IMPORTANT POINT
The levy of the property taxes under the Punjab Municipal Act, 1911, the New Delhi Municipal Corporation Act, 1994 and the Delhi Municipal Corporation Act, 1957, on lands and/or buildings belonging to the State governments situated within Delhi, is invalid and incompetent by virtue of the mandate contained in clause (1) of Article 289 of the Constitution of India, but the land or building used or occupied for the purposes of any trade or business carried on by or on behalf of the State government shall be subject to levy of property taxes.

ORDER

Judgment of Hon ble B.P. Jeevan Reddy, A.S. Anand, Suhas C. Sen, K.S. Paripoornan and B.N. Kirpal, JJ. Delivered by B.P. Jeevan Reddy, J. (Majority Opinion) :

1. Article 289(1) of the Constitution of India declares that the "property and income of a State shall be exempt from Union taxation". The question in this batch of appeals is whether the properties of the States situated in the Union Territory of Delhi are exempt from property taxes levied under the municipal enactments in force in the Union Territory of Delhi. The Delhi High Court has taken the view that they are. That view is challenged in these appeals preferred by the New Delhi Municipal Council and the Delhi Municipal Corporation.

2. Leave granted in the Special Leave Petitions.

3. Prior to 1911-12, a large part of the territory now comprised in the Union Territory of Delhi was a district of the Province of Punjab. By a Proclamation dated September 17, 1912, the Governor General took the said territory under his immediate authority arid, management, to be administered as a separate Province to be known as the Province of Delhi. (This was in connection with the decision to shift the Capital from Calcutta to Delhi.) In the same year, the Delhi Laws Act, 1912 (1912 Act) was enacted. It came into force on and with effect from the 1st day of October, 1912. Schedule-A to the Act defined the "territory" covered by the new Province. Sections 2 and 3 of the 1912 Act provided inter alia that the creation of the new Province of Delhi shall not effect any change in the territorial application of any enactment. One of the Acts so applying to the territory comprised in the new Province of Delhi was the Punjab Municipal Act, 1911.

4. In the year 1915, another Act called "The Delhi Laws Act, 1915" (1915 Act) was enacted. Under this enactment, certain areas formerly comprised in the United Provinces of Agra and Oudh were included in and added to the Province of Delhi with effect from 1st April, 1915. Section 2 of the 1915 Act also contained a saving clause similafr to Section 2 of the 1912 Act.

5. In the Constitution of India, 1950, as originally enacted, the First Schedule contained four categories of States, viz., Part 'A', Part 'B' Part 'C' and Part D. Part 'D' comprised only of Andaman and Nicobar Islands. The Chief Commissioner's Province of Delhi was one of the Part 'C' States. By virtue of the Part 'C' States (Laws) Act, 1950, the laws in force in the erstwhile Chief Commissioner's Province of Delhi were continued in the Part 'C' State of Delhi. This Act came into force on the 16th day of April, 1950.

6. In the year 1951, the Parliament enacted the Government of Part 'C' States Act, 1951. This Act contemplated that there shall be a legislature for each of the Part 'C' States specified therein which included Delhi. Section 21 stated that the legislature of a Part 'C' State shall have the power to make laws with respect to any of the matters enumerated in List-II and List-Ill of the Seventh Schedule to the Constitution. In the case of Delhi legislature, however, it was provided that it shall not have power to make law with respect to matters specified therein including "the Constitution and powers of municipal corporations and other local authorities, of improvement trusts and of water supply, drainage, electricity, transport and other public utility authorities in Delhi or in New Delhi". Section 22 provided that any law made by the legislature of a Part 'C' State shall, to the extent of repugnancy with any law made by Parliament, whether enacted earlier or later, be void. It is necessary to notice the two distinctive features of the legislatures of Part 'C' States; not only were they created under an Act made by Parliament, the laws made by them even with respect to any of the matters enumerated in List-II were subject to any law made by the Parliament. In case of repugnan