 of 1978 has raised the following contentions:</p><p style="text-align: justify;">(1) The Validating Act is ultra vires and void because what the Legislature has done by enacting the said Act is to overrule or set aside the decision of this Court, as it has attempted to levy cess without removing the defent pointed out by this Court.</p><p style="text-align: justify;">(2) The Validating Act is ultra vires Article 14 of the Constitution.</p><p style="text-align: justify;">(3) The Validating Act is ultra vires Article 19(1)(f) read with Article 31 of the Constitution.</p><p style="text-align: justify;">(4) The Act is bad as it results in unjust enrichment.</p><p style="text-align: justify;">5. Mr. P.V. Hathi, learned Advocate appearing for the petitioners in Special Civil Application No. 2636 of 1978 has raised only two contentions. First contention raised by him is same as that of Mr. Shah. Second contention is that the Validating Act has merely validated the collection already made till the said Act came into force and, therefore, the respondents have no authority to collect the education cess now for the years 1962 to 1976.</p><p style="text-align: justify;">6. Though in the petitions various contentions have been raised, these are the only contentions urged before us. Before we deal with the contentions, it will be useful to refer to the relevant provisions of the Act. As defined by Section 2(iv), 'Education Cess' means a surcharge or tax on lands and buildings levied under the Act. Section 3 provides that there shall be levied and collected in accordance with the provisions of the Act and education cess which shall consist of: (a) a surchage on all lands except lands which are included within a village site and not assessed to land revenue, and (b) a tax on lands and buildings in urban areas. Section 12 provides for levy and collection of tax on lands and buildings situated in an urban area at the rates specified in that section. What is required to be noted is that the rate fixed is a certain percentage of the annual letting value. 'Annual Letting Value' is defined by Section 2(i) to mean the rateable value or annual letting value or gross annual letting value of lands and buildings as determined in accordance with the relevant local authority law and in a case where property tax is assessed on any building or land on its capital value, such percentage of the capital value as may be determined by the State Government. The phrase 'relevant local authority law' is also defined by the Act, and for the purpose of those petitions, it would mean the Gujarat Municipalities Act, 1963. Section 15 specifies the authority competent to collect the tax under Section 12. Except in the case of cantonment of Ahmedabad, in all other urban areas the competent authority is the respective local authority, but it may happen that the local authority may not be for the time being levying a property tax. Therefore, proviso to Sub-section (1) empower the State Government in such cases to direct the Collector to collect the tax.</p><p style="text-align: justify;">7. The levy of education cess, that is, imposition of that tax is by the statute itself. The authorities have to assess and collect the cess in accordance with the provisions of the Act. As stated earlier, the local authorities in these cases were not levying property tax and it was for that reason that the State Government had by an order directed the Collector to collect the tax under Section 12 of the Act. Pursuant to that direction, the Collector had taken some steps and on the basis thereof education cess was demanded from the petitioners and other property owners of the said two urban areas. this Court held that demand and/or collection of education cess bad on the ground that as no property tax was levied by the concerned local authorities and as no machinery for assessment and collection was available to the Collector on a true interpretation of Rule 3 of the Gujarat Education Cess Rules, the demand and collection of education cess was without authority of law. this Court held that if for some reasons machinery under the relevant local authority law was not available then merely by viture of Rule 3 such machinery would not become available and in absence thereof cannot be any valid imposition levy and collection of house tax. Relying upon this reasoning of this Court, it was urged by the learned Advocate for the petitioners that the Validating Act has not removed the defect pointed out by this Court and not validated the imposition and levy of the tax and cess and, therefore, validation of collection only amounts to overruling the decision of this Court. According to the learned Advocates, the Legislature has no power to overrule the decision of this Court and, therefore, the Validating Act must be held as invalid.