Important Points
1. After the amendment of Sections 2(j) and 12 of the Andhra Pradesh Non-Agricultural Lands Assessment Act w.e.f. 1.7.1974 the Act applies to land owned by the Central or State Government and leased out for any commercial, industrial or other agricultural purpose and lessee of such land is liable to non-agricultural assessment.
2. A Company registered under the Companies Act being a separate legal entity, property of a Government Company cannot be considered as property of the Government so as to get the benefit of Articles 285 and 289 of Constitution of India.

Headnote:(i) Andhra Pradesh Non Agricultural Lands Assessment Act, 1963 as amended by Amending Act 1974 w.e.f. 1.7.1974 - Sections 2(j), 3 and 12-Constitution of India-Article 285-Non-agricultural assessment-Lessee of Government land-Government Company-State Government leased land to Department of Atomic Energy of Central Government which in turn leased land to Central Government Company-Plea of Company that land belonged to Union of India as property of Company belonged to Union of India and in view of Article 285 of Constitution, Act did not apply to land leased out to Company-Not tenable-After amendment to Section 12 w.e.f. 1.7.1974 Act applies to land owned by Central or State Government and leased out for commercial, industrial or non-agricultural purpose-Owner includes lessee of land owned by Central or State Government-Further Company registered under Companies Act is a distinct legal entity-Property of Central Government Company is not property of Union of India-It is property of Company-State Government entitled to levy non-agricultural assess-ment upon land leased out to Company-Article 285 not attracted.
       Held : Neither has Article 285 any application to these appeals nor are we concerned with whether or not the appellants are controlled by or under the authority of the Central Government. (Para 12)
       With effect from 1st July, 1974, Section 12 of the Act was amended so that it now applied to land which was owned by the Central or a State Government and was leased out for any commercial, industrial or other non-agricultural purpose. With effect from that date, by reason of the amendment of Section 2(j), an “owner” included a lessee of land owned by the Central or a State Government if the land was leased out by such Government for a commercial, industrial or other non-agricultural purpose. By virtue of Section 3, the obligation to pay non-agricultural assessment on the leased land lay upon the owner lessee. It is the case of the appellant company in its writ petition that it is the lessee of the Department of Atomic Energy of the Union of India in respect of the said land. The said land, therefore, is of the ownership of the Central Government and, being leased out to the appellant company for an industrial and commercial purpose, is land to which the Act applies. By virtue of the amended definition of “owner” under Section 2(j) of the Act, the appellant company is the owner of the said land and, by virtue of Section 3, is liable to pay non-agricultural assessment thereon. (Paras 13 & 14)
       A clear distinction must be drawn between a company and its shareholder, even though that shareholder may be only one and that the Central or a State Government. In the eye of the law, a company registered under the Companies Act is a distinct legal entity other than the legal entity or entities that hold its shares. (Para 15)
       (ii) Andhra Pradesh Non-agricultural Lands Assessment Act, 1963 as amended by Amending Act, 1974-Sections 2(j), 3 and 12-Non-agricultural assessment-Land owned by Central or State Government and leased out for non-agricultural purpose- Amendment to with effect from 1.7.1974 not retrospective-No demand for non-agricultural assessment for period prior to 1.7.1974 could be demanded. (Paras 23 & 24)
       (iii) Constitution of India-Articles 285 and 289-Property of Union of India-Government Company-Company registered under Companies Act is distinct legal entity-Property of Company is not property of Union of India-Article 285 not applicable in respect of such property. (Para 3)

Judgment

Bharucha J.-Under challenge is the principal judgment and order dated 30th July, 1982 of the High Court of Andhra Pradesh in the case of Electronics Corporation of India Ltd. (Civil Appeal No. 142 of 1983) and the orders following the principal judgment and order in the cases of M/s. Parel Investment and Trading Co. Limited (Civil Appeal No. 3937-38 of 1990) and Hindustan Shipyard Ltd. (Civil Appeal Nos. 3939-41 of 1990 and 3393 of 1991).

2. It is enough to set out the facts pertaining to Civil Appeal No. 142 of 1983 filed by the Electronics Corporation of India Ltd. (“the appellant company”) in as much as the same issue of law is involved in all the appeals and all the appellants are companies registered under the Companies Act.

3. The Andhra Pradesh Non Agricultural Lands Assessment Act, 1963 (“the Act”) defined “owner” to include “any person for the time being receiving or entitled to receive whether on his own account or as agent, or trustee, guardian, manager, receiver for another person or for any religious, educational or charitable purpose, rent or profits from the non agricultural land or for the structure constructed on such land, in respect of which the word is used”. Consequent upon amending Act 28 of 1974, with effect from 1st July, 1974, the definition of “owner” was amended and the following, so far as is relevant here, was added : “and also includes in respect of the land owned by the State Government or the Central Government (i) the lessee, if the land has been leased out by that Government for any commercial, industrial or other non agricultural purpose .......”. Section 3 is the charging section of the Act and provides for the levy of assessment on non agricultural land, to be paid by “the owner such land”. Section 12 of the Act sets out the categories of land to which the Act does not apply. Prior to amending Act 28 of 1974, the Act did not apply to land owned by the State Government or the Central Government. Thereafter, it did not apply to land owned by the State Government or the Central Government “other than (i) the land leased out for any commercial, industrial or other non agricultural purpose .....”.

4. In 1963 the State of Andhra Pradesh had granted a large area of land to the Department of Atomic Energy of the Central Government. In 1964 the Department of Atomic Energy gave 220.25 acres (“the said land”) thereout to the appellant company. On 1st October, 1978, the first respondent issued to the appellant company notices of demand for non-agricultural assessment on the said land under the Act. For the period 1970-71 to 1973-74 the sum demanded was Rs. 1,91,189.68. For the period 1974-75 to 1978-79 the sum demanded was Rs. 11,98,826.32.

5. The appellant company filed a writ petition in the High Court of Andhra Pradesh impugning the said notices of demand. The contention of the appellant company in the writ petition, as set out in the judgment and order under appeal, was that it was the lessee of the said land which belonged to the Union of India and, since the property of the Union of India could not, by virtue of Article 285 of the Constitution, be taxed by a State legislature, the Act did not apply to the said land and, accordingly, no demand thereunder could be made “upon the petitioner, which is a lessee of the Union of India. It is stated that an area of approximately 1,000 acres was granted by the State Government to the Department of Atomic Energy, Government of India, and that the Department of Atomic Energy, in turn, leased out an extent of 280.25 acres to the petitioner corporation for establishing its plant and machinery. It is further contended that out of the extent granted to the petitioner an extent of 29 acres is covered by buildings, an extent of 12 acres by roads, and the rest of the area is meant for future expansion. It is also submitted that an extent of 14.25 acres is being used for agricultural purposes”.

6. The response on behalf of the State Government to the writ pet

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1999 Supreme(SC) 597

Cases Referred (6)