Consentia on Law - VOl - II

VARIATION OF LAND REVENUE ACCORDING TO THE PURPOSE FOR WHICH THE LAND IS ISSUED

Introduction

General interpretation

  1. The section says that the assessment of land revenue of any land shall be made with reference to the use to which such is put. It has therefore divided the use of land in five kinds as under: (1) Agricultural; (2) Dwelling houses; (3) Industrial or commercial; (4) Mining under a mining lease; (5) Anything other than the above.
  2. The purpose of ‘mining under a mining lease’ has been added for the first time in 1987.

  • Sub-section (2) provides for alteration of assessment in a case where the use of land is diverted from one purpose to another, irrespective of the fact that the term for which assessment was made, has not expired.
  1. Sub-section (2-a) authorises the Sub-Divisional Officer to make assessment or alteration of assessment.
  2. Sub-section (3) makes provision for assessment of land revenue which is held free for a certain purpose, in the event of the use being changed to another purpose.
  3. Sub-section (4) directs that the assessment to be made under sub-section (2) and (3) shall be made in accordance with the rules made by the State Government in this respect. It has further directed that the rules to be made by the State Government shall be made in accordance with the principles contained in Chapter VII or VIII of the Code, as the case may be. Chapter VII of the Code deals with Revenue Survey and Settlement in Non-urban areas while Chapter VIII deals with assessment and re-assessment of land in urban areas.
  • Sub-section (5) authorises the Sub-Divisional Officer to impose premium also on land diverted from one use to another in accordance with the rules, apart from the land revenue assessed under this section. But no such premium shall be charged for the diversion of any land for charitable purpose.
  • Sub-section (6) abolishes exemption from payment of premium in respect of certain lands held in malik makbuza right immediately before the coming into force of the Madhya Pradesh Land Revenue Code, 1954 but also provides for giving them certain rebate.

Applicability and scope:

  1. Land being used for non- agricultural purposes even before the date Code came into force. It shall be deemed to have been diverted. Re-assessment may be made. Taran-taran Pathshala v. State of M.P., 1994 RN 398(Revenue).
  2. Where proceedings started and order also was passed under section 172 (7), there is no need of any action or enquiry under this section. 13rybfrushan Moth v. State of M.P., 1994 RN 192 (Revenue).
  • Construction of house for agricultural implements and cattle is not diversion but it is improvement. 1986 RN 131.
  1. Passing of an order by adopting summary procedure is wrong. 1986.

Effect of order of re-assessment:

  1. Where the original order of the Sub-Divisional Officer making re-assessment was passed on 11-1-1965, the order of revised assessment will come into force with effect from the first day of October next, the date of commencement of the next revenue year. Although assessment could be made under section 59(2) of the Code for diversion made prior to the Code, the order could not be made to act retrospectively and the same would be effective from the date it is passed.
  2. When the purpose of the land is diverted and re-assessment is made, it cannot take effect retrospectively from the date of the diversion. Assessment or reassessment when made can only be effective from the end of the agricultural year in which the assessment has been made.
  • The two cases cited above relate to a period when the provisions of S.59-A were not made. The legislature vide M.P. Act 15 of 1975, has inserted Ss.59-A and 59-B in respect of payment of land revenue re-assessed under the provisions of S.59. Section 59-A now makes it clear that the land revenue as re-assessed shall be payable from the date of diversion not from the beginning of the next agricultural year in which such re- assessment was made. The provision of Section 59-A has been given retrospective effect from the beginning of the Code, i.e. 2.10.1959.

Is diverted:

The expression is diverted used in sub section (2) of section 59 of the M.P. Land Revenue Code, is used without reference to time and indicate a hypothesis. When proceedings are initiated under section 59 (2), what must be seen is whether on that date land stood actually diverted or not, irrespective of the fact that the diversion took place before or after the Code came into force.

 

ALTERATION OF ASSESSMENT

  • Diversion from a non-agricultural purpose to an agricultural purpose in non urban and urban areas.
  1. When land already diverted to a non-agricultural purpose and re-assessed on that basis is re-diverted to an agricultural purpose the assessment as refixed shall be equal to the agricultural assessment on the land as fixed at the last settlement.
  2. When land already diverted to a non-agricultural purpose and assessed on that basis is re-diverted to an agricultural purpose and there is no agricultural assessment to fall back upon, the assessment on re-diversion shall be fixed at the rate adopted for similar soil in the same village or in a neighbouring village at the last settlement.
  • The assessment fixed under rules 2 and 3 shall remain in force till the next succeeding settlement of the village.