</p><p style="text-align: justify;">8. this Court in Atmanand Jain Punjab Dharmashala v. State of Gujarat and Ors. (1980) XXI GLR 787, rejected the contention that as the Validating Act did not provide for validation of the assessment lists, unlawful collection of education cess made by the Collector could not have been straightaway validated for the reason that the Validating Act was passed in order to validate the levy and collection of education cess by the Collectors in those areas in which the Municipal limits did not provide machinery for assessment and collection and therefore the question of validating the assessment lists did not arise. this Court held that irrespective of whether the assessment lists prepared by the Collector are valid or not, if any tax is levied unlawfully and collected by the State Government, it is open to the State Legislature to pass a Validating Act and to validate it. If a tax can be imposed by a Legislature by enacting a law, unlawful recovery of tax can also be validated by a Legislature because validation of the collection of unlawful tax which is always retrospective imparts to it the authority of law which it did not have earlier.</p><p style="text-align: justify;">9. Moreover, if we turn to Section 3 of the Validating Act, it becomes clear that apart from providing that the collection shall be deemed to be and to have always been validly made, the Legislature has further provided that it shall be deemed to have been made, as if at all material times when such collection or recovery was made, Clause (b) of Sub-section (2) of Section 15 had provided that where a direction under the proviso to Clause (b) of Sub-section (1) of Section 15 has been issued, the collection of tax (including any penalty) shall be made in such manner as the Collector may, having regard, as far as possible, to the provisions relating to the assessment and collection of property tax in the relevant local authority law, consider reasonable, proper and appropriate in the circumstances of the case. It is also provided that the validity of the collection of such tax shall not be called in question merely on the ground, (i) that no valid or effective rules were made or prescribed for the purpose of collection of such tax, or (ii) that the Collector had collected the tax or penalty in such manner as he deemed reasonably proper or appropriate, or in accordance with the provisions of, or the principles underlying the provisions of, the relevant local authority law relating to the assessment or collection of property tax. As pointed out earlier, so far as imposition of the case is concerned, it is by the Statute itself. Thus, there was no defect in respect of imposition of the cess. Only defect which was noticed by this Court was the absence of provision for assessment and collection of the cess. That view was taken as the concerned local authorities were not levying property tax and thus the assessment list and other provisions for collection of property tax were not available to the Collector for assessing by the Collector towards preparation of assessment lists and determination of education cess it had to be conceded by the learned Advocates that the assessment lists were prepared by the Collector and for each tax payer education cess was assessed before issuing a demand notice. If the Collector had not taken such steps then the Mamlatdar could not have issued notices demanding specific amounts from the owners of lands and buildings. In view of Section 3 of the Validating Act, we will have to proceed on the basis that the said assessment lists were prepared by him by following the procedure which was reasonable and proper, and that valid assessment list were available to the Collector for assessing the education cess. The contention raised to the contrary that no machinery was available to him for the purpose of assessment and collection of education cess has to be rejected.</p><p style="text-align: justify;">10. It was urged by Mr. Hathi that the levy of education cess having been declared as unlawful by this Court, the Legislature ought to have validated the levy also before it can be said that the Validating Act has effectively validated the collection of the education cess. In our opinion, the learned Advocate has misunderstood the meaning of the word 'levy' used by this Court in the judgments by which levy of education cess was held to be illegal. As held by the Supreme Court, the term 'levy' is wider in its import than the term 'assessment'. It may included both imposition of a tax as well as assessment. The term 'imposition' is generally used for the levy of tax or duty by a legislative provision indicating the subject-matter of the tax and the rates at which it has to be taxed. The term 'assessment' is generally used for the actual procedure adopted in fixing the liability to pay a tax and determining its amount. Therefore, when this Court held levy of education cess as illegal what it illegal was the assessment part of it and not the imposition part as the imposition of cess is by the Act itself and that provision was never under challenge. So far as the assessment part of it is concerned, the Legislature now by the Validating Act has provided that whatever procedure the Collector might have followed for that purpose it shall be regarded as reasonable and proper and the demand made on the basis of such assessment must be regarded as valid. It is, therefore, not possible to agree with the contention that what the Legislature has done by validating the Act is merely to overrule the decision of this Court and that it has not passed the Validating Act in the manner in which it is required to be passed.