THE LOKMANYA MILLS vs THE BARSI BOROUGH MUNICIPALITY

The Supreme Court ruled that under Section 58 of the Bombay Municipal Boroughs Act, 1925, a municipality cannot levy taxes based solely on the floor area of factory buildings, as this method does not align with the statutory definition of 'annual letting value', which requires consideration of potential rent a hypothetical tenant would pay. The Court held that the Barsi Municipality's Rule 2C was illegal and ultra vires, as it disregarded the prescribed valuation methods and restricted taxpayers' rights to challenge valuations. The judgment emphasized that a uniform rate based on area fails to account for the diverse nature of properties and their rental potential.