(ii)        Diversion from an agricultural purpose to a non-agricultural purpose.

(a) Non-Urban areas

  1. If any land assessed at agricultural rates is diverted to a non-agricultural purpose, the assessment thereon shall be revised in accordance with any of the methods specified below according to the circumstances of the case, Viz.:—
  2. If the area in which the land is situate has an assessment rate as approved by the State Government under Sub-section (2) of Section 77 of the Code, then in accordance with the assessment rate so prevailing.
  3. If there be no assessment rate in force as aforesaid, then the Sub-Divisional Officer shall calculate the estimated rental value of the land to be assessed in accordance with rules 33,34,35 and 36 of the rules framed under Clauses (viii), (ix) (x)&(xii) of Sub-section (2) of section 258 of the Code, as far as they may apply and fix the assessment of the land up to the maximum of 33 percent of the estimated, rental value of the land, taking into account the advantages or disadvantages and other circumstances peculiar to the survey number to be assessed.
  4. In fixing the actual assessment, the area of a survey number or Sub-division measuring less than 5 sq. metres shall be taken to be 5 sq. metres. In other cases areas up to 5 sq. metres shall be ignored and areas exceeding 5 sq. metres but below 10sq. metres shall be taken as 10 square metres. The assessment shall be correct to the nearest naye Paise.
  5. The assessment fixed under rule 5 shall remain in force till the next succeeding settlement of the village.

(b) Urban Areas

  • If any land in an urban area assessed at agricultural rate is diverted to a non-agricultural purpose, its assessment shall be altered by fixing the actual assessment on the basis of the standard rate prevailing for the area in which the land is situated, if, in such area, a standard rate as approved by the State Government under rule 30 of the rules framed under clauses (x,,i), (xvii) and (x-viii) of Sub-section (2) of Section 258 of the Code, is in force.
  • If no such standard rate is in force, the average letting value of the land shall be calculated, as far as may be, in accordance with rules 25, 26, 27 and 28 of the rules made under the clauses specified in rule 8 above and a standard rate determined in accordance with the provisions of rule 30 of the said rules.
  1. On such standard rate being calculated, the Sub-Divisional Officer shall fix., the actual assessment on the land diverted to a non-agricultural purpose up to one-third of the estimated annual rental value of the land, if the land is held for the purposes mentioned in clause (b) or (c) of Sub-section (1) of Section 59 of the Code and up to one-half of the estimated annual rental value, if the land is held for purposes mentioned in clause (d) of the said Sub-section.
  2. In fixing the actual assessment, the area of a plot measuring less than 5 sq. metres shall be taken to be 5 sq. metres. In other cases areas up to 5 sq. metres shall be ignored, and areas exceeding 5 sq. metres but below 10 sq. metres shall be taken as 10 sq. metres. The assessment shall be correct to the nearest naye paise.
  3. The assessment fixed under rule 10 shall remain in force till the next succeeding settlement of the village.
  • IMPOSITION OF PREMIUM
  • When the land assessed for any non-agricultural purpose is diverted to any agricultural purpose no premium shall be imposed under Sub-section (5) of Section 59 of the Code.
  • For the purpose of levy of premium on agricultural land other than the land specified in the proviso to Sub-section (5) of Section 59 of the Code diverted to non-agricultural purposes, in any towns and villages in the State of Madhya Pradesh shall be divided into the following classes as specified in Column (1) of the Schedule appended to these rules and the premium shall be imposed according to the rates specified in Column (2) and (3) of the said Schedule as the case may be:

Provided that with the sanction of the State Government the Sub-Divisional Officer may include any particular village in higher or lower class than that prescribed in this rule:

Provided further that no premium shall be payable on agricultural land diverted into residential purposes if the area of diverted land is not exceeding one hundred square metre and “Kachha” construction is built on such land.

Explanation- I. When the ‘abadi’ of two or more villages adjoins, the population shall be taken as the population of the combined villages.

Explanation- II. ‘Kachha’ construction means such construction in which only clay and wood (excluding timber wood) are used.]

  • In the event of the land diverted to non-agricultural purposes being re-diverted to an agricultural purpose, the holder of the land pr his successor-in-title will not be entitled to get a refund of the amount of premium already paid for diversion to a non-agricultural purpose.
  1. All changes in assessment on account of diversion shall be brought on the record-of-rights and other record prescribed under section 114 and necessary corrections shall also be made in respect of the survey numbers or plot numbers, as the case may be.