</p><p style="text-align: justify;">11. The learned Advocates for the petitioners relied upon two decisions of the Supreme Court in support of their contention. Mr. Shah relied upon the following observations made in Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality and Ors. : [1971]79ITR136(SC) :</p><p style="text-align: justify;">When a legislature sets out to validate a tax declared by a Court to be illegally collected under an ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively. The most important condition, of course, is that the legislature must process the power to impose the tax, for, if it does not, the action must ever remain ineffective and illegal. Granted legislative competence, it is not sufficient to declare merely that the decision of the Court shall not bind for that is tantamount to reversing the decision in exercise of judicial power which the legislature does not possess or exercise. A Court's decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances....</p><p style="text-align: justify;">In our opinion, the test laid down by this decision is complied with in this case, and therefore, this decision can be of no help to him.</p><p style="text-align: justify;">12. Mr. Hathi relied upon the decision in Janapada Sabha, Chhindwara v. The Central Provinces Syndicate Ltd. : [1970]3SCR745 . In that case, the Validation Act did not set out the amendments intended to be made in the earlier enactments, nor did it provide that the notifications issued whereby rates of cess on coal were increased, without the sanction of the State Government shall be deemed to have been issued validly. For that reason, the Supreme Court observed that what the Legislature did was to attempt to overrule or set aside the decision of the Supreme Court. The Supreme Court held that it is open to the Legislature within certain limits to amend the provisions of an Act retrospectively and to declare what the law shall be deemed to have been, but it is not open to the Legislature to say that a judgment of a Court properly constituted and rendered in exercise of its powers in a matter brought before it shall be deemed to be ineffective and the interpretation of law shall be otherwise then as declared by the Court. That being not the position in our case, this decision cannot assist the petitioners.</p><p style="text-align: justify;">13. For the reasons stated above, we reject the contention raised on behalf of the petitioners that the Validating Act is not a valid piece of legislation.</p><p style="text-align: justify;">14. We will now deal with the other contentions raised by Mr. Shah. It was urged that the Validating Act is violative of Article 14 of the Constitution, inasmuch as it leads to discrimination between those who have paid the cess and those who have not paid the same. He submitted that as a result of the Validating Act collection of cess has been made legal. Therefore, those who have paid the cess stand to lose as against those who have not paid it. This submission of Mr. Shah proceeds on the assumption that what is validated is only the collection of amount recovered as education cess. As pointed out above, what has been validated is not merely the collection of the amount but the whole machinery for assessment and collection of the education cess. Therefore, it will be open to the competent authority to take steps for the purpose of recovering education cess from those persons who have not paid the same. As the contention proceeds upon a misconception of the correct position it has to be rejected as without any substance.</p><p style="text-align: justify;">15. Mr. Shah also submitted that the Validating Act is violative of Article 19(1)(f) read with Article 31 of the Constitution. Articles 19(1)(f) and 31 have been repealed. Therefore, there is no question of declaring the said Act as ultra vires Article 19(1)(f) read with Article 31 now. No other contention was raised in this behalf by the learned Advocates.</p><p style="text-align: justify;">16. It was also submitted that the Validating Act is illegal inasmuch as it results in unjust enrichment. In support of this contention, the learned Advocate referred to Sections 70 and 72 of the Indian Contract Act. As we have held that the payments were not made under a mistake of law, the question of unjust enrichment does not arise. Therefore, this contention also has to be rejected.</p><p style="text-align: justify;">The second contention raised by Mr. Hathi also deserves to be rejected as what is validated by the Validating Act is the assessment and collection of the education cess. This is the view which we have taken on true interpretation of Section 3 of the Validating Act.</p><p style="text-align: justify;">17. As we do not find any substance in any of the contentions raised on behalf of the petitioners, these petitions are dismissed. Rule in each of these petitions is discharged with no order as to costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