Standardisation of Land Revenue Assessment

The Taxation Enquiry Commission (1953-54) was in favour of undertaking settlement operations in only those areas where original settlement had not been done so far. In respect of the areas in which settlement had already been carried out and land revenue had been assessed on the basis of detailed land survey and soil classification, the Commission did not favour revision of settlement as it would be an expensive and time-consuming process, particularly when resettlement was overdue for most of the areas in the country and the technical personnel were not available in so a large number as to complete the operations in a reasonable time. The Commission, nevertheless, pointed out large disparities in the assessment of land revenue in the different States and in the different areas of the same Slate, and greatly emphasised the desirability of standardising the assessment and raising the receipts from land revenue in this process.

The Commission attributed the existing disparities in land revenue assessment chiefly to the differences in price-levels of the different periods in which original or revision settlements were done. To minimise the disparities, it recommended that the present incidence of land revenue in the areas last settled during the periods 1880-99, 1900-19 and 1920-39 should be raised by 25, 12.50 and 6.25 per cent respectively in conformity with the continued rise in prices since 1873, while no enhancement should be effected in those areas in which revision or original settlement had been done after 1939. It also recommended revision of standardised assessments every 10th year according to rise or fall in the average level of the prices of the decennium over that of the preceding 20 years. For the price-rise of more than 25 per cent and upto 43.75 per cent and above, it suggested enhancement of 3.25 to 12.50 per cent, and for similar price-falls, reduction of 6.25 to 25 percent[1].

Wide Diversity in Land Revenue

One would hardly dispute the Commission’s finding regarding the wide divergence in the assessment of land revenue of the different areas. If we take for illustration the present Madhya Pradesh State which comprises the areas of four old States formed of parts of both erstwhile British India and princely States, we find that the incidence of land revenue per acre of occupied area works out to Rs. 0.90 in Mahakoshal, Rs. 1.45 in Vindhya Pradesh, Rs 2.02 in Bhopal and Rs 2.40 in Madhya Bharat. In individual districts, it varies from below Rs. 1.00 in Bastar, Mandla, East Nimar, Betul, Chhindwara, Seoni, Raipur, Bilaspur, Surguja, Raigarh and Shahdol districts to between Rs 2.50 and Rs 4.00 in Gwalior, Shajapur, Mandsaur, Morena, Ujjain, ludore, Datia, Hat Jam and Behind districts. In the remaining 23 districts it ranges from Rs. 1.00 to Rs 2.50. Higher incidence of land revenue in Madhya Bharat and Bhopal in comparison to Mahakoshal is understandable to some extent, but it is difficult to understand the rationality of higher rates in Vindhya Pradesh where soil fertility and economic conditions of the people are in no way belter than those in Mahakoshal. But the (Commission’s view that the diversities in incidence of land revenue are largely due to divergence in price-levels of the different periods in which settlements were done, is not sound. It assumes that the basis of assessment has been uniform in the different areas and times, and only the variation in prices has been taken as the sole criterion to revise the assessments.

According to this view the percentage increase in the original incidence of land revenue should be less in the case of resettlements done during the years 1900-19 when the prices were 195 per cent of the prices in the year 1873 (the base taken by the (Commission) than the percentage increase in incidence in the case of resettlements done during the years 1920-39 when prices were 242 percent .of those in the base year. Bill it is found that the increase in the incidence in Damon. Jabalpur, Sagar, East Nimar, Hoshangabad, Seoni, Betul, Balaghat and Chhindwara districts of the Madhya Pradesh State resettled during the former period varies from 15 to 40 percent and the increase in the incidence in Narsimhpur, Mandla, Raipur, Durg and Bilaspur districts resettled during the latter period also varies from 14 to 43 percent.

In the same Morena district, the revision sell lenient of 1925 resulted in 30 per cent increase in the incidence of laud revenue in Khategaon Pargana, and 20 percent decrease in Kanod Pargana while the revision settlement done in Morena Pargana in 1939, gave only 16 percent increase.

Bases of Assessment

Thus the available data do not substantiate the Commission’s view that the disparities in land revenue in the different areas are mainly due to differences in price-levels of the periods in which they were settled or resettled. Naturally the question arises: what are the other causes of diversities in land revenue assessments of the different areas?

For an answer, we must examine the bases of assessment.

The basis of land revenue assessment in some States or tracts is net assets of the estate, while in others; it is net produce or gross produce. Still in another sot of States, capital value or rental value determines the basis of assessment. These different bases are essentially the function of certain agricultural and economic factors. The agricultural factors are quality of soil and level or position of the land, type of crops raised, possibilities of natural or artificial watering, manuring, and land improvements, and the economic factors are nearness to the village habitation and market, transport and communication facilities, prices of crops raised, and the economic condition of the tenants. Though the different bases of assessment agree more or less in essentials, the) differ substantially with regard to details of calculation.