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		'appellant' => 'Balvantrai Tulsidas and ors.',
		'authreffered' => '',
		'casename' => 'Balvantrai Tulsidas and ors. Vs. State of Gujarat and anr.',
		'casenote' => ' -  -  (4) The Act is bad as it results in unjust enrichment. this Court held that demand and/or collection of education cess bad on the ground that as no property tax was levied by the concerned local authorities and as no machinery for assessment and collection was available to the Collector on a true interpretation of Rule 3 of the Gujarat Education Cess Rules, the demand and collection of education cess was without authority of law. Hathi that the levy of education cess having been declared as unlawful by this Court, the Legislature ought to have validated the levy also before it can be said that the Validating Act has effectively validated the collection of the education cess. As held by the Supreme Court, the term 'levy' is wider in its import than the term 'assessment'.It may included both imposition of a tax as well as assessment. [1971]79ITR136(SC) :When a legislature sets out to validate a tax declared by a Court to be illegally collected under an ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively.',
		'caseanalysis' => null,
		'casesref' => 'Chhindwara v. The Central Provinces Syndicate Ltd.;',
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		'court' => 'Gujarat',
		'court_type' => 'HC',
		'decidedon' => '1991-01-10',
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		'judge' => ' G.T. Nanavati and; J.M. Panchal, JJ.',
		'judgement' => '<p style="text-align: justify;">G.T. Nanavati, J.</p><p style="text-align: justify;">1. The common question which arises in both these petition is whether the Gujarat Education Cess (Validation) Act, 1977, which came into force on 24th January, 1978 is a valid piece of legislation. Therefore, at the request of the learned Advocates appearing in these petitions, they are heard together and they are now disposed of by this common judgment.</p><p style="text-align: justify;">2. Special Civil Application No. 2063 of 1978 is filed by owners of lands and buildings situated within the urban area of Junagadh Nagar Palika (now Municipality). Till April 1, 1975, Junagadh Municipality had not levied property tax on the lands and buildings situated within its area. It appears that pursuant to the direction given by the State Government under Section 15(1) of the Gujarat Education Cess Act, 1962 to the Collector of Junagadh, steps were taken by the Collector for collecting the education cess. Pursuant thereto the Mamlatdar, Junagadh issued demand notices in March and April 1978. Those notices were challenged by some of the present petitioners and others by filing a petition in this Court being Special Civil Application No. 768 of 1976. Other property owners who had received such notices had also filed Special Civil Application Nos. 707, 757 to 762.815 and 1541 of 1976. Those petitions were allowed by this Court on June 22, 1977 and it was held that the said demand notices were illegal and invalid, as the levy of education cess was not legal in absence of levy of property tax by the Junagadh Municipality and in absence of the machinery of assessment and collection of the education cess. That decision was followed in Special Civil Application No. 768 of 1976. In respect of other urban areas also, this Court had held the collection of tax on lands and buildings under Section 15(2)(b) of the Act by the Collector, where the local authorities had not imposed property tax as invalid, on the ground that Rules 3 of the Gujarat Education Cess Rules, 1962 prescribing the manner of preparing assessment list could not be invoked as no rules were made by the concerned authorities for the purpose of collection of property tax in such areas. In order to validate the collection of such tax, first an Ordinance was issued and then the Gujarat Education Cess (Validation) Act, 1977 came to be enacted. As the request of the petitioners, based upon the judgment of this Court, to refund the education cess recovered from them was rejected by the State on the ground that the said collection has to be regarded as valid in view of the Validating Act, they have filed these petitions. The petitioners are now challenging the validity of the Validating Act and seek a writ of Mandamus directing the respondents to refund the education cess recovered from them for the years 1962 to 1976.</p><p style="text-align: justify;">3. Petitioners in Special Civil Application No. 2636 of 1978 are owners of lands of buildings situated in Mangrol town of Junagadh District. Levy and collection of education cess from the owners of lands and buildings of that urban area was challenged by such property owners by filing Special Civil Applications Nos. 1239 and 1812 of 1975, 266 of 1976, 610 of 1976, 838 of 1976, 704 and 739 of 1976. this Court followed those petitions for the same reasons, quashed the bills issued to the petitioners and directed the respondent-State to refund the cess, if it was already collected. The Mamlatdar of Mangrol has now issued fresh notices calling upon the petitioners to pay education cess. The petitioners have therefore filed these petitions in the representative capacity. They are also challenging the validity of the Validating Act and want this Court to direct the respondent-State not to enforce the demands made for recovering the education cess and to refund the same, if it has already been collected.</p><p style="text-align: justify;">4. Mr. Deepak M. Shah, learned Advocate appearing for the petitioners in Special Civil Application No. 2063 of 1978 has raised the following contentions:</p><p style="text-align: justify;">(1) The Validating Act is ultra vires and void because what the Legislature has done by enacting the said Act is to overrule or set aside the decision of this Court, as it has attempted to levy cess without removing the defent pointed out by this Court.</p><p style="text-align: justify;">(2) The Validating Act is ultra vires Article 14 of the Constitution.</p><p style="text-align: justify;">(3) The Validating Act is ultra vires Article 19(1)(f) read with Article 31 of the Constitution.</p><p style="text-align: justify;">(4) The Act is bad as it results in unjust enrichment.</p><p style="text-align: justify;">5. Mr. P.V. Hathi, learned Advocate appearing for the petitioners in Special Civil Application No. 2636 of 1978 has raised only two contentions. First contention raised by him is same as that of Mr. Shah. Second contention is that the Validating Act has merely validated the collection already made till the said Act came into force and, therefore, the respondents have no authority to collect the education cess now for the years 1962 to 1976.</p><p style="text-align: justify;">6. Though in the petitions various contentions have been raised, these are the only contentions urged before us. Before we deal with the contentions, it will be useful to refer to the relevant provisions of the Act. As defined by Section 2(iv), 'Education Cess' means a surcharge or tax on lands and buildings levied under the Act. Section 3 provides that there shall be levied and collected in accordance with the provisions of the Act and education cess which shall consist of: (a) a surchage on all lands except lands which are included within a village site and not assessed to land revenue, and (b) a tax on lands and buildings in urban areas. Section 12 provides for levy and collection of tax on lands and buildings situated in an urban area at the rates specified in that section. What is required to be noted is that the rate fixed is a certain percentage of the annual letting value. 'Annual Letting Value' is defined by Section 2(i) to mean the rateable value or annual letting value or gross annual letting value of lands and buildings as determined in accordance with the relevant local authority law and in a case where property tax is assessed on any building or land on its capital value, such percentage of the capital value as may be determined by the State Government. The phrase 'relevant local authority law' is also defined by the Act, and for the purpose of those petitions, it would mean the Gujarat Municipalities Act, 1963. Section 15 specifies the authority competent to collect the tax under Section 12. Except in the case of cantonment of Ahmedabad, in all other urban areas the competent authority is the respective local authority, but it may happen that the local authority may not be for the time being levying a property tax. Therefore, proviso to Sub-section (1) empower the State Government in such cases to direct the Collector to collect the tax.