The different factors are not scientifically and comprehensively assessed in all settlements. Some factors are completely left out, and idiosyncracies of the Settlement Officers have often filled the gaps. In different settlements, different systems of soil classification have been adopted; and they are not comparable. While a comparison is possible on the basis of productivity and value of land in areas taken in one settlement, no comparison is possible between areas which have been assessed in different settlements in the same or different periods. It is thus the difference in details of calculation of the bases of assessment which is chiefly responsible for differences in land revenue.

Historical Factors

Other factors responsible for disparities are historical circumstances, difference in the outlook of the rulers of the princely States, and abundance or scarcity of resources other than land on which taxation could be imposed. In the same Ratlam Tehsil which is comprised of villages belonging to three former princely Slates, the rate per acre for the same standard Kali 1 soil varies from Rs. 2.19 to Rs. 6.06 (Rs. 3.81 in Dhar, Rs. 4.56 in Ratlam, and Rs. 2.19 to Rs 6.06 in Sailana). The non-occupancy tenants in the Madhya Bharat districts were required to pay somewhat higher contractual rents than the occupancy tenants who paid rents fixed by the Settlement Officer at circle rates on the .soil-classification basis. The pitch of assessment in the Jagirdari areas was generally higher than that in the Zamindari areas. In the wheat districts of Sagar, Damo, Jabalpur, Hoshangabad and Narsimhpur in Mahakoshal, the rents were quite high even in the original settlements, while those in the rice districts of Bilaspur, Raipur and Durg were much lower. The old disparities have continued during the subsequent settlements because no attempt was made to follow a uniform scale of soil-classification in the different areas; and enhancement effected in these areas was mostly on an ad-hoc basis according to local circumstances. It is not that the Commission was not alive to these basic factors and historical circumstances which have led to disparities in land revenue assessment, but in its anxiety to simplify the procedure of standardisation, it has laid undue emphasis on the part played by fluctuations in prices at the cost of other factors which govern land values and should thus form the basis for formulating of any scheme for lessening the disparities in assessment. The following quotation from its report bears .ample testimony to its awareness of these factors and circumstances:—

Though the general pattern of land revenue settlement and assessment in India broadly follows the description given above, (i.e. in its report), the development of the different systems has not been on the same lines in all States. This disparity has been further widened with the integration of the former princely States where, except in a few States administered by retired or deputed officers from British India, there were no regular settlements or systems of land revenue. The result is that, at one end we find States like Punjab, Bombay (before the merger in it of certain princely States), Madras, Assam and Mysore in which practically all the land has been surveyed, measured and settled on some definite principles. At the other, there are States like Rajasthan, Saurashtra and Madhya Bharat where there are still large portions of unsurveyed and unsettled land and where settlements made in the past followed no scientific principles and have been more or less the result of political conditions prevailing in the States at the time. In between, there are Stales like Uttar Pradesh and Madhya Pradesh where there have been settlements on regular lines, but owing to the prevalent zamindari system, several intermediaries had crept in. Recently, these intermediaries have been eliminated and the former tenants have become occupants of land directly responsible to the State Governments for payment of revenue. But the revenue realised from these former tenants is the same as the rent paid by them previously to the intermediaries and has not been revised on the abolition of the intermediaries.

The lands have not been resettled on the hitherto accepted principles of revenue assessment, viz, productivity of the land, cost of cultivation, economic facilities, etc. It appears that in these Slates, considerations such as past history, political expediency and the administrative difficulties most influenced the rates of land revenue recently fixed and these are likely to continue for a time. Conditions in the States of West Bengal, Bihar and Orissa are more or less similar, and in quite a large part of these States, there was no organised land revenue administration at the lower level because of the permanent settlement.

Alternative Method of Standardisation

Since the Commission’s recommendation to standardise the land revenue assessment by eliminating the effect of variations in ‘general price-level is not sound, it is necessary to evolve some different method to measure the extent of disparities in assessments in different areas and to formulate proper scales to minimise them. Instead of correlating the pitch of assessment only to price-level, it would be more appropriate to link it with the money-measure of the total effects of the various factors which contribute to the value of land. Such procedure will take into account both the agricultural factors which govern the productivity of land and the prices of the products raised which ultimately determines the value of land. The required money-measure of the total effects of these agro-economic factors can be found either from the sale or lease value of the land or the net or gross value of all produce raised thereon.

The statistics of sale or lease value of land can he tabulated from the returns of the registration offices. However, data on sale or lease value of land are not readily available in a systematic compilation in many States. The gross value of the produce can be calculated on the basis of the average yields and farm prices (i.e., the wholesale prices received by the farmers) of the crops during the preceding decennium or quinquennium. Such data are now available in almost all States for a fairly large number of years. The net value of the produce can be obtained after deducting from the gross value of the produce the cost of cultivation of crops, for the determination of which practically no Stale has conducted comprehensive enquiry on a scientific, basis. Thus the statistics of the gross value of the produce run only be used as a dependable money-measure of the total effects of the various agro-economic factors which determine the value of land.

Gross Value as Multiple

The gross value of the produce can be calculated in terms of per acre of cultivated area. Land revenue is expressed either in terms of per acre of occupied area (i.e. area of holdings) or per acre of cultivated area. For the sake of comparison, both should be expressed in terms of per acre of cultivated area. After this is done, the gross value of the produce can be expressed as multiple of the current rate of land revenue. This multiple can be calculated for the whole of a district or a smaller administrative unit which has been covered in the same or similar settlements. Where this multiple is high, the obvious conclusion would be that the present pitch of assessment is low and there is justification for enhancement and vice-versa.

There will be little justification for any enhancement in land, revenue in those districts or areas where the gross value of the produce is only 20 or less times the land revenue. The Taxation Enquiry Commission has further ruled out any enhancement larger than 25 per cent over the existing rates, because a sudden rise might cause inconvenience and hardship to the people and might arouse their resentment. Therefore, a maximum enhancement of 25 percent, may be effected in those districts where the gross value is 100 or more times the rental value or thereabout. Between these two extreme limits, the incidence of land revenue may be enhanced in progression by 10 to 20 per cent.

The scales of enhancement may be as follows:

Gross value of produce as multiple of land proposed percent revenue Proposed percent increase
Below 20 0
20-30 10
30-50 15
50-100 20
Above 100 25

The Case for Uniformity

A question worth consideration at this stage is whether the assessment within a district or any other administrative unit should be raised at the same rate in all the assessment groups in it or a graduated scale should he adopted as the incidence of land revenue differs widely from one assessment group to another assessment group in the same district or area. It may be pointed out that within a district or any area settled simultaneously, either the settlements in all the parts have been done during the same period or during periods close to each other, and they have been done almost by the same Settlement Officer according to the same principles. The variations in the assessments within a district or area is, therefore, not so much due to variation in price-levels or historical circumstances as due to genuine differences in the productivity of the soils and other factors which are taken into consideration in fixing the assessment. There would be thus little logic in applying different scales of revision in the different assessment groups of the same district or area. In view of high appreciation in land value and value of the produce raised due to economic advancement and price-rise, there is little justification of any reduction in the present pitch of assessment in any area, howsoever high it may appear in comparison to other areas. Therefore, no decrease is recommended. But the grading of the multiples and the rates of increase for the different grades of multiples can be varied in the different States on the consideration of local conditions. After the statistical ratios of land revenue to land value are calculated and enhancement effected on the basis of these ratios, the effects of agricultural and economic factors which should really form the basis for land revenue assessment, will be reflected in the enhanced assessment, and the effects of such extraneous factors such as historical circumstances will get minimised. If the disparities in any State arc very pronounced, they can be ironed out in stages by repeating this process, without causing drastic revisions in one stroke. After the standardisation of assessment, it should be possible to adopt the scales of periodical revision of standardised rents on the basis of variation in price-level as recommended by the Taxation Enquiry Commission and as referred to in the concluding part of the first paragraph of this paper.

 

 

 

 

 

 

 

 

 

 

 

Conclusion

With the imposition of ceiling on land holdings, standardisation of land revenue assessment will be the final link in the chain of land reforms in this country, the various classes of landed aristocracy having been eliminated and the land distributed to the actual cultivators in not too big holdings, the standardisation of land revenue assessment will not only contribute to equitable distribution of the burden of land tax on them, but they will also be made to contribute their appropriate share to the national revenue which has to be raised in all possible justified manner for financing the development projects.

The various land reforms measures have been taken chiefly with a view to benefitting the actual tillers of land to whom does also accrue the benefits of agricultural developments under the Plan. The standardisation of land revenue assessment should, therefore, receive the attention of the policy framers and legislators to achieve the twin objectives of equity in taxation on land and raising of finances for our development plans.

[1] Report of the Taxation Enquiry Commission, Vol. III, pp 235-30.

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