</p><p style="text-align: justify;">7. The levy of education cess, that is, imposition of that tax is by the statute itself. The authorities have to assess and collect the cess in accordance with the provisions of the Act. As stated earlier, the local authorities in these cases were not levying property tax and it was for that reason that the State Government had by an order directed the Collector to collect the tax under Section 12 of the Act. Pursuant to that direction, the Collector had taken some steps and on the basis thereof education cess was demanded from the petitioners and other property owners of the said two urban areas. this Court held that demand and/or collection of education cess bad on the ground that as no property tax was levied by the concerned local authorities and as no machinery for assessment and collection was available to the Collector on a true interpretation of Rule 3 of the Gujarat Education Cess Rules, the demand and collection of education cess was without authority of law. this Court held that if for some reasons machinery under the relevant local authority law was not available then merely by viture of Rule 3 such machinery would not become available and in absence thereof cannot be any valid imposition levy and collection of house tax. Relying upon this reasoning of this Court, it was urged by the learned Advocate for the petitioners that the Validating Act has not removed the defect pointed out by this Court and not validated the imposition and levy of the tax and cess and, therefore, validation of collection only amounts to overruling the decision of this Court. According to the learned Advocates, the Legislature has no power to overrule the decision of this Court and, therefore, the Validating Act must be held as invalid.</p><p style="text-align: justify;">8. this Court in Atmanand Jain Punjab Dharmashala v. State of Gujarat and Ors. (1980) XXI GLR 787, rejected the contention that as the Validating Act did not provide for validation of the assessment lists, unlawful collection of education cess made by the Collector could not have been straightaway validated for the reason that the Validating Act was passed in order to validate the levy and collection of education cess by the Collectors in those areas in which the Municipal limits did not provide machinery for assessment and collection and therefore the question of validating the assessment lists did not arise. this Court held that irrespective of whether the assessment lists prepared by the Collector are valid or not, if any tax is levied unlawfully and collected by the State Government, it is open to the State Legislature to pass a Validating Act and to validate it. If a tax can be imposed by a Legislature by enacting a law, unlawful recovery of tax can also be validated by a Legislature because validation of the collection of unlawful tax which is always retrospective imparts to it the authority of law which it did not have earlier.</p><p style="text-align: justify;">9. Moreover, if we turn to Section 3 of the Validating Act, it becomes clear that apart from providing that the collection shall be deemed to be and to have always been validly made, the Legislature has further provided that it shall be deemed to have been made, as if at all material times when such collection or recovery was made, Clause (b) of Sub-section (2) of Section 15 had provided that where a direction under the proviso to Clause (b) of Sub-section (1) of Section 15 has been issued, the collection of tax (including any penalty) shall be made in such manner as the Collector may, having regard, as far as possible, to the provisions relating to the assessment and collection of property tax in the relevant local authority law, consider reasonable, proper and appropriate in the circumstances of the case. It is also provided that the validity of the collection of such tax shall not be called in question merely on the ground, (i) that no valid or effective rules were made or prescribed for the purpose of collection of such tax, or (ii) that the Collector had collected the tax or penalty in such manner as he deemed reasonably proper or appropriate, or in accordance with the provisions of, or the principles underlying the provisions of, the relevant local authority law relating to the assessment or collection of property tax. As pointed out earlier, so far as imposition of the case is concerned, it is by the Statute itself. Thus, there was no defect in respect of imposition of the cess. Only defect which was noticed by this Court was the absence of provision for assessment and collection of the cess. That view was taken as the concerned local authorities were not levying property tax and thus the assessment list and other provisions for collection of property tax were not available to the Collector for assessing by the Collector towards preparation of assessment lists and determination of education cess it had to be conceded by the learned Advocates that the assessment lists were prepared by the Collector and for each tax payer education cess was assessed before issuing a demand notice. If the Collector had not taken such steps then the Mamlatdar could not have issued notices demanding specific amounts from the owners of lands and buildings. In view of Section 3 of the Validating Act, we will have to proceed on the basis that the said assessment lists were prepared by him by following the procedure which was reasonable and proper, and that valid assessment list were available to the Collector for assessing the education cess. The contention raised to the contrary that no machinery was available to him for the purpose of assessment and collection of education cess has to be rejected.</p><p style="text-align: justify;">10. It was urged by Mr. Hathi that the levy of education cess having been declared as unlawful by this Court, the Legislature ought to have validated the levy also before it can be said that the Validating Act has effectively validated the collection of the education cess. In our opinion, the learned Advocate has misunderstood the meaning of the word 'levy' used by this Court in the judgments by which levy of education cess was held to be illegal. As held by the Supreme Court, the term 'levy' is wider in its import than the term 'assessment'. It may included both imposition of a tax as well as assessment. The term 'imposition' is generally used for the levy of tax or duty by a legislative provision indicating the subject-matter of the tax and the rates at which it has to be taxed. The term 'assessment' is generally used for the actual procedure adopted in fixing the liability to pay a tax and determining its amount. Therefore, when this Court held levy of education cess as illegal what it illegal was the assessment part of it and not the imposition part as the imposition of cess is by the Act itself and that provision was never under challenge. So far as the assessment part of it is concerned, the Legislature now by the Validating Act has provided that whatever procedure the Collector might have followed for that purpose it shall be regarded as reasonable and proper and the demand made on the basis of such assessment must be regarded as valid. It is, therefore, not possible to agree with the contention that what the Legislature has done by validating the Act is merely to overrule the decision of this Court and that it has not passed the Validating Act in the manner in which it is required to be passed.</p><p style="text-align: justify;">11. The learned Advocates for the petitioners relied upon two decisions of the Supreme Court in support of their contention. Mr. Shah relied upon the following observations made in Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality and Ors. : [1971]79ITR136(SC) :</p><p style="text-align: justify;">When a legislature sets out to validate a tax declared by a Court to be illegally collected under an ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively. The most important condition, of course, is that the legislature must process the power to impose the tax, for, if it does not, the action must ever remain ineffective and illegal. Granted legislative competence, it is not sufficient to declare merely that the decision of the Court shall not bind for that is tantamount to reversing the decision in exercise of judicial power which the legislature does not possess or exercise. A Court's decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances....</p><p style="text-align: justify;">In our opinion, the test laid down by this decision is complied with in this case, and therefore, this decision can be of no help to him.</p><p style="text-align: justify;">12. Mr. Hathi relied upon the decision in Janapada Sabha, Chhindwara v. The Central Provinces Syndicate Ltd. : [1970]3SCR745 . In that case, the Validation Act did not set out the amendments intended to be made in the earlier enactments, nor did it provide that the notifications issued whereby rates of cess on coal were increased, without the sanction of the State Government shall be deemed to have been issued validly. For that reason, the Supreme Court observed that what the Legislature did was to attempt to overrule or set aside the decision of the Supreme Court. The Supreme Court held that it is open to the Legislature within certain limits to amend the provisions of an Act retrospectively and to declare what the law shall be deemed to have been, but it is not open to the Legislature to say that a judgment of a Court properly constituted and rendered in exercise of its powers in a matter brought before it shall be deemed to be ineffective and the interpretation of law shall be otherwise then as declared by the Court. That being not the position in our case, this decision cannot assist the petitioners.</p><p style="text-align: justify;">13. For the reasons stated above, we reject the contention raised on behalf of the petitioners that the Validating Act is not a valid piece of legislation.</p><p style="text-align: justify;">14. We will now deal with the other contentions raised by Mr. Shah. It was urged that the Validating Act is violative of Article 14 of the Constitution, inasmuch as it leads to discrimination between those who have paid the cess and those who have not paid the same. He submitted that as a result of the Validating Act collection of cess has been made legal. Therefore, those who have paid the cess stand to lose as against those who have not paid it. This submission of Mr. Shah proceeds on the assumption that what is validated is only the collection of amount recovered as education cess. As pointed out above, what has been validated is not merely the collection of the amount but the whole machinery for assessment and collection of the education cess. Therefore, it will be open to the competent authority to take steps for the purpose of recovering education cess from those persons who have not paid the same. As the contention proceeds upon a misconception of the correct position it has to be rejected as without any substance.</p><p style="text-align: justify;">15. Mr. Shah also submitted that the Validating Act is violative of Article 19(1)(f) read with Article 31 of the Constitution. Articles 19(1)(f) and 31 have been repealed. Therefore, there is no question of declaring the said Act as ultra vires Article 19(1)(f) read with Article 31 now. No other contention was raised in this behalf by the learned Advocates.</p><p style="text-align: justify;">16. It was also submitted that the Validating Act is illegal inasmuch as it results in unjust enrichment. In support of this contention, the learned Advocate referred to Sections 70 and 72 of the Indian Contract Act. As we have held that the payments were not made under a mistake of law, the question of unjust enrichment does not arise. Therefore, this contention also has to be rejected.</p><p style="text-align: justify;">The second contention raised by Mr. Hathi also deserves to be rejected as what is validated by the Validating Act is the assessment and collection of the education cess. This is the view which we have taken on true interpretation of Section 3 of the Validating Act.</p><p style="text-align: justify;">17. As we do not find any substance in any of the contentions raised on behalf of the petitioners, these petitions are dismissed. Rule in each of these petitions is discharged with no order as to costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
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LAW: Section 15(2)(b, the Validating Act, the Validating Act, the Validating Act, The Validating Act, The Validating Act, Article 14 of the Constitution.(3, The Validating Act, Article 19(1)(f, Article 31 of the Constitution.(4, the Validating Act, Section 2(iv, Section 3, Section 12, Section 2(i, the Gujarat Municipalities Act, Section 15, Section 12, Section 12, Rule 3, Rule 3, the Validating Act, the Validating Act, the Validating Act, the Validating Act, a Validating Act, Section 3, the Validating Act, Section 15, Section 15, Section 3, the Validating Act, the Validating Act, the Validating Act, the Validating Act, the Validation Act, the Validating Act, the Validating Act, Article 14 of the Constitution, the Validating Act, the Validating Act, Article 19(1)(f, Article 31 of the Constitution, Article 19(1)(f, Article 31, the Validating Act, the Indian Contract Act, the Validating Act, Section 3, the Validating Act.17

ORG: G.T. Nanavati, the Gujarat Education Cess (Validation) Act, the State Government under Section 15(1, the Gujarat Education Cess Act, the Collector of Junagadh, Court, Special Civil Application Nos, Court, Court, the Gujarat Education Cess Rules, the Gujarat Education Cess (Validation) Act, Court, State, Court, Court, Legislature, Court, Act, the State Government, the State Government, the State Government, Court, the Gujarat Education Cess Rules, Court, Court, Court, Court, Legislature, Court, Court, Atmanand Jain, Collectors, Court, the State Government, the State Legislature, Legislature, Legislature, Legislature, Statute, Court, Court, Legislature, Advocate, Court, the Supreme Court, Court, Legislature, Legislature, Court, the Supreme Court, Shri Prithvi Cotton Mills Ltd., Court, Court, Court, the State Government, the Supreme Court, Legislature, the Supreme Court, The Supreme Court, Legislature, Legislature, Court, Court

NORP: J.1, Mandamus

DATE: 1977, 24th January, 1978, 1978, April 1, 1975, 1962, March, April 1978, 1976, 1541, 1976, June 22, 1977, 1976, 1962, 1977, the years 1962, 2636, 1978, 1239, 1812 of 1975, 1976, 1976, 1976, 1976, 1978, 2636, 1978, the years 1962, annual, annual, annual, 1963, 1980

GPE: Junagadh, Junagadh Municipality, Junagadh, the Junagadh Municipality, Mangrol, Mangrol, Ahmedabad, Gujarat, rejected.10, Janapada Sabha

PERSON: Mamlatdar, Levy, Mamlatdar, Deepak M. Shah, P.V. Hathi, Shah, Mamlatdar, Hathi, Shah, Hathi, Chhindwara v. The, Shah, Shah, Shah, Hathi

CARDINAL: 768, 707, 762.815, 768, 3, 1976.3, 266, 610, 838, 704, 739, only two, 1976.6, 1, two, 787, 2, 1, two, 1971]79ITR136(SC, 1970]3SCR745, 19(1)(f, 31, 70 and 72

PRODUCT: 757

LOC: Junagadh District

ORDINAL: First, Second, second

FAC: Broach Borough Municipality and

WORK_OF_ART: legislation.14